<PAGE>
Dreyfus
Institutional
U.S. Treasury
Money Market Fund
Annual Report
October 31, 1995
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus
Institutional U.S. Treasury Money Market Fund for the fiscal year ended
October 31, 1995. Effective September 15, 1995, the name of your Fund
changed from Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund to
Dreyfus Institutional U.S. Treasury Money Market Fund.
ECONOMIC REVIEW
The Economy Reaccelerates Modestly
After slowing down somewhat during the first six months of the recent
fiscal period, the U.S. economy began to pick up its pace once again. Lower
interest rates rekindled demand in such credit-sensitive sectors as autos and
housing. Meanwhile, many companies stopped cutting production. However,
investors should take note of several limiting factors which are now pointing
to an economic expansion that may be muted rather than robust, and to
continued low inflation.
First of all, foreign economies, especially Mexico and Japan, are
still struggling. This economic lethargy, along with the rebounding dollar,
should continue to restrain U.S. export growth. Additionally, the domestic
economy is being constrained by record high consumer installment debt.
Finally, capital spending, the lead sector of the U.S. economy, is beginning
to stabilize of late as lack of pricing power trims business profits, making
it more difficult to justify additional expansion plans. In addition, the
economies of the heavily populated Northeast region and California are
lagging far behind the rest of the nation, so the overall economy is actually
not firing on all cylinders. All these factors point toward more moderate
economic growth going forward, which should help to keep inflation at bay.
Inflation Slows More Than Expected
By early October 1995, the annualized rate of inflation had dropped
to approximately 2-1/2%, a more dramatic slowdown than many analysts had
expected. This deceleration relieved fears that the economy was operating
close to full capacity, a situation which could have begun to stimulate
inflation. At the same time, long-term disinflationary forces have continued
to stymie the ability of businesses to raise prices on their goods and
services.
This scenario of relatively stable economic growth and low inflation
could set the stage for the Federal Reserve Board to lower interest rates
again. A key interest rate, the Federal Funds rate, is currently more than 3%
above the underlying inflation rate. Thus, monetary policy is considered
restrictive and the Fed could easily defend another easing. However, we
believe the Fed will wait for more economic data along with resolution of the
Federal budget before determining if, when, and how much to lower rates.
Money Market Yields Remain Attractive
As short-term interest rates have fallen in recent months, so have
yields on money market securities and mutual funds. In terms of supply and
demand, interest-rate uncertainty kept supplies of new money market
securities fairly light during the recent period as issuers awaited the next
move by the Federal Reserve Board. At the same time, demand stayed fairly
steady as investors continued to recognize the importance of money market
instruments in a balanced investment portfolio.
<PAGE>
Market Outlook: Cautiously Optimistic
Although the market has ebbed and flowed along with new economic data
and interest rate perceptions, the market currently presents a relatively
stable, positive environment for money market investors. The market will be
watching Federal budget negotiations and the Fed carefully, along with the
economy.
PORTFOLIO REVIEW
Despite a market environment that included lower interest rates and
relatively high prices for Treasury securities, Dreyfus Institutional U.S.
Treasury Money Market Fund continued to provide shareholders with competitive
performance. For the twelve months ended October 31, 1995, your Fund's yield
was 5.43%. Reinvesting the Fund's dividends and calculating this effect of
compounding resulted in an effective yield of 5.57%.*
Supply and demand of money market securities retained a normal
seasonal balance throughout the period. Interest rates fell lower, with the
Federal Reserve Board interpreting the low inflationary environment as benign
enough to allow a policy designed to put more money into the hands of
businesses and consumers.
Anticipating these lower rates, Fund management extended the
portfolio's average maturity early on, from a target range of 30 to 40 days
to one between 40 and 50 days. This longer average maturity enabled the Fund
to lock in some higher interest rates and boost its income stream.
Near-term uncertainty over the budget and interest rates could cause
some market volatility. However, our focus on U.S. Treasury securities should
enable the Fund to maintain the stability it has provided thus far.
Sincerely,
Laurie Carroll
Portfolio Manager
November 14, 1995
New York, N.Y.
*Effective yield is based upon dividends declared daily and reinvested
monthly.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
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Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--55.8% Purchase Amount Value
- -------------------------------------------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
11/9/95................................................... 5.20% $ 30,000,000 $ 29,965,600
11/16/95.................................................. 5.49 25,000,000 24,943,542
11/30/95.................................................. 5.48 30,000,000 29,869,500
12/7/95................................................... 5.37 45,000,000 44,761,500
12/14/95.................................................. 5.78 25,000,000 24,830,389
12/21/95.................................................. 5.24 30,000,000 29,784,583
1/11/96................................................... 6.02 25,000,000 24,710,083
1/18/96................................................... 5.33 25,000,000 24,715,083
2/8/96.................................................... 5.51 25,000,000 24,630,469
2/22/96................................................... 5.48 25,000,000 24,580,958
3/7/96.................................................... 5.41 25,000,000 24,532,569
4/4/96.................................................... 5.86 40,000,000 39,026,945
4/18/96................................................... 5.42 25,000,000 24,379,747
5/30/96................................................... 5.50 35,000,000 33,913,790
7/25/96................................................... 5.64 25,000,000 24,006,167
------------
TOTAL U.S. TREASURY BILLS (cost $428,650,925)................. $428,650,925
------------
Repurchase Agreements-44.7%
- --------------------------------------------------------------
Barclays De Zoette Wedd Securities, Inc.
dated 10/31/95, due 11/1/95 in the amount of $125,020,399
(fully collateralized by $105,461,000 U.S. Treasury Notes
4.25% to 9.25%, due 1/31/96 to 8/15/2002 value $109,452,916
and $14,723,000 U.S. Treasury Bonds 7.25% to 14%, due
11/15/2012 to 8/15/2022 value $18,048,139)................ 5.88% $125,000,000 $125,000,000
Donaldson, Lufkin & Jenrette Securities, Inc.
dated 10/31/95, due 11/1/95 in the amount of $150,024,479
(fully collateralized by $144,361,000 U.S. Treasury Notes
7.5%, due 10/31/99 value $153,000,140).................... 5.88 150,000,000 150,000,000
Goldman Sachs & Co.
dated 10/31/95, due 11/1/95 in the amount of $67,835,605
(fully collateralized by $43,540,000 U.S. Treasury Bonds
12.5%, due 8/15/2014 value $69,182,457)................... 5.88 67,824,527 67,824,527
------------
TOTAL REPURCHASE AGREEMENTS (cost $342,824,527)............... $342,824,527
------------
TOTAL INVESTMENTS (cost $771,475,452) ............. 100.5% $771,475,452
LIABILITIES, LESS CASH AND RECEIVABLES............. (.5%) $ (3,527,903)
------ ------------
NET ASSETS......................................... 100.0% $767,947,549
------ ------------
------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
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Statement of Assets and Liabilities October 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $771,475,452)--see Statement of
Investments
(including repurchase agreements of $342,824,527)..................... $771,475,452
Cash.................................................................... 427,827
Interest receivable..................................................... 55,956
------------
771,959,235
LIABILITIES:
Due to The Dreyfus Corporation--Note 2(a)................................ $ 188,521
Due to Distributor--Note 2(b) ........................................... 197,351
Dividends Payable....................................................... 3,612,348
Accrued expenses and other liabilities.................................. 13,466 4,011,686
----------- ------------
NET ASSETS at value, represented by paid-in capital,
applicable to 767,947,549 outstanding shares of Capital Stock
(2 billion shares of $.001 par value Capital Stock authorized).......... $767,947,549
------------
------------
NET ASSET VALUE, offering and redemption price per share
($767,947,549 / 767,947,549 shares of Capital Stock outstanding)........ $1.00
-----
-----
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
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Statement of Operations Year ended October 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest Income....................................................... $39,702,491
Expenses:
Investment management fee--Note 2(a)................................... $ 967,664
Shareholder service fee--Note 2(b)..................................... 1,036,783
Directors' fees and expenses--Note 2(c)................................ 69,119
----------
Total Expenses.................................................... 2,073,566
-----------
INVESTMENT INCOME-NET, representing net increase in net assets
resulting from operations............................................... $37,628,925
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
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Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS;
Investment income--net............................................... $ 37,628,925 $ 17,666,894
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net............................................... (37,628,925) (17,666,894)
-------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................ 3,138,307,082 3,029,275,330
Dividends reinvested................................................. 4,562,052 2,102,357
Cost of shares redeemed.............................................. (2,961,699,870) (2,945,252,694)
-------------- --------------
Increase In Net Assets From Capital Stock Transactions............. 181,169,264 86,124,993
-------------- --------------
Total Increase In Net Assets..................................... 181,169,264 86,124,993
NET ASSETS:
Beginning of year.................................................... 586,778,285 500,653,292
-------------- --------------
End of year.......................................................... $ 767,947,549 $ 586,778,285
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
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Financial Highlights
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------------
PER SHARE DATA: 1995 1994(1) 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Operations;
Investment income--net.............................. .0543 .0351(2) .0287(3) .0381(3) .0620(3)
------- ------- ------- ------- -------
Distributions;
Dividends from investment income--net............... (.0543) (.0351) (.0287) (.0381) (.0620)
------- ------- ------- ------- -------
Net asset value, end of year........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN................................. 5.57% 3.55% 2.91% 3.88% 6.39%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............. .30% .30%(4) .30% .30% .30%
Ratio of net investment income to average net assets 5.44% 3.55% 2.87% 3.81% 6.04%
Net Assets, end of year (000's Omitted)............. $767,948 $586,778 $500,653 $666,378 $452,333
<FN>
- -----------
(1) Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(2) Net investment income before reimbursement of expenses by the investment
manager for the year ended October 31, 1994 was $.0350 per share.
(3) For the years ended October 31, 1993, 1992 and 1991 the investment
adviser reimbursed expenses of the Fund amounting to $.0004, $.0003 and
$.0008 per share, respectively.
(4) Annualized expense ratio before reimbursement of expenses by the
investment manager for the year ended October 31, 1994 was .31%.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
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NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
The Dreyfus/Laurel Funds, Inc. (the "Company") 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
sixteen Series including the Dreyfus Institutional U.S. Treasury Money Market
Fund (the "Fund"). The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
On July 26, 1995, the Fund's Directors approved a change to the Fund's
name, effective September 15, 1995, from "Dreyfus/Laurel Institutional U.S.
Treasury Money Market Fund" to "Dreyfus Institutional U.S. Treasury Money
Market Fund."
In addition, Class II and Class III shares were eliminated. The
designation Class I of the Funds' only remaining class of shares also was
eliminated and these shares were redesignated as shares of the Funds'. The
Company has the authority to issue 25 billion shares of capital stock with a
par value of $.001
(a) Portfolio Valuation: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has
been determined by the Fund's Board of Directors to represent the fair value
of the Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to enable it to do
so. There is no assurance, however, that the Fund will be able to maintain a
stable net asset value of $1.00.
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
(c) Repurchase Agreements: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund,
through its custodian, and sub-custodian takes possession of an underlying
debt obligation subject to an obligation of the seller to repurchase, and the
Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Fund's holding period. The value of the collateral is at least
equal, at all times, to the total amount of the repurchase obligations,
including interest. In the event of a counterparty default, the Fund has the
right to use the collateral to offset losses incurred. There is potential
loss to the Fund in the event the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during
the period while the Fund seeks to assert its rights. The Fund's manager,
acting under the supervision of the Board of Directors, reviews the value of
the collateral and the creditworthiness of those banks and dealers with which
the Fund enters into repurchase agreements to evaluate potential risks.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(d) Distributions to Shareholders: It is the policy of the Fund to
declare dividends daily from investment income-net; such
dividends are paid monthly. Dividends from net realized capital gain are
normally declared and paid annually, but the Fund may make distributions on a
more frequent basis to comply with the distribution requirements of the
Internal Revenue Code. To the extent that net realized capital gain can be
offset by capital loss carryovers, it the policy of the Fund not to
distribute such gain.
(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--Investment Management Fee and Other Transactions with Affiliates:
(a) Investment Management Fee: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. The Manager also directs the investments of the Fund in accordance with
its investment objective, policies and limitations. For these services, the
Fund is contractually obligated to pay the Manager a fee, calculated daily
and paid monthly, at the annual rate of .15% of the value of the Fund's
average daily net assets. Out of its fee, the Manager pays all of the
expenses of the Fund except brokerage fees, taxes, interest, Rule 12b-1
distribution fees and expenses, fees and expenses of non-interested Directors
(including counsel fees) and extraordinary expenses. In addition, the Manager
is required to reduce its fee in an amount equal to the Fund's allocable
portion of fees and expenses of the non-interested Directors (including
counsel).
(b) Shareholder Servicing Plan: The Fund has adopted a shareholder
servicing plan (the "Plan"). Under the Plan, the Fund may pay up to .15% of
the value of the average daily net assets annually to compensate certain
banks, brokers, dealers or other financial institutions for shareholder
services. For the year ended October 31, 1995, the Fund incurred service fees
of $1,036,783.
Under its terms, the shareholder servicing plan shall remain in effect
from year to year, provided such continuance is approved annually by a vote
of a majority of those Directors who are not "interested persons" of the
Investment Company and who have no direct or indirect financial interest in
the operation of the Plan or any agreement related to the Plan.
(c) Directors' Fees: Each director who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000 for each Board meeting
attended and $750 for each Audit Committee attended and is reimbursed for
travel and out-of-pocket expenses. These expenses are paid in total by the
following funds: the Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and the Dreyfus/Laurel Funds Trust. In addition the Chairman
of the Board receives an annual fee of $75,000 per year. These fees and expens
es are charged and allocated to each series based on net assets.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of
the Dreyfus Institutional U.S. Treasury Money Market Fund of The
Dreyfus/Laurel Funds, Inc., including the statement of investments, as of
October 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
indicated herein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Dreyfus Institutional U.S. Treasury Money Market Fund of The
Dreyfus/Laurel Funds, Inc., as of October 31, 1995, and the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 15, 1995
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ------------------------------------------------------------------------------
Important Tax Information (Unaudited)
For State individual income tax purposes, the Fund hereby designates
58.11% of the ordinary income dividends paid during its fiscal year ended
October 31, 1995 as attributable to interest income from direct obligations
of the United States government. Such dividends are currently exempt from
taxation for individual income tax purposes in most states, including New
York, California and the District of Columbia.
<PAGE>
Dreyfus Institutional U.S. Treasury Money
Market Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Transfer Agent &
Dividend Disbursing Agent
First Data Investor Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 930AR9510
