DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus
Institutional Prime Money Market Fund. For its semi-annual reporting period
ended April 30, 1996, your Fund provided an annualized yield of 5.28%. The
annualized effective yield was 5.41% after taking into account the effect of
compounding.*
THE ECONOMY
Concerns that the economy was heading toward recession were eased
by the recent release of brighter-than-expected reports on employment and
consumer spending. Consequently, the Federal Reserve Board refrained from
making any further reductions in the Federal Funds rate; the last easing of
this benchmark interest rate occurred on January 31st. In reaction to the
more optimistic economic news (and the related fears of a potential
rekindling of inflation), long-term interest rates as measured by 30-year Trea
sury bonds rose nearly one percentage point since February.
The rosier outlook for the economy was spearheaded by reports of
large gains in employment for two consecutive months (February and March).
Furthermore, personal income and expenditures data indicated that consumers
continued to spend, despite their present high level of installment credit.
Retail sales reports have correspondingly edged higher, confirming a modest
recovery in consumer spending from its year-end slump.
Supporting the growing consensus that the economy has picked up
steam were reports of slow but steady growth in the manufacturing sector.
After adjusting data for the 17-day General Motors strike, industrial output
rose modestly. New orders for durable goods, a closely watched indicator of
future hiring and production, also posted gains.
Despite the economy's apparent recovery from its year-end pause,
inflation has remained under control. Through March of this year, the
Consumer Price Index rose at an annual rate of 2.8%. There appear to be few
signs of inflationary pressure in the economy. Factories are running at a
relatively comfortable rate of capacity (82.5%), markedly below this
expansion's peak of 85.1% reached over a year ago. With major industries
trying to reduce inventories, there is little to suggest that product pricing
will surge upwards. Reflecting this absence of so-called pipeline
inflationary pressure, price increases at both the wholesale and production
levels of the economy remained similarly under control. The cautionary stance
of the Federal Reserve regarding additional reductions in interest rates,
combined with a reduction in government spending, should serve as additional
moderating forces against any resurgence in inflation.
We are mindful, however, of a potential change in what has been a
benign inflation picture. The recent rise in oil prices, along with strength
in other commodity prices such as grain, are not to be dismissed lightly.
While they may be only aberrations of a temporary nature, they also could
represent early warning signs of a fundamental change in inflation which will
be seen later in the year.
THE MARKET AND THE PORTFOLIO
The surge in interest rates following the April 5th release of the
government's March employment report sharply steepened the yield curve as
fear of higher inflation worried long-term investors. The surprising growth
in jobs was widely interpreted as a sign that the economy might be
overheating.
Money market rates declined modestly during the reporting period,
reacting to the easing in the Fed Funds rate in January 1996. Since then,
short-term rates have been the stable pivot point on the yield curve. The
Fund's principal portfolio holdings include commercial paper and repurchase
agreements and the Fund had an average portfolio maturity of 32 days on April
30, 1996.
There was no appreciable change in portfolio strategy with respect
to duration during the reporting period. The recent signs of economic
strength have resulted in a steeper money market yield curve. Accordingly,
cash contributions have been invested at more attractive yield levels. We
expect that the Federal Reserve will pursue a stable monetary policy unless
it becomes clear that economic growth is accelerating. Until then, we
currently expect to maintain the average portfolio maturity of the Fund at its
present level.
Included in this report is a series of detailed statements about
your Fund's holdings and its financial condition. We hope you find them
informative. Please know that we greatly appreciate your continued confidence
in the Fund and in The Dreyfus Corporation.
Very truly yours,
[Laurie Carroll signature logo]
Laurie Carroll
Portfolio Manager
May 15, 1996
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
STATEMENT OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
COMMERCIAL PAPER-69.5% AMOUNT VALUE
____________________ _____ ____
<S> <C> <C>
Air Products & Chemicals Inc.
5.05%-5.59%, 5/17/96-7/24/96.......................................... $ 18,200,000 $ 18,090,147
Bayerische Vereinsbank AG
5.13%, 9/6/96......................................................... 9,000,000 8,840,000
Bell Atlantic Financial Services Inc.
5.37%, 5/6/96......................................................... 8,070,000 8,064,003
Ciesco L.P.
5.32%, 6/12/96........................................................ 15,500,000 15,404,520
Clorox Co.
5.12%, 5/14/96........................................................ 15,000,000 14,972,646
Commonwealth Bank of Australia
5.33%, 6/24/96........................................................ 15,000,000 14,881,200
Dean Witter, Discover & Co.
5.11%, 5/20/96........................................................ 20,000,000 19,946,800
DuPont (E.I.) de Nemours & Co.
5.33%, 5/16/96........................................................ 15,000,000 14,967,000
Eaton Corp.
5.86%, 6/17/96........................................................ 5,000,000 4,963,314
Ford Motor Credit Co.
5.19%, 6/6/96......................................................... 15,000,000 14,923,500
Golden Peanut Co.
5.02%, 6/21/96........................................................ 6,000,000 5,958,095
McCormick & Co. Inc.
5.14%, 10/25/96....................................................... 15,000,000 14,634,937
Northern Rock Building Society
5.13%, 6/5/96......................................................... 15,000,000 14,926,500
Sandoz Corp.
5.35%, 7/25/96........................................................ 15,000,000 14,813,000
Sara Lee Corp.
5.37%, 5/31/96........................................................ 15,000,000 14,933,375
Southern California Edison Co.
5.33%, 5/29/96........................................................ 15,000,000 14,938,167
Sweden (Kingdom of)
5.11%, 7/8/96......................................................... 15,000,000 14,858,333
Toshiba America Inc.
5.37%, 5/9/96......................................................... 15,000,000 14,982,167
U.S. Bancorp
5.15%, 5/10/96........................................................ 13,000,000 12,983,425
United Parcel Service of America Inc.
5.09%, 5/28/96........................................................ 15,000,000 14,943,525
_____________
TOTAL COMMERCIAL PAPER
(cost $273,024,654)................................................... $273,024,654
=============
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
REPURCHASE AGREEMENTS-30.8% AMOUNT VALUE
__________________ ____ ___
Donaldson, Lufkin & Jenrette Securities Inc., 5.32%
dated 4/30/96, due 5/1/96 in the amount of $50,007,389
(fully collateralized by $34,569,000 U.S. Treasury Notes
4.25% to 8.5% due 5/15/96 to 2/15/2000 value $36,459,972
and by $15,700,000 U.S. Treasury Bonds 6.25% to 11.875%,
due 11/15/2003 to 8/15/2023 value $14,384,825)........................ $ 50,000,000 $ 50,000,000
Goldman, Sachs & Co., 5.31%
dated 4/30/96, due 5/1/96 in the amount of $70,998,825
(fully collateralized by $62,939,000 U.S. Treasury Bonds
8%, due 11/15/2021 value $71,956,006)................................. 70,988,354 70,988,354
_____________
TOTAL REPURCHASE AGREEMENTS
(cost $120,988,354)................................................... $120,988,354
=============
TOTAL INVESTMENTS
(cost $394,013,008)........................................ 100.3% $394,013,008
===== =============
LIABILITIES, LESS CASH AND RECEIVABLES............................ (.3%) $ (1,007,402)
===== =============
NET ASSETS 100.0%...................... $393,005,606
===== =============
See notes to financial statements.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED)
ASSETS:
Investments in securities, at value (cost $394,013,008)-See Statement of
Investments
(including repurchase agreements of $120,988,354)..................... $394,013,008
Interest receivable..................................................... 17,860
_____________
394,030,868
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)................................ $ 35,086
Due to Distributor-Note 2(b)............................................ 48,332
Cash overdraft due to Custodian......................................... 733,251
Directors' fees payable-Note 2(c)....................................... 208,593 1,025,262
__________ ______________
NET ASSETS.................................................................. $393,005,606
=============
REPRESENTEDBY:
Paid-in capital......................................................... $393,003,134
Accumulated undistributed net realized gain on investments.............. 2,472
______________
NET ASSETS at value applicable to 393,003,134 outstanding shares
of Capital Stock, equivalent to $1.00 per share (4 billion shares of
$.001 par value authorized)............................................. $393,005,606
=============
See notes to financial statements.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME......................................................... $17,121,456
EXPENSES:
Investment management fee-Note 2(a)................................... $423,743
Shareholder service fee-Note 2(b)..................................... 454,010
Directors' fees and expenses-Note 2(c)................................ 30,267
................................ __________
TOTAL EXPENSES.................................................... 908,020
................................ ................................ _____________
INVESTMENT INCOME-NET, representing net increase in net assets
resulting from operations............................................... $16,213,436
................................ ................................ ============
See notes to financial statements.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995
________________ ______________
OPERATIONS:
Investment income-net................................................ $ 16,213,436 $ 51,980,944
Net realized gain on investments..................................... - 2,472
________________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. 16,213,436 51,983,416
________________ ____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................ (16,213,436) (51,980,944)
________________ ____________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):*
Net proceeds from shares sold:
Class I shares..................................................... 2,474,981,472 6,764,968,751
Class II shares.................................................... - 979,545,884
Dividends reinvested:
Class I shares..................................................... 6,486,101 14,679,121
Class II shares.................................................... - 6,095,405
Cost of shares redeemed:
Class I shares..................................................... (2,862,063,998) (6,687,828,845)
Class II shares.................................................... - (985,641,289)
________________ ____________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS (380,596,425) 91,819,027
________________ ____________
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ (380,596,425) 91,821,499
NET ASSETS:
Beginning of period.................................................. 773,602,031 681,780,532
________________ ____________
End of period........................................................ $ 393,005,606 $ 773,602,031
================ ============
* Effective November 1, 1995 the Fund's Class I designation was eliminated
and these shares were redesignated as shares of the Fund.
</TABLE>
See notes to financial statements.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
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 period indicated. This
information has been derived from the Fund's financial statements.(1)
<TABLE>
<CAPTION>
CLASS I SHARES
--------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 1996 YEAR ENDED OCTOBER 31,
------------------------------------------------------------
PER SHARE DATA: (UNAUDITED) 1995 1994(2) 1993 1992 1991
___________ ______ _______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS;
Investment income-net(3) .026 .056 .035 .030 .040 .064
______ ______ ______ ______ ______ ______
DISTRIBUTIONS;
Dividends from investment
income-net............ (.026) (.056) (.035) (.030) (.040) (.064)
______ ______ ______ ______ ______ ______
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN..... 5.33%(4) 5.77% 3.67% 3.04% 4.09% 6.60%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets............ .30%(4) .30% .29% .27% .29% .30%
Ratio of net investment income
to average net assets. 5.34%(4) 5.61% 3.58% 2.99% 4.04% 6.22%
Net Assets, end of period
(000's Omitted)....... $393,006 $773,602 $681,781 $824,080 $950,322 $943,636
(1) Prior to October 31, 1995, shares of the Fund were designated Class I
shares. Effective November 1, 1995 the Fund's Class I and Class II
designations were eliminated and the Fund became a single class Fund.
(2) 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.
(3) For the years ended October 31, 1993, 1992 and 1991 the investment
adviser reimbursed expenses of the Fund amounting to $.00005, $.0001 and
$.0007 per share, respectively.
(4) Annualized.
</TABLE>
See notes to financial statements.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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 period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
CLASS II SHARES
_______________
PERIOD ENDED
OCTOBER 31, 1995(1)
PER SHARE DATA: (UNAUDITED)
_______________
<S> <C>
Net asset value, beginning of year......................................... $ - (2)
___
INVESTMENT OPERATIONS;
Investment income-net...................................................... .028
___
DISTRIBUTIONS;
Dividends from investment income-net....................................... (.028)
___
Net asset value, end of year............................................... $ - (2)
===
TOTAL INVESTMENT RETURN........................................................ 2.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................................... .20%(3)
Ratio of net investment income to average net assets....................... 5.67%(3)
Net Assets, end of year (000's Omitted).................................... $0
(1) The Fund commenced selling Class II shares on November 3, 1994.
(2) Beginning and end of the year there were no shares outstanding. All shares were purchased and redeemed during the year.
(3) Annualized.
</TABLE>
See notes to financial statements.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 seventeen series including the Dreyfus Institutional Prime Money
Market Fund (the "Fund"). The Fund's investment objective is to seek a high
level of current income consistent with stability of principal by investing
in high grade money market instruments. 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.
(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 repurchas
e, 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
obligation, 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.
(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, if any, it is the policy of the Fund not to distribute such gain.
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue
to qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-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 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 six months ended April 30, 1996, the Fund incurred service
fees of $454,010.
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
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 meeting 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 expenses are charged and allocated to each series based
on net assets.
[Dreyfus lion "d" logo]
DREYFUS INSTITUTIONAL PRIME
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, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 922SA964
[Dreyfus logo]
Institutional
Prime
Money Market Fund
Semi-Annual
Report
April 30, 1996
