Dreyfus Premier
Real Estate
Mortgage Fund
SEMIANNUAL REPORT April 30, 2000
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Cash Flows
12 Statement of Changes in Net Assets
14 Financial Highlights
19 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Premier
Real Estate Mortgage Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Real Estate
Mortgage Fund, covering the six-month period from November 1, 1999 through April
30, 2000. Inside, you'll find information about how the fund was managed during
the reporting period, and a discussion with Michael Hoeh, the fund's portfolio
manager.
At a meeting of your fund's Board of Trustees held on May 3, 2000, the Board
approved a proposal to liquidate the fund, effective on June 30, 2000. Your
fund' s Board approved this proposal because the fund has attracted very few
investors and is small in asset size, making efficient portfolio management
difficult. As a result, this is the fund's final shareholder report.
We appreciate your confidence and investment in the fund, and hope to be able to
serve your investment needs in the future.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 15, 2000
DISCUSSION OF FUND PERFORMANCE
Michael Hoeh, Portfolio Manager
How did Dreyfus Premier Real Estate Mortgage Fund perform relative to its
benchmark?
For the six-month period ended April 30, 2000, the fund's Class A shares
produced a 9.52% total return, Class B shares produced a 9.13% total return,
Class C shares produced a 9.04% total return, Class R shares produced a 9.68%
total return and Class T shares produced a 9.42% total return.(1) This
performance compares favorably to the returns provided by the fund's benchmarks,
the Standard & Poor' s Real Estate Investment Trust Composite Index(2) and the
Lehman Brothers Aggregate Bond Index,(3) which produced total returns of 9.62%
and 1.42% , respectively.
We attribute the fund's good absolute performance to higher real estate values
throughout the United States, which spanned multiple sectors of the real estate
market, including residential, commercial and industrial properties. The fund's
strong performance on a comparative basis is primarily the result of our asset
allocation and security selection strategies, which included an increase in the
stocks of real estate investment trusts (REITs).
What was the fund's investment approach over the period?
As always, we used a three-step investment approach:
* Based on our analysis of the real estate market and risk-adjusted return
projections, we allocated the fund's assets among commercial and residential
mortgage-backed securities, U.S. government agency mortgages, commercial
mortgage obligations, asset-backed securities, REIT debt, and REIT common and
preferred stocks.
* Quantitative analytical tools helped us identify the market' s most
attractive mortgage-related investments. We sought to keep the duration of the
fund's fixed-income securities within a 20% range above and below the duration
of the Lehman Brothers Aggregate Bond Index.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
* We conducted fundamental analysis of REIT debt and equity investments to
find those in markets with improving rental rates and low levels of new
construction. To help limit risk, we diversified the fund's REIT holdings both
geographically and across market sectors.
What other factors influenced the fund's performance?
The fund was influenced by inflation fears and rising interest rates over the
past six months. When the reporting period began on November 1, 1999, investors
had become concerned that robust economic growth might rekindle long-dormant
inflationary pressures, especially rising wages in a tight job market. In an
attempt to ease these pressures and forestall a reacceleration of inflation, the
Federal Reserve Board raised short-term interest rates three times during the
reporting period, causing most bond prices to fall. These interest-rate hikes
followed two previous increases implemented before the current reporting period
began, for a total increase of 125 basis points since mid-1999.
Unlike most financial assets, real estate values nationwide benefited from
robust economic growth and signs of a potential resurgence of inflation. As the
economy expands, companies tend to grow, often requiring them to lease
additional office, factory or warehouse space in commercial and industrial
properties. On the residential side, a strong economy has supported residents'
efforts to upgrade their home environments, creating additional demand for a
limited supply of housing. In addition, recent inflationary pressures have also
helped real estate values, primarily because, historically, real estate prices
have tended to rise during inflationary times.
How was the fund managed over the period?
We continued to employ a hybrid approach, investing in both stocks and bonds
according to our outlook for real estate securities. We recently increased our
holdings of REIT stocks from approximately 22.2% of the portfolio at the start
of the reporting period to about 30.7% as of April 30. Fortunately, we made this
change in mid-March, just prior to the sharp rally of REIT stocks that took
place in April.
In the fund' s fixed-income portfolio, we recently took profits in commercial
mortgage-backed securities after they had performed well earlier in the year,
reducing our position from about 17.7% of the portfolio to approximately 7.0% of
the portfolio. On the other hand, we increased our holdings of U.S. government
agency mortgage-backed securities, primarily among bonds issued by the Federal
National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac") after comments from officials in the U.S. Senate and
Treasury Department caused these agencies' bond prices to fall, creating
attractive values, in our opinion.
May 15, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT NOT THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A AND CLASS T
SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON
REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN
REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT
UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS
CORPORATION DURING THE PERIOD, WITHOUT WHICH THE FUND'S RETURNS WOULD HAVE BEEN
LOWER.
(2) SOURCE: BLOOMBERG L.P. -- REFLECTS THE REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD & POOR'S REAL ESTATE
INVESTMENT TRUST (REIT) COMPOSITE INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF
100 STOCKS DESIGNED TO MEASURE THE PERFORMANCE OF REAL ESTATE INVESTMENT TRUSTS,
COMMONLY KNOWN AS REITS, WITH A BASE VALUE OF 100 AS OF DECEMBER 31, 1996.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS
AGGREGATE BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX OF
CORPORATE, U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS,
MORTGAGE-BACKED SECURITIES AND ASSET-BACKED SECURITIES, WITH AN AVERAGE MATURITY
OF 1-10 YEARS.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
April 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
Principal
BONDS AND NOTES--77.5% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--3.4%
Nomura Depositor Trust,
Ser. 1998-STI, Cl. B-2, 10.38%, 2003 500,000 (a,b,c) 460,313
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--8.2%
Chase Commercial Mortgage Securities,
Ser. 2000-1, Cl. A-2, 7.757%, 2010 500,000 500,859
DLJ Mortgage Acceptance,
Ser. 1997-CF2, Cl. B-3TB, 6.99%, 2009 200,000 (a) 163,469
GGP Ala Moana,
Ser. 1999-C1, Cl. D, 7.23%, 2004 250,000 (a,b) 250,000
Trizec Hahn Office Properties Trust,
Ser. 1999-TOPA, Cl. D, 7.33%, 2007 200,000 (a,b) 200,000
1,114,328
REAL ESTATE INVESTMENT TRUSTS--1.7%
Crescent Real Estate Equities,
Notes, 7%, 2002 250,000 228,200
RESIDENTIAL MORTGAGE PASS-THROUGH CTFS.--38.7%
Bank of America Mortgage Securities:
Ser. 1999-6, Cl. B-5, 6.25%, 2024 290,601 (a) 178,719
Ser. 1999-10, Cl. B-6, 6.50%, 2014 219,775 (a) 61,537
Chase Mortgage Finance:
Ser. 1998-S3, Cl. B-4, 6.50%, 2013 311,274 (a) 206,122
Ser. 1998-S3, Cl. B-5, 6.50%, 2013 415,208 (a) 99,650
Ser. 1998-S5, Cl. B-5, 6.50%, 2013 293,105 (a) 79,138
Ser. 1999-S7, Cl. B-4, 6.25%, 2014 180,061 (a) 119,966
Ser. 1999-S13, Cl. B-3, 6.50%, 2014 512,918 (a) 388,012
Ser. 1999-S13, Cl. B-4, 6.50%, 2014 219,822 (a) 139,455
Ser. 1999-S13, Cl. B-5, 6.50%, 2014 220,511 (a) 41,897
GE Capital Mortgage Services:
Ser. 1998-16, Cl. B-4, 6.50%, 2013 349,494 (a) 229,902
Ser. 1998-16, Cl. B-5, 6.50%, 2013 349,497 (a) 83,879
Ser. 1998-17, Cl. B-5, 6.75%, 2028 903,251 (a) 224,684
Ser. 2000-5, Cl. B-4, 7.25%, 2015 254,000 (a) 168,434
Norwest Asset Securities:
Ser. 1997-17, Cl. B-5, 7.25%, 2027 1,025,271 (a) 307,581
Ser. 1997-20, Cl. B-4, 6.75%, 2012 229,108 (a) 172,777
Ser. 1998-2, Cl. B-4, 6.50%, 2028 366,935 218,785
Ser. 1998-2, Cl. B-5, 6.50%, 2028 367,468 108,403
Ser. 1998-9, Cl. B-5, 6.50%, 2028 268,834 (a,c) 165,484
Ser. 1998-9, Cl. B-6, 6.50%, 2028 404,282 (a,c) 119,263
Ser. 1998-19, Cl. B-6, 6.50%, 2013 314,245 (a) 84,846
Ser. 1999-19, Cl. B-5, 6.25%, 2014 363,064 (a) 214,207
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL MORTGAGE PASS-THROUGH CTFS. (CONTINUED)
Norwest Asset Securities (continued)
Ser. 1999-19, Cl. B-6, 6.25%, 2014 362,725 (a) 68,918
Ser. 1999-22, Cl. B-5, 6.25%, 2014 291,860 (a) 197,005
Ocwen Residential MBS,
Ser. 1998-R1, Cl. B-1, 7%, 2040 386,917 (a) 344,538
PNC Mortgage Securities:
Ser. 1997-8, Cl. 3B-4, 6.75%, 2012 234,772 (a) 181,991
Ser. 1997-8, Cl. 3B-5, 6.75%, 2012 187,817 (a) 121,585
Ser. 1998-2, Cl. 3B-6, 6.75%, 2013 355,831 (a) 92,516
Ser. 1998-2, Cl. 4B-6, 6.75%, 2027 259,184 (a) 75,811
Residential Funding Mortgage Securities I:
Ser. 1995-J1, Cl. 2, 7.505%, 2023 386,405 (a,b) 307,675
Ser. 1998-NS1, Cl. B-2, 6.375%, 2009 68,303 (a) 45,763
Ser. 1998-S16, Cl. B-2, 6.50%, 2013 213,799 (a) 126,576
Ser. 1998-S16, Cl. B-3, 6.50%, 2013 213,802 (a) 53,885
Ser. 1998-S22, Cl. B-2, 6.50%, 2013 359,096 (a) 236,274
5,265,278
U.S. GOVERNMENT AGENCIES/
MORTGAGE-BACKED SECURITIES-25.5%
Federal Home Loan Mortgage:
8% 550,000 (d) 549,828
REMIC, Multiclass Mortgage Participation Ctfs.,
Stripped Securities, Interest Only Class:
Ser. 1499, Cl. E, 7%, 2023 864,285 (c,e) 438,702
Ser. 1542, Cl. QC, 7%, 2020 661,560 (c,e) 53,639
Ser. 1995, Cl. PY, 7%, 2027 875,000 (c,e) 346,103
Ser. 2153, Cl. PI, 6.50%, 2016 1,318,229 (c,e) 275,243
Federal National Mortgage Association:
7.50% 415,000 (d) 406,181
REMIC, Multiclass Mortgage Participation Ctfs.,
Stripped Securities, Interest Only Class:
Ser. 1993-119, Cl. JA, 7%, 2019 241,387 (e) 2,858
Ser. 1998-17, Cl. PL, 7%, 2019 1,192,785 (c,e) 126,960
Government National Mortgage Association I,
Project Loans:
6.45%, 11/15/2033 494,700 471,662
6.625%, 8/15/2028 492,373 476,060
Government National Mortgage Association II,
7.50% 320,000 (d) 313,398
3,460,634
TOTAL BONDS AND NOTES
(cost $11,130,558) 10,528,753
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
EQUITY-RELATED SECURITIES--39.8% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
REAL ESTATE--3.8%
Trammell Crow 40,000 520,000
REAL ESTATE INVESTMENT TRUSTS--36.0%
AMB Property 25,000 551,562
Apex Mortgage Capital 15,000 138,750
Cabot Industrial Trust 40,000 770,000
Camden Property Trust 10,000 283,750
Crescent Real Estate Equities 34,000 582,250
Equity Residential Properties Trust 10,000 455,000
Host Marriott 20,000 213,750
Meditrust 29,200 58,400
Nationwide Health Properties 15,000 198,750
PS Business Parks 25,000 556,250
Public Storage 15,000 335,625
Reckson Associates Realty 25,000 501,563
Simon Property Group 10,000 253,750
4,899,400
TOTAL EQUITY-RELATED SECURITIES
(cost $5,693,441) 5,419,400
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $16,823,999) 117.3% 15,948,153
LIABILITIES, LESS CASH AND RECEIVABLES (17.3%) (2,350,457)
NET ASSETS 100.0% 13,597,696
(A) SECURITIES 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, 2000,
THESE SECURITIES AMOUNTED TO $6,011,872 OR 44.2% OF NET ASSETS.
(B) VARIABLE INTEREST RATE--INTEREST RATE SUBJECT TO CHANGE PERIODICALLY.
C SECURITIES HELD IN WHOLE OR IN PART BY THE CUSTODIAN IN A SEGREGATED ACCOUNT
AS COLLATERAL FOR SECURITIES PURCHASED ON A FORWARD COMMITMENT BASIS.
(D) PURCHASED ON A FORWARD COMMITMENT BASIS.
(E) REFLECTS NOTIONAL FACE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000 (Unaudited)
Cost Value
-------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 16,823,999 15,948,153
Cash 193,582
Receivable for investment securities sold 1,086,646
Dividends and interest receivable 146,081
Paydowns receivable 6,159
Prepaid expenses 23,179
Due from The Dreyfus Corporation and affiliates 30,925
17,434,725
--------------------------------------------------------------------------------
LIABILITIES ($):
Bank loan payable--Note 2 1,980,000
Payable for investment securities purchased 1,834,010
Interest payable--Note 2 8,479
Accrued expenses 14,540
3,837,029
--------------------------------------------------------------------------------
NET ASSETS ($) 13,597,696
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 14,601,448
Accumulated undistributed investment income--net 109,772
Accumulated net realized gain (loss) on investments (237,678)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (875,846)
--------------------------------------------------------------------------------
NET ASSETS ($) 13,597,696
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
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Net Assets ($) 13,169,214 90,614 96,994 239,719 1,155
Shares Outstanding 1,126,970 7,817 8,352 20,535 99
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 11.69 11.59 11.61 11.67 11.67
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 574,593
Cash Dividends 200,997
TOTAL INCOME 775,590
EXPENSES:
Management fee--Note 3(a) 42,056
Interest expense--Note 2 71,225
Organization expenses 32,347
Registration fees 30,235
Shareholder servicing costs--Note 3(c) 17,019
Auditing fees 14,276
Prospectus and shareholders' reports 4,455
Custodian fees--Note 3(c) 2,169
Distribution fees--Note 3(b) 528
Trustees' fees and expenses--Note 3(d) 505
Legal fees 488
Miscellaneous 3,006
TOTAL EXPENSES 218,309
Less--expense reimbursement from The Dreyfus Corporation due to
undertaking--Note 3(a) (88,665)
NET EXPENSES 129,644
INVESTMENT INCOME--NET 645,946
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 81,275
Net unrealized appreciation (depreciation) on investments 484,939
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 566,214
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,212,160
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CASH FLOWS
Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES ($):
Dividends and interest received 831,504
Interest and loan commitment fees paid (110,837)
Operating expenses paid (63,547)
657,120
CASH FLOWS FROM INVESTING ACTIVITIES ($):
Purchases of portfolio securities (23,365,094)
Proceeds from sales of portfolio securities 23,472,915 107,821
CASH FLOWS FROM FINANCING ACTIVITIES ($):
Proceeds from fund shares sold 799,652
Payments for fund shares redeemed (1,181,535)
Cash dividends paid (50,268)
Net repayments from bank loans (330,000) (762,151)
Increase in cash 2,790
Cash at beginning of period 190,792
Cash at end of period 193,582
--------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES ($):
Net Increase in Net Assets Resulting from Operations 1,212,160
Adjustments to reconcile net increase in net assets
resulting from operations to net cash provided by
operating activities:
Decrease in dividends and interest receivable 54,186
Decrease in paydowns receivable 1,728
Decrease in interest payable (39,612)
Decrease in accrued expenses (8,664)
Decrease in prepaid expenses 34,204
Increase in due from The Dreyfus Corporation
and affiliates (27,995)
Decrease in due to distributor (2,673)
Net realized gain on investments (81,275)
Net unrealized appreciation on investments (484,939)
NET CASH PROVIDED BY OPERATING ACTIVITIES 657,120
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
April 30, 2000 Year Ended
(Unaudited) October 31, 1999(a)
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OPERATIONS ($):
Investment income--net 645,946 1,365,342
Net realized gain (loss) on investments 81,275 (245,082)
Net unrealized appreciation (depreciation)
on investments 484,939 (413,593)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 1,212,160 706,667
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (655,897) (1,347,086)
Class B shares (4,065) (3,216)
Class C shares (2,798) (137)
Class R shares (15,197) (15,086)
Class T shares (56) (75)
Net realized gain on investments:
Class A shares -- (282,340)
TOTAL DIVIDENDS (678,013) (1,647,940)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 375,698 962,717
Class B shares 46,404 82,511
Class C shares 377,550 3,500
Class R shares -- 301,000
Class T shares -- 1,000
Dividends reinvested:
Class A shares 624,908 1,571,690
Class B shares 1,512 818
Class C shares 1,211 137
Class R shares 58 7,192
Class T shares 56 75
Cost of shares redeemed:
Class A shares (795,223) (2,071,724)
Class B shares (40,403) --
Class C shares (295,909) --
Class R shares (50,000) (7,112)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 245,862 851,804
TOTAL INCREASE (DECREASE) IN NET ASSETS 780,009 (89,469)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 12,817,687 12,907,156
END OF PERIOD 13,597,696 12,817,687
Undistributed investment income--net 109,772 141,839
(A) FROM DECEMBER 24, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999, FOR CLASS B, CLASS C, CLASS R AND CLASS T SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
Six Months Ended
April 30, 2000 Year Ended
(Unaudited) October 31, 1999(a)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A
Shares sold 33,688 82,330
Shares issued for dividends reinvested 57,013 136,179
Shares redeemed (70,516) (179,624)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 20,185 38,885
--------------------------------------------------------------------------------
CLASS B
Shares sold 4,180 7,081
Shares issued for dividends reinvested 139 73
Shares redeemed (3,656) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 663 7,154
--------------------------------------------------------------------------------
CLASS C
Shares sold 33,593 304
Shares issued for dividends reinvested 109 12
Shares redeemed (25,666) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 8,036 316
--------------------------------------------------------------------------------
CLASS R
Shares sold -- 25,025
Shares issued for dividends reinvested 5 595
Shares redeemed (4,468) (622)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (4,463) 24,998
--------------------------------------------------------------------------------
CLASS T
Shares sold -- 87
Shares issued for dividends reinvested 5 7
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 5 94
(A) FROM DECEMBER 24, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999, FOR CLASS B, CLASS C, CLASS R AND CLASS T SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Six Months Ended
April 30, 2000 Year Ended October 31,
------------------------------------------
CLASS A SHARES (Unaudited) 1999 1998 1997(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.25 12.09 12.69 12.50
Investment Operations:
Investment income--net .56 1.22 1.03 .06
Net realized and unrealized gain (loss)
on investments .47 (.57) (.52) .13
Total from Investment Operations 1.03 .65 .51 .19
Distributions:
Dividends from investment income--net (.59) (1.23) (.96) --
Dividends from net realized gain on investments -- (.26) (.15) --
Total Distributions (.59) (1.49) (1.11) --
Net asset value, end of period 11.69 11.25 12.09 12.69
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TOTAL RETURN (%) 19.09(b),(c) 5.41(b) 3.82 17.34(c,d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to average net assets .90(c) .90 .90 .90(c)
Ratio of interest expense to average net assets 1.10(c) 1.61 1.66 --
Ratio of net investment income
to average net assets 9.99(c) 10.23 8.13 5.39(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 1.37(c) .96 .71 2.77(c)
Portfolio Turnover Rate 142.53(e) 267.67 752.42 244.61(e)
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Net Assets, end of period ($ x 1,000) 13,169 12,452 12,907 10,396
(A) FROM SEPTEMBER 30, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1997.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) EXCLUSIVE OF REDEMPTION FEE.
(E) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Six Months Ended
April 30, 2000 Year Ended
CLASS B SHARES (Unaudited) October 31,
1999(a)
--------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.17 11.47
Investment Operations:
Investment income--net .49 .77
Net realized and unrealized gain (loss) on investments .49 (.24)
Total from Investment Operations .98 .53
Distributions:
Dividends from investment income--net (.56) (.83)
Net asset value, end of period 11.59 11.17
--------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 18.31(c) 5.71(c)
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to average net assets 1.65(c) 1.60(c)
Ratio of interest expense to average net assets 1.07(c) 1.50(c)
Ratio of net investment income to average net assets 9.26(c) 9.57(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 1.52(c) 1.00(c)
Portfolio Turnover Rate 142.53(d) 267.67
--------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 91 80
(A) FROM DECEMBER 24, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Six Months Ended
April 30, 2000 Year Ended
CLASS C SHARES (Unaudited) October 31,
1999(a)
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PER SHARE DATA ($):
Net asset value, beginning of period 11.21 11.47
Investment Operations:
Investment income--net .54 .80
Net realized and unrealized gain (loss) on investments .43 (.25)
Total from Investment Operations .97 .55
Distributions:
Dividends from investment income--net (.57) (.81)
Net asset value, end of period 11.61 11.21
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TOTAL RETURN (%)(B) 18.13(c) 5.91(c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to average net assets 1.65(c) 1.62(c)
Ratio of interest expense to average net assets .80(c) 1.57(c)
Ratio of net investment income to average net assets 7.92(c) 9.50(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 5.53(c) 1.59(c)
Portfolio Turnover Rate 142.53(d) 267.67
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Net Assets, end of period ($ x 1,000) 97 4
(A) FROM DECEMBER 24, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Six Months Ended
April 30, 2000 Year Ended
CLASS R SHARES (Unaudited) October 31,
1999(a)
--------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.24 11.47
Investment Operations:
Investment income--net .56 .95
Net realized and unrealized gain (loss) on investments .48 (.29)
Total from Investment Operations 1.04 .66
Distributions:
Dividends from investment income--net (.61) (.89)
Net asset value, end of period 11.67 11.24
--------------------------------------------------------------------------------
TOTAL RETURN (%) 19.41(b) 7.04(b)
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to average net assets .65(b) .59(b)
Ratio of interest expense to average net assets 1.11(b) 1.45(b)
Ratio of net investment income to average net assets 10.24(b) 10.33(b)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation .33(b) .90(b)
Portfolio Turnover Rate 142.53(c) 267.67
--------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 240 281
(A) FROM DECEMBER 24, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999.
(B) ANNUALIZED.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Six Months Ended
April 30, 2000 Year Ended
CLASS T SHARES (Unaudited) October 31,
1999(a)
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PER SHARE DATA ($):
Net asset value, beginning of period 11.24 11.47
Investment Operations:
Investment income--net .54 1.00
Net realized and unrealized gain (loss) on investments .47 (.39)
Total from Investment Operations 1.01 .61
Distributions:
Dividends from investment income--net (.58) (.84)
Net asset value, end of period 11.67 11.24
--------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 18.89(c) 6.45(c)
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to average net assets 1.14(c) 1.14(c)
Ratio of interest expense to average net assets 1.13(c) 1.62(c)
Ratio of net investment income to average net assets 9.74(c) 10.05(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 1.91(c) 1.83(c)
Portfolio Turnover Rate 142.53(d) 267.67
--------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1 1
(A) FROM DECEMBER 24, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Real Estate Mortgage Fund (the "fund" ) is a separate
non-diversified series of Dreyfus Debt and Equity Funds (the "Company") which is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end management investment company and operates as a series company
currently offering six series, including the fund. The fund's investment
objective is to maximize total return, consisting of capital appreciation and
current income. The Dreyfus Corporation (the "Manager") serves as the fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon"), which is a wholly-owned subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ('DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund
is authorized to issue an unlimited number of $.001 par value shares in the
following classes of shares: Class A, Class B, Class C, Class R and Class T
shares. Class A and Class T shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge (" CDSC" ) imposed on Class B share redemptions made within six years of
purchase, Class C shares are subject to a CDSC imposed on Class C shares
redeemed within one year of purchase and Class R shares are sold at net asset
value per share only to institutional investors. Other differences between the
classes include the services offered to and the expenses borne by each class and
certain voting rights.
As of April 30, 2000, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 946,558 Class A shares of the fund.
The Company accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 debt 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. Investments in equity related securities 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 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.
(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. Under the terms of the custody agreement, the fund receives net
earnings credits based on available cash balances left on deposit.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare and pay
dividends from investment income-net quarterly. 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.
The fund has an unused capital loss carryover of approximately $321,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1999. If not
applied, the carryover expires in fiscal 2007.
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
separate $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 the leveraging
arrangement during the period ended April 30, 2000 was approximately $2,374,700
with a related weighted average annualized interest rate of 6.03%.
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. The The Fun
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
Manager has undertaken from November 1, 1999 through October 31, 2000 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 commissions, interest on borrowings, commitment fees, Rule 12b-1
distribution fees, shareholder servicing fees and expenses and extraordinary
expenses) exceed an annual rate of .65 of 1% of the value of the fund's average
daily net assets. The expense reimbursement pursuant to the undertaking,
amounted to $88,665 during the period ended April 30, 2000.
DSC retained $230 during the period ended April 30, 2000, from commissions
earned on sales of the fund' s shares.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, Class B, Class C and Class T shares pay the distributor for
distributing their shares at an annual rate of .75 of 1% of the value of the
average daily net assets of Class B and Class C shares and .25 of 1% of the
value of the average daily net assets of Class T shares. During the period ended
April 30, 2000, Class B, Class C and Class T shares were charged $287, $240 and
$1, respectively, pursuant to the Plan, of which $70, $144 and $1 for Class B,
Class C and Class T shares, respectively, were paid to DSC.
(C) Under the Shareholder Services Plan, Class A, Class B, Class C and Class T
shares pay the distributor at an annual rate of .25 of 1% of the value of their
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, 2000, Class A, Class B, Class C and
Class T shares were charged $15,659, $96, $80 and $1, respectively, pursuant to
the Shareholder Services Plan, of which $3,543, $23, $48 and $1 for Class A,
Class B, Class C and Class T shares, respectively, were paid to DSC.
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, 2000, the fund was charged $940 pursuant to the transfer agency
agreement.
The fund compensates Mellon under a custody agreement for providing custodial
services for the fund. During the period ended April 30, 2000 the fund was
charged $2,169 pursuant to the custody agreement.
(D) 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:
The aggregate amount of purchases and sales (including paydowns) of investment
securities, excluding short-term securities, during the period ended April 30,
2000, amounted to $23,516,862 and $23,728,356, respectively.
At April 30, 2000, accumulated net unrealized depreciation on investments was
$875,846, consisting of $519,815 gross unrealized appreciation and $1,395,661
gross unrealized depreciation.
At April 30, 2000, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
NOTE 5--Subsequent Event:
At a meeting of the fund's Board of Trustees held on May 3, 2000, the Board
approved a proposal to liquidate the fund and distribute its assets pro rata to
fund shareholders. The anticipated date of liquidation of the fund is June 30,
2000.
The Fund
NOTES
For More Information
Dreyfus Premier Real Estate Mortgage 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
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 2000 Dreyfus Service Corporation 045SA004
