<PAGE>
Dreyfus
Institutional
Government
Money Market Fund
Semi-Annual
Report
April 30, 1998
<PAGE>
Dreyfus Institutional Government Money Market Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus Institutional Government
Money Market Fund for its semi-annual reporting period ended April 30, 1998. For
the period, your Fund produced an annualized yield of 5.30% and after taking
into account the effect of compounding, the annualized effective yield was
5.43%.* The Economy
The United States is now in its eighth consecutive year of economic
expansion. Inflation continues to rise at its slowest pace since 1964 and the
unemployment rate has fallen to a level not seen in 25 years. Not surprisingly,
consumer confidence has soared. Along with continued evidence of the robustness
of the economy have come heightened expectations that the Federal Reserve Board
(the "Fed") will raise interest rates in a preemptive move to avoid a reigniting
of inflation. The last increase in short-term rates came in March 1997 when the
Federal Open Market Committee (the policy-making arm of the Fed) hiked the
target rates for Federal Funds by one quarter of a percent to 5.5%. (The Federal
Funds rate is the rate of interest that banks charge one another for overnight
loans.)
Inflation has remained benign on all fronts, even in the tight labor market,
an area closely watched by the Fed for signs of incipient inflation. The Labor
Department's Employment Cost Index (ECI), a measure of wage, salary and benefit
costs, suggests that wage inflation so far is not a problem. In fact, the first
quarter increase in the ECI (0.7%) was its smallest quarterly rise in two years.
Another inflation gauge, the broad-based Gross Domestic Product Price Deflator,
rose at an annual rate of only 0.9% in the first quarter, its lowest rate since
1964. Inflation as measured by the Consumer Price Index has been similarly tame.
Prices at the consumer level rose at an annual rate of about 1.5% over the
reporting period. The lack of inflation has been even more dramatic at the
production level of the economy where prices have fallen: in the 12 months ended
April 30, the Producer Price Index declined 1.8%. Such a generally tepid price
environment has been partly fostered by the economic problems in Asia which have
suppressed worldwide demand for commodities, particularly oil.
Reflecting a level of confidence not seen in three decades, consumers
increased their spending over the reporting period, the first-quarter rate
rising at the fastest pace in six years. Not surprisingly, the growth rate in
new home construction over the reporting period was the strongest in four years.
Plentiful and well-paying jobs (total wage and salary income is 7% higher than a
year ago), low interest rates, the absence of inflation and investment market
gains have resulted in a financially healthy consumer with a corresponding
propensity to spend. Strong domestic demand for lower-priced imports has
contributed further to the quiescent inflation environment while offsetting the
drag on the economy resulting from the Asian financial crisis. It is still
widely expected that the Asian economic slowdown will have a further dampening
effect on the U.S. economy. Although the surge in domestic spending has masked
the full impact of the fall in Asian demand, our trade deficit has reached a
ten-year high, a dramatic sign of deterioration. Expectation of an economic
slowdown is another reason why the Fed has been reluctant to raise short-term
interest rates.
The production side of the economy has remained robust. Factory utilization
has been high, production rates strong, and while exports to Asia have fallen
sharply, they are growing in the rest of the world. Such resilience has been
characteristic of one of the longest, most healthy economic advances in our
history. Yet we remain mindful that the concept of an economic cycle is not
dead, nor is inflation, and we are alert for indications of a resurgence in
price pressures.
The Market Environment/Portfolio Overview
Money market yields have been stable since the Federal Reserve increased the
Fed Funds rate on March 25, 1997 to 5.50% from 5.25%. The flat slope of the
money market yield curve seems to indicate that investors do not expect any
change in monetary policy by the Federal Reserve in the foreseeable future.
<PAGE>
The Fund invests in securities issued or guaranteed by the U.S. Government
and its agencies and instrumentalities, and repurchase agreements. Throughout
the reporting period, the Fund's average portfolio maturity was targeted at
40-55 days. We currently intend to maintain this target range because we believe
this is an appropriate strategy in this stable yield environment.
The Fund held an allocation of 92.3% to U.S. Agency securities and 17.8% to
repurchase agreements. The Fund's average portfolio maturity at the end of the
reporting period was 41 days.
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,
/s/ Laurie Carroll
Laurie Carroll
Portfolio Manager
May 18, 1998
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Government Money Market Fund
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Statement of Investments April 30, 1998 (Unaudited)
Annualized
Yield on
Date of Principal
U.S. Government Agencies--92.3% Purchase Amount Value
- -------------------------------------------------------------------- ---------- ------------- -------------
<S> <C> <C> <C>
Federal Farm Credit Banks, Notes
5/1/98......................................................... 5.35% $ 36,000,000 $ 36,000,000
7/1/98......................................................... 5.54 35,000,000 35,000,000
8/3/98......................................................... 5.39 34,000,000 34,000,000
10/1/98........................................................ 5.37 10,000,000 10,000,000
Federal Home Loan Banks, Floating Rate Notes
9/17/98........................................................ 5.51 (a) 15,000,000 14,995,506
9/30/98........................................................ 5.52 (a) 15,000,000 14,994,496
10/6/98........................................................ 5.75 (a) 20,000,000 20,000,000
Federal Home Loan Mortgage Corp., Discount Notes
6/19/98........................................................ 5.92 10,000,000 9,999,356
Federal Home Loan Mortgage Corp., Floating Rate Notes
6/22/98........................................................ 5.47 (a) 10,500,000 10,499,257
Federal National Mortgage Association, Discount Notes
7/17/98........................................................ 5.44 20,000,000 19,770,283
Federal National Mortgage Association, Floating Rate Notes
3/5/99......................................................... 5.57 (a) 10,000,000 9,997,553
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $215,256,451)............................................ $215,256,451
============
Repurchase Agreements--17.8%
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Barclays De Zoette Wedd Securities, Inc.
dated 4/30/98, due 5/1/98 in the amount of $15,002,292
(fully collateralized by $14,926,000 U.S. Treasury Notes 5.5%,
due 11/15/98, value $15,300,120)............................... 5.50% $ 15,000,000 $ 15,000,000
Goldman, Sachs & Co.
dated 4/30/98, due 5/1/98 in the amount of $26,438,383
(fully collateralized by $26,170,000 U.S. Treasury Notes 6.125%,
due 8/15/2007, value $26,963,405).............................. 5.52 26,434,330 26,434,330
-------------
TOTAL REPURCHASE AGREEMENTS
(cost $41,434,330)............................................. $ 41,434,330
============
TOTAL INVESTMENTS
(cost $256,690,781)................................. 110.1% $256,690,781
======= ============
LIABILITIES, LESS CASH AND RECEIVABLES................. (10.1%) $(23,447,019)
======= ============
NET ASSETS............................................. 100.0% $233,243,762
======= ============
Notes to Statement of Investments:
- ---------------------------------------------------------------------------------------------------------------------------
(a) Variable interest rate--subject to periodic change.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Government Money Market Fund
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Statement of Assets and Liabilities April 30, 1998 (Unaudited)
Cost Value
------------- -------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments
(including Repurchase Agreements of $41,434,330)
--Note 1(c).................................... $256,690,781 $256,690,781
Cash............................................. 26,596
Interest receivable.............................. 1,583,010
------------
258,300,387
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 28,305
Due to Distributor............................... 28,320
Payable for investment securities purchased...... 25,000,000
------------
25,056,625
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NET ASSETS..................................................................... $233,243,762
============
REPRESENTED BY: Paid-in capital.................................. $233,270,885
Accumulated net realized gain (loss) on investments (27,123)
------------
NET ASSETS..................................................................... $233,243,762
============
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized)................. 233,270,885
NET ASSET VALUE, offering and redemption price per share....................... $1.00
=====
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
Dreyfus Institutional Government Money Market Fund
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Statement of Operations Six Months Ended April 30, 1998 (Unaudited)
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $5,748,849
EXPENSES: Management fee--Note 2(a)................... $ 154,120
Shareholder servicing costs--Note 2(b)...... 154,120
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Total Expenses........................... 308,240
-----------
INVESTMENT INCOME--NET.................................................... 5,440,609
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b)........................ (13,160)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $5,427,449
===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Government Money Market Fund
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Statement of Changes in Net Assets
Six Months Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................. $ 5,440,609 $ 13,082,534
Net realized gain (loss) on investments................................ (13,160) (13,963)
---------------- ----------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 5,427,449 13,068,571
---------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.................................................. (5,440,609) (13,082,534)
Net realized gain on investments....................................... -- (3,935)
---------------- ----------------
Total Dividends.................................................. (5,440,609) (13,086,469)
---------------- ----------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold.......................................... 977,252,624 1,950,330,327
Dividends reinvested................................................... 309,129 1,858,350
Cost of shares redeemed................................................ (936,158,164) (2,055,751,566)
---------------- ----------------
Increase (Decrease) in Net Assets from Capital Stock Transactions 41,403,589 (103,562,889)
---------------- ----------------
Total Increase (Decrease) in Net Assets....................... 41,390,429 (103,580,787)
NET ASSETS:
Beginning of Period.................................................... 191,853,333 295,434,120
---------------- ----------------
End of Period.......................................................... $ 233,243,762 $ 191,853,333
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Government 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 period indicated. This information has been
derived from the Fund's financial statements.
Six Months Ended
April 30, 1998 Year Ended October 31,
-----------------------------------------------
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994(1) 1993
----------- ---- ---- ---- ------- ------
<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.................... .026 .052 .051 .056 .036 .029(2)
Distributions:
Dividends from investment income--net..... (.026) (.052) (.051) (.056) (.036) (.029)
----- ----- ----- ----- ----- -----
Net asset value, end of period........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
TOTAL INVESTMENT RETURN..................... 5.36%(3) 5.28% 5.25% 5.71% 3.63% 2.97%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.. .30%(3) .30% .30% .30% .30% 0.30%
Ratio of net investment income to
average net assets.................... 5.30%(3) 5.14% 5.14% 5.55% 3.60% 2.93%
Net Assets, end of period (000's Omitted) $233,244 $191,853 $295,434 $515,812 $470,007 $406,690
- ---------------------
<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) For the year ended October 31, 1993 the investment adviser reimbursed
expenses of the Fund amounting to $.0001 per share.
(3) Annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Government Money Market Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Institutional Government Money Market Fund (the "Fund") is a separate
diversified series of The Dreyfus/Laurel Funds, Inc. (the "Company") which is
registered under the Investment Company Act of 1940 ("Act") as an open-end
management investment company and operates as a series company currently
offering eighteen 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 principally in high grade money
market instruments issued or guaranteed by the U.S. Government and its agencies
and instrumentalities. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
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 purchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield 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 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, if any, 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 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.
<PAGE>
Dreyfus Institutional Government Money Market Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The Fund has an unused capital loss carryover of approximately $14,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1997. If not
applied, the carryover expires in fiscal 2005.
At April 30, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
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, commitment fees, 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 fees pertain to the following funds: The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds Trust. (The
$1,000 attendance fee and reimbursement of meeting expenses are also borne pro
rata by Dreyfus High Yield Strategies Fund.) These fees and expenses are
allocated to each series based on net assets. Amounts required to be paid by the
Company directly to the non-interested Directors, that would be applied to
offset a portion of the management fee payable to the Manager, are in fact 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 April 30, 1998,
the Fund was charged $154,120 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. During the period ended April 30, 1998, the Fund did not borrow
under the line of credit.
<PAGE>
Dreyfus Institutional Government
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. 919SA984
