YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Fellow Shareholder:
It is a pleasure to have this opportunity to communicate with my fellow
shareholders of The Dreyfus Fund Incorporated.
This letter accompanies the annual report of The Dreyfus Fund for the 12-month
period ended December 31, 1998. Over this period, your Fund produced a total
return of 17.15%,* which compares with a total return of 28.60% for the Standard
and Poor' s 500 Composite Stock Price Index (S&P 500),** and 11.25% for the
Wilshire Large Company Value Index*** over the same period.
The Fund was partially restructured during the last quarter of the year, as a
result of slightly altering its investment strategy. During most of the year,
the Fund was managed primarily under a disciplined "value investing" approach,
focusing on securities with high earnings yields (low price to earnings ratios).
Later in the year, we broadened the Fund's investment focus. While we are still
sensitive to the value being paid for securities, we are taking a broader view
of value, including analysis of price to cash flow, price to sales, price to
book value, price to asset value, and valuation relative to growth rate. This
change has expanded our range of equity investments for the Fund.
The relatively concentrated holdings in the Fund for much of the year, only
about 60 securities during the first three quarters, made the Fund more volatile
than the diversified indices referred to above, which are both composed of
approximately 500 securities. Given that the restructured portfolio during much
of the fourth quarter contained more than 100 securities, volatility was
reduced.
Value stocks underperformed growth stocks during the period. The margin was
among the widest in memory. The performance of the S&P 500 Index was largely
driven by a relatively few so-called "mega-cap" growth stocks, or the very
largest domestically traded companies. The S&P 500 Index and many of its major
security components carry valuations well above those of any historic period by
almost any financial measure, according to our calculations. This concentrated
overvaluation, in our opinion, is reminiscent of the early 1970s' "nifty fifty"
stocks, or oil stocks in the early 1980s. Both of those markets ended with quick
and severe corrections of the overvalued securities. No one can predict such an
occurrence today, but many market participants may conclude that the risk level
of the S& P 500 Index, and many of its major security components, is high by
historic standards. Regardless, at least for the time being, positive price
momentum in this index and in many of these mega-cap stocks has continued, even
through this past summer's stock market correction and subsequent recovery.
The investment strategy for the Fund over the past year mainly kept it out of
what we considered were overvalued mega-cap securities. Many of these
high-priced mega cap securities were the best performing stocks in the market,
restraining the Fund's relative performance. During the fourth quarter, we began
to invest in some securities that our former value process would have considered
overvalued, but that our new, broader process considered reasonably priced.
Investment performance improved considerably.
Your Fund, which was managed using a value investment process during the year,
did handily outperform the Wilshire Large Company Value Index for the period.
Strength was spread among various securities, most within the health care,
technology and consumer staples sectors of the market. Our bottom-up process has
and will continue to focus on selecting good companies, and does not
significantly over- or under-weight economic sectors.
ECONOMIC REVIEW
The U.S. entered 1998 with a strong economy and at near full employment.
During the spring months this economic strength led the Federal Reserve Board,
our central bank, to contemplate raising short-term interest rates in order to
keep growth and inflation in check. By mid-year, however, the impact of weak
Asian economies on U.S. economic growth had already done the job, permitting the
Fed to leave rates unchanged. More recently, the combination of stresses in the
financial system and slowing economic growth convinced the Fed to lower interest
rates three times: at the end of September, in mid-October, and in mid-November.
As the year ended, the Fed's official stance was neutral.
A significant influence on the U.S. economy during the year was slower growth
in the overall world economy and the evolution of a worldwide financial crisis.
Both events caused a drop in inflation, which helped send interest rates lower.
The fall in inflation and lower interest rates benefited companies that sell to
the consumer, as more income was left over after inflation to buy goods and
services, and the cost of debt was reduced. Home mortgages were refinanced at
lower rates, for example, putting more discretionary income in consumers'
pockets.
The negative effect in the U.S. of slower global economies was directed toward
the industrial sector. Corporate profits weakened, especially in Asian-impacted
sectors, such as world-traded commodities (paper producers, for example) and
exporters (computer manufacturers, for example). One result of this industrial
weakness was to cool off a U.S. economy that had been growing perhaps too
rapidly.
A financial crisis developed during the midsummer months, primarily in Russia
and Brazil. Panic set in as lenders called in outstanding loans and were
reluctant to issue new debt, sharply reducing the economic outlook for these
areas. The effect on European and U.S. companies was to lower profit growth
expectations, given the decline in export opportunities to these regions.
Energetic steps were taken late in the year in attempts to stabilize the
Japanese banks, to design a support package for Brazil, and to generally make
money less expensive to lend. In the coming months, economic prospects for the
major developed countries will be powerfully impacted by whether foreign
financial stresses in the coming months calm down, as the consensus appears to
be currently concluding, or intensify, as was the fear just a couple of months
ago.
STOCK MARKET OVERVIEW
The 12-month period ended December 31, 1998 reflected a number of contrasting
phases in the U.S. stock market. There was strength during the early part of the
period, as stocks recovered from the Asian-induced selloff that occurred during
the fourth quarter of 1997. By midsummer, as large company security valuations
neared all-time highs, there was a sharp market decline sparked by the implosion
of the Russian financial markets. The U.S. stock market declined again in late
September due to the collapse of a major U.S. hedge fund. Finally, there was a
strong rally from mid-October until the end of the year in response to the
Federal Reserve Board's lowering of short-term interest rates.
Over the 12-month period, investment returns for mid-sized and small companies
were significantly lower than those for large companies, with the Standard &
Poor' s MidCap 400 Index returning 19.11% and the small-company Russell 2000
Index declining -2.55% .(+) The erosion of expectations for corporate profit
growth over the year contributed to an outperformance by a select few mega-cap
growth stocks. Investors had confidence in the more consistent earnings growth
from this small group of stocks that compose the bulk of the S&P 500 Index than
for the broader market. Almost every other capitalization and investment style
group lagged far behind these mega-cap growth stocks.
OUR INVESTMENT PROCESS
We continue to practice a value-sensitive approach in managing the Fund. While
we look for growing companies, we want to own securities selling at what we
believe are reasonable prices. Our focus is currently on well-established
companies with market capitalizations of $5 billion or greater. Most securities
in the Fund currently pay dividends, and the current dividend yield of the Fund
is approximately equal to that of the S & P 500 Index. Of course, this yield
will fluctuate.
To narrow down a list of over 1,500 equity securities to about 100 or so for
investment and to help digest all of the fundamental data available on
companies, we begin the security selection process with our proprietary computer
model. This model identifies those securities that we feel offer the most
appropriate exposure to the current stock market and economic environments. This
multifactor computer model scores each stock based upon 21 different factors
including various growth, valuation, leverage, surprise and momentum factors.
Once a favorable stock is identified through our computer screen, our team of
analysts conducts in-depth fundamental analysis on the company. Our extensive
team of analysts kicks the tires on companies, visiting factories and
interviewing corporate management at different levels. Additionally, our
analysts interview customers, competitors and suppliers who might provide unique
information on the company. The overall focus of our analysts is to identify a
catalyst for positive change at a company: an unrecognized trigger event that
could result in the realization of the underlying value.
There are several reasons why a security might be sold. We constantly review
every holding in the Fund, and conditions for a potential sale include a
negative score on our multifactor computer model, the discovery of unfavorable
fundamental information by our analyst, or deterioration in a security's share
price.
Turnover in the Fund, defined as the buying and selling of portfolio
securities, is expected to be relatively restrained under our management, except
during periods of restructuring. In addition, attention is paid to the
realization of capital gains taxes and, when securities are to be sold, an
effort is made to realize long-term capital gains instead of short-term capital
gains. Of course, remember that the Fund is not required to keep turnover or
distributions at any particular level, and that these rates will vary over time
EXAMPLES OF OUR INVESTMENT PROCESS
Describing the detailed fundamental analysis, computer modeling and portfolio
strategy that go into the decision-making process for each security in the Fund
is not possible in this short report. Instead, provided below are several brief
summaries of some of the better and poorer performing securities within the Fund
during the annual period.
Biogen, a biotechnology company, was one of the better performing securities
in your Fund during the reporting period. Our earnings estimates for the company
have been well above the Wall Street consensus, qualifying this growth stock as
a value stock. We believe that the company's current products and new product
pipeline, both near term and long term, are particularly promising. The security
remained a holding at the end of the fiscal year.
International Business Machines, better known as IBM, has made a remarkable
comeback, both in its operations and in its stock price, since mid-1993 when the
stock hit a split adjusted low of about $20 per share. The company spends more
on research and development than any other technology company, which should bode
well for its future. One of the better performers in your Fund for the year, it
remained a holding at year-end.
Aluminum Co. of America, a poor performing security on a relative basis for
the year, was purchased during September. As one of the few basic materials
sector holdings in the Fund, this aluminum producer suffered neglect for much of
the fall from investors' changing economic outlooks. In late 1998 the stock
began to perform well, and the company announced strong earnings early in
January 1999.
Bankers Trust, a major money-center bank, was a poor performing security in
your Fund. Almost every financial stock was punished during the summer months
when emerging markets and worldwide bond markets ran into difficulties. We
reacted quickly to reduce exposure to the industry, including the sale of this
security.
In almost any Fund there are both strong performing and poor performing
securities. Our job is to maximize the good and minimize the bad, while keeping
risk at tolerable levels. We will not be successful every quarter or every year,
but we work hard to reward our fellow investors over the long term.
Diligent management of your investment is our highest priority. Thank you for
entrusting us with your assets.
Sincerely,
[Timothy M. Ghriskey signature]
Timothy M. Ghriskey
Portfolio Manager
January 13, 1999
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
*** SOURCE: WILSHIRE ASSOCIATES, INC.--The Wilshire Large Company Value Index
is constructed by using a blend of price-to-book and forecast price-to-
earnings ratios. The largest 750 stocks in the Wilshire 5000 are ranked
based on a style score that is 75% price-to-earnings ratio and 25% forecast
P/E. The universe is divided so that companies that represent half of the
total capitalization fall into growth and the remainder are placed
into value. Approximately 500 securities are in the Value Index and
approximately 250 securities are in the Growth Index.
(+) SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor' s MidCap 400 Index is a broad-based index of 400
companies with market capitalizations generally ranging from $50
million to $10 billion and is a widely accepted, unmanaged index of
overall mid-cap stock market performance.
The Russell 2000 Index is an unmanaged index and is composed of the 2,000
smallest companies in the Russell 3000 Index. The Russell 3000 Index is composed
of 3,000 of the largest U.S. companies by market capitalization.
<TABLE>
THE DREYFUS FUND INCORPORATED DECEMBER 31, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS FUND
INCORPORATED AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
Dollars
$2,988,714
Standard & Poor's 500 Composite Stock Price Index*
$2,356,726
The Dreyfus Fund Incorporated
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended Five Years Ended Ten Years Ended From Inception (5/24/51)
December 31, 1998 December 31, 1998 December 31, 1998 to December 31, 1998
____________________ ____________________ ____________________ __________________________
<S> <C> <C> <C> <C>
17.15% 12.24% 11.83% 12.39%
- ------------------------
Past performance is not predictive of future performance.
</TABLE>
Although the Fund commenced operations on 5/24/51, the Standard & Poor's 500
Composite Stock Price Index was available beginning 12/31/51. Accordingly, the
above graph compares a $10,000 investment made in The Dreyfus Fund Incorporated
on 12/31/51 to a $10,000 investment made in the Standard & Poor's 500 Composite
Stock Price Index on that date. All dividends and capital gain distributions are
reinvested.
The Fund's performance shown in the line graph takes into account all applicable
fees and expenses. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted, unmanaged index of overall stock market performance, which does
not take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if applicable,
is contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
<TABLE>
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--99.2% Shares Value
- ------------------------------------------------------- ____________ ______________
<S> <C> <C>
Consumer Durables--1.2% Ford Motor . . . . . . . . . . . . . . . . . . . . . . 326,000 $ 19,132,125
General Motors . . . . . . . . . . . . . . . . . . . . 171,000 12,237,188
_______________
31,369,313
_______________
Consumer Non-Durables--8.2% Anheuser-Busch Cos. . . . . . . . . . . . . . . . . . 128,000 8,400,000
Coca-Cola . . . . . . . . . . . . . . . . . . . . . . 333,000 22,269,375
Colgate-Palmolive . . . . . . . . . . . . . . . . . . 80,000 7,430,000
ConAgra . . . . . . . . . . . . . . . . . . . . . . . 132,000 4,158,000
Gillette . . . . . . . . . . . . . . . . . . . . . . . 305,000 14,735,312
Kimberly-Clark . . . . . . . . . . . . . . . . . . . . 146,000 7,957,000
PepsiCo . . . . . . . . . . . . . . . . . . . . . . . 388,000 15,883,750
Philip Morris Cos. . . . . . . . . . . . . . . . . . . 647,000 34,614,500
Procter & Gamble . . . . . . . . . . . . . . . . . . . 545,000 49,765,312
RJR Nabisco Holdings . . . . . . . . . . . . . . . . . 825,000 24,492,187
Sara Lee . . . . . . . . . . . . . . . . . . . . . . . 260,000 7,328,750
Unilever. . . . . . . . . . . . . . . . . . . . . . . 179,000 14,845,813
_______________
211,879,999
_______________
Consumer Services--4.2% Cendant . . . . . . . . . . . . . . . . . . . . . . . 1,620,000 30,881,250
Disney (Walt) . . . . . . . . . . . . . . . . . . . . 546,000 16,380,000
McDonald's . . . . . . . . . . . . . . . . . . . . . . 186,000 14,252,250
MediaOne Group . . . . . . . . . . . . . . . . . . . . 167,000 (a) 7,849,000
Tele-Communications Ser. A TCI Group . . . . . . . . . 135,000 (a) 7,467,188
Time Warner . . . . . . . . . . . . . . . . . . . . . 338,000 20,977,125
Viacom, Cl. B . . . . . . . . . . . . . . . . . . . . 143,000 (a) 10,582,000
_______________
108,388,813
_______________
Electronic Technology--14.9% Boeing . . . . . . . . . . . . . . . . . . . . . . . . 135,000 4,404,375
Cisco Systems . . . . . . . . . . . . . . . . . . . . 394,000 (a) 36,568,125
Compaq Computer . . . . . . . . . . . . . . . . . . . 705,000 29,565,937
Dell Computer . . . . . . . . . . . . . . . . . . . . 341,000 (a) 24,956,938
EMC . . . . . . . . . . . . . . . . . . . . . . . . . 134,000 (a) 11,390,000
Hewlett-Packard . . . . . . . . . . . . . . . . . . . 285,000 19,469,062
Intel . . . . . . . . . . . . . . . . . . . . . . . . 525,000 62,245,313
International Business Machines . . . . . . . . . . . 370,000 68,357,500
Lucent Technologies . . . . . . . . . . . . . . . . . 356,000 39,160,000
Motorola . . . . . . . . . . . . . . . . . . . . . . . 168,000 10,258,500
Northern Telecom . . . . . . . . . . . . . . . . . . . 177,000 8,872,125
Raytheon, Cl. B . . . . . . . . . . . . . . . . . . . 239,000 12,726,750
Storage Technology . . . . . . . . . . . . . . . . . . 658,000 (a) 23,400,125
Sun Microsystems . . . . . . . . . . . . . . . . . . . 148,000 (a) 12,672,500
Texas Instruments . . . . . . . . . . . . . . . . . . 128,000 10,952,000
United Technologies . . . . . . . . . . . . . . . . . 91,000 9,896,250
_______________
384,895,500
_______________
Energy Minerals--5.9% British Petroleum, A.D.S. . . . . . . . . . . . . . . 246,000 23,370,000
Chevron . . . . . . . . . . . . . . . . . . . . . . . 175,000 14,514,062
Exxon . . . . . . . . . . . . . . . . . . . . . . . . 650,000 47,531,250
Mobil . . . . . . . . . . . . . . . . . . . . . . . . 209,000 18,209,125
Royal Dutch Petroleum, A.D.R. . . . . . . . . . . . . 570,000 27,288,750
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ____________ _______________
Energy Minerals (continued) Texaco . . . . . . . . . . . . . . . . . . . . . . . . 144,000 $ 7,614,000
USX - Marathon Group . . . . . . . . . . . . . . . . . 448,000 13,496,000
_______________
152,023,187
_______________
Finance--16.1% American Express . . . . . . . . . . . . . . . . . . . 123,000 12,576,750
American General . . . . . . . . . . . . . . . . . . . 357,000 27,846,000
Associates First Capital, Cl. A . . . . . . . . . . . 180,000 7,627,500
Bank One . . . . . . . . . . . . . . . . . . . . . . . 320,000 16,340,000
BankAmerica . . . . . . . . . . . . . . . . . . . . . 703,000 42,267,875
Bank of New York . . . . . . . . . . . . . . . . . . . 197,000 7,929,250
Chase Manhattan . . . . . . . . . . . . . . . . . . . 335,000 22,800,937
Citigroup . . . . . . . . . . . . . . . . . . . . . . 919,000 45,490,500
EXEL, Cl. A . . . . . . . . . . . . . . . . . . . . . 200,000 15,000,000
Equitable Cos. . . . . . . . . . . . . . . . . . . . . 210,000 12,153,750
Federal Home Loan Mortgage . . . . . . . . . . . . . . 182,000 11,727,625
Federal National Mortgage Association . . . . . . . . 280,000 20,720,000
First Union . . . . . . . . . . . . . . . . . . . . . 260,000 15,811,250
Fleet Financial Group . . . . . . . . . . . . . . . . 165,000 7,373,437
GE Investment Private Placement Partners I, L.P. (Units) . . 6.128 (b) 11,743,623
Istituto Banc San Pablo . . . . . . . . . . . . . . . 950,000 16,833,278
KeyCorp . . . . . . . . . . . . . . . . . . . . . . . 490,000 15,680,000
Morgan Stanley Dean Witter . . . . . . . . . . . . . . 156,000 11,076,000
National City . . . . . . . . . . . . . . . . . . . . 182,000 13,195,000
SunAmerica . . . . . . . . . . . . . . . . . . . . . . 595,000 48,269,375
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . 200,000 7,100,000
Wells Fargo . . . . . . . . . . . . . . . . . . . . . 650,000 25,959,375
_______________
415,521,525
_______________
Health Technology--12.1% Abbott Laboratories . . . . . . . . . . . . . . . . . 432,000 21,168,000
American Home Products . . . . . . . . . . . . . . . . 355,000 19,990,938
Biogen . . . . . . . . . . . . . . . . . . . . . . . . 290,000 (a) 24,070,000
Bristol-Myers-Squibb . . . . . . . . . . . . . . . . . 393,000 52,588,312
Galen Partners II, L.P. (Units) . . . . . . . . . . . 3.544 (b) 3,145,320
Johnson & Johnson . . . . . . . . . . . . . . . . . . 355,000 29,775,625
Lilly (Eli) . . . . . . . . . . . . . . . . . . . . . 140,000 12,442,500
Medtronic . . . . . . . . . . . . . . . . . . . . . . 126,000 9,355,500
Merck & Co. . . . . . . . . . . . . . . . . . . . . . 452,500 66,828,594
Pfizer . . . . . . . . . . . . . . . . . . . . . . . . 345,500 43,338,656
Pharmacia & Upjohn . . . . . . . . . . . . . . . . . . 203,000 11,494,875
Schering-Plough . . . . . . . . . . . . . . . . . . . 196,000 10,829,000
Warner-Lambert . . . . . . . . . . . . . . . . . . . . 110,000 8,270,625
_______________
313,297,945
_______________
Industrial Services--1.2% Waste Management . . . . . . . . . . . . . . . . . . . 550,000 25,643,750
Yorktown Energy Partners, L.P. (Units) . . . . . . . . 4.754 (b) 5,031,368
_______________
30,675,118
_______________
Non-Energy Minerals--1.0% Aluminum Co. of America . . . . . . . . . . . . . . . 345,000 25,724,063
_______________
Process Industries--.9% duPont (E.I.) de Nemours . . . . . . . . . . . . . . . 440,000 23,347,500
_______________
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ____________ _______________
Producer Manufacturing--6.8% AlliedSignal . . . . . . . . . . . . . . . . . . . . . 226,000 (a) $ 10,014,625
Emerson Electric . . . . . . . . . . . . . . . . . . . 121,000 7,570,063
General Electric . . . . . . . . . . . . . . . . . . . 968,000 98,796,500
Masco . . . . . . . . . . . . . . . . . . . . . . . . 800,000 23,000,000
Minnesota Mining & Manufacturing . . . . . . . . . . . 104,000 7,397,000
Tyco International . . . . . . . . . . . . . . . . . . 60,000 4,526,250
Xerox . . . . . . . . . . . . . . . . . . . . . . . . 205,000 24,190,000
_______________
175,494,438
_______________
Retail Trade--8.4% American Stores . . . . . . . . . . . . . . . . . . . 1,240,000 45,802,500
Federated Department Stores . . . . . . . . . . . . . 585,000 25,484,063
Gap . . . . . . . . . . . . . . . . . . . . . . . . . 159,000 8,943,750
Home Depot . . . . . . . . . . . . . . . . . . . . . . 397,000 24,291,438
SK Equity Fund, L.P. (Units) . . . . . . . . . . . . . 18.259 (b) 40,379,666
Safeway . . . . . . . . . . . . . . . . . . . . . . . 95,100 5,795,156
Sears, Roebuck . . . . . . . . . . . . . . . . . . . . 297,000 12,622,500
Wal-Mart Stores . . . . . . . . . . . . . . . . . . . 600,000 48,862,500
Walgreen . . . . . . . . . . . . . . . . . . . . . . . 131,000 7,671,688
_______________
219,853,261
_______________
Technology Services--5.4% Computer Associates . . . . . . . . . . . . . . . . . 228,000 9,718,500
Microsoft . . . . . . . . . . . . . . . . . . . . . . 830,000 (a) 115,110,625
Oracle . . . . . . . . . . . . . . . . . . . . . . . . 382,000 (a) 16,473,750
_______________
141,302,875
_______________
Transportation--1.7% CNF Transportation . . . . . . . . . . . . . . . . . . 653,700 24,554,606
Union Pacific . . . . . . . . . . . . . . . . . . . . 426,000 19,196,625
_______________
43,751,231
_______________
Utilities--11.2% AT&T . . . . . . . . . . . . . . . . . . . . . . . . . 480,000 36,120,000
AirTouch Communications . . . . . . . . . . . . . . . 150,000 (a) 10,818,750
Ameritech . . . . . . . . . . . . . . . . . . . . . . 760,000 48,165,000
Bell Atlantic . . . . . . . . . . . . . . . . . . . . 400,000 21,200,000
BellSouth . . . . . . . . . . . . . . . . . . . . . . 526,000 26,234,250
Coastal . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 34,937,500
GTE . . . . . . . . . . . . . . . . . . . . . . . . . 255,000 17,196,563
MCI WorldCom . . . . . . . . . . . . . . . . . . . . . 476,000 (a) 34,153,000
Sprint (FON Group) . . . . . . . . . . . . . . . . . . 113,000 9,506,125
Texas Utilities . . . . . . . . . . . . . . . . . . . 900,000 42,018,750
US West . . . . . . . . . . . . . . . . . . . . . . . 135,000 8,724,375
_______________
289,074,313
_______________
TOTAL COMMON STOCKS
(cost $2,078,240,591) . . . . . . . . . . . . . . $2,566,599,081
_______________
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Short-Term Investments--.6% Amount Value
- ------------------------------------------------------- ____________ _______________
U.S. Government & Agency; Federal Home Loan Banks,
4.30%, 1/4/1999
(cost $14,994,625) . . . . . . . . . . . . . . . . $15,000,000 $ 14,994,625
_______________
TOTAL INVESTMENTS (cost $2,093,235,216). . . . . . . . . . . . . . . . . . . . . . . . . . 99.8% $2,581,593,706
_______ _______________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2% $ 5,051,153
_______ _______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $2,586,644,859
_______ _______________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
(b) Securities restricted as to public resale. Investments in restricted
securities with an aggregate market value of $60,299,977 represent
approximately 2.3% of net assets.
Acquisition Purchase Percentage of
Issuer Date Price* Net Assets Valuation**
_____ __________ ________ ____________ _________
GE Investment Private Placement
Partners I, L.P. (Units) . . . . . . . . . . 5/28/91 - 9/13/95 $1,756,405 .45% $1,916,388 per unit
Galen Partners II, L.P. (Units). . . . . . . . . 1/28/93 - 1/3/97 887,506 .12% 887,506 per unit
SK Equity Fund, L.P. (Units) . . . . . . . . . . 12/6/92 - 10/30/96 763,747 1.56% 2,211,494 per unit
Yorktown Energy Partners, L.P. (Units) . . . . . 3/5/91 - 9/15/95 1,070,217 .19% 1,058,344 per unit
- -----------------------------
* Average cost.
(**) The valuation of these securities has been determined in good faith under the direction of the Board of Directors.
Subject to certain limitations, the Fund has commitments to invest in the
limited partnership listed below:
Portion of Committed
Issuer Amounts Uninvested
_____ ___________________
Galen Partners II, L.P. (Units). $147,742
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_______________ ______________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $2,093,235,216 $2,581,593,706
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 7,460,733
Receivable for investment securities sold . . . . . . . . 14,088,085
Dividends receivable . . . . . . . . . . . . . . . . . . 2,952,566
Receivable for shares of Capital Stock subscribed . . . . 75
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 115,713
_______________
2,606,210,878
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 1,480,016
Payable for shares of Capital Stock redeemed . . . . . . 12,227,918
Payable for investment securities purchased . . . . . . . 5,464,282
Accrued expenses . . . . . . . . . . . . . . . . . . . . 393,803
_______________
19,566,019
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,586,644,859
_______________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $2,004,814,663
Accumulated undistributed investment income--net . . . . 991,057
Accumulated net realized gain (loss) on investments and
foreign currency transactions . . . . . . . . . . . . . 92,480,649
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b) . . . . . . . . . . . . . . . 488,358,490
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,586,644,859
_______________
SHARES OUTSTANDING
(500 MILLION SHARES OF $1 PAR VALUE CAPITAL STOCK AUTHORIZED). . . . . . . . . . . . . . . 224,543,818
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $11.52
________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $454,201 foreign taxes
withheld at source) . . . . . . . . . . . . . $ 37,975,285
Interest . . . . . . . . . . . . . . . . . . . 1,808,790
______________
Total Income . . . . . . . . . . . . . . . . . $ 39,784,075
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . 16,220,063
Shareholder servicing costs--Note 3(a) . . . . . 1,743,484
Prospectus and shareholders' reports . . . . . . 281,549
Custodian fees--Note 3(a) . . . . . . . . . . . . 185,586
Professional fees . . . . . . . . . . . . . . . . 171,656
Directors' fees and expenses--Note 3(b) . . . . . 87,111
Registration fees . . . . . . . . . . . . . . . . 46,311
Loan commitment fees--Note 2 . . . . . . . . . . 25,329
Interest expense--Note 2 . . . . . . . . . . . . 11,704
Miscellaneous . . . . . . . . . . . . . . . . . . 5,992
______________
Total Expenses . . . . . . . . . . . . . . . . 18,778,785
______________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,005,290
______________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and
foreign currency transactions . . . . . . . . $123,277,807
Net realized gain (loss) on forward currency
exchange contracts . . . . . . . . . . . . . . 886,817
______________
Net Realized Gain (Loss) . . . . . . . . . 124,164,624
Net unrealized appreication (depreciation)
on investments . . . . . . . . . . . . . . . . 266,811,455
______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . 390,976,079
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . $411,981,369
______________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
_________________ ________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,005,290 $ 23,701,972
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . 124,164,624 368,614,512
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . 266,811,455 (101,443,384)
________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . 411,981,369 290,873,100
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,854,366) (18,861,839)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . -- (406,809,835)
Dividends in excess of net realized gain on investments . . . . . . . . . . . . . -- (31,683,975)
________________ ________________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,854,366) (457,355,649)
________________ ________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 823,497,590 2,865,010,268
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,687,231 383,965,424
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,272,738,782) (3,153,188,355)
________________ ________________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . (428,553,961) 95,787,337
________________ ________________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . (41,426,958) (70,695,212)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,628,071,817 2,698,767,029
________________ ________________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,586,644,859 $2,628,071,817
________________ ________________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . $ 991,057 $ 4,840,133
________________ ________________
Shares Shares
________________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,078,825 247,569,413
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . 1,921,698 38,995,031
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (120,120,204) (271,282,702)
________________ ________________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . (40,119,681) 15,281,742
________________ ________________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of Capital
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
Year Ended December 31,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $ 9.93 $10.82 $10.42 $11.93 $13.10
_______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .10 .10 .08 .22 .21
Net realized and unrealized gain (loss) on investments . 1.60 1.01 1.57 2.57 (.76)
_______ _______ _______ _______ _______
Total from Investment Operations . . . . . . . . . . . . 1.70 1.11 1.65 2.79 (.55)
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.11) (.08) (.09) (.22) (.22)
Dividends from net realized gain on investments . . . . . -- (1.78) (1.16) (4.08) (.40)
Dividends in excess of net realized gain
on investments . . . . . . . . . . . . . . . . . . . -- (.14) -- -- --
_______ _______ _______ _______ _______
Total Distributions . . . . . . . . . . . . . . . . . . . (.11) (2.00) (1.25) (4.30) (.62)
_______ _______ _______ _______ _______
Net asset value, end of period . . . . . . . . . . . . . $11.52 $ 9.93 $10.82 $10.42 $11.93
_______ _______ _______ _______ _______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 17.15% 10.75% 15.85% 23.77% (4.26%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . .73% .71% .73% .74% .74%
Ratio of net investment income to average net assets . . .82% .85% .70% 1.56% 1.63%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 109.61% 201.10% 220.92% 269.26% 27.70%
Net Assets, end of period (000's Omitted) . . . . . . . . $2,586,645 $2,628,072 $2,698,767 $2,653,539 $2,445,300
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Dreyfus Fund Incorporated (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as a diversified open-end
management investment company. The Fund's investment objective is to provide
investors with long-term capital growth consistent with the preservation of
capital. The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon").
Premier Mutual Fund Services, Inc. is the distributor of the Fund's shares,
which are sold to the public without a sales charge.
The Fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities are valued at the last
sales price on the securities exchange on which such securities are primarily
traded or at the last sales price on the national securities market. Securities
not listed on an exchange or the national securities market, or securities for
which there were no transactions, are valued at the average of the most recent
bid and asked prices. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. 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 market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Fund receives net
earnings credits based on available cash balances left on deposit.
(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 are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). To the extent that net realized capital gain can be offset
by capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended
December 31, 1998 was approximately $217,000 with a related weighted average
annualized interest rate of 5.39%.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is payable monthly, based on the following annual percentages of
the value of the Fund's average daily net assets: .65 of 1% of the first $1.5
billion; .625 of 1% of the next $500 million; .60 of 1% of the next $500
million; and .55 of 1% over $2.5 billion.
The Agreement provides for an expense reimbursement from the Manager should
the Fund' s aggregate expenses, exclusive of taxes and brokerage commissions,
exceed 1% of the value of the Fund's average daily net assets for any full year.
No expense reimbursement was required pursuant to the Agreement for the period
ended December 31, 1998.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended December 31, 1998, the Fund was charged $1,112,267 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement for providing custodial
services for the Fund. During the period ended December 31, 1998, the Fund was
charged $185,586 pursuant to the custody agreement.
(B) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $6,500 and an attendance fee of $500 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended December 31, 1998 amounted to $2,748,774,401 and
$3,177,347,651, respectively.
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. 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 counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract. At December 31, 1998, there were no open forward currency exchange
contracts.
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) At December 31, 1998, accumulated net unrealized appreciation on
investments was $488,358,490, consisting of $509,463,484 gross unrealized
appreciation and $21,104,994 gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
THE DREYFUS FUND INCORPORATED
We have audited the accompanying statement of assets and liabilities of The
Dreyfus Fund Incorporated, including the statement of investments, as of
December 31, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification by examination of securities
held by the custodian as of December 31, 1998 and confirmation of securities not
held by the custodian by correspondence with others. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Dreyfus Fund Incorporated at December 31, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the indicated
years, in conformity with generally accepted accounting principles.
[ERNST & YOUNG LLP SIGNATURE]
New York, New York February 1, 1999
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates 100% of the ordinary
dividends paid during the fiscal year ended December 31, 1998 as qualifying for
the corporate dividends received deduction.
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
PROXY RESULTS (UNAUDITED)
Stockholders voted on the following proposals presented at a special meeting
of stockholders (or adjournment thereof) held on September 11, 1998 and October
9, 1998, as noted below. All three Proposals were approved by shareholders. Each
Proposal as listed on the proxy card, the number of shares voted and the date on
which votes on the proposal were taken are as follows:
September 11, 1998
1. To approve an Amendment and Restatement of the Fund's Articles of
Incorporation.
Affirmative: 121,736,462.531
Against: 14,391,360.917
Abstain: 18,845,861.421
October 9, 1998
2. To change certain of the Fund's investment techniques and investment
restrictions and to amend the Fund's Articles of Incorporation with respect
thereto.
(1A) Options and Futures Transactions
Affirmative: 130,011,245.467
Against: 18,355,970.535
Abstain: 21,974,274.705
(1B) Short-Selling
Affirmative: 129,898,228.707
Against: 18,467,798.091
Abstain: 21,975,463.909
(1C) Purchasing securities on margin
Affirmative: 130,040,695.542
Against: 18,279,540.411
Abstain: 22,021,254.754
(1D) Making Loans
Affirmative: 130,154,206.836
Against: 18,176,719.321
Abstain: 22,010,564.550
(1E) Acting as underwriter
Affirmative: 130,756,346.521
Against: 17,568,563.803
Abstain: 22,016,580.383
(1F) 5% issuer diversification (delete from Charter only)
Affirmative: 130,694,889.655
Against: 17,632,169.616
Abstain: 22,014,431.436
(1G) Ownership of 10% of any issuer (delete from Charter only)
Affirmative: 130,602,391.334
Against: 17,725,403.018
Abstain: 22,013,696.355
(1H) Transactions with officers or directors
Affirmative: 129,970,341.722
Against: 18,356,178.187
Abstain: 22,014,970.798
THE DREYFUS FUND INCORPORATED
- -----------------------------------------------------------------------------
PROXY RESULTS (UNAUDITED) (CONTINUED)
(1I) Retaining securities owned by officers or directors
Affirmative: 130,351,257.530
Against: 17,976,943.379
Abstain: 22,013,289.798
(1J) Investing in other investment companies
Affirmative: 130,651,653.400
Against: 17,679,163.665
Abstain: 22,010,773.642
(1K) Unseasoned issuers
Affirmative: 130,305,268.750
Against: 18,022,278.370
Abstain: 22,013,943.587
(1L) Real estate
Affirmative: 130,451,895.234
Against: 17,874,223.719
Abstain: 22,015,371.754
(1M) Investing to exercise control
Affirmative: 130,481,815.044
Against: 17,846,279.308
Abstain: 22,013,396.355
(1N) Industry concentration
Affirmative: 130,718,905.827
Against: 17,610,184.330
Abstain: 22,012,400,550
(1O) Illiquid securities
Affirmative: 130,096,595.942
Against: 18,234,236.869
Abstain: 22,010,657.896
3. To approve an amendment to the Fund's Articles of Incorporation to permit
the Fund to impose a service fee on certain small accounts to be collected by
redeeming shares from the relevant stockholder accounts.
Affirmative: 121,769,607.263
Against: 29,349,262.336
Abstain: 19,222,621.108
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[reg.tm logo]
(reg.tm)
THE DREYFUS FUND INCORPORATED
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 026AR9812
The Dreyfus Fund
Incorporated
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
DREYFUS FUND INCORPORATED AND THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
STANDARD
& POOR'S 500
COMPOSITE THE DREYFUS
PERIOD STOCK FUND
PRICE INDEX * INCORPORATED
12/31/51 10,000 10,000
12/31/52 11,840 10,437
12/31/53 11,722 10,426
12/31/54 17,887 17,094
12/31/55 23,540 21,634
12/31/56 25,093 24,887
12/31/57 22,383 23,767
12/31/58 32,097 36,617
12/31/59 35,949 45,971
12/31/60 36,129 49,066
12/31/61 45,847 61,991
12/31/62 41,859 53,563
12/31/63 51,402 67,003
12/31/64 59,884 78,289
12/31/65 67,369 101,770
12/31/66 60,565 103,506
12/31/67 75,101 131,101
12/31/68 83,437 146,511
12/31/69 76,345 128,868
12/31/70 79,398 120,805
12/31/71 90,752 137,760
12/31/72 107,995 150,415
12/31/73 92,120 121,928
12/31/74 67,708 97,676
12/31/75 92,896 128,698
12/31/76 115,005 163,844
12/31/77 106,724 163,899
12/31/78 113,768 183,947
12/31/79 134,702 230,812
12/31/80 178,345 301,036
12/31/81 169,606 317,341
12/31/82 205,902 362,708
12/31/83 252,229 434,406
12/31/84 268,120 448,408
12/31/85 354,455 560,840
12/31/86 420,029 652,372
12/31/87 441,870 708,585
12/31/88 516,104 770,531
12/31/89 678,677 952,679
12/31/90 656,960 920,943
12/31/91 857,332 1,178,929
12/31/92 923,347 1,244,140
12/31/93 1,016,235 1,323,213
12/31/94 1,029,548 1,266,846
12/31/95 1,415,938 1,568,002
12/31/96 1,740,895 1,816,506
12/31/97 2,321,484 2,011,752
12/31/98 2,988,714 2,356,726
*Source: Lipper Analytical Services, Inc.
