LETTER TO SHAREHOLDERS
Dear Shareholder:
For the fiscal year ended December 31, 1994, the annualized yield of
Dreyfus Liquid Assets, Inc. was 3.48%, which equals an annualized effective
yield of 3.54% after taking into account the effect of compounding.* It may
be of interest to note that in the last quarter, the three months ended
December 31, the annualized yield was 4.37% and the annualized effective
yield was 4.47%.
The year's returns for Dreyfus Liquid Assets, Inc. reflect the much lower
level of interest rates when the year began as well as the continuous rises
since then.
The performance of the U.S. economy last year was most impressive, in
spite of slow retail sales during the Christmas season. During the year, we
saw a robust housing market, booming automobile sales, notable expansion in
new jobs, a drop in the jobless rate, and expanding industrial production.
All this was accomplished with a very modest level of inflation, whether you
measure inflation by the existing numbers, or revise it downward as has been
suggested by the Chairman of the Federal Reserve Board, Alan Greenspan. In
January, Mr. Greenspan told Congress that he thinks the currently published
inflation numbers overstate the Consumer Price Index by .05 to 1.5%.
On February 1, 1995, the Federal Reserve took the seventh of the series
of steps it initiated last February to try to head off inflation, and
moderate the growth rate of the economy. In this latest step, the Federal
Reserve Board raised the Federal Funds rate to 6.00% and the closely watched
Discount Rate to 5 1/4%.
With most economic indicators still signalling continued strength in
business activity, it is quite possible that the Federal Reserve may act
again. In that event, we would expect still higher interest rates which, of
course, would produce still higher yields for short-term assets such as money
market funds.
As always, we will be watching the economic developments closely and will
not hesitate to make portfolio adjustments as required.
As announced by The Dreyfus Corporation, Joseph S. DiMartino has resigned
as President of The Dreyfus Corporation and as portfolio manager of Dreyfus
Liquid Assets, Inc. in order to assume new duties as Chairman of the Boards
of all Dreyfus mutual funds. I have worked closely with Mr. DiMartino for the
past 13 years and currently manage other Dreyfus money market funds.
I am committed to continuing the superior investment service this Fund
has provided to you in the past and look forward to serving your investment
needs of the future.
Sincerely,
(Patricia A. Larkin Signature Logo)
Patricia A. Larkin
Portfolio Manager
February 2, 1995
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested daily.
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--10.9% AMOUNT VALUE
---------------- --------------
<S> <C> <C>
Chase Manhattan Bank N.A. (London)
5.50%-6.56%, 1/6/95-5/22/95............................................. $ 140,000,000 $ 140,000,000
Fleet Bank of Massachusetts (London)
6.55%, 4/13/95.......................................................... 75,000,000 75,000,000
Harris Trust & Savings Bank (London)
5.55%-6.50%, 1/10/95-5/22/95............................................ 185,000,000 185,000,000
NationsBank of Texas N.A. (London)
5.13%, 3/17/95-3/20/95.................................................. 130,000,000 130,000,000
----------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $530,000,000)..................................................... $ 530,000,000
================
BANKERS' ACCEPTANCES--.2%
Bank of New York, Co. Inc.
6.55%, 4/27/95
(cost $9,793,456)....................................................... $ 10,000,000 $ 9,793,456
================
COMMERCIAL PAPER--67.5%
BHF Finance (Delaware) Inc.
5.58%, 1/11/95.......................................................... $ 50,000,000 $ 49,923,611
Bankers Trust New York Corp.
5.02%-5.58%, 1/6/95-2/17/95............................................. 190,000,000 189,575,592
Bear Stearns & Co. Inc.
5.84%-5.92%, 1/24/95-3/17/95............................................ 75,000,000 74,303,514
CS First Boston Inc.
5.11%, 1/11/95.......................................................... 50,000,000 49,930,556
Chase Manhattan Corp.
6.50%, 4/27/95.......................................................... 100,000,000 97,950,667
Ciesco L.P.
5.14%-6.48%, 1/20/95-4/10/95............................................ 51,000,000 50,553,330
Corporate Asset Funding Co. Inc.
5.47%, 1/10/95.......................................................... 24,500,000 24,466,925
Den Danske Corp. Inc.
5.09%-6.61%, 1/9/95-4/28/95............................................. 185,000,000 182,965,008
Ford Motor Credit Co.
6.44%-6.46%, 4/4/95-4/20/95............................................. 110,000,000 108,043,383
General Electric Capital Corp.
5.07%-6.56%, 1/9/95-4/28/95............................................. 221,000,000 218,734,216
General Electric Capital Services Inc.
5.14%-6.43%, 1/10/95-5/1/95............................................. 225,000,000 223,717,468
General Motors Acceptance Corp.
5.61%-6.49%, 1/10/95-4/20/95............................................ 240,000,000 237,725,439
Generale Bank Inc.
5.15%-5.23%, 1/12/95-3/17/95............................................ 95,000,000 94,675,542
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
---------------- --------------
Goldman Sachs Group L.P.
5.12%-6.48%, 1/5/95-4/20/95............................................. $ 233,000,000 $ 230,725,848
ITT Corp.
5.93%, 2/16/95.......................................................... 35,000,000 34,738,822
ITT Financial Corp.
5.51%-6.29%, 1/5/95-4/5/95.............................................. 195,000,000 193,182,624
Internationale Nederlanden (U.S.) Funding Corp.
5.41%, 2/2/95........................................................... 60,000,000 59,716,800
Lehman Brothers Holdings Inc.
5.14%-6.63%, 1/9/95-5/26/95............................................. 235,000,000 232,392,780
Merrill Lynch & Co. Inc.
5.51%-5.58%, 1/6/95-2/17/95............................................. 125,000,000 124,785,290
NYNEX Corp.
5.13%-6.29%, 1/13/95-4/7/95............................................. 210,000,000 207,602,169
Preferred Receivables Funding Corp.
5.46%, 1/18/95.......................................................... 48,100,000 47,977,572
Prudential Home Mortgage Company
5.08%, 1/31/95.......................................................... 25,000,000 24,896,875
Sears Roebuck Acceptance Corp.
5.45%-5.61%, 1/11/95-2/21/95............................................ 140,000,000 139,285,319
SwedBank Inc.
5.55%-6.53%, 1/23/95-5/22/95............................................ 235,000,000 232,202,669
Toronto-Dominion Holdings U.S.A. Inc.
6.49%-6.55%, 4/12/95-4/28/95............................................ 80,000,000 78,482,669
UBS Finance (Delaware) Inc.
6.25%, 1/3/95........................................................... 75,000,000 74,973,958
---------------
TOTAL COMMERCIAL PAPER (cost $3,283,528,646)................................ $3,283,528,646
================
CORPORATE NOTES--2.7%
Ford Motor Credit Co.
4.99%, 1/17/95.......................................................... $ 19,000,000 $ 19,003,112
General Electric Capital Corp.
3.54%, 1/19/95.......................................................... 25,000,000 24,999,179
Merrill Lynch & Co. Inc.
5.67%, 2/23/95-3/17/95 (a).............................................. 86,000,000 86,000,000
----------------
TOTAL CORPORATE NOTES (cost $130,002,291)................................... $ 130,002,291
================
SHORT-TERM BANK NOTES--8.0%
Comerica Bank
5.72%, 3/14/95 (a)...................................................... $ 25,000,000 $ 25,000,000
FCC National Bank (Delaware)
3.62%-3.70%, 1/19/95-2/3/95............................................. 150,000,000 149,998,161
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
SHORT-TERM BANK NOTES (CONTINUED) AMOUNT VALUE
---------------- --------------
First National Bank of Chicago
5.06%, 1/9/95........................................................... $ 25,000,000 $ 25,000,000
Huntington National Bank
3.66%, 1/10/95.......................................................... 59,000,000 59,000,573
NationsBank of North Carolina N.A.
6.25%-6.53%, 3/31/95-4/28/95............................................ 105,000,000 105,000,000
PNC Bank N.A.
5.25%, 2/13/95.......................................................... 25,000,000 25,000,000
----------------
TOTAL SHORT-TERM BANK NOTES (cost $388,998,734)............................. $ 388,998,734
================
U.S. GOVERNMENT AGENCIES--1.9%
Federal National Mortgage Association
Floating Rate Notes
5.97% 2/14/97(a)
(cost $90,000,000)...................................................... $ 90,000,000 $ 90,000,000
================
U.S. TREASURY BILLS--.5%
3.69%, 2/9/95
(cost $24,903,583)...................................................... $ 25,000,000 $ 24,903,583
================
TIME DEPOSITS--4.9%
Chemical Bank (London)
5.37%, 1/3/95........................................................... $ 201,000,000 $ 201,000,000
Republic National Bank of New York (London)
4.68%, 1/3/95........................................................... 38,459,000 38,459,000
----------------
TOTAL TIME DEPOSITS (cost $239,459,000)..................................... $ 239,459,000
================
REPURCHASE AGREEMENTS--3.7%
Eastbridge Capital Inc., 6.25%
dated 12/30/94, due 1/3/95 in the amount of $150,104,167
(fully collateralized by $159,215,000 U.S. Treasury Bills
due from 6/1/95-6/15/95, value $154,680,460)............................ $ 150,000,000 $ 150,000,000
Yamaichi International America Inc., 6.15%
dated 12/30/94, due 1/3/95 in the amount of $30,654,933
(fully collateralized by $30,000,000 U.S. Treasury Notes
7 3/4%, due 2/15/95, value $30,946,875)................................. 30,634,000 30,634,000
--------------
TOTAL REPURCHASE AGREEMENTS (cost $180,634,000)............................. $ 180,634,000
================
TOTAL INVESTMENTS (cost $4,877,319,710)............................ 100.3% $4,877,319,710
===== ================
LIABILITIES, LESS CASH AND RECEIVABLES............................. (.3%) $ (13,945,829)
===== ================
NET ASSETS......................................................... 100.0% $4,863,373,881
===== ================
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate - subject to periodic change.
See notes to financial statements.
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
Investments in securities, at value_Note 1(a,b)......................... $4,877,319,710
Cash.................................................................... 63,669,997
Interest receivable..................................................... 16,595,220
Prepaid expenses........................................................ 1,906,900
----------------
4,959,491,827
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 1,991,917
Payable for Common Stock redeemed....................................... 92,279,372
Accrued expenses........................................................ 1,846,657 96,117,946
------------- --------------
NET ASSETS ................................................................ $4,863,373,881
==============
REPRESENTED BY:
Paid-in capital......................................................... $4,866,273,824
Accumulated undistributed investment income-net......................... 652,902
Accumulated net realized (loss) on investments.......................... (3,552,845)
----------------
NET ASSETS at value applicable to 4,867,149,462 shares outstanding
(25 billion shares of $.10 par value Common Stock authorized)........... $4,863,373,881
==============
NET ASSET VALUE, offering and redemption price per share
($4,863,373,881 / 4,867,149,462 shares)................................. $1.00
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 206,207,936
EXPENSES:
Management fee_Note 2(a).............................................. $22,824,684
Shareholder servicing costs_Note 2(b)................................. 12,908,462
Prospectus and shareholders' reports.................................. 382,644
Custodian fees........................................................ 318,893
Professional fees..................................................... 94,157
Registration fees..................................................... 63,650
Directors' fees and expenses_Note 2(c)................................ 44,825
Miscellaneous......................................................... 294,557
-------------
TOTAL EXPENSES.................................................... 36,931,872
--------------
INVESTMENT INCOME--NET...................................................... 169,276,064
NET REALIZED GAIN ON INVESTMENTS--Note 1(b)................................. 329,169
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 169,605,233
===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994
---------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income_net................................................... $ 135,373,883 $ 169,276,064
Net realized gain on investments........................................ 178,144 329,169
---------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 135,552,027 169,605,233
---------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net................................................... (135,373,883) (168,623,162)
---------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 15,561,021,427 14,805,667,408
Dividends reinvested.................................................... 134,811,058 167,952,577
Cost of shares redeemed................................................. (16,369,977,245)(14,939,362,012)
---------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... (674,144,760) 34,257,973
---------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (673,966,616) 35,240,044
NET ASSETS:
Beginning of year....................................................... 5,502,100,453 4,828,133,837
---------------- --------------
End of year (including undistributed investment
income-net; $652,902 in 1994)......................................... $4,828,133,837 $4,863,373,881
================ ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $.9997 $.9992 $.9991 $.9991 $.9990
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income_net........................ .0764 .0570 .0341 .0261 .0348
Net realized gain (loss) on investments...... ._ (.0001) -_ (.0001) .0001
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS........... .0764 .0569 .0341 .0260 .0349
------- ------- ------- ------- -------
DISTRIBUTIONS;
Dividends from investment income_net......... (.0769) (.0570) (.0341) (.0261) (.0347)
------- ------- ------- ------- -------
Net asset value, end of year................. $.9992 $.9991 $.9991 $.9990 $.9992
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 7.99% 5.87% 3.47% 2.64% 3.53%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .65% .67% .72% .77% .76%
Ratio of net investment income to average net assets 7.66% 5.75% 3.43% 2.62% 3.49%
Net Assets, end of year (000's Omitted)...... $7,521,291 $6,200,255 $5,502,100 $4,828,134 $4,863,374
See notes to financial statements.
</TABLE>
DREYFUS LIQUID ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Directors to represent the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
and pay dividends from investment income-net on each business day. 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. To the extent that
net realized capital gain can be offset by capital loss carryovers, it is the
policy of the Fund not to distribute such gain.
On January 3, 1995, the Fund declared a cash dividend of approximately
$.0001 per share from undistributed investment income-net which includes
investment income-net for Saturday, December 31, 1994.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS LIQUID ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has an unused capital loss carryover of approximately $3,553,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1994. If not
applied, $1,356,000 of the carryover expires in 1995, $2,126,000 expires in
1997 and $71,000 expires in 1998.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is based on the average daily value of the Fund's net
assets and is computed at the following annual rates: 1/2 of 1% of the first
$1.5 billion; 48/100ths of 1% of the next $500 million; 47/100ths of 1% of
the next $500 million; and 45/100ths of 1% over $2.5 billion. The fee is
payable monthly.
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, interest on
borrowings, brokerage commissions and extraordinary expenses, exceed 1% of
the average value of the Fund's net assets for any full year. No expense
reimbursement was required pursuant to the Agreement for the year ended
December 31, 1994.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the year ended
December 31, 1994, the Fund was charged an aggregate of $3,822,518 pursuant
to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives an annual fee of $6,500 and an attendance fee of $500 per meeting.
DREYFUS LIQUID ASSETS, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS LIQUID ASSETS, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Liquid Assets, Inc., including the statement of investments, as of
December 31, 1994, 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 confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Liquid Assets, Inc. at December 31, 1994, and the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
January 27, 1995
DREYFUS LIQUID ASSETS, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 039AR9412
Liquid
Assets, Inc.
Annual Report
December 31, 1994
