<PAGE>
Dreyfus
Equity Dividend
Fund
Semi-Annual
Report
April 30, 1998
<PAGE>
Dreyfus Equity Dividend Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this semi-annual report for Dreyfus
Equity Dividend Fund for the six-month period ended April 30, 1998. Over
this period, your Fund produced a total return of 13.12%* which compares
with a total return of 22.50% for the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500")** and 19.78% for the Standard & Poor's
Barra Value Index.***
The performance of the Fund during this period was certainly below our
expectations when compared to these indices. Given that we position the Fund
for where we believe the market is going and not where it has been, it can
take time for the market to realize the potential value of our
investments. Value investing can require some patience. Regardless, we
have made changes in the holdings, and hope to look back on this period as
one of abnormality.
Performance during these past six months was somewhat restrained by
our disciplined value investing approach. We believed that the valuation
of most major market benchmarks and many of the largest securities had
become excessive during this period and constructed an investment portfolio
with a relatively low correlation to the S&P 500. In doing so, we believed
that the risk level of the Fund was significantly lower than that of this
and other major benchmarks, and that the values we uncovered potentially
would be realized. Unfortunately, during the fall months, the Fund was
negatively impacted by the Asian economic crisis. Many of the same
companies and sectors that had done so well earlier in 1997 were penalized
during the fourth calendar quarter due to either export exposure to Asian
countries or commodity exposure that might hurt selling prices in a weaker
global marketplace. Late in the calendar year, we restructured the Fund's
security holdings for this new economic environment, favoring domestically
oriented companies and businesses with less economic cyclicality.
Economic Review
Although real Gross Domestic Product (GDP) sustained a growth
trend approaching 4% into the first quarter, incoming evidence suggests a
shift to somewhat slower economic growth in coming months. Aggregate profit
margins have already begun to narrow in some sectors. The conflicting
pressures of a softening economy and a still tightening labor market
have kept the Federal Reserve Board in neutral, although a bias favoring
higher interest rates was resumed recently. Market interest rates have
likewise stayed within a narrow range in recent months.
While manufacturing has turned appreciably sluggish since year-end, this
was overshadowed in the first quarter by a strong rebound in domestic
demand. The industrial sector has been slowed by the strong dollar and
by weak exports. However, with Asian economies still in turmoil, competition
from Asian-made imports has emerged only gradually. The first quarter rebound
in domestic demand was fueled primarily by strong housing market
conditions and rising real household incomes.
Market Overview
Equity prices during the six months ended April 30, 1998 continued to
display some volatility, most of the time ultimately ending up on the
upside. The U.S. equity markets quickly rebounded from the financial crisis
in Asia.
<PAGE>
Occasionally, there are temporary setbacks due to worries about inflation
and concern about the corporate profit outlook. During the first calender
quarter, however, the markets resumed their upward surge. As the market
entered the second quarter, interest rate fears have held prices in a fairly
narrow trading range.
Value Investing and Our Investment Process
While there are other investment disciplines practiced at Dreyfus,
the Dreyfus Equity Value Team passionately believes in value investing.
As value investors, we want to buy growing companies, but we want to pay
as little for them as we can. In this sense, it is a lower-risk, more
conservative style of equity investing.
Our approach to the selection of securities starts and ends with
our analysts, who are an integral part of our investment team. Our Dreyfus
analysts contribute their proprietary forecasts to our computer models,
their analysis and opinions to our decision-making process, and their
constant flow of information to our ongoing assessment of securities
owned. We screen the universe of stocks by computer according to two
principal methods. The first computer screen determines value by identifying
companies with a dividend yield (current dividend divided by the current
market price) that is greater than the dividend yield of the overall S&P 500.
Being paid more than the average dividend rate for the risk inherent in
equity investing is central to our value discipline. The second
computer screen looks at 19 other factors that have historically
influenced stock returns. We input into this model the current economic
and stock market trends, and the computer calculates each security's
exposure to this environment. Combining all of this data with our
analysts' in-depth knowledge of the individual companies, we then construct a
portfolio of approximately 50 securities. We use the same disciplined
criteria and several other factors to determine when selling a security is in
our shareholders' best interest.
Examples of Our Investment Process
While it is not possible to review all the detail that goes into the
decision-making and implementation process of buying, owning and eventually
selling a security in this short report, provided below are several brief
examples of securities actually owned.
One of the securities held in the Fund was Masco, a building materials
manufacturer. Our computer valuation model initially showed Masco to be a
competitively priced value stock. Its dividend yield was solidly above that
of the average security within the S&P 500. At this dividend level, we were
being compensated for the risk of equity investing. Further, our multifactor
computer model calculated an overall score for Masco of +2, with zero being
the average security score. Various factors in the model demonstrated that
the security's growth was being offered for sale at a discount, that its
reported earnings would likely be above consensus expectations, and that
the company was well
<PAGE>
positioned for the current economic and market
environment. As acquisitions were assimilated into the company, a
significant factor in its corporate strategy, management was able to
reduce operating costs by leveraging its existing
operations, combining back office, sales and administrative functions.
Wall Street analysts did not include future acquisitions in their computer
models on the company, setting up a likely possibility of positive
surprises. Finally, management ownership interest in Masco was substantial,
and we believe it to be an advantage when management's financial interests
are the same as that of our shareholders.
Masco remained an attractive investment for the Fund at the end of April
1998. Operations were strong. The company often delivered earnings above Wall
Street expectations. For 1998, the company could deliver earnings per share
growth about 20% greater than 1997, well above the 15% growth rate expected
by Wall Street analysts.
AT&T, the long distance telephone company, was also purchased in November
1997. According to our computer valuation model, AT&T was a value stock given
a dividend yield greater than that of the S&P 500. Our multifactor computer
model score was a solid +6 for the security. Until recently, the stock
had been a laggard in price appreciation relative to the overall stock
market. Concern over growing competition and changing technology had weighed
heavily on the stock for some time. Further, senior management was
unsettled, with lack of clear succession plans and a seeming lack of
strategic direction for dealing with the changing industry environment. In
all of this pessimism and concern over what we believed were issues that
would soon be addressed if not resolved, we saw opportunity. Finally,
with the advent of the Asian economic crisis, a defensive investment like
AT&T, with a largely domestic orientation and little economic sensitivity,
was well suited to the current environment as reflected in our
multifactor computer model.
AT&T remained in the Fund at the end of April 1998. Despite substantial
appreciation in the stock price, AT&T's dividend yield was still
substantially greater than that of the Standard & Poor's Industrials, our
valuation sell point, so it remained part of the Fund and within our
valuation parameters. Additionally, new senior management had been
appointed and dramatic steps to improve the company for the future had
already been taken.
This type of detailed fundamental analysis is performed every day for
your Fund. Both current holdings and potential new holdings are
regularly evaluated.
Summary
Investment results during this semi-annual period benefited from
holdings such as EG&G, Xerox, Equity Office Properties Trust, US West
Communications Group, Flowers Industries, and NationsBank. Relative
performance results during the period were penalized by holdings including
Georgia Pacific, AMP, Whirlpool, and ConAgra.
<PAGE>
We will continue to manage your investments with dedication and discipline.
Sincerely,
/S/ Timothy M. Ghriskey
Timothy M. Ghriskey
Portfolio Manager
May 18, 1998 New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the
reinvestment of income dividends and, where applicable, capital gain
distributions. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted unmanaged index of U.S. stock market performance.
*** The Standard & Poor's Barra Value Index is a capitalization-weighted
index of all the stocks in the Standard & Poor's 500
Composite Stock Price Index that have low price-to-book ratios. It is
designed so that approximately 50% of the S&P 500's market capitalization
is in the Value Index.
<PAGE>
Dreyfus Equity Dividend Fund
- -----------------------------------------------------------------------------
Statement of Investments April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks--97.5% Shares Value
------------ -----------
<S> <C> <C>
Commercial Services--2.4% Ogden ........................................ 3,900 $ 119,925
-----------
Consumer Durables--7.3% Eastman Kodak................................. 1,400 101,063
General Motors................................ 1,100 74,113
Jostens....................................... 3,600 85,275
Tupperware.................................... 3,800 102,837
-----------
363,288
-----------
Consumer Non-Durables--11.9% Anheuser-Busch................................ 2,100 96,206
ConAgra....................................... 3,200 93,400
Gallaher Group, A.D.S......................... 4,200 86,362
Kimberly-Clark................................ 1,800 91,350
Philip Morris................................. 1,800 67,163
Quaker Oats................................... 1,700 88,400
RJR Nabisco Holdings.......................... 2,400 66,750
-----------
589,631
-----------
Consumer Services--2.1% La Quinta Inns................................ 4,800 105,600
-----------
Electronic Technology--6.0% AMP........................................... 2,300 90,419
EG&G.......................................... 4,000 120,500
General Dynamics.............................. 2,000 84,500
-----------
295,419
-----------
Energy Minerals--9.2% British Petroleum, A.D.S...................... 1,000 94,500
Mobil......................................... 1,000 79,000
Phillips Petroleum............................ 1,600 79,300
Sun........................................... 2,500 101,094
USX-Marathon Group............................ 2,800 100,275
-----------
454,169
-----------
Finance--18.0% BankAmerica................................... 1,200 102,000
Bankers Trust New York........................ 900 116,213
Chase Manhattan............................... 700 96,994
Chelsea GCA Realty............................ 2,200 84,012
Equity Office Properties Trust................ 2,812 79,966
Morgan (J.P.)................................. 900 118,125
NationsBank................................... 1,200 90,900
Simon DeBartolo Group......................... 3,100 102,106
St. Paul...................................... 1,200 101,700
-----------
892,016
-----------
Health Technology--6.1% American Home Products........................ 1,100 102,438
Bausch & Lomb................................. 2,000 98,875
Glaxo Wellcome, A.D.R......................... 1,800 101,812
-----------
303,125
-----------
Non-Energy Minerals--1.2% Southern Peru Copper.......................... 4,000 60,750
-----------
</TABLE>
<PAGE>
Dreyfus Equity Dividend Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
------------ -----------
<S> <C> <C>
Process Industries--6.8% Chesapeake.................................... 2,300 $ 83,662
Crown Cork & Seal............................. 1,800 93,713
Temple-Inland................................. 1,300 83,931
Tenneco....................................... 1,700 73,206
-----------
334,512
-----------
Producer Manufacturing--4.5% Dana.......................................... 2,000 118,250
Masco......................................... 1,800 104,400
-----------
222,650
-----------
Retail Trade--6.6% American Stores............................... 4,400 105,600
Penney (J.C.)................................. 1,500 106,594
Sears, Roebuck & Co........................... 1,900 112,694
-----------
324,888
-----------
Transportation--1.6% Teekay Shipping............................... 2,500 76,875
-----------
Utilities--13.8% AT&T.......................................... 1,800 108,112
Ameritech..................................... 3,000 127,687
Dominion Resources............................ 2,300 90,994
Empresa Nacional de Electricidad, A.D.R....... 3,700 64,519
Telefonos de Mexico, Cl. L, A.D.S............. 1,600 90,600
Texas Utilities............................... 2,400 96,000
U S West Communications Group................. 2,000 105,500
-----------
683,412
-----------
TOTAL COMMON STOCKS
(cost $4,086,674).......................... $ 4,826,260
===========
Convertible Preferred Stocks--2.2%
Finance; Sanwa International Finance
(cost $119,351).......................(a,b) 15,000,000 $ 109,440
============
TOTAL INVESTMENTS (cost $4,206,025)............................................ 99.7% $ 4,935,700
======= ============
CASH AND RECEIVABLES (NET)..................................................... .3% $ 15,264
======= ============
NET ASSETS..................................................................... 100.0% $ 4,950,964
======= ============
Notes to Statement of Investments:
- -----------------
<FN>
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April
30, 1998, this security amounted to $ 109,440 or 2.2% of net assets.
(b) Scheduled variable interest rate.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Equity Dividend Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
------------ -----------
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $4,206,025 $4,935,700
Cash............................................. 109,987
Dividends and interest receivable................ 14,559
Net unrealized appreciation on forward
currency exchange contracts--Note 4(a).......... 4,642
Prepaid expenses................................. 14,173
-----------
5,079,061
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 1,929
Due to Distributor............................... 1,031
Payable for investment securities purchased...... 98,725
Accrued expenses................................. 26,412
-----------
128,097
-----------
NET ASSETS..................................................................... $4,950,964
===========
REPRESENTED BY: Paid-in capital.................................. $3,715,074
Accumulated undistributed investment income--net.. 3,305
Accumulated net realized gain (loss) on investments
and foreign currency transactions.............. 498,268
Accumulated net unrealized appreciation (depreciation)
on investments and forward currency
exchange contracts--Note 4(b)................... 734,317
-----------
NET ASSETS..................................................................... $4,950,964
===========
SHARES OUTSTANDING
(Unlimited number of $.001 par value shares of Beneficial Interest authorized). 275,539
NET ASSET VALUE, offering and redemption price per share....................... $17.97
=======
See notes to financial statements.
</TABLE>
<PAGE>
Dreyfus Equity Dividend Fund
- -------------------------------------------------------------------------------
Statement of Operations Six Months Ended April 30, 1998 (Unaudited)
INVESTMENT INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
INCOME: Cash dividends (net of $1,281 foreign taxes
withheld at source)...................... $ 69,072
Interest................................... 3,667
---------
Total Income............................. $ 72,739
EXPENSES: Management fee--Note 3(a)................... 17,613
Auditing fees.............................. 12,810
Registration fees.......................... 12,233
Shareholder servicing costs--Note 3(b)...... 7,016
Prospectus and shareholders' reports....... 3,202
Custodian fees--Note 3(b)................... 769
Trustees' fees and expenses--Note 3(c)...... 333
Legal fees................................. 114
Loan commitment fees--Note 2................ 26
Miscellaneous.............................. 1,348
---------
Total Expenses........................ 55,464
Less--expense reimbursement from Manager
due to undertaking--Note 3(a)............. (25,421)
---------
Net Expenses.......................... 30,043
---------
INVESTMENT INCOME--NET.................................................... 42,696
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments
and foreign currency transactions........ $499,747
Net unrealized appreciation (depreciation)
on investments and forward currency
exchange contracts....................... 46,124
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................... 545,871
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $588,567
=========
See notes to financial statements.
</TABLE>
<PAGE>
Dreyfus Equity Dividend Fund
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
--------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 42,696 $ 73,149
Net realized gain (loss) on investments................................ 499,747 328,523
Net unrealized appreciation (depreciation) on investments.............. 46,124 489,186
----------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 588,567 890,858
----------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.................................................. (42,478) (72,235)
Net realized gain on investments....................................... (329,506) (59,415)
----------- -------------
Total Dividends.................................................. (371,984) (131,650)
----------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......................................... 473,926 685,376
Dividends reinvested................................................... 356,187 127,388
Cost of shares redeemed................................................ (409,690) (115,946)
----------- -------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 420,423 696,818
----------- -------------
Total Increase (Decrease) in Net Assets....................... 637,006 1,456,026
NET ASSETS:
Beginning of Period.................................................... 4,313,958 2,857,932
----------- -------------
End of Period.......................................................... $4,950,964 $4,313,958
=========== =============
Undistributed investment income--net....................................... $ 3,305 $ 3,087
=========== =============
Shares Shares
----------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 27,311 43,022
Shares issued for dividends reinvested................................. 21,537 8,374
Shares redeemed........................................................ (22,952) (7,551)
----------- -------------
Net Increase (Decrease) in Shares Outstanding.................... 25,896 43,845
=========== =============
See notes to financial statements.
</TABLE>
<PAGE>
Dreyfus Equity Dividend Fund
- ------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Beneficial Interest 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
April 30, 1998 Year Ended October 31,
---------------------
PER SHARE DATA: (Unaudited) 1997 1996(1)
<S> <C> <C> <C>
--------- ------- -------
Net asset value, beginning of period............................. $17.28 $13.89 $12.50
------- ------- -------
Investment Operations:
Investment income--net........................................... .16 .32 .23
Net realized and unrealized gain (loss) on investments........... 1.98 3.67 1.38
------- ------- -------
Total from Investment Operations................................. 2.14 3.99 1.61
------- ------- -------
Distributions:
Dividends from investment income--net............................ (0.16) (.32) (.22)
Dividends from net realized gain on investments.................. (1.29) (.28) --
------- ------- -------
Total Distributions.............................................. (1.45) (.60) (.22)
------- ------- -------
Net asset value, end of period................................... $17.97 $17.28 $13.89
======= ======= =======
TOTAL INVESTMENT RETURN............................................. 13.12%(2) 29.34% 12.93%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................... .63%(2) 1.27% 1.08%(2)
Ratio of net investment income to average net assets............. .90%(2) 1.98% 1.76%(2)
Decrease reflected in above expense ratios due to
undertakings by the Manager................................... .54%(2) 1.36% 1.05%(2)
Portfolio Turnover Rate.......................................... 77.27%(2) 80.43% 98.84%(2)
Average commission rate paid (3)................................. $.0583 $.0546 $.0483
Net Assets, end of period (000's Omitted)........................ $4,951 $4,314 $2,858
- ----------------------------------
<FN>
(1) From December 19, 1995 (commencement of operations) to October 31, 1996.
(2) Not annualized.
(3) The Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Equity Dividend Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Equity Dividend Fund (the "Fund") is a separate diversified series
of Dreyfus Income Funds (the "Company") which is registered under the
Investment Company Act of 1940 ("Act") as an open-end management
investment company and operates as a series company currently offering five
series, including the Fund. The Fund's investment objective is current
income. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares, which are sold to the public without a sales charge.
The Company accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged
to that fund's operations; expenses which are applicable to all funds
are allocated among them on a pro rata basis.
As of April 30, 1998, APT Holdings Corporation, an indirect subsidiary
of Mellon Bank Corporation, held 183,890 shares of the Fund.
The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Investments denominated in foreign currencies are translated to U.S.
dollars at the prevailing rates of exchange.
(b) Foreign currency transactions: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with
the net realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities, resulting from changes in exchange rates. Such
gains and losses are included with net realized and unrealized gain or loss
on investments.
(c) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis.
Dividend income is recognized on the ex-dividend date and interest
income, including, where applicable, amortization of discount on
investments, is recognized on the accrual basis.
(d) Dividends to shareholders: Dividends are recorded on the ex-
dividend date. Dividends from investment income-net are declared and paid on
a quarterly basis. Dividends from net realized capital gain are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
<PAGE>
Dreyfus Equity Dividend Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(e) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in
the best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from substantially all Federal
income and excise taxes.
NOTE 2--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600
million redemption credit facility ("Facility") to be utilized for
temporary or emergency purposes, including the financing of
redemptions. In connection therewith, the Fund has agreed to pay commitment
fees on its pro rata portion of the Facility. Interest is charged to the
Fund at rates based on prevailing market rates in effect at the time of
borrowings. During the period ended April 30, 1998, the Fund did not borrow
under the Facility.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .75 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The Manager has
undertaken from November 1, 1997 through April 30, 1998 to reduce the
management fee paid by, or reimburse such excess expenses of the Fund,
to the extent that the Fund's aggregate annual expenses (exclusive of
taxes, brokerage, interest on borrowings, commitment fees and
extraordinary expenses) exceed an annual rate of 1.25% of the value of the
Fund's average daily net assets. The expense reimbursement pursuant to
the undertaking, amounted to $25,421 during the period ended April 30, 1998.
(b) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for the provision of certain services. 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. The Distributor may make payments to Service Agents (a
securities dealer, financial institution or other industry professional)
in respect of these services. The Distributor determines the amounts to
be paid to Service Agents. During the period ended April 30, 1998, the
Fund was charged $5,871 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 April 30, 1998, the Fund was charged $513 pursuant to
the transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended April 30, 1998,
the Fund was charged $769 pursuant to the custody agreement.
(c) Each trustee who is not an "affiliated person" as defined in the
Act receives from the Company an annual fee of $2,500 and an attendance fee
of $500 per meeting. The Chairman of the Board receives an additional
25% of such compensation.
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment
securities, excluding short-term securities and forward currency exchange
contracts, during the period ended April 30, 1998 amounted to
$3,689,481 and $3,580,430, respectively.
<PAGE>
Dreyfus Equity Dividend Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
The following summarizes open forward currency exchange contracts at
April 30, 1998:
<TABLE>
<CAPTION>
Foreign
Currency Unrealized
Forward Currency Exchange Contracts Amount Proceeds Value Appreciation
--------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales:
-----
Japanese Yen, expiring 5/18/1998 15,000,000 $117,873 $113,231 $4,642
========
</TABLE>
The Fund enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. When executing forward currency exchange
contracts, the Fund is obligated to buy or sell a foreign currency at a
specified rate on a certain date in the future. With respect to sales
of forward currency exchange contracts, the Fund would incur a loss if
the value of the contract increases between the date the forward
contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract decreases between
those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date
the forward contract is closed. The Fund realizes a gain if the value
of the contract increases between those dates. The Fund is also exposed to
credit risk associated with counter party nonperformance on these forward
currency exchange contracts which is typically limited to the unrealized
gains on each open contract.
(b) At April 30, 1998, accumulated net unrealized appreciation on
investments and forward currency exchange contracts was $734,317,
consisting of $817,083 gross unrealized appreciation and $82,766 gross
unrealized depreciation.
At April 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).
<PAGE>
Dreyfus Equity Dividend Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 042SA984
