DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for the Dreyfus Institutional
U.S. Treasury Money Market Fund for the 12-month reporting period ended
October 31, 1997. For the period, your Fund produced a yield of 5.04% and
after taking into account the effect of compounding, the effective yield was
5.16%.*
THE ECONOMY
With the level of inflation as low as it has been seen since 1964 and
unemployment still near a 23-year low, the economy continued its solid growth
over the reporting period. Gross Domestic Product (GDP) - the dollar total of
all goods and services produced in the United States - has grown in excess of
3% for the past four quarters, a level and consistency of gain unmatched
since 1984. This extraordinary economic performance has been fueled by huge
business investment in new plant and equipment as well as a renewed surge in
consumer spending over the summer. Consumers play a substantial role in
determining the course of the economy since their spending accounts for two
thirds of all economic activity. Retail sales rose through the summer and
into September, although there was some sign of deceleration as the third
quarter progressed.
The big economic story continued to be the lack of inflation in an
economy now in its seventh year of expansion. This remarkable price
stability, at a time in the business cycle when inflationary pressures would
usually be apparent, has enabled the Federal Reserve Board (the "Fed") to
refrain from tightening monetary policy. The Federal Open Market Committee
(FOMC), the policy-making arm of the Fed, has raised interest rates just once
in over two years, a period roughly coinciding with the surge of growth in
the economy. The last increase in short-term interest rates came on March 25,
1997, when the FOMC increased the Federal Funds rate by a modest one quarter
of a percentage point to 5.50%. (The Federal Funds rate is the rate of
interest that banks charge one another for overnight loans.)
Of course, the recent financial market turbulence arising from currency
devaluations in some of the economically weaker Southeast Asian countries has
added a cautionary note to any Fed monetary actions that might further roil
investment markets. The Southeast Asian economies have been cooling or in
outright recession for some time and represent a large share of the global
economy and the U.S. import/export market. The recent crisis has boosted the
value of the U.S. dollar and could further dampen the demand for U.S. exports
to this region. This bodes well for continued low inflation in the U.S. and
weakens the argument that we are on the brink of price acceleration.
In fact, various economic measures indicate that inflation remains in
check. The Implicit Price Deflator, an indicator of inflation that measures
the prices of all goods and services in the U.S., has risen at an annual rate
of less than 2% for the past two quarters. This favorable trend in prices has
been mirrored by both the Consumer Price and Producer Price Indices. The
Labor Department's Employment Cost Index, a broad measure of changes in wages
and benefits, has indicated relatively modest increases in labor costs.
Still, the labor market remains tight, with the unemployment rate at a level
unmatched in 23 years.
Whether the economy will slow without further monetary restraint by the
Fed remains an open question. Industrial production has been strong, and
operating rates, an indicator of possible future price pressures, have edged
to their highest level in two years. Of paramount concern to Fed Chairman
Alan Greenspan is the possibility that continuing strong economic growth,
driving the unemployment rate even lower, and so producing an upsurge in wage
rates, might reignite inflation. The performance of the economy over the
coming months appears crucial in determining whether the Fed will actively
restrain the economy. We remain alert to changes in economic trends that
would increase the risk of rising inflation and, consequently, the prospect
of higher interest rates.
THE MARKET AND THE PORTFOLIO
Money market yields have essentially been neutral since the Fed increased
the Federal Funds rate on March 25, 1997 to 5.50% from 5.25%. The benign
outlook for inflation convinced market participants that the Fed would not
need to tighten money market rates in the near future. This outlook is the
same for the foreseeable future.
The Fund invests in U.S. Treasury securities and repurchase agreements
secured by such obligations. Throughout the reporting period, the Fund's
average maturity was approximately 45 days with a target range of 40 to 50
days. We will be maintaining this target range because we believe this is a
moderate approach in light of the fact that no significant changes are
anticipated in the Federal Funds rate.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Laurie Carroll signature logo]
Laurie Carroll
Portfolio Manager
November 18, 1997
New York, N.Y.
* Effective yield is based upon dividends declared daily and reinvested
monthly.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Annualized
Yield on
Date of Principal
U.S. Treasury Bills-14.8% Purchase Amount Value
____________ ____________ ____________
<S> <C> <C> <C>
11/6/97.................................................... 4.70% $100,000,000 $ 99,934,722
11/13/97................................................... 4.94 15,000,000 14,975,500
____________
TOTAL U.S. TREASURY BILLS (cost $114,910,222).................. $114,910,222
============
U.S. Treasury Notes-44.4%
7.38%, 11/15/97............................................ 5.17% $ 30,000,000 $ 30,023,419
5.38%, 11/30/97............................................ 5.17 35,000,000 35,000,563
5.25%, 12/31/97............................................ 5.14 40,000,000 39,996,528
6%, 12/31/97............................................... 5.21 25,000,000 25,024,828
5%, 1/31/98................................................ 5.34 50,000,000 49,937,569
5.63%, 1/31/98............................................. 5.35 20,000,000 20,002,113
7.25%, 2/15/98............................................. 5.47 40,000,000 40,183,651
5.13%, 2/28/98............................................. 5.40 20,000,000 19,971,961
5.13%, 3/31/98............................................. 5.27 25,000,000 24,975,424
5.88%, 4/30/98............................................. 5.31 15,000,000 15,025,217
5.38%, 5/31/98............................................. 5.37 15,000,000 14,985,443
6.25%, 6/30/98............................................. 5.34 15,000,000 15,070,606
4.75%, 8/31/98............................................. 5.47 15,000,000 14,905,466
____________
TOTAL U.S. TREASURY NOTES (cost $345,102,788).................. $345,102,788
============
Repurchase Agreements-36.0%
Donaldson, Lufkin & Jenrette Securities, Inc.
dated 10/31/97, due 11/3/97 in the amount of
$180,085,200 (fully collateralized by
$21,692,000 U.S Treasury Bills dated 11/28/97
to 10/15/98, $39,052,000 U.S. Treasury Bonds,
7.125% to 12.75%, due from 2/15/2003 to 11/15/2024
and, $107,717,000 U.S Treasury Notes, 4.75% to 9.125%,
due from 1/31/98 to 2/15/2007, value $183,600,872)......... 5.68% $180,000,000 $180,000,000
Goldman, Sachs & Co.
dated 10/31/97, due 11/3/97 in the amount of
$69,168,589 (fully collateralized by
$69,583,000 U.S Treasury Notes, 5.875%, due
8/31/99, value $70,519,133)................................ 5.67 69,135,922 69,135,922
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Annualized
Yield on
Date of Principal
Repurchase Agreements (continued) Purchase Amount Value
____________ ____________ ____________
Morgan Stanley & Co.
dated 10/31/97, due 11/3/97 in the amount of
$30,014,150 (fully collateralized by
$30,120,000 U.S Treasury Notes, 5.75%, due
12/31/98, value $30,760,042)............................... 5.66% $ 30,000,000 $ 30,000,000
____________
TOTAL REPURCHASE AGREEMENTS (cost $279,135,922)................ $279,135,922
============
TOTAL INVESTMENTS (cost $739,148,932)............... 95.2% $739,148,932
==== ============
CASH AND RECEIVABLES (NET).......................... 4.8% $ 37,577,237
==== ============
NET ASSETS.......................................... 100.0% $776,726,169
==== ============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1997
Cost Value
_____________ _____________
ASSETS: Investments in securities-See Statement of Investments
(including Repurchase Agreements of $279,135,922) $739,148,932 $739,148,932
Cash....................................... 31,543,654
Interest receivable........................ 6,223,613
____________
776,916,199
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 90,448
Due to Distributor......................... 99,582
____________
190,030
____________
NET ASSETS.................................................................. $776,726,169
============
REPRESENTED BY: Paid-in capital............................ $776,680,415
Accumulated net realized gain (loss) on investments 45,754
____________
NET ASSETS.................................................................. $776,726,169
============
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized).............. 776,680,415
NET ASSET VALUE, offering and redemption price per share.................... $1.00
====
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1997
INVESTMENT INCOME
INCOME Interest Income................................ $39,079,523
EXPENSES: Management fee-Note 2(a)....................... $ 1,097,044
Shareholder servicing costs-Note 2(b).......... 1,097,044
____________
Total Expenses............................. 2,194,088
____________
INVESTMENT INCOME-NET....................................................... 36,885,435
NET REALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b)........................... 48,004
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $36,933,439
============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1997 October 31, 1996
________________ ________________
OPERATIONS:
Investment income-net................................................... $ 36,885,435 $ 34,356,531
Net realized gain (loss) on investments................................. 48,004 (2,250)
________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations....... 36,933,439 34,354,281
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (36,885,435) (34,356,531)
________________ ________________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 5,047,750,868 4,469,388,218
Dividends reinvested.................................................... 914,971 2,389,411
Cost of shares redeemed................................................. (4,938,347,456) (4,573,363,146)
________________ ________________
Increase (Decrease) in Net Assets from Capital Stock Transactions..... 110,318,383 (101,585,517)
________________ ________________
Total Increase (Decrease) in Net Assets............................. 110,366,387 (101,587,767)
NET ASSETS:
Beginning of Period..................................................... 666,359,782 767,947,549
________________ ________________
End of Period........................................................... $ 776,726,169 $ 666,359,782
================ ================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL U.S. TREASURY 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.
Year Ended October 31,
___________________________________________________
PER SHARE DATA: 1997 1996 1995 1994(1) 1993
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
____ ____ ____ ____ ____
Investment Operations:
Investment income-net........................ .050 .051 .054 .035(2) .029(3)
____ ____ ____ ____ ____
Distributions:
Dividends from investment income-net......... (.050) (.051) (.054) (.035) (.029)
____ ____ ____ ____ ____
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN.......................... 5.16% 5.17% 5.57% 3.55% 2.91%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .30% .30% .30% .30%(4) .30%
Ratio of net investment income
to average net assets...................... 5.04% 5.06% 5.44% 3.55% 2.87%
Net Assets, end of period (000's Omitted).... $776,726 $666,360 $767,948 $586,778 $500,653
(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 theFund'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 year ended October 31, 1993 the investment adviser reimbursed
expenses of the Fund amounting to $.0004 per share.
(4) Annualized expense ratio before reimbursement of expenses by the
investment manager for the year ended October 31, 1994 was .31%.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional U.S. Treasury Money Market Fund (the "Fund") is a
series of The Dreyfus/Laurel Funds, Inc. (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 seventeen series including the Fund. The Fund's investment objective
is to seek a high level of current income consistent with stability of
principal and conservative investment risk by investing in direct obligations
of the U.S. Treasury and repurchase agreements secured by such obligations.
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. is the distributor of the Fund's shares.
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 are valued at
amortized cost in accordance with Rule 2a-7 of the Act, 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 per share 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 obligation,
including interest. In the event of a counter party 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 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.
(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.
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At October 31, 1997, 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 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). Each director 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. The Chairman of the Board
receives an additional annual fee of $25,000 per year. 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.
These fees and expenses are allocated to each series based on net assets.
Amounts required to be paid by the Company directly to non-interested
Directors, that would be applied to offset a portion of the management fee
payable to the Manager, are infact paid directly by the Manager to the
non-interested Directors.
(b) Shareholder servicing plan: Under the Shareholder Servicing Plan (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. During the period ended
October 31, 1997, the Fund was charged $1,097,044 pursuant to the Plan.
Under its terms, the 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.
NOTE 3-BANK LINE OF CREDIT:
The Fund 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. For the period ended October 31, 1997, the Fund did not
borrow under the line of credit.
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,
including the statement of investments, of Dreyfus Institutional U.S.
Treasury Money Market Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 1997, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
five-year period then ended. 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 also
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, 1997, by correspondence with the custodi
an 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 Dreyfus Institutional U.S. Treasury Money Market Fund of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1997, the results of its
operations for the year then ended, changes in its net assets for each of the
years in the two-year period then ended and its financial highlights for each
of the years in the five-year period then ended, in conformity with generally
accepted accounting principles.
New York, New York
December 17, 1997
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates
58.43% of the ordinary income dividends paid during its fiscal year ended
October 31, 1997 as attributable to interest income from direct obligations
of the United States. Such dividends are currently exempt from taxation for
individual income tax purposes in most states, including New York, California
and the District of Columbia.
Registration Mark
[Dreyfus lion "d" logo]
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, 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. 930AR9710
Registration Mark
[Dreyfus logo]
Institutional
U.S. Treasury
Money Market Fund
Annual Report
October 31, 1997
