The Dreyfus Fund
Incorporated
ANNUAL REPORT
December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues
(Unaudited)
The fund could be adversely affected if the computer systems used by Dreyfus and
the fund's other service providers do not properly process and calculate
date-related information from and after January 1, 2000. Dreyfus has taken steps
designed to avoid year 2000-related problems in its systems and to monitor the
readiness of other service providers. 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.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
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
22 Report of Independent Auditors
23 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Fund
The Dreyfus Fund
Incorporated
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for The Dreyfus Fund Incorporated,
covering the 12-month period from January 1, 1999 through December 31, 1999.
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,
Timothy M. Ghriskey.
The past year has been both highly volatile and rewarding for many investors in
U.S. stocks. On December 31, the last trading day of 1999, most major stock
market indices hit new highs, including the Dow Jones Industrial Average, the
S&P 500 Index of large-cap stocks, the technology-heavy Nasdaq 100 and the
Russell 2000 Index of small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the stock market's
advance in 1999, however. Following the trend established over the past several
years, growth-oriented stocks handily outperformed value-oriented stocks.
Indeed, until a more broad-based rally in the fourth quarter, stellar
performance was generally limited to a handful of highly valued technology and
telecommunications companies. In our view, many fundamentally sound companies in
other market sectors may be selling at attractive valuations.
We appreciate your confidence over the past year, and we look forward to your
continued participation in The Dreyfus Fund Incorporated.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF FUND PERFORMANCE
Timothy M. Ghriskey, Portfolio Manager
How did The Dreyfus Fund Incorporated perform relative to its benchmark?
For the one-year period ended December 31, 1999, The Dreyfus Fund Incorporated
produced a total return of 24.07%.(1) This performance exceeded the Standard &
Poor's 500((reg.tm) ) Composite Stock Price Index's ("S&P 500 Index") 21.03%
total return for the same period.(2)
We attribute this strong performance to the surprisingly rapid recovery of
global capital markets in the wake of 1998's sharp declines, and to the
broadening of market strength among large-cap stocks that occurred later in
1999. We believe the fund's superior performance as compared to the S&P 500
Index, our benchmark, was the result of our sector allocation and stock
selection strategies.
What is the fund's investment approach?
The Dreyfus Fund Incorporated invests primarily in stocks of well-established
U.S. companies that we believe demonstrate potential to outperform the S&P 500
Index with less volatility. Our investment approach targets 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 targets, 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
their operations, interview corporate management and conduct detailed surveys of
the competitive environment, seeking catalysts likely to
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
spark a 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 one-year period was a portfolio of
approximately 100 carefully selected stocks, the majority of which performed
well. Technology stocks represented a relatively large percentage of the fund's
holdings compared to the S&P 500 Index. Since technology drove much of the
market's advance throughout the year, our overweighting of this sector boosted
performance. We gained strong returns from market leaders such as Nokia, Sun
Microsystems and Cisco Systems.
We also realized notably good performance from several other sectors, most
notably consumer cyclicals, consumer staples and basic materials. Among consumer
cyclicals, we scored successes with companies such as Home Depot and Wal-Mart
Stores that implemented effective efforts to expand their business franchises
during the period. In the consumer staples sector, we targeted companies such as
Time Warner and Viacom that are finding innovative ways to combine media,
technology and telecommunications to deliver information to consumers and
business. Finally, in basic materials, we invested in companies poised to
benefit from increasing global economic activity. The fund strongly outperformed
the S&P 500 Index in this sector, benefiting from well-chosen investments in
providers of basic industrial products. One such company, Alcoa, appreciated in
value by more than 125% during the year.
What other factors influenced the fund's performance?
The fund's performance was positively affected by our ability to identify
winning stocks even in sectors that, on average, delivered relatively lackluster
returns during the year. For example, the fund significantly outperformed its
benchmark in the relatively weak sectors of health care and financial services.
Compared to the S&P 500, we took small positions in these two underperforming
sectors and realized relatively strong returns from the investments we held.
On the other hand, some holdings lagged, even within our best-performing
sectors. For example, despite the fund's strong overall returns in technology,
Storage Technology and Compaq Computer fell sharply. The fund also experienced
particularly disappointing performance from investments in communications
services, the one sector in which we significantly underperformed the S&P 500
Index. We attribute some of this underperformance to weakness in a few of the
fund's holdings, such as AT&T and Bell Atlantic. We also avoided some of the
sector's hottest performers because they failed to meet our conservative
investment criteria.
What is the fund's current strategy?
As of December 31, 1999, we have been encouraged by the market's broadening base
of strength. Both growth- and value-oriented stocks, especially those of
large-cap companies, performed relatively well during much of the year. Of
course, we cannot be certain that the market's positive trends will continue,
but we continue to believe that investors can benefit from an actively and
conservatively managed portfolio of high quality stocks. Accordingly, we have
adhered to our consistent, disciplined approach that seeks above-average growth
while managing risk.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE
STANDARD & POOR'S 500((reg.tm)) COMPOSITE STOCK PRICE INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Fund
<TABLE>
<CAPTION>
FUND PERFORMANCE
The Dreyfus Fund Incorporated $2,923,921
Standard and Poor's 500 Composite Stock Price Index + $3,617,332.
Comparison of change in value of $10,000 investment in The Dreyfus Fund
Incorporated and the Standard & Poor's 500 Composite Stock Price Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 12/31/99
Inception From
Date 1 Year 5 Years 10 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FUND 5/24/51 24.07% 18.21% 11.87% 12.62%
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
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 $10,000 INVESTMENT MADE IN THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE
REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A
WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE, WHICH DOES
NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION
RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE,
IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE
IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
December 31, 1999
COMMON STOCKS--100.1% Shares Value ($)
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BASIC INDUSTRIES--.4%
<S> <C> <C>
Weyerhaeuser 172,400 12,380,475
CONSUMER DURABLES--.9%
Ford Motor 287,000 15,336,562
General Motors 140,000 10,176,250
25,512,812
CONSUMER NON-DURABLES--5.6%
Anheuser-Busch Cos. 106,000 7,512,750
Coca-Cola 562,000 32,736,500
Gillette 246,000 10,132,125
Heinz (H.J.) 300,000 11,943,750
Kimberly-Clark 121,000 7,895,250
PepsiCo 368,000 12,972,000
Philip Morris Cos. 541,000 12,544,438
Procter & Gamble 473,000 51,823,062
RJ Reynolds Tobacco Holdings 239,600 4,222,950
Unilever, ADR 134,000 7,294,625
159,077,450
CONSUMER SERVICES--5.4%
CBS 286,000 (a) 18,286,125
Cendant 525,000 (a) 13,945,313
Clear Channel Communications 82,000 (a) 7,318,500
Comcast, Cl. A 173,000 8,693,250
Disney (Walt) 488,000 14,274,000
Gannett 66,000 5,383,125
McDonald's 309,000 12,456,563
MediaOne Group 221,000 (a) 16,975,562
Time Warner 442,000 32,017,375
Viacom, Cl. B 385,000 (a) 23,268,437
152,618,250
ELECTRONIC TECHNOLOGY--21.5%
Apple Computer 72,700 (a) 7,474,469
Applied Materials 89,000 (a) 11,275,187
Boeing 225,000 9,351,563
Cisco Systems 920,000 (a) 98,555,000
Compaq Computer 385,000 10,419,062
Dell Computer 576,000 (a) 29,376,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONIC TECHNOLOGY (CONTINUED)
EMC 357,000 (a) 39,002,250
Hewlett-Packard 241,000 27,458,938
Intel 750,000 61,734,375
International Business Machines 515,000 55,620,000
Lexmark International Group, Cl. A 85,000 (a) 7,692,500
Lucent Technologies 885,000 66,209,062
Motorola 212,000 31,217,000
Nokia Oyj, ADS 79,000 15,010,000
Nortel Networks 463,000 46,763,000
Qualcomm 144,000 (a) 25,380,000
Sun Microsystems 442,000 (a) 34,227,375
Tellabs 89,000 (a) 5,712,688
Texas Instruments 198,000 19,181,250
United Technologies 114,000 7,410,000
609,069,719
ENERGY MINERALS--5.3%
BP Amoco, ADS 304,000 18,031,000
Chevron 148,000 12,820,500
Conoco, Cl. B 508,902 12,658,927
Exxon Mobil 784,721 63,219,094
Royal Dutch Petroleum, ADR 616,000 37,229,500
Texaco 125,000 6,789,063
150,748,084
FINANCE--13.2%
Allstate 182,000 4,368,000
American Express 152,000 25,270,000
American General 181,000 13,733,375
American International Group 541,250 58,522,656
AXA Financial 216,000 7,317,000
Bank One 277,800 8,906,963
Bank of America 621,000 31,166,437
Bank of New York 250,600 10,024,000
Chase Manhattan 284,000 22,063,250
Citigroup 1,215,000 67,508,437
Federal National Mortgage Association 349,000 21,790,688
Fleet Boston Financial 559,000 19,460,187
GE Investment Private Placement Partners I, L.P. (Units) 5.798 (b) 10,420,671
COMMON STOCKS (CONTINUED) Shares Value ($)
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FINANCE (CONTINUED)
Merrill Lynch 85,000 7,097,500
Morgan (J.P.) 63,000 7,977,375
Morgan Stanley Dean Witter 201,000 28,692,750
Schwab (Charles) 186,000 7,137,750
Wells Fargo 590,000 23,858,125
375,315,164
HEALTH SERVICES--.6%
Columbia/HCA Healthcare 564,000 16,532,250
HEALTH TECHNOLOGY--8.0%
Abbott Laboratories 360,000 13,072,500
American Home Products 294,000 11,594,625
Amgen 242,000 (a) 14,535,125
Bristol-Myers Squibb 547,000 35,110,563
Galen Partners II, L.P. (Units) 3.468 (b) 2,942,106
Johnson & Johnson 314,000 29,241,250
Lilly (Eli) & Co. 255,000 16,957,500
Medtronic 274,000 9,983,875
Merck & Co. 567,700 38,071,381
Pfizer 905,500 29,372,156
Pharmacia & Upjohn 60,000 2,700,000
Schering-Plough 196,000 8,268,750
Warner-Lambert 194,000 15,895,875
227,745,706
INDUSTRIAL SERVICES--.1%
Yorktown Energy Partners, L.P. (Units) 2.231 (b) 2,162,089
NON-ENERGY MINERALS--.8%
Alcoa 205,000 17,015,000
Inco 195,000 (a) 4,582,500
21,597,500
PROCESS INDUSTRIES--1.7%
Dow Chemical 50,000 6,681,250
duPont (E.I.) deNemours 411,752 27,124,163
International Paper 93,000 5,248,688
Temple-Inland 94,700 6,244,281
Union Carbide 31,000 2,069,250
47,367,632
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER MANUFACTURING--6.9%
Caterpillar 81,000 3,812,063
General Electric 932,000 144,227,000
Honeywell International 268,125 15,467,461
Illinois Tool Works 100,000 6,756,250
Minnesota Mining & Manufacturing 94,000 9,200,250
Tyco International 380,200 14,780,275
194,243,299
RETAIL TRADE--8.9%
Dayton Hudson 103,000 7,564,063
Gap 292,000 13,432,000
Home Depot 766,500 52,553,156
Lowes 124,000 7,409,000
May Department Stores 189,000 6,095,250
SK Equity Fund, L.P. (Units) 16.484 (b) 53,733,200
Wal-Mart Stores 1,592,000 110,047,000
250,833,669
TECHNOLOGY SERVICES--10.7%
America Online 753,000 (a) 56,804,438
Charter Communications, Cl. A 535,700 (a) 11,718,437
Computer Associates International 140,000 9,791,250
eBay 39,500 (a) 4,944,906
Electronic Data Systems 219,000 14,659,313
Microsoft 1,186,000 (a) 138,465,500
Oracle 351,000 (a) 39,333,937
Yahoo! 60,000 (a) 25,961,250
301,679,031
TRANSPORTATION--.6%
Burlington Northern Santa Fe 389,000 9,433,250
CNF Transportation 218,100 7,524,450
16,957,700
UTILITIES--9.5%
AT&T 746,399 37,879,749
AT&T - Liberty Media Group, Cl .A 318,000 (a) 18,046,500
Bell Atlantic 154,000 9,480,625
BellSouth 424,000 19,848,500
Coastal 561,000 19,880,438
Enron 168,000 7,455,000
COMMON STOCKS (CONTINUED) Shares Value ($)
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UTILITIES (CONTINUED)
Global Crossing 176,000 (a) 8,800,000
GTE 388,000 27,378,250
MCI WorldCom 659,550 (a) 34,997,372
SBC Communications 776,288 37,844,040
Sprint (FON Group) 196,800 13,247,100
Sprint (PCS Group) 103,000 (a) 10,557,500
Texas Utilities 364,000 12,944,750
U S West 157,000 11,304,000
269,663,824
TOTAL COMMON STOCKS
(cost $1,896,102,692) 2,833,504,654
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Principal
SHORT-TERM INVESTMENTS--.2% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Banks,
1.50%, 1/3/2000
(cost $5,449,546) 5,450,000 5,449,546
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TOTAL INVESTMENTS (cost $1,901,552,238) 100.3% 2,838,954,200
LIABILITIES, LESS CASH AND RECEIVABLES (.3%) (8,329,404)
NET ASSETS 100.0% 2,830,624,796
(a) NON-INCOME PRODUCING.
(b) SECURITIES RESTRICTED AS TO PUBLIC RESALE. INVESTMENTS IN RESTRICTED
SECURITIES WITH AN AGGREGATE MARKET VALUE OF $69,258,066 REPRESENTING
APPROXIMATELY 2.4% OF NET ASSETS ARE AS FOLLOWS:
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Net
Acquisition Purchase Assets
Issuer Date Price ($)* (%) Valuation ($)**
- ------------------------------------------------------------------------------------------------------------------------------------
GE Investment Private
Placement Partners I, L.P. (Units) 5/28/91-9/13/95 1,797,287 .37 1,797,287 per unit
Galen Partners II, L.P. (Units) 1/28/93-1/3/97 848,358 .10 848,358 per unit
SK Equity Fund, L.P. (Units) 12/6/92-10/30/96 705,825 1.90 3,259,719 per unit
Yorktown Energy Partners, L.P.
(Units) 3/5/91-9/15/95 996,497 .07 969,112 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) $147,742
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 1,901,552,238 2,838,954,200
Dividends receivable 2,169,549
Receivable for investment securities sold 207,417
Receivable for shares of Capital Stock subscribed 31,000
Prepaid expenses 31,418
2,841,393,584
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 1,587,505
Cash overdraft due to Custodian 1,172,281
Payable for shares of Capital Stock redeemed 5,326,692
Payable for investment securities purchased 2,383,848
Accrued expenses 298,462
10,768,788
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,830,624,796
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,869,295,866
Accumulated net realized gain (loss) on investments
and foreign currency transactions 23,926,968
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b) 937,401,962
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,830,624,796
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(500 million shares of $1 par value Capital Stock authorized) 213,217,303
NET ASSET VALUE, offering and redemption price per share ($) 13.28
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $248,119 foreign taxes withheld at source) 29,136,889
Interest 794,605
TOTAL INCOME 29,931,494
EXPENSES:
Management fee--Note 3(a) 16,523,173
Shareholder servicing costs--Note 3(a) 1,375,416
Custodian fees--Note 3(a) 165,357
Professional fees 122,696
Directors' fees and expenses--Note 3(b) 85,446
Registration fees 55,081
Prospectus and shareholders' reports 34,306
Interest expense--Note 2 32,272
Loan commitment fees--Note 2 23,215
Miscellaneous 86,034
TOTAL EXPENSES 18,502,996
INVESTMENT INCOME--NET 11,428,498
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 112,627,223
Net realized gain (loss) on financial futures 2,660,917
NET REALIZED GAIN (LOSS) 115,288,140
Net unrealized appreciation (depreciation) on investments 449,043,472
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 564,331,612
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 575,760,110
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
----------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 11,428,498 21,005,290
Net realized gain (loss) on investments 115,288,140 124,164,624
Net unrealized appreciation (depreciation)
on investments 449,043,472 266,811,455
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 575,760,110 411,981,369
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (12,722,630) (24,854,366)
Net realized gain on investments (183,841,821) --
TOTAL DIVIDENDS (196,564,451) (24,854,366)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 679,848,709 823,497,590
Dividends reinvested 167,780,735 20,687,231
Cost of shares redeemed (982,845,166) (1,272,738,782)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (135,215,722) (428,553,961)
TOTAL INCREASE (DECREASE) IN NET ASSETS 243,979,937 (41,426,958)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,586,644,859 2,628,071,817
END OF PERIOD 2,830,624,796 2,586,644,859
Undistributed investment income--net -- 991,057
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 55,665,487 78,078,825
Shares issued for dividends reinvested 13,414,475 1,921,698
Shares redeemed (80,406,477) (120,120,204)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (11,326,515) (40,119,681)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 11.52 9.93 10.82 10.42 11.93
Investment Operations:
Investment income--net .05(a) .10 .10 .08 .22
Net realized and unrealized
gain (loss) on investments 2.65 1.60 1.01 1.57 2.57
Total from Investment Operations 2.70 1.70 1.11 1.65 2.79
Distributions:
Dividends from investment income--net (.06) (.11) (.08) (.09) (.22)
Dividends from net realized gain on
investments (.88) -- (1.78) (1.16) (4.08)
Dividends in excess of net realized gain
on investments -- -- (.14) -- --
Total Distributions (.94) (.11) (2.00) (1.25) (4.30)
Net asset value, end of period 13.28 11.52 9.93 10.82 10.42
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 24.07 17.15 10.75 15.85 23.77
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .71 .73 .71 .73 .74
Ratio of net investment income
to average net assets .43 .82 .85 .70 1.56
Portfolio Turnover Rate 58.61 109.61 201.10 220.92 269.26
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,830,625 2,586,645 2,628,072 2,698,767 2,653,539
(a) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
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"),
which is a wholly-owned subsidiary of Mellon Financial Corporation. 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
NOTES TO FINANCIAL STATEMENTS (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.
During the period ended December 31, 1999, the fund increased accumulated
undistributed investment income-net by $303,075 and
decreased paid-in capital by $303,075. Net assets were not affected by this
reclassification.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund at rates based on prevailing
market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended
December 31, 1999 was approximately $551,800 with a related weighted average
annualized interest rate of 5.85%.
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 December 31, 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 December 31, 1999, the fund was charged $972,171 pursuant to the transfer
agency agreement.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The fund compensates Mellon under a custody agreement for providing custodial
services for the fund. During the period ended December 31, 1999, the fund was
charged $165,357 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.
(c) During the period ended December 31, 1999, the fund incurred total brokerage
commissions of $2,996,216, of which $81,576 was paid to Dreyfus Brokerage
Services, a wholly-owned subsidiary of Mellon Financial Corporation.
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
December 31, 1999, amounted to $1,519,578,048 and $1,813,850,147, 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. 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 custodian, which consist of cash or cash
equivalents, up to approximately 10% of the contract amount. The amount of these
deposits is determined by the exchange or Board of Trade on which the contract
is traded and is subject to change. At December 31, 1999, there were no open
financial futures contracts outstanding.
(b) At December 31, 1999, accumulated net unrealized appreciation on investments
was $937,401,962, consisting of $978,296,356 gross unrealized appreciation and
$40,894,394 gross unrealized depreciation.
At December 31, 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).
The Fund
REPORT OF 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, 1999, 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification by examination of
securities held by the custodian as of December 31, 1999 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, 1999, 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 accounting principles generally accepted in the United
States.
Ernst & Young LLP
(signature logo)
New York, New York
February 3, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.325 per share as a
long-term capital gain distribution of the $.435 per share paid on December 20,
1999 and also designates $.455 per share as a long-term capital gain
distribution of the $.470 per share paid on June 30, 1999.
The fund also designates 85.23% of the ordinary dividends paid during the fiscal
year ended December 31, 1999 as qualifying for the corporate dividends received
deduction.
The Fund
NOTES
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) 2000 Dreyfus Service Corporation 026AR9912
