June 30, 1997
<PAGE>
Dreyfus Liquid Assets, Inc.
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus Liquid Assets, Inc.
for its six-month reporting period ended June 30, 1997. Your Fund produced
an annualized yield of 4.85% and, after taking into account the effect of
compounding, the annualized effective yield was 4.96%.*
Economic Review
Since ending its 1995 mid-cycle slowdown, the economy has sustained an
above-trend growth trajectory, slowing only briefly in the third quarter of
1996 and again in recent months. Meanwhile, the level of economic activity is
now at the point where economic resources are near full deployment. Yet price
inflation remains quiescent, boosting the purchasing power of incomes and
contributing to the best sense of economic well-being in decades. In this
environment, economic policy has been benign, allowing market interest rates to
sway within an eighteen-month trading range and corporate profits to rise
steadily. However, even while the jury is out on the inflation risks ahead, the
Federal Reserve Board (the "Fed") has again indicated a one-way bias towards
tighter future policy.
Real Gross Domestic Product grew an above-trend 3.1% from year-end 1995 to
year-end 1996, then accelerated to more than 4.0% in the first half of this
year. However, this year's pattern shows growth concentrated into the first
quarter, when GDP surged 5.9%, while a slowdown to near 2.5% is apparent in the
second quarter. The slower near-term growth is attributable to a lackluster
retail sector, even though exports and capital spending are gaining. A key
issue is whether the absence of pent-up demand could lead to a sluggish
consumer profile and, hence, a slow GDP growth from here on. Indeed, factors
that could underpin a resumption of stronger spending are rising: real consumer
purchasing power, soaring household wealth and all-time highs in consumer
confidence. Additionally, inventories remain lean, muting the prospect of yet
slower economic growth.
Alongside evidence of a slower retail sector in the second quarter are
reports showing that unemployment fell below 5% and industrial capacity
utilization tightened towards its 1994 highs. With these developments, the
economy now is operating at a high level with little slack. Yet wage inflation
abated in the second quarter while price inflation continued to decelerate. The
absence of any troublesome sign of inflation has kept market interest rates in
a long-standing trading range. Even corporate profits continue to surprise on
the upside.
Views on the need to tighten monetary policy are divergent. There are those
who believe that inflation pressure points are just different than in the past
and others who believe the inflation cycle has been eliminated by global
factors and technology. However, by leaning towards tighter future policy, the
Fed is at least willing to err on the cautious side in the next several months.
The Money Market
The money market began the current calendar year in a reasonably steady mode
with fluctuations within a narrow band. As the year advanced, however, the
market became increasingly concerned that the Fed would raise interest rates.
Late in December, 1996, Fed Chairman Alan Greenspan made his highly publicized
remark about "irrational exuberance" in the equity markets. Early in 1997,
other central bank officials spoke on the same theme. So it was no great
surprise to the markets when the Fed, in late March, actually raised the short-
term interbank rate by one quarter of a point. This was done as a moderate dose
of preventive medicine against possible future inflation.
By late spring and early summer, however, signs of a slowdown in the economy
caused interest rates to simmer down. To be sure, there was the usual
nervousness before each subsequent scheduled meeting of the rate-setting
Federal Open Market Committee. Yet the general trend of rates most recently has
been to fluctuate moderately while working down to * somewhat lower levels.
<PAGE>
Portfolio Strategy
In this environment, we have stayed with our current strategy of maintaining
slightly longer average maturities than the industry average. The purpose, of
course, is to seek to improve the yields available to our investors. To date,
this has been a rewarding approach.
You may be assured that we will, as always, adapt portfolio strategy to the
prevailing market conditions in order to bring you competitive yields on your
cash reserves.
Once again, we would like to express our appreciation for your confidence in
Dreyfus Liquid Assets.
Sincerely,
Patricia A. Larkin
Senior Portfolio Manager
July 17, 1997
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested daily.
<PAGE>
Dreyfus Liquid Assets, Inc.
- ------------------------------------------------------------------------------
Statement of Investments June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal
Negotiable Bank Certificates of Deposit--8.7% Amount Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Bankers Trust Co.
5.72%-5.85%, 10/2/97-1/9/98 (a)........................................... $ 205,000,000 $ 204,937,751
Chase Manhattan Bank USA
5.50%, 7/9/97............................................................. 100,000,000 100,000,000
Huntington National Bank
5.70%, 8/4/97............................................................. 50,000,000 50,000,846
Morgan Guaranty Trust Co.
5.75%, 8/5/97............................................................. 50,000,000 50,001,125
--------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $404,939,722)....................................................... $ 404,939,722
==============
Commercial Paper--55.2%
- -----------------------------------------------------------------------------
AES Shady Point Inc.
5.83%-6.00%, 10/14/97-10/15/97 (b)........................................ $ 83,983,000 $ 82,555,874
Bankers Trust Co. New York Corp.
5.74%, 10/17/97(a)........................................................ 25,000,000 25,000,000
Bear Stearns Companies Inc.
5.61%-5.73%, 7/7/97-7/21/97............................................... 95,000,000 94,856,544
Canadian Imperial Holdings Inc.
5.66%, 7/7/97............................................................. 50,000,000 49,953,292
Den Danske Corp. Inc.
5.53%-5.90%, 7/22/97-10/31/97............................................. 75,000,000 74,350,153
Ford Motor Credit Co.
5.82%, 3/13/98............................................................ 150,000,000 144,071,250
General Electric Capital Corp.
5.49%-5.73%, 7/7/97-8/6/97................................................ 225,000,000 224,324,050
General Electric Capital Services, Inc.
5.50%-5.99%, 7/7/97-2/24/98............................................... 200,000,000 197,525,445
General Motors Acceptance Corp.
5.54%-5.81%, 7/1/97-12/5/97............................................... 210,000,000 208,618,152
Generale Bank Inc.
5.52%, 7/8/97............................................................. 48,000,000 47,949,880
Goldman Sachs Group L.P.
5.53%-5.68%, 9/5/97-10/31/97.............................................. 130,000,000 128,277,223
HSBC Americas Inc.
5.93%, 10/15/97........................................................... 100,000,000 98,304,000
Lehman Brothers Holdings, Inc.
5.78%-6.06%, 10/3/97-12/19/97............................................. 180,000,000 175,993,609
</TABLE>
<PAGE>
Dreyfus Liquid Assets, Inc.
- -----------------------------------------------------------------------------
Statement of Investments (continued) June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal
Commercial Paper (continued) Amount Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Merrill Lynch & Co., Inc.
5.42%-5.87%, 7/7/97-11/10/97.............................................. $ 170,000,000 $ 168,349,425
Mitsubishi Motors Credit of America Inc.
5.70%, 7/22/97 (a)........................................................ 30,000,000 29,901,125
Morgan Stanley Group Inc.
5.66%, 9/12/97............................................................ 100,000,000 98,868,500
Paine Webber Group Inc.
5.78%-5.92%, 7/24/97-12/1/97.............................................. 30,000,000 29,682,792
Sanwa Business Credit Corp.
5.73%-5.81%, 7/8/97-9/22/97............................................... 200,000,000 198,661,010
Societe Generale North America, Inc.
5.70%, 7/21/97............................................................ 75,000,000 74,765,833
Svenska Handelsbanken Inc.
5.50%, 8/11/97............................................................ 100,000,000 99,390,694
Swedbank Inc.
5.51%-5.87%, 7/1/97-11/10/97.............................................. 210,000,000 207,888,750
Toronto Dominion Holdings USA Inc.
5.61%, 10/6/97............................................................ 50,000,000 49,275,194
UBS Finance (DE) Inc.
6.05%, 7/1/97............................................................. 75,000,000 75,000,000
--------------
TOTAL COMMERCIAL PAPER
(cost $2,583,562,795)..................................................... $2,583,562,795
==============
Corporate Notes--15.4%
- -----------------------------------------------------------------------------
Bear Stearns Companies, Inc.
5.68%-5.83%, 7/11/97-1/13/98 (b).......................................... $ 125,000,000 $ 125,002,018
General Motors Acceptance Corp.
5.54%, 11/17/97........................................................... 14,878,000 15,000,430
Heller Financial Inc.
5.80%, 4/15/98 (b)........................................................ 40,000,000 40,000,000
IBM International Finance N.V.
5.79%, 1/28/98............................................................ 25,000,000 24,983,680
Key Bank N.A.
5.67%, 2/18/98 (b)........................................................ 50,000,000 49,984,634
Lehman Brothers Holdings, Inc.
5.53%, 8/29/97............................................................ 50,000,000 50,204,240
Merrill Lynch & Co., Inc.
5.72%-5.75%, 7/2/97-3/26/98 (b)........................................... 55,000,000 55,000,000
</TABLE>
<PAGE>
Dreyfus Liquid Assets, Inc.
- -----------------------------------------------------------------------------
Statement of Investments (continued) June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal
Corporate Notes (continued) Amount Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
PNC Bank, N.A.
5.68%, 2/18/98-4/24/98 (b)................................................ $ 210,000,000 $ 209,926,456
Salomon Inc.
5.85%, 6/1/98-7/20/98 (b)................................................. 150,000,000 150,000,000
--------------
TOTAL CORPORATE NOTES
(cost $720,101,458)....................................................... $ 720,101,458
==============
Short-Term Bank Notes--10.9%
- -----------------------------------------------------------------------------
Bank of America NT & SA
5.55%, 8/15/97............................................................ $ 100,000,000 $ 100,000,606
Comerica Bank
5.71%, 4/17/98 (b)........................................................ 50,000,000 49,980,825
Fifth Third Bank
5.70%-5.72%, 8/5/97-8/6/97................................................ 50,000,000 50,000,246
First National Bank of Boston
5.43%-6.00%, 8/13/97-3/23/98.............................................. 190,000,000 190,000,000
Morgan Guaranty Trust Co.
6.00%, 6/22/98............................................................ 100,000,000 99,967,020
PNC Bank, N.A.
6.15%, 5/28/98............................................................ 20,000,000 19,981,781
--------------
TOTAL SHORT TERM BANK NOTES
(cost $509,930,478)....................................................... $ 509,930,478
==============
U.S. Treasury Bills--3.1%
- -----------------------------------------------------------------------------
5.38%-5.64%, 2/5/98-6/25/98
(cost $143,120,542)....................................................... $ 150,000,000 $ 143,120,542
==============
U.S. Government Agencies--3.8%
- -----------------------------------------------------------------------------
Federal Farm Credit Banks, Floating Rate Note
5.67%, 8/8/97 (b)......................................................... $ 50,000,000 $ 49,994,966
Federal Home Loan Banks, Floating Rate Note
5.65%, 4/27/98 (b)........................................................ 50,000,000 50,061,753
Federal National Mortgage Association, Floating Rate Note
5.62%, 7/25/97 (b)........................................................ 80,000,000 80,000,000
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $180,056,719)....................................................... $ 180,056,719
=============
</TABLE>
<PAGE>
Dreyfus Liquid Assets, Inc.
- -----------------------------------------------------------------------------
Statement of Investments (continued) June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal
Time Deposit--.6% Amount Value
- ----------------------------------------------------------------------------- -------------- --------------
Principal Republic National Bank of New York (London)
6.13%, 7/1/97
<S> <C> <C>
(cost $28,701,000)........................................................ $ 28,701,000 $ 28,701,000
==============
Repurchase Agreements--2.0%
- -----------------------------------------------------------------------------
SBC Capital Corp.
5.85%, dated 6/30/97, due 7/1/97 in the amount of
$93,641,214 (fully collateralized by $100,000,000 U.S.
Treasury Bills due 4/30/98, value $95,507,556)
(cost $93,626,000)........................................................ $ 93,626,000 $ 93,626,000
==============
TOTAL INVESTMENTS
(cost $4,664,038,714)............................................... 99.7% $4,664,038,714
====== ==============
CASH AND RECEIVABLES (NET) ............................................ .3% $ 16,228,431
====== ==============
NET ASSETS............................................................ 100.0% $4,680,267,145
====== ==============
<FN>
Notes to Statement of Investments:
- -------------------------------------------------------
(a) Variable interest rate--subject to periodic change.
(b) Backed by an irrevocable letter of credit.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Liquid Assets, Inc.
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
--------------- ---------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments--Note 1(b)....................... $4,664,038,714 $4,664,038,714
Cash........................................... 51,856,421
Interest receivable............................ 29,430,177
Prepaid expenses............................... 629,874
--------------
4,745,955,186
--------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.. 2,983,821
Payable for shares of Common Stock redeemed.... 61,921,668
Accrued expenses............................... 782,552
--------------
65,688,041
--------------
NET ASSETS................................................................... $4,680,267,145
==============
REPRESENTED BY: Paid-in capital................................ $4,681,634,681
Accumulated net realized gain (loss) on investments (1,367,536)
--------------
NET ASSETS................................................................... $4,680,267,145
==============
SHARES OUTSTANDING
(25 billion shares of $.10 par value Common Stock authorized)................ 4,682,510,049
NET ASSET VALUE, offering and redemption price per share..................... $1.00
=====
</TABLE>
Statement of Operations Six Months Ended June 30, 1997 (Unaudited)
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income................................ $131,635,435
EXPENSES: Management fee--Note 2(a)...................... $11,077,596
Shareholder servicing costs--Note 2(b)......... 6,333,799
Prospectus and shareholders' reports........... 162,540
Custodian fees................................. 139,220
Registration fees.............................. 50,758
Directors' fees and expenses--Note 2(c)........ 38,423
Professional fees.............................. 34,178
Miscellaneous.................................. 49,652
-----------
Total Expenses............................ 17,886,166
Less--reduction in management fee due to
undertaking--Note 2(a)....................... (277,209)
-----------
Net Expenses.............................. 17,608,957
------------
INVESTMENT INCOME--NET....................................................... 114,026,478
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b)........................... 531,562
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................... $114,558,040
============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Liquid Assets, Inc.
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
---------------- -----------------
OPERATIONS:
<S> <C> <C>
Investment income--net................................................ $ 114,026,478 $ 219,245,338
Net realized gain (loss) on investments............................... 531,562 281,929
--------------- ---------------
Net Increase (Decrease) in Net Assets Resulting from Operations 114,558,040 219,527,267
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................ (114,026,478) (220,475,485)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:........................................ 10,502,993,954 20,551,870,721
Dividends reinvested:................................................. 113,441,779 219,063,717
Cost of shares redeemed:.............................................. (10,651,398,926) (20,515,225,668)
--------------- ---------------
Increase (Decrease) in Net Assets from Capital Stock Transactions (34,963,193) 255,708,770
--------------- ---------------
Total Increase (Decrease) in Net Assets....................... (34,431,631) 254,760,552
NET ASSETS:
Beginning of Period................................................... 4,714,698,776 4,459,938,224
--------------- ---------------
End of Period......................................................... $ 4,680,267,145 $ 4,714,698,776
=============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
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 period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ----------------------------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
----------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
Investment Operations:
Investment income--net................. .024 .048 .053 .035 .026 .034
----- ----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net.. (.024) (.048) (.053) (.035) (.026) (.034)
----- ----- ----- ----- ----- -----
Net asset value, end of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
TOTAL INVESTMENT RETURN................... 4.90%* 4.91% 5.45% 3.53% 2.64% 3.47%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .75%* .75% .79% .76% .77% .72%
Ratio of net investment income
to average net assets............... 4.85%* 4.76% 5.33% 3.49% 2.62% 3.43%
Decrease reflected in above expense ratios
due to undertakings by the Manager.. .01%* .02% -- -- -- --
Net Assets, end of period (000's Omitted)$4,680,267 $4,714,699 $4,459,938 $4,863,374 $4,828,134 $5,502,100
<FN>
- ------------
* Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Liquid Assets, Inc.
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Liquid Assets, Inc. (the "Fund") is registered under the
Investment
Company Act of 1940 ("Act") as a diversified open-end management investment
company. The Fund's investment objective is to provide investors with as high
a
level of current income as is consistent with the preservation of capital. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund
Services, Inc. is the distributor of the Fund's shares, which are sold to the
public without a sales charge.
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
per
share $1.00.
The Fund's 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 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.
(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.
The Fund has an unused capital loss carryover of approximately $1,899,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1996. If not
applied, $1,828,000 of the carryover expires in 1997 and $71,000 expires in
1998.
<PAGE>
Dreyfus Liquid Assets, Inc.
- ------------------------------------------------------------------------------
- -
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
At June 30, 1997, 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 value of the Fund's average daily 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 that if any full fiscal year the aggregate
expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed 1% of the value of the Fund's average net assets for any full
year, the Manager will refund to the Fund, or bear, the excess over 1%.
However,
the Manager has undertaken from January 1, 1997 through December 31, 1997 to
reduce the management fee paid by the Fund, to the extent that the Fund's
aggregate annual expenses (exclusive of certain expenses as described above)
exceed an annual rate of .75 of 1% of the value of the Fund's average daily
net
assets. The reduction in management fee, pursuant to the undertaking, amounted
to $277,209 during the period ended June 30, 1997.
(B) Under the Shareholder Services Plan, the Fund reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not
to
exceed an annual rate of .25 of 1% of the value of the Fund's average daily
net
assets for certain allocated expenses of providing personal services and/or
maintaining 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 period
ended June 30, 1997, the Fund was charged an aggregate of $2,679,019 pursuant
to
the Shareholder Services Plan.
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. Such compensation
amounted to $2,453,453 during the period ended June 30, 1997.
(C) 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.
<PAGE>
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
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
