YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Liquid Assets, Inc. for
the 12-month period ended December 31, 1998. Your Fund produced a yield of 4.86%
and, after taking into account the effect of compounding, the effective yield
was 4.97%.*
ECONOMIC REVIEW
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year, but world economic weakness generated powerful enough disinflationary
forces that the Fed acted instead to ease credit beginning in September. After
many years of subpar economic growth, continental Europe moved into a sustained
economic expansion. The overall European economy benefited as interest rates in
peripheral countries such as Spain and Italy fell, approaching the lower levels
established by Germany, on the eve of currency unification. Unlike the U.S.,
Europe has substantial excess capacity of productive plant and labor. In Asia,
weak economies were pervasive as a result of a financial crisis. The Latin
American economies weakened in turn as the financial stresses spread throughout
that region. On balance, there was a substantial weakening of the world economy
over the course of 1998 moderated mainly by the American consumer's role as
"spender of last resort."
A main influence on the U.S. economy during the year was the foreign financial
crisis and consequent cooling of the world economy. The positive effects hit
first. Actual inflation and expected inflation dropped, causing a decline in
long-term Treasury bond yields and mortgage rates. This caused a boom in
housing. The fall in inflation left more of the growth in consumer income with
which to buy goods and services. Thus, consumers benefited from a combination of
good growth in income after inflation, a strong labor market, and increases in
the prices of assets they owned, including bonds, stocks and real estate. In a
sense, 1998 was a year of disinflationary boom in the U.S., as above-trend
economic growth coincided with negligible inflation.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports.
Evidence of a weaker world economy accumulated during 1998 as the financial
stresses continued. A worsened financial crisis occurred between the Russian
default in mid-August and the fallout from the Long Term Capital Management
hedge fund crisis through early October. However, energetic steps were taken to
stabilize the Japanese banks, design a support package for Brazil, ease monetary
policy, and help overinvested financial institutions rebuild their cash
reserves. Indications of a calming of financial fears were evident in the final
months of the year. In any case, there appears to have been a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
The global economy survived a triple financial crisis in 1998 from Japan,
emerging market countries and overextended financial institutions. Excess
capacity persists in many worldwide industries after years of high capital
spending followed by the onset of a worldwide weakening in demand. Fortunately,
the U.S. has led the world in making the transition away from the old
manufacturing industries to the new growth industries, such as biotechnology,
software, computer hardware and the Internet. This contributed to the favorable
combination of low unemployment and low inflation in the U.S., and may yet lead
toward more efficient allocation of capital elsewhere in the world.
As 1998 ended, interest rates set by central banks remained in a downtrend in
most parts of the world including Europe and the U.S. A similar trend had even
begun in many emerging countries, as the stresses of financial crisis relaxed.
MARKET ENVIRONMENT/PORTFOLIO FOCUS
The economic forces described above drove down interest rates in late summer
and early fall. Later in the year there was a modest increase in rates. One of
its effects was to change the yield curve from one that had been negative to a
positive, sloping structure. In this normal configuration, longer-term yields
exceeded those of the shorter-term instruments.
A flight to safety by global investors was the force that drove down
longer-term U.S. yields last fall. In recent weeks, investors appear to have
become more confident about the economic outlook. One factor has been the rise
in interest rates in Japan, which brought about some repatriation of investment
funds to that country. In addition, the introduction of the Euro currency at the
start of the new year, which was well received, put some downward pressure on
the U.S. dollar.
Investor fears of worldwide financial turmoil seemed to have receded recently.
Currently, prices and rates in the money market appear to be reacting more to
underlying economic forces than to such market psychology factors. This, of
course, can be constructive for investors in short-term money market
instruments.
The fact that the Federal Reserve Open Market Committee lowered interest rates
three times between late September and year-end has been a strong
confidence-building factor in the markets. Currently, we expect the Fed to
remain in a "wait and see" mode for a while.
During the reporting period, we lengthened the average portfolio maturity, as
we deemed appropriate in order to take advantage of possible declining interest
rates. We will continue to monitor the market, including interest rates, in
seeking investment opportunities for the Fund.
Sincerely,
[Patricia A. Larkin signature]
Patricia A. Larkin
Senior Portfolio Manager
January 13, 1999
New York, N.Y.
* Effective yield is based upon dividends declared daily and reinvested daily.
<TABLE>
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Principal
Negotiable Bank Certificates of Deposit--6.0% Amount Value
- ------------------------------------------------------- _____________ _______________
<S> <C> <C>
Bankers Trust Co.
5.71%, 2/26/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000,000 $ 49,997,059
Bankers Trust Co. (Yankee)
4.89%, 7/23/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000 19,992,999
Chase Manhattan Bank N.A.
5.00%-5.75%, 6/8/99-8/3/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,500,000 101,620,865
Union Bank of California
5.12%-5.16%, 4/1/99-4/28/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000,000 150,000,000
_______________
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $321,610,923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 321,610,923
===============
COMMERCIAL PAPER--50.2%
- -------------------------------------------------------
ABN Amro North America Finance Inc.
5.70%, 1/4/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000,000 $ 49,977,125
Abbey National North America
5.40%, 1/14/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000 49,904,306
BHF Finance (DE) Inc.
5.50%, 3/5/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000,000 69,344,625
Bank of America FSB
5.03%-5.10%, 5/11/99-5/13/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000,000 108,008,050
Bear Stearns Companies Inc.
5.62%, 1/29/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000 99,573,778
Canadian Imperial Holdings Inc.
4.89%-5.08%, 4/26/99-6/29/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000,000 265,066,805
Chase Manhattan Corp.
5.05%, 1/29/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000 99,612,666
Chrysler Financial Corp.
5.28%, 1/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000 99,797,388
Finova Capital Corp.
5.32%-5.69%, 1/28/99-3/19/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266,000,000 263,962,542
General Electric Co.
5.07%, 4/16/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 24,636,875
General Electric Capital Corp.
5.08%-5.51%, 2/11/99-4/13/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000,000 267,458,022
General Electric Capital Services, Inc.
5.64%, 1/27/99-2/1/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000 99,565,736
Goldman, Sachs Group L.P.
5.01%-5.70%, 1/29/99-5/28/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,000,000 222,373,110
HSBC Americas
5.12%, 9/2/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000 28,997,973
Heller Financial Inc.
5.08%-5.45%, 3/22/99-5/5/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000,000 157,830,883
Hertz Corporation
5.20%-5.65%, 1/13/99-3/26/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000,000 199,091,485
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Commercial Paper (continued) Amount Value
- ------------------------------------------------------- _____________ _______________
Lehman Brothers Holdings Inc.
5.77%, 1/15/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,000,000 $ 34,924,731
Merrill Lynch & Co., Inc.
5.71%, 3/26/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000 49,360,667
Morgan (J.P.) & Co. Inc.
5.20%-5.43%, 1/25/99-2/16/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000,000 94,528,508
Morgan Stanley, Dean Witter Co.
5.64%, 1/22/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 24,919,938
Nordbanken N.A. Inc.
5.63%, 2/12/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000,000 22,853,222
Paine Webber Group Inc.
5.71%, 1/7/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000,000 21,979,467
Salomon Smith Barney Holdings Inc.
5.60%, 2/18/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000,000 34,745,667
Societe Generale N.A., Inc.
5.04%-5.63%, 1/4/99-7/2/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,000,000 128,629,442
Swedbank Inc.
5.20%-5.26%, 2/22/99-3/8/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000 99,157,750
Toronto Dominion Holdings USA Inc.
5.68%, 4/6/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000,000 88,705,625
_______________
TOTAL COMMERCIAL PAPER
(cost $2,705,006,386) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,705,006,386
===============
CORPORATE NOTES--15.0%
- -------------------------------------------------------
BankBoston N.A.
4.91%, 1/11/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000,000 $ 49,999,474
Bear Stearns Companies, Inc.
4.80%-5.69%, 2/26/99-4/16/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000,000 110,000,715
CIT Group Holdings Inc.
4.87%-4.97%, 9/21/99-11/2/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,000,000 146,968,858
General Motors Acceptance Corp.
5.48%-5.68%, 2/1/99-5/19/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,090,000 25,113,029
Heller Financial Inc.
5.00%, 9/8/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 15,000,000
Key Bank N.A.
4.87%, 9/23/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 24,996,457
Lehman Brothers Holdings, Inc.
4.96%-5.05%, 1/13/99-3/22/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000,000 85,000,000
Merrill Lynch & Co., Inc.
4.85%-4.87%, 2/22/99-9/1/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000,000 104,996,671
Morgan (J.P.) & Co.
4.86%, 2/24/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000 19,998,760
PNC Bank, N.A.
4.86%-4.87%, 5/24/99-6/11/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000,000 189,941,623
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Corporate Notes (continued) Amount Value
- ------------------------------------------------------- _____________ _______________
Paine Webber Group Inc.
6.07%, 11/4/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,000,000 $ 35,000,000
_______________
TOTAL CORPORATE NOTES
(cost $807,015,587) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 807,015,587
===============
SHORT-TERM BANK NOTES--26.1%
- -------------------------------------------------------
BankBoston N.A.
4.93%-5.77%, 2/26/99-9/10/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . $220,000,000 $ 219,982,861
First Union National Bank
4.83%-5.56%, 3/26/99-7/23/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,000,000 245,003,186
Huntington National Bank
5.56%, 2/2/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000,000 47,999,527
Key Bank N.A.
4.84%-4.92%, 1/12/99-9/3/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000,000 219,979,314
LaSalle National Bank
5.11%-5.70%, 1/5/99-5/28/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238,000,000 238,000,046
Morgan Guaranty Trust Co.
5.57%-5.69%, 1/8/99-2/4/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000,000 34,999,609
NationsBank N.A.
4.87%-5.57%, 2/22/99-1/5/2000 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,000,000 154,988,407
PNC Bank, N.A.
4.87%, 6/4/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000,000 44,985,329
SouthTrust, Bank N.A.
4.86%, 6/18/99-7/6/99 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000,000 199,943,196
_______________
TOTAL SHORT-TERM BANK NOTES
(cost $1,405,881,475) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,405,881,475
===============
U.S. TREASURY BILLS--.9%
- -------------------------------------------------------
4.16%, 9/16/99
(cost $48,566,667) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000,000 $ 48,566,667
================
TIME DEPOSIT--2.3%
- -------------------------------------------------------
Republic National Bank of New York (London)
2.88%, 1/4/99
(cost $124,592,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $124,592,000 $ 124,592,000
===============
TOTAL INVESTMENTS
(cost $5,412,673,038) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.5% $5,412,673,038
======= ===============
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . (.5%) $ (28,140,839)
======== ===============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $5,384,532,199
======= ===============
NOTES TO STATEMENT OF INVESTMENTS:
- -----------------------------------------------------------------------------
(a) Variable interest rate--subject to periodic change.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_______________ _______________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $5,412,673,038 $5,412,673,038
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 74,369,784
Interest receivable . . . . . . . . . . . . . . . . . . . 40,318,097
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 1,152,542
_______________
5,528,513,461
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 2,580,729
Payable for shares of Common Stock redeemed . . . . . . . 101,522,671
Payable for investments securities purchased . . . . . . 39,597,222
Accrued expenses . . . . . . . . . . . . . . . . . . . . 280,640
_______________
143,981,262
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,384,532,199
===============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $5,384,525,919
Accumulated net realized gain (loss) on investments . . . 6,280
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,384,532,199
===============
SHARES OUTSTANDING
(25 BILLION SHARES OF $.10 PAR VALUE COMMON STOCK AUTHORIZED). . . . . . . . . . . . . . . 5,385,401,287
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $1.00
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income . . . . . . . . . . . . . . . $283,302,243
EXPENSES: Management fee--Note 2(a) . . . . . . . . . . . . $ 23,802,618
Shareholder servicing costs--Note 2(b) . . . . . 13,068,869
Prospectus and shareholders' reports . . . . . . 749,723
Custodian fees . . . . . . . . . . . . . . . . . 250,849
Registration fees . . . . . . . . . . . . . . . . 99,388
Professional fees . . . . . . . . . . . . . . . . 83,871
Directors' fees and expenses--Note 2(c) . . . . . 77,187
Miscellaneous . . . . . . . . . . . . . . . . . . 262,128
_____________
Total Expenses . . . . . . . . . . . . . . 38,394,633
Less--reduction in management fee due to
undertaking--Note 2(a) . . . . . . . . . . . . (718,983)
_____________
Net Expenses . . . . . . . . . . . . . . . 37,675,650
______________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,626,593
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b) . . . . . . . . . . . . . . . . 76,661
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . $245,703,254
==============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS LIQUID ASSETS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
___________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 245,626,593 $ 229,416,284
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . 76,661 1,828,717
__________________ __________________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . 245,703,254 231,245,001
__________________ __________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (245,626,593) (229,416,284)
__________________ __________________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 18,785,165,495 18,330,869,555
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,052,633 228,467,232
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,212,055,022) (18,709,571,848)
__________________ __________________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . 818,163,106 (150,235,061)
__________________ __________________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . 818,239,767 (148,406,344)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,566,292,432 4,714,698,776
__________________ __________________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,384,532,199 $ 4,566,292,432
================== ==================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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.
Year Ended December 31,
_____________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
_______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .049 .049 .048 .053 .035
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.049) (.049) (.048) (.053) (.035)
_______ _______ _______ _______ _______
Net asset value, end of period . . . . . . . . . . . . . ($1.00) $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 4.97% 5.04% 4.91% 5.45% 3.53%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . .. .74% .74% .76% .79% .76%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . . . . . 4.85% 4.92% 4.76% 5.33% 3.49%
Decrease reflected in above expense ratios due to
undertakings by the Manager . . . . . . . . . . . . . .01% .01% .02% -- --
Net Assets, end of period (000's Omitted) . . . . . . . . $5,384,532 $4,566,292 $4,714,699 $4,459,938 $4,863,374
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS LIQUID ASSETS, INC.
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NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Liquid Assets, Inc. (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 as high a level of current income as is 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. 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 per share of
$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 custody 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 of 1986, as amended (the "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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
At December 31, 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.
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NOTES TO FINANCIAL STATEMENTS (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%. The
Manager had undertaken from January 1, 1998 through December 31, 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
$718,983 during the period ended December 31, 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
December 31, 1998, the Fund was charged $6,647,808 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 December 31, 1998, the Fund was charged $5,171,158 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 LIQUID ASSETS, INC.
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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, 1998, 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 and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1998 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, 1998, 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.
New York, New York
February 1, 1999
DREYFUS LIQUID ASSETS, INC.
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PROXY RESULTS (UNAUDITED)
Stockholders voted on the following proposals presented at a special meeting
of stockholders (or adjournment thereof) held on September 11, 1998 and October
9, 1998, as noted below. Both Proposals were approved. Each Proposal as listed
on the proxy card, the number of shares voted and the date on which votes on the
proposal were taken are as follows:
September 11, 1998
1. To change certain of the Fund's investment restrictions.
(1A) Investing in equity and debt securities
Affirmative: 2,228,641,250.452
Against: 328,243,063.078
Abstain: 178,399,374.925
(1B) Borrowing money
Affirmative: 2,221,976,302.742
Against: 334,711,770.058
Abstain: 178,595,615.655
(1C) Pledging assets
Affirmative: 2,225,868,872.382
Against: 330,084,708.478
Abstain: 179,330,107.595
(1D) Short-selling
Affirmative: 2,207,125,174.432
Against: 349,400,370.318
Abstain: 178,758,143.705
(1E) Put and call options
Affirmative: 2,213,828,441.282
Against: 342,844,517.548
Abstain: 178,610,729.625
(1F) Acting as underwriter
Affirmative: 2,278,366,784.592
Against: 278,077,205.618
Abstain: 178,839,698.245
(1G) Purchasing securities on margin
Affirmative: 2,262,993,794.042
Against: 293,539,016.808
Abstain: 178,750,877.605
(1H) Illiquid Securities
Affirmative: 2,267,116,298.072
Against: 288,705,711.668
Abstain: 179,461,678.715
(1I) Issuer diversification
Affirmative: 2,224,188,976.802
Against: 331,690,712.788
Abstain: 179,403,998.865
(1J) Bank and other industry concentration
Affirmative: 2,281,704,965.622
Against: 274,889,125.098
Abstain: 178,689,597.735
DREYFUS LIQUID ASSETS, INC.
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PROXY RESULTS (UNAUDITED) (CONTINUED)
(1K) Investing to exercise control
Affirmative: 2,221,640,882.282
Against: 334,475,459.728
Abstain: 179,167,346.445
(1L) Investing in other investment companies
Affirmative: 2,275,190,379.102
Against: 281,596,426.188
Abstain: 178,496,883.165
October 9, 1998
2. To approve an amendment to the Fund's Articles of Incorporation to permit
the Fund to impose a service fee on certain small accounts to be collected by
redeeming shares from the relevant stockholder accounts.
Affirmative: 2,503,850,304.290
Against: 619,180,409.250
Abstain: 149,228,714.775
[reg.tm 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. 039AR9812
Liquid
Assets, Inc.
Annual Report
December 31, 1998
