DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Liquid Assets, Inc. for
the six-month period ended June 30, 1998. Your Fund produced an annualized yield
of 4.95% and, after taking into account the effect of compounding, the
annualized effective yield was 5.06%.*
THE ECONOMY AND MARKET ENVIRONMENT
A major influence on the money market in the past few months has been
increased evidence of a slowdown in general economic activity. Overall, the
economy appears to be healthy, the job market has been strong, consumers seem to
be in a constructive frame of mind and inflation has remained at bay. However,
the fast pace of expansion that prevailed earlier in the year has clearly
cooled.
The problems in Japan and Southeast Asia are finally having some repercussions
in this country. Demand for our exports from that part of the world has declined
sharply. Furthermore, the flight to the dollar which has resulted from the Asian
problems has made the U.S. dollar very expensive for those trading partners.
Lately, the virtual shutdown of U.S. production at General Motors plants, due
to the UAW strike in Flint, Michigan, has been another factor reducing the pace
of the economy.
Although growth in corporate profits has slowed in many sectors during the
past year, consensus estimates of future profit growth continue to be cut.
Profit margins had already begun to shrink under the weight of rising labor
costs, making companies' reported profits increasingly dependent on growth of
sales. Overall profits could thus prove quite vulnerable to a period of
significantly slower economic growth.
In view of this cooling trend, it has come as no surprise that the Federal
Reserve Board, though still watchful for signs of wage inflation, has not taken
any recent action to raise interest rates.
Thus, the money market is feeling the effects of economic cross-currents.
Factors tending to restrain interest rates include the demand for U.S.
instruments from foreign investors seeking a "safe haven" as well as the
prospect of the U.S. Government running a budget surplus, thus reducing the need
for Treasury borrowing. Yet, we believe that the continuing economic expansion,
albeit at a slower rate, helped to keep money market rates from going lower than
they did during the reporting period.
PORTFOLIO FOCUS
In this market environment, we maintained an average maturity in the Portfolio
somewhat longer than our peer group an effort to enhance yield during the
reporting period. Of course, we will look to vary our approach should new
factors in the market make this desirable.
Sincerely,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
July 15, 1998
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested daily.
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
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STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Principal
Negotiable Bank Certificates of Deposit--4.4% Amount Value
- ------------------------------------------------------- _______________ ______________
<S> <C> <C>
Bankers Trust Co.
5.53%-5.71%, 8/12/98-2/26/99 $ 80,000,000 $ 79,999,205
Chase Manhattan Bank N.A.
5.75%, 6/8/99 50,000,000 49,975,314
Morgan Guaranty Trust Co. (London)
5.52%, 10/14/98 60,500,000 60,542,271
Old Kent Bank & Trust (Yankee)
5.66%, 7/7/98(a) 25,000,000 25,000,000
_______________
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $215,516,790) $ 215,516,790
===============
</TABLE>
<TABLE>
<CAPTION>
Commercial Paper--50.1%
- -------------------------------------------------------
<S> <C> <C>
ABN Amro North America Finance Inc.
5.59%-5.70%, 9/25/98-1/4/99 $ 100,000,000 $ 97,924,944
Abbey National North America
5.57%, 10/9/98 10,000,000 9,851,528
BHF Finance (DE) Inc.
5.60%-5.64%, 7/24/98-9/8/98 235,000,000 233,545,627
BT Alex Brown Inc.
5.73%, 12/24/98 5,000,000 4,865,556
Bankers Trust New York Corp.
5.57%-5.62%, 10/14/98-10/23/98 65,000,000 63,933,354
Bear Stearns Companies Inc.
5.66%, 12/7/98 45,000,000 43,906,875
Canadian Imperial Holdings Inc.
5.56%, 8/12/98 200,000,000 198,714,800
Den Danske Corp. Inc.
5.54%, 11/3/98 40,000,000 39,261,111
Donaldson, Lufkin and Jenrette Inc.
5.64%, 7/24/98 50,000,000 49,821,750
FINOVA Capital Corp.
5.56%-5.74%, 7/16/98-2/22/99 156,000,000 154,422,348
Fleet Funding Corp.
5.56%-5.57%, 7/27/98-7/30/98 45,000,000 44,809,100
General Electric Capital Corp.
5.58%-5.59%, 7/20/98-9/4/98 120,000,000 119,032,642
General Electric Capital Services, Inc.
5.59%-5.74%, 9/4/98-9/29/98 90,000,000 88,920,333
General Motors Acceptance Corp.
5.86%, 8/18/98 50,000,000 49,624,000
DREYFUS LIQUID ASSETS, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Principal
Commercial Paper (continued) Amount Value
- -------------------------------------------------------
_______________ ______________
Generale Bank Inc.
5.60%, 10/16/98 $ 25,000,000 $ 24,595,406
Goldman, Sachs Group L.P.
5.70%-5.84%, 8/28/98-1/29/99 75,000,000 73,743,583
Heller Financial Inc.
5.73%-5.76%, 9/15/98-12/15/98 135,000,000 132,551,417
Hertz Corporation
5.57%-5.60%, 7/10/98-8/6/98 100,000,000 99,601,938
Lehman Brothers Holdings Inc.
5.71%-5.77%, 11/3/98-3/1/99 75,000,000 72,985,425
Merrill Lynch & Co., Inc.
5.61%, 9/8/98 50,000,000 49,477,708
Morgan (J.P.) & Co. Inc.
5.63%, 12/1/98 60,000,000 58,602,600
National Rural Utilities Cooperative Finance Corp.
5.56%, 8/24/98 28,000,000 27,769,000
Nordbanken N.A. Inc.
5.71%, 7/6/98 50,000,000 49,961,458
Paine Webber Group Inc.
5.71%-5.87%, 7/6/98-10/13/98 45,000,000 44,579,723
SBC Finance (DE) Inc.
5.64%, 12/11/98 65,000,000 63,387,206
Societe Generale N.A. Inc.
5.47%-5.56%, 7/16/98-7/17/98 150,000,000 149,645,389
Svenska Handelsbanken Inc.
5.58%-5.67%, 8/13/98-11/13/98 150,000,000 147,601,528
Swedbank Inc.
5.57%-5.73%, 7/10/98-12/24/98 145,000,000 143,680,111
Toronto Dominion Holdings USA Inc.
5.51%, 7/27/98 100,000,000 99,612,888
_______________
TOTAL COMMERCIAL PAPER
(cost $2,436,429,348) $2,436,429,348
===============
</TABLE>
<TABLE>
<CAPTION>
Corporate Notes--19.8%
- -------------------------------------------------------
<S> <C> <C>
BankBoston N.A.
5.66%, 1/11/99(a) $ 50,000,000 $ 49,989,790
Bear Stearns Companies, Inc.
5.57%-5.67%, 7/9/98-3/9/99(a) 155,000,000 155,000,000
General Motors Acceptance Corp.
5.58%-5.75%, 2/1/99-5/19/99 25,090,000 25,145,237
DREYFUS LIQUID ASSETS, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Principal
Corporate Notes (continued) Amount Value
- -------------------------------------------------------
_______________ ______________
Heller Financial Inc.
5.70%, 10/26/98-11/6/98(a) $ 100,000,000 $ 100,000,000
Lehman Brothers Holdings, Inc.
5.71%-5.80%, 9/25/98-3/22/99(a) 165,000,000 165,060,531
Merrill Lynch & Co., Inc.
5.60%-5.67%, 8/11/98-4/19/99(a) 130,000,000 130,000,000
Morgan (J.P.) & Co.
5.61%, 2/24/99(a) 20,000,000 19,994,535
PNC Bank, N.A.
5.61%-5.62%, 5/24/99-6/11/99(a) 190,000,000 189,870,508
Paine Webber Group Inc.
5.75%, 10/30/98(a) 30,000,000 30,000,000
Salomon Inc.
5.60%, 7/20/98(a) 100,000,000 100,008,446
_______________
TOTAL CORPORATE NOTES
(cost $965,069,047) $ 965,069,047
===============
</TABLE>
<TABLE>
<CAPTION>
Short-Term Bank Notes--20.9%
- -------------------------------------------------------
<S> <C> <C>
BankBoston N.A.
5.63%-5.77%, 11/2/98-4/15/99 $ 163,000,000 $ 162,985,709
Bankers Trust Co.
5.88%, 10/5/98 94,000,000 93,990,540
Comerica Bank
5.67%, 7/13/98(a) 100,000,000 99,998,886
Huntington National Bank
5.56%, 2/2/99 48,000,000 47,996,805
Key Bank N. A.
5.67%, 1/12/99(a) 100,000,000 99,973,934
LaSalle National Bank
5.62%-5.80%, 12/28/98-5/28/99 198,000,000 198,007,696
Morgan Guaranty Trust Co.
5.57%-5.83%, 8/31/98-2/4/99 85,000,000 85,004,972
Nationsbank N.A.
5.52%, 10/19/98 85,000,000 85,000,000
PNC Bank, N.A.
5.62%, 6/4/99(a) 45,000,000 44,967,801
SouthTrust Bank N.A.
5.61%, 6/18/99(a) 100,000,000 99,943,516
_______________
TOTAL SHORT-TERM BANK NOTES
(cost $1,017,869,859) $1,017,869,859
===============
DREYFUS LIQUID ASSETS, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Principal
Time Deposits--2.3% Amount Value
- ------------------------------------------------------- _______________ ______________
Republic National Bank of New York (London)
5.63%, 7/1/98
(cost $108,950,000) $ 108,950,000 $ 108,950,000
===============
TOTAL INVESTMENTS
(cost $4,743,835,044) 97.5% $4,743,835,044
======= =============
CASH AND RECEIVABLES (NET) 2.5% $ 123,034,894
======= ===============
NET ASSETS 100.0% $4,866,869,938
======= ===============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Variable interest rate-subject to periodic change.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
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STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $4,743,835,044 $4,743,835,044
Receivable for investment securities sold 94,933,305
Interest receivable 33,772,612
Prepaid expenses 1,208,047
_______________
4,873,749,008
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 2,521,777
Cash overdraft due to Custodian 4,113,304
Accrued expenses 243,989
_______________
6,879,070
_______________
NET ASSETS $4,866,869,938
===============
REPRESENTED BY: Paid-in capital $4,867,039,559
Accumulated net realized gain (loss) on investments (169,621)
_______________
NET ASSETS $4,866,869,938
===============
SHARES OUTSTANDING
(25 BILLION SHARES OF $.10 PAR VALUE COMMON STOCK AUTHORIZED) 4,867,914,927
NET ASSET VALUE offering and redemption price per share $1.00
=====
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income $134,498,951
EXPENSES: Management Fee--Note 2(a) $ 11,146,391
Shareholder servicing costs--Note 2(b) 7,160,456
Prospectus and shareholders' reports 209,791
Custodian fees 150,531
Registration fees 58,512
Professional fees 38,565
Directors' fees and expenses--Note 2(c) 35,881
Miscellaneous 9,995
_____________
Total Expenses 18,810,122
Less--reduction in management fee due to
undertaking--Note 2(a) (1,164,923)
_____________
Net Expenses 17,645,199
_____________
INVESTMENT INCOME--NET 116,853,752
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b) (99,240)
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $116,754,512
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
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STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
________________ _______________
<S> <C> <C>
OPERATIONS:
Investment income--net $ 116,853,752 $ 229,416,284
Net realized gain (loss) from investments (99,240) 1,828,717
_______________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations 116,754,512 231,245,001
_______________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (116,853,752) (229,416,284)
_______________ ________________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 8,720,691,974 18,330,869,555
Dividends reinvested 115,262,106 228,467,232
Cost of shares redeemed (8,535,277,334) (18,709,571,848)
_______________ ________________
Increase (Decrease) in Net Assets from Capital Stock Transactions 300,676,746 (150,235,061)
_______________ ________________
Total Increase (Decrease) in Net Assets 300,577,506 (148,406,344)
NET ASSETS:
Beginning of period 4,566,292,432 4,714,698,776
_______________ ________________
End of period $4,866,869,938 $ 4,566,292,432
=============== ================
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 period indicated. This information has been
derived from the Fund's financial statements.
Six Months Ended
June 30, 1998 Year Ended December 31,
___________________________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993
__________ ______ ______ ______ ______ ______
<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 .025 .049 .048 .053 .035 .026
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net (.025) (.049) (.048) (.053) (.035) (.026)
______ ______ ______ ______ ______ ______
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 5.00%* 5.04% 4.91% 5.45% 3.53% 2.64%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .75%* .74% .76% .79% .76% .77%
Ratio of net investment income to
average net assets 4.94%* 4.92% 4.76% 5.33% 3.49% 2.62%
Decrease reflected in above expense ratios
due to undertakings by the Manager .05%* .01% .02% -- -- --
Net Assets, end of period (000's Omitted) $4,866,870 $4,566,292 $4,714,699 $4,459,938 $4,863,374 $4,828,134
- -----------------------------
* Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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 in securities 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.
Under the terms of the custodian agreement, the Fund receives net earnings
credit based on available cash balances left on deposit.
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 $70,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1997. If not
applied, the carryover expires in 1998.
At June 30, 1998, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
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 had undertaken from January 1, 1998 through June 30, 1998 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) exceeded 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
$1,164,923 during the period ended June 30, 1998.
(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, 1998, the Fund was charged $3,809,781 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. During the period
ended June 30, 1998, the Fund was charged $2,527,077 pursuant to the transfer
agency agreement.
(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.
[dreyfus lion "d" logo] (reg.tm)
[dreyfus logo] (reg.tm)
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
Printed in U.S.A. 039SA986
Liquid
Assets, Inc.
Semi-Annual
Report
June 30, 1998
