The Dreyfus Fund
Incorporated
SEMIANNUAL REPORT
June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues
(Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
12 Statement of Financial Futures
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
<PAGE>
The Fund
The Dreyfus Fund
Incorporated
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for The Dreyfus Fund
Incorporated, covering the six-month period from January 1, 1999 through June
30, 1999. Inside you'll find valuable information about how the portfolio was
managed during the reporting period, including a discussion with the fund's
portfolio manager, Timothy M. Ghriskey.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader Standard & Poor's 500 Composite Stock
Price Index and the technology-laden NASDAQ Index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in The Dreyfus Fund Incorporated.
Sincerely,
[Stephen E. Canter signature logo]
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
Timothy M. Ghriskey, Portfolio Manager
How did The Dreyfus Fund Incorporated perform relative to its benchmark?
For the six-month period ended June 30, 1999, The Dreyfus Fund Incorporated
produced a total return of 10.56%.(1) This performance compares with a return of
12.38% for the Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index") for the same period.(2)
We attribute this performance to the surprisingly rapid recovery of global
capital markets in the wake of last summer's decline, and to the broadening of
market strength that occurred during the second half of the reporting period.
The fund's underperformance compared to the S&P 500 Index, our benchmark, was
due to declines in a handful of individual stocks in which we held relatively
large positions.
What is the fund's investment approach?
The Dreyfus Fund Incorporated invests primarily in stocks of well-established
U.S. companies that we believe, collectively, demonstrate potential to
outperform the S&P 500 Index with less volatility. Our investment approach more
recently has included both growth-and value-oriented stocks, while maintaining
a somewhat conservative bias in favor of value. In short, we seek growth at a
reasonable price.
Our disciplined investment process sifts through over 1,500 equity securities to
identify the relatively small number of stocks that best meet our criteria. We
start with computerized, quantitative analysis of all potential candidates,
scoring each stock on a wide range of growth, valuation, leverage, earnings
surprise, momentum and risk factors. Our team of experienced analysts then
further narrows the field by examining the specifics of each top-ranked
candidate. We observe operations, interview corporate management and conduct
detailed surveys of the competitive environment, seeking catalysts likely to
spark a
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
change in a company's market value. Armed with these analytical insights, we
decide which stocks to purchase, and whether any current holdings should be
sold.
The result of our approach during the recent six-month period was a portfolio of
approximately 100 carefully selected stocks, the majority of which performed
well. Technology was the largest contributor to the fund's positive overall
performance. Innovative market leaders, such as Microsoft, International
Business Machines and Cisco Systems, led the way. We also realized notably good
performance from several other sectors. Many of the fund's financial industry
holdings performed well, even though concerns about the effects of rising
interest rates hurt the financial sector as a whole. Our above-average
performance among financials was led by investments in many of the largest and
best-regarded companies in the sector, such as American International Group and
Citigroup. We also scored notable successes with capital goods companies, such
as Honeywell and Tyco International, and communications services companies, such
as MCI WorldCom and Ameritech.
What other factors influenced the fund's performance?
Of course, not every stock in the portfolio showed positive returns. Some
lagged, even among our best-performing sectors. For example, despite the fund's
strong overall returns in technology, two investments in particular caused us to
underperform the benchmark in this sector. Specifically, Storage Technology and
Compaq Computer declined by more than 40% and 50%, respectively, between
February and May 1999. Because Storage Technology was not a component of the S&P
500 Index, and because the fund was overweighted in Compaq Computer compared to
the benchmark, these losses helped contribute to our underperformance relative
to the S&P 500 Index. Similarly, among financials, First Union was a notable
underperformer.
The fund also experienced particularly weak performance from investments in
consumer staples, a key value-oriented sector. Once again, a small number of
individual holdings accounted for most of our underperformance. American Stores,
which rose sharply last period after receiving a takeover offer, slipped during
the current
4
<PAGE>
period as some investors took profits. Philip Morris Cos. was buffeted by
tobacco-related litigation, while Clorox struggled to integrate a newly acquired
company.
We viewed the problems facing each of these underperforming stocks as
transitory, and continued to hold positions. However, we reduced our holdings
somewhat in recognition that these companies were currently out of favor with
the market.
What is the fund's current strategy?
As of June 30, 1999, we have been encouraged by the market's broadening base of
strength. Both growth-and value-oriented stocks have performed relatively well
since mid-April, whereas during the first few months of the year most of the
market's gains had been concentrated among a handful of high-growth companies.
Of course, we cannot be certain that the market's positive trends will continue,
but we continue to believe that investors can benefit from a conservatively
managed portfolio of carefully selected stocks. Accordingly, we have adhered to
our consistent, disciplined approach that seeks above-average growth while
managing risk.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAINS 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
<PAGE>
<TABLE>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
COMMON STOCKS--99.2% Shares Value ($)
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<S> <C> <C>
CONSUMER DURABLES--1.8%
Black & Decker 232,500 14,676,562
Ford Motor 287,000 16,197,562
General Motors 156,000 10,296,000
Newell Rubbermaid 148,000 6,882,000
48,052,124
CONSUMER NON-DURABLES--5.0%
Anheuser-Busch Cos. 176,000 12,485,000
Clorox 28,200 3,012,112
Coca-Cola 300,000 18,750,000
Gillette 272,000 11,152,000
Kimberly-Clark 129,000 7,353,000
NIKE, Cl. B 109,000 6,901,062
PepsiCo 510,000 19,730,625
Philip Morris Cos. 563,000 22,625,562
Procter & Gamble 341,000 30,434,250
132,443,611
CONSUMER SERVICES--5.5%
CBS 176,000 7,645,000
Cendant 1,620,000 33,210,000
Clear Channel Communications 100,000 6,893,750
Comcast, Cl. A 172,000 6,611,250
Disney (Walt) 488,000 15,036,500
McDonald's 481,000 19,871,312
MediaOne Group 221,000 (a) 16,436,875
Time Warner 285,000 20,947,500
Viacom, Cl. B 465,000 (a) 20,460,000
147,112,187
CONSUMER STAPLES--.2%
Unilever, N.V. ,A.D.R. 67,000 4,673,250
ELECTRONIC TECHNOLOGY--16.1%
Boeing 222,000 9,809,625
Cisco Systems 910,000 (a) 58,695,000
Compaq Computer 495,000 11,725,312
Dell Computer 643,000 (a) 23,791,000
EMC 228,000 (a) 12,540,000
Hewlett-Packard 241,000 24,220,500
6
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONIC TECHNOLOGY (CONTINUED)
Intel 1,226,000 72,947,000
International Business Machines 680,000 87,890,000
Lucent Technologies 705,000 47,543,437
Motorola 147,000 13,928,250
Nortel Networks 167,000 (a) 14,497,687
Storage Technology 500,000 (a) 11,375,000
Sun Microsystems 196,000 (a) 13,499,500
Texas Instruments 99,000 14,355,000
United Technologies 162,000 11,613,375
428,430,686
ENERGY MINERALS--5.9%
BP Amoco, A.D.R. 152,000 16,492,000
Chevron 164,000 15,610,750
Exxon 577,000 44,501,125
Mobil 274,000 27,126,000
Royal Dutch Petroleum 700,000 42,175,000
Texaco 137,000 8,562,500
USX-Marathon Group 28,600 931,287
155,398,662
FINANCE--15.1%
Allstate 210,000 7,533,750
American Express 108,000 14,053,500
American General 123,000 9,271,125
American International Group 293,000 34,299,313
Associates First Capital, Cl. A 180,000 7,976,250
Bank One 295,000 17,570,938
Bank of New York 279,000 10,235,812
BankAmerica 621,000 45,527,063
CIGNA 140,000 12,460,000
Chase Manhattan 330,000 28,586,250
Citigroup 1,215,000 57,712,500
Equitable Cos. 108,000 7,236,000
Federal Home Loan Mortgage 161,000 9,338,000
Federal National Mortgage Association 245,900 16,813,412
First Union 236,000 11,092,000
Fleet Financial Group 202,000 8,963,750
GE Investment Private Placement Partners 1, L.P. (Units) 6.128 (c) 11,744,532
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- --------------------------------------------------------------------------------
FINANCE (CONTINUED)
Household International 118,000 5,590,250
Keycorp 215,000 6,906,875
Merrill Lynch 85,000 6,794,688
Morgan (J.P.) 63,000 8,851,500
Morgan Stanley Dean Witter 139,000 14,247,500
National City 86,000 5,633,000
Schwab (Charles) 96,500 10,602,938
Wells Fargo 590,000 25,222,500
XL Capital, Cl. A 112,700 6,367,550
400,630,996
HEALTH SERVICES--.3%
Columbia/HCA Healthcare 350,000 7,984,375
HEALTH TECHNOLOGY--9.4%
Abbott Laboratories 360,000 16,380,000
American Home Products 309,000 17,767,500
Amgen 128,000 7,792,000
Bristol-Myers Squibb 479,000 33,739,563
Galen Partners II, L.P. (Units) 3.468 (c) 3,055,814
Johnson & Johnson 339,000 33,222,000
Lilly (Eli) 319,100 22,855,538
Medtronic 73,000 5,684,875
Merck & Co. 611,000 45,214,000
Pfizer 307,500 33,748,125
Pharmacia & Upjohn 118,000 6,703,875
Schering-Plough 196,000 10,388,000
Warner-Lambert 195,000 13,528,125
250,079,415
INDUSTRIAL SERVICES--.5%
Waste Management 152,000 8,170,000
Yorktown Energy Partners, L.P. (Units) 4.754 (c) 5,030,043
13,200,043
NON-ENERGY MINERALS--1.4%
Alcoa 584,000 36,135,000
PROCESS INDUSTRIES--2.2%
Dow Chemical 153,000 19,411,875
8
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
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PROCESS INDUSTRIES (CONTINUED)
duPont (E.I.) deNemours 283,000 19,332,438
International Paper 152,000 7,676,000
Monsanto 157,000 6,191,688
Sealed Air 103,000 (a) 6,682,125
59,294,126
PRODUCER MANUFACTURING--7.5%
AlliedSignal 226,000 14,238,000
Delphi Automotive Systems 109,033 2,023,925
Emerson Electric 103,000 6,476,125
General Electric 917,800 103,711,400
Honeywell 111,000 12,862,125
Illinois Tool Works 83,000 6,806,000
Ingersoll-Rand 80,000 5,170,000
Minnesota Mining & Manufacturing 104,000 9,041,500
Tyco International 292,000 27,667,000
Xerox 168,000 9,922,500
197,918,575
RETAIL TRADE--9.0%
Albertson's 599,610 30,917,391
CVS 147,000 7,460,250
Dayton Hudson 157,000 10,205,000
Federated Department Stores 240,000 (a) 12,705,000
Gap 210,000 10,578,750
Home Depot 397,000 25,581,688
K mart 117,000 (a) 1,923,188
Kroger 194,000 (a) 5,419,875
SK Equity Fund, L.P. (Units) 17.146 (c) 43,563,102
Sears, Roebuck & Co. 47,000 2,094,438
Wal-Mart Stores 1,592,000 76,814,000
Walgreen 374,000 10,986,250
238,248,932
TECHNOLOGY SERVICES--6.0%
America Online 252,000 (a) 27,846,000
Computer Associates International 140,000 7,700,000
Microsoft 1,230,000 (a) 110,930,625
Oracle 351,000 (a) 13,030,875
159,507,500
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--.5%
Vodafone Group, A.D.R. 70,000 13,790,000
TRANSPORTATION-1.0%
CNF Transportation 366,600 14,068,275
Union Pacific 226,000 13,178,625
27,246,900
UTILITIES--11.8%
AT&T 746,399 41,658,394
AT&T - Liberty Media Group, Cl.A 384,000 (a) 14,112,000
Ameritech 654,000 48,069,000
Bell Atlantic 188,000 12,290,500
BellSouth 526,000 24,656,250
Coastal 883,000 35,320,000
Enron 84,000 6,867,000
GTE 388,000 29,391,000
MCI WorldCom 448,100 38,648,625
Sprint (Fon Group) 322,800 17,047,875
Sprint (Pcs Group) 107,000 6,112,375
Texas Utilities 750,000 30,937,500
U S West 135,000 7,931,250
313,041,769
TOTAL COMMON STOCKS
(cost $1,967,380,636) 2,633,188,151
</TABLE>
10
<PAGE>
<TABLE>
Principal
SHORT-TERM INVESTMENTS--1.0% Amount ($) Value ($)
- --------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Banks,
4.60%, 7/1/1999 26,000,000 26,000,000
U.S. Treasury Bills,
4.67%, 9/30/1999 2,327,000 (b) 2,299,634
TOTAL SHORT-TERM INVESTMENTS
(cost $28,299,530) 28,299,634
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TOTAL INVESTMENTS (cost $1,995,680,166) 100.2% 2,661,487,785
LIABILITIES, LESS CASH AND RECEIVABLES (.2%) (6,291,554)
NET ASSETS 100.0% 2,655,196,231
(A) NON-INCOME PRODUCING
(B) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL FUTURES POSITIONS.
(C) SECURITIES RESTRICTED AS TO PUBLIC RESALE. INVESTMENTS IN RESTRICTED SECURITIES WITH AN AGGREGATE MARKET VALUE OF
$63,393,491 REPRESENT APPROXIMATELY 2.4% OF NET ASSETS:
</TABLE>
<TABLE>
Net
Acquisition Purchase Assets
Issuer Date Price ($)* (%) Valuation ($)**
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<S> <C> <C> <C> <C>
GE Investment Private Placement
Partners I, L.P. (Units) 5/28/91-9/13/95 1,754,341 .44 1,916,046 per unit
Galen Partners Il, L.P. (Units) 1/28/93-1/3/97 881,146 .12 881,146 per unit
SK Equity Fund, L.P. (Units) 12/6/92-10/30/96 749,082 1.64 2,540,433 per unit
Yorktown Energy Partners, L.P. (Units) 3/5/91-9/15/95 1,070,442 .19 1,058,065 per unit
* AVERAGE COST.
** THE VALUATION OF THESE SECURITIES HAS BEEN DETERMINED IN GOOD FAITH UNDER THE DIRECTION OF THE BOARD OF DIRECTORS.
</TABLE>
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) $147,724
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 11
<PAGE>
STATEMENT OF FINANCIAL FUTURES
June 30, 1999 (Unaudited)
<TABLE>
Market Value Unrealized
Covered Appreciation
Contracts by Contracts ($) Expiration at 6/30/99 ($)
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<S> <C> <C> <C> <C>
FINANCIAL FUTURES LONG
Standard & Poor's 500 107 36,960,475 September '99 919,785
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 1,995,680,166 2,661,487,785
Receivable for investment securities sold 70,180,063
Dividends receivable 1,653,518
Receivable for futures variation margin--Note 4(a) 668,750
Receivable for shares of Capital Stock subscribed 12,968
Prepaid expenses 110,344
2,734,113,428
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 1,565,168
Cash overdraft due to Custodian 13,770,543
Payable for investment securities purchased 40,736,002
Payable for shares of Capital Stock redeemed 22,415,530
Accrued expenses 429,954
78,917,197
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NET ASSETS ($) 2,655,196,231
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,914,042,013
Accumulated undistributed investment income--net 152,336
Accumulated net realized gain (loss) on investments 74,274,478
Accumulated net unrealized appreciation (depreciation)
on investments (including $919,785 net unrealized
appreciation on financial futures)--Note 4(b) 666,727,404
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NET ASSETS ($) 2,655,196,231
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SHARES OUTSTANDING
(500 million shares of $1 par value Capital Stock authorized) 216,832,186
NET ASSET VALUE, offering and redemption price per share ($) 12.25
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 13
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
Cash dividends (net of $144,218 foreign taxes withheld at source) 14,762,392
Interest 213,504
TOTAL INCOME 14,975,896
EXPENSES:
Management fee--Note 3(a) 8,246,705
Shareholder servicing costs--Note 3(a) 717,995
Prospectus and shareholders' reports 109,121
Custodian fees--Note 3(a) 79,408
Professional fees 78,064
Directors' fees and expenses--Note 3(b) 42,824
Interest expense--Note 2 31,946
Registration fees 30,184
Loan commitment fees--Note 2 5,922
Miscellaneous 54,343
TOTAL EXPENSES 9,396,512
INVESTMENT INCOME--NET 5,579,384
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign
currency transactions 78,137,430
Net unrealized appreciation (depreciation)
on investments (including $919,785 net
unrealized appreciation on financial futures) 178,368,914
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 256,506,344
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 262,085,728
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 5,579,384 21,005,290
Net realized gain (loss) on investments 78,137,430 124,164,624
Net unrealized appreciation (depreciation)
on investments 178,368,914 266,811,455
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 262,085,728 411,981,369
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (6,418,105) (24,854,366)
Net realized gain on investments (96,343,601) --
TOTAL DIVIDENDS (102,761,706) (24,854,366)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 349,876,429 823,497,590
Dividends reinvested 87,004,670 20,687,231
Cost of shares redeemed (527,653,749) (1,272,738,782)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (90,772,650) (428,553,961)
TOTAL INCREASE (DECREASE) IN NET ASSETS 68,551,372 (41,426,958)
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,586,644,859 2,628,071,817
END OF PERIOD 2,655,196,231 2,586,644,859
Undistributed investment income--net 152,336 991,057
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 28,992,777 78,078,825
Shares issued for dividends reinvested 7,106,249 1,921,698
Shares redeemed (43,810,658) (120,120,204)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (7,711,632) (40,119,681)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
Six Months
Ended
June 30,
1999 Year Ended December 31,
-----------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 11.52 9.93 10.82 10.42 11.93 13.10
Investment Operations:
Investment income--net .03(a) .10 .10 .08 .22 .21
Net realized and unrealized
gain (loss) on investments 1.19 1.60 1.01 1.57 2.57 (.76)
Total from Investment Operations 1.22 1.70 1.11 1.65 2.79 (.55)
Distributions:
Dividends from investment
income--net (.03) (.11) (.08) (.09) (.22) (.22)
Dividends from net realized gain
on investments (.46) -- (1.78) (1.16) (4.08) (.40)
Dividends in excess of net realized
gain on investments -- -- (.14) -- -- --
Total Distributions (.49) (.11) (2.00) (1.25) (4.30) (.62)
Net asset value, end of period 12.25 11.52 9.93 10.82 10.42 11.93
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 10.56(b) 17.15 10.75 15.85 23.77 (4.26)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .36(b) .73 .71 .73 .74 .74
Ratio of net investment income
to average net assets .21(b) .82 .85 .70 1.56 1.63
Portfolio Turnover Rate 34.14(b) 109.61 201.10 220.92 269.26 27.70
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 2,655,196 2,586,645 2,628,072 2,698,767 2,653,539 2,445,300
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 (including financial futures)
are valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
The Fund 17
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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.
18
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NOTE 2--Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund at rates based on prevailing
market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended June
30, 1999 was approximately $1,228,000 with a related weighted average annualized
interest rate of 5.18%.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(A) Pursuant to a management agreement (the "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 June 30, 1999.
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 June 30, 1999, the fund was charged $489,764 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 June
The Fund 19
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
30, 1999, the fund was charged $79,408 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 financial futures, during the period ended
June 30, 1999, amounted to $882,189,190 and $1,071,200,700, respectively.
The fund may invest in financial futures contracts in order to gain exposure to
or protect against changes in the market. The fund is exposed to market risk as
a result of changes in the value of the underlying financial instruments.
Investments in financial futures require the fund to "mark to market" on a daily
basis, which reflects the change in the market value of the contract at the
close of each day's trading. Typically, variation margin payments are received
or made to reflect daily unrealized gains or losses. When the contracts are
closed, the fund recognizes a realized gain or loss. These investments require
initial margin deposits with a custodian, which consist of cash or cash
equivalents, up to approximately 10% of the contract amount. The amount of these
deposits is determined by the exchange or Board of Trade on which the contract
is traded and is subject to change. Contracts open at June 30, 1999 are set
forth in the Statement of Financial Futures.
(B) At June 30, 1999, accumulated net unrealized appreciation on investments and
financial futures was $666,727,404, consisting of $682,813,416 gross unrealized
appreciation and $16,086,012 gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
20
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For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request
to [email protected]
ON THE INTERNET Information
can be viewed online or
downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 026SA996
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