<PAGE>
Dreyfus
Tax-Smart
Growth Fund
Semi-Annual
Report
February 28, 1999
<PAGE>
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
It is a pleasure and privilege for me to introduce you to Fayez Sarofim, who
manages the Dreyfus Tax-Smart Growth Fund.
Mr. Sarofim is also the portfolio manager for the Dreyfus Premier Tax Managed
Growth Fund, the Dreyfus Appreciation Fund, Inc. and the Dreyfus Premier
Worldwide Growth Fund, Inc. He is president, chairman of the board and a
director of Fayez Sarofim & Co., which serves as the fund's sub-investment
adviser.
As explained in the fund's prospectus, the fund's goal is to seek long-term
capital appreciation consistent with minimizing realized capital gains and
taxable current income. To minimize adverse tax impacts, the fund employs a
long-term, low-portfolio-turnover investment approach and emphasizes investment
in equities of high-quality companies, generally with relatively low yields. The
fund's annual portfolio turnover rate generally will not exceed 15%, and will
exceed 25% only in extraordinary market conditions.
Mr. Sarofim founded Fayez Sarofim & Co. in 1958. The Houston-based investment
firm currently manages approximately $52 billion in assets for a number of
clients. Prior to establishing his own company, Mr.Sarofim was assistant to
the president of Anderson, Clayton & Co.
He earned his B.S. in food technology from the University of California and
his M.B.A. from Harvard Business School. He is a Chartered Investment Counselor
and a member of the New York Society of Security Analysis and the Houston
Society of Financial Analysts.
Currently, Mr. Sarofim serves as a director of Unitrin, Inc., Argonaut Group,
EXOR Group and Imperial Holly Corporation. He is also on the board of directors
of the Texas Heart Institute and is a member of the Board of Overseers of
Memorial Sloan-Kettering Cancer Center.
We have full confidence in Mr. Sarofim's ability to manage your investment in
this fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President
The Dreyfus Corporation
March 19, 1999
New York, N.Y.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this semiannual report on the activity of
the Dreyfus Tax-Smart Growth Fund for the period from September 30, 1998, the
fund's inception, through February 28, 1999. Over this period, your fund
produced a total return of 20.61%.* During the same period, the Standard &
Poor's 500 Composite Stock Price Index (S&P 500) provided a return of 22.42%.**
Portfolio Composition
At the close of the period, the fund had 10.5% of its net assets in
short-term Treasuries, and industry concentrations in consumer staples,
healthcare and financials. We will continue to invest the short-term cash
equivalent assets, as investment opportunities arise, in favorable market
conditions.
Economic and Market Outlook
Despite 1998's global financial turmoil, positive fundamentals in the United
States economy trumped the forces of recession and deflation from overseas. We
continue to expect moderate economic growth, coupled with very low inflation,
for the next several years. We believe profit growth at corporations will be
achieved primarily through volume growth, new product development and
productivity improvement, not price increases. Although the risk of financial
shocks has diminished, it has not disappeared, and we want to own companies of
unquestioned financial strength that can survive--and perhaps take advantage
of--periods of financial stress. Our investment strategy in this environment is
to stay rigorously focused on high-quality, geographically diversified global
corporations, with dominant market share in their home markets and prospects for
growth in the developing economies.
We believe that liquidity trends remain favorable, as individual investors
continue to shift assets from shorter-term instruments to equities. One of the
significant lessons of the third quarter correction was the generally steady
behavior of individual and mutual fund investors in the face of bleak and
alarming headlines. We suspect that liquidity is still substantial amongst
individual investors, and that corrections will tend to be viewed as
opportunities to commit to longer-term assets such as equities. As a result, we
intend to maintain a fully invested posture in the Dreyfus Tax-Smart Growth
Fund.
Investment Strategy
We would also like to take the opportunity to review the investment
philosophy that guides our selection process and the resulting composition of
the fund's portfolio. Succinctly stated, our philosophy is guided by one basic
principle: earnings growth is the ultimate driver of stock price appreciation
over the long term. We believe that large, globally dominant and diverse
companies are best positioned to show earnings growth in a consistent and
predictable manner over time. By taking a long-term outlook, we assess a
company's earnings growth prospects over a period of several years. We look for
businesses with sustainable competitive advantages in growing industries that
can perform in a variety of economic backdrops. Once we find a company that
meets these criteria, we will continue to hold it as long as the industry
outlook is strong and company fundamentals are sound. As a result of our
in-depth analysis and long-term outlook, changes to the fund's portfolio within
a year tend to be few and the turnover low. Our goal is to create a
well-diversified portfolio of companies that exhibits sustainable earnings
growth, possesses financial quality and an established growth record, and offers
a reasonable valuation.
Characteristics of companies in the fund's portfolio include a dominant
industry position, the possession of strong brand names and/or proprietary
technologies, and the ability to take strong domestic franchises and enter new
geographic markets. We believe all of these characteristics are contributors to
the production of consistent and profitable earnings growth. The opportunity to
expand geographically provides an excellent source of future earnings growth as
<PAGE>
companies roll out their products and develop their businesses in new markets.
While predominantly U.S.-based, these companies have global businesses, but the
majority of profits are derived from the U.S., Japan and western Europe;
generally, exposure to emerging markets is small, but provides opportunities for
future growth over the long term.
The implementation of the above-described equity strategy has led us to
concentrate the portfolio in the consumer staples, healthcare and financial
sectors. The consumer staples sector is primarily benefiting from geographic
expansion, as companies such as Coca-Cola, Gillette, Procter & Gamble and Philip
Morris introduce their branded, low-cost products to an emerging middle class
around the world. With aging populations, increasing use of prescription drugs,
and strong new drug pipelines, we believe the healthcare sector has excellent
visibility for earnings growth over the next five to ten years. Lastly, we
expect the financial sector to produce solid earnings growth in the future as
consolidation and globalization of the industry continues, prompted by
deregulation.
Investment Highlights
During the reporting period, the fund achieved excellent absolute returns.
The fund's overweighted position in the consumer staples sector contributed to
its underperformance relative to the broad S&P 500. Many of our global growth
companies, such as Coca-Cola and Gillette, were adversely affected by the
currency devaluations and economic turmoil that arose in Southeast Asia and
Russia. While these dislocations have hurt their earnings over the near term, we
believe these companies are using the crisis to strengthen their businesses,
better position themselves and ultimately gain market share, as economic growth
resumes. In addition, technology was the top performing sector in the S&P 500,
and the fund's relative performance was undermined by our underweighted
position. However, our selective emphasis on Microsoft, Cisco Systems and Intel,
all possessing strong leadership status and strong brand names, with global
operations, benefited results. On an absolute basis, the financial services
sector had the most positive impact on the fund's performance, led by shares of
Chase Manhattan, Citigroup, Marsh & McLennan and Berkshire Hathaway, Cl.A. The
fund's strategic overweighted position in the healthcare sector, specifically
the high-quality pharmaceutical companies, had the second most positive impact
on performance, with notable strength in Pfizer, Merck & Co., American Home
Products and Bristol-Myers Squibb.
We appreciate your investment in the Dreyfus Tax-Smart Growth Fund, and we
will continue to seek rewarding returns on your behalf.
Sincerely,
/s/ Fayez Sarofim
Fayez Sarofim
Portfolio Manager
March 19, 1999
New York, NY
* Total return includes reinvestment of dividends and any capital gains paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index
of U.S. stock market performance.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Statement of Investments February 28, 1999 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks--93.0% Shares Value
- ----------------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Capital Goods--7.7% AlliedSignal.......................... 9,000 $ 372,375
Boeing................................ 1,000 35,563
Emerson Electric...................... 6,000 344,625
General Electric...................... 10,000 1,003,125
Rockwell International................ 9,000 399,937
-----------
2,155,625
-----------
Communication Services--5.5% Ameritech............................. 5,000 326,875
Bell Atlantic......................... 1,500 86,156
BellSouth............................. 13,000 601,250
SBC Communications.................... 10,000 528,750
-----------
1,543,031
-----------
Consumer Cyclical--6.0% DaimlerChrysler....................... 6,070 570,201
Ford Motor............................ 11,000 652,438
McGraw-Hill Cos....................... 3,000 328,312
Polo Ralph Lauren, Cl. A.............. 7,500 (a) 149,531
-----------
1,700,482
-----------
Consumer Staples--20.5% Coca-Cola............................. 21,000 1,342,688
Colgate-Palmolive..................... 4,500 381,937
Fox Entertainment Group, Cl. A........ 10,000 260,000
Gillette.............................. 12,000 643,500
McDonald's............................ 5,000 425,000
PepsiCo............................... 15,000 564,375
Philip Morris Cos..................... 25,000 978,125
Procter & Gamble...................... 6,000 537,000
Walgreen.............................. 20,000 640,000
-----------
5,772,625
-----------
Energy--2.2% BP Amoco, A.D.S....................... 2,500 212,500
Exxon................................. 3,000 199,687
Mobil................................. 2,500 207,969
-----------
620,156
-----------
Finance--19.3% Associates First Capital, Cl. A....... 15,000 609,375
BankAmerica........................... 10,036 655,476
Berkshire Hathaway, Cl. A............. 9 (a) 654,120
Chase Manhattan....................... 8,000 637,000
Citigroup............................. 11,000 646,250
Federal National Mortgage Association. 11,000 770,000
Marsh & McLennan...................... 8,500 601,906
Merrill Lynch......................... 3,000 230,250
SunTrust Banks........................ 9,000 611,438
-----------
5,415,815
-----------
</TABLE>
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) February 28, 1999 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ----------------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Health Care--18.5% Abbott Laboratories................... 12,000 $ 557,250
American Home Products................ 10,000 595,000
Bristol-Myers Squibb.................. 5,000 629,688
Johnson & Johnson..................... 10,000 853,750
Merck & Co............................ 12,000 981,000
Pfizer................................ 12,000 1,583,250
-----------
5,199,938
-----------
Technology--12.1% Cisco Systems......................... 6,000 (a) 586,875
Conexant Systems...................... 3,000 51,000
Hewlett-Packard....................... 6,500 431,844
Intel................................. 12,000 1,439,250
Microsoft............................. 6,000 (a) 900,750
-----------
3,409,719
-----------
Transportation--1.2% Norfolk Southern...................... 12,000 336,750
-----------
TOTAL COMMON STOCKS
(cost $24,575,750).................. $26,154,141
===========
Preferred Stocks--.4%
- -----------------------------------------------------------------------
Consumer Cyclical; News, A.D.S., Cum., $.40
(cost $101,138)...................... 4,000 $ 105,000
=============
Principal
Short-Term Investments--10.5% Amount
- ----------------------------------------------------------------------- ------------
U.S. Treasury Bills: 4.38%, 5/6/1999....................... $ 813,000 $ 806,028
4.38%, 5/13/1999...................... 303,000 300,209
4.46%, 5/20/1999...................... 1,574,000 1,557,758
4.47%, 5/27/1999...................... 298,000 294,640
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,959,978)................... $ 2,958,635
============
TOTAL INVESTMENTS (cost $27,636,866)................................... 103.9% $29,217,776
======= ============
LIABILITIES, LESS CASH AND RECEIVABLES................................. (3.9%) $(1,086,351)
======= ============
NET ASSETS............................................................. 100.0% $28,131,425
======= ============
</TABLE>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Non-income producing.
See notes to financial statements.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities February 28, 1999 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments. $27,636,866 $29,217,776
Cash................................................... 277,115
Dividends receivable................................... 25,822
-----------
29,520,713
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.......... 24,976
Due to Distributor..................................... 955
Payable for investment securities purchased............ 1,363,357
-----------
1,389,288
-----------
NET ASSETS ................................................................... $28,131,425
===========
REPRESENTED BY: Paid-in capital........................................ $26,544,963
Accumulated undistributed investment income--net....... 5,927
Accumulated net realized gain (loss) on investments.... (375)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 ............................. 1,580,910
-----------
NET ASSETS ................................................................... $28,131,425
===========
SHARES OUTSTANDING
(100 million shares of $.001 par value CommonStock authorized)................. 1,867,731
NET ASSET VALUE, offering and redemption price per share--Note 2(c)............ $15.06
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Statement of Operations
from September 30, 1998 (commencement of operations) to February 28, 1999
(Unaudited)
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $169 foreign taxes
withheld at source)................................. $ 70,415
Interest............................................... 29,486
----------
Total Income..................................... $ 99,901
EXPENSES: Management fee--Note 2(a)............................... 65,313
Distribution fees--Note 2(b)............................ 14,844
----------
Total Expenses................................... 80,157
----------
INVESTMENT INCOME--NET.......................................................... 19,744
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments................ $ (375)
Net unrealized appreciation (depreciation) on investments 1,580,910
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 1,580,535
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $1,600,279
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
from September 30, 1998 (commencement of operations) to February 28, 1999
(Unaudited)
<TABLE>
<S> <C> <C>
OPERATIONS:
Investment income--net......................................................................... $ 19,744
Net realized gain (loss) on investments........................................................ (375)
Net unrealized appreciation (depreciation) on investments...................................... 1,580,910
-----------
Net Increase (Decrease) in Net Assets Resulting from Operations............................. 1,600,279
-----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.......................................................................... (13,817)
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.................................................................. 27,031,432
Dividends reinvested........................................................................... 13,550
Cost of shares redeemed........................................................................ (500,019)
-----------
Increase (Decrease) in Net Assets from Capital Stock Transactions........................... 26,544,963
-----------
Total Increase (Decrease) in Net Assets.................................................. 28,131,425
NET ASSETS:
Beginning of Period............................................................................ --
-----------
End of Period.................................................................................. $28,131,425
===========
Undistributed investment income--net............................................................... $ 5,927
-----------
CAPITAL SHARE TRANSACTIONS: Shares
-----------
Shares sold.................................................................................... 1,900,251
Shares issued for dividends reinvested......................................................... 938
Shares redeemed................................................................................ (33,458)
-----------
Net Increase (Decrease) in Shares Outstanding............................................... 1,867,731
===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
Financial Highlights (Unaudited)
Contained below is per share operating performance data for a share of
CommonStock outstanding, total investment return, ratios to average net assets
and other supplemental data for the period from September 30, 1998 (commencement
of operations) to February 28, 1999. This information has been derived from the
Fund's financial statements.
PER SHARE DATA:
Net asset value, beginning of period.............................. $12.50
------
Investment Operations:
Investment income--net............................................ .02
Net realized and unrealized gain (loss) on investments............ 2.56
------
Total from Investment Operations.................................. 2.58
------
Distributions:
Dividends from investment income--net............................. (.02)
------
Net asset value, end of period.................................... $15.06
======
TOTAL INVESTMENT RETURN(1,2)......................................... 20.61%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2)........................ .56%
Ratio of net investment income to average net assets(2)........... .14%
Portfolio Turnover Rate........................................... --
Net Assets, end of period (000's Omitted)......................... $28,131
- ------------------
(1) Exclusive of redemption fee.
(2) Not annualized.
See notes to financial statements.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Tax-Smart Growth 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, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the Fund. The Fund's investment objective is
to achieve long-term capital appreciation consistent with minimizing realized
capital gains and taxable current income. The Dreyfus Corporation (the
"Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. ("Mellon Bank") which is a wholly-owned
subsidiary of Mellon Bank Corporation. Fayez Sarofim & Co. ("Sarofim") serves as
the Fund's sub-investment adviser. Premier Mutual Fund Services, Inc. (the
"Distributor") is the distributor of the Fund's shares, which are sold to the
public without a sales charge. The Fund's fiscal year end is August 31.
At February 28, 1999, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 200,222 shares of the Fund.
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 (including financial
futures) are valued at the last sales price on the securities exchange on which
such securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors.
(b) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(c) Financial futures: The Fund may invest in financial futures contracts
in order to gain exposure to or protect against changes in the market. The Fund
is exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the Fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contracts at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the Fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. At February 28, 1999,
there were no open financial futures contracts.
(d) Distributions to shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and 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
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Revenue Code of 1986, as amended (the "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 qualify as a
regulated investment company, if such qualification is in the best interests of
its shareholders, by complying with the applicable provisions of the Code, and
to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
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 1.10% 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 $40,000 per year, plus $5,000 for each joint Board meeting of The
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The
Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for
separate committee meetings attended which are not held in conjunction with a
regularly scheduled board meeting and $500 for Board meetings and separate
committee meetings attended that are conducted by telephone and is reimbursed
for travel and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable
amounts). In the event that there is a joint committee meeting of the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000 fee
will be allocated between the Dreyfus/Laurel Funds and the Dreyfus High Yield
Strategies Fund. These fees and expenses are charged and 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.
Pursuant to a Sub-Investment Advisory Agreement between the Manager and
Sarofim, the Manager has agreed to pay Sarofim an annual fee of .30 of 1% of the
value of the Fund's average daily net assets, payable monthly.
(b) Distribution plan: Under a Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, the Fund may pay annually up to .25% of
the value of the Fund's average daily net assets to compensate Mellon Bank, the
Manager or Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for shareholder servicing
activities and expenses primarily intended to result in the sale of Fund shares.
During the period ended February 28, 1999, the Fund was charged $14,844 pursuant
to the Plan.
(c) A 1% redemption fee is charged and retained by the Fund on shares
redeemed within six months following the date of issuance, including redemptions
made through the use of the Fund Exchange privilege.
<PAGE>
Dreyfus Tax-Smart Growth Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 3--Securities Transactions:
The aggregate amount of purchases of investment securities, excluding
short-term securities, during the period ended February 28, 1999, amounted to
$24,676,986.
At February 28, 1999, accumulated net unrealized appreciation on
investments was $1,580,910, consisting of $2,003,933 gross unrealized
appreciation and $423,023 gross unrealized depreciation.
At February 28, 1999, 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 4--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
February 28, 1999, the Fund did not borrow under the Facility.
<PAGE>
[This Page Intentionally Left Blank.]
<PAGE>
Dreyfus Tax-Smart
Growth Fund
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Fayez Sarofim & Co.
Two Houston Center
Suite 2907
Houston, TX 77010
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. 047SA992
