N-CSR 1 form.htm FORM NCSR-DLF 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. 
    (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:    4/30/05 

FORM N-CSR

Item 1. Reports to Stockholders.

Dreyfus 
Bond Market 
Index Fund 

SEMIANNUAL REPORT April 30, 2005

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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 
24    Statement of Assets and Liabilities 
25    Statement of Operations 
26    Statement of Changes in Net Assets 
28    Financial Highlights 
30    Notes to Financial Statements 
38    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
Bond Market Index Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus Bond Market Index Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for most fixed-income securities.Although the Federal Reserve Board began to raise short-term interest rates before the reporting period in June 2004, longer-term bonds have remained remarkably resilient through 2004. Nonetheless, the first four months of 2005 saw heightened bond market volatility as higher interest rates and renewed inflationary pressures took their toll on investor sentiment.These factors led to price erosion late in the reporting period among corporate bonds and, to a lesser extent, U.S. government securities.

Nonetheless, fixed-income securities have held up well compared to previous periods of rising short-term interest rates. Strong demand from domestic and foreign investors have supported prices of U.S. Treasury securities, and stronger balance sheets and better business conditions have bolstered prices of corporate bonds. In our view, the bond market's surprising strength represents yet another example of how a long-term investment perspective and a steady asset allocation strategy can benefit investors.As always, we encourage you to talk regularly with your financial advisor about the investment strategies that may be appropriate for you.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus Bond Market Index Fund perform relative to its benchmark?

For the six-month period ended April 30, 2005, the fund achieved total returns of 0.76% for its Investor shares and 0.88% for its BASIC shares.1 The fund's benchmark, the Lehman Brothers U.S.Aggregate Index (the "Index"), achieved a total return of 0.98% for the same period.2

Investors' low inflation expectations supported prices of U.S. government securities, and better business conditions sparked a rally among corporate bonds over the final months of 2004. However, these gains were later offset by weakness caused by mounting inflationary pressures and deteriorating business fundamentals in the automotive sector.We attribute the difference between the fund's and benchmark's returns to fees and expenses that are not reflected in the Index.

What is the fund's investment approach?

The fund seeks to match the total return of the Index.To pursue this goal, the fund normally invests at least 80% of its assets in bonds that are included in the Index. To maintain liquidity, the fund may invest up to 20% of its assets in various short-term, fixed-income securities and money market instruments.

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 April 30, 2005, the average duration of the fund was approximately 4.35 years.

What other factors influenced the fund's performance?

The resolution of the U.S. presidential election lifted a cloud of uncertainty from the economy and financial markets, sparking a rally among corporate bonds as investors looked forward to better business condi-

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

tions in the recovering economy. At the same time, U.S. government securities benefited from investors' relatively benign inflation expectations, as energy prices had retreated from their previous highs and gains in the labor market remained modest.

In fact, longer-term bond yields remained remarkably stable over the first half of the reporting period, despite higher short-term interest rates from the Federal Reserve Board (the "Fed"), which continued to move away from the accommodative monetary policy of the past several years. The Fed raised short-term interest rates at each of four meetings of its Federal Open Market Committee during the reporting period, driving the overnight federal funds rate from 1.75% to 2.75% .

However, these generally favorable market conditions appeared to change during the first quarter of 2005. Stronger-than-expected employment gains and a renewed surge in energy prices caused investors to worry that the Fed might raise interest rates faster and to a higher level that they previously expected. These concerns caused yields of the more interest-rate-sensitive areas of the bond market to rise, and their prices to fall.

At the same time, weaker-than-expected financial results from major automobile manufacturers General Motors and Ford put an end to the corporate bond market rally, which gave up some of its previous gains as concerns mounted that these American corporate icons' debt securities might be downgraded from investment grade to the high-yield category. (Indeed, just days after the end of the reporting period, one major bond rating agency did so.) Bonds from issuers in other industries that are relatively sensitive to changes in the prices of oil, gas and other commodities also experienced weakness. In addition, because yield differences between corporate bonds and U.S.Treasury securities already had narrowed well beyond historical norms, the prospect of deteriorating business conditions put additional downward pressure on corporate bond prices. Price declines were particularly severe among lower-rated credits as investors appeared to lose their appetite for risk.

4

Within the U.S. government securities sector, mortgage-backed securities fared relatively well as interest rates rose, fewer homeowners refinanced their mortgages and the risk of larger-than-expected prepayments of existing mortgages fell. In March, a drop in new mortgage applications suggested that demand for new homes might have peaked. While U.S. Treasuries produced positive returns during the reporting period, their performance was constrained by supply-and-demand factors: the ballooning federal budget deficit caused the supply of newly issued bonds to rise sharply. Finally, while U.S. government agencies were subject to intensified criticism of their issuers by legislators and regulators, the relatively high yields offered by their debt securities supported investor demand.

What is the fund's current strategy?

As of April 30, 2005, approximately 40% of the fund's assets were invested in mortgage-backed securities, 22% were allocated to U.S. Treasury securities, 20% to corporate bonds and asset-backed securities, 16% in affiliated money markets and 2% in U.S. government agency bonds. In addition, the majority of the fund's corporate securities were BBB-rated as of the reporting period's end, which is at the low end of the investment-grade range and is closely aligned with the overall credit quality of the Index.

May 16, 2005

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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005     
    Investor Shares    BASIC Shares 
Expenses paid per $1,000 †    $ 1.99    $ .75 
Ending value (after expenses)    $1,007.60    $1,008.80 

  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 April 30, 2005 
    Investor Shares    BASIC Shares 
Expenses paid per $1,000 †    $ 2.01    $ .75 
Ending value (after expenses)    $1,022.81    $1,024.05 

† Expenses are equal to the fund's annualized expense ratio of .40% for Investor shars and .15% for Basic shares; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

  6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Principal     
Bonds and Notes—98.9%    Amount ($)    Value ($) 
Aerospace & Defense—.8%         
Boeing:         
Debs., 7.25%, 2025    150,000    185,157 
Debs., 8.1%, 2006    25,000    26,336 
General Dynamics,         
Sr. Notes, 2.125%, 2006    500,000    492,153 
Northrop Grumman,         
Debs., 7.75%, 2016    540,000    658,660 
Raytheon,         
Notes, 6.75%, 2007    550,000    578,601 
United Technologies:         
Debs., 8.75%, 2021    50,000    69,108 
Notes, 4.875%, 2015    500,000    501,562 
Notes, 6.1%, 2012    575,000    628,163 
        3,139,740 
Asset-Backed Ctfs.-Auto Loans—.6%     
Ford Credit Auto Owner Trust,         
Ser. 2005-B, Cl. A3, 4.17%, 2009    1,400,000    1,403,135 
WFS Financial Owner Trust,         
Ser. 2003-4, Cl. A4, 3.15%, 2011    1,000,000    989,635 
        2,392,770 
Asset-Backed Ctfs.-Credit Cards—.9%     
Bank One Issuance Trust,         
Ser. 2004-A1, Cl. A1, 3.45%, 2011    950,000    925,612 
Capital One Master Trust:         
Ser. 2001-3A, Cl. A, 5.45%, 2009    1,000,000    1,018,137 
Ser. 2001-5, Cl. A, 5.3%, 2009    400,000    407,216 
Chemical Master Credit Card Trust 1,         
Ser. 1996-3, Cl. A, 7.09%, 2009    700,000    725,555 
MBNA Master Credit Card Trust,         
Ser. 1995-C, Cl. A, 6.45%, 2008    400,000    401,640 
        3,478,160 
Asset-Backed Ctfs.-Utilities—.4%         
CPL Transition Funding,         
Ser. 2002-1, Cl. A4, 5.96%, 2015    550,000    591,397 
California Infrastructure PG&E-1,         
Ser. 1997-1, Cl. A8, 6.48%, 2009    850,000    892,172 
Peco Energy Transition Trust,         
Ser. 1999-A, Cl. A7, 6.13%, 2009    235,000    247,407 
        1,730,976 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Automotive—1.1%             
DaimlerChrysler:             
Debs., 7.45%, 2027    50,000        51,553 
Notes, 4.05%, 2008    1,225,000        1,180,882 
Ford Motor,             
Global Landmark Securities, 7.45%, 2031    150,000    a    123,574 
Ford Motor Credit:             
Bonds, 7.375%, 2011    1,925,000        1,804,999 
Global Landmark Securities, 7.25%, 2011    200,000        185,091 
GMAC,             
Debs., 6%, 2011    70,000        58,216 
General Motors:             
Debs., 7.7%, 2016    300,000        237,440 
Debs., 8.375%, 2033    450,000    a    343,288 
Debs., 8.8%, 2021    150,000        125,050 
Toyota Motor Credit,             
Notes, 4.35%, 2010    150,000        150,557 
            4,260,650 
Banking—4.2%             
BB&T,             
Sub. Notes, 4.75%, 2012    325,000        324,419 
Bank of America:             
Bonds, 5.125%, 2014    350,000        358,768 
Sub. Notes, 7.8%, 2010    1,150,000        1,311,866 
Sub. Notes, 7.8%, 2016    160,000        196,937 
Bank of New York,             
Sr. Notes, 5.2%, 2007    450,000        459,265 
Bank One:             
Notes, 8.75%, 2006    500,000        518,168 
Sub. Notes, 5.9%, 2011    500,000        533,692 
Bayerische Landesbank New York,             
Sub. Notes, Ser. F, 5.875%, 2008    300,000        317,315 
Capital One Bank,             
Notes, 4.25%, 2008    275,000        271,941 
Citigroup:             
Debs., 6.625%, 2028    100,000        114,323 
Notes, 6%, 2012    750,000        809,955 
Sub. Notes, 5%, 2014    1,000,000        1,008,471 
Dresdner Bank-New York,             
Sub. Debs., 7.25%, 2015    145,000        171,235 

8

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Banking (continued)         
FleetBoston Financial,         
Sub. Notes, 7.375%, 2029    175,000    195,561 
HSBC Holdings,         
Sub. Notes, 7.5%, 2009    200,000    223,338 
J.P. Morgan Chase & Co.:         
Sr. Notes, 4%, 2008    1,000,000    994,549 
Sr. Notes, 5.625%, 2006    500,000    510,233 
KFW:         
Notes, 3.25%, 2009    1,250,000    1,218,644 
Notes, 4.125%, 2014    350,000    343,281 
Key Bank,         
Sub. Debs., 6.95%, 2028    100,000    118,527 
Landwirtschaftliche Rentenbank,         
Notes, Ser. 6, 3.875%, 2008    825,000    819,996 
MBNA America Bank,         
Sub. Notes, 6.75%, 2008    100,000    106,112 
NB Capital Trust IV,         
Capital Securities, 8.25%, 2027    55,000    60,773 
PNC Funding,         
Sub. Notes, 5.25%, 2015    450,000    460,040 
Regions Financial,         
Notes, 4.375%, 2010    400,000    394,088 
Royal Bank of Scotland,         
Sub. Notes, 6.375%, 2011    410,000    450,048 
Sanwa Finance Aruba,         
Notes, 8.35%, 2009    150,000    170,950 
SouthTrust,         
Sub. Notes, 5.8%, 2014    500,000    530,838 
State Street Bank & Trust,         
Sub. Notes, 5.25%, 2018    200,000    203,315 
U.S. Bancorp,         
Capital Securities, 8.09%, 2026    100,000    109,731 
U.S. Bank,         
Sub. Notes, 6.375%, 2011    100,000    109,847 
Wachovia Bank,         
Sub. Notes, 5%, 2015    250,000    251,480 
Washington Mutual Finance,         
Sr. Notes, 6.25%, 2006    500,000    512,240 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Banking (continued)         
Wells Fargo & Co:         
Notes, 5.25%, 2007    1,600,000    1,647,232 
Sub. Notes, 6.375%, 2011    420,000    464,005 
Wells Fargo Capital I,         
Capital Securities, 7.96%, 2026    30,000    33,202 
Westpac Banking,         
Sub. Notes, 4.625%, 2018    500,000    472,723 
Zions Bancorp,         
Sub. Notes, 6%, 2015    250,000    266,924 
        17,064,032 
Broadcasting & Media—.6%         
COX Communications,         
Bonds, 5.5%, 2015    450,000    449,093 
Clear Channel Communications,         
Notes, 4.25%, 2009    750,000    719,880 
Comcast Cable Communications:         
Notes, 9.455%, 2022    304,000    426,344 
Sr. Notes, 6.75%, 2011    600,000    659,352 
        2,254,669 
Building & Construction—.1%         
Pulte Homes,         
Sr. Notes, 5.25%, 2014    500,000    491,336 
Chemicals—.2%         
Eastman Chemical,         
Notes, 3.25%, 2008    700,000    675,041 
Potash-Saskatchewan,         
Notes, 7.75%, 2011    200,000    231,000 
        906,041 
Commercial Mortgage Pass-Through Ctfs.—2.8%     
Asset Securitization,         
Ser. 1997-D4, Cl. A1D, 7.49%, 2029    280,506    295,903 
Bear Stearns Commercial Mortgage Securities,     
Ser. 1999-WF2, Cl. A2, 7.08%, 2031    250,000    273,058 
CS First Boston Mortgage Securities,         
Ser. 1999-C1, Cl. A2, 7.29%, 2041    1,050,000    1,154,098 
Chase Commercial Mortgage Securities:         
Ser. 2000-2, Cl. A2, 7.631%, 2032    250,000    285,389 
Ser. 2000-3, Cl. A2, 7.319%, 2032    450,000    504,929 
GE Capital Commercial Mortgage,         
Ser. 2002-1A, Cl. A3, 6.269%, 2035    850,000    928,451 

10

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Commercial Mortgage Pass-Through Ctfs. (continued)     
GMAC Commercial Mortgage Securities:         
Ser. 1998-C1, Cl. A2, 6.7%, 2030    205,186    217,202 
Ser. 1998-C2, Cl. A2, 6.42%, 2035    993,000    1,049,724 
Heller Financial Commercial Mortgage Asset,         
Ser. 1999-PH1, Cl. A2, 6.847%, 2031    700,000    754,599 
J.P. Morgan Chase Commercial         
Mortgage Securities,         
Ser. 2004-CB8, Cl. A4, 4.404%, 2039    1,000,000    967,897 
LB Commercial Conduit Mortgage Trust,         
Ser. 1999-C2, Cl. A2, 7.325%, 2032    200,000    220,936 
LB-UBS Commercial Mortgage Trust:         
Ser. 2000-C3, Cl. A2, 7.95%, 2025    1,100,000    1,255,000 
Ser. 2004-C6, Cl. A6, 5.02%, 2029    275,000    278,202 
Merrill Lynch Mortgage Trust,         
Ser. 2003-KEY1, Cl. A4, 5.236%, 2035    500,000    513,843 
Morgan Stanley Capital I:         
Ser. 2003-HQ2, Cl. A2, 4.92%, 2035    500,000    504,830 
Ser. 2004-T13, Cl. A4, 4.66%, 2045    1,000,000    988,845 
Salomon Brothers Mortgage Securities VII,         
Ser. 2000-C1, Cl. A2, 7.52%, 2009    300,000    334,530 
Wachovia Bank Commercial Mortgage Trust,         
Ser. 2004-C11, Cl. A5, 5.215%, 2041    800,000    819,430 
        11,346,866 
Commercial Services—.1%         
Cendant,         
Sr. Notes, 7.375%, 2013    200,000    226,188 
Consumer—.3%         
Avon Products,         
Sr. Notes, 4.2%, 2018    250,000    229,128 
Procter & Gamble,         
Notes, 6.875%, 2009    750,000 a    830,156 
        1,059,284 
Data Processing—.1%         
First Data,         
Sr. Notes, 5.625%, 2011    250,000    267,097 
Drugs & Pharmaceuticals—.3%         
Bristol-Myers Squibb,         
Notes, 5.75%, 2011    250,000    265,072 
Eli Lilly & Co.,         
Notes, 7.125%, 2025    200,000    249,249 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Drugs & Pharmaceuticals (continued)         
GlaxoSmithKline Capital,             
Notes, 4.375%, 2014    500,000        488,408 
Merck & Co.,             
Debs., 6.4%, 2028    150,000        166,994 
Wyeth,             
Bonds, 6.5%, 2034    200,000        226,643 
            1,396,366 
Entertainment/Media—.4%             
News America:             
Bonds, 6.2%, 2034    250,000        253,083 
Debs., 8.25%, 2018    150,000        184,087 
Time Warner Cos.,             
Notes, 6.95%, 2028    600,000        677,036 
Viacom,             
Sr. Notes, 5.5%, 2033    250,000    a    227,635 
Walt Disney:             
Debs., 7.55%, 2093    100,000        118,010 
Sr. Notes, 7%, 2032    150,000        176,040 
            1,635,891 
Financial Services—3.2%             
Aetna,             
Debs., 7.625%, 2026    50,000        62,074 
American General Finance,             
Notes, Ser. F, 5.875%, 2006    350,000        357,916 
CIT,             
Sr. Notes, 5.5%, 2007    1,350,000        1,388,418 
Countrywide Capital Industries,             
Notes, 8%, 2026    200,000        210,725 
Countrywide Home Loans,             
Notes, Ser. J, 5.5%, 2006    400,000        407,212 
Credit Suisse First Boston USA,             
Notes, 5.125%, 2014    550,000        560,392 
General Electric Capital:             
Debs., 8.3%, 2009    15,000        17,260 
Notes, Ser. A, 5%, 2007    2,750,000        2,795,028 
Notes, Ser. A, 5.45%, 2013    650,000        680,857 
Notes, Ser. A, 6.75%, 2032    200,000        239,485 
Goldman Sachs:             
Notes, Ser. B, 7.35%, 2009    100,000        111,244 
Sr. Notes, 6.6%, 2012    1,000,000        1,100,812 
Sub. Notes, Ser. B, 6.345%, 2034    350,000    a    367,652 

12

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Financial Services (continued)         
HSBC Finance:         
Notes, 4.75%, 2013    700,000    693,458 
Notes, 8%, 2010    630,000    729,160 
Lehman Brothers,         
Notes, 6.625%, 2012    650,000    719,103 
Merrill Lynch & Co.:         
Notes, 6.875%, 2018    150,000    173,820 
Notes, Ser. C, 5.45%, 2014    565,000    584,570 
Morgan Stanley,         
Notes, 7.25%, 2032    600,000    747,022 
Paine Webber,         
Sr. Notes, 6.55%, 2008    150,000    161,234 
SLM,         
Notes, 5.125%, 2012    850,000    870,125 
        12,977,567 
Food & Beverages—1.1%         
Archer-Daniels-Midland,         
Debs., 7.125%, 2013    300,000    346,630 
Bottling Group,         
Notes, 4.625%, 2012    350,000    350,123 
Coca-Cola Enterprises:         
Debs., 6.7%, 2036    250,000    296,545 
Debs., 8.5%, 2002    100,000    135,010 
Coors Brewing,         
Sr. Notes, 6.375%, 2012    130,000    141,661 
General Mills,         
Notes, 6%, 2012    125,000    134,686 
H.J. Heinz,         
Debs., 6.375%, 2028    100,000    113,882 
Hershey Foods,         
Debs., 8.8%, 2021    30,000    42,251 
Kraft Foods,         
Notes, 4.625%, 2006    1,325,000    1,335,012 
Kroger,         
Sr. Notes, 7.25%, 2009    550,000    600,691 
Nabisco,         
Debs., 7.55%, 2015    40,000    47,999 
Safeway,         
Sr. Notes, 5.8%, 2012    210,000 a    217,691 
Sara Lee,         
Notes, 6.25%, 2011    300,000    327,096 

The Fund 13

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Food & Beverages (continued)         
Unilever Capital,         
Notes, 5.9%, 2032    250,000    269,915 
        4,359,192 
Foreign—3.3%         
Asian Development Bank,         
Sr. Notes, 4.5%, 2012    750,000    764,606 
European Investment Bank:         
Notes, 4.625%, 2007    500,000    506,983 
Notes, 4.625%, 2014    500,000 a    513,632 
Hydro-Quebec:         
Debs., Ser. HH, 8.5%, 2029    200,000    294,124 
Debs., Ser. HK, 9.375%, 2030    20,000    31,737 
Inter-American Development Bank,         
Bonds, 5.75%, 2008    1,600,000    1,675,618 
KFW International Finance:         
Debs., 8%, 2010    35,000    40,335 
Notes, 5.25%, 2006    300,000    305,096 
Korea Development Bank:         
Bonds, 7.25%, 2006    300,000    310,087 
Notes, 5.5%, 2012    350,000    362,344 
Malaysia,         
Notes, 8.75%, 2009    330,000    381,723 
PEMEX Project Funding Master Trust,     
Notes, 7.375%, 2014    400,000    435,600 
Province of British Columbia,         
Bonds, 6.5%, 2026    25,000    30,371 
Province of Manitoba,         
Debs., 8.8%, 2020    10,000    14,066 
Province of Ontario:         
Notes, 3.625%, 2009    1,200,000    1,173,548 
Sr. Unsub. Notes, 5.5%, 2008    500,000    523,315 
Province of Quebec,         
Debs., 7.5%, 2023    200,000    257,742 
Republic of Chile,         
Bonds, 5.5%, 2013    350,000    364,805 
Republic of Finland,         
Bonds, 6.95%, 2026    25,000    31,846 
Republic of Italy:         
Debs., 6.875%, 2023    70,000    85,721 
Notes, 5.375%, 2033    550,000    574,619 
Sr. Notes, 2.75%, 2006    500,000    492,683 

14

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Foreign (continued)             
Republic of Korea,             
Notes, 8.875%, 2008    840,000        944,094 
Republic of South Africa,             
Notes, 6.5%, 2014    170,000        184,025 
United Mexican States:             
Notes, Ser. A, 6.75%, 2034    450,000    a    449,325 
Notes, Ser. A, 9.875%, 2010    2,025,000    a    2,420,888 
            13,168,933 
Health Care—.1%             
UnitedHealth,             
Notes, 5%, 2014    300,000        304,766 
Industrial—.5%             
John Deere Capital,             
Notes, 7%, 2012    600,000        684,212 
Praxair,             
Notes, 2.75%, 2008    900,000        864,424 
Tyco International,             
Notes, 6.875%, 2029    235,000        274,195 
Waste Management,             
Sr. Notes, 7%, 2028    150,000        171,416 
            1,994,247 
Insurance—.7%             
AXA,             
Sub. Notes, 8.6%, 2030    165,000        220,914 
Anthem,             
Bonds, 6.8%, 2012    300,000        337,249 
Berkshire Hathaway Finance,             
Sr. Notes, 4.85%, 2015    200,000    b    198,926 
GE Global Insurance,             
Notes, 7%, 2026    150,000        161,164 
Marsh & McLennan Cos.,             
Sr. Notes, 5.875%, 2033    200,000        189,455 
MetLife,             
Sr. Notes, 6.125%, 2011    260,000        281,882 
Nationwide Financial Services,             
Sr. Notes, 6.25%, 2011    350,000        381,883 
Progressive,             
Sr. Notes, 6.625%, 2029    100,000        115,878 
Prudential Financial,             
Notes, Ser. B, 4.75%, 2014    350,000        345,955 

The Fund 15

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Insurance (continued)         
Safeco Capital Trust I,         
Capital Securities, 8.072%, 2037    300,000    343,272 
Torchmark,         
Debs., 8.25% 2009    150,000    169,311 
        2,745,889 
Mining & Metals—.1%         
Alcan,         
Debs., 7.25%, 2031    350,000    431,992 
Alcoa,         
Notes, 6%, 2012    150,000    161,726 
        593,718 
Oil & Gas—1.5%         
Anadarko Finance,         
Notes, Ser. B, 6.75%, 2011    300,000    334,020 
BP Amoco,         
Notes, 5.9%, 2009    850,000    903,733 
Canadian Natural Resources,         
Notes, 4.9%, 2014    350,000    344,008 
ChevronTexaco Capital,         
Notes, 3.5%, 2007    500,000    494,706 
ConocoPhillips:         
Notes, 5.9%, 2032    500,000    543,500 
Notes, 8.75%, 2010    200,000    239,377 
Devon Financing,         
Notes, 7.875%, 2031    275,000    347,862 
Encana,         
Bonds, 7.2%, 2031    150,000    182,362 
Kinder Morgan,         
Sr. Notes, 6.5%, 2012    650,000    711,209 
Marathon Oil,         
Notes, 5.375%, 2007    200,000    204,501 
Occidental Petroleum,         
Sr. Notes, 5.875%, 2007    1,000,000    1,029,588 
Pioneer Natural Resources,         
Sr. Notes, 5.875%, 2016    200,000    198,685 
Transocean,         
Notes, 7.5%, 2031    150,000    188,139 
Valero Energy,         
Notes, 7.5%, 2032    250,000    296,187 
        6,017,877 

16

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Paper Products—.3%         
International Paper:         
Notes, 7.625%, 2007    10,000    10,530 
Sr. Notes, 6.75%, 2011    200,000    218,473 
MeadWestvaco,         
Notes, 6.85%, 2012    600,000    662,979 
Weyerhaeuser,         
Debs., 7.375%, 2032    200,000    218,185 
        1,110,167 
Real Estate Investment Trusts—.3%     
EOP Operating,         
Notes, 4.75%, 2014    300,000    288,555 
ERP Operating,         
Notes, 5.2%, 2013    600,000    608,890 
Simon Property,         
Notes, 6.35%, 2012    400,000    430,217 
        1,327,662 
Retail—.5%         
Federated Department Stores,         
Debs., 7.45%, 2017    350,000    412,597 
Home Depot,         
Sr. Notes, 3.75%, 2009    875,000    857,195 
May Department Stores,         
Notes, 6.7%, 2034    200,000    217,839 
NIKE,         
Sr. Notes, 5.5%, 2006    400,000    408,627 
Target,         
Debs., 7%, 2031    125,000    156,203 
        2,052,461 
State Government—.1%         
State of Illinois,         
Bonds, 5.1%, 2033    450,000    443,183 
Technology—.3%         
Hewlett-Packard,         
Sr. Notes, 5.5%, 2007    150,000    154,281 
IBM:         
Debs., 7.5%, 2013    75,000    88,610 
Debs., 8.375%, 2019    600,000    794,065 
Motorola,         
Debs., 7.5%, 2025    150,000    175,748 
        1,212,704 

The Fund 17

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Telecommunications—1.9%         
AT&T Wireless Services:         
Notes, 8.125%, 2012    250,000    295,976 
Sr. Notes, 7.875%, 2011    475,000    547,161 
BellSouth Telecommunications,         
Debs., 6.375%, 2028    550,000    595,512 
British Telecom,         
Bonds, 8.875%, 2030    150,000 c    205,450 
Deutsche Telekom International Finance,         
Notes, 8.75%, 2030    300,000 c    403,206 
France Telecom,         
Notes, 8.75%, 2031    150,000 c    203,693 
Koninklijke KPN,         
Sr. Unsub. Notes, 8.375%, 2030    250,000    332,379 
New Jersey Bell Telephone,         
Debs., 8%, 2022    25,000    30,252 
Pacific Bell,         
Debs., 7.125%, 2026    310,000    357,491 
SBC Communications,         
Notes, 5.875%, 2012    775,000    824,248 
Sprint Capital,         
Sr. Notes, 7.625%, 2011    1,200,000    1,356,104 
360 Communications,         
Sr. Notes, 7.6%, 2009    200,000    221,371 
Telecom Italia Capital,         
Notes, Cl. B, 5.25%, 2013    800,000    802,822 
Telefonica Europe,         
Notes, 7.75%, 2010    200,000    229,619 
Verizon Global Funding,         
Sr. Notes, 7.25%, 2010    500,000    562,106 
Vodafone,         
Sr. Notes, 7.75%, 2010    580,000    660,987 
        7,628,377 
Transportation—.3%         
Burlington Northern Santa Fe,         
Debs., 7%, 2025    100,000    118,008 
Canadian National Railway,         
Notes, 6.9%, 2028    100,000    119,338 
Continental Airlines,         
Pass-Through Certificates, Ser. 974A, 6.9%, 2018    170,322    167,372 

18

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Transportation (continued)         
FedEx,         
Notes, 9.65%, 2012    225,000    290,410 
Norfolk Southern:         
Bonds, 7.8%, 2027    250,000    321,933 
Debs., 9%, 2021    10,000    13,822 
Union Pacific,         
Debs., 6.625%, 2029    200,000    226,088 
United Parcel Service,         
Debs., 8.375%, 2030    10,000    14,322 
        1,271,293 
U.S. Government—25.8%         
U.S. Treasury Bonds:         
5.375%, 2/15/2031    2,150,000    2,428,984 
5.5%, 8/15/2028    2,350,000    2,646,852 
6.25%, 5/15/2030    1,800,000    2,241,630 
7.125%, 2/15/2023    1,950,000    2,546,427 
7.875%, 2/15/2021    3,830,000    5,261,731 
8.75%, 5/15/2020    3,380,000    4,936,896 
8.875%, 8/15/2017    3,325,000    4,736,562 
11.25%, 2/15/2015    25,000    39,014 
12%, 8/15/2013    1,445,000    1,809,631 
12.5%, 8/15/2014    40,000    53,501 
12.75%, 11/15/2010    75,000    78,758 
14%, 11/15/2011    30,000    34,643 
U.S. Treasury Notes:         
2.25%, 2/15/2007    5,000,000 a    4,884,350 
2.5%, 5/31/2006    3,000,000 a    2,971,407 
3.5%, 11/15/2006    12,700,000 a    12,695,428 
3.625%, 5/15/2013    3,700,000 a    3,599,841 
4%, 2/15/2014    6,850,000 a    6,772,136 
4.375%, 8/15/2012    2,300,000 a    2,353,549 
4.75%, 11/15/2008    6,500,000 a    6,707,155 
5%, 8/15/2011    3,300,000 a    3,484,965 
5.625%, 5/15/2008    3,000,000 a    3,161,460 
5.75%, 8/15/2010    3,500,000 a    3,804,325 
6%, 8/15/2009    5,550,000 a    6,019,752 
6.125%, 8/15/2007    9,900,000 a    10,435,194 
6.5%, 10/15/2006    2,900,000 a    3,021,539 
6.5%, 2/15/2010    3,350,000 a    3,730,124 
7%, 7/15/2006    3,500,000 a    3,644,760 
        104,100,614 

The Fund 19

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies—10.0%         
Federal Farm Credit Bank,         
Bonds, 2.625%, 9/17/2007    1,500,000    1,456,687 
Federal Home Loan Bank:         
Bonds, 1.875%, 6/15/2006    3,250,000    3,186,596 
Bonds, 2.875%, 9/15/2006    3,400,000    3,362,624 
Bonds, 3.875%, 1/15/2010    1,500,000    1,483,323 
Bonds, 4.5%, 9/16/2013    1,500,000    1,506,148 
Sr. Notes, 5.8%, 9/2/2008    850,000    894,905 
Federal Home Loan Mortgage Corp:         
Notes, 3.5%, 9/15/2007    2,100,000    2,083,998 
Notes, 3.625%, 9/15/2008    1,000,000    986,460 
Notes, 4.5%, 1/15/2015    1,100,000    1,095,606 
Notes, 4.875%, 3/15/2007    3,600,000    3,666,920 
Notes, 5.5%, 9/15/2011    2,500,000    2,657,547 
Notes, 5.5%, 8/20/2019    500,000    503,152 
Notes, 6.25%, 7/15/2032    650,000    777,157 
Sub. Notes, 5.875%, 3/21/2011    750,000    801,088 
Federal National Mortgage Association:         
Bonds, 6.25%, 5/15/2029    1,900,000    2,246,385 
Notes, 2.625%, 1/19/2007    3,000,000    2,941,245 
Notes, 5.25%, 1/15/2009    5,525,000    5,740,420 
Notes, 5.375%, 11/15/2011    1,250,000    1,319,772 
Notes, 7.25%, 1/15/2010    1,450,000    1,636,119 
Financing Corp:         
Bonds, 8.6%, 9/26/2019    40,000    55,541 
Bonds, 9.65%, 11/2/2018    510,000    754,647 
Tennessee Valley Authority:         
Bonds, Ser. C, 6%, 3/15/2013    450,000    497,776 
Notes, Ser. C, 4.75%, 8/1/2013    750,000    768,560 
        40,422,676 
U.S. Government Agencies/Mortgage-Backed—34.4%     
Federal Home Loan Mortgage Corp:         
4%, 9/1/2008—9/1/2018    2,341,992    2,283,003 
4.5%, 5/1/2010-8/1/2033    9,027,231    8,938,036 
5%, 11/1/2007-4/1/2035    16,124,590    16,092,283 
5.5%, 9/1/2009-1/1/2035    12,856,930    13,041,102 
6%, 12/1/2013-7/1/2034    5,892,131    6,067,760 
6.5%, 3/1/2011-11/1/2033    3,481,826    3,624,147 
7%, 9/1/2011-7/1/2034    1,118,686    1,181,587 
7.5%, 7/1/2010-11/1/2033    771,897    827,996 
8%, 5/1/2026-10/1/2031    256,339    279,882 
8.5%, 6/1/2030    7,486    8,176 

20

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies/         
Mortgage-Backed (continued)         
Federal National Mortgage Association:         
4%, 12/1/2018-3/1/2019    1,294,406    1,257,316 
4.5%, 4/1/2018-10/1/2033    6,480,661    6,386,188 
5%, 5/1/2010-5/1/2035    20,556,576    20,511,462 
5.5%, 1/1/2017-1/1/2035    22,744,329    23,030,214 
6%, 6/1/2011-9/1/2034    10,180,085    10,478,682 
6.5%, 1/1/2011-1/1/2034    5,563,663    5,797,438 
7%, 8/1/2008-10/1/2032    1,805,440    1,906,977 
7.5%, 8/1/2015-3/1/2032    523,191    561,648 
8%, 5/1/2027-10/1/2030    90,621    98,918 
8.5%, 2/1/2025-2/1/2031    19,215    21,006 
9%, 10/1/2030    8,101    8,976 
Government National Mortgage Association I:     
4.5%, 6/15/2019-8/15/2033    1,410,112    1,391,919 
5%, 3/15/2018-5/15/2034    2,928,783    2,936,671 
5.5%, 2/15/2033-1/15/2035    5,157,288    5,253,753 
6%, 4/15/2017-9/15/2034    3,802,562    3,928,075 
6.5%, 9/15/2008-11/15/2033    1,561,140    1,635,490 
7%, 10/15/2011-8/15/2032    725,828    769,990 
7.5%, 12/15/2026-10/15/2032    301,060    323,856 
8%, 8/15/2024-3/15/2032    141,904    153,910 
8.5%, 10/15/2026    35,738    39,066 
9%, 2/15/2022-2/15/2023    43,387    47,857 
        138,883,384 
Utilities/Gas & Electric—1.6%         
Cincinnati Gas & Electric,         
Notes, 5.7%, 2012    185,000    194,886 
Duke Capital,         
Sr. Notes, 8%, 2019    225,000    275,229 
Florida Power & Light,         
First Mortgage Bonds, 5.625%, 2034    250,000    266,020 
Georgia Power,         
Sr. Notes, Ser. J, 4.875%, 2007    400,000    406,654 
MidAmerican Energy,         
Sr. Notes, 5.875%, 2012    350,000    369,236 
NiSource Finance,         
Bonds, 5.4%, 2014    150,000    154,648 
Ohio Power,         
Sr. Notes, Ser. F, 5.5%, 2013    400,000    416,179 

The Fund 21

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Utilities/Gas & Electric (continued)         
Oncor Electric Delivery,         
Sr. Secured Notes, 7%, 2032    250,000    297,476 
PPL Electric Utilities,         
Secured Bonds, 6.25%, 2009    300,000    321,162 
Pacific Gas & Electric,         
First Mortgage Bonds, 6.05%, 2034    350,000    375,307 
Progress Energy,         
Sr. Notes, 7.1%, 2011    500,000    548,271 
Public Service Company of Colorado,         
First Mortgage Bonds, 7.875%, 2012    350,000    420,084 
Sempra Energy,         
Sr. Notes, 7.95%, 2010    500,000    568,890 
South Carolina Electric & Gas,         
First Mortgage Bonds, 6.625%, 2032    200,000    239,454 
Southern California Edison,         
Notes, 6.65%, 2029    100,000    114,983 
Southern Power,         
Sr. Notes, Ser. D, 4.875%, 2015    300,000    295,177 
Virginia Electric & Power,         
Sr. Notes, Ser. A, 5.375%, 2007    1,000,000    1,019,922 
        6,283,578 
Total Bonds and Notes         
(cost $395,942,308)        398,548,354 
 
Short-Term Investments—.1%         
Repurchase Agreement;         
Goldman Sachs & Co., Tri-Party Repurchase     
Agreement, 2.79%, dated 4/29/2005,         
due 5/2/2005 in the amount of $ 352,897     
(fully collateralized by $ 379,499 U.S. Treasury     
Strips, due 11/15/2006, value $ 359,871)     
(cost $352,815)    352,815    352,815 

22
Investment of Cash Collateral         
for Securities Loaned—18.2%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Plus Fund         
(cost $73,416,657)    73,416,657 d    73,416,657 
Total Investments (cost $469,711,780)    117.2%    472,317,826 
Liabilities, Less Cash and Receivables    (17.2%)    (69,174,172) 
Net Assets    100.0%    403,143,654 

a All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $82,714,340 and the total market value of the collateral held by the fund is $85,330,480, consisting of 
cash collateral of $73,416,657 and U.S. Government and Agency securities valued at $11,913,823. 
b Security exempt from registration under Rule 144A of the Securities Act of 1933.This security may be resold in 
transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2005, this security 
amounted to $198,926 or .05% of net assets. 
c Variable rate security—interest rate subject to periodic change. 
d Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
U.S. Government/Agency Securities    70.2    Mortgage/Asset-Backed Securities    4.7 
Corporate Bonds    20.6    Foreign Securities    3.3 
Short-Term/Money        State Government    .1 
Market Investments    18.3        117.2 

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

The Fund 23

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—See Statement         
of Investments (including securities on loan,     
valued at $82,714,340)—Note 1(b):         
Unaffiliated issuers    396,295,123    398,901,169 
Affiliated issuers    73,416,657    73,416,657 
Cash        181,780 
Interest receivable        3,987,891 
Receivable for shares of Capital Stock subscribed    397,715 
Receivable for investment securities sold        8,785 
        476,893,997 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    92,424 
Liability for securities on loan—Note 1(b)        73,416,657 
Payable for shares of Capital Stock redeemed    241,262 
        73,750,343 
Net Assets ($)        403,143,654 
Composition of Net Assets ($):         
Paid-in capital        400,895,275 
Accumulated distributions in excess         
of investment income—net        (324,274) 
Accumulated net realized gain (loss) on investments    (33,393) 
Accumulated net unrealized appreciation         
(depreciation) on investments        2,606,046 
Net Assets ($)        403,143,654 

Net Asset Value Per Share         
    Investor Shares    BASIC Shares 
Net Assets ($)    210,090,519    193,053,135 
Shares Outstanding    20,534,656    18,852,480 
Net Asset Value Per Share ($)    10.23    10.24 

See notes to financial statements.

24

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Interest    8,733,409 
Income on securities lending    32,612 
Total Income    8,766,021 
Expenses:     
Management fee—Note 3(a)    296,448 
Distribution fee (Investor Shares)—Note 3(b)    257,874 
Loan commitment fees—Note 2    1,880 
Total Expenses    556,202 
Investment Income—Net    8,209,819 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    (143,415) 
Net unrealized appreciation     
(depreciation) on investments    (4,733,000) 
Net Realized and Unrealized Gain (Loss) on Investments    (4,876,415) 
Net Increase in Net Assets Resulting from Operations    3,333,404 

See notes to financial statements.

The Fund 25

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    8,209,819    15,473,192 
Net realized gain (loss) on investments    (143,415)    1,295,818 
Net unrealized appreciation         
(depreciation) on investments    (4,733,000)    2,615,812 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    3,333,404    19,384,822 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (4,342,057)    (9,000,973) 
BASIC shares    (4,209,872)    (7,349,709) 
Net realized gain on investments:         
Investor shares    (253,303)    (993,873) 
BASIC shares    (216,262)    (710,630) 
Total Dividends    (9,021,494)    (18,055,185) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Investor shares    36,534,730    93,204,485 
BASIC shares    59,548,194    75,296,765 
Dividends reinvested:         
Investor shares    4,453,952    9,587,604 
BASIC shares    3,092,359    5,897,214 
Cost of shares redeemed:         
Investor shares    (36,047,437)    (113,902,366) 
BASIC shares    (38,810,516)    (50,333,121) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    28,771,282    19,750,581 
Total Increase (Decrease) in Net Assets    23,083,192    21,080,218 
Net Assets ($):         
Beginning of Period    380,060,462    358,980,244 
End of Period    403,143,654    380,060,462 
Undistributed (distributions in         
excess of) investment income—net    (324,274)    17,836 

26
    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Share Transactions:         
Investor Shares         
Shares sold    3,559,598    9,014,756 
Shares issued for dividends reinvested    434,738    929,077 
Shares redeemed    (3,514,983)    (11,024,045) 
Net Increase (Decrease) in Shares Outstanding    479,353    (1,080,212) 
BASIC Shares         
Shares sold    5,811,651    7,292,526 
Shares issued for dividends reinvested    301,511    571,043 
Shares redeemed    (3,795,406)    (4,869,359) 
Net Increase (Decrease) in Shares Outstanding    2,317,756    2,994,210 

See notes to financial statements.

The Fund 27

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.

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 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 these changes in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01. 
d    Not annualized. 
e    Annualized. 
See notes to financial statements. 

28

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 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 these changes in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01. 
d    Not annualized. 
e    Annualized. 
See notes to financial statements. 

The Fund 29

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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 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

30

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. Investments in registered investment companies are valued at their net asset value. 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.

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

The Fund 31

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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

32

(d) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net; such dividends are paid monthly. Dividends from net realized capital gain, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code").To the extent that net realized capital gain can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gain.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.

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2004 was as follows: ordinary income $16,350,682 and long-term capital gains $1,704,503.The tax character of current year distributions will be determined at the end of the current fiscal year.

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. For the period ended April 30, 2005, the fund did not borrow under the Facility.

The Fund 33

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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, 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

34

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% 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 April 30, 2005, the Investor shares were charged $257,874 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 $49,647 and Rule 12b-1 distribution plan fees $42,777.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities, during the period ended April 30, 2005, amounted to $111,861,200 and $80,629,691, respectively.

At April 30, 2005, accumulated net unrealized appreciation on investments was $2,606,046, consisting of $5,861,022 gross unrealized appreciation and $3,254,976 gross unrealized depreciation.

At April 30, 2005, 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).

The Fund 35

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

NOTE 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are

36

asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

The Fund 37

  INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and

38

Lipper averages, and discussed the results of the comparisons. The Board members took into consideration that the fund's total return performance was higher than the comparison group and Lipper category averages for the three- and five-year periods, higher than the Lipper category average for the one-year period, lower than the comparison group average for the one-year period, and lower than the comparison group and Lipper category averages for the ten-year period.The Board members also took into consideration that the fund's income performance was higher than the comparison group and Lipper category averages for the one-, five- and ten-year periods, and higher than the comparison group average and lower than the Lipper category average for the three-year period.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category. Noting the fund's "unitary fee" structure, the Board members took into consideration that the fund's management fee and expense ratio were the lowest among the funds in the comparison group and the expense ratio was notably lower than the Lipper category average.

Noting that neither the Manager nor its affiliates manage any other bond index funds, representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by separate accounts, commingled funds and/or mutual funds for which they serve as sub-investment adviser, with similar investment objectives, policies and strategies (the "Similar Accounts"). Representatives of the Manager explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the advisory fees paid in light of the Manager's performance and the services provided. The Board concluded that the

The Fund 39

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued)

Similar Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts had lower fees as a result of historical pricing arrangements and other Similar Accounts were mutual funds that were sub-advised but not administered by an affiliate of the Manager.The Board members considered the relevance of the fee information provided for the Similar Accounts to evaluate the appropriateness and reasonableness of the fund's advisory fees.The Board acknowledged that differences in fees paid by the Similar Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

40

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material

economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

The Fund 41

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 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.

© 2005 Dreyfus Service Corporation

Dreyfus 
BASIC S&P 500 
Stock Index Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
23    Statement of Financial Futures 
24    Statement of Assets and Liabilities 
25    Statement of Operations 
26    Statement of Changes in Net Assets 
27    Financial Highlights 
28    Notes to Financial Statements 
35    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus BASIC S&P 500 Stock Index Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

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 six-month period ended April 30, 2005, the fund produced a total return of 3.16% .1 The Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index") the fund's benchmark, produced a 3.28% return for the same period.2,3

We attribute the fund and market's performance to investors' changing economic expectations. Stock market gains achieved in the wake of the U.S. presidential election during the first half of the reporting period were followed by relatively lackluster returns during the second half of the reporting period.The difference in return between the fund and S&P 500 Index 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 was growing stronger due to low interest rates, strong consumer confidence and higher levels of capital spending among businesses. In addition, the resolution of the U.S. presidential election lifted a cloud of uncertainty from the economy and financial markets. These factors helped fuel a stock market rally that persisted through the end of 2004. By February 2005, however, the economy appeared to hit a "soft patch," and investors became concerned that rising short-term interest rates and higher energy prices might constrain economic growth further.

In this changing investment environment, investor sentiment shifted from smaller, faster-growing companies to shares of larger companies with track records of stable and predictable earnings under a broad range of economic conditions. As a result, the large-cap stocks in the S&P 500 Index generally produced higher returns than smaller-cap stocks for the first extended period in several years.

The fund's strongest gains during the reporting period stemmed from its energy holdings, which benefited from higher commodity prices as rising demand from China and other emerging markets was met by limited supplies of oil and gas. Large integrated energy companies, such as industry leader Exxon Mobil, produced particularly strong results.

The fund also received strong contributions to performance from the health care sector, where medical providers, HMOs and hospitals fared well.These companies benefited from greater pricing power and lower costs. In addition, as more workers found employment in the recovering economy, HMO enrollment trends improved, helping to boost revenues and earnings.

Consumer staples stocks benefited during the reporting period from investors' increasing preference for value-oriented stocks over more growth-oriented shares. Companies that sell home goods, food, beverages and tobacco products to consumers tend to offer attractive dividends and produce stable,predictable returns regardless of economic conditions. In addition, tobacco companies, such as Altria Group, gained value as litigation concerns eased.

4

On the other hand, technology stocks produced generally disappointing returns over the reporting period as investors turned away from the more growth-oriented parts of the market. Electronic equipment and Internet companies bore the brunt of the sector's weakness.Automobile companies also lost value as the industry's business fundamentals deteriorated in the rising interest-rate environment. Finally, in the consumer cyclicals area, large warehouse-type retailers, such as Wal-Mart Stores, were hurt by higher gasoline costs, which left their customer base with less disposable income. However, luxury retailers, whose customers generally have higher incomes, fared relatively well.

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 April 30, 2005, the percentage of the fund's assets invested in each industry group closely approximated its representation in the S&P 500 Index. In our view, an investment in a broadly diversified index fund, such as Dreyfus BASIC S&P 500 Stock Index Fund, can help investors seek to manage stock market risk by limiting the impact on the overall portfolio of unexpected losses in any single industry group or holding.

May 16, 2005

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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.01 
Ending value (after expenses)    $1,031.60 

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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.00 
Ending value (after expenses)    $1,023.80 

† Expenses are equal to the fund's annualized expense ratio of .20%, multiplied by the average account value over the period, multiplied bt 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
Common Stocks—95.4%    Shares    Value ($) 
Consumer Cyclical—8.3%         
Albertson's    45,886 a    908,083 
AutoNation    28,200 b    515,214 
AutoZone    8,400 b    697,200 
Bed Bath & Beyond    37,700 b    1,402,817 
Best Buy    37,200    1,872,648 
Big Lots    14,100 b    143,538 
Brunswick    12,050    506,100 
CVS    49,868    2,572,191 
Circuit City Stores—Circuit City Group    23,886    377,399 
Coach    47,600 b    1,275,680 
Cooper Tire & Rubber    8,753    152,740 
Costco Wholesale    58,900    2,390,162 
Dana    18,749    214,113 
Darden Restaurants    18,450    553,500 
Delphi    69,972    230,907 
Delta Air Lines    17,450 a,b    57,410 
Dillard's, Cl. A    8,800    204,776 
Dollar General    37,546    764,061 
Eastman Kodak    35,750 a    893,750 
Eaton    19,042    1,116,813 
Family Dollar Stores    20,900    563,882 
Federated Department Stores    21,100    1,213,250 
Ford Motor    228,311    2,079,913 
Gap    98,950    2,112,582 
General Motors    70,450 a    1,879,606 
Genuine Parts    21,800    935,220 
Harley-Davidson    36,450    1,713,879 
Harrah's Entertainment    14,194    931,410 
Hasbro    20,775    393,063 
Hilton Hotels    47,950    1,046,748 
Home Depot    273,800    9,684,306 
International Game Technology    43,000    1,156,270 
J.C. Penney    33,750    1,600,088 
Johnson Controls    23,856    1,308,978 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Consumer Cyclical (continued)         
Jones Apparel Group    15,300    465,885 
Kohl's    40,600 b    1,932,560 
Kroger    91,300 b    1,439,801 
Limited Brands    47,600    1,032,444 
Liz Claiborne    13,500    478,305 
Lowe's Cos.    96,400    5,023,404 
Marriott International, Cl. A    25,050    1,571,888 
Mattel    51,950    937,698 
May Department Stores    36,400    1,276,912 
Maytag    9,900 a    95,931 
McDonald's    158,600    4,648,566 
NIKE, Cl. B    28,650    2,200,607 
Navistar International    8,200 b    242,146 
Nordstrom    15,750    800,573 
Office Depot    39,050 b    764,599 
OfficeMax    11,614    377,223 
PACCAR    21,674    1,471,665 
RadioShack    19,752    493,207 
Reebok International    6,965    282,849 
Safeway    55,850 b    1,189,047 
Sears Holdings    11,941    1,614,901 
Southwest Airlines    91,893    1,367,368 
Staples    92,700    1,767,789 
Starbucks    49,850 b    2,468,572 
Starwood Hotels & Resorts Worldwide    26,450    1,437,293 
TJX Cos.    60,050    1,360,133 
Target    111,650    5,180,560 
Tiffany & Co.    18,100    545,715 
Toys R Us    26,800 b    679,380 
V. F.    12,450    704,546 
Visteon    16,196    56,686 
Wal-Mart Stores    422,500    19,916,650 
Walgreen    127,400    5,485,844 
Wendy's International    14,197    609,477 
Whirlpool    8,350 a    518,201 
Yum! Brands    36,360    1,707,466 
        115,614,188 

8

Common Stocks (continued)    Shares    Value ($) 
Consumer Staples—7.7%         
Alberto-Culver, Cl. B    10,616    472,412 
Altria Group    258,000    16,767,420 
Anheuser-Busch Cos.    96,900 a    4,541,703 
Archer-Daniels-Midland    77,735    1,398,453 
Avon Products    58,772    2,355,581 
Brown-Forman, Cl. B    11,200 a    621,600 
Campbell Soup    40,650    1,208,931 
Clorox    19,150    1,212,195 
Coca-Cola    282,500    12,271,800 
Coca-Cola Enterprises    43,950    892,185 
Colgate-Palmolive    65,500    3,261,245 
ConAgra Foods    64,282    1,719,543 
Fortune Brands    18,021    1,524,216 
General Mills    45,500    2,247,700 
Gillette    123,600    6,382,704 
H.J. Heinz    43,650    1,608,502 
Hershey Foods    27,300    1,744,470 
International Flavors & Fragrances    11,000    416,900 
Kellogg    43,750    1,966,562 
Kimberly-Clark    60,000    3,747,000 
McCormick & Co.    16,900    584,571 
Molson Coors Brewing, Cl. B    10,065 a    621,514 
Newell Rubbermaid    34,278 a    744,861 
Pactiv    18,550 b    397,712 
Pepsi Bottling Group    24,700    708,149 
PepsiCo    209,220    11,641,001 
Procter & Gamble    314,600    17,035,590 
Reynolds American    14,550 a    1,134,464 
SUPERVALU    16,800 a    530,208 
Sara Lee    98,400    2,104,776 
Sysco    79,408    2,747,517 
UST    20,600    943,480 
Wm. Wrigley Jr.    24,350    1,683,316 
        107,238,281 
Energy—8.3%         
Amerada Hess    10,650    997,372 
Anadarko Petroleum    29,575    2,160,158 

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Energy (continued)         
Apache    40,726 a    2,292,466 
BJ Services    20,300    989,625 
Baker Hughes    42,170    1,860,540 
Burlington Resources    48,212    2,343,585 
ChevronTexaco    262,420    13,645,840 
ConocoPhillips    86,737    9,094,374 
Devon Energy    59,800    2,701,166 
Dynegy, Cl. A    41,250 b    138,188 
EOG Resources    29,800    1,416,990 
El Paso    80,236 a    801,558 
Exxon Mobil    796,256    45,410,480 
Halliburton    62,900    2,616,011 
Kerr-McGee    20,339    1,578,306 
KeySpan    20,100    762,393 
Kinder Morgan    13,700    1,047,502 
Marathon Oil    43,300    2,016,481 
Nabors Industries    17,700 b    953,499 
National-Oilwell Varco    20,900 b    830,566 
Nicor    5,550 a    205,184 
NiSource    33,850    786,674 
Noble    16,950    862,755 
Occidental Petroleum    49,500    3,415,500 
Peoples Energy    4,720    186,912 
Rowan Cos.    13,360 a    354,441 
Schlumberger    73,500    5,028,135 
Sempra Energy    29,642    1,196,944 
Sunoco    8,618 a    855,423 
Transocean    40,050 b    1,857,119 
Unocal    33,700    1,838,335 
Valero Energy    32,000    2,192,960 
Williams Cos.    71,100 a    1,210,122 
XTO Energy    43,366    1,308,352 
        114,955,956 
Health Care—13.0%         
Abbott Laboratories    194,350    9,554,246 
Aetna    36,754    2,696,641 
Allergan    16,450    1,157,916 

10

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
AmerisourceBergen    13,150 a    805,832 
Amgen    156,166 b    9,090,423 
Applera—Applied Biosystems Group    24,500    519,400 
Bausch & Lomb    6,714    503,550 
Baxter International    77,300    2,867,830 
Becton, Dickinson & Co.    31,500    1,843,380 
Biogen Idec    41,640 b    1,509,034 
Biomet    31,475    1,217,767 
Boston Scientific    94,800 b    2,804,184 
Bristol-Myers Squibb    243,700 a    6,336,200 
C.R. Bard    13,100    932,327 
CIGNA    16,400    1,508,472 
Cardinal Health    54,050    3,003,559 
Caremark Rx    57,000 b    2,282,850 
Chiron    18,400 a,b    628,360 
Eli Lilly & Co.    141,250    8,258,887 
Express Scripts    9,500 a,b    851,580 
Fisher Scientific International    14,600 a    866,948 
Forest Laboratories    43,800 b    1,562,784 
Genzyme    30,950 b    1,813,979 
Gilead Sciences    54,000 b    2,003,400 
Guidant    40,200    2,978,016 
HCA    51,350    2,867,384 
Health Management Associates, Cl. A    30,450 a    753,029 
Hospira    19,445 b    652,379 
Humana    20,050 b    694,733 
Johnson & Johnson    370,796    25,447,729 
King Pharmaceuticals    30,150 b    241,200 
Laboratory Corporation of America Holdings    16,800 b    831,600 
Manor Care    10,750    358,513 
McKesson    36,804    1,361,748 
Medco Health Solutions    34,369 b    1,751,787 
MedImmune    31,050 b    787,738 
Medtronic    150,800    7,947,160 
Merck & Co.    275,350    9,334,365 
Millipore    6,250 b    301,375 
Mylan Laboratories    33,600    554,400 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
PerkinElmer    16,182    299,367 
Pfizer    930,340    25,277,338 
Quest Diagnostics    11,350    1,200,830 
Schering-Plough    183,900    3,837,993 
St. Jude Medical    45,000 b    1,756,350 
Stryker    46,700    2,267,285 
Tenet Healthcare    58,350 a,b    698,450 
Thermo Electron    19,900 b    497,102 
UnitedHealth Group    79,950    7,556,075 
Waters    15,100 b    598,413 
Watson Pharmaceuticals    13,650 b    409,500 
WellPoint Health Networks    38,050 b    4,860,888 
Wyeth    166,650    7,489,251 
Zimmer Holdings    30,720 b    2,501,222 
        180,732,769 
Interest Sensitive—22.7%         
ACE    35,400    1,520,784 
AFLAC    62,600    2,544,690 
Allstate    84,650    4,753,944 
Ambac Financial Group    13,600    909,160 
American Express    146,300    7,710,010 
American International Group    324,796    16,515,876 
AmSouth Bancorporation    44,250    1,164,660 
Aon    39,450 a    822,532 
Apartment Investment & Management, Cl. A    11,900    453,628 
Archstone-Smith Trust    24,900    895,653 
BB&T    68,400    2,681,964 
Bank of America    505,482    22,766,908 
Bank of New York    97,028    2,710,962 
Bear Stearns Cos.    14,098    1,334,516 
CIT Group    26,300    1,059,364 
Capital One Financial    30,800    2,183,412 
Charles Schwab    143,150    1,481,603 
Chubb    23,900    1,954,542 
Cincinnati Financial    20,837    838,481 
Citigroup    651,626    30,600,357 
Comerica    21,200    1,213,912 

12

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
Compass Bancshares    15,400    662,508 
Countrywide Financial    72,398    2,620,084 
E*TRADE Financial    46,200 b    513,282 
Equity Office Properties Trust    50,300    1,582,941 
Equity Residential    35,250    1,210,837 
Fannie Mae    120,650    6,509,067 
Federated Investors, Cl. B    11,850    337,133 
Fifth Third Bancorp    64,891 a    2,822,759 
First Horizon National    15,400    639,562 
Franklin Resources    24,700    1,696,396 
Freddie Mac    85,750    5,275,340 
General Electric    1,321,750    47,847,350 
Golden West Financial    35,200    2,194,016 
Goldman Sachs Group    55,850    5,964,222 
H&R Block    20,650    1,028,576 
Hartford Financial Services Group    36,900    2,670,453 
Huntington Bancshares    28,876    678,875 
J.P. Morgan Chase & Co.    443,148    15,727,322 
Janus Capital Group    29,500    383,205 
Jefferson-Pilot    17,000    853,570 
KeyCorp    50,650 a    1,679,554 
Lehman Brothers Holdings    34,450    3,159,754 
Lincoln National    21,750    978,097 
Loews    19,900    1,410,512 
M&T Bank    12,300    1,272,435 
MBIA    17,500 a    916,650 
MBNA    159,318    3,146,530 
MGIC Investment    12,050    710,950 
Marsh & McLennan Cos.    66,000    1,849,980 
Marshall & Ilsley    25,950    1,106,508 
Mellon Financial    52,800    1,462,032 
Merrill Lynch    116,050    6,258,577 
MetLife    91,400    3,555,460 
Morgan Stanley    138,760    7,301,551 
National City    74,100    2,516,436 
North Fork Bancorporation    58,725    1,653,109 
Northern Trust    25,350    1,141,511 

The Fund 13

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
PNC Financial Services Group    35,250 a    1,876,358 
Plum Creek Timber    22,900    790,966 
Principal Financial Group    37,350 a    1,459,638 
Progressive    25,000    2,281,750 
ProLogis    22,900    906,611 
Providian Financial    36,550 b    609,289 
Prudential Financial    65,350    3,734,753 
Regions Financial    57,886    1,938,602 
SLM    53,550    2,551,122 
Safeco    15,900    837,453 
Simon Property Group    27,550 a    1,820,229 
Sovereign Bancorp    46,700    960,619 
St. Paul Travelers Cos.    83,527    2,990,267 
State Street    41,600    1,923,168 
SunTrust Banks    42,300    3,080,709 
Synovus Financial    38,800    1,087,564 
T. Rowe Price Group    15,450    852,377 
Torchmark    13,516    722,160 
U.S. Bancorp    231,157    6,449,280 
UnumProvident    37,072 a    619,844 
Wachovia    197,690    10,117,774 
Washington Mutual    108,885    4,499,128 
Wells Fargo    211,480    12,676,111 
XL Capital, Cl. A    17,300    1,216,190 
Zions Bancorporation    11,250    787,838 
        314,243,902 
Producer Goods & Services—9.9%         
Air Products & Chemicals    28,350    1,664,996 
Alcoa    108,638    3,152,675 
Allegheny Technologies    11,133    249,379 
American Power Conversion    22,450    544,637 
American Standard Cos.    22,450    1,003,740 
Ashland    8,300    558,092 
Avery Dennison    12,692    664,426 
Ball    13,700    541,150 
Bemis    13,300    366,548 
Black & Decker    10,050    840,482 

14

Common Stocks (continued)    Shares        Value ($) 
Producer Goods & Services (continued)             
Boeing    103,844        6,180,795 
Burlington Northern Santa Fe    47,217        2,278,220 
CSX    26,850        1,077,491 
Caterpillar    42,750        3,764,138 
Centex    15,828        913,592 
Cooper Industries, Cl. A    11,600        738,456 
Cummins    5,347        363,596 
Deere & Co.    30,800        1,926,232 
Dover    25,400        923,544 
Dow Chemical    118,913        5,461,674 
E. I. du Pont de Nemours    124,294        5,855,490 
Eastman Chemical    9,726        525,204 
Ecolab    27,550        901,161 
Emerson Electric    52,300        3,277,641 
Engelhard    15,200        465,576 
FedEx    37,592        3,193,440 
Fluor    10,639        548,546 
Freeport-McMoRan Copper & Gold, Cl. B    22,300    a    772,918 
General Dynamics    24,950        2,620,997 
Georgia-Pacific    32,387        1,109,902 
Goodrich    15,000        604,500 
Goodyear Tire & Rubber    21,900    a,b    259,953 
Great Lakes Chemical    6,403        198,749 
Hercules    13,950    b    184,558 
Honeywell International    106,100        3,794,136 
ITT Industries    11,550        1,044,813 
Illinois Tool Works    34,250        2,870,835 
Ingersoll-Rand, Cl. A    21,650        1,664,236 
International Paper    61,138        2,096,422 
KB HOME    10,300    a    587,100 
L-3 Communications Holdings    14,400        1,021,968 
Leggett & Platt    23,800        641,648 
Lockheed Martin    50,050        3,050,548 
Louisiana-Pacific    13,800        339,480 
Masco    55,818        1,757,708 
MeadWestvaco    25,246        743,494 
Molex    20,925        531,704 

The Fund 15

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares        Value ($) 
Producer Goods & Services (continued)             
Monsanto    33,188        1,945,480 
Newmont Mining    55,324    a    2,100,652 
Norfolk Southern    49,900        1,566,860 
Northrop Grumman    44,912        2,462,974 
Nucor    19,900        1,016,890 
PPG Industries    21,621        1,460,499 
Pall    15,453        414,604 
Parker-Hannifin    14,990        898,501 
Phelps Dodge    12,075        1,036,639 
Praxair    40,200        1,882,566 
Pulte Homes    14,796        1,057,174 
Raytheon    56,500        2,124,965 
Rockwell Automation    21,800        1,007,814 
Rockwell Collins    22,200        1,018,536 
Rohm & Haas    24,255        1,058,973 
Sealed Air    10,381    b    502,856 
Sherwin-Williams    15,800        704,206 
Sigma-Aldrich    8,600        502,498 
Snap-On    7,250        240,483 
Stanley Works    9,377        403,492 
3M    96,300        7,364,061 
Temple-Inland    14,300        482,625 
Textron    16,850        1,269,648 
Tyco International    251,082        7,861,377 
Union Pacific    32,550        2,080,922 
United Parcel Service, Cl. B    139,550        9,951,311 
United States Steel    14,250        609,330 
United Technologies    63,878        6,497,670 
Vulcan Materials    12,850        681,564 
W.W. Grainger    10,400        575,016 
Weyerhaeuser    30,300        2,078,883 
            136,735,659 
Services—6.3%             
ALLTEL    37,750        2,150,240 
Affiliated Computer Services, Cl. A    15,800    a,b    753,186 
Allied Waste Industries    33,800    a,b    270,062 

16

Common Stocks (continued)    Shares        Value ($) 
Services (continued)             
Apollo Group, Cl. A    20,700    a,b    1,492,884 
Automatic Data Processing    72,750        3,160,260 
Carnival    65,700        3,211,416 
Cendant    131,586        2,619,877 
Cintas    18,600        717,774 
Clear Channel Communications    65,750        2,100,055 
Comcast, Cl. A    275,796    b    8,855,809 
Computer Sciences    23,850    b    1,036,998 
Convergys    17,750    a,b    230,040 
Dow Jones & Co.    8,850        295,944 
Electronic Data Systems    64,550        1,249,043 
Equifax    16,850        567,003 
First Data    99,972        3,801,935 
Fiserv    24,150    b    1,021,545 
Gannett    31,350    a    2,413,950 
IMS Health    28,900        693,022 
Interpublic Group of Companies    52,700    b    677,722 
Knight-Ridder    9,450    a    611,415 
McGraw-Hill Cos.    23,700        2,063,796 
Meredith    5,660        266,020 
Monster Worldwide    15,050    a,b    346,301 
Moody's    17,100        1,404,594 
NEXTEL Communications, Cl. A    140,550    b    3,933,995 
New York Times, Cl. A    18,186        606,684 
News, Cl. A    359,300        5,490,104 
Omnicom Group    23,250        1,927,425 
Paychex    44,375        1,357,875 
R. R. Donnelley & Sons    26,900        885,279 
Robert Half International    20,050    a    497,641 
Ryder System    7,950        293,594 
Sabre Holdings    16,426        321,292 
SunGard Data Systems    36,050    b    1,204,070 
Time Warner    573,100    b    9,633,811 
Tribune    37,241        1,437,502 
Unisys    42,100    b    273,229 
Univision Communications, Cl. A    36,350    a,b    955,642 

The Fund 17

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Services (continued)         
Viacom, Cl. B    212,600    7,360,212 
Walt Disney    255,300    6,739,920 
Waste Management    70,842    2,018,289 
        86,947,455 
Technology—13.6%         
ADC Telecommunications    101,150 b    229,610 
Adobe Systems    30,300    1,801,941 
Advanced Micro Devices    49,100 a,b    698,693 
Agilent Technologies    53,908 b    1,118,591 
Altera    46,400 b    961,872 
Analog Devices    46,500    1,586,115 
Andrew    20,100 a,b    246,627 
Apple Computer    101,900 b    3,674,514 
Applied Materials    207,950    3,092,216 
Applied Micro Circuits    38,400 b    102,528 
Autodesk    28,600 a    910,338 
Avaya    59,868 b    519,654 
BMC Software    27,650 b    447,930 
Broadcom, Cl. A    36,250 b    1,084,238 
CIENA    71,400 b    164,220 
Cisco Systems    806,050 b    13,928,544 
Citrix Systems    21,150 b    475,875 
Computer Associates International    66,349    1,784,788 
Compuware    48,350 b    287,682 
Comverse Technology    24,650 b    561,774 
Corning    175,800 b    2,417,250 
Danaher    34,300    1,736,609 
Dell    306,600 b    10,678,878 
EMC    300,000 b    3,936,000 
eBay    150,900 b    4,788,057 
Electronic Arts    38,400 b    2,050,176 
Freescale Semiconductor, Cl. B    50,113 b    945,131 
Gateway    37,300 b    127,193 

18
Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
Hewlett-Packard    361,065    7,391,001 
Intel    776,500    18,263,280 
International Business Machines    203,600    15,550,968 
Intuit    23,150 b    932,945 
JDS Uniphase    180,200 b    266,696 
Jabil Circuit    22,900 b    632,040 
KLA-Tencor    24,500    955,990 
LSI Logic    48,032 a,b    257,451 
Lexmark International    15,800 b    1,097,310 
Linear Technology    38,300    1,368,842 
Lucent Technologies    552,571 a,b    1,342,747 
Maxim Integrated Products    40,750    1,524,050 
Mercury Interactive    10,550 b    436,032 
Micron Technology    76,550 b    743,301 
Microsoft    1,261,750    31,922,275 
Motorola    305,706    4,689,530 
NCR    23,200 b    765,600 
NVIDIA    20,700 b    454,158 
National Semiconductor    44,300    845,244 
Network Appliance    45,650 b    1,215,659 
Novell    47,300 b    279,543 
Novellus Systems    17,450 b    408,854 
Oracle    560,350 b    6,477,646 
PMC-Sierra    22,450 b    180,947 
Parametric Technology    33,750 b    179,550 
Pitney Bowes    28,756    1,285,968 
QLogic    11,500 b    382,260 
QUALCOMM    205,200 a    7,159,428 
Sanmina-SCI    65,250 b    261,653 
Scientific-Atlanta    19,000    581,020 
Siebel Systems    64,200 b    577,800 
Solectron    121,050 a,b    399,465 
Sun Microsystems    421,200 b    1,528,956 

The Fund 19

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
Symantec    88,500 b    1,662,030 
Symbol Technologies    30,300    405,111 
Tektronix    11,168    241,899 
Tellabs    57,650 b    447,364 
Teradyne    24,250 a,b    267,235 
Texas Instruments    214,600    5,356,416 
VERITAS Software    52,630 b    1,083,652 
Xerox    119,398 a,b    1,582,024 
Xilinx    43,500    1,171,890 
Yahoo!    162,600 b    5,611,326 
        188,544,200 
Utilities—5.6%         
AES    80,900 b    1,300,872 
AT&T    99,849    1,910,111 
Allegheny Energy    20,200 a,b    493,688 
Ameren    24,350 a    1,258,895 
American Electric Power    47,790    1,683,164 
BellSouth    228,400    6,050,316 
CMS Energy    26,850 a,b    346,902 
Calpine    66,600 a,b    119,214 
CenterPoint Energy    36,044 a    426,761 
CenturyTel    16,800    515,592 
Cinergy    23,850    944,460 
Citizens Communications    41,800 a    532,950 
Consolidated Edison    30,200    1,307,056 
Constellation Energy Group    22,050    1,158,948 
DTE Energy    21,700 a    997,115 
Dominion Resources    42,434    3,199,524 
Duke Energy    116,922    3,412,953 
Edison International    40,600    1,473,780 
Entergy    26,550    1,946,115 
Exelon    82,874    4,102,263 

20
Common Stocks (continued)    Shares    Value ($) 
Utilities (continued)         
FPL Group    48,800    1,992,016 
FirstEnergy    41,131 a    1,790,021 
PG&E    45,000 a    1,562,400 
PPL    23,550    1,277,823 
Pinnacle West Capital    12,100    506,990 
Progress Energy    30,824    1,294,300 
Public Service Enterprise Group    29,750    1,728,475 
Qwest Communications International    208,374 a,b    712,639 
SBC Communications    411,928    9,803,886 
Southern    92,650    3,052,818 
Sprint (FON Group)    184,300    4,102,518 
TECO Energy    25,800    428,538 
TXU    29,970    2,571,126 
Verizon Communications    345,392    12,365,034 
Xcel Energy    49,980 a    858,656 
        77,227,919 
Total Common Stocks         
(cost $1,016,192,048)        1,322,240,329 

    Principal     
Short-Term Investments—4.5%    Amount ($)    Value ($) 
Repurchase Agreement—3.9%         
Goldman Sachs & Co., Tri-Party Repurchase Agreement,     
2.79%, dated 4/29/2005, due 5/2/2005 in the     
amount of $54,512,671 (fully collateralized by     
$53,778,000 of various U.S. Government Agency     
Obligations,value $54,500,561)    54,500,000    54,500,000 
U.S. Treasury Bills—.6%         
2.71%, 6/16/2005    2,500,000 c    2,491,725 
2.68%, 6/30/2005    5,000,000 c    4,977,950 
        7,469,675 
Total Short-Term Investments         
(cost $61,969,382)        61,969,675 

The Fund 21

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Investment of Cash Collateral         
for Securities Loaned—2.9%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Fund         
(cost $40,032,731)    40,032,731 d    40,032,731 
Total Investments (cost $1,118,194,161)    102.8%    1,424,242,735 
Liabilities, Less Cash and Receivables    (2.8%)    (38,761,771) 
Net Assets    100.0%    1,385,480,964 

a All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $38,077,892 and the total market value of the collateral held by the fund is $40,032,731. 
b Non-income producing. 
c Partially held by the 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    22.7    Services    6.3 
Technology    13.6    Utilities    5.6 
Health Care    13.0    Short-Term Investments/     
Producer Goods & Services    9.9    Money Market Investments    4.5 
Consumer Cyclical    8.3    Investment of Cash Collateral    2.9 
Energy    8.3    Future Contracts    (.2) 
Consumer Staples    7.7        102.6 

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

22

STATEMENT OF FINANCIAL FUTURES
April 30, 2005 (Unaudited)
        Market Value        Unrealized 
        Covered by        (Depreciation) 
    Contracts    Contracts ($)    Expiration    at 4/30/2005 ($) 
 
Financial Futures Long                 
Standard & Poor's 500    223    64,586,375    June 2005    (2,213,813) 

See notes to financial statements.

The Fund 23

STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan valued at $38,077,892)—Note 1(b):     
Unaffiliated issuers    1,078,161,430    1,384,210,004 
Affiliated issuers    40,032,731    40,032,731 
Cash        376,223 
Dividends and interest receivable        1,682,221 
Receivable for futures variation margin—Note 4    860,590 
Receivable for shares of Capital Stock subscribed    374,181 
        1,427,535,950 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(a)    236,463 
Liability for securities loaned—Note 1(b)    40,032,731 
Payable for shares of Capital Stock redeemed    1,681,941 
Payable for investment securities purchased    103,851 
        42,054,986 
Net Assets ($)        1,385,480,964 
Composition of Net Assets ($):         
Paid-in capital        1,308,529,064 
Accumulated undistributed investment income—net    6,167,570 
Accumulated net realized gain (loss) on investments    (233,050,432) 
Accumulated net unrealized appreciation (depreciation)     
on investments [including ($2,213,813) net unrealized     
(depreciation) on financial futures]    303,834,762 
Net Assets ($)        1,385,480,964 
Shares Outstanding         
(150 million shares of $.001 par value Capital Stock authorized)    57,432,260 
Net Asset Value, offering and redemption price per share ($)    24.12 

See notes to financial statements.

24
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends    16,198,919 
Interest    618,312 
Income from securities lending    16,103 
Total Income    16,833,334 
Expenses:     
Management fee—Note 3(a)    1,396,134 
Loan commitment fees—Note 2    6,537 
Total Expenses    1,402,671 
Investment Income—Net    15,430,663 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    (9,563,534) 
Net realized gain (loss) on financial futures    2,366,250 
Net Realized Gain (Loss)    (7,197,284) 
Net unrealized appreciation (depreciation) on investments [including     
($2,497,488) net unrealized (depreciation) on financial futures]    33,448,609 
Net Realized and Unrealized Gain (Loss) on Investments    26,251,325 
Net Increase in Net Assets Resulting from Operations    41,681,988 

See notes to financial statements.

The Fund 25

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    15,430,663    20,218,955 
Net realized gain (loss) on investments    (7,197,284)    (46,757,519) 
Net unrealized appreciation         
(depreciation) on investments    33,448,609    142,636,199 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    41,681,988    116,097,635 
Dividends to Shareholders from ($):         
Investment income—net    (16,751,971)    (19,461,638) 
Capital Stock Transactions ($):         
Net proceeds from shares sold    219,911,466    302,924,387 
Dividends reinvested    14,825,298    17,625,867 
Cost of shares redeemed    (212,508,875)    (410,410,373) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    22,227,889    (89,860,119) 
Total Increase (Decrease) in Net Assets    47,157,906    6,775,878 
Net Assets ($):         
Beginning of Period    1,338,323,058    1,331,547,180 
End of Period    1,385,480,964    1,338,323,058 
Undistributed investment income—net    6,167,570    7,488,878 
Capital Share Transactions (Shares):         
Shares sold    8,854,047    13,000,240 
Shares issued for dividends reinvested    598,440    784,433 
Shares redeemed    (8,586,617)    (17,775,102) 
Net Increase (Decrease) in Shares Outstanding    865,870    (3,990,429) 

See notes to financial statements.

26

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.

a    Based on average shares outstanding at each month end. 
b    Not annualized. 
See notes to financial statements. 

The Fund 27

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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 available. Investments in registered investment companies are valued at their net asset value. 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

28

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.

(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 institu-tions.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 transac-tion.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 29

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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.

(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

30

best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

The fund has an unused capital loss carryover of $197,191,966 available for federal income tax purposes 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 year ended October 31, 2004 was as follows: ordinary income $19,461,638. The tax character of current year distributions will be determined at the end of the current fiscal year.

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 April 30, 2005, 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 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

The Fund 31

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 component of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $236,463.

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 April 30, 2005, amounted to $88,747,637 and $85,644,631, respectively.

32

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 April 30, 2005, are set forth in the Statement of Financial Futures.

At April 30, 2005, accumulated net unrealized appreciation on investments was $306,048,574, consisting of $418,819,765 gross unrealized appreciation and $112,771,191 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The

The Fund 33

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants. With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

34

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and discussed the results of the comparisons. The Board

The Fund 35

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

members took into consideration that the fund's total return performance was higher than the fund's comparison group and Lipper category averages for the one-, three-, five- and ten-year periods.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category.They took into consideration that the fund's expense ratio was below the comparison group and Lipper category averages.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts, or mutual funds for which the Manager or its affiliates serve as sub-investment adviser, with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee"structure,the Board members concluded that the Similar Funds had advisory fees and expense ratios that were higher than the fund's management fee and expense ratio and the two Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that one of the Similar Accounts has lower fees as a result of historical pricing arrangements and the other Similar Account was a mutual fund that was sub-advised but not administered by an affiliate of the Manager. The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee.The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

36

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to Dreyfus from acting as investment adviser and noted the Manager's soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's performance.

The Fund 37

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

38

NOTES

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 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.

© 2005 Dreyfus Service Corporation 0713SA0405

Dreyfus Disciplined 
Stock Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
 
    T H E F U N D 
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 
16    Notes to Financial Statements 
23    Information About the Review 
    and Approval of the Fund's 
    Investment Management Agreement 
 
    F O R M O R E I N F O R M AT I O N 
    Back Cover 

  Dreyfus
Disciplined Stock Fund

The Fund

L E T T E R F R O M T H E C H A I R M A N

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus Disciplined Stock Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Crporation
May 16, 2005

2

D I S C U S S I O N O F F U N D P E R F O R M A N C E

Sean P. Fitzgibbon, Portfolio Manager

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

For the six-month period ended April 30, 2005, the fund produced a total return of 4.32% .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 3.28% .2

We attribute the generally favorable environment for stocks to good corporate revenue and earnings reports in expanding U.S. and global economies. These positive factors outweighed the negative impact of high energy prices, rising short-term interest rates and ongoing geopolitical uncertainties. The fund matched or exceeded the benchmark's performance in virtually every investment sector, deriving particularly good returns from holdings in the consumer discretionary and financial sectors.

What is the fund's investment approach?

The fund seeks capital appreciation.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 standards for value and growth.The fund invests in growth and value stocks, which are chosen through a disciplined investment process that combines computer-modeling techniques, fundamental analysis and risk management. The fund's investment process is designed to provide investors with investment exposure to sector weightings and risk characteristics generally similar to those of the S&P 500 Index.

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

T h e F u n d 3

D I S C U S S I O N O F F U N D P E R F O R M A N C E (continued)

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 99 stocks across nine economic sectors. Our 10 largest holdings accounted for approximately 27% of the portfolio, so that the fund's performance was not overly dependent on any one stock but was determined by a large number of securities.

What other factors influenced the fund's performance?

The fund produced its best performance compared to the benchmark in the consumer discretionary sector. Much of the fund's relatively strong returns in the sector flowed from our decision to avoid the troubled automotive industry, which suffered substantial declines during the reporting period. Instead, we focused on travel and leisure-related companies, such as cruise line operator Carnival, hotel operator and franchiser Marriott International and diversified entertainment company Walt Disney.The timely sale of the fund's position in online auctioneer eBay further boosted relative performance. This move, prompted by the stock's rising valuation, preceded a sharp decline in the stock's price, illustrating the importance of disciplined adherence to the fund's growth-and-value investment criteria.

In the financial sector, the fund enhanced performance by trimming its exposure to banking stocks that we believed were vulnerable to a rising interest-rate environment. Instead, the fund emphasized asset management companies, such as Franklin Resources, and brokerage firms, such as Goldman Sachs Group and Lehman Brothers Holdings. In the health care area, the fund benefited from its holdings among service providers, such as WellPoint, and its increased exposure in 2005 to major pharmaceutical firms, such as Johnson & Johnson.

4

On the negative side, technology holdings, such as IBM, declined even more steeply in 2005, detracting from the fund's total returns. Finally, telecommunications provider Verizon Communications lost significant ground during the reporting period over concerns related to its bid to acquire MCI.

What is the fund's current strategy?

As of April 30, 2005, the fund held slightly overweighted positions among consumer discretionary stocks in the travel-, leisure- and media-related areas, reflecting the group's attractive valuations and rebounding advertising spending. On the other hand, the fund held mildly underweighted exposure to consumer staples stocks, particularly in the beverage and food retailing areas, in light of challenging business trends. More generally, we believe that the economy's recent rate of cyclical growth shows signs of slowing. Accordingly, within most industry groups, we currently are in the process of shifting our emphasis toward companies that, in our judgment, have stable growth characteristics.

May 16, 2005

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 through October 31, 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. 

T h e F u n d 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 Disciplined Stock Fund from November 1, 2004 to April 30, 2005. 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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 4.56 
Ending value (after expenses)    $1,043.20 

C O M P A R I N G Y O U R F U N D ' S E X P E N S E S W I T H T H O S E O F O T H E R F U N D S ( U n a u d i t e d )

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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 4.51 
Ending value (after expenses)    $1,020.33 

† Expenses are equal to the fund's annualized expense ratio of .90%; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6

S TAT E M E N T O F I N V E S T M E N T S
A p r i l 3 0 , 2 0 0 5 (Unaudited)
Common Stocks—99.4%    Shares    Value ($) 
Consumer Discretionary—12.3%         
Advance Auto Parts    227,690 a    12,147,262 
Carnival    208,490    10,190,991 
Coach    404,300 a    10,835,240 
Comcast, Cl. A    314,620 a    10,102,448 
Dollar General    390,700    7,950,745 
Home Depot    259,210    9,168,258 
J. C. Penney    242,350    11,489,813 
Marriott International, Cl. A    91,830    5,762,333 
McDonald's    389,140    11,405,693 
Nordstrom    124,250    6,315,628 
Omnicom Group    70,480 b    5,842,792 
Time Warner    995,670 a    16,737,213 
Viacom, Cl. B    167,720    5,806,466 
Walt Disney    610,080    16,106,112 
        139,860,994 
Consumer Staples—8.9%         
Altria Group    216,020    14,039,140 
Bunge    121,140 b    6,880,752 
CVS    124,750    6,434,605 
Diageo, ADR    103,500    6,184,125 
Estee Lauder Cos., Cl. A    188,040    7,222,616 
Gillette    273,340    14,115,278 
Kellogg    135,460    6,088,927 
Procter & Gamble    400,700    21,697,905 
Wal-Mart Stores    375,530    17,702,484 
        100,365,832 
Energy Related—8.6%         
Anadarko Petroleum    54,250    3,962,420 
ChevronTexaco    152,510    7,930,520 
ConocoPhillips    177,380    18,598,293 
Devon Energy    238,552    10,775,394 
Exxon Mobil    712,720    40,646,422 
Transocean    150,180 a    6,963,847 
Weatherford International    170,370 a    8,884,796 
        97,761,692 

T h e F u n d 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Financials—19.6%         
American Express    166,290    8,763,483 
American International Group    146,900    7,469,865 
Ameritrade Holding    543,170 a,b    5,692,422 
Axis Capital Holdings    108,670    2,890,622 
Bank of America    740,030    33,330,951 
CIT Group    279,930    11,275,580 
Chubb    203,490    16,641,412 
Citigroup    873,560    41,022,378 
Franklin Resources    262,530    18,030,560 
Freddie Mac    85,430    5,255,654 
Goldman Sachs Group    226,860    24,226,379 
Lehman Brothers Holdings    123,040    11,285,229 
Merrill Lynch    102,360    5,520,275 
Radian Group    189,130    8,403,046 
Wachovia    440,230    22,530,971 
        222,338,827 
Health Care—14.2%         
Aetna    81,160    5,954,709 
Bausch & Lomb    3,660    274,500 
Charles River Laboratories International    130,700 a    6,191,259 
Fisher Scientific International    198,400 a    11,780,992 
Genzyme    76,800 a    4,501,248 
Hospira    191,780 a    6,434,219 
Johnson & Johnson    325,900    22,366,517 
Laboratory Corporation of America Holdings    98,820 a    4,891,590 
McKesson    159,380    5,897,060 
Medco Health Solutions    69,880 a    3,561,784 
Pfizer    902,204    24,512,883 
Sanofi-Aventis, ADR    286,290    12,702,687 
Triad Hospitals    102,400 a    5,248,000 
Waters    156,380 a    6,197,339 
WebMD    798,620 a    7,586,890 
WellPoint    108,560 a    13,868,540 
Wyeth    425,860    19,138,148 
        161,108,365 

8
Common Stocks (continued)    Shares    Value ($) 
Industrials—12.5%         
Burlington Northern Santa Fe    142,890    6,894,443 
Danaher    252,830    12,800,783 
Deere & Co.    117,940    7,375,968 
Eaton    141,650    8,307,772 
FedEx    70,700    6,005,965 
General Dynamics    85,060    8,935,553 
General Electric    1,145,280    41,459,136 
Manpower    94,630    3,647,987 
Norfolk Southern    188,640    5,923,296 
PACCAR    63,030    4,279,737 
Rockwell Automation    143,670    6,641,864 
Textron    99,040 b    7,462,664 
Tyco International    385,010    12,054,663 
United Technologies    91,710 b    9,328,741 
        141,118,572 
Information Technology—14.2%         
Alliance Data Systems    131,350 a    5,306,540 
Altera    397,040 a    8,230,639 
Cisco Systems    751,600 a    12,987,648 
EMC    1,173,790 a    15,400,125 
Global Payments    106,610    6,904,064 
Intel    847,140    19,924,733 
International Business Machines    359,150    27,431,877 
Lucent Technologies (warrants)    1,426 a    684 
Microsoft    1,352,050    34,206,865 
Motorola    556,560    8,537,630 
Texas Instruments    610,770    15,244,819 
VeriSign    253,390 a    6,704,699 
        160,880,323 
Materials—3.1%         
Air Products & Chemicals    139,240    8,177,565 
Alcoa    400,490    11,622,220 
Dow Chemical    136,310    6,260,718 
E. I. duPont deNemours    106,010    4,994,131 

T h e F u n d 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Materials (continued)         
PPG Industries    54,180    3,659,859 
        34,714,493 
Telecommunication Services—2.3%         
SBC Communications    357,850    8,516,830 
Verizon Communications    477,180    17,083,044 
        25,599,874 
Utilities—3.7%         
Constellation Energy Group    154,720    8,132,083 
Exelon    253,320    12,539,340 
PG&E    417,060    14,480,323 
Sempra Energy    175,740    7,096,381 
        42,248,127 
Total Common Stocks         
(cost $943,978,470)        1,125,997,099 

    Principal     
Short-Term Investments—.1%    Amount ($)    Value ($) 
U.S.Treasury Bills:         
2.53%, 5/12/2005    184,000    183,867 
2.62%, 6/2/2005    963,000    960,824 
Total Short-Term Investments         
(cost $1,144,697)        1,144,691 

10

Investment of Cash Collateral         
for Securities Loaned—.8%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Fund         
(cost $9,664,850)    9,664,850 c    9,664,850 
Total Investments (cost $954,788,017)    100.3%    1,136,806,640 
Liabilities, Less Cash and Receivables    (.3%)    (3,678,758) 
Net Assets    100.0%    1,133,127,882 

ADR—American Depository Receipts. 
a Non-income producing. 
b All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $9,488,992 and the total market value of the collateral held by the fund is $9,664,850. 
c Investment in affiliated money market mutual fund. 

Portfolio Summary    (Unaudited)†         
 
    Value (%)        Value (%) 
Financials    19.6    Consumer Staples    8.9 
Health Care    14.2    Energy Related    8.6 
Information Technology    14.2    Other    10.0 
Industrials    12.5         
Consumer Discretionary    12.3        100.3 

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

T h e F u n d 11

S TAT E M E N T O F A S S E T S A N D L I A B I L I T I E S
A p r i l 3 0 , 2 0 0 5 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan, valued at $9,488,992)—Note 1(b):     
Unaffiliated issuers    945,123,167    1,127,141,790 
Affiliated issuers    9,664,850    9,664,850 
Cash        336,232 
Receivable for investment securities sold    12,051,215 
Dividends and interest receivable        1,081,933 
Receivable for shares of Capital Stock subscribed    42,575 
        1,150,318,595 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    848,615 
Liability for securities loaned—Note 1(b)    9,664,850 
Payable for investment securities purchased    6,130,250 
Payable for shares of Capital Stock redeemed    546,998 
        17,190,713 
Net Assets ($)        1,133,127,882 
Composition of Net Assets ($):         
Paid-in capital        1,067,796,964 
Accumulated distributions in excess of investment income—net    (879,003) 
Accumulated net realized gain (loss) on investments    (115,808,702) 
Accumulated net unrealized appreciation     
(depreciation) on investments        182,018,623 
Net Assets ($)        1,133,127,882 
Shares Outstanding         
(165 million shares of $.001 par value Capital Stock authorized)    36,529,492 
Net Asset Value, offering and redemption price per share ($)    31.02 

See notes to financial statements.

  12
S TAT E M E N T O F O P E R AT I O N S
S i x M o n t h s E n d e d A p r i l 3 0 , 2 0 0 5 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends (net of $2,548 foreign taxes withheld at source)    13,924,446 
Interest    79,260 
Income from securities lending    598 
Total Income    14,004,304 
Expenses:     
Management fee—Note 3(a)    5,467,351 
Distribution fees—Note 3(b)    607,483 
Loan commitment fees—Note 2    5,897 
Interest expense—Note 2    420 
Total Expenses    6,081,151 
Less—reduction in management fee     
due to undertaking—Note 3(a)    (607,483) 
Net Expenses    5,473,668 
Investment Income—Net    8,530,636 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    89,491,244 
Net unrealized appreciation (depreciation) on investments    (41,391,536) 
Net Realized and Unrealized Gain (Loss) on Investments    48,099,708 
Net Increase in Net Assets Resulting from Operations    56,630,344 

See notes to financial statements.

T h e F u n d 13

S TAT E M E N T O F C H A N G E S I N N E T A S S E T S

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    8,530,636    8,927,109 
Net realized gain (loss) on investments    89,491,244    182,011,874 
Net unrealized appreciation         
(depreciation) on investments    (41,391,536)    (113,290,391) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    56,630,344    77,648,592 
Dividends to Shareholders from ($):         
Investment income—net    (12,094,806)    (8,969,807) 
Capital Stock Transactions ($):         
Net proceeds from shares sold    20,834,315    56,770,640 
Dividends reinvested    11,217,917    8,320,272 
Cost of shares redeemed    (188,803,533)    (352,706,942) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (156,751,301)    (287,616,030) 
Total Increase (Decrease) in Net Assets    (112,215,763)    (218,937,245) 
Net Assets ($):         
Beginning of Period    1,245,343,645    1,464,280,890 
End of Period    1,133,127,882    1,245,343,645 
Undistributed (distributions in excess of)         
investment income—net    (879,003)    2,685,167 
Capital Share Transactions (Shares):         
Shares sold    662,326    1,901,342 
Shares issued for dividends reinvested    356,546    285,532 
Shares redeemed    (5,976,703)    (11,834,458) 
Net Increase (Decrease) in Shares Outstanding    (4,957,831)    (9,647,584) 

See notes to financial statements.

14

F I N A N C I A L H I G H L I G H T S

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.

Six Months Ended                     
April 30, 2005        Year Ended October 31,     
(Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    30.02    28.64    25.06    29.57    42.34    40.96 
Investment Operations:                         
Investment income—net a    .22    .19    .17    .12    .05    .01 
Net realized and unrealized                         
gain (loss) on investments    1.08    1.38    3.58    (4.53)    (10.87)    2.78 
Total from                         
Investment Operations    1.30    1.57    3.75    (4.41)    (10.82)    2.79 
Distributions:                         
Dividends from investment                         
income—net    (.30)    (.19)    (.17)    (.10)    (.03)    (.02) 
Dividends from net realized                         
gain on investments    —    —    —    —    (1.92)    (1.39) 
Total Distributions    (.30)    (.19)    (.17)    (.10)    (1.95)    (1.41) 
Net asset value,                         
end of period    31.02    30.02    28.64    25.06    29.57    42.34 
Total Return (%)    4.32b    5.54    14.99    (14.96)    (26.63)    6.88 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .50b    1.00    1.00    1.00    1.00    1.00 
Ratio of net expenses                         
to average net assets    .45b    .93    1.00    1.00    1.00    1.00 
Ratio of net investment                         
income to average                         
net assets    .69b    .66    .66    .41    .16    .02 
Portfolio Turnover Rate    32.09b    79.49    50.96    41.46    53.68    50.32 
Net Assets, end of period                         
($ x 1,000) 1,133,128 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. 
b    Not annualized. 
See notes to financial statements. 

T h e F u n d 15

N O T E S T O F I N A N C I A L S TAT E M E N T S (Unaudited)

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.The fund's investment objective is to seek capital appre-ciation.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 available. Investments in registered investment companies are valued at their net asset value.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

16

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 institu-tions.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 transac-tion.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 oblig-

T h e F u n d 17

N O T E S T O F I N A N C I A L S TAT E M E N T S (Unaudited) (continued)

ation 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) 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.

18

The fund has an unused capital loss carryover of $203,197,565 available for federal income tax purposes 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 year ended October 31, 2004 was as follows: ordinary income $8,969,807. The tax character of current year distributions will be determined at the end of the current fiscal year.

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 April 30, 2005 was approximately $26,000, with a related weighted average annualized interest rate of 3.26% .

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

T h e F u n d 19

N O T E S T O F I N A N C I A L S TAT E M E N T S (Unaudited) (continued)

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 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 November 1, 2004 through October 31, 2005.The reduction in management fee, pursuant to the undertaking, amounted to $607,483 during the period ended April 30, 2005.

(b) Distribution plan: Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, the fund may pay annually up to .10% of the value of the fund's average daily net assets to compensate Mellon 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 April 30, 2005, the fund was charged $607,483 pursuant to the Plan.

20

DS.0728SA0405 6/22/05 2:14 PM Page 21

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 $848,497 and Rule 12b-1 distribution plan fees $94,300, which are offset against an expense reimbursement currently in effect in the amount of $94,182.

(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 aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended April 30, 2005, amounted to $387,700,048 and $552,213,531, respectively.

At April 30, 2005, accumulated net unrealized appreciation on investments was $182,018,623, consisting of $200,971,710 gross unrealized appreciation and $18,953,087 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the

T h e F u n d 21

N O T E S T O F I N A N C I A L S TAT E M E N T S (Unaudited) (continued)

"Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

22

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio.The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and

T h e F u n d 23

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

discussed the results of the comparisons.The Board members took into consideration that the fund's total return performance was below the fund's comparison group and Lipper category averages for the three-and five-year periods, below the fund's comparison group for the one-year period, higher than the Lipper category average for the one-year period, and higher than the comparison group and Lipper category average for the ten-year period.They also took into consideration the fund's improved one-year total return performance, from the three- and five-year periods, achieving second quartile comparison group and Lipper rankings, as it did for the ten-year period. Representatives of the Manager discussed with the Board members the Manager's efforts to improve the fund's total return performance, including the portfolio management change in October 2004, when Sean Fitzgibbon became the portfolio manager of the fund.The change to the fund's investment objective in October 2004 also was noted.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category. They noted that the Manager's voluntary waiver of a portion of the management fee over the fund's short-term time period was not fully reflected in the fund's annual expense ratio because the waiver had not been in effect for the fund's full fiscal year.They also noted that the Fund's expense ratio was generally around or below the comparison group and Lipper category averages, with or without the voluntary waiver. Representatives of the Manager and the Board members agreed that the Manager's voluntary waiver of a portion of the fund's management fee would remain at 0.10% of the value of the fund's average daily net assets and continue until October 31, 2005.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts, or mutual funds for which the Manager or its affiliates serve as sub-investment adviser, with similar investment objectives, policies

24

and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board members concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio and the Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts have lower fees as a result of historical pricing arrangements and other Similar Accounts were mutual funds that were sub-advised but not administered by an affiliate of the Manager. The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee. The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted the Manager's soft dollar arrangements with respect to trading the fund's portfolio.

T h e F u n d 25

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the Manager's efforts to improve the fund's total return performance, noting, in particular, the change in portfolio managers in October 2004.
  • The Board concluded, taking into account the existing voluntary fee waiver, that the fee paid to the Manager by the fund was rea- sonable in light of considerations described above.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

26

N O T E S
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 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.

®

© 2005 Dreyfus Service Corporation 0728SA0405

Dreyfus Institutional 
Government Money 
Market Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus Institutional Government Money Market Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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.

While most longer-term investments produced mixed results over the reporting period, higher interest rates helped improve the yields of money market instruments. Between the Federal Reserve Board's initial rate hike in June 2004 and the reporting period's end, the overnight federal funds rate rose from 1% to 2.75% .What's more, yield differences across the municipal money market's maturity spectrum have widened through most of the reporting period, which offered investors opportunities to capture incrementally higher levels of current income.

In this rising interest-rate environment, the money market investments that are right for you depend on your current liquidity needs, future goals and the composition of your current portfolio. As always, your financial advisor may be in the best position to recommend the specific investments that will satisfy your portfolio diversification and capital preservation needs.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus Institutional Government Money Market Fund perform during the period?

For the six-month period ended April 30, 2005, Dreyfus Institutional Government Money Market Fund produced a 2.07% annualized yield and, after taking into account the effects of compounding, an annualized effective yield of 2.08% .1

We attribute the fund's performance primarily to rising interest rates in a recovering economy, which resulted in higher yields for short-term U.S. government securities.

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?

The fund's performance was influenced primarily by rising short-term interest rates in a recovering economy. In fact, the Federal Reserve Board (the "Fed") raised interest rates at each of four meetings of its Federal Open Market Committee ("FOMC") during the reporting period, continuing its gradual move away from the aggressively accommodative monetary policy that had prevailed over the past several years. At its November 2004 FOMC meeting, the Fed increased the overnight federal funds rate from 1.75% to 2%, which was followed by another increase, to 2.25%, in late December. In its public comment accompanying the December rate hike, the Fed stated that economic activity was growing at a moderate pace and job

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

creation was on an upward trend. It was later confirmed that the U.S. economy grew at a 3.8% annualized rate during the fourth quarter of 2004 and by a relatively robust 4.4% rate for the year overall.

As most analysts expected, the Fed raised its target for the federal funds rate by 25 basis points at each of its FOMC meetings in February and March 2005. In its announcement of the March rate increase to 2.75%, the Fed noted that "pressures on inflation have picked up in recent months and pricing power is more evident."This more hawkish tone, together with a renewed surge in energy prices, caused investors' inflation concerns to intensify.

Even as the Fed's inflation concerns appeared to intensify, weaker-than-expected data in April suggested that the U.S. economy might be hitting another soft patch. However, it later was estimated that the U.S. labor market added more jobs than expected in April, and employment statistics for February and March were revised upward. While these data provided some encouragement that high energy prices had not hindered the economic expansion, difficulties encountered by the airline and automotive industries were regarded as potential threats to consumer and business confidence and spending.

In this changing environment, most money market investors focused primarily on securities with maturities of six months or less in an attempt to maintain liquidity and keep funds available for higher-yielding instruments as they became available. As a result, demand for shorter-term money market instruments was robust, while demand for instruments with one-year maturities was relatively low. This caused yield differences between overnight instruments and one-year securities to steepen significantly.

Like many other managers of money market funds, we focused primarily on securities with relatively short maturities. Accordingly, over most of the reporting period, we set the fund's weighted average maturity in a range we considered shorter than average. In addition,

4

we increased the fund's holdings of short-term U.S. government agency securities during the reporting period, as they offered higher yields than other money market instruments issued by the U.S. government. In fact, returns from U.S. Treasury bills and repurchase agreements proved to be relatively modest, and we reduced the fund's exposure to these areas of the market during the reporting period.

What is the fund's current strategy?

Just days after the end of the reporting period, the Fed raised short-term interest rates for the eighth consecutive time, increasing the federal funds rate to 3%, and more rate hikes are expected at subsequent meetings of the Federal Open Market Committee. Accordingly, we have maintained the fund's relatively short weighted average maturity. On April 30, 2005, the fund's average maturity was 33 days, compared to 35 days when the reporting period began.

In addition, we have continued to allocate the largest portion of the fund's assets to U.S. government agency securities, followed by repurchase agreements and U.S. government-issued floating-rate notes. As always, we intend to continue to monitor economic and market conditions, and we are prepared to adjust our strategies as needed.

May 16, 2005

    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. 
1    Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past 
    performance is no guarantee of future results.Yields fluctuate. 

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.50 
Ending value (after expenses)    $1,010.30 

  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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.51 
Ending value (after expenses)    $1,023.31 

† Expenses are equal to the fund's annualized expense ratio of .30%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Annualized         
    Yield on         
    Date of    Principal     
U.S. Government Agencies—79.3%    Purchase (%)    Amount ($)    Value ($) 
Federal Farm Credit Bank, Discount Notes             
6/2/2005    2.76    10,000,000    9,975,556 
Federal Home Loan Banks, Discount Notes             
5/4/2005    2.70    10,000,000    9,997,758 
5/11/2005    2.74    10,000,000    9,992,389 
6/29/2005    2.90    10,000,000    9,952,718 
8/2/2005    3.03    10,000,000    9,922,242 
Federal Home Loan Banks, Floating Rate Notes         
8/26/2005    2.83 a    11,000,000    10,997,257 
9/16/2005    2.91 a    20,000,000    19,997,135 
Federal Home Loan Mortgage Corp.,             
Discount Notes             
5/3/2005    2.64    7,500,000    7,498,904 
5/10/2005    2.66    10,000,000    9,993,388 
5/17/2005    2.72    7,500,000    7,491,000 
6/15/2005    2.74    10,000,000    9,966,125 
6/21/2005    2.81    7,300,000    7,271,250 
6/30/2005    2.90    10,000,000    9,952,167 
7/26/2005    2.84    10,000,000    9,932,992 
Federal National Mortgage Association,             
Discount Notes             
5/18/2005    2.75    10,000,000    9,987,108 
5/23/2005    2.77    10,000,000    9,983,133 
6/8/2005    2.86    10,000,000    9,970,054 
7/20/2005    3.01    10,000,000    9,933,667 
7/27/2005    3.02    10,000,000    9,927,500 
Federal National Mortgage Association,             
Floating Rate Notes             
9/6/2005    2.89 a    10,000,000    9,997,413 
Total U.S. Government Agencies             
(cost $202,739,756)            202,739,756 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Annualized         
    Yield on         
    Date of    Principal     
Repurchase Agreements—20.9%    Purchase (%)    Amount ($)    Value ($) 
Goldman Sachs & Co.             
dated 4/30/2005, due 5/2/2005 in the amount         
of $23,523,990 (fully collateralized by             
$16,525,000 U.S. Treasury Bonds             
8.75%, due 5/15/2017, value $23,990,294)    2.79    23,518,522    23,518,522 
Salomon Smith Barney Inc.             
dated 4/30/2005, due 5/2/2005 in the amount         
of $30,007,425 (fully collateralized by             
$30,625,000 Federal Home Loan             
Discount Notes, due 5/9/2005,             
value $30,600,500)    2.97    30,000,000    30,000,000 
Total Repurchase Agreements             
(cost $53,518,522)            53,518,522 
 
Total Investments (cost $256,258,278)        100.2%    256,258,278 
 
Liabilities, Less Cash and Receivables        (.2%)    (569,001) 
 
Net Assets        100.0%    255,689,277 

a Variable interest rate—subject to periodic change.

Portfolio Summary (Unaudited) †     
 
    Value (%) 
Government Agency    79.3 
Repurchase Agreements    20.9 
    100.2 

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

8

STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $53,518,522)—Note 1(b)    256,258,278    256,258,278 
Interest receivable        129,972 
        256,388,250 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        75,184 
Dividends payable        623,789 
        698,973 
Net Assets ($)        255,689,277 
Composition of Net Assets ($):         
Paid-in capital        255,731,908 
Accumulated net realized gain (loss) on investments        (42,631) 
Net Assets ($)        255,689,277 
Shares Outstanding         
(2 billion shares of $.001 par value Capital Stock authorized)    255,731,908 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

The Fund 9

  STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Interest Income    2,898,226 
Expenses:     
Management fee—Note 3(a)    178,347 
Shareholder servicing costs—Note 3(b)    178,347 
Total Expenses    356,694 
Investment Income—Net, representing net increase     
in net assets resulting from operations    2,541,532 

See notes to financial statements.

10

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net, representing         
net increase in net assets resulting         
from operations    2,541,532    2,502,692 
Dividends to Shareholders from ($):         
Investment income—net    (2,541,532)    (2,502,692) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold    1,061,314,149    5,027,651,050 
Dividends reinvested    7    45 
Cost of shares redeemed    (1,014,433,817)    (5,148,251,988) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    46,880,339    (120,600,893) 
Total Increase (Decrease) in Net Assets    46,880,339    (120,600,893) 
Net Assets ($):         
Beginning of Period    208,808,938    329,409,831 
End of Period    255,689,277    208,808,938 

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.

Six Months Ended                     
    April 30, 2005        Year Ended October 31,     
    (Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    1.00    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                         
Investment income—net    .010    .009    .009    .016    .045    .058 
Distributions:                         
Dividends from                         
investment income—net    (.010)    (.009)    (.009)    (.016)    (.045)    (.058) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    2.08a    .89    .93    1.66    4.59    5.94 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .30a    .30    .30    .30    .30    .30 
Ratio of net investment income                     
to average net assets    2.14a    .83    .97    1.65    4.08    5.81 
Net Assets, end of period                         
($ x 1,000)    255,689    208,809    329,410    822,496    624,020    292,672 

a Annualized. 
See notes to financial statements. 

12

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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.

The Fund 13

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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. 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 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.

14

(d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

The fund has an unused capital loss carryover of $42,631 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 distributions paid to shareholders during the fiscal year ended October 31, 2004 were all ordinary income.The tax character of current year distributions will be determined at the end of the current fiscal year.

At April 30, 2005, 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 April 30, 2005, 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

The Fund 15

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 .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 April 30, 2005, the fund was charged $178,347 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 $37,592 and shareholder services plan fees $37,592.

NOTE 4—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to

The Fund 17

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

18

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND'S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio.The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and iMoneyNet and

The Fund 19

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Lipper averages, and discussed the results of the comparisons.The Board members took into consideration that the fund's performance was higher than the iMoneyNet category average but lower than the fund's comparison group for the one-, three- and five-year periods, lower than the iMoneyNet category average for the ten-year period and higher than the fund's comparison group for the ten-year period.

The Board members reviewed the range of management fees and expense ratios in the comparison group and discussed the fund's management fee and expense ratio, noting its "unitary fee" structure.They took into consideration that the Fund's expense ratio was below the fund's comparison group and Lipper category averages.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts and/or commingled funds with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund.The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar Funds had expense ratios that were lower than the fund's expense ratio, and the Separate Accounts had advisory fees that were both higher and lower than the fund's management fee.The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee.The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

20

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.

The Fund 21

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

  • The Board was generally satisfied with the fund's overall performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

22

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.

®

© 2005 Dreyfus Service Corporation 0919SA0405

Dreyfus 
Institutional Prime 
Money Market Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
10    Statement of Assets and Liabilities 
11    Statement of Operations 
12    Statement of Changes in Net Assets 
13    Financial Highlights 
14    Notes to Financial Statements 
20    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus Institutional Prime Money Market Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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.

While most longer-term investments produced mixed results over the reporting period, higher interest rates helped improve the yields of money market instruments. Between the Federal Reserve Board's initial rate hike in June 2004 and the reporting period's end, the overnight federal funds rate rose from 1% to 2.75% .What's more, yield differences across the municipal money market's maturity spectrum have widened through most of the reporting period, which offered investors opportunities to capture incrementally higher levels of current income.

In this rising interest-rate environment, the money market investments that are right for you depend on your current liquidity needs, future goals and the composition of your current portfolio. As always, your financial advisor may be in the best position to recommend the specific investments that will satisfy your portfolio diversification and capital preservation needs.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus Institutional Prime Money Market Fund
perform during the period?

For the six-month period ended April 30, 2005, Dreyfus Institutional Prime Money Market Fund produced a 2.11% annualized yield and, after taking into account the effects of compounding, an annualized effective yield of 2.13% .1

We attribute the fund's performance primarily to rising interest rates, which resulted in higher yields for money market instruments.

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 floating or variable rates of interest

What other factors influenced the fund's performance?

The fund's performance was influenced primarily by rising short-term interest rates in a recovering economy. In fact, the Federal Reserve Board (the "Fed") raised interest rates at each of four meetings of its Federal Open Market Committee ("FOMC") during the reporting period. At its December 2004 FOMC meeting, the Fed stated that

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

economic activity was growing at a moderate pace and job creation was on an upward trend. It was later confirmed that the U.S. economy grew at a 3.8% annualized rate during the fourth quarter of 2004 and by a relatively robust 4.4% rate for the year overall.

As most analysts expected, the Fed raised its target for the federal funds rate at its FOMC meetings in February and March 2005. In its announcement of the March rate increase to 2.75%, the Fed noted that "pressures on inflation have picked up in recent months and pricing power is more evident." This more hawkish tone, together with a renewed surge in energy prices, caused investors' inflation concerns to intensify.

Even as the Fed's inflation concerns appeared to intensify, weaker-than-expected data in April suggested that the U.S. economy might be hitting another soft patch. However, it later was estimated that the U.S. labor market added more jobs than expected in April, and employment statistics for February and March were revised upward. While these data provided some encouragement that high energy prices had not hindered the economic expansion, difficulties encountered by the airline and automotive industries were regarded as potential threats to consumer and business confidence and spending.

In this changing economic environment, most money market investors focused primarily on securities with maturities of six months or less in an attempt to maintain liquidity and keep funds available for higher-yielding instruments as they became available. As a result, demand for shorter-term money market instruments was robust, while demand for instruments with one-year maturities was relatively low. This caused yield differences between overnight instruments and one-year securities to steepen significantly.

Like many other managers of money market funds, we focused primarily on securities with relatively short maturities. Accordingly, over most of the reporting period, we set the fund's weighted average maturity in a range we considered shorter than average. However, we tended to

4

emphasize commercial paper, which offered higher yields than other comparable money market instruments.The fund also received relatively attractive levels of income from short-term U.S. government agency securities. Returns from U.S. Treasury bills and repurchase agreements proved to be more modest during the reporting period.

What is the fund's current strategy?

Just days after the end of the reporting period, the Fed raised short-term interest rates for the eighth consecutive time, increasing the federal funds rate to 3%, and more rate hikes are expected at subsequent meetings of the Federal Open Market Committee.Accordingly, we have maintained the fund's relatively short weighted average maturity. On April 30, 2005, the fund's average maturity was 25 days, compared to 31 days when the reporting period began. In addition, 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.As always, we intend to continue to monitor economic and market conditions, and we are prepared to adjust our strategies as needed.

May 16, 2005

    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. 
1    Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past 
    performance is no guarantee of future results.Yields fluctuate. 

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.50 
Ending value (after expenses)    $1,010.50 

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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.51 
Ending value (after expenses)    $1,023.31 

† Expenses are equal to the fund's annualized expense ratio of .30%; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Principal     
Negotiable Bank Certificates of Deposit—2.3%    Amount ($)    Value ($) 
Washington Mutual Bank         
2.77%, 5/18/2005         
(cost $10,000,000)    10,000,000    10,000,000 
 
Commercial Paper—33.6%         
Alliance & Leicester PLC         
3%, 7/11/2005    10,000,000 a    9,941,425 
Amstel Funding Corp.         
2.90%, 6/7/2005    10,000,000 a    9,970,451 
Bank Of America Corp.         
2.82%, 5/9/2005    10,000,000    9,993,756 
Britannia Building Society         
3.09%, 7/11/2005    9,000,000    8,945,508 
Ciesco LLC         
2.78%, 5/12/2005    10,000,000 a    9,991,551 
CIT Group Inc.         
3.07%, 7/1/2005    10,000,000    9,948,319 
Dupont (Ei) De Nemours & Co.         
2.93%, 6/13/2005    10,000,000    9,965,122 
Grampian Funding LLC         
2.69%, 6/21/2005    10,000,000 a    9,962,317 
International Lease Finance Corp.         
2.71%, 5/11/2005    10,000,000    9,992,528 
KFW International Finance Inc.         
2.56%, 5/10/2005    7,500,000 a    7,495,238 
Mont Blanc Captial Corp.         
2.85%, 5/10/2005    10,000,000 a    9,992,900 
Nestle Capital Corp.         
2.55%, 5/6/2005    10,000,000 a    9,996,486 
Scaldis Capital Ltd.         
2.85%, 5/31/2005    10,000,000 a    9,976,417 
Shell Finance (UK) PLC         
3%, 7/6/2005    10,000,000    9,945,366 
Windmill Funding Corp.         
3.07%, 7/5/2005    10,000,000 a    9,944,931 
Total Commercial Paper         
(cost $146,062,315)        146,062,315 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Corporate Notes—18.9%    Amount ($)    Value ($) 
American Honda Finance Corp.         
3.11%, 10/20/2005    10,000,000 a,b    10,004,411 
Caterpillar Financial Services Corp.         
2.76%, 8/15/2005    10,000,000 b    10,002,533 
Credit Suisse First Boston         
3.08%, 12/29/2005    10,000,000 b    10,001,182 
General Electric Co.         
3.13%, 10/24/2005    10,000,000 b    10,003,723 
Johnson Controls Inc.         
2.97%, 9/15/2005    10,000,000 b    10,003,931 
Lehman Brothers Holdings Inc.         
2.95%, 5/16/2005    12,000,000 b    12,000,000 
Northern Rock PLC         
3.11%, 7/13/2005    10,000,000 a,b    10,001,043 
SLM Corp.         
2.97%, 8/15/2005    10,000,000 b    10,003,160 
Total Corporate Notes         
(cost $82,019,983)        82,019,983 
 
 
Short-Term Bank Notes—8.2%         
Abbey National Treasury Services PLC         
2.99%, 5/26/2005    10,000,000 b    9,999,775 
American Express Centurion Bank         
2.78%, 3/16/2006    10,000,000 b    10,000,000 
HSBC USA Inc.         
2.78%, 8/18/2005    10,000,000 b    10,003,880 
Natexis Banques Populaires         
2.95%, 8/16/2005    5,500,000 b    5,499,269 
Total Short-Term Bank Notes         
(cost $35,502,924)        35,502,924 
 
Time Deposits—4.4%         
Suntrust Bank Atlanta (Grand Cayman)         
2.97%, 5/2/2005         
(cost $19,083,000)    19,083,000    19,083,000 

8
    Principal     
Repurchase Agreements—32.7%    Amount ($)    Value ($) 
Credit Suisse First Boston Inc.         
2.85% dated 4/29/2005, due 5/2/2005 in the         
amount of $10,002,375 (fully collateralized by         
$6,785,000 U.S. Treasury Bonds         
8.75%, due 5/15/2020, value $10,201,061)    10,000,000    10,000,000 
Goldman Sachs & Co.         
2.79% dated 4/29/2005, due 5/2/2005 in the         
amount of $31,633,219 (fully collateralized by         
$22,221,000 U.S. Treasury Bonds         
8.75%, due 5/15/2017, value $32,259,506)    31,625,866    31,625,866 
Salomon Smith Barney Inc.         
2.97% dated 4/29/2005, due 5/2/2005 in the         
amount of $100,274,812 (fully collateralized by         
$20,515,000 Federal Home Loan Bank Bonds         
3%-8.75%, due 7/23/2010-4/17/2018 and         
$82,603,000 Federal Home Loan Bank Discount Notes     
due 5/27/2005-7/1/2005, value $102,329,928)    100,250,000    100,250,000 
Total Repurchase Agreements         
(cost $141,875,866)        141,875,866 
 
Total Investments (cost $434,544,088)    100.1%    434,544,088 
 
Liabilities, Less Cash and Receivables    (.1%)    (553,311) 
 
Net Assets    100.0%    433,990,777 

a Securities exempt from registration under Rule 144A of the Secutities Act of 1933.These securities may be resold 
in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2005, these 
securities amounted to $107,277,170 or 24.7% of net assets. 
b Variable interest rate—subject to periodic change. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Repurchase Agreements    32.7    Brokerage Firms    2.8 
Banking    30.7    Aerospace & Defense    2.3 
Finance & Financial    10.9    Other    13.8 
Asset-Backed—Multiseller Program    6.9        100.1 

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

The Fund 9

STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—See Statement         
of Investments (including Repurchase Agreements         
of $141,875,866)—Note 1(b)    434,544,088    434,544,088 
Cash        55,726 
Interest receivable        372,011 
        434,971,825 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    94,761 
Dividend payable        886,287 
        981,048 
Net Assets ($)        433,990,777 
Composition of Net Assets ($):         
Paid-in capital        433,985,515 
Accumulated undistributed net investment income—net        2,375 
Accumulated net realized gain (loss) on investments        2,887 
Net Assets ($)        433,990,777 
Shares Outstanding         
(2 billion shares of $.001 par value Capital Stock authorized)    433,985,515 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

10
  STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Interest Income    5,021,221 
Expenses:     
Management fee—Note 3(a)    314,086 
Shareholder servicing costs—Note 3(b)    314,086 
Total Expenses    628,172 
Investment Income—Net, representing net increase in     
net assets resulting from operations    4,393,049 

See notes to financial statements.

The Fund 11

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    4,393,049    4,514,979 
Net realized gain (loss) from investments    —    2,887 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    4,393,049    4,517,866 
Dividends to Shareholders from ($):         
Investment income—net    (4,393,049)    (4,514,979) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold    1,514,812,388    3,487,112,401 
Dividends reinvested    369,820    398,856 
Cost of shares redeemed    (1,573,645,395)    (3,557,588,810) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (58,463,187)    (70,077,553) 
Total Increase (Decrease) in Net Assets    (58,463,187)    (70,074,666) 
Net Assets ($):         
Beginning of Period    492,453,964    562,528,630 
End of Period    433,990,777    492,453,964 
Undistributed investment income—net    2,375    2,375 

See notes to financial statements.

12

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.

a Annualized.
See notes to financial statements.

The Fund 13

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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.

14

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.

The Fund 15

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2004 were all ordinary income. The tax character of current year distributions will be determined at the end of the current fiscal year.

At April 30, 2005, 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 April 30, 2005, 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 addition, the Manager is required to reduce its fee in an amount equal to

16

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 April 30, 2005, the fund was charged $314,086 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 Fund 17

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $47,381 and shareholder servicing plan fees $47,380.

NOTE 4—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks compensatory and punitive damages, rescission of the advisory contracts, and an accounting and restitution

18

of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

The Fund 19

  INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and iMoneyNet and Lipper category averages, and discussed the results of the comparisons.

20

The Board members took into consideration that the fund's performance was higher than the average of the fund's comparison group for the five- and ten-year periods, higher than the iMoneyNet category for the one-, three- and five-year periods, lower than the average of the fund's comparison group for the one- and three-year periods, and lower than the iMoneyNet category for the ten-year period.

The Board members reviewed the range of management fees and expense ratios in the comparison group and discussed the fund's management fee and expense ratio, noting its "unitary fee" structure.They took into consideration that the fund's expense ratio was below the fund's comparison group and Lipper category averages.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts and/or commingled funds with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio, and the Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts may have lower fees as a result of a larger overall trust department relationship with a particular client in which the client pays additional fees for services rendered or as a result of a particular historical pricing arrangement.The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the

The Fund 21

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

fund's management fee.The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale. The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to Dreyfus from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement.

22

Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's overall performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

The Fund 23

NOTES
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.

© 2005 Dreyfus Service Corporation 0922SA0405

Dreyfus Institutional 
U.S. Treasury 
Money Market Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus Institutional U.S. Treasury Money Market Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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.

While most longer-term investments produced mixed results over the reporting period, higher interest rates helped improve the yields of money market instruments. Between the Federal Reserve Board's initial rate hike in June 2004 and the reporting period's end, the overnight federal funds rate rose from 1% to 2.75% .What's more, yield differences across the municipal money market's maturity spectrum have widened through most of the reporting period, which offered investors opportunities to capture incrementally higher levels of current income.

In this rising interest-rate environment, the money market investments that are right for you depend on your current liquidity needs, future goals and the composition of your current portfolio. As always, your financial advisor may be in the best position to recommend the specific investments that will satisfy your portfolio diversification and capital preservation needs.

Thank you for your continued confidence and support.

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

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 six-month period ended April 30, 2005, Dreyfus Institutional U.S.Treasury Money Market Fund produced a 1.93% annualized yield and, after taking into account the effects of compounding, an annualized effective yield of 1.95% .1

We attribute the fund's performance primarily to rising interest rates in a recovering economy, which resulted in higher yields for short-term U.S. government securities.

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?

The fund's performance was influenced primarily by rising short-term interest rates in a recovering economy. In fact, the Federal Reserve Board (the "Fed") raised interest rates at each of four meetings of its Federal Open Market Committee ("FOMC") during the reporting period, continuing its gradual move away from the aggressively

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

accommodative monetary policy that had prevailed over the past several years. At its November 2004 FOMC meeting, the Fed increased the overnight federal funds rate from 1.75% to 2%, which was followed by another increase, to 2.25%, in late December. In its public comment accompanying the December rate hike, the Fed stated that economic activity was growing at a moderate pace and job creation was on an upward trend. It was later confirmed that the U.S. economy grew at a 3.8% annualized rate during the fourth quarter of 2004 and by a relatively robust 4.4% rate for the year overall.

As most analysts expected, the Fed raised its target for the federal funds rate by 25 basis points at each of its FOMC meetings in February and March 2005. In its announcement of the March rate increase to 2.75%, the Fed noted that "pressures on inflation have picked up in recent months and pricing power is more evident."This more hawkish tone, together with a renewed surge in energy prices, caused investors' inflation concerns to intensify.

Even as the Fed's inflation concerns appeared to intensify, weaker-than-expected data in April suggested that the U.S. economy might be hitting another soft patch. However, it later was estimated that the U.S. labor market added more jobs than expected in April, and employment statistics for February and March were revised upward. While these data provided some encouragement that high energy prices had not hindered the economic expansion, difficulties encountered by the airline and automotive industries were regarded as potential threats to consumer and business confidence and spending.

In this changing environment, most money market investors focused primarily on securities with maturities of six months or less in an attempt to maintain liquidity and keep funds available for higher-yielding instruments as they became available. As a result, demand for shorter-term money market instruments was robust, while demand for instruments with one-year maturities was relatively low. This caused yield differences between overnight instruments and one-year securities to steepen significantly.

4

Like many other managers of money market funds, we focused primarily on securities with relatively short maturities. Over most of the reporting period, we set the fund's weighted average maturity in a range we considered modestly shorter than average.We achieved this position by balancing the fund's holdings of U.S. Treasury bills with repurchase agreements that are backed by U.S.Treasury securities.

What is the fund's current strategy?

Just days after the end of the reporting period, the Fed raised short-term interest rates for the eighth consecutive time, increasing the federal funds rate to 3%, and more rate hikes are expected at subsequent meetings of the Federal Open Market Committee. Accordingly, we have continued to focus on repurchase agreements and U.S.Treasury bills with shorter maturities. On April 30, 2005, the fund's average maturity was 29 days, which was roughly in line with industry averages. In comparison, the fund's weighted average maturity was 35 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 needed.

May 16, 2005

    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. 
1    Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past 
    performance is no guarantee of future results.Yields fluctuate. 

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.49 
Ending value (after expenses)    $1,009.60 

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 April 30, 2005 
 
Expenses paid per $1,000 †    $ 1.51 
Ending value (after expenses)    $1,023.31 

† Expenses are equal to the fund's annualized expense ratio of .30%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Annualized         
    Yield on         
    Date of    Principal     
U.S. Treasury Bills—46.8%    Purchase (%)    Amount ($)    Value ($) 
5/5/2005    2.62    7,500,000    7,497,826 
5/12/2005    2.59    17,500,000    17,486,162 
5/19/2005    2.67    7,500,000    7,490,025 
5/26/2005    2.67    10,000,000    9,981,569 
6/2/2005    2.71    10,000,000    9,976,044 
6/9/2005    2.75    7,500,000    7,477,859 
6/16/2005    2.74    7,500,000    7,473,981 
6/23/2005    2.75    10,000,000    9,959,882 
7/7/2005    2.74    10,000,000    9,949,285 
7/14/2005    2.74    10,000,000    9,944,192 
7/21/2005    2.76    10,000,000    9,938,463 
7/28/2005    2.86    10,000,000    9,930,700 
8/4/2005    2.89    10,000,000    9,924,369 
Total U.S. Treasury Bills             
(cost $127,030,357)            127,030,357 
 
U.S. Treasury Notes—10.1%             
1.25%, 5/31/2005    2.46    20,000,000    19,979,748 
1.125%, 6/30/2005    2.63    7,500,000    7,481,232 
Total U.S. Treasury Notes             
(cost $27,460,980)            27,460,980 
 
Repurchase Agreements—39.6%             
Barclays Capital Inc.             
dated 4/29/2005, due 5/2/2005 in the amount         
of $35,008,313 (fully collateralized by             
$11,947,000 U.S. Treasury Bills, due 9/22/2005         
and $23,870,000 U.S. Treasury Notes             
2.50%, due 5/31/2006, value $35,700,901)    2.85    35,000,000    35,000,000 
Credit Suisse First Boston Inc.             
dated 4/29/2005, due 5/2/2005 in the amount         
of $35,008,312 (fully collateralized by             
$23,750,000 U.S. Treasury Bonds             
8.75%, due 5/15/2020, value $35,707,473)    2.85    35,000,000    35,000,000 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Annualized         
    Yield on         
    Date of    Principal     
Repurchase Agreements (continued)    Purchase (%)    Amount ($)    Value ($) 
Goldman Sachs & Co.             
dated 4/29/2005, due 5/2/2005 in the amount         
of $37,373,784 (fully collateralized by             
$26,253,000 U.S. Treasury Bonds             
8.75%, due 5/15/2017, value $38,112,992)    2.79    37,365,097    37,365,097 
Total Repurchase Agreements             
(cost $107,365,097)            107,365,097 
 
Total Investments (cost $261,856,434)        96.5%    261,856,434 
 
Cash and Receivables (Net)        3.5%    9,534,767 
 
Net Assets        100.0%    271,391,201 

Portfolio Summary (Unaudited) †     
 
    Value (%) 
U.S. Treasury    56.9 
Repurchase Agreements    39.6 
    96.5 

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

8

STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $107,365,097)—Note 1(b)    261,856,434    261,856,434 
Cash        1,402 
Receivable for investment securities sold        9,999,701 
Interest receivable        231,172 
        272,088,709 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        77,677 
Dividends payable        619,831 
        697,508 
Net Assets ($)        271,391,201 
Composition of Net Assets ($):         
Paid-in capital        271,380,790 
Accumulated undistributed investment income—net        11,467 
Accumulated net realized gain (loss) on investments        (1,056) 
Net Assets ($)        271,391,201 
Shares Outstanding         
(2 billion shares of $.001 par value Capital Stock authorized)    271,380,790 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

The Fund 9

  STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Interest Income    3,369,468 
Expenses:     
Management fee—Note 3(a)    227,688 
Shareholder servicing costs—Note 3(b)    227,688 
Total Expenses    455,376 
Investment Income—Net, representing net     
increase in net assets resulting from operations    2,914,092 

See notes to financial statements.

10

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    2,914,092    3,026,862 
Net realized gain (loss) on investments    —    (1,056) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    2,914,092    3,025,806 
Dividends to Shareholders from ($):         
Investment income—net    (2,914,092)    (3,026,862) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold    1,172,268,314    2,165,674,933 
Dividends reinvested    6,847    5,683 
Cost of shares redeemed    (1,245,730,505)    (2,362,382,045) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (73,455,344)    (196,701,429) 
Total Increase (Decrease) in Net Assets    (73,455,344)    (196,702,485) 
Net Assets ($):         
Beginning of Period    344,846,545    541,549,030 
End of Period    271,391,201    344,846,545 
Undistributed investment income—net    11,467    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.

Six Months Ended                     
    April 30, 2005        Year Ended October 31,     
    (Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    1.00    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                         
Investment income—net    .010    .008    .009    .016    .044    .055 
Distributions:                         
Dividends from                         
investment income—net    (.010)    (.008)    (.009)    (.016)    (.044)    (.055) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    1.94a    .84    .88    1.59    4.53    5.64 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .30a    .30    .30    .30    .30    .30 
Ratio of net investment income                     
to average net assets    1.92a    .84    .89    1.56    4.52    5.53 
Net Assets, end of period                         
($ x 1,000)    271,391    344,847    541,549    615,142    420,096    462,366 

a Annualized.
See notes to financial statements.

12

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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 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, 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.

The Fund 13

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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. 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 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.

14

(d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

The fund has an unused capital loss carryover of $1,056 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 distributions paid to shareholders during the fiscal year ended October 31, 2004 were all ordinary income.The tax character of current year distributions will be determined at the end of the current fiscal year.

At April 30, 2005, 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 April 30, 2005, 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

The Fund 15

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .15% of the value of the fund's average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, shareholder servicing fees and expenses, fees and expenses of non-interested Directors (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund's allocable portion of fees and expenses of the non-interested Directors (including counsel fees). Each Director receives $40,000 per year, plus $5,000 for each joint Board meeting of the 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 April 30, 2005, the fund was charged $227,688 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 $38,839 and shareholder services plan fees $38,838.

NOTE 4—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert

The Fund 17

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

18

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one-year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the Fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the Fund's distribution channels.The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day Fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio.The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and iMoneyNet and

The Fund 19

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Lipper averages, and discussed the results of the comparisons.The Board members took into consideration that the Fund's performance was generally higher than the fund's comparison group and iMoneyNet category averages for the one-, three-, five- and ten-year periods.

The Board members reviewed the range of management fees and expense ratios in the comparison group and discussed the fund's management fee and expense ratio, noting its "unitary fee" structure.They took into consideration that the Fund's expense ratio was below the fund's comparison group and Lipper category averages.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts and/or commingled funds with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio, and the Separate Accounts had advisory fees that were both higher and lower than the fund's management fee. The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee. The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

20

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the Fund grows and whether fee levels reflect these economies of scale for the benefit of Fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.

The Fund 21

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

  • The Board was satisfied with the fund's overall performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

22

NOTES
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.

®

© 2005 Dreyfus Service Corporation 0930SA0405

Dreyfus 
Money Market 
Reserves 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
10    Statement of Assets and Liabilities 
11    Statement of Operations 
12    Statement of Changes in Net Assets 
13    Financial Highlights 
15    Notes to Financial Statements 
21    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
FOR MORE INFORMATION
    Back Cover 

Dreyfus 
Money Market Reserves 

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus Money Market Reserves, covering the six-month period from November 1, 2004, through April 30, 2005. 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.

While most longer-term investments produced mixed results over the reporting period, higher interest rates helped improve the yields of money market instruments. Between the Federal Reserve Board's initial rate hike in June 2004 and the reporting period's end, the overnight federal funds rate rose from 1% to 2.75% .What's more, yield differences across the municipal money market's maturity spectrum have widened through most of the reporting period, which offered investors opportunities to capture incrementally higher levels of current income.

In this rising interest-rate environment, the money market investments that are right for you depend on your current liquidity needs, future goals and the composition of your current portfolio. As always, your financial advisor may be in the best position to recommend the specific investments that will satisfy your portfolio diversification and capital preservation needs.

Thank you for your continued confidence and support.

Sincerely,

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus Money Market Reserves perform during the period?

For the six-month period ended April 30, 2005, the fund's Investor shares produced an annualized yield of 1.70%, and its Class R shares produced an annualized yield of 1.91% .Taking into account the effects of compounding, the annualized effective yields for the fund's Investor shares and Class R shares were 1.72% and 1.92%, respectively.1

We attribute the fund's performance primarily to rising interest rates, which resulted in higher yields for money market instruments.

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

What other factors influenced the fund's performance?

The fund's performance was influenced primarily by rising short-term interest rates in a recovering economy. In fact, the Federal Reserve Board (the "Fed") raised interest rates at each of four meetings of its

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

Federal Open Market Committee ("FOMC") during the reporting period. At its December 2004 FOMC meeting, the Fed stated that economic activity was growing at a moderate pace and job creation was on an upward trend. It was later confirmed that the U.S. economy grew at a 3.8% annualized rate during the fourth quarter of 2004 and by a relatively robust 4.4% rate for the year overall.

As most analysts expected, the Fed raised its target for the federal funds rate at its FOMC meetings in February and March 2005. In its announcement of the March rate increase to 2.75%, the Fed noted that "pressures on inflation have picked up in recent months and pricing power is more evident." This more hawkish tone, together with a renewed surge in energy prices, caused investors' inflation concerns to intensify.

Even as the Fed's inflation concerns appeared to intensify, weaker-than-expected data in April suggested that the U.S. economy might be hitting another soft patch. However, it later was estimated that the U.S. labor market added more jobs than expected in April, and employment statistics for February and March were revised upward. While these data provided some encouragement that high energy prices had not hindered the economic expansion, difficulties encountered by the airline and automotive industries were regarded as potential threats to consumer and business confidence and spending.

In this changing environment, most money market investors focused primarily on securities with maturities of six months or less in an attempt to maintain liquidity and keep funds available for higher-yielding instruments as they became available. As a result, demand for shorter-term money market instruments was robust, while demand for instruments with one-year maturities was relatively low. This caused yield differences between overnight instruments and one-year securities to steepen significantly.

Like many other managers of money market funds, we focused primarily on securities with relatively short maturities. Accordingly,

4

over most of the reporting period, we set the fund's weighted average maturity in a range we considered shorter than average. However, we tended to emphasize commercial paper, which offered higher yields than other comparable money market instruments. The fund also received relatively attractive levels of income from short-term U.S. government agency securities. Returns from U.S. Treasury bills and repurchase agreements proved to be more modest during the reporting period.

What is the fund's current strategy?

Just days after the end of the reporting period, the Fed raised short-term interest rates for the eighth consecutive time, increasing the federal funds rate to 3%, and more rate hikes are expected at subsequent meetings of the Federal Open Market Committee.Accordingly, we have maintained the fund's relatively short weighted average maturity. On April 30, 2005, the fund's average maturity was 28 days, compared to 30 days when the reporting period began. In addition, we have continued to allocate the largest portion of the fund's assets to commercial paper, followed by repurchase agreements, corporate floating-rate notes and time deposits.As always, we intend to continue to monitor economic and market conditions, and we are prepared to adjust our strategies as needed.

May 16, 2005

    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. 
1    Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past 
    performance is no guarantee of future results.Yields fluctuate. 

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005     
    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.49    $ 2.49 
Ending value (after expenses)    $1,008.50    $1,009.50 

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 April 30, 2005

    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.51    $ 2.51 
Ending value (after expenses)    $1,021.32    $1,022.32 

† 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 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Principal     
Commercial Paper—33.3%    Amount ($)    Value ($) 
AWB Harvest Finance Ltd.         
2.86%, 6/14/2005    10,000,000 a    9,965,289 
Alliance & Leicester PLC         
3%, 7/11/2005    10,000,000 a    9,941,425 
Amstel Funding Corp.         
2.90%, 6/7/2005    10,000,000 a    9,970,451 
Bank Of America Corp.         
2.82%, 5/9/2005    10,000,000    9,993,756 
Charta LLC         
2.95%, 5/19/2005    10,000,000 a    9,985,300 
Ciesco LLC         
2.78%, 5/12/2005    10,000,000 a    9,991,551 
CIT Group Inc.         
2.75%, 5/17/2005    10,000,000    9,987,867 
Edison Asset Securitization         
3.11%, 8/12/2005    10,000,000 a    9,912,164 
Grampian Funding Ltd.         
2.93%, 7/1/2005    10,000,000 a    9,950,861 
ING (U.S.) Funding LLC         
3%, 6/22/2005    10,000,000    9,956,811 
Kimberly-Clark Corp.         
2.70%, 5/3/2005    10,000,000    9,998,506 
Nestle Capital Corp.         
2.55%, 5/6/2005    10,000,000 a    9,996,486 
Proctor & Gamble Co.         
2.84%, 6/1/2005    18,000,000 a    17,956,031 
Scaldis Capital LLC         
2.85%, 5/31/2005    10,000,000 a    9,976,417 
Sherwin Williams Co.         
2.97%, 6/20/2005    10,000,000 a    9,959,028 
Total Commercial Paper         
(cost $157,541,943)        157,541,943 
 
Corporate Notes—14.8%         
Bear Stearns Cos. Inc.         
2.86%, 11/28/2005    10,000,000 b    10,005,247 
Canadian Imperial Bank Of Commerce     
3.02%, 5/31/2005    10,000,000 b    9,999,875 
General Electric Co.         
3.13%, 10/24/2005    10,000,000 b    10,003,723 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Corporate Notes (continued)    Amount ($)    Value ($) 
Johnson Controls Inc.         
2.97%, 9/15/2005    10,000,000 b    10,003,931 
Lehman Brothers Holdings Inc.         
2.95%, 5/16/2005    10,000,000 b    10,000,000 
National City Bank         
3.03%, 10/3/2005    10,000,000 b    9,998,511 
Skandinaviska Enskilda Banken AB         
2.97%, 1/19/2006    10,000,000 a,b    10,000,000 
Total Corporate Notes         
(cost $70,011,287)        70,011,287 
 
Short-Term Bank Notes—8.5%         
Abbey National Treasury Services         
2.99%, 5/26/2005    10,000,000 b    9,999,776 
American Express Centurion Bank         
2.78%, 3/16/2006    10,000,000 b    10,000,000 
Natexis Banques Populaires         
2.98%, 6/22/2005    10,000,000 b    9,999,426 
Royal Bank of Scotland PLC         
2.94%, 6/20/2005    10,000,000 b    9,999,584 
Total Short-Term Bank Notes         
(cost $39,998,786)        39,998,786 
 
Time Deposits—6.3%         
Branch Banking & Trust Co. (Grand Cayman)         
2.98%, 5/2/2005    15,000,000    15,000,000 
Marshall & Ilsley Bank (Grand Cayman)         
2.94%, 5/2/2005    15,000,000    15,000,000 
Total Time Deposits         
(cost $30,000,000)        30,000,000 
 
Repurchase Agreements—37.2%         
Goldman Sachs & Co.         
2.79% dated 4/29/2005, due 5/2/2005 in the amount     
of $26,334,138 (fully collateralized by         
$18,517,000 U.S. Treasury Bonds         
8.75%, due 5/15/2017, value $26,855,438)    26,328,017    26,328,017 

8
    Principal     
Repurchase Agreements (continued)    Amount ($)    Value ($) 
Greenwich Capital Markets Inc.         
2.84% dated 4/29/2005, due 5/2/2005 in the amount     
of $50,011,833 (fully collateralized by $36,745,000         
Federal Home Loan Banks 2.30%—4.03%, due         
4/17/2006—7/16/2013, $1,700,000 Federal Home         
Loan Mortgage Corporation 5.98%—7.20%,         
due 12/8/2005—7/26/2006, and $11,052,000         
Tennessee Valley Authority 6.375%—6.79%,         
due 6/15/2005—5/23/2012, value $51,003,818)    50,000,000    50,000,000 
Salomon Smith Barney Holdings Inc.         
2.97% dated 4/29/2005, due 5/2/2005 in the amount     
of $100,024,750 (fully collateralized by $71,090,000     
Federal Home Loan Bank Discount Notes, due from         
5/9/2005—5/25/2005, $16,600,000 Federal Home         
Loan Bank Notes 3.25%, due 10/26/2007, and         
$14,600,000 Federal Home Loan Mortgage         
Corporation 2.18%, due 5/12/2006,         
value $102,000,492)    100,000,000    100,000,000 
Total Repurchase Agreements         
(cost $176,328,017)        176,328,017 
 
Total Investments (cost $473,880,033)    100.1%    473,880,033 
 
Liabilities, Less Cash and Receivables    (.1%)    (250,059) 
 
Net Assets    100.0%    473,629,974 

a Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in 
transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2005, these securities 
amounted to $127,605,003 or 26.9% of net assets. 
b Variable interest rate—subject to periodic change. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Repurchase Agreements    37.2    Household Products    3.8 
Banking    31.6    Building & Constrction    2.3 
Finance    10.5    Asset-Backed Ctfs    2.1 
Asset-Backed-Multiseller Programs    8.4         
Brokerage Firms    4.2        100.1 

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

The Fund 9

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $176,328,017)—Note 1(b)    473,880,033    473,880,033 
Cash        681,793 
Interest receivable        207,271 
        474,769,097 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        247,663 
Dividend payable        860,956 
Payable for Capital Stock redeemed        30,504 
        1,139,123 
Net Assets ($)        473,629,974 
Composition of Net Assets ($):         
Paid-in capital        473,631,217 
Accumulated net realized gain (loss) on investments        (1,243) 
Net Assets ($)        473,629,974 

Net Asset Value Per Share         
    Investor Shares    Class R Shares 
Net Assets ($)    302,855,362    170,774,612 
Shares Outstanding    302,854,385    170,776,832 
Net Asset Value Per Share ($)    1.00    1.00 

See notes to financial statements.

10

  STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Interest Income    5,923,906 
Expenses:     
Management fee—Note 3(a)    1,236,591 
Distribution fees (Investor Shares)—Note 3(b)    332,354 
Total Expenses    1,568,945 
Investment Income—Net, representing net increase     
in net assets resulting from operations    4,354,961 

See notes to financial statements.

The Fund 11

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    4,354,961    3,478,251 
Net realized gain (loss) on investments    —    (619) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    4,354,961    3,477,632 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (2,808,285)    (1,975,321) 
Class R shares    (1,546,676)    (1,502,930) 
Total Dividends    (4,354,961)    (3,478,251) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold:         
Investor shares    303,866,265    1,218,842,895 
Class R shares    317,535,742    765,162,295 
Dividends reinvested:         
Investor shares    2,793,350    1,965,555 
Class R shares    399,239    301,076 
Cost of shares redeemed:         
Investor shares    (360,967,440)    (1,242,909,692) 
Class R shares    (326,712,343)    (800,022,958) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (63,085,187)    (56,660,829) 
Total Increase (Decrease) in Net Assets    (63,085,187)    (56,661,448) 
Net Assets ($):         
Beginning of Period    536,715,161    593,376,609 
End of Period    473,629,974    536,715,161 

See notes to financial statements.

12

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.

Six Months Ended                     
    April 30, 2005        Year Ended October 31,     
Investor Shares    (Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value, beginning of period 1.00    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                         
Investment income—net    .008    .005    .006    .016    .044    .056 
Distributions:                         
Dividends from                         
investment income—net    (.008)    (.005)    (.006)    (.016)    (.044)    (.056) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    1.71a    .54    .64    1.58    4.47    5.70 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .70a    .70    .70    .70    .70    .70 
Ratio of net investment income                     
to average net assets    1.69a    .53    .64    1.63    3.91    5.56 
Net Assets, end of period                         
($ X 1,000)    302,855    357,163    379,265    432,816    871,945    333,377 

a Annualized. 
See notes to financial statements. 

The Fund 13

FINANCIAL HIGHLIGHTS (continued)

Six Months Ended                     
    April 30, 2005        Year Ended October 31,     
Class R Shares    (Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    1.00    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                         
Investment income—net    .009    .007    .008    .018    .046    .058 
Distributions:                         
Dividends from                         
investment income—net    (.009)    (.007)    (.008)    (.018)    (.046)    (.058) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    1.92a    .74    .83    1.79    4.68    5.91 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .50a    .50    .50    .50    .50    .50 
Ratio of net investment income                     
to average net assets    1.91a    .72    .84    1.82    4.54    5.80 
Net Assets, end of period                         
($ X 1,000)    170,775    179,552    214,112    248,164    419,057    393,117 

a Annualized. 
See notes to financial statements. 

14

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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 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 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.

The Fund 15

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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

16

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.

The fund has an unused capital loss carryover of $1,243 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 distributions paid to shareholders during the fiscal year ended October 31, 2004 was all ordinary income. The tax character of current year distributions will be determined at the end of the current fiscal year.

At April 30, 2005, 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 April 30, 2005, 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, cus-

The Fund 17

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 .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

18

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 April 30, 2005, Investor shares were charged $332,354 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 $196,368 and Rule 12b-1 distribution plan fees $51,295.

NOTE 4—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds. The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other

The Fund 19

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

20

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND'S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to groups of comparable funds and iMoneyNet and

The Fund 21

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Lipper averages, and discussed the results of the comparisons.The Board members took into consideration that the fund's performance was generally higher than the average of each of the fund's comparison groups and iMoneyNet category, noting in particular the fund's strong one-, three-, five- and ten-year rankings.

The Board members reviewed the range of management fees and expense ratios in each comparison group and discussed the fund's management fee and expense ratio, noting its "unitary fee" structure. They took into consideration that the fund's expense ratio was below the average of each of the fund's comparison groups and slightly higher than the Lipper category average.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts and/or commingled funds with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio, and the Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts may have lower fees as a result of a larger overall trust department relationship with a particular client in which the client pays additional fees for services rendered or as a result of a particular historical pricing arrangement.The Board members con-

22

sidered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee.The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale. The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to Dreyfus from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision

The Fund 23

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's overall performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

24

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.

®

© 2005 Dreyfus Service Corporation 0317SA0405

Dreyfus     
Municipal    Reserves 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
13    Statement of Assets and Liabilities 
14    Statement of Operations 
15    Statement of Changes in Net Assets 
16    Financial Highlights 
18    Notes to Financial Statements 
24    Information About the Review and Approval 
    of the Fund's Management Agreement 
    FOR MORE INFORMATION 
    Back Cover 

  Dreyfus
Municipal Reserves
The    Fund 

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus Municipal Reserves, covering the six-month period from November 1, 2004, through April 30, 2005. 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.

While most longer-term investments produced mixed results over the reporting period, higher short-term interest rates helped increase the yields of municipal money market instruments. Between the Federal Reserve Board's initial rate hike in June 2004 and the reporting period's end, the overnight federal funds rate rose from 1% to 2.75% . What's more, yield differences across the municipal money market's maturity spectrum have widened through most of the reporting period, which offered investors opportunities to capture incrementally higher levels of current income.

In this rising interest-rate environment, the tax-exempt money market investments that are right for you depend on your current liquidity needs, future goals and the composition of your current portfolio. As always, your financial advisor may be in the best position to recommend the specific investments that will satisfy your needs for tax-free income and capital preservation.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

J. Christopher Nicholl, Portfolio Manager

How did Dreyfus Municipal Reserves perform during the period?

For the six-month period ended April 30, 2005, the fund's Investor shares produced an annualized yield of 1.15% and, taking into account the effects of compounding, an annualized effective yield of 1.16% . The fund's Class R shares provided a 1.36% annualized yield and a 1.36% annualized effective yield for the same period.1

We attribute the fund's results to rising interest rates as the Federal Reserve Board (the "Fed") continued to move away from its accommodative monetary policy of the past several years.

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.
  • 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?

After expanding in fits and starts for much of 2004, the U.S. economy appeared to grow in a more sustainable way during the final two months of the year. The end of the presidential election removed a degree of uncertainty from the economic environment, and more solid employment gains seemed to confirm that the recovery was gaining momentum.As it had since late June 2004, the Fed continued to raise short-term interest rates in an attempt to strike a more neutral posture that would neither stimulate nor restrain economic growth.

Indeed, the Fed so far has been unusually candid regarding its monetary policy intentions, which has helped to ease investor concerns and market volatility. However, during the first four months of 2005, renewed inflationary pressures arose when energy prices surged and the U.S. labor market grew more vigorously.As inflation fears intensified, the Fed continued to raise interest rates at each meeting of its Federal Open Market Committee, and by the end of the reporting period the federal funds rate stood at 2.75%, up from 2% when the reporting period began. In addition, investors generally expected the Fed to continue to raise short-term interest rates in the months ahead.

In this rising interest-rate environment, investors generally focused on money market instruments at the short end of the maturity range in order to maintain liquidity and keep cash available for higher-yielding securities as they became available. With demand robust at the short end of the maturity range and slack at the longer end, yield differences among money market instruments in the overnight to six-month range narrowed substantially, while yields of securities with one-year maturities rose.

Tax-exempt money markets also were influenced by improving fiscal conditions for many states and municipalities. Government entities generally enjoyed higher tax revenues in the recovering economy, which relieved some of the fiscal pressures they had experienced during the downturn. As a result, the supply of tax-exempt money

4

market instruments remained relatively low compared to the same period one year earlier. For example, issuance of money market instruments by California dropped off dramatically after the state took steps to resolve its budget crisis.

As for the fund, we also focused on money market instruments with relatively short maturities, because it did not make sense to us to lock in higher yields at the long end of the range in the rising interest-rate environment.Accordingly, the percentage of the fund's assets allocated to variable-rate demand notes — floating-rate securities on which yields are reset daily or weekly — rose over the course of the reporting period, while the fund's allocation to longer-term municipal notes and bonds fell.

What is the fund's current strategy?

We expect the Fed to continue raising short-term interest rates as the U.S. economy strengthens further and inflationary pressures resurface. Indeed, just days after the reporting period's end, the Fed boosted the federal funds rate to 3%. Therefore, we have continued to emphasize tax-exempt money market securities with short maturities. However, we remain watchful for opportunities to extend the fund's weighted average maturity whenever opportunities arise to capture higher yields. In our judgment, these are prudent strategies as we move to the next phase of the economic cycle.

May 16, 2005

    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. 
1    Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past 
    performance is no guarantee of future results.Yields fluctuate. Income may be subject to state and 
    local taxes and some income may be subject to the federal alternative minimum tax (AMT) for 
    certain investors. 

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005     
    Investor    Class R 
Expenses paid per $1,000 †    $ 3.53    $ 2.54 
Ending value (after expenses)    $1,005.70    $1,006.70 

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 April 30, 2005 
    Investor    Class R 
Expenses paid per $1,000 †    $ 3.56    $ 2.56 
Ending value (after expenses)    $1,021.27    $1,022.27 

† 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 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Principal         
Tax Exempt Investments—112.8%    Amount ($)    Value ($) 
Alabama—4.7%             
Port City Medical Clinic Board             
Health Care Facilities Revenue             
VRDN (Infirmary Health Systems)             
2.98% (Insured; AMBAC and Liquidity Facility:             
Bank of Nova Scotia and KBC Bank)    6,000,000    a    6,000,000 
Alaska—1.8%             
Alaska Industrial Development Authority             
Health Care Facilities Revenue, VRDN             
(Providence Medical Office Building)             
2.65% (LOC; KBC Bank)    2,260,000    a    2,260,000 
California—3.5%             
State of California, GO Notes, VRDN             
(Kindergarten University)             
3% (LOC: Citibank, National Australia Bank             
and State Street Bank and Trust)    2,965,000    a    2,965,000 
California Pollution Control Financing Authority             
PCR, Refunding, VRDN             
(Pacific Gas and Electric Corp.)             
2.96% (LOC; Bank One)    1,500,000    a    1,500,000 
Colorado—5.8%             
Castle Rock Metropolitan District Number 7, GO Notes             
Refunding 2.30%, 12/1/2005 (LOC; U.S. Bank NA)    2,830,000        2,830,000 
Dove Valley Metropolitan District Arapahoe County             
GO Notes 1.95%, 11/1/2005 (LOC; BNP Paribas)    2,500,000        2,500,000 
Interstate South Metropolitan District, GO Notes             
Refunding 1.95%, 11/1/2005 (LOC; BNP Paribas)    1,975,000        1,975,000 
Connecticut—1.9%             
Connecticut State Health and Educational Facility             
Authority, College and University Revenue             
VRDN (Yale University) 3%    2,400,000    a    2,400,000 
Florida—3.8%             
Florida Housing Finance Agency, MFMR, VRDN             
(Town Colony Associates)             
3.07% (LOC; Credit Suisse First Boston)    4,800,000    a    4,800,000 
Georgia—2.7%             
De Kalb County Development Authority             
Private Schools Revenue, VRDN             
(Marist School Inc. Project)             
3% (LOC; SunTrust Bank)    3,400,000    a    3,400,000 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
Hawaii—3.2%             
Honolulu City and County, GO Notes, CP             
2%, 6/2/2005 (LOC; Helaba Bank)    4,000,000        4,000,000 
Illinois—30.4%             
City of Chicago, GO Notes:             
2.20%, 12/8/2005 (LOC; State Street Bank and Trust)    3,500,000        3,500,000 
2.30%, 12/8/2005 (LOC; Bank of America)    825,000        825,000 
Chicago School Finance Authority, GO Notes             
Refunding 5.20%, 6/1/2005 (Insured; FGIC)    2,780,000        2,788,975 
Illinois Development Finance Authority, IDR             
VRDN (Heritage Tool and Manufacturing Inc.)             
3.11% (LOC; Bank of Montreal)    4,285,000    a    4,285,000 
Illinois Educational Facilities Authority, Recreational             
Revenue, VRDN (Shedd Aquarium Society)             
3% (LOC; Bank One)    2,500,000    a    2,500,000 
Illinois Health Facilities Authority, Revenue, VRDN:             
(Memorial Medical Center) 3% (LOC; KBC Bank)    2,400,000    a    2,400,000 
(Resurrection Health Care)             
3.04% (Insured; FSA and Liquidity             
Facility; Bank One)    2,300,000    a    2,300,000 
(Rush Presbyterian St. Luke's Medical Center)             
3% (LOC; Northern Trust Co.)    3,800,000    a    3,800,000 
(The Carle Foundation)             
3% (Insured; AMBAC and Liquidity Facility;             
Northern Trust Co.)    3,900,000    a    3,900,000 
Illinois Student Assistance Commission             
Student Loan Revenue, VRDN             
3.02% (LOC; Bank One)    3,300,000    a    3,300,000 
Jackson-Union Counties Regional Port District             
Port Facilities Revenue, Refunding, VRDN             
(Enron Transportation Services)             
2.95% (LOC; Wachovia Bank)    2,400,000    a    2,400,000 
Regional Transportation Authority, Transportation             
Revenue, Refunding 2.80%, 6/1/2005             
(Liquidity Facility; Depfa Bank PLC)    6,500,000        6,500,000 
Indiana—8.8%             
City of Seymour, EDR, VRDN             
(Pedcor Investments Project) 3.05% (LOC; FHLB)    3,881,000    a    3,881,000 
City of Wabash, EDR, VRDN             
(Wabash Alloys Project)             
3.06% (LOC; Bank of America)    7,250,000    a    7,250,000 

8

    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
Iowa—1.0%             
Iowa Finance Authority, Private College Revenue             
VRDN (Drake University Project)             
3.05% (LOC; Wells Fargo Bank)    1,300,000    a    1,300,000 
Kentucky—1.2%             
County of Breckinridge, LR, VRDN             
(Association County Leasing Trust)             
2.96% (LOC; U.S. Bank NA)    1,300,000    a    1,300,000 
County of Ohio, PCR, VRDN             
(Big Rivers Electric Corp. Project)             
3% (Insured; AMBAC and Liquidity Facility;    200,000    a    200,000 
Credit Suisse First Boston)             
Louisiana—.8%             
Plaquemines Port Harbor and Terminal District             
Port Facilities Revenue             
(International Marine Terminals Project)             
2.60%, 3/15/2006 (LOC; KBC Bank)    1,000,000        1,000,000 
Massachusetts—9.9%             
Commonwealth of Massachusetts, GO Notes, VRDN             
(Central Artery) 3.03% (Liquidity Facility;             
Landesbank Baden-Wuerttemberg)    2,600,000    a    2,600,000 
Massachusetts Health and Educational Facilities             
Authority, VRDN:             
College and University Revenue             
(Simmons College) 3.04% (Insured; AMBAC             
and Liquidity Facility; Bank of America)    200,000    a    200,000 
Revenue, Capital Asset Program:             
3.02%, Series B (Insured; MBIA and             
Liquidity Facility; State Street Bank and Trust)    1,800,000    a    1,800,000 
3.02%, Series C (Insured; MBIA and             
Liquidity Facility; State Street Bank and Trust)    2,850,000    a    2,850,000 
City of Newburyport, GO Notes, BAN             
3%, 5/1/2005    5,000,000        5,000,100 
Michigan—2.6%             
Michigan Strategic Fund, LOR, VRDN             
(Henry Ford Museum Village Project)             
3.03% (LOC; Comerica Bank)    3,300,000    a    3,300,000 
Mississippi—4.0%             
County of Jackson, Port Facility Revenue, Refunding             
VRDN (Chevron USA Inc. Project) 3.03%    5,000,000    a    5,000,000 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
New Mexico—2.5%             
City of Santa Fe, Gross Receipts Tax Revenue, VRDN             
(Wastewater Systems) 3.07% (LOC; BNP Paribas)    3,200,000    a    3,200,000 
New York—9.0%             
City of New York, GO Notes, VRDN 3%             
(LOC; Bayerische Landesbank)    8,700,000    a    8,700,000 
New York City Transitional Finance Authority             
Income Tax Revenue, VRDN 3%             
(Liquidity Facility; Dexia Credit Locale)    2,700,000    a    2,700,000 
Ohio—.6%             
County of Hamilton, Hospital Facilities Revenue             
VRDN (Health Alliance) 2.90% (Insured; MBIA             
and Liquidity Facility; Credit Suisse First Boston)    700,000    a    700,000 
Pennsylvania—.7%             
Lehigh County Industrial Development Authority, PCR         
VRDN (Allegheny Electric Cooperative)             
2.30% (LOC; Rabobank Nederland)    920,000    a    920,000 
Rhode Island—.7%             
Rhode Island Health and Educational Building             
Corporation, Health Care Facilities Revenue             
VRDN (Ocean State Assisted)             
2.95% (LOC: The Bank of New York and             
Sovereign Bank FSB)    900,000    a    900,000 
Texas—2.1%             
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)             
3.05% (Insured; MBIA and Liquidity Facility;             
Dexia Credit Locale)    600,000    a    600,000 

10
    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
Washington—4.3%             
Washington Housing Finance Commission, MFMR             
VRDN (Wandering Creek Project) 3.08%             
(Insured; FHLMC and Liquidity Facility; FHLMC)    5,300,000    a    5,300,000 
Washington Public Power Supply System Project             
Number 2, Electric Revenue, Refunding, VRDN             
2.98% (Insured; MBIA and Liquidity Facility;             
Credit Suisse First Boston)    100,000    a    100,000 
West Virgina—2.6%             
County of Marshall, PCR, VRDN             
(Ohio Power Co. Project)             
3.04% (LOC; Royal Bank of Scotland)    3,300,000    a    3,300,000 
Wisconsin—4.2%             
University of Wisconsin Hospitals and Clinics Authority         
Health Care Facilities Revenue, VRDN 3%             
(Insured; MBIA and Liquidity Facility; U.S. Bank NA)    5,300,000    a    5,300,000 
 
Total Investments (cost $142,545,075)    112.8%        142,545,075 
Liabilities, Less Cash and Receivables    (12.8%)    (16,207,013) 
Net Assets    100.0%        126,338,062 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Summary of Abbreviations         
 
AMBAC    American Municipal Bond    GO    General Obligation 
    Assurance Corporation    IDR    Industrial Development Revenue 
BAN    Bond Anticipation Notes    LOC    Letter of Credit 
CP    Commercial Paper    LOR    Limited Obligation Revenue 
EDR    Economic Development Revenue    LR    Lease Revenue 
FGIC    Financial Guaranty Insurance    MBIA    Municipal Bond Investors 
    Company        Assurance Insurance 
FHLB    Federal Home Loan Bank        Corporation 
FHLMC    Federal Home Loan Mortgage    MFMR    Multi-Family Mortgage Revenue 
    Corporation    PCR    Pollution Control Revenue 
FSA    Financial Security Assurance    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    93.6 
AAA, AA, A b        Aaa, Aa, A b        AAA, AA, A b    6.4 
                    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. 
See notes to financial statements. 

12

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    142,545,075    142,545,075 
Cash        645,698 
Interest receivable        491,008 
        143,681,781 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        60,497 
Bank loan payable—Note 2        10,575,000 
Payable for investment securities purchased        6,500,000 
Dividends payable        205,906 
Interest payable—Note 2        2,316 
        17,343,719 
Net Assets ($)        126,338,062 
Composition of Net Assets ($):         
Paid-in capital        126,342,562 
Accumulated net realized gain (loss) on investments        (4,500) 
Net Assets ($)        126,338,062 

Net Asset Value Per Share         
    Investor Shares    Class R Shares 
Net Assets ($)    23,419,777    102,918,285 
Shares Outstanding    23,421,531    102,921,031 
Net Asset Value Per Share ($)    1.00    1.00 

See notes to financial statements.

The Fund 13

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005
Investment Income ($):     
Interest Income    1,330,279 
Expenses:     
Management fee—Note 3(a)    358,874 
Distribution fees (Investor Shares)—Note 3(b)    23,898 
Interest expense—Note 2    5,209 
Total Expenses    387,981 
Investment Income—Net, representing net increase     
in net assets resulting from operations    942,298 

See notes to financial statements.

14

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment Income—Net, representing net increase     
in net assets resulting from operations    942,298    1,320,963 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (135,679)    (127,486) 
Class R shares    (806,619)    (1,193,477) 
Total Dividends    (942,298)    (1,320,963) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold:         
Investor shares    28,900,299    66,325,162 
Class R shares    199,922,496    512,954,857 
Dividends reinvested:         
Investor shares    132,754    118,559 
Class R shares    98,592    149,592 
Cost of shares redeemed:         
Investor shares    (31,993,274)    (71,374,586) 
Class R shares    (221,940,836)    (637,509,901) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (24,879,969)    (129,336,317) 
Total Increase (Decrease) in Net Assets    (24,879,969)    (129,336,317) 
Net Assets ($):         
Beginning of Period    151,218,031    280,554,348 
End of Period    126,338,062    151,218,031 

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 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.

Six Months Ended                     
    April 30, 2005        Year Ended October 31,     
Investor Shares    (Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    1.00    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                         
Investment income—net    .006    .004    .004    .009    .026    .033 
Distributions:                         
Dividends from                         
investment income—net    (.006)    (.004)    (.004)    (.009)    (.026)    (.033) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    1.15a    .44    .44    .87    2.60    3.38 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .71a    .71    .70    .71    .71    .71 
Ratio of net investment income                     
to average net assets    1.14a    .43    .45    .86    2.64    3.35 
Net Assets, end of period                         
($ X 1,000)    23,420    26,380    31,311    31,902    26,955    39,694 

a Annualized.
See notes to financial statements.

16

Six Months Ended                     
    April 30, 2005        Year Ended October 31,     
Class R Shares    (Unaudited)    2004    2003    2002    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    1.00    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                         
Investment income—net    .007    .006    .006    .011    .028    .035 
Distributions:                         
Dividends from                         
investment income—net    (.007)    (.006)    (.006)    (.011)    (.028)    (.035) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    1.35a    .64    .65    1.07    2.78    3.59 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .51a    .51    .50    .51    .51    .51 
Ratio of net investment income                     
to average net assets    1.35a    .60    .65    1.07    2.72    3.52 
Net Assets, end of period                         
($ X 1,000)    102,918    124,838    249,243    317,102    341,092    264,215 

a Annualized 
See notes to financial statements. 

The Fund 17

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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. 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.

18

(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.

The Fund 19

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The fund has an unused capital loss carryover of $4,500 available for federal income tax purposes 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 distributions paid to shareholders during the fiscal year ended October 31, 2004 were all tax exempt income. The tax character of current year distributions will be determined at the end of the current fiscal year.

At April 30, 2005, 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 April 30, 2005 was approximately $341,100 with a related weighted average annualized interest rate of 3.08% .

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

20

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 compensate the Distributor for shareholder servicing activities and activities primarily intended to result in the sale of Investor shares. During the period ended April 30, 2005, Investor shares were charged $23,898 pursuant to the Plan.

The Fund 21

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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

The components of Due to The Dreyfus Corporation and affiliates consist of: management fees $56,954 and Rule 12b-1 distribution plan fees $3,543.

NOTE 4—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert

22

that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds

The Fund 23

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act, (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant

24

emphasis on comparisons to groups of comparable funds and iMoneyNet and Lipper averages, and discussed the results of the com-parisons.The Board members took into consideration that the fund's performance was generally higher than the average of each of the fund's comparison groups and iMoneyNet category for the one-, three-, five- and ten-year periods.

The Board members reviewed the range of management fees and expense ratios in each comparison group and discussed the fund's management fee and expense ratio, noting its "unitary fee" structure.They noted that the fund's expense ratio was below the average of each of the fund's comparison groups and higher than the Lipper category average.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") with similar investment objectives, policies and strategies as the fund and explained the nature of each Similar Fund and the differences, from the Manager's perspective, in managing and providing other services to the Similar Funds as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and the Similar Funds through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the "unitary fee" structure of the fund, the Board concluded that the Similar Funds had expense ratios that were lower than the fund's expense ratio.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund's management fee and expense ratio. The Board acknowledged that differences in fees paid by the Similar Funds seemed to be consistent with the management and other services provided.The Board noted that there were no separate accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.

The Fund 25

I N FO R M AT I O N A B O U T T H E R E V I E W A N D A P P R OVA L O F
T H E F U N D ' S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) ( c o n t i n u e d )

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, quality and extent of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's overall performance.

26

  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

The Fund 27

NOTES
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.

®

© 2005 Dreyfus Service Corporation 0324SA0405

Dreyfus Premier 
Balanced Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
20    Statement of Financial Futures 
21    Statement of Options Written 
22    Statement of Assets and Liabilities 
23    Statement of Operations 
24    Statement of Changes in Net Assets 
26    Financial Highlights 
31    Notes to Financial Statements 
43    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
FOR MORE INFORMATION
    Back Cover 

Dreyfus Premier 
Balanced Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus Premier Balanced Fund, covering the six-month period from November 1, 2004, through April 30, 2005. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio managers, L. Emerson Tuttle, who manages the equity component of the fund, and Catherine Powers, who manages the fixed-income component of the fund.

The six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

L. Emerson Tuttle and Catherine Powers, Portfolio Managers

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

For the six-month period ended April 30, 2005, the fund produced total returns of 1.89% for Class A shares, 1.51% for Class B shares, 1.42% for Class C shares, 2.02% for Class R shares and 1.76% 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 2.36% for the same period. Separately, the S&P 500 Index and the Lehman Aggregate Index provided total returns of 3.28% and 0.98%, respectively, for the same period.2

The stock and bond markets rose mildly over the reporting period on the strength of robust U.S. economic growth and low inflation, respectively. However, the stock market's gains were constrained by geopolitical and economic uncertainties, while the bond market was held back by rising interest rates. The fund's returns underperformed the fund's blended benchmark. While the fund's emphasis on stocks helped boost the fund's results, the benefits of our asset allocation strategy were largely offset by relative weakness among energy and health care stocks.

On a separate note, Catherine Powers became the fund's primary portfolio manager for the fixed-income portion of the fund's portfolio on January 31, 2005.

What is the fund's investment approach?

The fund seeks to outperform an unmanaged hybrid index,60% of which is the S&P 500 Index and 40% of which is the Lehman Aggregate Index.

The fund is a balanced fund, with an allocation under normal circumstances of approximately 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 valuation and volatility levels of stocks relative to bonds, and economic factors such as interest rates.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

We use a valuation model and fundamental analysis to select stocks based on:value,or how a stock is priced relative to its perceived intrinsic worth; growth, in this case the sustainability or growth of earnings or cash flow; and financial profile, which measures the financial health of the company.

In choosing bonds, we review economic, market and other factors, leading to valuations by sector, maturity and quality.The fund invests primarily in U.S. government securities, corporate bonds, mortgage-backed securities and asset-backed securities for its fixed-income port-folio.The dollar-weighted average maturity of the fund's fixed-income portfolio normally will not exceed 10 years.

What other factors influenced the fund's performance?

The fund's emphasis on stocks over bonds helped boost its returns during the reporting period. Among equities, energy stocks produced the market's strongest gains in response to historically high oil and gas prices. While the fund participated in the sector's gains, our disciplined investment approach led us to focus on conservative, large-cap consolidated oil and gas companies, such as Exxon Mobil and ConocoPhillips, which generated relatively modest returns.The fund also underperformed its equity benchmark in the health care sector, primarily due to its relatively light exposure to HMOs and other medical service providers that delivered particularly healthy gains.

On a more positive note, the fund achieved strong relative returns from the materials and processing and technology sectors.Top materials and processing holdings included E. I. du Pont de Nemours and Co. and Air Products and Chemicals, both of which climbed sharply in an improving cost and pricing environment. In the technology sector, one of the market's few declining sectors over the reporting period, the fund limited its losses with investments in semiconductor manufacturers, such as Texas Instruments and National Semiconductor.

The fund's bond portfolio generally kept pace with its fixed-income benchmark. Despite steadily rising interest rates, longer-term U.S. government securities held up relatively well, and corporate bonds rallied during the reporting period's first half. During the second half of the reporting period, however, corporate bonds lost value as concerns arose regarding the sustainability of economic growth and the potential impact of deteriorating fundamentals in the automotive industry.

In this environment, the fund benefited from its generally defensive fixed-income investment posture, including an underweighted position in investment-grade corporate bonds and, to a lesser extent, mortgage-backed securities. In addition, we successfully emphasized bonds

4

in maturity ranges that we believed would benefit as yield differences narrowed among securities of various maturities. However, the fund's small position in high-yield bonds, which are not part of the benchmark, hindered its relative performance.

What is the fund's current strategy?

With interest rates rising and the economy exhibiting a modest rate of growth, we have retained the fund's slightly greater emphasis on stocks than the blended benchmark.

We have continued to consolidate the fund's equity positions, adjusting sector weightings and reducing the number of holdings to place greater emphasis on the specific stocks we view most favorably. As of the end of the reporting period, the fund held overweighted positions in the health care sector, where we found attractive valuations among large-cap pharmaceutical stocks, and the energy sector, where we emphasized conservatively positioned integrated oil and gas companies. The fund held underweighted positions among financial companies, which may be vulnerable to rising interest rates, and the consumer staples sector, where relatively few companies offer the combination of growth and value characteristics we seek.

Just days after the end of the reporting period, the Federal Reserve Board raised short-term interest rates for their eighth consecutive time, and further increases are expected. Consequently, we have maintained the fund's relatively defensive fixed-income positioning until we find more attractively valued opportunities.

May 16, 2005

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, 2006, 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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.71    $ 9.44    $ 9.44    $ 4.46    $ 6.95 
Ending value (after expenses)    $1,018.90    $1,015.10    $1,014.20    $1,020.20    $1,017.60 

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 April 30, 2005 
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.71    $ 9.44    $ 9.44    $ 4.46    $ 6.95 
Ending value (after expenses)    $1,019.14    $1,015.42    $1,015.42    $1,020.38    $1,017.90 

† Expenses are equal to the fund's annualized expense ratio of 1.14% for Class A, 1.89% for Class B, 1.89% for Class C, .89% for Class R and 1.39% for Class T; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
Common Stocks—63.1%    Shares    Value ($) 
Consumer Discretionary—5.0%         
Advance Auto Parts    24,600 a,b    1,312,410 
Carnival    22,400    1,094,912 
Disney (Walt)    64,600    1,705,440 
eBay    15,600 a    494,988 
Federated Department Stores    14,000 b    805,000 
Hilton Hotels    76,100    1,661,263 
Home Depot    37,000    1,308,690 
Target    20,300    941,920 
        9,324,623 
Consumer Staples—5.3%         
Altria Group    36,800    2,391,632 
Estee Lauder Cos., Cl. A    8,100    311,121 
PepsiCo    48,100    2,676,284 
Procter & Gamble    42,700    2,312,205 
Wal-Mart Stores    46,400    2,187,296 
        9,878,538 
Energy—6.5%         
Anadarko Petroleum    18,600    1,358,544 
ChevronTexaco    52,500    2,730,000 
ConocoPhillips    11,300    1,184,805 
Exxon Mobil    107,500    6,130,725 
Sempra Energy    17,000 b    686,460 
        12,090,534 
Financial—11.2%         
American Express    67,100    3,536,170 
Bank of America    75,100    3,382,504 
Capital One Financial    10,700 b    758,523 
Chubb    23,200 b    1,897,296 
Citigroup    80,400    3,775,584 
Countrywide Financial    53,600    1,939,784 
Fidelity National Financial    20,000    642,200 
Goldman Sachs Group    23,700 b    2,530,923 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Financial (continued)         
Merrill Lynch    24,500    1,321,285 
Willis Group Holdings    32,500    1,087,125 
        20,871,394 
Health Care—11.2%         
Alcon    20,300    1,969,100 
Caremark Rx    25,400 a    1,017,270 
Fisher Scientific International    22,000 a    1,306,360 
Genzyme    31,200 a,b    1,828,632 
Johnson & Johnson    48,100    3,301,103 
Lilly(Eli) & Co.    13,900    812,733 
Medtronic    14,300 b    753,610 
Novartis, ADR    58,600    2,855,578 
PacifiCare Health Systems    16,200 a,b    968,112 
Pfizer    45,800    1,244,386 
Schering-Plough    97,200 b    2,028,564 
WellPoint    15,000    1,916,250 
Wyeth    15,400    692,076 
        20,693,774 
Industrial—6.6%         
Caterpillar    15,200 b    1,338,360 
Danaher    30,700    1,554,341 
Emerson Electric    23,600    1,479,012 
General Electric    138,900    5,028,180 
3M    8,100    619,407 
Tyco International    68,900    2,157,259 
        12,176,559 
Information Technology—9.7%         
Alliance Data Systems    26,500 a    1,070,600 
Altera    19,400 a    402,162 
Amdocs    27,800    742,538 
Cisco Systems    73,700 a    1,273,536 

8
Common Stocks (continued)    Shares    Value ($) 
Information Technology (continued)         
EMC    153,700 a    2,016,544 
Intel    68,100    1,601,712 
International Business Machines    41,300    3,154,494 
Microsoft    117,500    2,972,750 
Motorola    98,600    1,512,524 
National Semiconductor    31,400    599,112 
Texas Instruments    62,200 b    1,552,512 
VeriSign    38,700 a    1,024,002 
        17,922,486 
Materials—2.0%         
Air Products & Chemicals    28,700    1,685,551 
du Pont EI de Nemours    42,200    1,988,042 
        3,673,593 
Multimedia—.8%         
News, Cl. A    101,500    1,550,920 
Retail Trade—.3%         
Dollar General    27,900    567,765 
Telecommunication Services—1.8%         
SBC Communications    72,400    1,723,120 
Verizon Communications    43,200    1,546,560 
        3,269,680 
Transportation—1.2%         
Burlington Northern Santa Fe    48,400    2,335,300 
Utilities—1.5%         
Consolidated Edison    15,100 b    653,528 
PG&E    18,000 b    624,960 
Southern    43,700    1,439,915 
        2,718,403 
Total Common Stocks         
(cost $101,229,364)        117,073,569 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes—34.1%    Amount ($)    Value ($) 
Aerospace & Defense—.1%         
Northrop Grumman         
Notes, 7.125%, 2/15/2011    75,000    84,457 
Raytheon,         
Notes, 5.5%, 11/15/2012    65,000    68,241 
        152,698 
Agricultural—.2%         
Altria,         
Notes, 7%, 11/4/2013    270,000    298,647 
Asset-Backed Certificates-Automobile—1.0%         
Ford Credit Auto Owner Trust,         
Ser. 2005-B, Cl. B, 4.5%, 4/15/2010    195,000    196,168 
WFS Financial Owner Trust:         
Ser. 2003-3, Cl. A4, 3.25%, 5/20/2011    1,600,000    1,582,786 
Ser. 2005-32 Cl. B, 4.57%, 11/19/2012    105,000    105,541 
        1,884,495 
Asset-Backed Certificates-Credit Cards—.7%         
MBNA Master Credit Card Note Trust,         
Ser. 2002-C1, 6.8%, 7/15/2014    1,228,300    1,356,096 
Asset-Backed Certificates-         
Home Equity Loans—.1%         
Ameriquest Mortgage Securities,         
Ser. 2003-11, Cl.AF6, 5.14%, 1/25/2034    175,000    176,627 
Asset-Backed Certificates-         
Manufactured Housing—.1%         
Green Tree Financial,         
Ser. 1994-7, Cl. M1, 9.25%, 3/15/2020    200,000    216,313 
Asset-Backed Certificates-Other—1.4%         
Residential Asset Mortgage Products         
Ser. 2003-RS8, Cl. AI4, 4.223%, 10/25/2028    1,600,000    1,598,053 
Saxon Asset Securities Trust,         
Ser. 2004-2, Cl. AF2, 4.15%, 8/25/2035    1,081,000    1,074,152 
        2,672,205 
Auto Manufactering—.0%         
DaimlerChrysler,         
Notes, 8.5%, 1/18/2031    60,000    68,714 

10
    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Banking—.9%             
Chuo Mitsui Trust & Banking,             
Sub. Notes, 5.506%, 12/1/2049    100,000    c    95,773 
Northern Rock Plc,             
Notes, 5.6%, 4/29/2049    190,000    c    195,013 
Rabobank Capital Funding II,             
Bonds, 5.26%, 12/29/2049    490,000    c    494,488 
Union Planters,             
Notes, 4.375%, 12/1/2010    200,000        197,044 
Washington Mutual,             
Sub.Notes, 4.625%, 4/1/2014    355,000        342,416 
Wells Fargo & Co.,             
Sub. Notes, 6.375%, 8/1/2011    95,000        104,953 
Zions Bancorporation,             
Sub.Notes, 6%, 9/15/2015    140,000        149,478 
            1,579,165 
Beverages—.2%             
Pepsi Bottling,             
Sr. Notes, Ser. B, 7%, 3/1/2029    235,000        288,860 
Building & Construction—.0%             
American Standard,             
Sr. Notes, 7.375%, 2/1/2008    85,000        91,296 
Chemicals—.3%             
Lubrizol:             
Sr. Notes, 4.625%, 10/1/2009    145,000        143,855 
Debs., 6.5%, 10/1/2034    200,000        216,794 
RPM International,             
Sr. Notes, 4.45%, 10/15/2009    110,000    c    108,710 
Bonds, 6.25%, 12/15/2013    140,000        147,854 
            617,213 
Commercial Mortgage Pass Through Certificates.—.8%         
Calwest Industrial Trust             
Ser. 2002-CALW Cl.A, 6.127%, 2/15/2017    275,000    c    297,451 
Salomon Brothers Mortgage Securities VII,             
Ser. 2002-KEY2, Cl. A1, 3.222%, 3/18/2036    1,235,735        1,224,649 
            1,522,100 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Commercial Services—.2%         
Deluxe,         
Notes, Ser. B, 3.5%, 10/1/2007    55,000    53,815 
Erac USA Finance,         
Bonds, 5.6%, 5/1/2015    90,000 c    91,266 
RR Donnelley & Sons,         
Notes, 4.95%, 4/1/2014    200,000    197,232 
        342,313 
Diversified Financial Services—2.0%     
Amvescap,         
Notes, 5.375%, 2/27/2013    180,000    182,507 
Banco Nacional de Desenvolvimento Economico e Social,     
Notes, 2.832%, 6/16/2008    215,000 d    215,067 
Bear Stearns & Cos.,         
Notes, 4.5%, 10/28/2010    100,000    99,426 
Boeing Capital,         
Sr. Notes, 7.375%, 9/27/2010    160,000    182,203 
Countrywide Home Loans,         
Notes, Ser. L, 4%, 3/22/2011    380,000    364,379 
Export-Import Bank Of Korea,         
Sr. Notes, 4.5%, 8/12/2009    175,000    174,210 
Ford Motor Credit,         
Notes, 7%, 10/1/2013    140,000    126,189 
GMAC,         
Bonds, 8%, 11/1/2031    200,000    168,699 
Glencore Funding,         
Notes, 6%, 4/15/2014    225,000 c    213,477 
Goldman Sachs,         
Notes, 5.7%, 9/1/2012    210,000    220,492 
HSBC Finance,         
Bonds, 4.75%, 4/15/2010    105,000 b    105,712 
International Lease Finance,         
Notes, 4.75%, 1/13/2012    265,000    260,807 
Jefferies Group,         
Sr. Notes, 5.5%, 3/15/2016    210,000    211,094 
JPMorgan Chase & Co.,         
Sub. Notes, 5.125%, 9/15/2014    260,000    262,875 

12
    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Diversified Financial Services (continued)     
Morgan Stanley,         
Sub. Notes, 4.75%, 4/1/2014    575,000    556,759 
Pearson Dollar Finance,         
Notes, 4.7%, 6/1/2009    100,000 c    100,103 
SLM,         
Notes, 5.375%, 1/15/2013    200,000    210,511 
        3,654,510 
Electric—.7%         
Appalachian Power         
Bonds, 5.95%, 5/15/2033    75,000    78,427 
Consumers Energy,         
First Mortgage, 5%, 2/15/2012    235,000    235,948 
Dominion Resources,         
Sr. Notes, Ser. A, 7.195%, 9/15/2014    185,000    213,735 
FirstEnergy,         
Notes, Ser. C, 7.375%, 11/15/2031    60,000    70,937 
Nisource Finance,         
Gtd. Notes, 7.875%, 11/15/2010    115,000    132,941 
Public Service Company of Colorado,         
First Collateral Trust Bonds, Ser. 12,         
4.875%, 3/1/2013    541,000    546,116 
Sierra Pacific Power,         
Mortgage Notes, 6.25%, 4/15/2012    60,000    60,150 
        1,338,254 
Entertainment—.1%         
Mohegan Tribal Gaming Authority,         
Sr. Notes, 6.125%, 2/15/2013    110,000 b,c    108,900 
Environmental Control—.3%         
Republic Services,         
Notes, 6.086%, 3/15/2035    250,000 c    260,900 
USA Waste Services,         
Sr.Notes, 7%, 7/15/2028    175,000    199,985 
Waste Management,         
Notes, 6.875%, 5/15/2009    45,000    48,684 
        509,569 

The Fund 13

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        Principal         
Bonds and Notes (continued)        Amount ($)    Value ($) 
Food—.3%                 
Kroger,                 
Sr. Notes, 8%, 9/15/2029        165,000        201,941 
Safeway,                 
Notes, 4.8%, 7/16/2007        260,000        261,661 
Stater Brothers,                 
Sr. Notes, 8.125%, 6/15/2012        65,000        60,775 
                524,377 
Foreign Governments—2.2%                 
Australia Government,                 
Bonds, Ser. 121, 5.25%, 8/15/2010    AUD    1,800,000    e    1,405,971 
Deutsche Bundesrepublik:                 
Bonds, Ser. 98, 4.125%, 7/4/2008    EUR    285,000    e    292,297 
Bonds, Ser. 03, 4.5%, 1/4/2013    EUR    280,000    e    298,221 
Bonds, Ser. 03, 4.75%, 7/4/2034    EUR    495,000    e    549,431 
Russian Federation,                 
Sr. Notes, 10%, 6/26/2007        300,000    c    333,750 
Russian Government,                 
Notes, 12.75%, 6/24/2028        250,000        428,344 
South Africa Government,                 
Notes, 9.125%, 5/19/2009        230,000        266,225 
United Mexican States,                 
Notes, 9.875%, 2/1/2010        90,000    b    107,595 
Notes, 6.625%, 3/3/2015        370,000        392,755 
                4,074,589 
Forest Products & Paper—.4%                 
Celulosa Arauco y Constitucion SA:                 
Notes, 5.125%, 7/9/2013        115,000        113,123 
Notes, 5.625%, 4/20/2015        45,000    c    45,244 
International Paper,                 
Notes, 5.3%, 4/1/2015        210,000        208,156 
Georgia-Pacific:                 
Sr. Notes, 8.875%, 2/1/2010        100,000        111,500 
Sr. Notes, 8%, 1/15/2024        130,000        139,100 
Sappi Papier Holding,                 
Notes, 6.75%, 6/15/2012        100,000    c    108,814 
Westvaco,                 
Debs., 7.95%, 2/15/2031        85,000        107,993 
                833,930 
Gaming & Lodging—.0%                 
MGM Mirage,                 
Sr. Notes, 6%, 10/1/2009        65,000        64,431 

14

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Insurance—.3%         
Ace Capital Trust II,         
Bonds, 9.7%, 4/1/2030    75,000    101,565 
Assurant,         
Sr. Notes, 6.75%, 2/15/2034    125,000    138,590 
North Front Pass-Through Trust,         
Notes, 5.81%, 12/15/2024    290,000 c    297,941 
        538,096 
Manufacturing—.1%         
Bombardier,         
Notes, 6.3%, 5/1/2014    235,000 b,c    203,275 
Media—.7%         
British Sky Broadcasting,         
Notes, 6.875%, 2/23/2009    320,000    344,862 
Clear Channel Communications,         
Sr. Notes, 5%, 3/15/2012    175,000    165,938 
Comcast,         
Notes, 5.5%, 3/15/2011    200,000    207,400 
News America,         
Notes, 5.3%, 12/15/2014    180,000    180,638 
Time Warner,         
Notes, 6.75%, 4/15/2011    165,000    181,488 
Univision Communications,         
Notes, 7.85%, 7/15/2011    160,000    185,156 
        1,265,482 
Mining—.1%         
Teck Cominco,         
Notes, 7%, 9/15/2012    150,000    166,061 
Oil & Gas—.3%         
Amerada Hess,         
Notes, 7.3%, 8/15/2031    185,000    212,128 
PC Financial Partnership,         
Notes, 5%, 11/15/2014    145,000    145,346 
XTO Energy,         
Sr.Notes, 7.5%, 4/15/2012    155,000    178,948 
        536,422 
Oil & Gas Services—.1%         
Halliburton,         
Notes, 5.5%, 10/15/2010    110,000    114,622 

The Fund 15

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Packaging & Containers—.1%         
Sealed Air,         
Notes, 5.625%, 7/15/2013    100,000 c    101,963 
Pharmaceuticals—.1%         
American Home Products,         
Notes, 6.7%, 3/15/2011    95,000    105,895 
Medco Health Solutions,         
Sr. Notes, 7.25%, 8/15/2013    50,000    55,664 
        161,559 
Real Estate—.2%         
EOP Operating,         
Sr. Notes, 7%, 7/15/2011    195,000    215,678 
ERP Operating,         
Notes, 5.25%, 9/15/2014    190,000    190,970 
        406,648 
Real Estate Investment Trust—.5%         
Arden Realty,         
Notes, 5.25%, 3/1/2015    125,000    123,119 
Duke Realty,         
Sr. Notes, 5.875%, 8/15/2012    440,000    462,025 
Healthcare Realty Trust,         
Sr. Notes, 5.125%, 4/1/2014    155,000    150,717 
Mack-Cali Realty,         
Notes, 5.05%, 4/15/2010    70,000    70,718 
Simon Property Group,         
Notes, 4.875%, 8/15/2010    175,000    175,609 
        982,188 
Residential Mortgage         
Pass-Through Certificates—1.3%         
First Horizon Alternative Mortgage Securities I,         
Ser. 2004-FA1, Cl. A1, 6.25%, 10/25/2034    1,909,169    1,968,935 
Nomura Asset Acceptance,         
Ser. 2005-WF1, Cl. A, 5.18%, 3/1/2035    150,000    151,805 
Washington Mutual,         
Ser. 2005-AR4, Cl. A4B, 4.684%, 4/25/2035    200,000    198,813 
        2,319,553 

16
    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Retail—.1%         
May Department Stores         
Notes, 6.65%, 7/15/2024    165,000    177,559 
Semiconductors—.0%         
Freescale Semiconductor,         
Sr. Notes, 6.875%, 7/15/2011    45,000    46,350 
Telecommunications—.7%         
Alltel,         
Notes, 4.656%, 5/17/2007    90,000    90,808 
Cingular Wireless Services,         
Sr. Notes, 8.75%, 3/1/2031    75,000    102,594 
Deutsche Telekom International Finance,     
Bonds, 8.75%, 6/15/2030    210,000    282,244 
France Telecom,         
Notes, 8%, 3/1/2011    85,000    98,074 
Nextel Communications         
Sr. Notes, 5.95%, 3/15/2014    60,000    61,050 
SBC Communications,         
Notes, 5.625%, 6/15/2016    105,000    109,012 
Sprint Capital,         
Notes, 8.75%, 3/15/2032    265,000    357,437 
Verizon Global Funding,         
Notes, 7.75%, 6/15/2032    170,000    212,978 
        1,314,197 
Transportation—.1%         
Union Pacific,         
Notes, 3.875%, 2/15/2009    200,000    195,830 
U.S. Government—5.0%         
U.S. Treasury Bonds:         
6.25%, 5/15/2030    1,955,000    2,434,659 
U.S. Treasury Notes:         
1.25%, 5/31/2005    690,000    689,407 
3%, 12/31/2006    895,000    886,641 
U.S Treasury Inflation Protection Securities:     
3.375%, 1/15/2007    4,956,424 f    5,206,911 
        9,217,618 

The Fund 17

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies/Mortgage-Backed—12.4%     
Federal National Mortgage Association:         
Mortgage Backed:         
4.0%, 5/1/2010    402,186    397,409 
5%, 5/1/2018-6/15/2033    5,425,000 g    5,391,425 
5.5%, 5/1/2029-9/1/2034    6,774,226 g    6,873,818 
6.0%, 9/1/2034    1,090,284    1,120,578 
4.5%, 5/1/2018    3,675,000 g    3,635,935 
Government National Mortgage Association I:     
Mortgage Backed:         
4.01%, 7/16/2027    175,000    171,500 
4.38%, 8/16/2030    200,000    199,560 
5.5%, 4/15/2033-4/15/2034    2,858,707    2,919,601 
6%, 5/15/2028-12/15/2033    2,261,595    2,336,650 
        23,046,476 
Total Bonds and Notes         
(cost $63,520,587)        63,169,201 

    Face Amount     
    Covered by     
Options—.0%    Contracts ($)    Value ($) 
Call Options         
U.S. Treasury Notes,         
4%, 2/15/2015, May 2005 @ 96.9375    800,000    12,592 
Put Options:         
U.S. Treasury Notes,         
4%, 2/15/2015, June 2005 @ 95.328    865,000    908 
Total Options         
(cost $20,384)        13,500 

    Principal     
Short-Term Investments—.0%    Amount ($)    Value ($) 
U.S. Treasury Bills;         
2.49%, 6/16/2005         
(cost $24,915)    25,000 h    24,917 

Other Investments—10.8%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Preferred Plus Money Market Fund     
(cost $20,042,000)    20,042,000 i    20,042,000 

18

Investment of Cash Collateral         
for Securities Loaned—6.7%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Fund         
(cost $12,492,800)    12,492,800 i    12,492,800 
Total Investments (cost $197,330,050)    114.7%    212,815,987 
Liabilities, Less Cash and Receivables    (14.7%)    (27,291,488) 
Net Assets    100.0%    185,524,499 

a Non-income producing. 
b All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $12,324,650 and the total market value of the collateral held by fund is $12,492,800. 
c 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. At April 30, 2005 these securities 
amounted to $3,057,068 or 1.65% of the net assets. 
d Variable rate security—interest rate subject to periodic change. 
e Principal amount stated in U.S. Dollars unless otherwise noted. 
AUD—Austrailian Dollar 
EUR—Euro 
f Principal amount for accrual purposes is periodically adjusted based on changes in the Consumer Price Index 
g Purchase on a forward commitment basis. 
h Partially held by a broker in a segregated account for open financial futures. 
i Investments in affiliated money market mutual funds. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Short-Term/        Consumer Staples    5.3 
Money Market Investments    17.5    Consumer Discretionary    5.0 
U.S. Government Agencies/        U.S. Government    5.0 
Mortgage-Backed    12.4    Foreign Governments    2.2 
Financial    11.2    Other    22.1 
Health Care    11.2    Futures/Options/     
Information Technology    9.7    Forward Currency     
Industrials    6.6    Exchange Contracts    .0 
Energy    6.5        114.7 

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

The Fund 19

STATEMENT OF FINANCIAL FUTURES
April 30, 2005 (Unaudited)
                Unrealized 
        Market Value        Appreciation 
        Covered by        (Depreciation) 
    Contracts    Contracts ($)    Expiration    at 4/30/2005 ($) 
Financial Futures Long:                 
U.S. Treasury 5 year Note    18    1,952,156    June 2005    (2,894) 
Financial Futures Short:                 
U.S. Treasury 10 year Note    24    (2,674,125)    June 2005    1,236 
U.S. Treasury 30 year Bond    4    (459,375)    June 2005    (6,268) 
                (7,926) 

See notes to financial statements.

20
  STATEMENT OF OPTIONS WRITTEN
April 30, 2005 (Unaudited)
    Face Amount     
    Covered by     
    Contracts ($)    Value ($) 
Call Options         
U.S. Treasury Notes,         
4%, 2/15/2015, May 2005 @ $98.484    160,000    (10,448) 
Put Options:         
U.S. Treasury Notes,         
4%, 2/15/2015, June 2005 @ $93.531    173,000    (242) 
(premiums received 20,384)        (10,690) 

See notes to financial statements.

The Fund 21

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan valued at $12,324,650)—Note 1(c):         
Unaffiliated issuers    164,795,250    180,281,187 
Affiliated issuers    32,534,800    32,534,800 
Cash        44,147 
Receivable for investment securities sold        5,468,343 
Dividends and interest receivable        734,857 
Unrealized appreciation on forward currency         
currency exchange contracts—Note 4        84,059 
Receivable for shares of Capital Stock subscribed        24,534 
Receivable for futures variation margin—Note 4        1,858 
        219,173,785 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    210,197 
Payable for investment securities purchased        16,920,317 
Liability for securities on loan—Note 1(c)        12,492,800 
Payable for shares of Capital Stock redeemed        4,015,282 
Outstanding options written, at value (premiums         
received $20,384)—See Statement of Options Written    10,690 
        33,649,286 
Net Assets ($)        185,524,499 
Composition of Net Assets ($):         
Paid-in capital        380,618,102 
Accumulated undistributed investment income—net    777,959 
Accumulated net realized gain (loss) on investments    (211,436,344) 
Accumulated net unrealized appreciation (depreciation)     
on investments, foreign currency transactions and options transactions     
[including ($7,926) net unrealized (depreciation) on financial futures]    15,564,782 
Net Assets ($)        185,524,499 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    83,231,249    56,235,353    13,585,419    32,287,753    184,725 
Shares Outstanding    6,731,316    4,565,389    1,099,136    2,609,383    14,949 
Net Asset Value                     
Per Share ($)    12.36    12.32    12.36    12.37    12.36 

See notes to financial statements.

22

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends (net of $8,903 foreign taxes withheld at source):     
Unaffiliated issuers    1,948,291 
Affiliated issuers    107,884 
Interest    1,394,193 
Income from securities lending    3,943 
Total Income    3,454,311 
Expenses:     
Management fee—Note 3(a)    1,073,069 
Distribution and service fees—Note 3(b)    532,556 
Loan commitment fees—Note 2    1,093 
Total Expenses    1,606,718 
Less—reduction in management fee     
due to undertaking—Note 3(a)    (115,167) 
Net Expenses    1,491,551 
Investment Income—Net    1,962,760 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    15,909,486 
Net realized gain (loss) on financial futures    77,715 
Net realized gain (loss) on forward currency exchange contracts    (140,245) 
Net Realized Gain (Loss)    15,846,956 
Net unrealized appreciation (depreciation) on investments,     
foreign currency transactions and options transactions     
[including ($7,926) net unrealized (depreciation) on financial futures]    (12,776,949) 
Net Realized and Unrealized Gain (Loss) on Investments    3,070,007 
Net Increase in Net Assets Resulting from Operations    5,032,767 

See notes to financial statements.

The Fund 23

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    1,962,760    3,278,450 
Net realized gain (loss) on investments    15,846,956    16,242,094 
Net unrealized appreciation         
(depreciation) on investments    (12,776,949)    (4,559,373) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    5,032,767    14,961,171 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (1,204,545)    (1,593,781) 
Class B shares    (645,742)    (616,845) 
Class C shares    (139,529)    (122,547) 
Class R shares    (614,689)    (1,676,548) 
Class T shares    (2,794)    (3,622) 
Total Dividends    (2,607,299)    (4,013,343) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    19,487,801    28,703,307 
Class B shares    1,309,625    4,328,838 
Class C shares    670,186    2,035,294 
Class R shares    2,956,876    21,794,470 
Class T shares    7,163    85,353 
Dividends reinvested:         
Class A shares    776,236    1,038,390 
Class B shares    519,988    490,306 
Class C shares    79,865    70,625 
Class R shares    611,218    1,670,880 
Class T shares    2,606    3,347 
Cost of shares redeemed:         
Class A shares    (36,406,036)    (63,587,557) 
Class B shares    (24,580,805)    (33,934,852) 
Class C shares    (3,719,209)    (6,719,516) 
Class R shares    (26,452,288)    (71,578,657) 
Class T shares    (76,129)    (169,288) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (64,812,903)    (115,769,060) 
Total Increase (Decrease) in Net Assets    (62,387,435)    (104,821,232) 
Net Assets ($):         
Beginning of Period    247,911,934    352,733,166 
End of Period    185,524,499    247,911,934 
Undistributed investment income—net    777,959    1,422,498 

24

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Share Transactions:         
Class A a         
Shares sold    1,552,721    2,343,349 
Shares issued for dividends reinvested    61,905    86,481 
Shares redeemed    (2,887,817)    (5,228,334) 
Net Increase (Decrease) in Shares Outstanding    (1,273,191)    (2,798,504) 
Class B a         
Shares sold    104,627    353,483 
Shares issued for dividends reinvested    41,466    40,940 
Shares redeemed    (1,963,103)    (2,782,403) 
Net Increase (Decrease) in Shares Outstanding    (1,817,010)    (2,387,980) 
Class C         
Shares sold    53,053    165,695 
Shares issued for dividends reinvested    6,347    5,876 
Shares redeemed    (295,223)    (549,861) 
Net Increase (Decrease) in Shares Outstanding    (235,823)    (378,290) 
Class R         
Shares sold    235,267    1,750,591 
Shares issued for dividends reinvested    48,909    139,050 
Shares redeemed    (2,093,425)    (5,838,704) 
Net Increase (Decrease) in Shares Outstanding    (1,809,249)    (3,949,063) 
Class T         
Shares sold    570    7,011 
Shares issued for dividends reinvested    208    278 
Shares redeemed    (6,060)    (13,946) 
Net Increase (Decrease) in Shares Outstanding    (5,282)    (6,657) 

a    During the period ended April 30, 2005, 907,451 Class B shares representing $11,350,315 were automatically 
    converted to 905,198 Class A shares and 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. 
See notes to financial statements. 

The Fund 25

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.

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

26

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 27

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

28

a    Based on average shares outstanding at each month end. 
b    Not annualized. 
See notes to financial statements. 

The Fund 29

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

30

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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 31

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 available. Investments in registered investment companies are valued at their net asset value.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 portfolio 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. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange. Forward currency exchange contracts are valued at the forward rate.

32

Debt securities (excluding short-term investments (other than U.S. Treasury Bills) and financial futures) 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 fund 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. Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Options traded over-the-counter are priced at the mean between the bid and asked price.

The Fund 33

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

(b) Foreign currency transactions: Each portfolio does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the portfolios' books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities, resulting from changes in exchange rates. Such gains and losses are included with net realized and unrealized gain or loss on investments.

(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, 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 institu-tions.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 transac-tion.Although each security loaned is fully collateralized, the fund would

34

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.

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

(e) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net are declared and paid on a quarterly basis. Dividends from net realized capital gain, 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.

(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

The fund has an unused capital loss carryover of $226,015,598 available for federal income tax purposes 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.

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2004 was as follows: ordinary income $4,013,343. The tax character of current year distributions will be determined at the end of the current fiscal year.

The Fund 35

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2005, 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 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

36

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 had agreed from November 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 Manager has agreed from April 5, 2005 through April 4, 2006, or until the fund is merged into another Dreyfus-managed fund, whichever occurs sooner to waive receipt of a portion of the fund's management fee, in the amount of .15 of 1% of the value of the fund's average daily net assets. The reduction in management fee pursuant to the undertaking, amounted to $115,167 during the period ended April 30, 2005.

During the period ended April 30, 2005, the Distributor retained $3,318 and $37 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $93,411 and $4,648 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

The Fund 37

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 April 30, 2005, Class A, Class B, Class C and Class T shares were charged $115,478, $255,377, $57,038 and $262, respectively, pursuant to their respective Plans. During the period ended April 30, 2005 Class B, Class C and Class T shares were charged $85,126, $19,013 and $262, 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 $157,241, Rule 12b-1 distribution plan fees $61,880 and shareholder services plan fees $14,661, which are offset against an expense reimbursement currently in effect in the amount of $23,585.

(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 aggregate amount of purchases and sales of investment securities, excluding short-term securities, financial futures, forward currency exchange contracts and options transactions during the period ended April 30, 2005, amounted to $241,966,914 and $313,715,777, respec-

38

tively, of which $7,004,710 in purchases and $7,018,832 in sales were from dollar roll transactions.

The fund may enter into dollar roll transactions with respect to mortgage-backed securities. In a dollar roll transaction, the fund sells mortgage-backed securities to a financial institution and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date, at an agreed upon price.

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 market value of the contracts at the close of each day's trading.Accordingly, 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 April 30, 2005, are set forth in the Statement of Financial Futures.

The following summarizes the fund's call/put options written for the period ended April 30, 2005:

    Face Amount        Options Terminated 
    Covered by    Premiums        Net Realized 
Options Written:    Contracts ($)    Received ($)    Costs ($)    Gain (Loss) ($) 
Contracts outstanding                 
October 31, 2004    —    —    —    — 
Contracts written    330,000    20,384         
Contracts outstanding                 
April 30, 2005    330,000    20,384         

The fund may purchase and write (sell) put and call options in order to gain exposure to or to protect against changes in the market.

The Fund 39

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund would incur a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund would realize a loss, if the price of the financial instrument increases between those dates.

As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund would incur a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund would realize a loss, if the price of the financial instrument decreases between those dates.

The fund enters into forward currency exchange contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings and to settle foreign currency transac-tions.When executing forward currency exchange contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward currency exchange contracts, the fund would incur a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward currency exchange contracts, the fund would incur a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward currency exchange

40

contracts which is typically limited to the unrealized gain on each open contract. The following summarizes open forward currency exchange contracts at April 30, 2005:

    Foreign             
Forward Currency    Currency            Unrealized 
Exchange Contracts    Amounts    Proceeds ($)    Value ($)    Appreciation ($) 
Sales:                 
Australian dollar,                 
expiring 6/15/2005    1,810,000    1,419,782    1,408,361    11,421 
Euro                 
expiring 6/15/2005    1,190,000    1,605,120    1,532,482    72,638 
Total                84,059 

At April 30, 2005, accumulated net unrealized appreciation on investments was $15,485,937, consisting of $18,299,491 gross unrealized appreciation and $2,813,554 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the

The Fund 41

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

42

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act, (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and

The Fund 43

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S

INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

discussed the results of the comparisons.The Board members took into consideration that the fund's total return performance for the one-, three- and five-year periods was generally below the fund's comparison group and Lipper category average, and for the ten-year period was lower than the Lipper category average but higher than the comparison group average. Representatives of the Manager discussed with the Board members the Manager's efforts to improve the fund's total return performance, including the portfolio management changes in October 2004 and January 2005, when Emerson Tuttle became the primary portfolio manager of the asset allocation and equity portion of the fund, and Catherine Powers and Christopher Pellegrino became the portfolio managers of the fixed income portion of the fund.The Board also noted that the fund was unsuccessful in receiving necessary shareholder approval in connection with a proposal to merge the fund into another Dreyfus-managed fund and agreed with the Manager's intention to consider other appropriate courses of action.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category. They noted that the Manager's voluntary waiver of a portion of the management fee over the fund's short-term time period was not fully reflected in the annual fund's expense ratio because the waiver had not been in effect for the fund's full fiscal year.They also noted that the fund's expense ratio was slightly below the Lipper category average and higher than the comparison group average, with or without the waiver.The Manager and the Board members agreed that the Manager's voluntary waiver of a portion of the fund's management fee would be increased from 0.10% to 0.15% of the value of the fund's average daily net assets, and continued until April 4, 2006, or until the fund is merged into another Dreyfus-managed fund, whichever occurs sooner.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") with similar investment objectives, policies and strategies as the fund and explained

44

the nature of each Similar Fund and the differences, from the Manager's perspective, in managing and providing other services to the Similar Funds as compared to management of the fund.The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Funds through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio, with and without the Manager's voluntary waiver.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund's management fee and expense ratio.The Board acknowledged that differences in fees paid by the Similar Funds seemed to be consistent with the management and other services provided.The Board noted that there were no separate accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.

Analysis of Profitability and Economies of Scale. The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted the Manager's soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including

The Fund 45

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • While the Board was concerned about the fund's performance, the Board believed the Manager was seeking to improve it, not- ing, in particular, the changes in the portfolio managers.
  • The Board concluded, taking into account the increased volun- tary fee waiver, that the fee paid to the Manager by the fund was reasonable in light of considerations described above.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

46

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 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.

© 2005 Dreyfus Service Corporation 0342SA0405

Dreyfus Premier 
Large Company 
Stock Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
15    Financial Highlights 
20    Notes to Financial Statements 
29    Information About the Review and Approval of 
    the Fund's Investment Management Agreement 
    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 semiannual report for Dreyfus Premier Large Company Stock Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Sincerely,

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Sean P. Fitzgibbon, Portfolio Manager

How did Dreyfus Premier Large Company Stock Fund perform relative to its benchmark?

For the six-month period ended April 30, 2005, the fund produced total returns of 4.25% for Class A shares, 3.89% for Class B shares, 3.89% for Class C shares, 4.45% for Class R shares and 4.16% 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 3.28% .2

We attribute these results to steady U.S. and global economic growth, which led to improving corporate financial results and a generally favorable environment for stocks. These positive factors outweighed investors' concerns regarding high energy prices, rising short-term interest rates and ongoing geopolitical uncertainties.The fund outperformed its benchmark, primarily due to strong returns in the consumer discretionary and financial sectors.

What is the fund's investment approach?

The fund seeks capital appreciation.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.The fund invests in growth and value stocks, which are chosen through a disciplined investment process that combines computer-modeling techniques, fundamental analysis and risk management. The fund's investment process is designed to provide investors with investment exposure to sector weightings and risk characteristics generally similar to those of the S&P 500 Index.

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

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

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 100 stocks across nine economic sectors. Our 10 largest holdings accounted for approximately 22% of the portfolio, so that the fund's performance was not overly dependent on any one stock, but was determined by a large number of securities.

What other factors influenced the fund's performance?

The fund equaled or exceeded the benchmark's performance in virtually every industry group represented in the S&P 500 Index. In the consumer discretionary sector, the fund avoided the troubled automotive industry, focusing instead on travel- and leisure-related companies, such as cruise line operator Carnival, hotel operator and franchiser Marriott International and diversified entertainment company Walt Disney.The fund further enhanced the relative performance of its consumer discretionary holdings through the timely sale of its position in a major online retailer based on the stock's rising valuation. This transaction, which preceded a sharp decline in the stock's price, illustrates the importance of disciplined adherence to the fund's growth-and-value investment criteria.

The fund also outperformed the benchmark in the financial and health care sectors.Among financials, the fund de-emphasized banking stocks in light of their vulnerability to rising interest rates. Instead, the fund focused on asset management companies, such as Franklin Resources, and brokerage firms, such as Goldman Sachs Group and Lehman Brothers Holdings. In the health care area, the fund benefited from

4

strength among medical service providers, such as WellPoint, and increased exposure in 2005 to major pharmaceutical firms, such as Johnson & Johnson.

Of course, not every holding contributed to the fund's positive returns. Technology holdings, such as IBM, declined steeply in 2005, detracting from the fund's total returns. Finally, telecommunications provider Verizon Communications lost significant ground during the reporting period over concerns related to its bid to acquire MCI.

What is the fund's current strategy?

As of the end of the reporting period, we believe that the strong cyclical growth that characterized most of 2004 has begun to moderate. As a result, we are in the process of shifting our emphasis toward companies exhibiting stable growth characteristics. The fund held slightly overweighted positions among consumer discretionary stocks in the travel-, leisure- and media-related areas. This emphasis reflects our belief that these stocks are attractively valued and likely to benefit from a rebound in advertising spending.The fund held mildly underweighted exposure to consumer staples stocks, particularly in the beverage and food retailing areas, in light of challenging business trends.

May 16, 2005

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 through 
    October 31, 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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.32    $ 9.10    $ 9.10    $ 4.06    $ 6.58 
Ending value (after expenses)    $1,042.50    $1,038.90    $1,038.90    $1,044.50    $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 April 30, 2005 
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.26    $ 9.00    $ 9.00    $ 4.01    $ 6.51 
Ending value (after expenses)    $1,019.59    $1,015.87    $1,015.87    $1,020.83    $1,018.35 

† 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 Shares; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
Common Stocks—99.8%    Shares    Value ($) 
Consumer Discretionary—12.2%         
Advance Auto Parts    18,670 a    996,045 
Carnival    16,830 b    822,650 
Coach    32,620 a    874,216 
Comcast, Cl. A    25,450 a    817,200 
Dollar General    32,000    651,200 
Home Depot    20,880    738,526 
J. C. Penney    19,870    942,037 
Marriott International, Cl. A    7,410 b    464,978 
McDonald's    31,390    920,041 
Nordstrom    10,000 b    508,300 
Omnicom Group    5,700 b    472,530 
Time Warner    80,490 a    1,353,037 
Viacom, Cl. B    13,620    471,524 
Walt Disney    49,310    1,301,784 
        11,334,068 
Consumer Staples—8.8%         
Altria Group    17,500    1,137,325 
Bunge    9,780    555,504 
CVS    10,080    519,926 
Diageo, ADR    8,330    497,718 
Estee Lauder Cos., Cl. A    15,150    581,912 
Gillette    22,050    1,138,662 
Kellogg    10,930    491,304 
Procter & Gamble    32,340 b    1,751,211 
Wal-Mart Stores    30,380 b    1,432,113 
        8,105,675 
Energy Related—8.5%         
Anadarko Petroleum    4,390    320,646 
ChevronTexaco    12,360 b    642,720 
ConocoPhillips    14,350    1,504,598 
Devon Energy    19,200    867,264 
Exxon Mobil    57,650    3,287,780 
Transocean    12,140 a    562,932 
Weatherford International    13,690 a    713,934 
        7,899,874 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Financials—19.4%         
American Express    13,450    708,815 
American International Group    11,977    609,030 
Ameritrade Holding    44,210 a,b    463,321 
Axis Capital Holdings    8,860    235,676 
Bank of America    59,770    2,692,041 
CIT Group    22,600    910,328 
Chubb    16,420 b    1,342,828 
Citigroup    70,550 b    3,313,028 
Franklin Resources    21,170    1,453,956 
Freddie Mac    6,880    423,258 
Goldman Sachs Group    18,340 b    1,958,529 
Lehman Brothers Holdings    10,000 b    917,200 
Merrill Lynch    8,190 b    441,687 
Radian Group    15,240    677,113 
Wachovia    35,550 b    1,819,449 
        17,966,259 
Health Care—14.1%         
Aetna    6,640    487,177 
Bausch & Lomb    300    22,500 
Charles River Laboratories International    10,630 a    503,543 
Fisher Scientific International    16,110 a,b    956,612 
Genzyme    6,270 a,b    367,485 
Hospira    15,480 a    519,354 
Johnson & Johnson    26,360    1,809,087 
Laboratory Corporation of America Holdings    7,990 a    395,505 
McKesson    12,930    478,410 
Medco Health Solutions    5,600 a,b    285,432 
Pfizer    73,513    1,997,348 
Sanofi-Aventis, ADR    23,310 a    1,034,265 
Triad Hospitals    8,200 a    420,250 
Waters    12,640 a    500,923 
WebMD    65,010 a    617,595 
WellPoint    8,700 a    1,111,425 
Wyeth    34,700    1,559,418 
        13,066,329 
Industrials—12.3%         
Burlington Northern Santa Fe    11,540    556,805 

8

Common Stocks (continued)    Shares    Value ($) 
Industrials (continued)         
Danaher    20,370 b    1,031,333 
Deere & Co.    9,580 b    599,133 
Eaton    11,430 b    670,370 
FedEx    5,760    489,312 
General Dynamics    6,850    719,593 
General Electric    93,150    3,372,030 
Manpower    7,640    294,522 
Norfolk Southern    15,200 b    477,280 
PACCAR    5,050    342,895 
Rockwell Automation    11,780 b    544,589 
Textron    7,900 b    595,265 
Tyco International    31,150    975,307 
United Technologies    7,460 b    758,831 
        11,427,265 
Information Technology—14.1%         
Alliance Data Systems    10,600 a    428,240 
Altera    32,010 a    663,567 
Cisco Systems    60,650 a    1,048,032 
EMC    94,880 a    1,244,826 
Global Payments    8,720 b    564,707 
Intel    68,420    1,609,238 
International Business Machines    29,460 b    2,250,155 
Lucent Technologies (warrants)    1,196 a    574 
Microsoft    109,240    2,763,772 
Motorola    45,010    690,453 
Texas Instruments    49,340    1,231,526 
VeriSign    20,490 a,b    542,165 
        13,037,255 
Materials—3.0%         
Air Products & Chemicals    11,240    660,125 
Alcoa    32,290 b    937,056 
Dow Chemical    11,000 b    505,230 
E. I. du Pont de Nemours    8,490    399,964 
PPG Industries    4,400    297,220 
        2,799,595 
Other—1.4%         
Standard & Poor's Depository Receipts Trust Series 1    11,190 b    1,295,243 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Telecommunication Services—2.3%         
SBC Communications    29,370    699,006 
Verizon Communications    38,590    1,381,522 
        2,080,528 
Utilities—3.7%         
Constellation Energy Group    12,520    658,051 
Exelon    20,530 b    1,016,230 
PG&E    33,660 b    1,168,675 
Sempra Energy    14,140 b    570,973 
        3,413,929 
Total Common Stock         
(cost $80,391,170)        92,426,020 
 
Investment of Cash Collateral         
for Securities Loaned—23.4%         
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Plus Fund     
(cost $21,617,177)    21,617,177 c    21,617,177 
 
Total Investments (cost $102,008,347)    123.2%    114,043,197 
Liabilities, Less Cash and Receivables    (23.2%)    (21,442,395) 
Net Assets    100.0%    92,600,802 

ADR—American Depository Receipts. 
a Non-income producing. 
b All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $21,189,271 and the total market value of the collateral held by the fund is $21,617,177. 
c Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Money Market Investments    23.4    Consumer Discretionary    12.2 
Financials    19.4    Other    10.4 
Health Care    14.1    Consumer Staples    8.8 
Information Technology    14.1    Energy Related    8.5 
Industrials    12.3        123.2 

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

10

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2005 (Unaudited)

    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan, valued at $21,189,271)—Note 1(b):     
Unaffiliated issuers    80,391,170    92,426,020 
Affiliated issuers    21,617,177    21,617,177 
Cash        5,214 
Receivable for investment securities sold    972,848 
Dividends        87,599 
Receivable for shares of Capital Stock subscribed    6,966 
        115,115,824 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    108,126 
Liability for securities on loan        21,617,177 
Payable for investment securities purchased    542,281 
Payable for shares of Capital Stock redeemed    247,438 
        22,515,022 
Net Assets ($)        92,600,802 
Composition of Net Assets ($):         
Paid-in capital        138,102,293 
Accumulated distributions in excess investment income—net    (190,040) 
Accumulated net realized gain (loss) on investments    (57,346,301) 
Accumulated net unrealized appreciation     
(depreciation) on investments        12,034,850 
Net Assets ($)        92,600,802 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    36,256,811    37,349,028    9,094,686    9,256,457    643,820 
Shares Outstanding    1,824,313    1,963,099    477,908    460,863    32,787 
Net Asset Value                     
Per Share ($)    19.87    19.03    19.03    20.09    19.64 

See notes to financial statements.

The Fund 11

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends    1,121,200 
Interest    5,823 
Income from securities lending    383 
Total Income    1,127,406 
Expenses:     
Management fee—Note 3(a)    443,362 
Distribution and service fees—Note 3(b)    308,909 
Loan commitment fees—Note 2    598 
Total Expenses    752,869 
Less—reduction in management fee     
due to undertaking—Note 3(a)    (49,262) 
Net Expenses    703,607 
Investment Income—Net    423,799 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    6,783,893 
Net unrealized appreciation (depreciation) on investments    (2,982,085) 
Net Realized and Unrealized Gain (Loss) on Investments    3,801,808 
Net Increase in Net Assets Resulting from Operations    4,225,607 

See notes to financial statements.

12

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    423,799    409,662 
Net realized gain (loss) on investments    6,783,893    20,337,023 
Net unrealized appreciation         
(depreciation) on investments    (2,982,085)    (12,432,950) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    4,225,607    8,313,735 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (385,725)    (320,999) 
Class B shares    (331,291)    (46,771) 
Class C shares    (74,570)    (10,924) 
Class R shares    (121,684)    (55,405) 
Class T shares    (6,720)    (2,115) 
Total Dividends    (919,990)    (436,214) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    7,051,177    17,495,441 
Class B shares    533,488    1,488,743 
Class C shares    320,528    1,013,075 
Class R shares    27,388    124,048 
Class T shares    8,264    137,331 
Dividends reinvested:         
Class A shares    333,900    92,714 
Class B shares    294,164    40,897 
Class C shares    38,412    6,347 
Class R shares    98,131    42,321 
Class T shares    6,268    1,996 
Cost of shares redeemed:         
Class A shares    (5,324,124)    (86,545,097) 
Class B shares    (10,369,834)    (14,310,932) 
Class C shares    (1,880,653)    (4,485,029) 
Class R shares    (1,222,914)    (2,264,822) 
Class T shares    (51,861)    (258,433) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (10,137,666)    (87,421,400) 
Total Increase (Decrease) in Net Assets    (6,832,049)    (79,543,879) 
Net Assets ($):         
Beginning of Period    99,432,851    178,976,730 
End of Period    92,600,802    99,432,851 
Undistributed (distributions in excess)         
investment income—net    (190,040)    306,151 

The Fund 13

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Share Transactions:         
Class A a         
Shares sold    348,634    919,511 
Shares issued for dividends reinvested    16,591    5,085 
Shares redeemed    (262,993)    (4,595,891) 
Net Increase (Decrease) in Shares Outstanding    102,232    (3,671,295) 
Class B a         
Shares sold    27,521    81,079 
Shares issued for dividends reinvested    15,096    2,328 
Shares redeemed    (535,165)    (783,422) 
Net Increase (Decrease) in Shares Outstanding    (492,548)    (700,015) 
Class C         
Shares sold    16,411    55,655 
Shares issued for dividends reinvested    1,971    361 
Shares redeemed    (97,152)    (245,854) 
Net Increase (Decrease) in Shares Outstanding    (78,770)    (189,838) 
Class R         
Shares sold    1,337    6,521 
Shares issued for dividends reinvested    4,842    2,301 
Shares redeemed    (59,805)    (118,764) 
Net Increase (Decrease) in Shares Outstanding    (53,626)    (109,942) 
Class T         
Shares sold    414    7,522 
Shares issued for dividends reinvested    314    111 
Shares redeemed    (2,592)    (13,650) 
Net Increase (Decrease) in Shares Outstanding    (1,864)    (6,017) 

a    During the period ended April 30, 2005, 275,940 Class B shares representing $5,353,167 were automatically 
    converted to 264,504 Class A shares and 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. 
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 (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.

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
d    Not annualized. 
See notes to financial statements. 

The Fund 15

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

16

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 17

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Not annualized. 
See notes to financial statements. 

18

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
d    Not annualized. 
See notes to financial statements. 

The Fund 19

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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. 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 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.

20

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 available. Investments in registered investment companies are valued at their net asset value. 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 portfolio 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 21

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 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

22

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 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 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.

The fund has an unused capital loss carryover of $63,227,215 available for federal income tax purposes 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 was as follows: ordinary income $436,214. The tax character of current year distributions will be determined at the end of the current fiscal year.

The Fund 23

NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2005, 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 .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

24

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 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 until October 31, 2005.The reduction in management fee, pursuant to a waiver, amounted to $49,262 during the period ended April 30, 2005.

During the period ended April 30, 2005, the Distributor retained $2,200 and $26 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $52,579 and $344 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 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

The Fund 25

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 April 30, 2005, Class A, Class B, Class C and Class T shares were charged $44,545, $160,194, $36,814 and $843, respectively, pursuant to their respective Plans. Class B, Class C and Class T shares were charged $53,398, $12,272 and $843, 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 $69,169, Rule 12b-1 distribution plan fees $36,814, and shareholder services plan fees $9,851, which are offset against an expense reimbursement currently in effect in the amount of $7,708.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended April 30, 2005, amounted to $32,908,763 and $42,912,474, respectively.

At April 30, 2005, accumulated net unrealized appreciation on investments was $12,034,850, consisting of $13,594,921 gross unrealized appreciation and $1,560,071 gross unrealized depreciation.

At April 30, 2005, 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).

26

NOTE 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is

The Fund 27

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds

28

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and discussed the results of the comparisons. The

The Fund 29

I N FO R M AT I O N A B O U T T H E R E V I E W A N D A P P R OVA L O F

T H E F U N D ' S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) ( c o n t i n u e d )

Board members took into consideration that the fund's total return performance was below the fund's comparison group and Lipper category average for the three- and five-year periods, below the fund's comparison group for the one-year period, higher than the Lipper category average for the one-year period, and higher than the comparison group and Lipper category average for the ten-year period.They also took into consideration the fund's improved one-year total return performance, from the three- and five-year periods, achieving second quartile comparison group and Lipper rankings. Representatives of the Manager discussed with the Board members the Manager's efforts to improve the fund's total return performance, including the portfolio management change in October 2004, when Sean Fitzgibbon became the portfolio manager of the fund.The change to the fund's investment objective in October 2004 also was noted.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category. They noted that the Manager's voluntary waiver of a portion of the management fee over the fund's short-term time period was not fully reflected in the fund's annual expense ratio because the waiver had not been in effect for the fund's full fiscal year.They also noted that the fund's expense ratio was below the comparison group and Lipper category averages, with or without the voluntary waiver. Representatives of the Manager and the Board members agreed that the Manager's voluntary waiver of a portion of the fund's management fee would remain at 0.10% of the value of the fund's average daily net assets and continue until October 31, 2005.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts, or mutual funds for which the Manager or its affiliates serve as sub-investment adviser, with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of

30

each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board members concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio and the Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts have lower fees as a result of historical pricing arrangements and other Similar Accounts were mutual funds that were sub-advised but not administered by an affiliate of the Manager. The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee. The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the services provided.

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted the Manager's soft dollar arrangements with respect to trading the fund's portfolio.

The Fund 31

  I N FO R M AT I O N A B O U T T H E R E V I E W A N D A P P R OVA L O F
T H E F U N D ' S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) ( c o n t i n u e d )

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the Manager's efforts to improve the fund's total return performance, noting, in particular, the change in portfolio managers in October 2004.
  • The Board concluded, taking into account the existing voluntary fee waiver, that the fee paid to the Manager by the fund was rea- sonable in light of considerations described above.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

32

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 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.

© 2005 Dreyfus Service Corporation 0318SA0405

Dreyfus Premier 
Limited Term 
Income Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
19    Statement of Options Written 
20    Statement of Assets and Liabilities 
21    Statement of Operations 
22    Statement of Changes in Net Assets 
25    Financial Highlights 
29    Notes to Financial Statements 
41    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus Premier Limited Term Income Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for most fixed-income securities.Although the Federal Reserve Board began to raise short-term interest rates before the reporting period in June 2004, longer-term bonds have remained remarkably resilient through 2004. Nonetheless, the first four months of 2005 saw heightened bond market volatility as higher interest rates and renewed inflationary pressures took their toll on investor sentiment. These factors led to price erosion late in the reporting period among corporate bonds and, to a lesser extent, U.S. government securities.

Nonetheless, fixed-income securities have held up well compared to previous periods of rising short-term interest rates. Strong demand from domestic and foreign investors have supported prices of U.S. Treasury securities, and stronger balance sheets and better business conditions have bolstered prices of corporate bonds. In our view, the bond market's surprising strength represents yet another example of how a long-term investment perspective and a steady asset allocation strategy can benefit investors.As always, we encourage you to talk regularly with your financial advisor about the investment strategies that may be appropriate for you.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

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 six-month period ended April 30, 2005, the fund achieved total returns of 0.91% for Class A shares, 0.66% for Class B shares, 0.74% for Class C shares and 1.03% for Class R shares.1 The fund's benchmark, the Lehman Brothers U.S.Aggregate Index (the "Index"), produced a total return of 0.98% for the same period.2

Strong fixed-income performance over the final months of 2004 was largely offset by weakness during the first four months of 2005 as higher interest rates and intensifying inflation concerns eroded prices of U.S. government securities, and disappointing earnings from automotive companies drove corporate bonds lower. The fund's returns were in line with its benchmark, primarily due to the fund's yield-curve positioning strategy during the reporting period.

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, 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.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

What other factors influenced the fund's performance?

The fund was influenced over the reporting period by rising interest rates in a recovering economy, which eroded prices of short- and intermediate-term bonds. However, prices of longer-term fixed-income securities remained surprisingly stable as strong demand from overseas investors and, for much of the reporting period, low inflation expectations helped support prices. In addition, the Federal Reserve Board (the "Fed") was unusually candid in signaling its intentions as it moved away from its aggressively accommodative monetary policy of the past several years, helping to remove a degree of uncertainty from the market.

These factors helped support rallies in most areas of the U.S. bond market during the final two months of 2004. As political uncertainty eased after the November presidential election and the economy showed signs of more sustainable growth without sparking inflationary pressures, fixed-income investors generally responded favorably. Corporate bonds fared particularly well as default rates fell toward historical lows and business conditions improved.

Investor sentiment shifted substantially during the opening months of 2005 when surging energy prices and a gradually strengthening labor market fueled renewed inflation concerns. Investors worried that these factors might cause the Fed to raise short-term interest rates more and faster than they previously had expected, potentially hurting the more interest-rate-sensitive areas of the market. In March, disappointing earnings announcements from Ford and General Motors caused corporate bond prices to move sharply lower as investors worried that the debt of these major issuers might be downgraded to the high-yield category. In fact, one of the major credit rating agencies did so just days after the end of the reporting period.

As shorter-term yields rose and longer-term yields remained stable, yield differences narrowed beyond historical norms. We successfully positioned the fund for this change by adopting a "barbell" strategy in which Treasury bonds in the 25- to 30-year maturity range were

4

balanced by Treasury bills with maturities of less than one year, producing an average duration that was modestly shorter than that of the benchmark.To a lesser extent, the fund's relative performance also benefited from its overweighted position in investment-grade corporate bonds, its relatively light holdings of U.S. government agency debentures and its positions in high-quality commercial mortgages, asset-backed securities and Treasury Inflation Protected Securities ("TIPS").

The beneficial effects of these strategies were partly offset by the fund's relatively light exposure to mortgage-backed securities. Contrary to historical trends, mortgage-backed securities gained value during the reporting period as interest rates rose.

What is the fund's current strategy?

Although we expect short-term interest rates to continue to rise relative to longer-term bond yields, we believe that we may be nearing the end of this part of the cycle. Accordingly, we recently have begun to move away from our "barbell" yield curve positioning strategy while maintaining the fund's slightly shorter-than-average duration. We also have reduced the fund's exposure to corporate bonds toward the neutral range due to recent volatility in the credit markets. In our view, these are prudent strategies in today's evolving fixed-income markets.

May 16, 2005

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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005         
    Class A    Class B    Class C    Class R 
Expenses paid per $1,000 †    $ 4.23    $ 6.72    $ 6.72    $ 2.99 
Ending value (after expenses)    $1,009.10    $1,006.60    $1,007.40    $1,010.30 

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 April 30, 2005 
    Class A    Class B    Class C    Class R 
Expenses paid per $1,000 †    $ 4.26    $ 6.76    $ 6.76    $ 3.01 
Ending value (after expenses)    $1,020.58    $1,018.10    $1,018.10    $1,021.82 

† 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 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Principal         
Bonds and Notes—116.3%    Amount a    Value ($) 
Aerospace & Defense—.4%             
Raytheon,             
Notes, 5.375%, 2013    230,000        237,413 
Asset-Backed Ctfs./Auto Loans—5.3%             
Ford Credit Auto Owner Trust:             
Ser. 2004-A, Cl. C, 4.19%, 2009    100,000        99,594 
Ser. 2005-B, Cl. B, 4.64%, 2010    225,000        226,347 
Honda Auto Receivables Owner Trust,             
Ser. 2003-2, Cl. A3, 1.69%, 2007    65,396        65,018 
Hyundai Auto Receivables Trust,             
Ser. 2004-A, Cl. B, 3.46%, 2011    80,000        78,710 
National City Auto Receivables Trust,             
Ser. 2004-A, Cl. A3, 2.11%, 2008    140,000        138,063 
Nissan Auto Receivables Owner Trust:             
Ser. 2003-C, Cl. A4, 2.7%, 2007    350,000        346,015 
Ser. 2004-A, Cl. A3, 2.01%, 2007    170,000        167,513 
Ser. 2004-C, Cl. A3, 2.85%, 2007    60,000        59,295 
USAA Auto Owner Trust:             
Ser. 2004-1, Cl. A3, 2.06%, 2008    700,000        690,550 
Ser. 2004-2, Cl. A4, 3.58%, 2011    255,000        252,435 
Ser. 2004-3, Cl. A1, 2.337%, 2005    104,309        104,287 
Volkswagen Auto Loan Enhanced Trust,             
Ser. 2003-1, Cl. A3, 1.49%, 2007    148,347        147,152 
WFS Financial Owner Trust:             
Ser. 2004-3, Cl. B, 3.51%, 2012    140,365        138,772 
Ser. 2004-4, Cl. C, 3.21%, 2012    235,000        232,697 
Whole Auto Loan Trust,             
Ser. 2003-1, Cl. A4, 2.58%, 2010    180,000        176,669 
            2,923,117 
Asset-Backed Ctfs./Credit Cards—.5%             
Capital One Multi-Asset Execution Trust,             
Ser. 2004-C1, Cl. C1, 3.4%, 2009    250,000        246,866 
Asset-Backed Ctfs./Home Equity Loans—17.9%         
ACE Securities:             
Ser. 2005-HE1, Cl. A2A, 3.14%, 2035    472,500    b    472,816 
Ser. 2005-HE2, Cl. A2A, 3.11%, 2035    343,338    b    343,537 
Accredited Mortgage Loan Trust,             
Ser. 2005-1, Cl. A2A, 3.12%, 2035    485,373    b    485,728 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Bonds and Notes (continued)    Amount a    Value ($) 
Asset-Backed Ctfs./Home Equity Loans (continued)         
Ameriquest Mortgage Securities:             
Ser. 2003-8, Cl. AF3, 4.37%, 2033    65,000        64,991 
Ser. 2003-11, Cl. AF6, 5.14%, 2034    55,000        55,511 
Ser. 2005-R1, Cl. A3A, 3.12%, 2035    357,182    b    357,477 
Bayview Financial Acquisition Trust,             
Ser. 2005-B, Cl. 1A6, 5.208%, 2039    145,000        145,861 
Bear Stearns Asset Backed Securities I:             
Ser. 2005-HE2, Cl. 1A1, 3.13%, 2035    542,286    b    542,660 
Ser. 2005-HE3, Cl. 1A1, 3.1%, 2035    447,325    b    447,553 
CS First Boston Mortgage Securities,             
Ser. 2005-FIX1, Cl. A5, 4.9%, 2035    290,000        289,685 
Centex Home Equity,             
Ser. 2004-A, Cl. AF2, 2.67%, 2021    200,000        199,440 
Chec Loan Trust,             
Ser. 2004-2, Cl. A1, 3.19%, 2025    132,858    b    132,945 
Countrywide Asset-Backed Certificates:             
Ser. 2004-14, Cl. A1, 3.16%, 2035    219,637    b    219,828 
Ser. 2005-2, Cl. 2A1, 3.11%, 2035    535,502    b    535,812 
Fremont Home Loan Trust,             
Ser. 2005-1, Cl. 2A1, 3.12%, 2035    543,745    b    544,060 
Merrill Lynch Mortgage Investors:             
Ser. 2005-NC1, Cl. A2A, 3.13%, 2035    369,876    b    370,148 
Ser. 2005-WMC1, Cl. A2A, 3.12%, 2035    442,888    b    443,217 
Morgan Stanley ABS Capital I,             
Ser. 2005-WMC2, Cl. A2A, 3.1%, 2035    465,745    b    466,015 
Opteum Mortgage Acceptance,             
Ser. 2005-1, Cl. A2, 3.16%, 2035    405,136    b    405,119 
Park Place Securities,             
Ser. 2005-WHQ1, Cl. A3A, 3.13% 2035    538,899    b    539,439 
Residential Asset Mortgage Products:             
Ser. 2003-RS9, Cl. MI1, 5.8%, 2033    105,000        106,406 
Ser. 2004-RS8, Cl. AI2, 3.81%, 2026    120,000        119,591 
Ser. 2004-RS9, Cl. AI2, 3.675%, 2026    90,000        89,458 
Ser. 2004-RS12, Cl. AII1, 3.15%, 2027    243,674    b    243,916 
Ser. 2005-RS2, Cl. AII1, 3.13%, 2035    516,079    b    516,503 
Residential Asset Securities:             
Ser. 2002-KS4, Cl. AIIB, 3.27%, 2032    490,563    b    491,845 
Ser. 2004-KS10, Cl. AI1, 3.19%, 2013    138,916    b    139,033 
Ser. 2005-EMX1, Cl. AI1, 3.12%, 2035    529,576    b    529,931 

8
        Principal         
Bonds and Notes (continued)        Amount a    Value ($) 
Asset-Backed Ctfs./Home Equity Loans (continued)             
Specialty Underwriting & Residential Finance,                 
Ser. 2004-BC4, Cl. A2A, 3.17%, 2035        366,340    b    366,639 
Ser. 2005-BC1, Cl. A1A, 3.13%, 2035        167,271    b    167,368 
                9,832,532 
Asset-Backed Ctfs./Manufactured Housing—.4%             
Green Tree Financial,                 
Ser. 1994-7, Cl. M1, 9.25%, 2020        200,000        216,313 
Automotive—1.7%                 
DaimlerChrysler,                 
Notes, 7.3%, 2012        110,000        117,979 
ERAC USA Finance,                 
Notes, 6.7%, 2034        160,000    c    180,924 
Ford Motor,                 
Global Landmark Securities, 7.45%, 2031        55,000    d    45,311 
Ford Motor Credit,                 
Global Landmark Securities, 7.25%, 2011        230,000    d    212,855 
General Motors:                 
Debs., 8.375%, 2033        55,000    d    41,957 
Notes, 8.375%, 2033    EUR    75,000 d    73,325 
Nissan Motor Acceptance,                 
Notes, 4.625%, 2010        275,000    c,d    272,633 
                944,984 
Banking—3.5%                 
Bank of America,                 
Sub. Notes, 4.75%, 2013        220,000    d    220,154 
Citigroup,                 
Sub. Notes, 5%, 2014        295,000        297,499 
Glencore Funding,                 
Notes, 6%, 2014        180,000    c    170,781 
J.P. Morgan Chase & Co.,                 
Sub. Notes, 5.125%, 2014        220,000        222,433 
Jefferies,                 
Sr. Notes, 7.75%, 2012        250,000        286,265 
Nordea Bank,                 
Bonds, 5.424%, 2049        130,000    b,c    131,653 
SouthTrust,                 
Sub. Notes, 5.8%, 2014        100,000        106,168 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Bonds and Notes (continued)    Amount a    Value ($) 
Banking (continued)             
Wachovia,             
Sub. Notes, 5.25%, 2014    75,000        76,954 
Washington Mutual,             
Sub. Notes, 4.625%, 2014    315,000        303,834 
Zions Bancorp,             
Sub. Notes, 6%, 2015    100,000        106,770 
            1,922,511 
Broadcasting & Media—.8%             
Clear Channel Communications,             
Sr. Notes, 7.65%, 2010    175,000        189,130 
Comcast Cable Communications,             
Sr. Notes, 6.75%, 2011    250,000        274,730 
            463,860 
Commercial Mortgage Pass-Through Ctfs.—7.0%         
Bear Stearns Commercial Mortgage Securities:         
Ser. 1999-WF2, Cl. A1, 6.8%, 2031    101,257        104,419 
Ser. 2003-T12, Cl. A4, 4.68%, 2039    200,000        198,808 
Ser. 2004-PWR5, Cl. A3, 4.565%, 2042    110,000        109,629 
Ser. 2005-T18, Cl. A2, 4.556%, 2042    85,000        85,239 
CS First Boston Mortgage Securities,             
Ser. 2001-CF2, Cl. A4, 6.505%, 2034    200,000        218,254 
Calwest Industrial Trust,             
Ser. 2002-CALW, Cl. A, 6.127%, 2017    175,000    c    189,861 
Capco America Securitization,             
Ser. 1998-D7, Cl. A1B, 6.26%, 2030    700,000        741,790 
DLJ Commercial Mortgage:             
Ser. 1998-CF2, Cl. A1B, 6.24%, 2031    270,000        285,710 
Ser. 1999-CG1, Cl. A1B, 6.46%, 2032    370,000        394,816 
First Union-Lehman Brothers-Bank of America,         
Ser. 1998-C2, Cl. A2, 6.56%, 2035    300,000        316,630 
J.P. Morgan Commercial Mortgage Finance,             
Ser. 2000-C10, Cl. A2, 7.371%, 2032    290,000        323,129 
LB Commercial Conduit Mortgage Trust,             
Ser. 1999-C1, Cl. B, 6.93%, 2031    150,000        163,554 
Mach One Trust,             
Ser. 2004-1A, Cl. A1, 3.89%, 2040    208,786    c    205,745 
Morgan Stanley Capital I,             
Ser. 1998-WFI, Cl. A2, 6.55%, 2030    500,587        525,871 
            3,863,455 

10

    Principal     
Bonds and Notes (continued)    Amount a    Value ($) 
Commercial Services—.3%         
Aramark Services,         
Sr. Notes, 6.375%, 2008    135,000    141,920 
Drugs & Pharmaceuticals—.2%         
Wyeth,         
Notes, 5.5%, 2014    125,000    130,045 
Entertainment & Media—.6%         
Carnival,         
Notes, 3.75%, 2007    140,000    138,391 
News America,         
Debs., 8.875%, 2023    150,000    195,744 
        334,135 
Financial Services—4.3%         
Amvescap:         
Notes, 5.375%, 2014    150,000    149,682 
Sr. Notes, 5.9%, 2007    130,000    134,019 
Boeing Capital,         
Sr. Notes, 7.375%, 2010    175,000    199,285 
Countrywide Home Loans,         
Notes, 4.125%, 2009    175,000    171,483 
Deluxe,         
Notes, Ser. B, 3.5%, 2007    170,000    166,338 
Fondo LatinoAmericano De Reservas,     
Notes, 3%, 2006    145,000 c    143,681 
General Electric Capital,         
Notes, Ser. A, 6.75%, 2032    295,000    353,241 
HSBC Finance,         
Notes, 6.75%, 2011    265,000    293,605 
International Lease Finance,         
Notes, 4.75%, 2012    145,000    142,706 
Merrill Lynch & Co.,         
Notes, Ser. C, 5%, 2015    140,000 d    140,470 
Morgan Stanley,         
Sub. Notes, 4.75%, 2014    250,000    242,069 
Pearson Dollar Finance,         
Notes, 4.7%, 2009    200,000 c    200,206 
        2,336,785 
Food & Beverages—1.1%         
H.J. Heinz,         
Bonds, 6.189%, 2005    290,000 b,c    293,809 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

        Principal     
Bonds and Notes (continued)        Amount a    Value ($) 
Food & Beverages (continued)             
Kroger,             
Sr. Notes, 6.2%, 2012        200,000    214,088 
Safeway,             
Debs., 7.25%, 2031        100,000 d    110,711 
            618,608 
Foreign—3.1%             
Australian Government,             
Bonds, Ser. 121, 5.25%, 2010    AUD    800,000    622,642 
Russian Federation:             
Notes, 10%, 2007        485,000 c    539,563 
Notes, 12.75%, 2028        130,000    222,739 
United Mexican States,             
Notes, Ser. A, 6.625%, 2015        290,000 d    307,835 
            1,692,779 
Industrial—1.1%             
Oakmont Asset Trust,             
Notes, 4.514%, 2008        155,000 c    154,818 
Pitney Bowes,             
Notes, 5%, 2015        135,000    136,514 
R.R. Donnelley & Sons,             
Notes, 4.95%, 2014        125,000    123,270 
Republic Services,             
Notes, 6.086%, 2035        35,000 c    36,526 
Waste Management,             
Sr. Notes, 7%, 2028        125,000    142,847 
            593,975 
Insurance—.8%             
Assurant,             
Sr. Notes, 6.75%, 2034        35,000    38,805 
Cincinnati Financial,             
Sr. Notes, 6.125%, 2034        85,000    89,564 
Nationwide Mutual Insurance,             
Notes, 8.25%, 2031        190,000 c    243,540 
Prudential Financial,             
Sr. Notes, 4.104%, 2006        45,000    45,294 
            417,203 

12
    Principal     
Bonds and Notes (continued)    Amount a    Value ($) 
Paper Products—.4%         
Celulosa Arauco y Constitucion,         
Notes, 5.625%, 2015    115,000 c    115,624 
Westvaco,         
Debs., 7.95%, 2031    70,000    88,935 
        204,559 
Pipelines—.5%         
Buckeye Partners,         
Notes, 5.3%, 2014    145,000    146,552 
Enbridge Energy Partners,         
Sr. Notes, 6.3%, 2034    130,000    137,341 
        283,893 
Real Estate Investment Trusts—2.7%         
Arden Realty:         
Notes, 5.2%, 2011    140,000    140,968 
Notes, 5.25%, 2015    25,000    24,624 
Boston Properties,         
Sr. Notes, 6.25%, 2013    140,000    150,652 
Duke Realty,         
Sr. Notes, 5.25%, 2010    300,000    306,688 
EOP Operating,         
Bonds, 7.875%, 2031    250,000    307,830 
ERP Operating,         
Notes, 5.25%, 2014    60,000    60,306 
Healthcare Realty Trust,         
Sr. Notes, 5.125%, 2014    200,000    194,473 
Mack-Cali Realty:         
Notes, 5.05%, 2010    100,000    101,026 
Notes, 5.125%, 2015    70,000    70,102 
Simon Property,         
Notes, 5.625%, 2014    135,000 d    138,384 
        1,495,053 
Residential Mortgage Pass-Through Ctfs.—3.1%     
Banc of America Mortgage Securities,         
Ser. 2004-F, Cl. 2A7, 4.173%, 2034    348,361 b    344,552 
Citigroup Mortgage Loan Trust,         
Ser. 2005-WF1, Cl. A5, 5.01%, 2035    115,000    115,091 

The Fund 13

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal         
Bonds and Notes (continued)    Amount a    Value ($) 
Residential Mortgage Pass-Through Ctfs. (continued)         
Nomura Asset Acceptance:             
Ser. 2005-AP1, Cl. 2A5, 4.855%, 2035    285,000        283,503 
Ser. 2005-WF1, Cl. 2A5, 5.159%, 2035    105,000        106,263 
Structured Adjustable Rate Mortgage Loan,             
Ser. 2005-8XS, Cl. A1, 3.12%, 2035    411,892    b    411,892 
Washington Mutual:             
Ser. 2003-AR10, Cl. A6, 4.076%, 2033    125,000    b    123,971 
Ser. 2004-AR7, Cl. A6, 3.954%, 2034    150,000    b    147,382 
Ser. 2004-AR9, Cl. A7, 4.22%, 2034    195,000    b    193,600 
            1,726,254 
Retail—.1%             
CVS,             
Notes, 4%, 2009    60,000        59,112 
State Government—.1%             
State of Illinois,             
Bonds, 5.1%, 2033    60,000        59,091 
Telecommunications—5.4%             
ALLTEL,             
Notes, 4.656%, 2007    155,000        156,392 
Cingular Wireless,             
Sr. Notes, 7.125%, 2031    195,000        227,292 
Deutsche Telekom International Finance,             
Notes, 8.75%, 2030    180,000    b    241,924 
France Telecom,             
Notes, 8%, 2011    90,000    b    103,843 
SBC Communications:             
Bonds, 6.45%, 2034    190,000        205,442 
Notes, 5.625%, 2016    85,000        88,248 
Sprint Capital,             
Notes, 8.75%, 2032    325,000        438,367 
Verizon Global Funding,             
Notes, 7.75%, 2030    245,000        305,810 
Verizon Wireless Capital:             
Notes, 2.93%, 2005    1,000,000    b,c    999,903 
Notes, 5.375%, 2006    170,000        173,496 
            2,940,717 
Tobacco—.6%             
Altria,             
Notes, 7%, 2013    275,000        304,178 

14

    Principal     
Bonds and Notes (continued)    Amount a    Value ($) 
Transportation—.1%         
FedEx,         
Notes, 3.5%, 2009    70,000    67,861 
U.S. Government—9.3%         
U.S. Treasury Bonds,         
5.25%, 11/15/2028    1,150,000    1,254,753 
U.S. Treasury Inflation Protected Securities:     
3%, 7/15/2012    1,061,207 d,e    1,181,943 
3.375%, 1/15/2007    907,770 d,e    953,647 
U.S. Treasury Notes:         
4.25%, 8/15/2013    535,000 d    539,473 
5%, 2/15/2011    1,120,000 d    1,180,715 
        5,110,531 
U.S. Government Agencies—1.3%         
Federal Farm Credit Bank,         
2.375%, 10/2/2006    400,000    392,450 
Federal Home Loan Mortgage Corp.,         
Notes, 5.125%, 7/15/2012    300,000    313,146 
        705,596 
U.S. Government Agencies/Mortgage-Backed—40.9%     
Federal Home Loan Mortgage Corp.:         
4%, 10/1/2009    93,202    93,027 
4.5%, 10/1/2009    158,536    159,576 
5%, 6/1/2033    441,787    438,747 
6%, 6/1/2012-2/1/2014    56,129    58,260 
6.5%, 3/1/2011-9/1/2029    103,729    108,086 
7%, 3/1/2012    32,949    34,637 
7.5%, 12/1/2025-1/1/2031    67,915    73,062 
8%, 10/1/2019-10/1/2030    38,135    41,327 
8.5%, 7/1/2030    3,323    3,629 
9%, 8/1/2030    4,869    5,407 
Federal National Mortgage Association:     
4%, 5/1/2010    268,125    264,939 
4.5%, 6/1/2010-8/1/2018    1,012,969    1,006,096 
5%    5,675,000 f    5,650,767 
5%, 7/1/2011-9/1/2033    1,110,253    1,108,202 
5.5%    5,300,000 f    5,384,304 
5.5%, 12/1/2024-1/1/2034    1,693,234    1,712,257 
6%    1,695,000 f    1,740,545 
6%, 9/1/2013-5/1/2033    809,192    834,318 
6.5%    100,000 f    104,000 

The Fund 15

STATEMENT OF INVESTMENTS (Unaudited) (continued)

    Principal     
Bonds and Notes (continued)    Amount a    Value ($) 
U.S. Government Agencies/Mortgage-Backed (continued)     
Federal National Mortgage Association (continued):     
7%, 7/1/2015-5/1/2031    65,907    69,688 
7.5%, 3/1/2012-3/1/2031    84,201    89,590 
8%, 5/1/2013-3/1/2031    44,600    48,250 
Grantor Trust,         
Ser. 2001-T11, Cl. B, 5.503%, 9/25/2011    210,000    222,513 
Government National Mortgage Association I:         
6%, 1/15/2029    70,661    73,067 
6.5%, 9/15/2008-6/15/2029    115,709    121,355 
7%, 8/15/2025-9/15/2031    93,193    98,969 
7.5%, 12/15/2026-1/15/2031    36,241    38,965 
8%, 1/15/2030-10/15/2030    36,685    39,780 
8.5%, 4/15/2025-9/15/2030    14,400    15,873 
9%, 10/15/2027    11,874    13,151 
9.5%, 2/15/2025    12,163    13,554 
Ser. 2003-64, Cl. A, 3.089%, 4/16/2024    136,321    134,423 
Ser. 2004-9, Cl. A, 3.36%, 8/16/2022    250,423    243,633 
Ser. 2004-23, Cl. B, 2.946%, 3/16/2019    250,000    240,811 
Ser. 2004-25, Cl. AC, 3.377%, 1/16/2023    350,000    340,996 
Ser. 2004-43, Cl. A, 2.822%, 12/16/2019    287,570    277,931 
Ser. 2004-51, Cl. A, 4.145%, 2/16/2018    360,503    358,858 
Ser. 2004-57, Cl. A, 3.022%, 1/16/2019    178,422    173,368 
Ser. 2004-67, Cl. A, 3.648%, 9/16/2017    289,531    285,299 
Ser. 2004-77, Cl. A, 3.402%, 3/16/2020    266,030    259,950 
Ser. 2004-97, Cl. AB, 3.084%, 4/16/2022    256,164    247,824 
Ser. 2005-09, Cl. A, 4.026%, 5/16/2022    124,633    123,430 
Ser. 2005-12, Cl. A, 4.044%, 5/16/2021    99,676    98,931 
        22,451,395 
Utilities/Gas & Electric—2.8%         
Alabama Power,         
Sr. Notes, Ser. X, 3.125%, 2008    140,000    135,371 
Consolidated Edison Company of New York,         
Debs., Ser. 2002-B, 4.875%, 2013    200,000    201,873 
Duke Energy ,         
Sr. Notes, 5.625%, 2012    50,000    52,404 
Niagara Mohawk Power,         
First Mortgage Bonds, 7.75%, 2006    300,000    312,229 

16
    Principal     
Bonds and Notes (continued)    Amount a    Value ($) 
Utilities/Gas & Electric (continued)         
Ohio Power,         
Sr. Notes, Ser, G, 6.6%, 2033    20,000    22,973 
Pacific Gas & Electric,         
First Mortgage Bonds, 6.05%, 2034    100,000    107,231 
Peco Energy,         
First Mortgage Bonds, 3.5%, 2008    135,000    132,424 
Pepco,         
Notes, 5.5%, 2007    285,000    291,258 
Southern California Edison,         
First Mortgage Bonds, 5%, 2014    70,000    70,991 
Virginia Electric & Power,         
Sr. Notes, 4.75%, 2013    215,000    213,904 
        1,540,658 
Total Bonds and Notes         
(cost $63,806,279)        63,865,399 

    Face Amount     
    Covered by     
Options—.0%    Contracts ($)    Value ($) 
Call Options—.0%         
U.S. Treasury Notes, 4%, 2/15/2015         
May 2005 @ 96.9375    550,000    8,657 
Put Options—.0%         
U.S. Treasury Notes, 4%, 2/15/2015         
June 2005 @ 95.328125    620,000    651 
Total Options         
(cost $14,358)        9,308 

    Principal     
Short-Term Investments—5.1%    Amount a    Value ($) 
Agency Discount Notes;         
Federal National Mortgage Association:         
2.63%, 5/12/2005    1,740,000    1,738,601 
3.03%, 5/12/2005    1,065,000    1,064,138 
Total Short-Term Investments         
(cost $2,802,739)        2,802,739 

The Fund 17

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Investment of Cash Collateral         
for Securities Loaned—7.8%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Plus Fund         
(cost $4,311,837)    4,311,837 g    4,311,837 
Total Investments ($70,935,213)    129.2%    70,989,283 
Liabilities, Less Cash and Receivables    (29.2%)    (16,051,493) 
Net Assets    100.0%    54,937,790 

a Principal amount stated in U.S. Dollars unless otherwise noted. 
AUD—Australian Dollar 
EUR—Euro 
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. At April 30, 2005, these 
securities amounted to $3,879,267 or 7.1% of net assets. 
d All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $5,100,553 and the total market value of the collateral held by the fund is $5,263,759, consisting of cash 
collateral of $4,311,837 and U.S. Government and agency securities valued at $951,922. 
e Principal amount for accrual purposes is periodically adjusted based on changes in the Consumer Price Index. 
f Purchased on a forward commitment basis. 
g Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
U.S. Government/Agency Securities    51.5    Foreign    3.1 
Mortgage/Asset-Backed    34.2    State Government    .1 
Corporate Bonds    27.4    Options/Swaps/Forward Currency 
Short-Term/        Exchange Contracts    .0 
Money Market Investments    12.9        129.2 

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

18

  STATEMENT OF OPTIONS WRITTEN
April 30, 2005 (Unaudited)
    Face Amount     
    Covered by     
    Contracts ($)    Value ($) 
Call Options;         
U.S. Treasury Notes, 4%, 2/15/2015         
May 2005 @ 98.484375         
    1,100,000    7,183 
Put Options;         
U.S. Treasury Notes, 4%, 2/15/2015         
June 2005 @ 93.53125    1,240,000    174 
(Premiums received $14,358)        7,357 

See notes to financial statements.

The Fund 19

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan, valued at $5,100,553)—Note 1(c):     
Unaffiliated issuers    66,623,376    66,677,446 
Affiliated issuers    4,311,837    4,311,837 
Cash        714,387 
Receivable for investment securities sold        763,468 
Interest receivable        400,138 
Receivable for shares of Capital Stock subscribed    153,396 
Unrealized appreciation on forward         
currency exchange contracts—Note 4        3,349 
Unrealized appreciation on swap contracts—Note 4    464 
        73,024,485 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    45,276 
Payable for investment securities purchased    13,663,139 
Liability for securities on loan—Note 1(c)        4,311,837 
Payable for shares of Capital Stock redeemed    57,432 
Outstanding options written, at value (premiums     
received $14,358)—See Statement of Options Written    7,357 
Unrealized depreciation on forward         
currency exchange contracts—Note 4        1,040 
Unrealized depreciation on swap contracts—Note 4    614 
        18,086,695 
Net Assets ($)        54,937,790 
Composition of Net Assets ($):         
Paid-in capital        54,439,181 
Accumulated distributions in excess of investment income—net    (31,851) 
Accumulated net realized gain (loss) on investments    467,350 
Accumulated net unrealized appreciation (depreciation) on investments,     
foreign currency transactions, options transactions and swap transactions    63,110 
Net Assets ($)        54,937,790 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R 
Net Assets ($)    19,843,684    14,447,539    8,524,656    12,121,911 
Shares Outstanding    1,747,610    1,268,491    759,073    1,067,726 
Net Asset Value Per Share ($)    11.35    11.39    11.23    11.35 

See notes to financial statements.

20

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Interest    1,147,580 
Income from securities lending    1,686 
Total Income    1,149,266 
Expenses:     
Management fee—Note 3(a)    168,997 
Distribution and service fees—Note 3(b)    116,074 
Loan commitment fees—Note 2    275 
Total Expenses    285,346 
Investment Income—Net    863,920 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments and foreign currency transactions    451,051 
Net realized gain (loss) on forward currency exchange contracts    45,986 
Net Realized Gain (Loss)    497,037 
Net unrealized appreciation (depreciation) on investments, foreign     
currency transactions, options transactions and swap transactions    (877,821) 
Net Realized and Unrealized Gain (Loss) on Investments    (380,784) 
Net Increase in Net Assets Resulting from Operations    483,136 

See notes to financial statements.

The Fund 21

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net    863,920    2,065,525 
Net realized gain (loss) on investments    497,037    712,481 
Net unrealized appreciation         
(depreciation) on investments    (877,821)    97,509 
Net Increase (Decrease) in Net Assets     
Resulting from Operations    483,136    2,875,515 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (321,833)    (711,730) 
Class B shares    (221,238)    (614,499) 
Class C shares    (127,383)    (319,832) 
Class R shares    (225,317)    (502,819) 
Net realized gain on investments:         
Class A shares    (222,110)    (16,325) 
Class B shares    (189,155)    (17,993) 
Class C shares    (108,849)    (8,692) 
Class R shares    (151,727)    (10,781) 
Total Dividends    (1,567,612)    (2,202,671) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    3,516,418    8,190,208 
Class B shares    708,100    2,388,335 
Class C shares    798,864    2,895,250 
Class R shares    130,695    749,859 

22
    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Stock Transactions ($) (continued):     
Dividends reinvested:         
Class A shares    306,870    401,442 
Class B shares    272,290    369,962 
Class C shares    165,887    211,766 
Class R shares    220,423    300,338 
Cost of shares redeemed:         
Class A shares    (2,915,183)    (9,666,106) 
Class B shares    (3,444,838)    (10,632,969) 
Class C shares    (2,104,032)    (4,475,397) 
Class R shares    (1,192,391)    (2,715,197) 
Increase (Decrease) in Net Assets from         
Capital Stock Transactions    (3,536,897)    (11,982,509) 
Total Increase (Decrease) in Net Assets    (4,621,373)    (11,309,665) 
Net Assets ($):         
Beginning of Period    59,559,163    70,868,828 
End of Period    54,937,790    59,559,163 
Undistributed (distributions in excess of)         
investment income—net    (31,851)    — 

The Fund 23

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Share Transactions:         
Class A a         
Shares sold    308,448    714,540 
Shares issued for dividends reinvested    26,963    35,025 
Shares redeemed    (255,427)    (845,846) 
Net Increase (Decrease) in Shares Outstanding    79,984    (96,281) 
Class B a         
Shares sold    62,323    209,271 
Shares issued for dividends reinvested    23,852    32,168 
Shares redeemed    (301,813)    (925,209) 
Net Increase (Decrease) in Shares Outstanding    (215,638)    (683,770) 
Class C         
Shares sold    70,991    255,318 
Shares issued for dividends reinvested    14,737    18,675 
Shares redeemed    (186,252)    (395,804) 
Net Increase (Decrease) in Shares Outstanding    (100,524)    (121,811) 
Class R         
Shares sold    11,480    65,211 
Shares issued for dividends reinvested    19,369    26,203 
Shares redeemed    (104,449)    (236,382) 
Net Increase (Decrease) in Shares Outstanding    (73,600)    (144,968) 

a    During the period ended April 30, 2005, 113,135 Class B shares representing $1,290,027 were automatically 
    converted to 113,481 Class A shares and 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. 
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.

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 these changes 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 Not annualized. 
f Annualized. 
g The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended April 30, 2005 and 
October 31, 2004 were 104.96% and 144.28%, respectively. 

See notes to financial statements.

The Fund 25

FINANCIAL HIGHLIGHTS (continued)

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 these changes 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 Not annualized. 
f Annualized. 
g The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended April 30, 2005 and 
October 31, 2004 were 104.96% and 144.28%, respectively. 

See notes to financial statements.

26

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 these changes 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 Not annualized. 
f Annualized. 
g The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended April 30, 2005 and 
October 31, 2004 were 104.96% and 144.28%, respectively. 

See notes to financial statements.

The Fund 27

FINANCIAL HIGHLIGHTS (continued)

Six Months Ended                     
April 30, 2005        Year Ended October 31,     
Class R Shares    (Unaudited)    2004    2003    2002 a    2001    2000 
Per Share Data ($):                         
Net asset value,                         
beginning of period    11.57    11.44    11.44    11.46    10.64    10.61 
Investment Operations:                         
Investment income—net    .20b    .41b    .39b    .54b    .63    .64 
Net realized and unrealized                         
gain (loss) on investments    (.09)    .15    .02    (.03)    .82    .03 
Total from Investment Operations    .11    .56    .41    .51    1.45    .67 
Distributions:                         
Dividends from                         
investment income—net    (.20)    (.42)    (.41)    (.53)    (.63)    (.64) 
Dividends from net realized                         
gain on investments    (.13)    (.01)    —    —    —    — 
Total Distributions    (.33)    (.43)    (.41)    (.53)    (.63)    (.64) 
Net asset value, end of period    11.35    11.57    11.44    11.44    11.46    10.64 
Total Return (%)    1.03c    5.02    3.61    4.70    14.02    6.59 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets    .60d    .60    .60    .60    .60    .60 
Ratio of net investment income                         
to average net assets    3.48d    3.57    3.37    4.80    5.77    6.12 
Portfolio Turnover Rate    192.64c,e 202.27e    173.68    136.77    65.05    72.30 
Net Assets, end of period                         
($ x 1,000)    12,122    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 these changes in presentation. 
b    Based on average shares outstanding at each month end. 
c    Not annualized. 
d    Annualized. 
e    The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended April 30, 2005 and 
    October 31, 2004 were 104.96% and 144.28%, respectively. 
See notes to financial statements. 

28

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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. Income, expenses (other than expenses attributable to a specific class),

The Fund 29

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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), financial futures, options, swaps and forward currency exchange contracts), 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 securities of the issuer

30

or comparable issuers. Short-term investments, excluding U.S.Treasury Bills, are carried at amortized cost, which approximates value. Investments in registered investment companies are valued at their net asset value. Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Options traded over-the-counter are priced at the mean between the bid and asked price. Swap transactions are valued daily based upon future cash flows and other factors, such as interest rates and underlying securities. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange. Forward currency exchange contracts are valued at the forward rate.

(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities, resulting from changes in exchange rates. Such gains and losses are included with net realized and unrealized gain or loss on investments.

(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

The Fund 31

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 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.

32

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

(e) 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.

(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

The tax character of distributions paid to shareholders during the fiscal year ended October 31,2004 was as follows:ordinary income $2,148,880 and long-term capital gains $53,791. The tax character of current year distributions will be determined at the end of the current fiscal year.

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 April 30, 2005, the fund did not borrow under the Facility.

The Fund 33

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 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 por-

34

tion 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 April 30, 2005, the Distributor retained $11,418 from commissions earned on sales of the fund's Class A shares and $37,777 and $866 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 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 April 30, 2005, Class A, Class B and Class C shares were charged $24,037, $38,934 and $22,424, respectively, pursuant to their respective Plans. During the period ended April 30, 2005, Class B and Class C shares were charged $19,467 and $11,212, 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 $27,123, Rule 12b-1 distribution plan fees $13,449 and service plan fees $4,704.

The Fund 35

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities, options transactions, forward currency exchange contracts and swap transactions during the period ended April 30, 2005, amounted to $122,631,438 and $116,482,620, respectively, of which $52,884,296 in purchases and $53,015,388 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.

The following summarizes the fund's call/put options written for the period ended April 30, 2005:

    Face Amount        Options Terminated 
    Covered by    Premiums    Net Realized 
Options Written:    Contracts ($)    Received ($)    Cost ($) Gain (Loss) ($) 
Contracts outstanding             
October 31, 2004    —    —     
Contracts written    2,340,000    14,358     
Contracts outstanding         
April 30, 2005    2,340,000    14,358     

The fund may purchase and write (sell) put and call options in order to gain exposure to or to protect against changes in the market.

As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund would incur a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund would realize a loss, if the price of the financial instrument increases between those dates.

36

As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund would incur a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund would realize a loss, if the price of the financial instrument decreases between those dates.

The fund enters into forward currency exchange contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings and to settle foreign currency transactions. When executing forward currency exchange contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future.With respect to sales of forward currency exchange contracts, the fund would incur a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward currency exchange contracts, the fund would incur a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward currency exchange contracts which is typically limited to the unrealized gain on each open contract. The following summarizes open forward currency exchange contracts at April 30, 2005:

    Foreign            Unrealized 
Forward Currency    Currency            Appreciation 
Exchange Contracts    Amounts    Proceeds ($)    Value ($)    (Depreciation) ($) 
Sales:                 
Australian Dollar,                 
expiring 6/15/2005    800,000    621,440    622,480    (1,040) 
Euro, expiring                 
6/15/2005    90,000    119,251    115,902    3,349 
Total                2,309 

The Fund 37

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The fund may enter into swap agreements to exchange the interest rate on, or return generated by, one nominal instrument for the return generated by another nominal instrument.

The fund accrues for the interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation (depreciation) of swap contracts in the Statement of Assets and Liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain (loss) on swaps, in addition to realized gain (loss) recorded upon the termination of swaps contracts in the Statement of Operations. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation (depreciation) on investments.

Credit default swaps involve commitments to pay or receive a fixed interest rate in exchange for payment if a credit event affecting a third party (the referenced company) occurs. Credit events may include a failure to pay interest or principal, bankruptcy, or restructuring. For those credit default swaps in which the fund is receiving a fixed rate, the fund is providing credits protection on the underlying instrument. The maximum payouts for these contracts are limited to the notional amount of each swap.The following summarizes credit default swaps entered into by the fund at April 30, 2005:

38

Risks may arise upon entering into these agreements from the potential inability of the counterparties to meet the terms of the agreement and are generally limited to the amount of net payments to be received, if any, at the date of default.

At April 30, 2005, accumulated net unrealized appreciation on investments was $54,070, consisting of $498,256 gross unrealized appreciation and $444,186 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons

The Fund 39

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

40

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and discussed the results of the comparisons. The Board

The Fund 41

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

members took into consideration the fund's generally competitive total return performance for the one-, three-, five- and ten-year periods, as well as its slightly improved comparison group and Lipper category rankings for total return performance for the one-year period. They also took into consideration that the fund's income rankings were below the comparison group and Lipper category averages for the one-, three-, five- and ten-year periods.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category. Noting the fund's "unitary fee" structure, they took into consideration that the fund's expense ratio was slightly below than the comparison group and Lipper category averages.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts, with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund.The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board members concluded that the Similar Funds had advisory fees and expense ratios that were both higher and lower than the fund's management fee and expense ratio and the Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts have lower fees as a result of historical pricing arrangements.The Board members considered the relevance of the fee information provided for the Separate Accounts to

42

evaluate the appropriateness and reasonableness of the fund's management fee.The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

The Fund 43

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE F U N D ' S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )
  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was generally satisfied with the fund's performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

44

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 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.

© 2005 Dreyfus Service Corporation 0345SA0405

Dreyfus Premier 
Midcap Stock Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
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 
30    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
FOR MORE INFORMATION
    Back Cover 

Dreyfus Premier 
Midcap Stock Fund 

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus Premier Midcap Stock Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

John O'Toole, Portfolio Manager

How did Dreyfus Premier Midcap Stock Fund perform relative to its benchmark?

For the six-month period ended April 30, 2005, the fund produced total returns of 3.14% for Class A shares, 2.73% for Class B shares, 2.73% for Class C shares, 3.25% for Class R shares and 3.02% 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 5.68% for the same period.2

We attribute these results to a favorable environment for most market sectors. Stocks rose on the strength of U.S. and global economic growth, which led to good corporate earnings reports and a positive business outlook for a wide variety of companies.The fund produced lower returns than its benchmark, due primarily to disappointing returns from several individual business and financial services holdings.

What is the fund's investment approach?

The fund seeks capital appreciation.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 fund's investment process is designed to provide investors with investment exposure to sector weightings and risk characteristics generally similar to those of the S&P 400 Index.

In selecting securities, Dreyfus uses a computer model to identify and rank stocks within an industry or sector, based on several characteristics, including: value, or how a stock is priced relative to its perceived intrinsic worth;growth,in this case the sustainability or growth of earnings;and financial profile, which measures the financial health of the company.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

What other factors influenced the fund's performance?

High oil and gas prices drove energy stocks sharply higher.The fund derived even greater gains from its energy holdings than the benchmark, primarily due to investments in companies, such as Tesoro Corp., that benefited from limited U.S. refinery capacity.The fund also owned some individual securities within the health care sector that produced relatively good results. Investments in medical services providers, such as Coventry Health Care and PacifiCare Health Systems, rose as a result of favorable business conditions and a healthy pricing environment. Two holdings in other sectors contributed significantly to the fund's positive returns as well. The Ryland Group, a homebuilding and mortgage finance company, was bolstered by persistently low long-term interest rates and a continuation of the national home building boom. Whole Foods Market, the nation's largest chain of natural and organic supermarkets, continued its successful program of geographic expansion.

On the other hand, several of the fund's holdings among companies providing various business services suffered notable declines. For example, shares of information management solutions provider Acxiom Corp. slid when the company released a disappointing earnings report. However, other holdings lost ground despite meeting earnings expectations. Concerned that economic growth might wane, investors evidently questioned the future business prospects of financial data provider FactSet Research Systems and employment services providers Manpower and Robert Half International. One additional holding, Puerto Rico-based savings and loan Doral Financial, further detracted from the fund's returns due to concerns regarding rising interest rates and questions regarding the value of some company assets.These developments led the fund to sell its position in the company during the reporting period.

4

What is the fund's current strategy?

In the wake of the recent appreciation-based expansion of the fund's energy holdings, we have trimmed exposure to the energy area to maintain a roughly sector-neutral position.While the fund's exposure to other sectors remains generally in line with the benchmark, we have emphasized or de-emphasized certain industries within those sectors to reflect our analysis of the current investment environment. For example, we have reduced the fund's exposure to automobile manufacturers in response to recent turmoil in the industry. In the health care area, we have focused on companies with technological advantages over those with a distribution-dependent business profile. Finally, within all sectors, we are seeking to invest in individual companies that, in our judgment, are likely to meet or exceed earnings forecasts and achieve expected levels of growth.

May 16, 2005

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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 6.80    $ 10.56    $ 10.56    $ 5.54    $ 8.05 
Ending value (after expenses)    $1,031.40    $1,027.30    $1,027.30    $1,032.50    $1,030.20 

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 April 30, 2005

    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 6.76    $ 10.49    $ 10.49    $ 5.51    $ 8.00 
Ending value (after expenses)    $1,018.10    $1,014.38    $1,014.38    $1,019.34    $1,016.86 

† 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 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
Common Stocks—100.1%    Shares    Value ($) 
Consumer Cyclical—15.6%         
Abercrombie & Fitch, Cl. A    28,400    1,532,180 
Aeropostale    33,600 a    938,448 
American Eagle Outfitters    41,400    1,085,508 
Applebee's International    45,500    1,127,490 
Autoliv    20,400    902,700 
Bandag    21,400    929,616 
Barnes & Noble    31,100 a    1,107,160 
CDW    36,600    2,001,654 
CEC Entertainment    25,200 a    912,240 
Choice Hotels International    15,300    925,956 
Claire's Stores    50,550    1,103,001 
Coach    36,600 a    980,880 
Coldwater Creek    49,200 a    822,624 
Foot Locker    29,300    781,138 
HNI    18,400    932,144 
Harman International Industries    16,000    1,257,280 
Hibbett Sporting Goods    17,000 a    458,490 
Michaels Stores    48,000    1,593,600 
Pacific Sunwear of California    34,100 a    771,001 
Penn National Gaming    34,400 a    1,083,600 
Polaris Industries    15,050    866,278 
Sonic    23,800 a    762,552 
Toro    18,800    776,816 
V.F.    22,300    1,261,957 
Whole Foods Market    23,800    2,373,336 
        27,287,649 
Consumer Staples—3.5%         
Estee Lauder Cos., Cl. A    19,300    741,313 
Fresh Del Monte Produce    34,450    995,605 
Hormel Foods    61,600    1,918,224 
SUPERVALU    17,400    549,144 
Sensient Technologies    33,050    661,330 
Tyson Foods, Cl. A    76,500    1,292,085 
        6,157,701 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Energy Related—9.3%         
Energen    19,650    1,217,318 
Grant Prideco    43,100 a    954,665 
Houston Exploration    22,000 a    1,120,680 
Hydril    19,950 a    1,049,370 
National-Oilwell Varco    17,100 a    679,554 
Newfield Exploration    18,650 a    1,324,709 
Oceaneering International    23,300 a    764,473 
Plains Exploration & Production    36,400 a    1,171,352 
Pogo Producing    26,900    1,210,769 
Questar    21,850    1,276,040 
Sunoco    12,650    1,255,639 
Tesoro    33,700 a    1,278,578 
Todco, Cl. A    48,100 a    1,070,225 
Weatherford International    38,500 a    2,007,775 
        16,381,147 
Health Care—12.5%         
Apria Healthcare Group    37,725 a    1,135,523 
Barr Pharmaceuticals    14,400 a    746,784 
Bausch & Lomb    13,400    1,005,000 
Cephalon    20,200 a    886,780 
Charles River Laboratories International    22,500 a    1,065,825 
Coventry Health Care    35,800 a    2,449,794 
Diagnostic Products    18,150    880,275 
Endo Pharmaceuticals Holdings    26,000 a    516,100 
First Horizon Pharmaceutical    34,200 a    619,362 
Haemonetics    25,500 a    1,090,635 
Health Net    48,650 a    1,655,559 
Millipore    21,850 a    1,053,607 
PacifiCare Health Systems    34,200 a    2,043,792 
PerkinElmer    33,500    619,750 
Respironics    14,900 a    941,531 
Sybron Dental Specialties    24,600 a    916,350 

8
Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
Thermo Electron    40,700 a    1,016,686 
United Therapeutics    11,700 a    561,483 
Varian Medical Systems    51,450 a    1,735,923 
WellChoice    16,000 a    899,200 
        21,839,959 
Interest Sensitive—17.7%         
AMB Property    21,800    849,982 
Allmerica Financial    25,500 a    856,035 
American Financial Group    50,600    1,573,154 
AmeriCredit    48,900 a    1,144,260 
Ameritrade Holding    72,100 a    755,608 
Apollo Investment    48,600    770,796 
Associated Banc-Corp    33,100    1,023,452 
Bank of Hawaii    33,750    1,598,063 
BlackRock, Cl. A    11,100    832,056 
Catellus Development    33,000    914,100 
Chicago Mercantile Exchange    2,700    527,904 
Colonial BancGroup    63,700    1,405,222 
Dime Bancorp (Warrants)    68,300 a    9,562 
Edwards (A.G.)    31,300    1,242,923 
First American    44,300    1,585,940 
First Marblehead    11,300 a    435,389 
Investors Financial Services    30,000    1,258,500 
La Quinta    88,500 a    769,950 
Lincoln National    26,200    1,178,214 
National Financial Partners    23,300    890,992 
New Century Financial    18,950    861,277 
New York Community Bancorp    45,733    809,474 
Providian Financial    44,400 a    740,148 
Regency Centers    17,900    942,435 
Silicon Valley Bancshares    27,100 a    1,284,540 
State Auto Financial    30,100    819,924 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
Texas Regional Bancshares, Cl. A    53,600    1,493,832 
Unitrin    24,000    1,092,000 
Webster Financial    22,400    1,018,080 
Weingarten Realty Investors    37,500    1,350,375 
Zenith National Insurance    18,500    1,063,935 
        31,098,122 
Producer Goods & Services—15.1%         
Bemis    41,500    1,143,740 
Cabot    31,400    959,270 
Cooper Industries, Cl. A    14,900    948,534 
Crane    26,850    687,360 
D.R. Horton    23,400    713,700 
Eagle Materials    9,500    714,875 
Energizer Holdings    21,700 a    1,236,249 
Florida Rock Industries    10,900    633,072 
Harsco    20,500    1,099,825 
Hunt (J.B.) Transport Services    42,300    1,653,507 
Lennar, Cl. A    43,050    2,215,784 
Lubrizol    38,200    1,481,014 
Lyondell Chemical    41,600    1,043,744 
Nucor    18,400    940,240 
Overnite    25,800    773,484 
Overseas Shipholding Group    25,100    1,416,393 
Rockwell Automation    16,600    767,418 
Ryland Group    28,500    1,749,900 
Sherwin-Williams    18,450    822,316 
Sigma-Aldrich    15,850    926,115 
Silgan Holdings    11,600    709,688 
Stanley Works    25,600    1,101,568 
Teledyne Technologies    25,400 a    772,668 
Timken    40,800    1,013,472 
W.W. Grainger    17,900    989,691 
        26,513,627 

10
Common Stocks (continued)    Shares    Value ($) 
Services—10.3%         
Acxiom    53,500    1,016,500 
Catalina Marketing    29,700    690,525 
Cognizant Technology Solutions, Cl. A    44,800 a    1,882,048 
Copart    54,700 a    1,185,896 
Cox Radio, Cl. A    40,550 a    637,446 
Equifax    30,600    1,029,690 
FactSet Research Systems    41,300    1,146,488 
Gemstar-TV Guide International    129,600 a    498,960 
Getty Images    13,600 a    973,080 
ITT Educational Services    23,550 a    1,082,829 
Manpower    31,700    1,222,035 
NAVTEQ    12,000    437,040 
ProQuest    17,200 a    557,968 
Republic Services    57,100    1,975,660 
Robert Half International    38,500    955,570 
Rollins    24,300    479,682 
Washington Post, Cl. B    2,600    2,247,050 
        18,018,467 
Technology—10.9%         
Altera    33,050 a    685,127 
Amphenol, Cl. A    35,700    1,408,008 
Arrow Electronics    30,700 a    747,238 
Autodesk    34,300    1,091,769 
Cabot Microelectronics    30,600 a    880,974 
CheckFree    28,600 a    1,049,048 
Citrix Systems    39,650 a    892,125 
Harris    63,700    1,796,340 
Imation    24,000    836,880 
Lam Research    31,000 a    795,150 
Microchip Technology    29,700    845,856 
National Semiconductor    38,500    734,580 
Novell    126,500 a    747,615 
Qlogic    24,900 a    827,676 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
SanDisk    32,500 a    770,250 
Storage Technology    51,050 a    1,419,190 
Sybase    42,700 a    808,311 
Tech Data    28,800 a    1,052,064 
Transaction Systems Architects    38,800 a    804,324 
Varian Semiconductor Equipment Associates    23,600 a    880,044 
        19,072,569 
Utilities—5.2%         
Alliant Energy    55,350    1,457,919 
CenturyTel    36,100    1,107,909 
Great Plains Energy    44,800    1,369,984 
OGE Energy    54,200    1,495,920 
Pinnacle West Capital    10,400    435,760 
SCANA    43,150    1,675,946 
WPS Resources    29,950    1,579,264 
        9,122,702 
 
Total Investments (cost $155,217,795)    100.1%    175,491,943 
Liabilities, Less Cash and Receivables    (.1%)    (147,002) 
Net Assets    100.0%    175,344,941 

a Non-income producing.

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Interest Sensitive    17.7    Services    10.3 
Consumer Cyclical    15.6    Energy Related    9.3 
Producer Goods & Services    15.1    Utilities    5.2 
Health Care    12.5    Consumer Staples    3.5 
Technology    10.9        100.1 

  † Based on net assets.
See notes to financial statements

12

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    155,217,795    175,491,943 
Cash        137,443 
Receivable for investment securities sold        7,326,660 
Receivable for shares of Capital Stock subscribed        150,177 
Dividends        96,931 
        183,203,154 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        225,897 
Payable for investment securities purchased        7,412,728 
Payable for shares of Capital Stock redeemed        219,150 
Loan commitment fees payable        438 
        7,858,213 
Net Assets ($)        175,344,941 
Composition of Net Assets ($):         
Paid-in capital        126,675,061 
Accumulated investment (loss)—net        (304,752) 
Accumulated net realized gain (loss) on investments        28,700,484 
Accumulated net unrealized appreciation         
(depreciation) on investments        20,274,148 
Net Assets ($)        175,344,941 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    89,382,425    36,074,910    15,302,357    33,019,423    1,565,826 
Shares Outstanding    4,893,559    2,100,233    889,313    1,770,920    87,050 
Net Asset Value                     
Per Share ($)    18.27    17.18    17.21    18.65    17.99 

See notes to financial statements.

The Fund 13

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends (net of $1,271 foreign taxes withheld at source):     
Unaffiliated issuers    1,369,159 
Affiliated issuers    7,712 
Income on securities lending    6,306 
Total Income    1,383,177 
Expenses:     
Management fee—Note 3(a)    1,236,067 
Distribution and service plan fees—Note 3(b)    449,293 
Interest expense—Note 2    2,556 
Loan commitment fees—Note 2    1,394 
Total Expenses    1,689,310 
Investment (Loss)—Net    (306,133) 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    28,804,090 
Net unrealized appreciation (depreciation) on investments    (16,079,516) 
Net Realized and Unrealized Gain (Loss) on Investments    12,724,574 
Net Increase in Net Assets Resulting from Operations    12,418,441 

See notes to financial statements.

14

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment (loss)—net    (306,133)    (812,560) 
Net realized gain (loss) on investments    28,804,090    36,810,135 
Net unrealized appreciation         
(depreciation) on investments    (16,079,516)    (15,814,013) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    12,418,441    20,183,562 
Dividends to Shareholders from         
net realized gain on investments ($):         
Class A shares    (2,444,137)    — 
Class B shares    (752,921)    — 
Class C shares    (306,980)    — 
Class R shares    (688,496)    — 
Class T shares    (28,405)    — 
Total Dividends    (4,220,939)    — 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    14,165,886    56,193,672 
Class B shares    1,320,324    3,658,021 
Class C shares    1,339,834    2,562,830 
Class R shares    1,994,111    8,758,567 
Class T shares    359,519    932,981 
Dividends reinvested:         
Class A shares    2,298,895    — 
Class B shares    683,221    — 
Class C shares    214,569    — 
Class R shares    627,042    — 
Class T shares    28,207    — 
Cost of shares redeemed:         
Class A shares    (91,105,664)    (57,453,703) 
Class B shares    (7,258,978)    (17,127,091) 
Class C shares    (2,479,154)    (3,802,293) 
Class R shares    (9,693,991)    (32,606,811) 
Class T shares    (410,465)    (965,386) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (87,916,644)    (39,849,213) 
Total Increase (Decrease) in Net Assets    (79,719,142)    (19,665,651) 
Net Assets ($):         
Beginning of Period    255,064,083    274,729,734 
End of Period    175,344,941    255,064,083 

The Fund 15

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Share Transactions:         
Class A a         
Shares sold    746,464    3,211,337 
Shares issued for dividends reinvested    122,022    — 
Shares redeemed    (4,714,312)    (3,284,588) 
Net Increase (Decrease) in Shares Outstanding    (3,845,826)    (73,251) 
Class B a         
Shares sold    72,008    218,577 
Shares issued for dividends reinvested    38,470    — 
Shares redeemed    (404,102)    (1,030,451) 
Net Increase (Decrease) in Shares Outstanding    (293,624)    (811,874) 
Class C         
Shares sold    74,800    154,672 
Shares issued for dividends reinvested    12,054    — 
Shares redeemed    (137,960)    (230,764) 
Net Increase (Decrease) in Shares Outstanding    (51,106)    (76,092) 
Class R         
Shares sold    102,423    491,604 
Shares issued for dividends reinvested    32,642    — 
Shares redeemed    (499,005)    (1,852,057) 
Net Increase (Decrease) in Shares Outstanding    (363,940)    (1,360,453) 
Class T         
Shares sold    19,148    54,433 
Shares issued for dividends reinvested    1,519    — 
Shares redeemed    (21,945)    (56,275) 
Net Increase (Decrease) in Shares Outstanding    (1,278)    (1,842) 

a    During the period ended April 30, 2005, 218,084 Class B shares representing $3,909,057 were automatically 
    converted to 205,536 Class A shares and 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. 
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.

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 17

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

18

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 19

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Not annualized. 
See notes to financial statements. 

20

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 21

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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. 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. 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.

22

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.

(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis.

The Fund 23

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization 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 institu-tions.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 transac-tion.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 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.

24

(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.

The tax character of current year distributions will be determined at the end of the current fiscal year.

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 April 30, 2005, was approximately $185,000, with a related weighted average annualized interest rate of 2.78% .

The Fund 25

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 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.

26

During the period ended April 30, 2005, the Distributor retained $9,527 and $3,751 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $28,655 and $364 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 value of the average daily net assets of Class B, Class C and Class T shares. During the period ended April 30, 2005, Class A, Class B, Class C and Class T shares were charged $161,493, $150,086, $62,701 and $2,042, respectively, pursuant to their respective Plans, and Class B, Class C and Class T shares were charged $50,029, $20,900 and $2,042, 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 Fund 27

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $162,902, Rule 12b-1 distribution plans fees $51,797 and shareholder services plan fees $11,198.

(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 April 30, 2005, amounted to $93,272,612 and $186,114,881, respectively.

At April 30, 2005, accumulated net unrealized appreciation on investments was $20,274,148, consisting of $26,826,682 gross unrealized appreciation and $6,552,534 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The

28

Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

The Fund 29

  INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services.The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and discussed the results of the comparisons. The

30

Board members took into consideration that the fund's total return performance was higher than the fund's comparison group and Lipper category average for the five- and ten-year periods, higher than the fund's comparison group average for the three-year period, lower than the Lipper category average for the three-year period, and below the comparison group and Lipper category averages for the one-year period.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category.They took into consideration that the fund's expense ratio was generally in line with the comparison group average and was below the Lipper category average.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") with similar investment objectives, policies and strategies as the fund and explained the nature of each Similar Fund and the differences, from the Manager's perspective, in managing and providing other services to the Similar Funds as compared to management of the fund.The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Funds through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board members concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio. The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund's management fee. The Board acknowledged that differences in fees paid by the Similar Funds seemed to be consistent with the management and other services provided.The Board noted that there were no separate accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.

The Fund 31

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted the Manager's soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was generally satisfied with the fund's performance.

32

  • The Board concluded that the fee paid to the Manager by thefund was reasonable in light of comparative performance andexpense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that materialeconomies of scale had not been shared with the fund, the Boardwould seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

The Fund 33

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 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.

© 2005 Dreyfus Service Corporation

Dreyfus Premier 
Small    Cap 
Value    Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
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    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus Premier Small Cap Value Fund, covering the six-month period from November 1, 2004, through April 30, 2005. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio managers, Ronald P. Gala and Adam T. Logan.

The six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Ronald P. Gala and Adam T. Logan, Portfolio Managers

How did Dreyfus Premier Small Cap Value Fund perform relative to its benchmark?

For the six-month period ended April 30, 2005, the fund's Class A, B, C, R and T shares produced total returns of 2.42%,1.98%,2.03%,2.55% and 2.28%, respectively.1 In comparison, the fund's benchmark, the Russell 2000 Value Index (the "Index"), produced a total return of 1.52% .2

In a reversal of the prevailing trend of the previous several years, small-cap value stocks generally lagged other segments of the stock market during the reporting period, particularly after January 2005, when investors became more risk averse during the sharp run-up in energy prices.The fund produced higher returns than its benchmark, primarily due to the success of our stock selection strategy among health care services companies and real estate investment trusts (REITs).

On a separate note, Ronald P. Gala and Adam T. Logan became the fund's primary portfolio managers in April 2005.

What is the fund's investment approach?

The fund seeks capital appreciation. To pursue its goal, the fund normally invests at least 80% of its assets in stocks of small U.S. com-panies.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 and Wall Street research.

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?

Stocks generally rallied strongly during the first half of the reporting period as a degree of uncertainty was lifted from the financial markets after the U.S. presidential election. However, the reporting period's second half was characterized by rising oil prices and inflation fears, and stocks mostly languished. As investors grew more cautious, small-cap stocks generally lagged their large-cap counterparts for the first extended period in several years.

In this changing market environment, the fund enjoyed strong contributions to its performance from health care services stocks, which historically have been relatively insensitive to the vagaries of the economy. The fund's top performer for the reporting period was specialty drug distributor Accredo Health, which received a buyout offer from Medco Health Solutions at a significant premium. Kindred Healthcare, which operates nursing homes, institutional pharmacies and rehabilitation centers, gained value on the strength of recently positive earnings reports.

The food and beverage industry, which is widely considered to be a classic value-oriented segment of the market, performed well during the reporting period. More specifically, poultry processor Pilgrim's Pride solidified its lead in market share, while Chiquita Brands International, an international marketer and distributor of bananas and other fresh produce, reported sales volumes and pricing that exceeded analysts' expectations.

Surprisingly, real estate and mortgage-related stocks were among the fund's strongest areas of investment. Real estate stocks historically have suffered when interest rates rise because borrowing is an important element in purchasing property. However, a number of REITs performed well during the reporting period, either because of strength in specific niche markets or because the securities were attractively priced when purchased. For example, MeriStar Hospitality, which focuses on

4

high-end hotels, benefited from strong occupancy and pricing trends. Meanwhile,American Home Mortgage Investment posted solid earnings after investors began to shun the REIT when the Federal Reserve Board began raising short-term interest rates in mid-2004. We purchased the REIT at an attractive price, and the shares performed well as mortgage rates stayed relatively low.

The fund matched the benchmark's strong performance in the energy sector as oil and gas prices surged. However, relatively weak areas for the fund included companies highly dependent on energy, particularly the chemical industry. In addition, metals and mining companies proved to be volatile as investors reacted to changing expectations of demand for raw materials from China and other emerging economies. Finally, technology stocks generally remained depressed during the reporting period amid lackluster customer demand.

What is the fund's current strategy?

We have continued to find opportunities in the health care services and energy sectors, and technology stocks have become increasingly attractive to us. Indeed, we recently have identified a number of technology companies whose shares are valued at little more than the amount of cash sitting on their balance sheets.

In addition, we remain committed to broad diversification across most industry groups. As of April 30, 2005, the fund held more than 224 stocks. In our view, diversification is particularly important given recent volatility and changing leadership in today's stock market.

May 16, 2005

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 charge imposed on redemptions in the case of Class B and 
    Class C shares. Had these charges been reflected, returns would have been lower. Past performance 
    is no guarantee of future results. Share price and investment return fluctuate such that upon 
    redemption, fund shares may be worth more or less than their original cost. 
2    SOURCE: LIPPER 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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 7.53    $ 11.27    $ 11.27    $ 6.28    $ 8.78 
Ending value (after expenses)    $1,024.20    $1,019.80    $1,020.30    $1,025.50    $1,022.80 

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 April 30, 2005 
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 7.50    $ 11.23    $ 11.23    $ 6.26    $ 8.75 
Ending value (after expenses)    $1,017.36    $1,013.64    $1,013.64    $1,018.60    $1,016.12 

† 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 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
Common Stocks—97.0%    Shares    Value ($) 
Consumer Cyclical—9.2%         
Arctic Cat    72,000    1,704,960 
Aztar    67,000 a    1,829,770 
Career Education    48,000    1,509,120 
Cato, Cl. A    78,000    2,004,600 
Claire's Stores    115,000    2,509,300 
Commercial Vehicle Group    67,000 a    1,291,760 
Deckers Outdoor    80,000 a,b    1,685,600 
Goody's Family Clothing    117,000    965,250 
K-Swiss Cl. A    61,000    1,830,000 
K2    157,000 a    1,997,040 
Landry's Restaurants    100,000    2,600,000 
MSC Industrial Direct, Cl. A    95,000    2,552,650 
Marvel Enterprises    95,000 a    1,862,000 
NBTY    108,000 a    2,302,560 
Pacific Sunwear of California    58,000 a    1,311,380 
RARE Hospitality International    60,000 a    1,669,200 
Ruby Tuesday    129,000    2,902,500 
School Specialty    48,000 a    1,781,280 
Sonic Automotive    63,000    1,239,210 
Tempur-Pedic International    95,000 a,b    1,813,550 
Too    79,000 a    1,817,790 
Wabash National    80,000    2,040,000 
Water Pik Technologies    65,000 a    1,223,300 
        42,442,820 
Consumer Staples—2.7%         
Chiquita Brands International    69,000    1,728,450 
Flowers Foods    52,000    1,499,680 
Lance    139,000    2,290,720 
Nash Finch    53,000    1,874,610 
Pilgrim's Pride    82,000 b    2,959,380 
Ralcorp Holdings    58,900    2,333,618 
        12,686,458 
Energy—10.1%         
Atmos Energy    125,000    3,287,500 
Cimarex Energy    48,000 a,b    1,704,000 
Cooper Cameron    37,000 a    2,032,780 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Energy (continued)         
Dril-Quip    46,000 a    1,340,900 
Edge Petroleum    190,000 a    2,662,850 
Grant Prideco    79,000 a,b    1,749,850 
Harvest Natural Resources    155,000 a    1,672,450 
Houston Exploration    31,000 a    1,579,140 
Key Energy Services    106,000 a    1,192,500 
National Fuel Gas    68,000    1,851,640 
New Jersey Resources    69,500    3,013,520 
Piedmont Natural Gas    142,000    3,258,900 
Plains Exploration & Production    108,000 a    3,475,440 
Pogo Producing    56,200 b    2,529,562 
Remington Oil & Gas    80,000 a    2,333,600 
Rowan Cos.    58,000 b    1,538,740 
St. Mary Land & Exploration    66,000 b    1,432,200 
Southern Union    88,000 a    2,106,720 
Spinnaker Exploration    35,500 a    1,136,355 
Tesoro    83,500 a    3,167,990 
Todco, Cl. A    54,000 a    1,201,500 
Universal Compression Holdings    72,000 a    2,527,200 
        46,795,337 
Financial Services—2.5%         
ASTA Funding    87,000    1,818,300 
Asset Acceptance Capital    148,000 a    3,026,600 
Fremont General    165,000    3,578,850 
iPayment Holdings    44,000 a    1,601,160 
NCO Group    85,000 a    1,583,550 
        11,608,460 
Health Care—6.0%         
Abgenix    160,000 a,b    1,115,200 
Amedisys    104,000 a,b    3,121,040 
ArthroCare    61,000 a    1,792,180 
Cooper Cos.    28,000    1,891,400 
Haemonetics    42,000 a    1,796,340 
Kindred Healthcare    83,000 a    2,730,700 
MGI Pharma    40,000 a    882,000 
Medical Action Industries    155,000 a    2,763,650 

8

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
Molina Healthcare    36,000 a    1,575,000 
Omnicare    56,000    1,941,520 
Pediatrix Medical Group    41,000 a    2,791,690 
Perrigo    113,000    2,070,160 
RehabCare Group    69,000 a    2,071,380 
Vistacare, Cl. A    68,127 a    1,219,473 
        27,761,733 
Insurance—5.2%         
American Equity Investment Life Holding    303,000 b    3,617,820 
AmerUs Group    63,000 b    2,961,630 
Arch Captial Group    79,000 a    3,159,210 
Delphi Financial Group, Cl. A    34,000    1,411,680 
Great American Financial Resources    56,000 a    889,840 
LandAmerica Financial Group    55,000    2,728,000 
Odyssey Re Holdings    57,000 b    1,296,180 
Ohio Casualty    126,000 a    2,954,700 
PMI Group    54,000 b    1,898,640 
Phoenix Cos.    128,000 b    1,450,240 
Platinum Underwriters Holdings    57,000    1,687,200 
        24,055,140 
Interest Sensitive—22.7%         
AmericanWest Bancorporation    170,000 a    3,167,100 
BancorpSouth    82,500    1,746,525 
BankAtlantic Bancorp, Cl. A    96,000    1,637,760 
BankUnited Financial, Cl. A    144,000    3,438,720 
Berkshire Hills Bancorp    81,500    2,559,100 
CVB Financial    81,000    1,393,200 
Camden Property Trust    34,000    1,734,000 
Capitol Bancorp    75,000    2,297,250 
Cedar Shopping Centers    165,000    2,277,000 
Citizens Banking    63,500    1,702,435 
Colonial Properties Trust    83,000    3,207,950 
Columbia Banking System    113,000    2,652,110 
Corporate Office Properties Trust    91,000    2,393,300 
Downey Financial    39,000    2,524,470 
1st Source    100,000    2,210,000 

The Fund 9

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
First Charter    66,000    1,428,240 
First Citizens BancShares, Cl. A    21,000    2,698,920 
First Niagara Financial Group    131,000    1,642,740 
FirstFed Financial    46,000 a    2,328,980 
Franklin Bank    156,000 a    2,622,360 
Glacier Bancorp    88,000    2,355,760 
Health Care REIT    68,000 b    2,278,000 
Highland Hospitality    178,000    1,867,220 
Impac Mortgage Holdings    175,000 b    3,206,000 
Irwin Financial    120,000    2,408,400 
Jefferies Group    62,000 b    2,244,400 
KNBT Bancorp    128,000    1,757,440 
Lexington Corporate Properties Trust    102,000 b    2,343,960 
Maguire Properties    105,000    2,677,500 
MainSource Financial Group    93,028    1,815,907 
MeriStar Hospitality    265,000 a    1,815,250 
New Century Financial    65,000 b    2,954,250 
NewAlliance Bancshares    150,000    1,965,000 
Newcastle Investment    91,000    2,683,590 
Pennsylvania Real Estate Investment Trust    68,000    2,866,200 
Provident Bankshares    52,000    1,522,560 
Provident Financial Services    188,000    3,194,120 
Regency Centers    58,000 b    3,053,700 
State Financial Services, Cl. A    67,000    2,448,180 
TierOne    56,000    1,303,680 
Trizec Properties    93,000 b    1,859,070 
Umpqua Holdings    83,000    1,844,260 
Union Bankshares    30,000    1,042,500 
United Bankshares    89,000    2,725,180 
United Community Banks    86,000    1,951,340 
Ventas    67,000    1,807,660 
Westcorp    25,000    1,118,500 
        104,771,787 
Producer Goods—18.2%         
Airgas Inc    82,000    1,797,440 
AptarGroup    36,500    1,760,395 
Arch Chemicals    100,000    2,578,000 

10

Common Stocks (continued)    Shares    Value ($) 
Producer Goods (continued)         
Avatar Holdings    15,000 a,b    728,250 
Beazer Homes USA    43,000 b    1,960,800 
CLARCOR    46,000    2,328,060 
Carpenter Technology    48,000    2,654,400 
Commercial Metals    65,500    1,670,905 
Covenant Transport, Cl. A    61,000 a    818,620 
Cummins    44,000 b    2,992,000 
Cytec Industries    47,500    2,190,700 
Eagle Materials    41,500 b    3,122,875 
Engineered Support Systems    88,500    3,125,820 
EnPro Industries    111,000 a    2,791,650 
FMC    47,500 a,b    2,327,500 
Georgia Gulf    55,000    2,030,050 
Gibraltar Industries    86,000    1,806,860 
H.B. Fuller    57,000 b    1,728,240 
Hughes Supply    46,000    1,200,600 
Kadant    148,000 a    2,545,600 
Kennametal    75,000    3,397,500 
MDU Resources Group    102,000 b    2,757,060 
M/I Homes    25,500    1,165,350 
Massey Energy    30,000 b    1,083,300 
Moog, Cl. A    46,500 a    1,386,165 
Mueller Industries    36,500    945,350 
OM Group    52,000    1,140,880 
Olin    81,400    1,444,036 
Orbital Sciences    188,000 a    1,752,160 
Oregon Steel Mills    112,000 a    1,862,560 
Overnite    67,000    2,008,660 
Sonoco Products    73,000    1,977,570 
Steel Technologies    67,000    1,285,730 
Stillwater Mining    176,000 a    1,284,800 
Terra Industries    280,000 a,b    1,932,000 
Timken    72,000    1,788,480 
Tredegar    85,000 a    1,382,100 
URS    106,000 a    3,259,500 
USG    92,000 a,b    3,863,080 
U.S. Xpress Enterprises, Cl. A    140,000 a    1,562,400 

The Fund 11

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares    Value ($) 
Producer Goods (continued)         
WCI Communities    65,000 a,b    1,821,950 
Wausau-Mosinee Paper    210,000    2,786,700 
        84,046,096 
Services—8.0%         
ACE Cash Express    62,000 a    1,364,000 
Allied Waste Industries    220,000 a,b    1,757,800 
Century Business Services    290,000 a    1,032,400 
Citadel Broadcasting    150,000 a    1,885,500 
Corillian    170,000 a    521,900 
Cornell Cos.    129,000 a    1,522,200 
Digital Insight    105,000 a    2,107,350 
eFunds    86,000 a    1,879,960 
Entravision Communications Cl. A    225,000 a    1,770,750 
Gray Television    110,000    1,446,500 
Healthcare Services Group    144,000    3,636,000 
Leap Wireless International    50,000 a    1,187,000 
MAXIMUS    83,000    2,548,100 
MPS Group    230,000 a    1,837,700 
Perot Systems, Cl. A    222,000 a    2,803,860 
Reader's Digest Association    140,000 b    2,380,000 
SupportSoft    260,000 a    1,235,000 
Thomas Nelson    86,000    2,062,280 
Volt Information Sciences    58,000 a    1,147,240 
Watson Wyatt & Co. Holdings    105,000    2,772,000 
        36,897,540 
Technology—9.7%         
Actel    92,000 a    1,290,760 
Agilysys    110,000    1,454,200 
Applied Micro Circuits    500,000 a    1,335,000 
Audiovox, Cl. A    151,000 a    2,062,660 
Axcelis Technologies    290,000 a    1,800,900 
Benchmark Electronics    86,000 a    2,325,440 
C-COR    100,000 a    661,000 
Cabot Microelectronics    63,000 a,b    1,813,770 
Checkpoint Systems    115,000 a    1,820,450 
Credence Systems    58,000 a,b    364,820 
Cymer    46,000 a,b    1,140,340 

12

Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
DoubleClick    162,000 a    1,302,480 
Entegris    170,000 a    1,463,700 
Exar    94,000 a    1,192,860 
Helix Technology    76,000    915,420 
Intergraph    65,000 a    1,922,050 
Interwoven    189,300 a    1,461,396 
MRO Software    128,000 a    1,637,120 
MTS Systems    62,000    1,795,520 
Novell    295,000 a    1,743,450 
OmniVision Technologies    115,000 a,b    1,610,000 
PalmOne    52,000 a    1,114,360 
Polycom    146,000 a    2,227,960 
Premiere Global Services    310,000 a    3,348,000 
Quest Software    97,000 a    1,150,420 
SafeNet    52,000 a    1,453,400 
Skyworks Solutions    265,000 a    1,388,600 
Tier Technologies, Cl. B    205,000 a    1,512,900 
WebEx Communications    58,000 a    1,265,560 
        44,574,536 
Utilities—2.7%         
Alliant Energy    124,000    3,266,160 
Avista    123,000    2,065,170 
Black Hills    48,000 b    1,645,440 
Cleco    130,000    2,654,600 
Great Plains Energy    88,000 b    2,691,040 
        12,322,410 
Total Common Stocks         
(cost $469,477,511)        447,962,317 

    Principal     
Short-Term Investments—2.5%    Amount ($)    Value ($) 
Repurchase Agreements;         
Greenwich Capital Markets,         
Tri-Party Repurchase Agreement, 2.84%         
dated 4/29/2005 to be repurchased at $11,352,686     
on 5/2/2005, fully collateralized by $11,585,000     
Federal Home Loan Mortgage Notes, 1.50% 8/15/2005,     
value $11,579,903 (cost $11,350,000)    11,350,000    11,350,000 

The Fund 13

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Investment of Cash Collateral         
for Securities Loaned—11.3%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage         
Plus Money Market Fund         
(cost $52,130,612)    52,130,612 c    52,130,612 
Total Investments (cost $532,958,123)    110.8%    511,442,929 
Liabilities, Less Cash and Receivables    (10.8%)    (49,684,386) 
Net Assets    100.0%    461,758,543 

a Non-income producing. 
b All or a portion of these securities are on loan. At April 30, 2005, the total market value of the fund's securities on 
loan is $50,767,808 and the total market value of the collateral held by the fund is $52,130,612. 
c Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Interest Sensitive    22.7    Consumer Cyclical    9.2 
Producer Goods    18.2    Services    8.0 
Short-Term/        Other    7.9 
Money Market Investments    13.8    Health Care    6.0 
Energy    10.1    Insurance    5.2 
Technology    9.7        110.8 

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

14

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan, valued at $50,767,808)—Note 1(b):     
Unaffiliated issuers    480,827,511    459,312,317 
Affiliated issuers    52,130,612    52,130,612 
Cash        2,122,811 
Receivable for shares of Capital Stock subscribed    3,507,446 
Receivable for investment securities sold        528,275 
Dividends and interest receivable        250,381 
        517,851,842 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    605,185 
Liability for securities on loan—Note 1(b)        52,130,612 
Payable for investment securities purchased    2,716,875 
Payable for shares of Capital Stock redeemed    640,427 
Loan commitment fee payable        200 
        56,093,299 
Net Assets ($)        461,758,543 
Composition of Net Assets ($):         
Paid-in capital        465,476,108 
Accumulated investment (loss)—net        (459,487) 
Accumulated net realized gain (loss) on investments    18,257,116 
Accumulated net unrealized appreciation         
(depreciation) on investments        (21,515,194) 
Net Assets ($)        461,758,543 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    251,121,050    29,678,166    55,063,591    115,902,833    9,992,903 
Shares Outstanding    12,812,097    1,581,667    2,932,462    5,845,638    515,937 
Net Asset Value                     
Per Share ($)    19.60    18.76    18.78    19.83    19.37 

See notes to financial statements.

The Fund 15

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends (net of $1,395 foreign taxes withheld at source source):    1,877,986 
Interest    164,289 
Income on securities lending    93,037 
Total Income    2,135,312 
Expenses:     
Management fee—Note 3(a)    2,055,706 
Distribution and service plan fees—Note 3(b)    615,806 
Loan commitment fees—Note 2    1,145 
Total Expenses    2,672,657 
Investment (Loss)—Net    (537,345) 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    18,346,098 
Net unrealized appreciation (depreciation) on investments    (32,623,470) 
Net Realized and Unrealized Gain (Loss) on Investments    (14,277,372) 
Net (Decrease) in Net Assets Resulting from Operations    (14,814,717) 

See notes to financial statements.

16

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment (loss)—net    (537,345)    (140,834) 
Net realized gain (loss) on investments    18,346,098    12,397,840 
Net unrealized appreciation         
(depreciation) on investments    (32,623,470)    5,335,770 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    (14,814,717)    17,592,776 
Dividends to Shareholders from ($):         
Net realized gain on investments:         
Class A shares    (7,782,895)    (1,482,128) 
Class B shares    (1,460,665)    (909,498) 
Class C shares    (1,827,815)    (361,973) 
Class R shares    (992,712)    (94,350) 
Class T shares    (239,026)    (42,850) 
Total Dividends    (12,303,113)    (2,890,799) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    177,124,873    105,146,002 
Class B shares    9,438,749    7,446,672 
Class C shares    32,308,861    19,999,283 
Class R shares    123,126,491    14,181,672 
Class T shares    9,066,541    2,999,650 
Dividends reinvested:         
Class A shares    6,389,415    1,257,906 
Class B shares    1,168,412    684,460 
Class C shares    1,190,553    267,228 
Class R shares    578,113    93,752 
Class T shares    182,577    42,331 
Cost of shares redeemed:         
Class A shares    (35,789,619)    (16,132,681) 
Class B shares    (3,543,318)    (6,754,808) 
Class C shares    (2,273,346)    (2,077,462) 
Class R shares    (14,659,165)    (1,317,059) 
Class T shares    (2,007,572)    (774,730) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    302,301,565    125,062,216 
Total Increase (Decrease) in Net Assets    275,183,735    139,764,193 
Net Assets ($):         
Beginning of Period    186,574,808    46,810,615 
End of Period    461,758,543    186,574,808 
Undistributed investment (loss) income—net    (459,487)    77,858 

The Fund 17

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Capital Share Transactions:         
Class A a         
Shares sold    8,442,055    5,536,356 
Shares issued for dividends reinvested    307,806    71,004 
Shares redeemed    (1,724,343)    (847,803) 
Net Increase (Decrease) in Shares Outstanding    7,025,518    4,759,557 
Class B a         
Shares sold    468,639    403,222 
Shares issued for dividends reinvested    58,599    39,935 
Shares redeemed    (174,586)    (368,447) 
Net Increase (Decrease) in Shares Outstanding    352,652    74,710 
Class C         
Shares sold    1,607,511    1,087,810 
Shares issued for dividends reinvested    59,709    15,546 
Shares redeemed    (113,688)    (113,931) 
Net Increase (Decrease) in Shares Outstanding    1,553,532    989,425 
Class R         
Shares sold    5,750,309    721,226 
Shares issued for dividends reinvested    27,556    5,255 
Shares redeemed    (704,338)    (68,288) 
Net Increase (Decrease) in Shares Outstanding    5,073,527    658,193 
Class T         
Shares sold    440,704    157,160 
Shares issued for dividends reinvested    8,889    2,409 
Shares redeemed    (97,828)    (41,358) 
Net Increase (Decrease) in Shares Outstanding    351,765    118,211 

a    During the period ended April 30, 2005, 38,700 Class B shares representing $787,102 were automatically 
    converted to 37,148 Class A shares and during the period ended October 31, 2004, 47,407 Class B shares 
    representing $876,275 were automatically converted to 45,765 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.

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 19

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
d    Not annualized. 
See notes to financial statements. 

20

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

The Fund 21

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Not annualized. 
See notes to financial statements. 

22

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 23

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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.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 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.

24

(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 available. Investments in registered investment companies are valued at their net asset value. 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.

(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.

The Fund 25

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institu-tions.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 transac-tion.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 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

26

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.

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2004, was as follows: ordinary income $1,824,436 and long-term capital gains $1,066,363.The tax character of current year distributions, if any, will be determined at the end of the current fiscal year.

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. During the period ended April 30, 2005, 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,

The Fund 27

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of 1.25% of the value of the fund's average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund, except brokerage fees, taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses, service fees, fees and expenses of non-interested Directors (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund's allocable portion of fees and expenses of the non-interested Directors (including counsel fees). Each Director receives $40,000 per year, plus $5,000 for each joint Board meeting of the 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 April 30, 2005, the Distributor retained $80,559 and $4,831 from commissions earned on sales of fund's Class A and T shares, respectively, and $18,772 and $5,049 from contingent deferred sales charges on redemptions of the fund's Class B and C shares, respectively.

28

(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 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 April 30, 2005, Class A, Class B, Class C and Class T shares were charged $238,506, $107,249, $162,908 and $8,545, respectively, pursuant to their respective Plans, and Class B, Class C and Class T shares were charged $35,750, $54,303 and $8,545, 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 $479,526, Rule 12b-1 distribution plan fees $106,146 and shareholder services plan fees $19,513.

The Fund 29

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

(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 April 30, 2005, amounted to $543,519,750 and $258,713,517, respectively.

At April 30, 2005, accumulated net unrealized depreciation on investments was $21,515,194, consisting of $12,662,235 gross unrealized appreciation and $34,177,429 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the

30

Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

The Fund 31

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to a group of comparable funds and Lipper averages, and discussed the results of the comparisons. The

32

Board members took into consideration that the fund's total return performance was higher than the fund's comparison group and Lipper category averages for the one-, three- and five-year periods.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category.They took into consideration that the fund's expense ratio was slightly below the comparison group and Lipper category averages.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts, or mutual funds for which the Manager or its affiliates serve as sub-investment adviser, with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee"structure,the Board members concluded that the Similar Accounts had advisory fees that were lower than the fund's management fee.A representative of the Manager stated that certain Similar Accounts have lower fees as a result of historical pricing arrangements and one of the Similar Accounts was a mutual fund that was sub-advised but not administered by an affiliate of the Manager.The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee.The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

The Fund 33

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted the Manager's soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and, given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's performance.

34

  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

The Fund 35

NOTES
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 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.

© 2005 Dreyfus Service Corporation 0148SA0405

Dreyfus Premier 
Tax Managed 
Growth Fund 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
10    Statement of Assets and Liabilities 
11    Statement of Operations 
12    Statement of Changes in Net Assets 
14    Financial Highlights 
19    Notes to Financial Statements 
27    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
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 semiannual report for Dreyfus Premier Tax Managed Growth Fund, covering the six-month period from November 1, 2004, through April 30, 2005. 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 six-month reporting period produced mixed results for U.S. stocks across most market-capitalization ranges. After rallying strongly in the weeks after the November 2004 presidential election, equities gave back most of their gains as rising energy prices and higher interest rates took their toll on investor sentiment during the first few months of 2005.

According to our economists, recent market turbulence probably is the result of a transition to a more mature phase of the economic cycle; one that typically is characterized by higher interest rates and slowing corporate profit growth. In this current market environment, we believe it is important to maintain a long-term investment perspective, and your financial advisor can help you decide what adjustments, if any, you should make to your investment portfolio.

Thank you for your continued confidence and support.

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

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 six-month period ended April 30, 2005, the fund produced total returns of 6.09% for Class A shares, 5.68% for Class B shares, 5.62% for Class C shares, 6.27% for Class R shares and 5.98% for Class T shares.1 In comparison, the fund's benchmark, the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), provided a 3.28% total return.2

Renewed inflationary pressures and rising interest rates led to weakness in the stock market over the first four months of 2005, partly offsetting a rally in the closing weeks of 2004. As investors became more risk averse in this environment, shares of large, well-established companies with track records of consistent growth fared better than more speculative stocks, helping the fund produce higher returns than its benchmark.

What is the fund's investment approach?

The fund invests primarily in large, well-established, multinational companies that we believe are well-positioned to weather difficult economic climates and thrive during favorable times. We focus on purchasing large-cap,"blue-chip" 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 earnings 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 employing a "buy-and-hold" investment strategy rather than short-term profit.We typically buy and sell relatively few stocks during the course of the year, which may help reduce investors' tax liabilities

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

and the fund's trading costs. During the reporting period, the fund's portfolio turnover rate was 0.87% .3

What other factors influenced the fund's performance?

The U.S. stock market rallied strongly over the final two months of 2004 after the presidential election removed a degree of uncertainty from the financial markets and the economy showed signs of more sustainable strength. As they had for some time, smaller, more speculative stocks led the rally. Market sentiment quickly shifted after the start of 2005, however, when evidence of high energy prices and rising interest rates sparked inflation concerns, and investors grew more risk averse. While stocks generally declined over the first four months of 2005, the well-established growth companies in which the fund invests generally fared better than their more economically sensitive counterparts, helping to support the fund's performance relative to the S&P 500 Index.

Stocks in the consumer staples sector provided particularly strong contributions to the fund's performance.The fund benefited both from its heavy exposure to the consumer staples sector and from its security selection strategy within the sector. For example, food and tobacco giant Altria Group saw its stock price rise sharply as litigation concerns eased and the company considered a reorganization designed to unlock shareholder value. Pharmacy chain Walgreen recovered from earlier weakness by posting strong financial results, and snack and beverage provider PepsiCo gained value as investors turned their attention to high-quality companies with more predictable growth trends.

The fund also benefited from its relatively light exposure to the lagging information technology sector, as well as through its investment in semiconductor leader Intel, where earlier inventory problems eased and customer demand appeared to improve. Although the fund also received generally positive contributions from energy stocks as oil and gas prices rose, our stock selection strategy within the sector hindered returns somewhat.

4

In addition, the fund's returns were constrained by our focus within the health care sector on large pharmaceutical companies. Merck and Pfizer suffered during the reporting period amid safety-related regulatory issues surrounding Vioxx and Celebrex.

What is the fund's current strategy?

We have continued to employ our disciplined approach to finding opportunities for long-term investment among large, multinational companies. During the reporting period, we added three new holdings to the fund that we believe may be poised for gains.In the consumer area,home improvement retailer Home Depot appears to be set to benefit from ongoing strength in the U.S. housing market.Among industrial companies, industrial gasses producer Praxair should see demand and pricing improve as the global economic recovery progresses and formerly third-world countries continue to build their industrial infrastructures. Finally, French energy company Total, the world's fourth-largest oil and gas producer, provides additional diversification in the energy sector through exposure to oil and gas reserves that have not been tapped by other energy holdings. In our judgment, consistent growers such as these should prosper as the U.S. and global economic recoveries mature and investors shift their focus from price momentum to business fundamentals.

May 16, 2005

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

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 6.90    $ 10.71    $ 10.71    $ 5.47    $ 8.17 
Ending value (after expenses)    $1,060.90    $1,056.80    $1,056.20    $1,062.70    $1,059.80 

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 April 30, 2005 
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 6.76    $ 10.49    $ 10.49    $ 5.36    $ 8.00 
Ending value (after expenses)    $1,018.10    $1,014.38    $1,014.38    $1,019.49    $1,016.86 

† 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, 1.07% for Class R and 1.60% for Class T, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

6
STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
Common Stocks—99.5%    Shares    Value ($) 
Banking—3.7%         
Bank of America    81,896    3,688,596 
Federal Home Loan Mortgage    10,000    615,200 
Federal National Mortgage Association    25,000    1,348,750 
SunTrust Banks    40,000    2,913,200 
        8,565,746 
Capital Goods—7.1%         
Emerson Electric    55,000    3,446,850 
General Electric    355,000    12,851,000 
        16,297,850 
Diversified Financial Services—10.0%         
American Express    90,000    4,743,000 
Citigroup    240,833    11,309,518 
J.P. Morgan Chase & Co.    134,500    4,773,405 
Merrill Lynch    37,000    1,995,410 
        22,821,333 
Energy—18.2%         
BP, ADR    150,000    9,135,000 
ChevronTexaco    175,000    9,100,000 
ConocoPhillips    33,500    3,512,475 
Exxon Mobil    347,112    19,795,797 
Total SA, ADR    2,000    221,820 
        41,765,092 
Food, Beverage & Tobacco—20.0%         
Altria Group    290,000    18,847,100 
Anheuser-Busch Cos.    55,000    2,577,850 
Coca-Cola    250,000    10,860,000 
Nestle, ADR    85,000    5,559,851 
PepsiCo    145,000    8,067,800 
        45,912,601 
Food & Staples Retailing—6.5%         
Wal-Mart Stores    135,000    6,363,900 
Walgreen    200,000    8,612,000 
        14,975,900 
Hotels, Restaurants & Leisure—1.1%         
McDonald's    85,000    2,491,350 

The Fund 7

STATEMENT OF INVESTMENTS (Unaudited) (continued)

Common Stocks (continued)    Shares        Value ($) 
Household & Personal Products—5.4%         
Colgate-Palmolive    59,000        2,937,610 
Estee Lauder Cos., Cl. A    30,000        1,152,300 
Procter & Gamble    155,000        8,393,250 
            12,483,160 
Insurance—1.8%             
American International Group    30,425        1,547,111 
Berkshire Hathaway, Cl. A    30    a    2,530,500 
            4,077,611 
Materials—.2%             
Praxair    10,000        468,300 
Media—5.2%             
McGraw-Hill Cos.    77,000        6,705,160 
News, Cl. A    161,000        2,460,080 
Time Warner    25,000    a    420,250 
Viacom, Cl. B    65,000        2,250,300 
            11,835,790 
Pharmaceuticals & Biotechnology—12.4%         
Abbott Laboratories    100,000        4,916,000 
Johnson & Johnson    110,000        7,549,300 
Lilly (Eli) & Co.    80,000        4,677,600 
Merck & Co.    80,000        2,712,000 
Pfizer    320,000        8,694,400 
            28,549,300 
Retailing—.2%             
Home Depot    11,000        389,070 
Semiconductors & Semiconductor Equipment—4.3%         
Intel    415,000        9,760,800 
Software & Services—2.2%             
Microsoft    200,000        5,060,000 
Transportation—1.2%             
United Parcel Service, Cl. B    40,000        2,852,400 
Total Common Stocks             
(cost $193,789,896)            228,306,303 

8
Other Investments—.8%    Shares    Value ($) 
Registered Investment Companies;         
Dreyfus Institutional Preferred Plus Money Market Fund     
(cost $1,715,000)    1,715,000 b    1,715,000 
Total Investments (cost $195,504,896)    100.3%    230,021,303 
Liabilities, Less Cash and Receivables    (.3%)    (586,440) 
Net Assets    100.0%    229,434,863 

ADR—American Depository Receipts. 
a    Non-income producing. 
b    Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Food, Beverage & Tobacco    20.0    Food & Staples Retailing    6.5 
Energy    18.2    Household & Personal Products    5.4 
Pharmaceuticals & Biotechnology    12.4    Media    5.2 
Diversified Financial Services    10.0    Other    15.5 
Capital Goods    7.1        100.3 

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

The Fund 9

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments:     
Unaffiliated issuers    193,789,896    228,306,303 
Affiliated issuers    1,715,000    1,715,000 
Dividends and interest receivable        435,999 
Receivable for shares of Capital Stock subscribed    30,350 
        230,487,652 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    336,602 
Cash overdraft due to Custodian        78,486 
Payable for shares of Capital Stock redeemed    637,701 
        1,052,789 
Net Assets ($)        229,434,863 
Composition of Net Assets ($):         
Paid-in capital        236,359,842 
Accumulated undistributed investment income—net    438,820 
Accumulated net realized gain (loss) on investments    (41,880,206) 
Accumulated net unrealized appreciation     
(depreciation) on investments        34,516,407 
Net Assets ($)        229,434,863 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    100,673,252    78,588,485    46,113,149    1,043.31    4,058,934 
Shares Outstanding    6,292,884    5,103,540    3,001,382    65.184    256,931 
Net Asset Value                     
Per Share ($)    16.00    15.40    15.36    16.01    15.80 

See notes to financial statements.

10

STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Income:     
Cash dividends:     
Unaffilliated issuers    3,647,522 
Affiliated issuers    1,679 
Income from securities lending    8,895 
Total Income    3,658,096 
Expenses:     
Management fee—Note 3(a)    1,343,206 
Distribution and service plan fees—Note 3(b)    836,508 
Interest expense—Note 2    6,736 
Loan commitment fees—Note 2    1,198 
Total Expenses    2,187,648 
Investment Income—Net    1,470,448 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    (2,593,982) 
Net unrealized appreciation (depreciation) on investments    15,732,625 
Net Realized and Unrealized Gain (Loss) on Investments    13,138,643 
Net Increase in Net Assets Resulting from Operations    14,609,091 

See notes to financial statements.

The Fund 11

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 a 
Operations ($):         
Investment income—net    1,470,448    774,991 
Net realized gain (loss) on investments    (2,593,982)    (7,859,918) 
Net unrealized appreciation         
(depreciation) on investments    15,732,625    16,595,756 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    14,609,091    9,510,829 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (1,156,603)    (650,724) 
Class B shares    (250,408)    (37,571) 
Class C shares    (203,832)    (36,071) 
Class R shares    (38,935)    — 
Class T shares    (14)    (26,050) 
Total Dividends    (1,649,792)    (750,416) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    23,432,614    38,531,514 
Class B shares    1,399,062    6,056,735 
Class C shares    1,429,181    6,118,260 
Class R shares    —    1,000 
Class T shares    34,961    356,271 
Dividends reinvested:         
Class A shares    873,636    501,464 
Class B shares    174,433    25,428 
Class C shares    117,279    20,219 
Class R shares    15    — 
Class T shares    34,777    22,338 
Cost of shares redeemed:         
Class A shares    (19,939,035)    (29,475,785) 
Class B shares    (30,472,810)    (51,836,306) 
Class C shares    (9,525,820)    (15,484,466) 
Class T shares    (882,032)    (1,030,353) 
Increase (Decrease) in Net Assets from         
Capital Stock Transactions    (33,323,739)    (46,193,681) 
Total Increase (Decrease) in Net Assets    (20,364,440)    (37,433,268) 
Net Assets ($):         
Beginning of Period    249,799,303    287,232,571 
End of Period    229,434,863    249,799,303 
Undistributed investment income—net    438,820    618,164 

12

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 a 
Capital Share Transactions:         
Class A b         
Shares sold    1,467,557    2,461,694 
Shares issued for dividends reinvested    55,470    33,232 
Shares redeemed    (1,242,799)    (1,892,695) 
Net Increase (Decrease) in Shares Outstanding    280,228    602,231 
Class B b         
Shares sold    90,411    403,107 
Shares issued for dividends reinvested    11,476    1,749 
Shares redeemed    (1,983,309)    (3,452,347) 
Net Increase (Decrease) in Shares Outstanding    (1,881,422)    (3,047,491) 
Class C         
Shares sold    92,660    407,303 
Shares issued for dividends reinvested    7,731    1,391 
Shares redeemed    (620,558)    (1,037,421) 
Net Increase (Decrease) in Shares Outstanding    (520,167)    (628,727) 
Class R         
Shares sold    —    64 
Shares issued for dividends reinvested    1    — 
Net Increase (Decrease) in Shares Outstanding    1    64 
Class T         
Shares sold    2,224    23,113 
Shares issued for dividends reinvested    2,235    1,499 
Shares redeemed    (56,106)    (66,702) 
Net Increase (Decrease) in Shares Outstanding    (51,647)    (42,090) 

a    Effective May 14, 2004 (commencement of initial offering) to October 31, 2004, for Class R shares. 
b    During the period ended April 30, 2005, 862,795 Class B shares representing $13,264,210 were automatically 
    converted to 829,805 Class A shares and 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. 
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 (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.

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
c    Not annualized. 
See notes to financial statements. 

14

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
d    Not annualized. 
See notes to financial statements. 

The Fund 15

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
d    Not annualized. 
See notes to financial statements. 

16

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 17

FINANCIAL HIGHLIGHTS (continued)

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
d    Not annualized. 
See notes to financial statements. 

18

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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.

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 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 19

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

As of April 30, 2005, 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 available. Investments in registered investment companies are valued at their net asset value.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 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.

20

(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 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 21

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

The fund has an unused capital loss carryover of $39,286,224 available for federal income tax purposes 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 year ended October 31, 2004 was as follows: ordinary income $750,416. The tax character of current year distributions will be determined at the end of the current fiscal year.

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 April 30, 2005, was approximately $490,000, with a related weighted average annualized interest rate of 2.73% .

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

22

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 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.

The Fund 23

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

During the period ended April 30, 2005, the Distributor retained $6,101 and $175 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $146,760 and $4,615 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 April 30, 2005, Class A, Class B, Class C and Class T shares were charged $124,625, $340,706, $185,176 and $5,354, respectively, pursuant to their respective Plans. During the period ended April 30, 2005, Class B, Class C and Class T shares were charged $113,568, $61,725 and $5,354, 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.

24

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $210,036, Rule 12b-1 distribution plan fees $99,731 and service plan fees $26,835.

(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 Dreyfus.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended April 30, 2005, amounted to $2,141,159 and $37,195,517, respectively.

At April 30, 2005, accumulated net unrealized appreciation on investments was $34,516,407, consisting of $48,974,684 gross unrealized appreciation and $14,458,277 gross unrealized depreciation.

At April 30, 2005, 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 5—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District Court for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds.The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund

The Fund 25

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks 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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

26

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services, and of the Sub-Investment Advisory Agreement between the Manager and Fayez Sarofim and Co. ("Sarofim & Co."), with respect to the fund, pursuant to which Sarofim & Co. provides day-to-day management of the fund.The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement, and by Sarofim & Co. pursuant to the Sub-Investment Advisory Agreement. The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels.The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's and Sarofim & Co.'s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements.The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure, as well as the Manager's supervisory activities over Sarofim & Co.

The Fund 27

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio.The Board members reviewed and compared the fund's performance, management fee and expense ratios to a group of comparable funds and Lipper averages, and discussed the results of the comparisons. The Board members took into consideration that the fund's total return performance was below the fund's comparison group and Lipper category averages for the one- and three-year periods and was higher than the comparison group and Lipper category averages for the five-year period.The Board then discussed Sarofim & Co.'s long-term "buy-and-hold" investment approach to investing in what generally is known as "mega-cap" companies, Sarofim & Co.'s considerable reputation based on following that investment approach, and that its investment approach has been out of favor over the one-and three-year periods.

The Board members reviewed the range of management fees and expense ratios in the comparison group and the expense ratio averages of the comparison group and Lipper category. They noted that the fund's expense ratio was below the fund's Lipper category average but above the fund's comparison group average.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts with similar investment objectives, policies and strategies (the "Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") managed by Sarofim & Co., and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries.The Board analyzed differences in fees paid to the Manager or Sarofim & Co. and discussed the relationship of the fees paid in light of the Manager's or Sarofim & Co.'s performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar

28

Funds had expense ratios that were both higher and lower than the fund's expense ratio.The Board members considered the relevance of the fee information provided for the Similar Accounts to evaluate the appropriateness and reasonableness of the fund's management fee, sub-investment advisory fee and expense ratio. The Board acknowledged that differences in fees paid by the Similar Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale.The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit.The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the recent decline in assets and the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager or Sarofim & Co. from acting as investment adviser and sub-investment adviser, and noted the soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision

The Fund 29

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

with respect to continuation of the fund's Management Agreement and Sub-Investment Advisory Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, quality and extent of the services provided by the Manager are adequate and appropriate.
  • While the Board was concerned with the fund's one and three- year total return performance, the Board believed that the fund's performance was consistent with Sarofim & Co.'s investment approach during those periods, and that the fund's performance should be measured over a longer market cycle.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of considerations described above.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement and Sub-Investment Advisory Agreement was in the best interests of the fund and its shareholders and that the Management Agreement and Sub-Investment Advisory Agreement would be renewed until October 31, 2005, prior to which the Board will reconsider the renewals for the remainder of the annual period (through April 4, 2006).

30

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 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.

© 2005 Dreyfus Service Corporation 0149SA0405

Dreyfus 
U.S. Treasury 
Reserves 

SEMIANNUAL REPORT April 30, 2005

Save time. Save paper. View your next shareholder report online as soon as it's available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It's simple and only takes a few minutes.

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 
8    Statement of Assets and Liabilities 
9    Statement of Operations 
10    Statement of Changes in Net Assets 
11    Financial Highlights 
13    Notes to Financial Statements 
19    Information About the Review 
and Approval of the Fund's
    Investment Management Agreement 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
U.S. Treasury Reserves

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this semiannual report for Dreyfus U.S. Treasury Reserves, covering the six-month period from November 1, 2004, through April 30, 2005. 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.

While most longer-term investments produced mixed results over the reporting period, higher interest rates helped improve the yields of money market instruments. Between the Federal Reserve Board's initial rate hike in June 2004 and the reporting period's end, the overnight federal funds rate rose from 1% to 2.75% .What's more, yield differences across the municipal money market's maturity spectrum have widened through most of the reporting period, which offered investors opportunities to capture incrementally higher levels of current income.

In this rising interest-rate environment, the money market investments that are right for you depend on your current liquidity needs, future goals and the composition of your current portfolio. As always, your financial advisor may be in the best position to recommend the specific investments that will satisfy your portfolio diversification and capital preservation needs.

Thank you for your continued confidence and support.

Sincerely,

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2005

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus U.S. Treasury Reserves perform during the period?

For the six-month period ended April 30, 2005, the fund's Investor shares produced an annualized yield of 1.54%, and its Class R shares produced an annualized yield of 1.74% .Taking into account the effects of compounding, the fund's Investor shares and Class R shares produced annualized effective yields of 1.56% and 1.76%, respectively.1

We attribute the fund's performance primarily to rising interest rates in a recovering U.S. economy, which resulted in higher yields for money market instruments, including short-term U.S.Treasury securities.

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?

The fund's performance was influenced primarily by rising short-term interest rates in a recovering economy. In fact, the Federal Reserve Board (the "Fed") raised interest rates at each of four meetings of its Federal Open Market Committee ("FOMC") during the reporting period. At its December 2004 FOMC meeting, the Fed stated that economic activity was growing at a moderate pace and job creation was on an upward trend. It was later confirmed that the U.S. economy grew at a 3.8% annualized rate during the fourth quarter of 2004 and by a relatively robust 4.4% rate for the year overall.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

As most analysts expected, the Fed raised its target for the federal funds rate at its FOMC meetings in February and March 2005. In its announcement of the March rate increase to 2.75%, the Fed noted that "pressures on inflation have picked up in recent months and pricing power is more evident." This more hawkish tone, together with a renewed surge in energy prices, caused investors' inflation concerns to intensify.

Even as the Fed's inflation concerns appeared to intensify, weaker-than-expected data in April suggested that the U.S. economy might be hitting another soft patch. However, it later was estimated that the U.S. labor market added more jobs than expected in April, and employment statistics for February and March were revised upward. While these data provided some encouragement that high energy prices had not hindered the economic expansion, difficulties encountered by the airline and automotive industries were regarded as potential threats to consumer and business confidence and spending.

In this changing environment, most money market investors focused primarily on securities with maturities of six months or less in an attempt to maintain liquidity and keep funds available for higher-yielding instruments as they became available. As a result, demand for shorter-term money market instruments was robust, while demand for instruments with one-year maturities was relatively low. This caused yield differences between overnight instruments and one-year securities to steepen significantly.

Like many other managers of money market funds, we focused primarily on securities with relatively short maturities. Over most of the reporting period, we set the fund's weighted average maturity in a range we considered modestly shorter than average.We achieved this position by reducing the fund's exposure to U.S. Treasury bills and increasing its holdings of repurchase agreements that are backed by U.S.Treasury securities.

4

What is the fund's current strategy?

Just days after the end of the reporting period, the Fed raised short-term interest rates for the eighth consecutive time, increasing the federal funds rate to 3%, and more rate hikes are expected at subsequent meetings of the Federal Open Market Committee. Accordingly, we have continued to focus on securities with shorter maturities.As of April 30, 2005, approximately 50% of the fund's assets were invested in U.S.Treasury bills and 50% in repurchase agreements. In comparison, the fund was comprised of roughly 52% U.S.Treasury bills and 48% repurchase agreements 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 needed.

May 16, 2005

    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. 
1    Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past 
    performance is no guarantee of future results.Yields fluctuate. 

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 November 1, 2004 to April 30, 2005. 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 April 30, 2005     
    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.48    $ 2.49 
Ending value (after expenses)    $1,007.70    $1,008.70 

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 April 30, 2005 
    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.51    $ 2.51 
Ending value (after expenses)    $1,021.32    $1,022.32 

† 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 181/365 (to reflect the one-half year period).

6
  STATEMENT OF INVESTMENTS
April 30, 2005 (Unaudited)
    Annualized         
    Yield on         
    Date of    Principal     
U.S. Treasury Bills—48.8%    Purchase (%)    Amount ($)    Value ($) 
5/5/2005    2.47    5,000,000    4,998,636 
5/12/2005    2.58    5,000,000    4,996,066 
5/19/2005    2.38    5,000,000    4,994,106 
5/26/2005    2.67    5,000,000    4,990,764 
6/2/2005    2.63    5,000,000    4,988,355 
6/23/2005    2.76    20,000,000    19,919,470 
7/7/2005    2.79    10,000,000    9,948,447 
7/14/2005    2.84    10,000,000    9,942,342 
7/28/2005    2.87    10,000,000    9,930,431 
Total U.S. Treasury Bills             
(cost $74,708,617)            74,708,617 
 
Repurchase Agreements—48.0%             
Goldman Sachs & Co.             
dated 4/29/2005, due 5/2/2005 in the amount         
of $38,496,508 (fully collateralized by $9,528,000         
U.S. Treasury Bonds 8.75%, due 5/15/2017 and         
$24,854,000 U.S. Treasury Notes 6.50%,             
due 8/15/2005, value $39,258,579)    2.79    38,487,560    38,487,560 
Greenwich Capital Markets, Inc.             
dated 4/29/2005, due 5/2/2005 in the amount         
of $35,008,283 (fully collateralized by             
$35,665,000 U.S. Treasury Inflation Index Bonds         
1.21%, due 4/15/2010, value $35,703,864)    2.84    35,000,000    35,000,000 
Total Repurchase Agreements             
(cost $73,487,560)            73,487,560 
 
Total Investments (cost $148,196,177)        96.8%    148,196,177 
Cash and Receivables (Net)        3.2%    4,848,211 
Net Assets        100.0%    153,044,388 

Portfolio Summary (Unaudited) †     
 
    Value (%) 
Repurchase Agreements    48.8 
U.S. Treasury    48.0 
    96.8 

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

The Fund 7

  STATEMENT OF ASSETS AND LIABILITIES
April 30, 2005 (Unaudited)
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $73,487,560)—Note 1(b)    148,196,177    148,196,177 
Cash        149,551 
Receivable for investment securities sold        4,999,889 
Interest receivable        51,892 
        153,397,509 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        77,472 
Dividend payable        270,462 
Payable for shares of Capital Stock redeemed        5,187 
        353,121 
Net Assets ($)        153,044,388 
Composition of Net Assets ($):         
Paid-in capital        153,043,557 
Accumulated undistributed investment income—net        831 
Net Assets ($)        153,044,388 

Net Asset Value Per Share         
    Investor Shares    Class R Shares 
Net Assets ($)    78,183,474    74,860,914 
Shares Outstanding    78,182,994    74,860,563 
Net Asset Value Per Share ($)    1.00    1.00 

See notes to financial statements.

8

  STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (Unaudited)
Investment Income ($):     
Interest Income    1,826,071 
Expenses:     
Management fee—Note 3(a)    407,949 
Distribution fees (Investor Shares)—Note 3(b)    80,165 
Total Expenses    488,114 
Investment Income—Net, representing net increase     
in net assets resulting from operations    1,337,957 

See notes to financial statements.

The Fund 9

STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    April 30, 2005    Year Ended 
    (Unaudited)    October 31, 2004 
Operations ($):         
Investment income—net, representing net increase     
in net assets resulting from operations    1,337,957    829,698 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (618,223)    (343,668) 
Class R shares    (719,734)    (486,030) 
Total Dividends    (1,337,957)    (829,698) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold:         
Investor shares    43,681,274    82,157,828 
Class R shares    124,240,048    153,742,606 
Dividends reinvested:         
Investor shares    597,946    331,734 
Class R shares    103,645    74,307 
Cost of shares redeemed:         
Investor shares    (43,139,016)    (97,433,041) 
Class R shares    (132,393,841)    (131,203,115) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (6,909,944)    7,670,319 
Total Increase (Decrease) in Net Assets    (6,909,944)    7,670,319 
Net Assets ($):         
Beginning of Period    159,954,332    152,284,013 
End of Period    153,044,388    159,954,332 
Undistributed investment income—net    831    831 

See notes to financial statements.

10

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.

  a Annualized.
See notes to financial statements.

The Fund 11

FINANCIAL HIGHLIGHTS (continued)

a Annualized.
See notes to financial statements.

12

NOTES TO FINANCIAL STATEMENTS (Unaudited)

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 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 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 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 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.

The Fund 13

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 Internal Revenue Code of 1986, as amended (the "Code").To the

14

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.

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2004 were all ordinary income.The tax character of current year distributions will be determined at the end of the current fiscal year.

At April 30, 2005, 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 April 30, 2005, 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 Fund 15

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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 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 April 30, 2005, Investor shares were charged $80,165 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 $64,416 and Rule 12b-1 distribution plan fees $13,056.

NOTE 4—Legal Matters:

In early 2004, two purported class and derivative actions were filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus Founders Funds (together, the "Funds") in the United States District for the Western District of Pennsylvania. In September 2004, plaintiffs served a Consolidated Amended Complaint (the "Amended Complaint") on behalf of a purported class of all persons who acquired interests in any of the Funds between January 30, 1999 and November 17, 2003, and derivatively on behalf of the Funds. The Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation also named the Distributor, Premier Mutual Fund Services, Inc. and two additional Fund directors as defendants and alleges violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1 and advisory fees allegedly charged to the Funds for marketing and distribution services. More specifically, plaintiffs claim, among other things, that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend the Funds over other funds, and that such payments were not disclosed to investors. In addition, plaintiffs assert that economies of scale and soft-dollar benefits were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were improperly charged to certain of the Funds that were closed to new investors.The Amended Complaint seeks compensatory and punitive damages,

The Fund 17

NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

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. As noted, some of the claims in this litigation are asserted derivatively on behalf of the Funds that have been named as nominal defendants.With respect to such derivative claims, no relief is sought against the Funds. Dreyfus believes the allegations to be totally without merit and intends to defend the action vigorously. Defendants filed motions to dismiss the Amended Complaint on November 12, 2004, and those motions are pending.

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 Funds believe that any of the pending actions will have a material adverse effect on the Funds or Dreyfus' ability to perform its contract with the Funds.

18

INFORMATION ABOUT THE REVIEW
AND APPROVAL OF THE FUND'S
INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At separate meetings of the Board of Directors held on March 29-30, 2005, the Board considered the re-approval for another one year term of the fund's Investment Management Agreement ("Management Agreement"), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members who are not "interested persons" (as defined in the Act (the "Independent Directors")) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members received a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager's representatives reviewed the fund's distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager's representatives noted the diversity of distribution of the fund as well as among the funds in the Dreyfus complex, and the Manager's corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each of the fund's distribution channels. The Board also reviewed the number of shareholder accounts in the fund, as well as the fund's asset size.

The Board members also considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager's extensive administrative, accounting and compliance infrastructure.

Comparative Analysis of the Fund's Performance, Management Fee and Expense Ratio. The Board members reviewed the fund's performance, management fee and expense ratios and placed significant emphasis on comparisons to groups of comparable funds and iMoneyNet and

The Fund 19

  INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE
FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) d )

Lipper averages, and discussed the results of the comparisons.The Board members took into consideration that the fund's performance was generally higher than the average of each of the fund's comparison groups and iMoneyNet category, noting in particular the fund's strong one-, three-, five- and ten-year rankings.

The Board members reviewed the range of management fees and expense ratios in each comparison group and discussed the fund's management fee and expense ratio, noting its "unitary fee" structure. They took into consideration that the fund's expense ratio was below the average of each of the fund's comparison groups and higher than the Lipper category average.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates (the "Similar Funds") and by separate accounts and/or commingled funds with similar investment objectives, policies and strategies as the fund ("Separate Accounts" and, collectively with the Similar Funds, the "Similar Accounts") and explained the nature of each Similar Account and the differences, from the Manager's perspective, in managing and providing other services to the Similar Accounts as compared to management of the fund. The Manager's representatives also reviewed the costs associated with distribution of the fund and Similar Accounts through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager's performance and the services provided. Noting the fund's "unitary fee" structure, the Board concluded that the Similar Funds had expense ratios that were both higher and lower than the fund's expense ratio, and the Separate Accounts had advisory fees that were lower than the fund's management fee. A representative of the Manager stated that certain Similar Accounts may have lower fees as a result of a larger overall trust department relationship with a particular client in which

20

the client pays additional fees for services rendered or as a result of a particular historical pricing arrangement.The Board members considered the relevance of the fee information provided for the Separate Accounts to evaluate the appropriateness and reasonableness of the fund's management fee. The Board acknowledged that differences in fees paid by the Separate Accounts seemed to be consistent with the management and other services provided.

Analysis of Profitability and Economies of Scale. The Manager's representatives reviewed the dollar amount of expenses allocated to, and profit received by, the Manager and the method used to determine such expenses and profit. The Board members evaluated the analysis in light of the relevant circumstances for the fund, including the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors.The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund's portfolio.

It was noted that the Board members should consider the Manager's profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if the fund's assets had not been increasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and given the fund's overall performance and generally superior service levels provided.

The Fund 21

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND'S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) ( c o n t i n u e d )

At the conclusion of these discussions, each of the Independent Directors expressed the opinion that he or she had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund's Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the services provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund's overall performance.
  • The Board concluded that the fee paid to the Manager by the fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that, to the extent that material economies of scale had not been shared with the fund, the Board would seek to do so.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund's Management Agreement was in the best interests of the fund and its shareholders.

22

NOTES
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.

© 2005 Dreyfus Service Corporation 0326SA0405

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Schedule of Investments.

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.

Not applicable. [CLOSED-END FUNDS ONLY]

Item 10. 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 East, 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 11. 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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Exhibits.

(a)(1)    Not applicable. 
(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. 
 
 
By:    /s/ Stephen E. Canter 
    Stephen E. Canter 
    President 
 
Date:    June 27, 2005 

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:    /s/ Stephen E. Canter 
    Stephen E. Canter 
    Chief Executive Officer 
Date:    June 27, 2005 
 
By:    /s/ James Windels 
James Windels
    Chief Financial Officer 
Date:    June 27, 2005 

EXHIBIT INDEX

(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)