<PAGE>
Dreyfus
High Yield
Securities Fund
Semi-Annual
Report
April 30, 1998
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for the Dreyfus High Yield
Securities Fund. For the six-month period ended April 30, 1998, your Fund
produced a total return, including share price changes and dividend income
generated, of 11.60%.* Income dividends paid from net investment income during
the period amounted to approximately $0.716 per share, representing an
annualized distribution rate per share of 9.19%.**
Economic Review
The United States is now in the eighth year of economic expansion. Inflation
continues to rise at the slowest pace since 1964 and the unemployment rate has
fallen to a level not seen in 25 years. Not surprisingly, consumer confidence
has soared. Along with continued evidence of the robustness of the economy have
come heightened expectations that the Federal Reserve Board (the "Fed") will
raise interest rates in a preemptive move to avoid a reignition of inflation.
The last increase in short-term rates came on March 25,1997 when the Federal
Open Market Committee (the policy-making arm of the Fed) hiked the target rates
for Federal Funds by one quarter of a percent to 5.5%. (The Federal Funds rate
is the rate of interest that banks charge one another for overnight loans.)
Inflation has remained benign on all fronts, even in the tight labor market,
an area closely watched by the Fed for signs of incipient inflation. The Labor
Department's Employment Cost Index (ECI), a measure of wage, salary and benefit
costs, suggests that wage inflation so far is not a problem. In fact, the first
quarter increase in the ECI (0.7%) was its smallest quarterly rise in two years.
Another inflation gauge, the broad-based Gross Domestic Product Price Deflator,
rose at an annual rate of only 0.9% in the first quarter, its lowest rate since
1964. Inflation as measured by the Consumer Price Index has been similarly tame.
Prices at the consumer level have risen at an annual rate of about 1.5% over the
reporting period. The lack of inflation has been even more dramatic at the
production level of the economy where prices have fallen: in the 12 months ended
April 30, the Producer Price Index declined 1.8%. Such a generally tepid price
environment has been partly fostered by the economic problems in Asia which have
suppressed worldwide demand for commodities, particularly oil.
Reflecting a level of confidence not seen in three decades, consumers
increased their spending over the reporting period, the first-quarter rate
rising at the fastest pace in six years. Not surprisingly, the growth rate in
new-home construction over the reporting period was the strongest in four years.
Plentiful and well-paying jobs (total wage and salary income is 7% higher than a
year ago), low interest rates, the absence of inflation and investment market
gains have resulted in a financially healthy consumer with a corresponding
propensity to spend. Strong domestic demand for lower-priced imports has
contributed further to the quiescent inflation environment while offsetting the
drag on the economy resulting from the Asian financial crisis. It is still
widely expected that the Asian economic slowdown will have a further dampening
effect on the U.S. economy. Although the surge in domestic spending has masked
the full impact of the fall in Asian demand, our trade deficit has reached a
10-year high, a dramatic sign of deterioration. Expectation of an economic
slowdown is another reason why the Fed has been reluctant to raise short-term
interest rates.
The production side of the economy has remained robust. Factory utilization
has been high, production rates strong, and while exports to Asia have fallen
sharply, they are growing in the rest of the world. Such resilience has been
characteristic of one of the longest, most healthy economic advances in our
history. Yet we remain mindful that the concept of an economic cycle is not
dead, nor is inflation, and we are alert for indications of a resurgence in
price pressures.
<PAGE>
Market Environment
The current economic environment is optimal for the high-yield market:
steady, controlled growth, a confident consumer, and high industrial output.
These conditions have helped the high-yield market continue its long run of
strong performance since 1991. The total return for the Merrill Lynch High Yield
Master II Index over the six-month period ended 4/30/98 was 5.39%.***
Another factor positively influencing the high-yield market is a strong
demand in the fixed-income marketplace for yield. In a period of low interest
rates, high-yield bonds look attractive to a wide variety of investors: cash
inflows into high-yield mutual funds continue; investment-grade corporate bond
mutual funds, insurance portfolios, and pension funds are buying the better
quality high-yield issues; and the asset-backed market is creating many
investment pools with high-yield bonds as assets. Concurrent with this, supply
of new issues has increased. While this has alarmed some observers, it has
broadened the high-yield market and tends to lag demand by only a few weeks. As
previously stated, the high-yield market is more mature, and this trend
continues.
The one caveat to this story at the present time is the potential
aftereffects of economic changes in Southeast Asia. The possibility of lower
prices for goods exported out of the region combined with less demand could
adversely affect the global economy and eventually our high-yield market.
Anticipation of this negatively affected the equity and high-yield markets in
October and November of last year, but the lack of any cataclysmic event in
Southeast Asia has lessened investors' fears for now. However, any threat of
recession, whether Asia-induced or not, is the worst scenario for the high-yield
market.
The Portfolio
The performance of the Fund over the last six months has benefitted from its
concentration in telecommunications and entertainment sectors and an
underweighting in health care, energy, and emerging markets.
The breakup of the regional telephone companies' monopoly over local
telephone service; increased penetration of wireless telephones both
domestically and internationally; and the opening of the western European
telephone market all have created tremendous opportunities for high yield
investments. Issues in this sector that have done well for the Fund include MGC
Communications, Concentric Network, Nextel Communications (Cencal
Communications), Viatel and Poland Telecom Finance B.V.
The broadcasting and entertainment industries are also undergoing changes
that have benefited high-yield investors. Radio broadcasters are now allowed
greater concentrations of stations in a given market, allowing for increased
cash flow due to synergies from operations and advertising. Recent transactions
involving entertainment networks have proven that their ability to offer a large
audience has significant intrinsic value. Cable operators are proving that
upgraded systems continue to be significant cash generators, while the digital
offerings of satellite television broadcasters have found a receptive audience.
Chancellor Media, Paxson Communications, Echostar Satellite Broadcast, and
Scandinavian Broadcasting System SA are issues that have performed well for the
Fund.
A key characteristic of these two sectors is that they are relatively secure
during international turmoil. No matter what happens in Asia, Latin America,
Russia, or other economic or political hot spots, businesses will be switching
to cheaper, higher-quality phone services, and consumers will be purchasing
entertainment. In fact, many of the changes in these domestic sectors are being
exported around the world. While the total return momentum might be slowing in
them, they still retain their defensive nature. Other defensive industries that
the Fund could look to in the future would be health care and natural gas.
Health care is a tremendous growth industry, and entirely domestic in nature,
but its total return potential is limited until the government decides how to
keep prices realistic. Natural gas is also a domestic industry in that it is
only partially affected by international oil pricing, but its rising importance
in national power generation implies the potential for high total returns.
<PAGE>
Emerging market exposure in the Fund is low due to the historically volatile
nature of the investment and a lesser ability by Dreyfus to perform adequate
credit research. Currency and sovereign risk, combined with less clear
accounting standards, make foreign analysis difficult. The Fund's foreign
exposure is usually limited to investment-grade-rated countries or issuers
affiliated with investment-grade multinational companies. No change in this
strategy is contemplated at this time.
Our primary task--to maximize total return through capital appreciation and
high current income--will guide our portfolio management decisions. We will
continue to use intensive fundamental research in seeking to achieve high
returns while reducing risk. We feel this approach is designed to reward the
patient investor.
Very truly yours,
/s/ Roger King
Roger King
Portfolio Manager
May 18, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
** Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period, adjusted for capital gain
distributions.
*** SOURCE: MERRILL LYNCH, PIERCE, FENNER AND SMITH INC.--The Merrill Lynch
High Yield Master II Index is a market capitalization weighted index
including all domestic and Yankee high-yield bonds with at least $100
million par amount outstanding and greater than or equal to one year to
maturity.
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes--81.7% Amount Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Aircraft & Aerospace--1.4% Aircraft Lease Portfolio Securitisation 96-1
Pass Through Trust, Ctfs.,
Cl. D, 12.75%, 2006....................... $ 997,252 $ 997,252
American Pacific,
Sr. Notes, 9.25%, 2005.................... 2,000,000 (a) 2,075,000
------------
3,072,252
------------
Automotive--3.1% Aetna Industries,
Sr. Notes, 11.875%, 2006.................. 6,000,000 6,600,000
------------
Broadcasting--2.8% ACME Television LLC/ACME Finance,
Sr. Discount Notes, Ser. B, Zero Coupon, 2000 2,000,000 (b) 1,635,000
Capstar Broadcasting Partners,
Sr. Discount Notes, Zero Coupon, 2002..... 1,750,000 (b) 1,312,500
Scandinavian Broadcasting System SA,
Conv. Sub. Notes, 7%, 2004................ 2,500,000 (a) 3,072,924
------------
6,020,424
------------
Building Materials--4.2% FWT,
Sr. Sub. Notes, 9.875%, 2007.............. 5,000,000 4,775,000
ICF Kaiser International:
Sr. Sub. Notes, 13%, 2003................. 1,585,000 1,664,250
Sr. Sub. Notes, 13%, 2003 (Units)......... 2,438,000 (c) 2,572,090
------------
9,011,340
------------
Cable Television--5.6% CCA Holdings,
Sr. Sub. Notes, Zero Coupon, 1999......... 9,328,404 7,500,000
Echostar Satellite Broadcast,
Gtd. Sr. Secured Notes, 12.50%, 2002...... 500,000 562,500
Innova,
Sr. Notes, 12.875%, 2007.................. 2,000,000 2,165,000
OpTel,
Sr. Notes, 13%, 2005...................... 1,000,000 1,122,500
Star Choice Communications,
Sr. Secured Notes, 13%, 2005 (Units)...... 500,000 (c) 532,500
------------
11,882,500
------------
Casinos & Gaming--2.0% Ameristar Casinos,
Sr. Sub. Notes, Ser. B, 10.50%, 2004...... 2,500,000 2,662,500
Waterford Gaming, LLC/ Finance,
Sr. Notes, 12.75%, 2003................... 1,419,000 1,567,994
------------
4,230,494
------------
Commercial Mortgage
Backed--.7% Structured Asset Securities,
Multiclass Pass-Through Ctfs.,
REMIC, Ser. 1996-CFL,
Cl. H, 7.75%, 2028........................ 1,750,000 (a) 1,401,641
------------
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Consumer--4.0% BPC Holding,
Sr. Secured Notes, 12.50%, 2006........... $ 2,248,000 $ 2,472,800
Decora Industries,
Sr. Secured Notes, 11%, 2005.............. 2,000,000 (a) 1,960,000
Jafra Cosmetics International,
Sr. Sub. Notes, 11.75%, 2008.............. 1,500,000 (a) 1,511,250
Packing Resources,
Sr. Secured Notes, 13%, 2003.............. 2,130,000 1,589,132
Syratech,
Sr. Notes, 11%, 2007...................... 1,000,000 895,000
------------
8,428,182
------------
Employment Services--.5% COMFORCE Operating,
Sr. Notes, 12%, 2007...................... 1,000,000 1,080,000
------------
Energy--6.3% Belden & Blake,
Sr. Sub. Notes, 9.875%, 2007.............. 3,000,000 2,992,500
Chiles Offshore LLC/Finance,
Sr. Notes, 10%, 2008...................... 500,000 (a) 510,000
DeepTech International,
Sr. Secured Notes, 11%, 2000.............. 3,000,000 (a) 3,135,000
First Wave Marine,
Sr. Notes, 11%, 2008...................... 1,000,000 1,055,000
Michael Petroleum,
Sr. Notes, 11.50%, 2005................... 1,000,000 (a) 992,500
Petsec Energy,
Sr. Sub. Notes, 9.50%, 2007............... 2,600,000 2,652,000
Sitel,
Notes, 9.25%, 2006........................ 1,000,000 (a) 1,030,000
Statia Terminals,
First Mortgage, Ser. B, 11.75%, 2003...... 1,000,000 1,065,000
------------
13,432,000
------------
Entertainment--3.4% Booth Creek Ski Holdings,
Sr. Notes:
12.50%, 2007........................... 4,500,000 4,725,000
12.50%, 2007........................... 500,000 (a) 525,000
Fox Kids Worldwide,
Sr. Discount Notes, Zero Coupon, 2002..... 3,000,000 (a,b) 1,935,000
------------
7,185,000
------------
Finance--1.0% AmeriCredit,
Sr. Notes, 9.25%, 2004.................... 1,000,000 (a) 1,020,000
Amresco,
Sr. Sub. Notes, Ser. 98- A, 9.875%, 2005.. 1,000,000 1,035,000
------------
2,055,000
------------
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Foods and Beverages--1.8% American Rice,
First Mortgage, 13%, 2002................. $ 2,263,000 $ 1,810,400
Cuddy International,
Sr. Notes, 10.75%, 2007................... 2,000,000 (a) 1,960,000
------------
3,770,400
------------
Healthcare--.2% Fountain View,
Sr. Sub. Notes, 11.25%, 2008.............. 500,000 (a) 512,500
------------
Industrial--1.5% HCC Industries,
Sr. Sub. Notes, 10.75%, 2007.............. 2,000,000 2,095,000
Numatics,
Sr. Sub. Notes, 9.625%, 2008.............. 1,000,000 (a) 1,017,500
------------
3,112,500
------------
Publishing--.6% WAM ! NET,
Sr. Discount Notes, Zero Coupon, 2002 (Units) 2,000,000 (a,b,c) 1,290,000
------------
Real Estate--.6% Crown Castle International,
Sr. Discount Notes, Zero Coupon, 2002..... 1,750,000 (a,b) 1,203,125
------------
Residential Mortgage
Backed--2.2% BA Mortgage Securities,
Mortgage Pass-Through Ctfs.,
Ser. 1997-1, Cl. B4, 7.50%, 2026.......... 667,623 (a) 484,027
Chase Mortgage Finance,
Multiclass Mortgage Pass-Through Ctfs.,
Ser. 1994-E, Cl. B6, 6.25%, 2010.......... 413,710 (a) 157,210
Citicorp Mortgage Securities,
REMIC, Pass-Through Ctfs.,
Ser. 1994-9, Cl. B2, 5.75%, 2009.......... 485,562 (a) 184,514
GE Capital Mortgage Services:
Home Equity Loan Pass-Through Ctfs.,
Ser. 1996-HE4, Cl. B5, 9.351%, 2026.... 1,933,347 (a,d) 444,670
REMIC, Multi-Class Pass-Through Ctfs.:
Ser. 1993-13, Cl. B5, 6%, 2008......... 470,959 (a) 178,965
Ser. 1994-15, Cl. B5, 6%, 2009......... 739,403 (a) 280,974
Ser. 1994-21, Cl. B5, 6.50%, 2009...... 971,366 (a) 369,119
Ser. 1996-10, Cl. B5, 6.75%, 2011...... 346,171 (a) 131,545
Ser. 1996-12, Cl. B5, 7.25%, 2011...... 405,030 (a) 153,912
Ser. 1996-14, Cl. 2B5, 7.25%, 2011..... 415,381 (a) 157,845
MORSERV,
Multi-Class Mortgage Pass-Through Ctfs.,
Ser. 1996-1, Cl. B5, 7%, 2011............. 493,112 (a) 187,383
Norwest Asset Securities,
Mortgage Pass-Through Ctfs.:
Ser. 1996-8, Cl. B4, 7.50%, 2026....... 124,543 (a) 108,275
Ser. 1996-8, Cl. B5, 7.50%, 2026....... 185,613 (a) 70,533
Ser. 1997-11, Cl. B4, 7%, 2027......... 248,491 (a) 205,859
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Residential Mortgage
Backed (continued) Norwest Asset Securities,
Mortgage Pass-Through Ctfs. (continued):
Ser. 1997-11, Cl. B5, 7%, 2027......... $ 372,736 (a) $ 141,640
Ser. 1997-15, Cl. B4, 6.75%, 2012...... 418,067 (a) 353,659
Ser. 1997-15, Cl. B5, 6.75%, 2012...... 250,608 (a) 95,231
Ser. 1997-16, Cl. B5, 6.75%, 2027...... 299,747 (a) 113,904
Prudential Home Mortgage Securities,
Mortgage Pass-Through Ctfs., REMIC,
Ser. 1996-7, Cl. B5, 6.75%, 2011.......... 852,673 (a) 324,016
Residential Accredit Loans,
Mortgage Asset-Backed Pass-Through Ctfs., REMIC,
Ser. 1997-QS6:
Cl. B2, 7.50%, 2012.................... 154,477 (a) 136,230
Cl. B3, 7.50%, 2012.................... 361,170 (a) 137,245
Structured Asset Securities,
Mortgage Pass-Through Ctfs., REMIC,
Ser. Greenpoint 1996-A:
Cl. B5, 8.397%, 2027................... 283,287 (a,d) 219,482
Cl. B6, 8.397%, 2027................... 354,657 (a,d) 120,584
------------
4,756,822
------------
Retail--2.3% Discovery Zone,
Sr. Secured Notes, 13.50%, 2002........... 4,500,000 4,365,000
J Crew Group,
Sr. Discount Notes, Zero Coupon, 2002..... 1,000,000 (b) 515,000
------------
4,880,000
------------
Shipping--4.6% American President Lines,
Sr. Notes, 7.125%, 2003................... 4,185,000 3,310,071
Golden Ocean Group, Ltd.,
Sr. Notes, 10%, 2001...................... 4,500,000 (a) 3,870,000
Holt Group,
Sr. Notes, 9.75%, 2006.................... 1,500,000 (a) 1,530,000
Moran Transportation,
First Preferred Ship Mortgage Notes,
11.75%, 2004.............................. 450,000 504,000
Ultrapetrol (Bahamas) Ltd.,
First Preferred Ship Mortgage Notes,
10.50%, 2008.............................. 500,000 (a) 502,500
------------
9,716,571
------------
Steel--1.5% NSM Steel / NSM Steel Ltd.,
Sr. Sub. Mortgage Notes, Ser. B,
12.25%, 2008 (Units)...................... 1,750,000 (a,c) 1,706,250
Renco Metals,
Sr. Notes, 11.50%, 2003................... 1,500,000 1,593,750
------------
3,300,000
------------
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Telecommunications/
Carriers--14.8% Bell Technology Group,
Sr. Notes, 13%, 2005 (Units).............. $ 3,000,000 (a,c) $ 3,067,500
Concentric Network,
Sr. Notes, 12.75%, 2007 (Units)........... 5,850,000 (a,c) 7,166,250
Covad Communications Group,
Sr. Discount Notes, Zero Coupon, 2003 (Units) 2,000,000 (a,b,c) 1,105,000
DTI Holdings,
Sr. Discount Notes, Zero Coupon, 2003 (Units) 1,750,000 (b,c) 997,500
FirstWorld, Communications,
Sr. Discount Notes, Zero Coupon, 2003 (Units) 1,500,000 (a,b,c) 765,000
Focal Communications,
Sr. Discount Notes, Zero Coupon, 2003..... 5,000,000 (a,b) 2,981,250
Level 3 Communications,
Sr. Notes, 9.125%, 2008................... 2,000,000 (a) 1,980,000
MGC Communications:
Sr. Secured Notes, 13%, 2004.............. 4,500,000 (a) 4,950,000
Sr. Secured Notes, 13%, 2004 (Units)...... 3,000,000 (a,c) 3,315,000
Rythms NetConnections,
Sr. Discount Notes, Zero Coupon, 2003 (Units) 5,000,000 (a,b,c) 2,612,500
USN Communications,
Sr. Discount Notes, Ser. B, Zero Coupon, 2000 3,000,000 (b) 2,460,000
------------
31,400,000
------------
Wireless
Communications--10.4% American Mobile Satellite/AMSC Acquisition,
Sr. Notes, 12.25%, 2008 (Units)........... 500,000 (a,c) 510,000
CTI Holdings SA,
Sr. Discount Notes, Zero Coupon, 2003..... 500,000 (a,b) 297,500
Cencall Communications,
Sr. Discount Notes, Zero Coupon, 1999..... 1,000,000 (b) 976,250
Comunicacion Celular SA,
Bonds, Zero Coupon, 2000.................. 1,000,000 (b) 787,500
Conecel Holdings, Ltd.,
Secured Notes:
14%, 2000 (Units)...................... 2,000,000 (a,c) 2,170,000
14%, 2002.............................. 1,000,000 1,037,500
Ionica plc:
Sr. Notes, 13.50%, 2006................... 1,500,000 1,327,500
Sr. Discount Notes, Zero Coupon, 2002..... 2,000,000 (b) 920,000
Occidente y Caribe Celular SA,
Sr. Discount Notes, Zero Coupon, 2001..... 2,910,000 (b) 2,247,975
Omnipoint,
Sr. Notes, Ser. A, 11.625%, 2006.......... 1,500,000 1,638,750
OrbCommunications Global, L.P./Capital,
Sr. Notes, 14%, 2004...................... 5,000,000 5,850,000
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Wireless
Communications (continued) Orion Network Systems,
Sr. Discount Notes, Zero Coupon, 2002 (Units) $ 1,000,000 (b,c) $ 775,000
Poland Telecom Finance BV,
Gtd. Sr. Notes, 14%, 2007 (Units)......... 3,000,000 (a,c) 3,405,000
RSL Communications, Ltd.,
Gtd. Sr. Notes, 12.25%, 2006.............. 196,000 224,420
------------
22,167,395
------------
Textiles--.8% Sassco Fashions,
Sr. Notes, 12.75%, 2004................... 1,500,000 1,616,250
------------
Transportation--5.4% Canadian Airlines,
Sr. Secured Notes, 10%, 2005.............. 1,000,000 1,010,000
HighwayMaster Communication:
Sr. Notes, 13.75%, 2005................... 3,000,000 3,150,000
Sr. Notes, 13.75%, 2005 (Units)........... 1,000,000 (a,c) 1,050,000
Teletrac,
Sr. Notes, 14%, 2007 (Units).............. 750,000 (c) 753,750
Terminal R.R. Association,
First Mortgage, 4%, 2019.................. 57,000 41,672
ValuJet,
Sr. Notes, 10.25%, 2001................... 5,650,000 5,565,250
------------
11,570,672
------------
TOTAL BONDS AND NOTES
(cost $167,715,093)....................... $173,695,068
============
<CAPTION>
Equity-Related Securities--19.3%
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stocks--.0% Shares
------------
Cable Television; OpTel........................................ 1,000 (a) $ 10
------------
Preferred Stocks--18.1%
Broadcasting--8.3% Paxson Communications,
Cum., $125.00............................. 6,375 6,534,375
Pegasus Media & Communications, Ser. A,
Cum., $127.50............................. 4,491 5,276,925
Spanish Broadcasting System,
Cum., $142.50............................. 5,570 (a) 5,848,500
------------
17,659,800
------------
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Preferred Stocks (continued) Shares Value
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Cable Television--3.4% Echostar Communications, Ser. C,
Conv. Cum., $3.375........................ 115,000 $ 7,158,750
------------
Energy--1.3% Clark USA,
Sr. Cum., $115.00......................... 2,643 2,828,010
------------
Packaging--.4% SF Holdings Group,
Cum. $137.50 (Units)...................... 1,000 (a,e) 913,750
------------
Supermarkets--1.3% Supermarkets General,
Cum., $3.52............................... 96,000 2,652,000
------------
Telecommunications--3.4% Hyperion Telecommunications, Ser. B,
Cum., $128.75............................. 1,061 1,214,845
WinStar Communications,
Cum., $142.50............................. 5,000 (a) 6,050,000
------------
7,264,845
------------
Total Preferred Stocks....................... 38,477,155
------------
Warrants--1.2%
Automotive--.0% Glasstech.................................... 2,000 2,500
------------
Broadcasting--.4% Spanish Broadcasting System.................. 3,000 (a) 615,000
Pegasus Media & Communications............... 5,000 162,500
------------
777,500
------------
Retail--.1% Discovery Zone............................... 4,500 270,000
------------
Shipping--.0% Golden Ocean Group, Ltd...................... 3,000 (a) 30
------------
Supermarkets--.0% Electronic Retailing Systems................. 1,250 25,000
------------
Telecommunications--.6% Advanced Radio Telecom....................... 30,000 588,000
Hyperion Telecommunications.................. 1,000 70,000
Iridium LLC.................................. 1,000 255,000
Microcell Telecommunications................. 16,000 270,720
------------
1,183,720
------------
Telecommunications/
Carriers--.0% MGC Communications........................... 3,000 (a) 150,000
------------
Transportation--.0% HighwayMaster Communications................. 3,000 30,000
------------
Wireless Communications--.1% Comunicacion Celular SA...................... 1,000 70,000
Occidente y Caribe Celular SA................ 7,640 16,808
RSL Communications, Ltd...................... 880 83,600
------------
170,408
------------
Total Warrants................................. 2,609,158
------------
TOTAL EQUITY-RELATED SECURITIES
(cost $36,813,359).......................... $ 41,086,323
============
</TABLE>
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C> <C>
TOTAL INVESTMENTS (cost $204,528,452).......................................... 101.0% $214,781,391
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (1.0%) $ (2,144,919)
====== ============
NET ASSETS..................................................................... 100.0% $212,636,472
====== ============
</TABLE>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1998, these securities amounted to $86,469,302 or 40.67% of net assets.
(b) Zero coupon until year shown at which time a stated coupon rate becomes
effective.
(c) With Warrants to purchase common stock.
(d) Variable rate security-interest rate subject to periodic change.
(e) With common stock attached.
See notes to financial statements.
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments................................... $204,528,452 $214,781,391
Cash............................................. 1,095,324
Dividends and interest receivable................ 3,947,087
Receivable for shares of Beneficial Interest
subscribed.................................... 2,398,405
Receivable for investment securities sold........ 1,670,401
Prepaid expenses and other assets................ 48,546
------------
223,941,154
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 117,939
Due to Distributor............................... 41,114
Bank loans payable--Note 2....................... 7,805,000
Payable for investment securities purchased...... 3,034,063
Payable for shares of Beneficial Interest redeemed 247,342
Interest payable--Note 2......................... 2,110
Accrued expenses................................. 57,114
------------
11,304,682
------------
NET ASSETS..................................................................... $212,636,472
============
REPRESENTED BY: Paid-in capital.................................. $195,898,425
Accumulated undistributed investment income--net. 2,481,728
Accumulated net realized gain (loss) on investments 4,003,380
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4........................ 10,252,939
------------
NET ASSETS..................................................................... $212,636,472
============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 13,551,181
NET ASSET VALUE, offering and redemption price per share--Note 3(d)............ $15.69
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
Statement of Operations Six Months Ended April 30, 1998 (Unaudited)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Interest................................... $ 7,965,801
Cash dividends............................. 1,526,959
-----------
Total Income............................. $ 9,492,760
EXPENSES: Management fee--Note 3(a).................. 513,352
Shareholder servicing costs--Note 3(b)..... 240,149
Interest expense--Note 2................... 105,941
Registration fees.......................... 50,914
Professional fees.......................... 25,249
Prospectus and shareholders' reports....... 15,147
Custodian fees--Note 3(b).................. 7,229
Trustees' fees and expenses--Note 3(c)..... 5,427
Miscellaneous.............................. 6,775
-----------
Total Expenses........................... 970,183
-----------
INVESTMENT INCOME--NET................................................... 8,522,577
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments.... $ 4,021,625
Net unrealized appreciation (depreciation) on
investments.............................. 6,028,425
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 10,050,050
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $18,572,627
===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus High Yield Securities 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................................................. $ 8,522,577 $ 7,668,676
Net realized gain (loss) on investments................................ 4,021,625 64,049
Net unrealized appreciation (depreciation) on investments.............. 6,028,425 3,314,766
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 18,572,627 11,047,491
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................. (7,356,612) (6,607,356)
Net realized gain on investments....................................... (141,121) (539,351)
------------ ------------
Total Dividends.................................................. (7,497,733) (7,146,707)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......................................... 99,581,119 157,007,092
Dividends reinvested................................................... 5,328,620 5,302,674
Cost of shares redeemed................................................ (24,165,766) (70,249,795)
------------ ------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 80,743,973 92,059,971
------------ ------------
Total Increase (Decrease) in Net Assets....................... 91,818,867 95,960,755
NET ASSETS:
Beginning of Period.................................................... 120,817,605 24,856,850
------------ ------------
End of Period.......................................................... $212,636,472 $120,817,605
============ ============
Undistributed investment income--net...................................... $ 2,481,728 $ 1,315,763
------------ ------------
Shares Shares
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 6,613,844 10,939,518
Shares issued for dividends reinvested................................. 358,167 378,089
Shares redeemed........................................................ (1,606,689) (4,928,619)
------------ ------------
Net Increase (Decrease) in Shares Outstanding....................... 5,365,322 6,388,988
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus High Yield Securities 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 Year Ended October 31,
April 30, 1998 ----------------------
PER SHARE DATA: (Unaudited) 1997 1996(1)
---------------- ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period............................. $14.76 $13.83 $12.50
------ ------ ------
Investment Operations:
Investment income--net........................................... .72 1.58 .69
Net realized and unrealized gain (loss) on investments........... .95 1.14 1.19
------ ------ ------
Total from Investment Operations................................. 1.67 2.72 1.88
------ ------ ------
Distributions:
Dividends from investment income--net............................ (.72) (1.56) (.55)
Dividends from net realized gain on investments.................. (.02) (.23) --
------ ------ ------
Total Distributions.............................................. (.74) (1.79) (.55)
------ ------ ------
Net asset value, end of period................................... $15.69 $14.76 $13.83
====== ====== ======
TOTAL INVESTMENT RETURN(2).......................................... 23.39%(3) 21.13% 25.14%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets................ 1.10%(3) .71% .02%(3)
Ratio of interest expenses to average net assets................. .13%(3) .34% .27%(3)
Ratio of net investment income to average net assets............. 10.79%(3) 11.72% 11.33%(3)
Decrease reflected in above expense ratios due to
undertakings by the Manager................................... -- .43% 1.55%(3)
Portfolio Turnover Rate.......................................... 61.67%(4) 252.50% 233.62%(4)
Net Assets, end of period (000's Omitted)........................ $212,636 $120,818 $24,857
<FN>
- ---------------
(1) From March 25, 1996 (commencement of operations) to October 31, 1996.
(2) Exclusive of redemption fee.
(3) Annualized.
(4) Not annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus High Yield Securities Fund (the "Fund") is a series of Dreyfus Income
Funds (the "Company") which is registered under the Investment Company Act of
1940 ("Act") as a diversified open-end management investment company and
operates as a series company currently offering five series, including the Fund.
The Fund's investment objective is to maximize total return, consisting of
capital appreciation and current income. The Dreyfus Corporation ("Manager")
serves as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A. ("Mellon"). 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.
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 (excluding short-term
investments, other than U.S. Treasury Bills, and financial futures) are valued
each business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily available
and are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by the
Service based upon its evaluation of the market for such securities). Other
investments (which constitute a majority of the portfolio securities) are
carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers; and general
market conditions. Securities for which there are no such valuations are valued
at fair value as determined in good faith under the direction of the Board of
Trustees. Short-term investments, excluding U.S. Treasury Bills, are carried at
amortized cost, which approximates value. 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 on
each business day. Investments denominated in foreign currencies are translated
to U.S. dollars at the prevailing rates of exchange.
(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. 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.
(c) Dividends to shareholders: It is the policy of the Fund to declare and
pay dividends quarterly from investment income-net. 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 High Yield Securities Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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.
NOTE 2--Bank Lines of Credit:
The Fund may borrow up to $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other Dreyfus-managed
funds in a $100 million unsecured line of credit primarily to be utilized for
temporary or emergency purposes, including the financing of redemptions.
Interest is charged to the Fund at rates which are related to the Federal Funds
rate in effect at the time of borrowings.
The average daily amount of borrowings outstanding under both arrangements
during the period ended April 30, 1998 was approximately $3,577,500, with a
related weighted average annualized interest rate of 5.97%.
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 .65 of 1% of the value of the Fund's average
daily net assets and is payable monthly.
(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 $197,443 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 $20,618 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 $7,229 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.
(d) A 1% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemptions through the use of the Fund
Exchanges service) where the redemption or exchange occurs within a six-month
period following the date of issuance. During the period ended April 30, 1998,
redemption fees amounted to $40,481.
<PAGE>
Dreyfus High Yield Securities Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the period ended
April 30, 1998, amounted to $182,569,611 and $101,935,913, respectively.
At April 30, 1998, accumulated net unrealized appreciation on investments was
$10,252,939, consisting of $11,938,970 gross unrealized appreciation and
$1,686,031 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 High Yield Securities 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. 043SA984
