Dreyfus Disciplined
Smallcap
Stock Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
The Fund
- --------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
For More Information
--------------------
Back Cover
<PAGE>
Dreyfus Disciplined The Fund
Small Cap Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Disciplined
Smallcap Stock Fund, covering the six-month period from November 1, 1998 through
April 30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio manager, Gene Cervi.
The past six months have been rewarding for many equity investors. The Federal
Reserve Board's lowering of short-term interest rates in the fall of 1998
appears to have helped U.S. businesses withstand the effects of economic
weakness in Japan, Asia and Latin America. At the same time, strong U.S.
economic growth, low inflation and high levels of consumer spending supported
continued strength in many broad measures of stock market performance. As a
result, several major U.S. market indices set new records, including the Dow
Jones Industrial Average's first-ever close above the 10,000 level. The broader
S&P 500 Index and the technology-laden NASDAQ Index also recorded new highs.
However, until near the end of the six-month period, small-cap stocks continued
to lag their larger counterparts substantially. For most of the reporting
period, investors continued to favor large companies with predictable earnings
and tended to avoid smaller companies with shorter track records. In April,
however, many smaller stocks began to rally as investors became increasingly
attracted by their valuation levels. In a global economic environment currently
characterized by fewer concerns, investors appear to have become somewhat more
comfortable with small-cap stocks.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Disciplined Smallcap Stock Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
Gene Cervi, Portfolio Manager
How did Dreyfus Disciplined Smallcap Stock Fund perform relative to its
benchmark?
For the six-month period ended April 30, 1999, the Fund produced a total return
of 16.23%.1 The Standard & Poor's SmallCap 600 Index ("S&P 600"), the Fund's
benchmark, produced a total return of 9.03% for the same period. 2
Small-cap stocks outperformed large-cap stocks in April, but provided less
robust returns over the past six months. Investors have generally preferred the
lower volatility of earnings offered by large companies as well as their greater
liquidity; that is, the ease of buying and selling larger company stocks.
What is the Fund's investment approach?
The Fund invests in a broadly diversified portfolio that blends growth and value
stocks of small-capitalization companies chosen through a disciplined process
that combines computer analysis with human judgment. The computer model
identifies and ranks stocks within an industry based on three broad concepts.
The first one is relative value, or how a stock is priced relative to its
perceived intrinsic worth. The second is relative growth. The third is relative
financial strength, which looks at attributes such as a company's level of debt.
Using the insights our analysts gained from their fundamental analysis, we are
able to select the most attractive of the top-ranked securities. Finally, we use
portfolio construction techniques to neutralize sector and industry risks. For
example, if the S&P 600 has a 10% weighting in a particular sector, about 10% of
the Fund's assets will also be invested in that sector.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
What other factors influenced the Fund's performance?
The Fund was able to invest in initial public offerings (IPOs), particularly
Internet-related companies, which did very well during the period. Examples
include Covad Communications Group, which provides Internet access for homes and
businesses; pcOrder.com, which sells software over the Internet that helps
personal computer manufacturers manage inventory; Priceline.com, which sells
airline tickets and rents hotel rooms over the Internet; and Vignette, which
sells software that improves the appearance of Internet Web sites. To manage
risk and maintain our neutral weighting, we generally sell Internet shares when
they appreciate beyond a certain level. We also generally sell stocks when they
appreciate to a point where we believe they no longer represent good value.
Other strong performing stocks in the portfolio included Catalina Marketing,
Claire's Stores, and Cox Radio. Catalina Marketing, which provides creative ways
to deliver ad messages and promotional incentives directly to customers,
recently announced a two-year marketing agreement with America Online, which may
enhance its position as a premier in-store marketing services company. Claire's
Stores, a mall-based retailer of popular-priced fashion accessories and apparel
targeted toward the teen market, has reported same-store sales well ahead of
expectations. Cox Radio, a national broadcasting company that acquires, develops
and operates radio stations in the U.S., has generated strong cash flow from
growth markets, such as Los Angeles and Miami.
On the other hand, poor performers included Documentum, a software company
experiencing a slowdown in revenues as customers freeze information technology
expenditures during the Y2K transition; and United Road Services, which owns and
operates towing companies throughout the country, many of which were adversely
affected by milder-than-normal weather conditions during the winter.
4
<PAGE>
What is the Fund's current strategy?
Although we generally match the S&P 600 in terms of industry weightings, we can
use some discretion when we see investor preferences emerging. For example, in
recent weeks, the market has moved from a preference toward growth stocks to a
new emphasis on "cyclical" stocks issued by chemical, energy and paper
companies. Because cyclical stocks tend to perform better when the economy is
improving, we have added to these industries.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid.
2 SOURCE: LIPPER ANALYTICAL SERVICES, INC.-- The Standard & Poor's SmallCap 600
Index is a broad-based, unmanaged index of 600 companies with market
capitalizations generally ranging from $50 million to $2 billion.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Common Stocks--97.2% Shares Value ($)
- --------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries--5.4%
Catalytica 8,900 a 121,819
Lone Star Industries 6,400 228,400
MacDermid 2,300 96,456
NCI Building Systems 7,900 a 190,094
Tredegar Industries 5,800 154,787
Wausau-Mosinee Paper 7,100 117,150
908,706
Capital Spending--19.2%
autobytel.com 3,000 90,000
Benchmark Electronics 5,400 a 181,575
Covad Communications Group 1,600 153,600
Dallas Semiconductor 6,400 272,000
Esterline Technologies 5,400 a 76,275
Extreme Networks 1,800 99,788
Howmet International 8,800 a 140,800
Marimba 2,500 151,875
Micrel 4,400 a 259,050
Milacron 7,400 170,200
OmniQuip International 9,400 118,675
pcOrder.com 1,000 61,812
Plexus 4,300 a 143,513
Priceline.com 1,300 211,087
Rhythms NetConnections 700 57,750
SPS Technologies 3,200 a 139,600
Sanmina 5,000 a 331,875
Semtech 4,600 a 150,075
Terex 4,400 a 139,150
USinternetworking 1,200 61,350
Vignette 1,200 114,000
Wyman-Gordon 9,100 a 127,400
3,251,450
Consumer Cyclical--19.1%
Action Performance Cos. 9,500 a 321,812
Ames Department Stores 3,500 a 122,281
Beyond.com 6,100 179,569
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- --------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclical (continued)
Claire's Stores 9,900 327,938
Cox Radio, Cl. A 5,700 a 277,875
Entercom Communications 2,600 96,525
La-Z Boy 10,400 204,750
Luby's 12,400 207,700
Mohawk Industries 8,700 a 280,575
Saks 11,000 a 311,437
Tower Automotive 10,300 a 236,900
Valassis Communications 5,800 a 324,800
Williams-Sonoma 6,400 a 185,600
World Color Press 5,800 a 148,263
3,226,025
Consumer Staples--3.0%
Canandaigua Brands, Cl. A 3,500 a 180,250
Earthgrains 7,400 156,788
Michael Foods 7,000 160,125
497,163
Energy--5.3%
Barrett Resources 2,200 a 66,825
Devon Energy 7,100 236,075
ENSCO International 11,100 206,044
New Jersey Resources 4,500 165,937
Veritas DGC 3,200 a 64,800
WICOR 6,700 158,288
897,969
Health Care--7.8%
Conmed 8,900 a 256,988
Cooper Cos. 3,700 a 58,275
Ocular Sciences 4,100 a 125,050
Owens & Minor 7,600 75,050
Patterson Dental 8,800 a 317,350
Priority Healthcare, Cl. B 2,300 a 116,581
Twinlab 8,900 a 75,650
Universal Health Services, Cl. B 5,800 a 300,512
1,325,456
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Sensitive--13.7%
Allied Capital 8,900 160,200
Banknorth Group 8,200 216,787
Commercial Federal 9,500 230,375
Cullen/Frost Bankers 5,200 280,475
Eaton Vance 4,000 91,250
Enhance Financial Services Group 5,800 119,988
Financial Security Assurance Holdings 3,700 211,363
Hambrecht & Quist Group 3,900 a 137,475
Legg Mason 7,200 251,100
MONY Group 5,000 132,500
Philadelphia Consolidated Holding 3,200 a 79,000
RenaissanceRe Holdings 4,500 140,344
Webster Financial 8,700 267,525
2,318,382
Mining & Metals--3.3%
AK Steel Holding 7,100 184,600
CONSOL Energy 3,300 47,025
RTI International Metals 5,400 a 71,887
Reliance Steel & Aluminum 7,000 255,063
558,575
Services--14.7%
Alternative Living Services 7,500 a 166,875
Catalina Marketing 5,700 a 486,994
Check Point Software Technologies 3,600 a 126,900
Core Laboratories, N.V. 7,800 a 140,400
Documentum 5,800 a 90,625
Education Management 15,000 a 299,062
Lernout & Hauspie Speech Products 5,000 a 195,625
Mastech 12,800 a 188,000
Mutual Risk Management 13,000 505,375
Ritchie Brothers Auctioneers 5,800 a 202,638
United Road Services 10,500 80,718
2,483,212
Transportation--3.3%
Alaska Air Group 3,500 a 154,219
Expeditors International of Washington 4,000 242,500
Varlen 5,875 164,500
561,219
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------------
<S> <C> <C>
Utilities--2.4%
Pacific Gateway Exchange 3,200 a 128,000
Sierra Pacific Resources 3,500 124,687
TNP Enterprises 5,000 156,250
408,937
Total Common Stocks
(cost $14,831,148) 16,437,094
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Principal
Short-Term Investments--7.0% Amount ($) Value ($)
- -------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Bills:
4.28%, 6/10/1999 211,000 209,980
4.32%, 6/17/1999 493,000 490,199
4.28%, 7/22/1999 490,000 485,078
Total Short-Term Investments
(cost $1,185,724) 1,185,257
- -------------------------------------------------------------------------------------
Total Investments (cost $16,016,872) 104.2% 17,622,351
Liabilities, Less Cash and Receivables (4.2%) (704,813)
Net Assets 100.0% 16,917,538
a Non-income producing.
See notes to financial statements.
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of Investments 16,016,872 17,622,351
Cash 255,155
Receivable for investment securities sold 74,949
Dividends receivable 3,317
17,955,772
- -------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 18,142
Due to Distributor 35
Payable for investment securities purchased 1,020,057
1,038,234
- -------------------------------------------------------------------------------------
Net Assets ($) 16,917,538
- -------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 15,174,430
Accumulated investment (loss) (31,796)
Accumulated net realized gain (loss) on investments 169,425
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 1,605,479
- -------------------------------------------------------------------------------------
Net Assets ($) 16,917,538
- --------------------------------------------------------------------------------------
Shares Outstanding
(100 million shares of $.001 par value Common Stock authorized) 1,114,578
Net Asset Value, offering and redemption price per share--Note 2(c)($) 15.18
See notes to financial statements.
</TABLE>
10
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------------------
<S> <C>
Income:
Cash dividends 33,750
Interest 18,313
Total Income 52,063
Expenses:
Management fee--Note 2(a) 69,875
Distribution fees--Note 2(b) 13,975
Loan commitment fees--Note 4 9
Total Expenses 83,859
Investment (Loss) (31,796)
- ---------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 218,721
Net unrealized appreciation (depreciation) on investments 1,319,357
Net Realized and Unrealized Gain (Loss) on Investments 1,538,078
Net Increase in Net Assets Resulting From Operations 1,506,282
See notes to financial statements.
</TABLE>
The Fund 11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998*
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment (loss) (31,796) (1,216)
Net realized gain (loss) on investments 218,721 (49,296)
Net unrealized appreciation (depreciation) on investments 1,319,357 286,122
Net Increase (Decrease) in Net Assets
Resulting from Operations 1,506,282 235,610
- -----------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold 11,628,570 5,193,055
Cost of shares redeemed (1,645,979) --
Increase (Decrease) in Net Assets from
Capital Stock Transactions 9,982,591 5,193,055
Total Increase (Decrease) in Net Assets 11,488,873 5,428,665
- -----------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 5,428,665 --
End of Period 16,917,538 5,428,665
(Distributions in excess of investment income--net) (31,796) --
- -----------------------------------------------------------------------------------------
Capital Share Transactions (Shares):
Shares sold 817,850 415,726
Shares redeemed (118,998) --
Net Increase (Decrease) in Shares Outstanding 698,852 415,726
</TABLE>
* From September 30, 1998 (commencement of operations) to
October 31, 1998.
See notes to financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Certain information reflects financial results for a single Fund share. "Total
return" shows how much your investment in the Fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998 a
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 13.06 12.50
Investment Operations:
Investment income (loss)--net (.03) --
Net realized and unrealized gain (loss) on investments 2.15 .56
Total from Investment Operations 2.12 .56
Net asset value, end of period 15.18 13.06
- ------------------------------------------------------------------------------------------------
Total Return (%)b,c 16.23 4.48
- ------------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assetsc .74 .13
Ratio of net investment income (loss) to average net assets c (.28) (.02)
Portfolio Turnover Rate c 32.75 2.58
- -------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 16,918 5,429
a From September 30, 1998 (commencement of operations) to October 31, 1998.
b Exclusive of redemption fee.
c Not annualized.
See notes to financial statements.
</TABLE>
The Fund 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Disciplined Smallcap Stock 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 seek investment returns (consisting of capital appreciation and income) that
surpass the Standard & Poor's SmallCap 600(R) Index. 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. 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.
At April 30, 1999, MBC Investment Corp., an indirect subsidiary of Mellon Bank
Corporation, held 400,000 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.
14
<PAGE>
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) 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) 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 contract 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
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
exchange or Board of Trade on which the contract is traded and is subject to
change. At April 30, 1999, there were no open financial futures contracts.
(e) Distributions to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and 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 of 1986, as amended (the "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.
(f) 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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $49,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1998. If not applied, the
carryover expires in fiscal 2006.
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 1.25% 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
16
<PAGE>
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.
(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 April 30, 1999, the Fund was charged $13,975 pursuant to the Plan.
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 use of the Fund Exchange privilege.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended April 30, 1999 amounted to
$13,487,685 and $3,537,165, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments was
$1,605,479, consisting of $2,266,482 gross unrealized appreciation and $661,003
gross unrealized depreciation.
At April 30, 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 April
30, 1999, the Fund did not borrow under the Facility.
18
<PAGE>
FOR MORE INFORMATION
Dreyfus Disciplined
Smallcap Stock 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
* 1999, Dreyfus Service Corporation 041SA994
Dreyfus
Premier Small Cap
Value Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- ---------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
15 Financial Highlights
17 Notes to Financial Statements
FOR MORE INFORMATION
- -----------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Premier The Fund
Small Cap Value Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Small Cap
Value Fund, covering the six-month period from November 1, 1998 through April
30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio manager, William P. Rydell.
The past six months have been rewarding for many equity investors. The Federal
Reserve Board's lowering of short-term interest rates in the fall of 1998
appears to have helped U.S. businesses withstand the effects of economic
weakness in Japan, Asia and Latin America. At the same time, strong U.S.
economic growth, low inflation and high levels of consumer spending supported
continued strength in many broad measures of stock market performance. As a
result, several major U.S. market indices set new records, including the Dow
Jones Industrial Average's first-ever close above the 10,000 level. The broader
S&P 500 Index and the technology-laden NASDAQ Index also recorded new highs.
However, until near the end of the six-month period, small-cap stocks continued
to lag their larger counterparts substantially. For most of the reporting
period, investors continued to favor large companies with predictable earnings
and tended to avoid smaller companies with shorter track records. In April,
however, many smaller stocks began to rally as investors became increasingly
attracted by their valuation levels. In a global economic environment currently
characterized by fewer concerns, investors appear to have become somewhat more
comfortable with small-cap stocks.
We appreciate your confidence over the past six months, and look forward to
your continued participation in Dreyfus Premier Small Cap Value Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
William P. Rydell, Portfolio Manager
How did Dreyfus Premier Small Cap Value Fund perform
relative to its benchmark?
The Fund's total return for the six-month period ended April 30, 1999 was 3.64%
for Class A shares, 3.36% for Class B shares, 3.36% for Class C shares, and
3.90% for Class R shares.1 For the same period, the Russell 2000 Value Index,
the Fund's benchmark, provided a total return of 4.39%, while the Russell 2000
Index provided a total return of 15.16%.2
Small-cap stocks did not perform as well as large-cap blue chip stocks as a
whole during the reporting period. In turn, small-cap value stocks did not do as
well as the small-cap growth stocks. Despite the recovery that small-cap value
stocks staged in April of 1999, they still trailed the large-cap segment of the
market, as well as the small-cap growth segment of the market, by a wide margin.
What is the Fund's investment approach?
The Fund uses a disciplined investment process that combines fundamental
valuation with a computer model that searches for undervalued stocks. Fourteen
different characteristics, such as changes in earnings estimates and in
earnings-to-price ratios, are used to identify value and opportunity among
individual stocks. A common definition of an undervalued stock is one selling at
a low price relative to its profits and its prospective earnings growth.
We select stocks on a company-by-company basis, rather than according to broad
economic or market trends. To help ensure ample diversification, we strive to
allocate the portfolio's assets among a variety of different industries and
economic sectors in proportions that reflect the industry and sector
allocations of our benchmark, the Russell 2000 Value Index. For example, if the
Russell 2000 Value Index has a 2% weighting in a particular industry, then
approximately 2% of the Fund's assets will be invested similarly. The reason we
generally stay industry
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
neutral is that we don't want the Fund to be adversely affected if a particular
industry is out of favor during an investment period. By maintaining a neutral
stance with regard to industries and sectors, we make sure that stock selection
drives the Fund's performance.
What other factors influenced the Fund's performance?
During the six-month reporting period, investors did not appear to focus on
valuation measures, such as the price/earnings ratios of stocks, but instead
showed a favoritism toward large-cap growth stocks. Another factor negatively
affecting the Fund was the narrowness of the market, which was dominated by a
handful of those highly valued, large-capitalization growth stocks. Because the
Fund is broadly diversified among small companies in many industries, it was
unable to match the general stock market's advance. For instance, financial
services -- including banks, brokerages, insurance companies, mortgage finance
firms and real estate investment trusts -- collectively represented about 30% of
the Russell 2000 Value Index. As a result, as of April 30, 1999, about 30% of
the Fund's portfolio was invested in financial services. Because this area did
not perform particularly well over the past six months, the Fund's performance
suffered.
Nevertheless, the Fund had a number of very strong performers. The best
performing stock was Arterial Vascular Engineering, a manufacturer of products
aiding blood circulation. The company was acquired by Medtronic, a medical
products company, boosting its share price by nearly 90% during the reporting
period. The second strongest performer was Calpine, a California energy producer
that is investing heavily in environmentally friendly alternative fuels, which
generally benefited from higher energy prices. Another strong performer was
Fossil, a maker of stylish inexpensive watches.
4
<PAGE>
What is the Fund's current strategy?
Toward the end of the reporting period, the market appeared to shift towards
value and away from growth. Although ours is primarily a value portfolio, we
have the capability to assign stronger weights to certain value characteristics
if we think it is warranted by market conditions. For instance, in 1998, we were
increasingly weighted toward valuation measures that emphasized earnings
momentum. More recently, we have shifted back toward more traditional value
criteria because we believe there are broad opportunities in industries, such as
finance and manufacturing, whose earnings are more sensitive to the strength of
the U.S. and international economies. The U.S. economy has shown surprising
strength in the past two quarters, while the foreign economic crises of last
fall seem to have eased.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares, or the applicable contingent deferred sales charge
on redemptions in the case of Class B and Class C shares.
2 SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Russell 2000 Index is a widely recognized unmanaged index of small-cap stock
performance. The Russell 2000 Value Index is an unmanaged index comprised of
companies in the Russell 2000 Index with lower price-to-book ratios.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Common Stocks--99.1% Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Banking--13.3%
BancorpSouth 1,800 29,925
Banknorth Group 1,300 34,369
CVB Financial 2,060 47,380
Chittenden 700 20,125
City National 700 27,037
Commercial Federal 1,500 36,375
Corus Bankshares 700 21,700
Cullen/Frost Bankers 1,800 97,087
Dain Rauscher 300 12,863
Downey Financial 1,800 36,000
Eaton Vance 1,100 25,094
First Citizens BancShares 100 8,025
Harbor Florida Bancshares 1,000 11,750
Heller Financial 900 24,412
MAF Bancorp 1,700 37,825
North Fork Bancorp 1,800 40,500
Peoples Heritage Financial Group 2,300 44,562
Queens County Bancorp 700 24,587
Resource Bancshares Mortgage Group 4,400 53,900
Washington Federal 990 21,904
Westamerica Bancorp 1,700 56,738
712,158
Basic Industries--7.8%
Ball 1,000 54,937
GenCorp 2,700 62,438
Grace (W.R.) 1,700 a 27,094
Lennar 400 9,675
Lone Star Industries 2,100 74,944
MacDermid 900 37,744
Southdown 1,300 83,281
Spartech 1,300 30,875
Universal Forest Products 1,800 35,831
416,819
Capital Spending--15.2%
AVT 600 a 16,312
CIBER 1,000 a 18,875
CTS 900 48,038
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Spending (continued)
California Water Service Group 800 18,350
Check Point Software Technologies 1,400 a 49,350
Citrix Systems 1,800 a 76,500
Computer Task Group 700 13,038
Cordant Technologies 400 18,450
Crane 700 20,256
Electronics for Imaging 400 a 18,925
Gallagher (Arthur J.) & Co. 800 38,000
Ingram Micro, Cl. A 600 a 15,300
Kaydon 800 27,000
Kronos 450 a 15,300
Lincoln Electric, Cl. A 3,300 68,062
Metzler Group 400 a 11,150
NeoMagic 1,800 a 21,038
Pittway, Cl.A 900 23,738
Plantronics 200 a 13,500
QLogic 500 a 34,969
SCM Microsystems 300 a 19,763
SPS Technologies 1,500 a 65,438
Semtech 500 a 16,313
Tecumseh Products, Cl. A 500 30,563
Terex 1,100 a 34,788
ThermoQuest 1,600 a 17,500
Thomas Industries 1,900 37,763
TranSwitch 500 a 22,000
810,279
Consumer Cyclical--15.1%
AnnTaylor Stores 500 a 23,750
AptarGroup 500 14,000
Arvin Industries 1,300 47,613
BJ's Wholesale Club 1,000 a 26,563
Borg-Warner Automotive 1,300 73,775
Buckle 800 a 18,700
Central Garden & Pet 1,200 a 16,800
Consolidated Graphics 400 a 17,050
Department 56 800 a 21,650
Ethan Allen Interiors 1,200 60,825
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclical (continued)
Fossil 800 a 24,600
Franklin Covey 1,200 a 11,625
Furniture Brands International 1,500 a 37,594
IHOP 400 a 18,300
Kellwood 2,000 51,500
Kimball International, Cl. B 1,000 16,000
King World Productions 1,800 a 63,450
Ross Stores 1,700 78,093
Ryan's Family Steak House 6,300 a 77,962
Safeskin 400 a 3,900
Tekelec 1,000 a 9,031
Valassis Communications 600 a 33,600
World Color Press 1,000 a 25,563
Zale 1,000 a 37,813
809,757
Consumer Staples--4.3%
Coors (Adolph), Cl. B 600 32,100
IDEX 1,800 48,037
J & J Snack Foods 900 a 19,575
Performance Food Group 900 a 23,850
Riviana Foods 2,100 40,950
Universal 1,700 43,244
Universal Foods 1,000 21,000
228,756
Energy--7.9%
Atmos Energy 1,700 42,925
Devon Energy 1,400 46,550
Energen 1,900 32,775
Helmerich & Payne 3,200 82,400
ONEOK 1,000 27,937
R&B Falcon 510 a 5,100
Tesoro Petroleum 3,200 a 36,200
Valero Energy 700 15,619
WICOR 2,600 61,425
Washington Gas Light 3,100 73,044
423,975
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care--3.1%
ALPHARMA, Cl. A 600 17,700
Bindley Western Industries 800 24,700
Datascope 700 a 19,906
IDEC Pharmaceuticals 300 a 15,225
Ocular Sciences 1,550 a 47,275
Patterson Dental 600 a 21,637
Roberts Pharmaceutical 1,000 a 17,000
163,443
Insurance--6.5%
Ambac Financial Group 800 48,300
Amerin 800 a 18,750
Capital Re 1,300 25,431
Fidelity National Financial 650 11,862
Financial Security Assurance Holdings 1,000 57,125
First American Financial 800 14,300
Harleysville Group 1,500 27,937
Medical Assurance 660 a 18,150
PartnerRe 800 33,000
Presidential Life 1,900 34,081
Protective Life 1,500 58,781
347,717
Mining and Metals--3.6%
AK Steel Holding 3,500 91,000
Cleveland-Cliffs 800 31,850
Commercial Metals 1,300 30,631
RTI International Metals 1,000 a 13,313
Reliance Steel & Aluminum 700 25,506
192,300
Real Estate--11.9%
Cabot Industrial Trust 1,300 26,487
Catellus Development 3,200 a 49,200
D. R. Horton 4,800 92,700
Franchise Finance Corp. of America 2,200 51,013
M.D.C. Holdings 1,800 35,325
Nationwide Health Properties 1,900 38,594
Pulte 4,300 97,287
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Real Estate (continued)
Rouse 1,800 43,763
Toll Brothers 1,200 a 25,650
U.S. Home 2,500 a 85,625
Webb (Del) 4,000 92,500
638,144
Transportation--3.4%
Alaska Air Group 1,300 a 57,281
Continental Airlines, Cl. B 1,200 a 51,825
SEACOR Smit 500 a 26,469
USFreightways 1,200 45,000
180,575
Utilities--7.0%
Aliant Communications 1,000 44,250
BEC Energy 1,500 63,750
Calpine 1,500 a 63,937
Cleco 800 24,700
Commonwealth Energy Systems 900 36,506
Conectiv 1,200 28,725
Idacorp 700 22,050
L-3 Communications Holdings 500 a 24,406
Pacific Gateway Exchange 400 a 16,000
Public Service Company of New Mexico 2,300 41,112
Rochester Gas & Electric 300 7,650
373,086
Total Common Stocks
(cost $5,572,246) 5,297,009
Principal
Short-Term Investments--.0% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------
U.S. Treasury Bills;
4.34%, 6/24/1999
(cost $1,987) 2,000 1,987
- -----------------------------------------------------------------------------------------
Total Investments (cost $5,574,233) 99.1% 5,298,996
Cash and Receivables (Net) .9% 47,554
Net Assets 100.0% 5,346,550
</TABLE>
a Non-income producing.
See notes to financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Cost Value ($)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of Investments 5,574,233 5,298,996
Cash 15,436
Receivable for investment securities sold 31,326
Receivable for shares of Capital Stock subscribed 1,885
Dividends receivable 6,547
5,354,190
- -------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 5,992
Due to Distributor 1,148
Payable for shares of Capital Stock redeemed 500
7,640
- -------------------------------------------------------------------------------------------
Net Assets ($) 5,346,550
- -------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 6,048,816
Accumulated distributions in excess of investment income--net (5,410)
Accumulated net realized gain (loss) on investments (421,619)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (275,237)
- -------------------------------------------------------------------------------------------
Net Assets ($) 5,346,550
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Class B Class C Class R
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets ($) 3,354,198 930,891 568,356 493,105
Shares Outstanding 310,444 86,552 52,845 45,594
- -------------------------------------------------------------------------------------------
Net Asset Value Per Share ($) 10.80 10.76 10.76 10.82
- -------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment Income ($)
- -------------------------------------------------------------------------------------------
Income:
Cash Dividends (net of $14 foreign taxes withheld at source) 38,007
Interest 3,408
Total Income 41,415
Expenses:
Management fee--Note 2(a) 31,748
Distribution and service fees--Note 2(b) 10,755
Loan commitment fees--Note 4 5
Total Expenses 42,508
Investment (Loss) (1,093)
- -------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments (305,189)
Net unrealized appreciation (depreciation) on investments 475,910
Net Realized and Unrealized Gain (Loss) on Investments 170,721
Net Increase in Net Assets Resulting from Operations 169,628
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998*
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income (loss)--net (1,093) 7,466
Net realized gain (loss) on investments (305,189) (116,430)
Net unrealized appreciation (depreciation)
on investments 475,910 (751,147)
Net Increase (Decrease) in Net Assets
Resulting from Operations 169,628 (860,111)
- -------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Class A shares (9,456) --
Class R shares (2,327) --
Total Dividends (11,783) --
- -------------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 92,252 3,776,717
Class B shares 415,076 757,342
Class C shares -- 711,811
Class R shares 60,000 501,500
Dividends reinvested:
Class A shares 9,165 --
Class R shares 2,327 --
Cost of shares redeemed:
Class A shares (15,967) (18,415)
Class B shares (152,216) (19,532)
Class C shares (71,048) (196)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 339,589 5,709,227
Total Increase (Decrease) in Net Assets 497,434 4,849,116
- -------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 4,849,116 --
End of Period 5,346,550 4,849,116
Undistributed (distribution in excess of)
investment income--net (5,410) 7,466
</TABLE>
* From April 1, 1998 (commencement of operations) to October 31, 1998.
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions
Class A
Shares sold 7,996 304,913
Shares issued for dividends reinvested 843 --
Shares redeemed (1,552) (1,756)
Net Increase (Decrease) in Shares Outstanding 7,287 303,157
- -------------------------------------------------------------------------------------------------------------------
Class B
Shares sold 39,879 63,366
Shares redeemed (14,733) (1,960)
Net Increase (Decrease) in Shares Outstanding 25,146 61,406
- -------------------------------------------------------------------------------------------------------------------
Class C
Shares sold -- 59,648
Shares redeemed (6,786) (17)
Net Increase (Decrease) in Shares Outstanding (6,786) 59,631
- -------------------------------------------------------------------------------------------------------------------
Class R
Shares sold 5,253 40,126
Shares issued for dividends reinvested 215 --
Net Increase (Decrease) in Shares Outstanding 5,468 40,126
</TABLE>
* From April 1, 1998 (commencement of operations) to October 31, 1998.
See notes to financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal period indicated. Certain information reflects financial results for a
single Fund share. Total return shows how much your investment in the Fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the Fund's
financial statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Year Ended April 30, 1999 Year Ended
(Unaudited) October 31, 1998a (Unaudited) October 31, 1998a
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 10.45 12.50 10.41 12.50
Investment Operations:
Investment income (loss)--net .01 .03 (.02) (.02)
Net realized and unrealized gain
(loss) on investments .37 (2.08) .37 (2.07)
Total from Investment Operations .38 (2.05) .35 (2.09)
Distributions:
Dividends from investment
income--net (.03) -- -- --
Net asset value, end of period 10.80 10.45 10.76 10.41
- -------------------------------------------------------------------------------------------
Total Return (%) b,c 3.64 (16.40) 3.36 (16.72)
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets c .74 .88 1.12 1.32
Ratio of net investment income (loss)
to average net assets c .06 .24 (.31) (.20)
Portfolio Turnover Rate c 26.78 19.72 26.78 19.72
- -------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1000) 3,354 3,169 931 639
<FN>
a From April 1, 1998 (commencement of operations) to October 31, 1998.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Class C Class R
------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Year Ended April 30, 1999 Year Ended
(Unaudited) October 31, 1998a (Unaudited) October 31, 1998a
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 10.41 12.50 10.47 12.50
Investment Operations:
Investment income (loss)--net (.03) (.02) .02 .04
Net realized and unrealized gain
(loss) on investments .38 (2.07) .39 (2.07)
Total from Investment Operations .35 (2.09) .41 (2.03)
Distributions:
Dividends from investment
income--net -- -- (.06) --
Net asset value, end of period 10.76 10.41 10.82 10.47
- -------------------------------------------------------------------------------------------
Total Return (%) b 3.36c (16.72)c 3.90 (16.24)
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets b 1.12 1.32 .62 .73
Ratio of net investment income (loss)
to average net assets b (.31) (.19) .19 .38
Portfolio Turnover Rate b 26.78 19.72 26.78 19.72
Net Assets, end of period
($ x 1000)) 568 621 493 420
<FN>
a From April 1, 1998 (commencement of operations) to October 31, 1998.
b Not annualized.
c Exclusive of sales load.
See notes to financial statements.
</FN>
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Small Cap Value 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 provide investors with total investment returns that consistently outperform
the Russell 2000 Value Index. The Dreyfus Corporation (the "Manager") serves as
the Fund's investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A. which is a wholly-owned subsidiary of Mellon Bank Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Company is authorized to issue 100 million shares of $.001
par value Capital Stock in each of the following classes: Class A, Class B,
Class C and Class R. Class A, Class B and Class C shares are sold primarily to
retail investors through financial intermediaries and bear a distribution fee
and/or service fee. Class A shares are sold with a front-end sales charge and
bear a distribution fee, while Class B and Class C shares are subject to a
contingent deferred sales charge ("CDSC"). Class R shares are sold primarily to
bank trust departments and other financial service providers (including Mellon
Bank and its affiliates) acting on behalf of customers having a qualified trust
or investment account or relationship at such institution, and bear no
distribution or service fees. Class R shares are offered without a front-end
sales charge or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
As of April 30, 1999, MBC Investment Corp., an indirect subsidiary
of Mellon Bank Corporation, held the following shares:
Class A................280,799 Class C..................40,000
Class B.................40,000 Class R..................40,214
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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 options and
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. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
(b) Foreign currency transactions: The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
18
<PAGE>
(c) 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.
(d) Dividends 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 Revenue Code of 1986, as amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $116,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1998. If not
applied, the carryover expires in fiscal 2006.
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
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.25% 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,
service fees, 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.
(b) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of their average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares.
20
<PAGE>
Under the Plan, Class B and Class C shares pay the Distributor for distributing
their shares at an aggregate annual rate of .75% of the value of the average
daily net assets of Class B and Class C shares. Class B and Class C shares are
also subject to a service plan adopted pursuant to Rule 12b-1, under which Class
B and Class C shares pay Dreyfus Service Corporation or the Distributor for
providing certain services to the holders of Class B and Class C shares a fee at
the annual rate of .25% of the value of the average daily net assets of Class B
and Class C shares. During the period ended April 30, 1999, Class A, Class B and
Class C shares were charged $4,114, $2,969 and $2,012, respectively, pursuant to
the Plan and Class B and Class C shares were charged $989 and $671,
respectively, pursuant to the service plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote of 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 or in any agreement related to the Plan
or service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excludingshort-term securities, during the period ended April 30, 1999,
amounted to $2,237,583 and $1,320,975, respectively.
At April 30, 1999, accumulated net unrealized depreciation on investments was
$275,237, consisting of $325,841 gross unrealized appreciation and $601,078
gross unrealized depreciation.
At April 30, 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 ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commit-
The Fund 21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
ment 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 April
30, 1999, the Fund did not borrow under the Facility.
22
<PAGE>
The Fund 23
<PAGE>
NOTES
24
<PAGE>
The Fund 25
<PAGE>
For More Information
Dreyfus Premier Small Cap
Value 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or
1-800-554-4611
By mail Write to:
The Dreyfus Premier
Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation 148/158SA994
Dreyfus Premier
Tax Managed
Growth Fund
SEMIANNUAL REPORT
April 30, 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>
CONTENTS
The Fund
- --------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
13 Financial Highlights
15 Notes to Financial Statement
For More Information
- ---------------------
Back Cover
<PAGE>
The Fund
Dreyfus Premier
Tax Managed Growth Fund
Letter From The President
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Tax Managed
Growth Fund, covering the six-month period from November 1, 1998 through April
30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio manager, Fayez Sarofim, of Fayez Sarofim & Co., the Fund's
Sub-Investment Adviser.
The past six months have been rewarding for many equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. The Federal Reserve
Board's lowering of short-term interest rates in the fall of 1998 appears to
have helped U.S. businesses withstand the effects of economic weakness in Japan,
Asia and Latin America. As a result, several major market indices set new
records, including the Dow Jones Industrial Average's first-ever close above the
10,000 level. The broader S&P 500 Index and the technology-laden NASDAQ Index
also recorded new highs.
Yet, until near the end of the six-month period, the stock market's advance
remained relatively narrow, confined to a handful of highly valued growth and
technology stocks. In April, however, some previously out-of-favor market
sectors rallied strongly, including large-cap cyclical companies as well as some
small- and mid-cap stocks.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Premier Tax Managed Growth Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
Fayez Sarofim, Portfolio Manager
Fayez Sarofim & Co., Sub-Investment Adviser
How did Dreyfus Premier Tax Managed Growth Fund perform relative to its
benchmark?
The Fund's total return for the six-month period ended April 30, 1999 was 18.14%
for Class A shares, 17.79% for Class B shares, 17.72% for Class C shares, and
18.05% for Class T shares.1 In comparison, the Fund's benchmark, the Standard &
Poor's 500 Composite Stock Price ("S&P 500") Index, provided a total return of
22.31%. 2
We attribute this performance to the surprisingly rapid recovery of the global
capital markets in the wake of last summer's stock market decline. Large-cap
stocks performed especially well in the recovery, particularly those in the
high-flying technology sector. The S&P 500, which emphasizes technology more
heavily than the Fund, benefited more than the Fund from these conditions.
What is the Fund's investment approach?
The Fund invests primarily in large, well-established, multinational growth
companies that we believe are well positioned to weather difficult economic
climates and thrive during favorable times. Indeed, many of the Fund's
holdings--selected for their sustained patterns of profitability, strong balance
sheets, expanding global presence and above-average growth potential--responded
well to the positive economic environment that prevailed during most of the
period. Stocks of companies such as Citigroup that had lost significant value
during August and September 1998 rebounded strongly in the autumn in response to
this favorable environment, as well as their own effective management
initiatives.
The Fund also employs a tax-managed investment strategy, which is particularly
well suited to the concerns of tax-conscious investors. This strategy is based
on targeting long-term growth rather than short-
The Fund 3
<PAGE>
term profit. We typically buy and sell relatively few stocks during the course
of the year, as part of our "buy and hold" approach, to minimize investors' tax
liabilities and reduce the Fund's trading costs. During the recent six-month
period, the Fund maintained a portfolio turnover rate of 0.32% (not annualized),
well within our goal of an annual portfolio turnover rate below 15% during
normal market conditions. In addition, since we remained fully invested we
participated fully in the market's strong recovery in late 1998.
Our investment strategy is also predicated on purchasing growth stocks at a
price we consider to be justified by a company's fundamentals. While the Fund
was invested in several leading technology companies during the period, such as
Intel and Microsoft, we avoided most high-flying Internet and many technology
companies because we found their stock prices to be higher than warranted by
their financial strength and growth rates. We believed--and continue to
believe--that the risks of such investments fail to outweigh the benefits.
Consequently, the Fund held few such stocks at a time when investors bid prices
of many up to stratospheric levels.
What other factors influenced the Fund's performance?
Much of the Fund's performance resulted from our sector selection process, an
analysis designed to identify industries likely to enjoy long-term growth. This
process led us to maintain the Fund's emphasis on stocks in the health care and
financial industries, and, to a lesser extent, the consumer staples industry.
For the six-month period, our position in financials significantly helped
performance while our health care weighting detracted from overall performance.
The Fund's investments in leading health care companies, such as American Home
Products and Johnson & Johnson, appreciated significantly in value during most
of the period. Although the stocks of many major pharmaceutical companies
declined during the final weeks of
4
<PAGE>
April because of concerns over expiring drug patents and new limits on Medicare
reimbursements, most performed well overall.
The financial sector proved a fruitful area of investment as well. Some of our
banking, insurance and other financial holdings recovered from their October
1998 lows to be among the Fund's best performers. We were particularly pleased
with the performance of Chase Manhattan and Marsh & McLennan, which not only
regained lost ground, but also went on to establish new all-time highs during
the first few months of 1999. The food and beverage sector, in which the Fund
held Coca-Cola, also benefited from the strengthening global economy and
improved investor confidence.
What is the Fund's current strategy?
As of April 30, the long-term economic trends that have led us to emphasize
health care, financials and consumer staples appear to remain in place.
Specifically, the U.S. economy has continued to perform well--inflation and
interest rates have remained low while consumer confidence has been high--and
the global economy has shown continuing signs of improvement. As a result, we
have seen little reason to alter our sector allocation model. Nor have we
observed changes in company fundamentals that might lead us to make significant
changes among our individual holdings.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A and Class T shares, or the applicable contingent deferred
sales charge imposed on redemptions in the case of Class B and Class C shares.
2 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.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Common Stocks--96.9% Shares Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Auto Related--5.0%
DaimlerChrysler 45,175 4,435,620
Ford Motor 120,000 7,672,500
General Motors 15,000 1,334,062
13,442,182
Banking--6.5%
BankAmerica 68,948 4,964,256
Chase Manhattan 85,000 7,033,750
SunTrust Banks 75,000 5,362,500
17,360,506
Basic Materials--.4%
duPont (EI) de Nemours 15,000 1,059,375
Capital Goods--8.9%
AlliedSignal 80,000 4,700,000
Boeing 25,000 1,015,625
Emerson Electric 70,000 4,515,000
General Electric 90,000 9,495,000
Rockwell International 80,000 4,130,000
23,855,625
Communications--5.2%
Bell Atlantic 35,000 2,016,875
BellSouth 130,000 5,817,500
SBC Communications 110,000 6,160,000
13,994,375
Computers--7.3%
Cisco Systems 55,000 a 6,273,437
Compaq Computer 25,000 557,812
Hewlett-Packard 50,000 3,943,750
Microsoft 110,000 a 8,944,375
19,719,374
Electronics--5.0%
Conexant Systems 27,500 a 1,120,625
Intel 200,000 12,237,500
13,358,125
Energy--5.2%
BP Amoco, A.D.S. 40,000 4,527,500
Chevron 20,000 1,995,000
Exxon 45,000 3,737,813
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Common Stocks--(continued) Shares Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Energy (continued)
Mobil 30,000 3,142,500
Royal Dutch Petroleum, A.D.R. 12,000 704,250
14,107,063
Finance--Misc.--7.9%
Associates First Capital, Cl. A 110,166 4,881,731
Citigroup 85,000 6,396,250
Federal National Mortgage Association 110,000 7,803,125
Merrill Lynch 25,000 2,098,438
21,179,544
Food & Drugs--1.7%
Walgreen 170,000 4,568,750
Food, Beverage & Tobacco--8.7%
Coca-Cola 170,000 11,560,000
PepsiCo 140,000 5,171,250
Philip Morris Cos. 185,000 6,486,563
23,217,813
Health Care--17.0%
Abbott Laboratories 100,000 4,843,750
American Home Products 75,000 4,575,000
Bristol-Myers Squibb 90,000 5,720,625
Johnson & Johnson 80,000 7,800,000
Merck 125,000 8,781,250
Pfizer 120,000 13,807,500
45,528,125
Insurance--4.2%
Berkshire Hathaway, Cl. A 79 6,035,600
Berkshire Hathaway, Cl. B 15 a 37,050
Marsh & McLennan 70,000 5,359,375
11,432,025
Media/Entertainment--2.8%
Fox Entertainment Group, Cl. A 110,000 2,818,750
McDonald's 90,000 3,813,750
Tricon Global Restaurants 12,500 a 804,687
7,437,187
Personal Care--5.4%
Colgate-Palmolive 40,000 4,097,500
Gillette 110,000 5,740,625
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Common Stocks--(continued) Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Personal Care (continued)
Procter & Gamble 50,000 4,690,625
14,528,750
Publishing--1.6%
McGraw-Hill Cos. 80,000 4,420,000
Retail--1.7%
Wal-Mart Stores 100,000 4,600,000
Telecommunications--.5%
Ameritech 20,000 1,368,750
Textiles Apparrel--.3%
Polo Ralph Lauren, Cl. A 35,000 778,750
Transportation--1.6%
Norfolk Southern 130,000 4,249,375
Total Common Stocks
(cost $223,951,390) 260,205,694
- ---------------------------------------------------------------------------------------------
Preferred Stocks--.6%
Publishing
News A.D.S., Cum., $.4228 55,000 1,680,938
(cost $1,391,500)
- ---------------------------------------------------------------------------------------------
Principal
Short-Term Investments--2.6% Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------
U.S. Treasury Bills:
4.22%, 6/10/1999 1,767,000 1,758,458
4.21%, 6/17/1999 100,000 99,432
4.30%, 7/22/1999 2,739,000 2,711,487
4.39%, 7/29/1999 2,296,000 2,271,410
Total Short-Term Investments (cost $6,841,434) 6,840,787
- ---------------------------------------------------------------------------------------------
Total Investments (cost $232,184,324) 100.1% 268,727,419
Liabilities, Less Cash and Receivables (.1%) (335,694)
Net Assets 100.0% 268,391,725
a Non-income producing.
See notes to financial statements.
</TABLE>
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Cost Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--
See Statement of Investments 232,184,324 268,727,419
Cash 834,493
Receivable for shares of Capital Stock subscribed 1,845,572
Dividends receivable 291,136
271,698,620
- ---------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 226,491
Due to Distributor 173,066
Payable for investment securities purchased 2,709,057
Payable for shares of Capital Stock redeemed 198,281
3,306,895
- ---------------------------------------------------------------------------------------------
Net Assets ($) 268,391,725
- ---------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 232,156,554
Accumulated investment (loss) (418,917)
Accumulated net realized gain (loss) on investments 110,993
Accumulated net unrealized appreciation (depreciation) on investments--Note 3 36,543,095
- ---------------------------------------------------------------------------------------------
Net Assets ($) 268,391,725
- ---------------------------------------------------------------------------------------------
<CAPTION>
Net Asset Value Per Share
Class A Class B Class C Class T
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets ($) 68,375,037 145,422,513 46,721,615 7,872,560
Shares Outstanding 3,917,513 8,416,634 2,705,149 452,374
Net Asset Value Per Share ($) 17.45 17.28 17.27 17.40
See notes to financial statements.
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Investment Income ($)
- ---------------------------------------------------------------------------------------------
<S> <C>
Income:
Cash dividends (net of $8,442 foreign taxes withheld at source) 1,317,936
Interest 118,666
Total Income 1,436,602
Expenses:
Management fee--Note 2(a) 1,076,030
Distribution and service fees--Note 2(b) 779,234
Loan commitment fees--Note 4 255
Total Expenses 1,855,519
Investment (Loss) (418,917)
- ---------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Invesments--Note 3:
Net realized gain (loss) on investments 110,993
Net unrealized appreciation (depreciation) on investments 29,284,024
Net Realized and Unrealized Gain (Loss) on Investments 29,395,017
Net Increase in Net Assets Resulting from Operations 28,976,100
See notes to financial statements.
</TABLE>
10
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998*
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment (loss) (418,917) (33,398)
Net realized gain (loss) on investments 110,993 3,024
Net unrealized appreciation (depreciation)
on investments 29,284,024 7,259,071
Net Increase (Decrease) in Net Assets
Resulting from Operations 28,976,100 7,228,697
- -------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Class A shares -- (7,111)
Class T shares -- (767)
Total Dividends -- (7,878)
- -------------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 32,906,204 34,492,581
Class B shares 62,164,231 73,204,923
Class C shares 22,591,399 22,099,641
Class T shares 3,017,565 4,773,293
Dividends reinvested:
Class A shares -- 84
Class T shares -- 22
Cost of shares redeemed:
Class A shares (2,139,067) (6,539,758)
Class B shares (5,014,076) (4,239,951)
Class C shares (1,976,986) (1,717,671)
Class T shares (654,205) (773,423)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 110,895,065 121,299,741
Total Increase (Decrease) in Net Assets 139,871,165 128,520,560
- -------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 128,520,560 --
End of Period 268,391,725 128,520,560
</TABLE>
* From November 4, 1997 (commencement of operations) to October 31, 1998.
See notes to financial statements
The Fund 11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998*
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions:
Class A
Shares sold 1,986,279 2,507,883
Shares issued for dividends reinvested -- 7
Shares redeemed (128,712) (447,944)
Net Increase (Decrease) in Shares Outstanding 1,857,567 2,059,946
- -------------------------------------------------------------------------------------------
Class B
Shares sold 3,788,485 5,230,565
Shares redeemed (302,850) (299,566)
Net Increase (Decrease) in Shares Outstanding 3,485,635 4,930,999
- -------------------------------------------------------------------------------------------
Class C
Shares sold 1,376,460 1,569,748
Shares redeemed (119,977) (121,082)
Net Increase (Decrease) in Shares Outstanding 1,256,483 1,448,666
- -------------------------------------------------------------------------------------------
Class T
Shares sold 187,076 358,322
Shares issued for dividends reinvested -- 2
Shares redeemed (40,066) (52,960)
Net Increase (Decrease) in Shares Outstanding 147,010 305,364
</TABLE>
* From November 4, 1997 (commencement of operations) to October 31, 1998.
See notes to financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal period indicated. Certain information reflects financial results for a
single Fund share. Total return shows how much your investment in the Fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the Fund's
financial statements.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares
-------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Year Ended April 30, 1999 Year Ended
(Unaudited) October 31, 1998 a (Unaudited) October 31, 1998 a
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 14.77 12.50 14.67 12.50
Investment Operations:
Investment income (loss)--net (.01) .05 (.03) (.02)
Net realized and unrealized gain (loss)
on investments 2.69 2.23 2.64 2.19
Total from Investment Operations 2.68 2.28 2.61 2.17
Distributions:
Dividends from investment income--net -- (.01) -- --
Net asset value, end of period 17.45 14.77 17.28 14.67
- ---------------------------------------------------------------------------------------------------------
Total Return (%) b,c 18.14 18.26 17.79 17.36
- ---------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assetsc .67 1.34 1.04 2.09
Ratio of net investment income (loss)
to average net assetsc .06 .52 (.31) (.27)
Portfolio Turnover Ratec .32 .05 .32 .05
- ---------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 68,375 30,428 145,423 72,347
</TABLE>
a From November 4, 1997 (commencement of operations) to October 31, 1998.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
The Fund 13
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Class C Shares Class T Shares
-------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Year Ended April 30, 1999 Year Ended
(Unaudited) October 31, 1998 a (Unaudited) October 31, 1998 a
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 14.66 12.50 14.74 12.50
Investment Operations:
Investment income (loss)--net (.03) (.02) (.02) .03
Net realized and unrealized gain (loss)
on investments 2.64 2.18 2.68 2.22
Total from Investment Operations 2.61 2.16 2.66 2.25
Distributions:
Dividends from investment income--net -- -- -- (.01)
Net asset value, end of period 17.27 14.66 17.40 14.74
- ---------------------------------------------------------------------------------------------------------
Total Return (%)c 17.72 b 17.36 b 18.05 17.97
- ---------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assetsc 1.04 2.09 .79 1.59
Ratio of net investment income (loss)
to average net assetsc (.31) (.26) (.06) .25
Portfolio Turnover Ratec .32 .05 .32 .05
- ---------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 46,722 21,244 7,873 4,501
</TABLE>
a From November 4, 1997 (commencement of operations) to October 31, 1998.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Tax Managed 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 provide investors with 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. 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. The Company is authorized to issue 100 million shares of $.001
par value Capital Stock in each of the following classes of shares: Class A,
Class B, Class C and Class T. Class A, Class B, Class C and Class T shares are
sold primarily to retail investors through financial intermediaries and bear a
distribution fee and/or service fee. Class A shares are sold with a front-end
sales charge and bear a distribution fee, while Class B and Class C shares are
subject to a contingent deferred sales charge and a distribution and service
fee. Class T shares are sold with a front-end sales charge and bear a
distribution and service fee. Each class of shares has identical rights and
privileges, except with respect to distribution and service fees and voting
rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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.
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(a) Portfolio valuation: Investments in securities 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. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
(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) Foreign currency transactions: The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends
16
<PAGE>
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 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 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 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 Transfer 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,
service fees, 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 sep-
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
arate 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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$3,095 during the period ended April 30, 1999 from commissions earned on sales
of the Fund's shares.
(b) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A may pay annually up to
..25% of the value of its average daily net assets to compensate the Distributor
and Dreyfus Service Corporation for shareholder servicing activities and the
Distributor for activities and expenses primarily intended to result in the sale
of Class A shares. Under the Plan, Class B, Class C and Class T shares pay the
Distributor for distributing their shares at an aggregate annual rate of .75%,
..75% and .25% of the value of the average daily net assets of Class B, Class C
and Class T shares, respectively. Class B, Class C and Class T shares are also
subject to a service plan adopted pursuant to Rule 12b-1, under which Class B,
Class C and Class T shares pay Dreyfus Service Corporation or the Distributor
for providing certain services to the holders of Class B, Class C and Class T
shares a fee at the annual rate of .25% of the value of the average daily net
assets of Class B, Class C
18
<PAGE>
and Class T shares. During the period ended April 30, 1999, Class A, Class B,
Class C and Class T shares were charged $60,751, $402,654, $123,667 and $8,361,
respectively, pursuant to the Plan. During the period ended April 30, 1999,
Class B, Class C and Class T shares were charged $134,218, $41,222 and $8,361,
respectively, pursuant to the service plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote of 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 in any
agreement related to the Plan or service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended April 30, 1999, amounted to
$112,591,579 and $605,728, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments was
$36,543,095, consisting of $39,605,652 gross unrealized appreciation and
$3,062,557 gross unrealized depreciation.
At April 30, 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 ("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 April
30, 1999, the Fund did not borrow under the Facility.
The Fund 19
<PAGE>
For More Information
Dreyfus Premier
Tax Managed Growth Fund
200 Park Avenue
New York, NY 10166
Investment Advisor
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Advisor
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or
1-800-554-4611
By mail Write to:
The Dreyfus Premier
Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation
149/159SA994
Dreyfus
Municipal Reserves
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- ----------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
18 Notes to Financial Statements
For More Information
- --------------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Municipal Reserves The Fund
Letter From The President
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Municipal
Reserves, covering the six-month period from November 1, 1998 through
April 30, 1999. Inside, you'll find valuable information about how the Fund
was managed during the reporting period, including a discussion with the
Fund's portfolio manager, John Flahive.
Yields on both taxable and tax-exempt money market securities generally
declined over the reporting period in response to the Federal Reserve Board's
decision in the fall of 1998 to ease monetary policy. While the U.S. economy
has continued to grow, the Federal Reserve was concerned about persistent
economic weakness abroad. Their adoption of lower short-term interest
rates was intended to stimulate not just domestic economic growth, but the
economies of other nations as well.
Despite lower nominal interest rates for tax-exempt money market
instruments, very low inflation continued to support attractive real
returns, which are nominal yields less the rate of inflation.
We appreciate your confidence over the past six months, and we look forward
to your continued participation in Dreyfus Municipal Reserves.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus Municipal Reserves perform during the period?
For the six-month period ended April 30, 1999, the Fund's Investor
shares provided an annualized yield of 2.44%, and after taking in account the
effect of compounding, the annualized effective yield was 2.46%.1 The Fund's
Restricted shares provided a 2.64% annualized yield and a 2.67%
annualized effective yield.1
The Fund's Investor shares provided a total return of 1.21%,2 compared to
a total return of 1.25% for the Lipper Tax-Exempt Money Market Fund's
average category for the same period.3 The Fund's Class R shares provided a
total return of 1.31%,2 compared to a total return of 1.39% for the Lipper
Institutional Tax-Exempt Money Market Fund's Category for the same period.3
We attribute this performance to lower short-term interest rates following
the Federal Reserve Board's easing of U.S. monetary policy in the fall of
1998. Performance was also affected by the low supply of new tax-exempt money
market securities relative to steady demand.
What is the Fund's investment approach?
Our goal is to seek as high a level of federally tax-exempt income as
is practical while maintaining a stable $1.00 share price. To achieve
this objective, we employ two primary strategies. First and foremost, we
attempt to add value by selecting the individual tax-exempt money market
instruments that we believe are most likely to provide the highest returns
with the least risk. Second, we actively manage the portfolio's average
maturity in anticipation of supply-and-demand changes in the short-term
municipal marketplace.
Using a "bottom up" approach that focuses on individual securities rather than
economic or market trends, we constantly search for securities that, in our
opinion, represent better values than we currently
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
hold in the portfolio. When we find securities that we believe will help us
enhance the fund's yield without sacrificing quality, we buy them and sell less
attractive securities.
The management of the portfolio's average maturity is a more tactical
approach. If we expect the supply of securities to increase temporarily, we may
reduce the portfolio's average maturity to make cash available for the
purchase of higher yielding securities. That's because yields tend to rise
temporarily if many issuers are competing simultaneously for investor interest.
If we expect demand for short-term municipal securities to surge at a time
when we anticipate little issuance and, therefore, lower yields -- as often
happens in January and June -- we may increase the portfolio's average
maturity to maintain current yields for as long as practical. At other times,
we generally try to maintain a neutral average maturity that is consistent with
our benchmark index.
What other factors influenced the Fund's performance?
Although the Fund, by definition, contains only securities from U.S.
issuers, the entire domestic fixed-income marketplace was influenced by
economic events overseas. When the Asian currency and credit crisis
spread to Russia and threatened Latin America last summer and fall, the
Federal Reserve Board and other central banks moved quickly to stimulate
global economic growth. They did so by reducing key short-term interest
rates, which was intended to help boost economic activity by making
borrowing less expensive for corporations. An additional consequence of
lower interest rates was lower yields on money market securities.
Despite economic weakness in some overseas markets, the U.S. economy
remained strong. Because they have enjoyed higher tax revenues during this
period of economic prosperity, many municipalities have
4
<PAGE>
had less need to borrow. As a result, fewer tax-exempt money market
securities were issued than in the same six-month period one year ago. Yet,
demand from investors seeking to minimize their income tax liabilities
remained high. This imbalance between supply and demand helped push
tax-exempt money market yields down further.
What is the Fund's current strategy?
We continue to search for the most attractive values in the tax-exempt
money markets. This search has led us to Variable Rate Demand Notes (VRDNs),
which are issued by investment banks through the securitization of longer
term municipal bonds. With conventional tax-exempt notes in short supply, we
believe that VRDNs have offered the most attractive yields among high-quality,
short-term municipal securities. Accordingly, as of April 30, 1999, 51.6%
of the portfolio was composed of VRDNs. Of course, we continue to watch for
opportunities in other types of tax-exempt securities, including conventional
fixed-rate notes.
Also as of April 30, the portfolio's 45-day average maturity was consistently
in the neutral range. In our view, the prevailing stability of monetary policy
and interest rates gave us little reason to either extend or shorten
maturities. However, we intend to remain vigilant in our efforts to
identify tactical opportunities in anticipation of any supply-and-demand
imbalances.
May 13, 1999
1 Annualized effective yield is based upon dividends declared daily and
reinvested monthly. An investment in the Fund is not insured or
guaranteed by the FDIC or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in a Fund.
2 Total return includes reinvestment of dividends.
3 Source: Lipper Analytical Services Inc.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Principal
Tax Exempt Investments--99.7% Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Alaska--3.0%
Alaska Industrial Development Authority, Revenue,
VRDN (Providence Medical Office Building)
3.10% (LOC; Kredietbank)a 3,545,000 3,545,000
Anchorage, Higher Education Revenue, Refunding,
VRDN (Alaska Pacific University)
4% (LOC; Seattle First National Bank)a 3,700,000 3,700,000
California--.8%
California Higher Education Loan Authority Inc.,
Student Loan Revenue
3.80%, Series E-5, 6/1/1999
(LOC; Student Loan Marketing Association) 2,000,000 2,000,000
Colorado--3.0%
Colorado Health Facilities Authority, Revenue,
VRDN (North Colorado Medical Center)
4% (BPA; Credit Suisse and Insured; MBIA)a 1,200,000 1,200,000
Dove Valley Metropolitan District of Arapohoe County,
Revenue, Refunding
3.375%, Series B, 11/1/1999
(LOC; Banque Nationale de Paris) 1,000,000 1,000,000
Interstate South Metropolitan District, Refunding
3.375%, Series B, 11/1/1999
(LOC; Banque Nationale de Paris) 975,000 975,000
Larimer County, COP (Courthouse and Jail Facility)
3.85%, 12/15/1999 (Insured; FSA) 2,460,000 2,470,174
SBC Metropolitan District 3.35%, 12/1/1999
(LOC; U.S. Bank of Washington) 1,560,000 1,560,000
Florida--7.8%
Broward County Housing Finance Authority, MFHR,
Refunding, VRDN (Waters Edge Project) 4%a 6,740,000 6,740,000
Capital Projects Finance Authority, Revenue, VRDN
(Florida Hospital Association Capital Project Loan)
4.05% (Insured; FSA and SBPA; Credit Suisse)a 3,600,000 3,600,000
Florida Multi-Family Housing Finance Agency, Refunding,
VRDN 4.10%, Series E (LOC; Comerica Bank)a 1,200,000 1,200,000
Greater Orlando Aviation Authority, Special Purpose
Revenue (Signature Flight)
3.25%, 12/1/1999 (LOC; Bayerische Landesbank) 2,725,000 2,725,000
Miami Health Facilities Authority, Health Facilities
Revenue, Refunding, VRDN
(Mercy Hospital Project) 3.90%
(LOC; Bank of America)a 2,000,000 2,000,000
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Principal
Tax Exempt Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Florida (continued)
Sarasota County Public Hospital District, HR, CP
(Sarasota Memorial Hospital Project)
2.80%, 5/19/1999 (LOC; Suntrust Bank) 2,400,000 2,400,000
Georgia--3.8%
Burke County Development Authority, PCR, CP
(Oglethorpe Power Corporation)
3.20%, Series B, 8/26/1999
(Insured; AMBAC and BPA; Suntrust Bank) 5,600,000 5,600,000
De Kalb County Development Authority, Revenue, VRDN
(Marist School Inc. Project) 4.05%
(LOC; Suntrust Bank)a 3,500,000 3,500,000
Illinois--13.8%
City of Chicago:
3.05%, Series C, 10/31/1999
(LOC; Societe Generale) 3,000,000 3,000,000
VRDN 4%, Series B
(LOC; Canadian Imperial Bank of Commerce)a 1,700,000 1,700,000
Chicago Midway Airport, Special Facility Revenue
(Signature Flight)
3.25%, 12/1/1999 (LOC; Bayerische Landesbank) 3,500,000 3,500,000
Chicago School Finance Authority, Refunding
5.80%, Series A, 6/1/1999 (Insured; FGIC) 4,340,000 4,350,180
Illinois Development Finance Authority, VRDN:
IDR:
(Columbia Graphics Corp. Project)
4.15% (LOC; Harris Trust and Savings Bank)a 2,500,000 2,500,000
(Institute of Gas Technology Project)
3.60% (LOC; Bank of Montreal)a 6,400,000 6,400,000
Revenue
(Residential Rental-F.C. Harris Pavilion Project)
4.05% (LOC; FNMA)a 1,100,000 1,100,000
Illinois Educational Facilities, Revenue,
VRDN (National-Louis University)
4.05% (LOC; Bank of Montreal)a 6,100,000 6,100,000
City of New Lenox, IDR, VRDN (Panduit Corp. Project)
4.05% (LOC; Commerzbank)a 1,300,000 1,300,000
City of Zion, Revenue, VRDN (H & M Enterprises
LLC Project) 4.05%, Series A
(LOC; Federal Home Loan Bank)a 2,920,000 2,920,000
Indiana--5.4%
City of Auburn, EDR, VRDN (RJ Tower Corp. Project)
4.15% (LOC; Comerica Bank)a 175,000 175,000
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Principal
Tax Exempt Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Indiana (continued)
City of Portage, EDR, VRDN (Pedcor Investments)
4.05%, Series A (LOC; Federal Home Loan Banks)a 6,253,000 6,253,000
City of Seymour, EDR, VRDN (Pedcor Investments-
Sycamore Springs Apartments Project)
4.05%, Series A (LOC; FNMA)a 4,077,000 4,077,000
Whiting Industrial, PCR, (Amoco Project-Standard
Oil Inc.) 3%, 8/15/1999 (Corp. Guaranty;
Amoco Credit Corp.) 2,500,000 2,500,000
Iowa--.4%
Iowa Higher Education Loan Authority, Revenue,
Refunding (Private College Facilities)
5%, 8/1/1999 (Insured; MBIA) 980,000 983,488
Kansas--.1%
City of Wichita, 4.25%, Series 734, 6/1/1999 200,000 200,124
Kentucky--.4%
Mayfield, Multi-City Lease Revenue, VRDN
(League of Cities Funding Trust)
4.10% (LOC; PNC Bank)a 1,000,000 1,000,000
Louisiana--13.7%
East Baton Rouge Parish, PCR, Refunding, VRDN
(Rhone Poulene Inc. Project)
4.25% (LOC; Banque Nationale De Paris)a 1,500,000 1,500,000
Louisiana Public Facilities Authority, Refunding, VRDN:
HR (Willis Knighton Medical Project)
4.05% (Insured; AMBAC and SBPA;
Credit Local De France)a 12,145,000 12,145,000
MFMR (Emberwood)
4% (LOC; General Electric Co.)a 1,000,000 1,000,000
City of New Orleans and Home Mortgage Authority,
SFMR 3.15%, Series C-2, 12/1/1999
(Collateralized; FNMA) 3,000,000 3,000,000
Saint James Parish, PCR, Refunding, CP (Texaco Project)
3.20%, Series B, 5/13/1999 (LOC; Texaco Inc.) 15,000,000 15,000,000
Maine--1.9%
Eastport, IDR, Refunding, VRDN (Passamaquoddy Tribe)
4.10% (LOC; Wachovia Bank and Trust Co.)a 4,660,000 4,660,000
Missouri--1.0%
Missouri Higher Education Loan Authority,
Student Loan Revenue, VRDN:
4.10%, Series A (LOC; National Westminster Bank)a 1,000,000 1,000,000
4.10%, Series B (LOC; National Westminster Bank)a 1,500,000 1,500,000
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Principal
Tax Exempt Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Montana--1.5%
Butte-Silver Bow, PCR, Refunding, VRDN
(Rhone-Poulenc Inc. Project)
4.05% (LOC; Banque Nationale de Paris)a 1,605,000 1,605,000
Montana Health Facilities Authority, Health Care
Revenue, VRDN (Pooled Loan Program)
4.05%, Series A (Insured; FGIC and SBPA;
Norwest Bank)a 1,900,000 1,900,000
Nevada--6.1%
Clark County Airport, Special Facility Revenue:
(Signature Flight Project)
3.10%, 6/1/1999 (LOC; Bayerische Landesbank) 7,335,000 7,335,000
(Signature Project)
3.25%, Series A, 12/1/1999 (LOC; Bayerische
Landesbank) 7,140,000 7,140,000
New Hampshire--1.5%
New Hampshire Higher Educational and Health
Facilities Authority, Revenue (Dartmouth Educational
Loan Corp.) 3.90%, 6/1/1999 (Guaranteed by;
Dartmouth College) 3,500,000 3,500,000
New Mexico--1.5%
City of Santa Fe, Gross Receipts Tax Revenue,
VRDN (Wastewater Systems)
4%, Series B (LOC; Canadian Imperial Bank
of Commerce)a 3,500,000 3,500,000
New York--6.3%
Metropolitan Transit Authority, Transit Facility
Revenue, CP 3.10%, Series 1, 5/14/1999
(LOC; ABN-Amro Bank) 15,000,000 15,000,000
Pennsylvania--8.3%
Allegheny County, Revenue
4.80%, Series C-43, 9/15/1999
(Escrowed in; U.S. Government Securities) 1,495,000 1,504,628
Allegheny County Hospital Development Authority,
Revenue, VRDN (Health Center Presbyterian)
4.05%, Series B (Insured; MBIA and SBPA; PNC Bank)a 100,000 100,000
Allentown Area Hospital Authority, Revenue, Refunding,
VRDN (Sacred Heart Hospital)
4.05%, Series B (LOC; First Union National Bank)a 900,000 900,000
Beaver County Industrial Development Authority,
PCR, CP (Duquense Light Co.)
3.10%, Series 94, 5/27/1999
(LOC; Union Bank of Switzerland) 2,900,000 2,900,000
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Principal
Tax Exempt Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania (continued)
Dauphin County General Authority, Revenue,
VRDN (All Health Pooled Financing)
4.05%, Series B (Insured; FSA and SBPA;
Credit Suisse)a 900,000 900,000
Fairview School District, Prerefunded
6%, 2/15/2000 (Escrowed in; U.S. Government
Securities and Insured; FGIC) 800,000 909,675
Lehigh County Industrial Development Authority,
PCR, VRDN (Allegheny Electric Co-Op)
3.55% (LOC; Rabobank Nederland)a 120,000 120,000
Moon Industrial Development Authority, IDR, VRDN
(Executive Office Association Project)
4.05% (LOC; PNC Bank)a 1,250,000 1,250,000
Pennsylvania Turnpike Commission, Revenue, Refunding
5%, Series O, 12/1/1999 (Insured; FGIC) 1,000,000 1,010,739
Quakertown General Authority, Revenue,
VRDN (Pooled Financing Program)
4%, Series A (LOC; PNC Bank)a 440,000 440,000
Quakertown Hospital Authority, HR,
VRDN (HPS Group Pooled Financing Project)
4% (LOC; First National Bank of Chicago)a 8,800,000 8,800,000
State Public School Building Authority, College Revenue,
Prerefunded (Harrisburg Area Community College)
6.90%, 10/1/1999 (Escrowed in; U.S. Government
Securities) 1,000,000 1,025,277
Texas--10.2%
Brownsville, Utility Systems Revenue, CP
2.80%, Series A, 5/14/1999
(LOC; Toronto-Dominion Bank) 2,425,000 2,425,000
Comal County Health Facilities Development
Corporation, Health Care Systems Revenue, VRDN
(McKenna) 3.15% (LOC; Chase Manhattan Bank)a 3,000,000 3,000,000
Dallas Area Rapid Transportation, Sales Tax Revenue, CP
3.10%, 8/12/1999 (LOC: Bayerische Landesbank,
Union Bank of Switzerland and WestDeutsche
Landesbank) 10,000,000 10,000,000
Dallas Industrial Development Corporation, IDR,
VRDN (Sealed Power Corp.)
3.20% (LOC; National Bank of Detroit)a 1,100,000 1,100,000
North Texas Higher Education Authority Inc.,
Student Loan Revenue, Refunding, VRDN
4.10%, Series A (BPA; Student Loan Marketing
Association and Insured; AMBAC)a 2,000,000 2,000,000
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Principal
Tax Exempt Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Texas (continued)
Nueces County Health Facilities Development
Corporation, Revenue, VRDN
(Driscoll Childrens Foundation) 4.05%
(LOC; Bank One)a 2,395,000 2,395,000
Rockwall Industrial Development Corporation, IDR,
VRDN (Columbia Extrusion Corp.)
4.15% (LOC; U.S. National Bank of Oregon)a 2,285,000 2,285,000
Texas Municipal Power Agency, Revenue, Refunding:
7%, 9/1/1999 (Insured; FGIC) 745,000 754,051
Prerefunded 7%, 9/1/1999 (Escrowed in;
U.S. Government Securities and Insured; FGIC) 500,000 515,969
Utah--3.7%
State of Utah, CP 3%, Series B, 5/11/1999
(LOC; Toronto-Dominion Bank) 6,300,000 6,300,000
City of West Jordan, TRAN 3.90%, 6/30/1999 2,500,000 2,500,000
Virginia--3.6%
Campbell County Industrial Development Authority,
Exempt Facility Revenue, VRDN
(Hadson Power 12) 4.40%, Series A
(LOC; Barclays Bank)a 5,200,000 5,200,000
Halifax County Industrial Development Authority,
IDR, VRDN (Annin and Co. Project)
3.75% (LOC; Chase Manhattan Bank)a 1,875,000 1,875,000
Virginia Small Business Financing Authority,
IDR, VRDN (Coral Graphic)
4.15% (LOC; Chase Manhattan Bank)a 1,500,000 1,500,000
Washington--.9%
Port Seattle Industrial Development Corporation,
Revenue, Refunding, VRDN (Sysco Food Service
Project) 4.05%a 1,000,000 1,000,000
Washington Health Care Facilities Authority,
Revenue (Multi-Care Health Systems)
4%, 8/15/1999 (Insured; MBIA) 1,230,000 1,231,041
Wyoming--1.0%
Green River, PCR, Revenue, Refunding,
VRDN (Rhone Poulenc Inc. Project)
4.30% (LOC; ABN-Amro Bank)a 2,300,000 2,300,000
- --------------------------------------------------------------------------------------------------
Total Investments (cost $238,300,346) 99.7% 238,300,346
Cash and Receivables (Net) .3% 628,261
Net Assets 100.0% 238,928,607
</TABLE>
The Fund 11
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Summary of Abbreviations
<S> <C> <C> <C>
AMBAC American Municipal Bond LOC Letter of Credit
Assurance Corporation MBIA Municipal Bond Investors Assurance
BPA Bond Purchase Agreement Insurance Corporation
COP Certificate of Participation MFHR Multi-Family Housing Revenue
CP Commercial Paper MFMR Multi-Family Mortgage Revenue
EDR Economic Development Revenue PCR Pollution Control Revenue
FGIC Financial Gauranty Insurance Company SBPA Standby Bond Purchase Agreement
FNMA Federal National Mortgage Association SFMR Single Family Mortgage Revenue
FSA Financial Security Assurance TRAN Tax and Revenue Anticipation Notes
HR Hospital Revenue VRDN Variable Rate Demand Notes
IDR Industrial Development Revenue
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Summary of Combined Ratings
Moody's or Standard & Poor's Value (%)
- --------------------------------------------------------------------------------
<S> <C> <C>
VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 81.3
Aaa/Aab AAA/AAb 17.0
Not Ratedc Not Ratedc 1.7
100.0
<FN>
a Securities payable on demand. Variable interest rate--subject to periodic change.
b Notes which are not MIG or SP rated are represented by bond ratings of the issuers.
c Securities which, while not rated by Moody's and Standard & Poor's have been
determined by the Manager to be of comparable quality to those rated securities in
which the Fund may invest.
See notes to financial statements.
</FN>
</TABLE>
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of Investments 238,300,346 238,300,346
Interest receivable 1,201,269
239,501,615
- -------------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 116,963
Due to Distributor 67
Cash overdraft due to Custodian 455,809
Interest payable--Note 3 169
573,008
- -------------------------------------------------------------------------------------------------
Net Assets ($) 238,928,607
- -------------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 238,936,954
Accumulated net realized gain (loss) on investments (8,347)
- -------------------------------------------------------------------------------------------------
Net Assets ($) 238,928,607
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Net Asset Value Per Share
Investor Class R
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Assets ($) 27,910,602 211,018,005
Shares Outstanding 27,912,612 211,023,739
- -------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($) 1.00 1.00
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Investment Income ($)
- ---------------------------------------------------------------------------------------------
<S> <C>
Income
Interest Income 4,133,948
Expenses:
Management fee--Note 2(a) 659,614
Distribution fees (Investor Shares)--Note 2(b) 26,875
Interest expense--Note 3 5,677
Total Expenses 692,166
Investment Income--Net,
representing net increase in net assets resulting from operations 3,441,782
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net, representing net increase
in net assets resulting from operations 3,441,782 7,399,745
- -------------------------------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Investor shares (327,870) (715,181)
Class R shares (3,113,912) (6,723,392)
Net realized gain on investments:
Investor shares -- (6,024)
Class R shares -- (62,009)
Total Dividends (3,441,782) (7,506,606)
- -------------------------------------------------------------------------------------------------------------------
Capital Stock Transactions ($1.00 per share):
Net proceeds from shares sold:
Investor shares 56,649,417 109,466,877
Class R shares 538,082,988 631,394,198
Dividends reinvested:
Investor shares 306,071 681,448
Class R shares 587,176 1,649,472
Cost of shares redeemed:
Investor shares (56,346,124) (102,321,618)
Class R shares (555,290,949) (599,466,760)
Increase (Decrease) in Net Assets from
Capital Stock Transactions (16,011,421) 41,403,617
Total Increase (Decrease) in Net Assets (16,011,421) 41,296,756
- -------------------------------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 254,940,028 213,643,272
End of Period 238,928,607 254,940,028
</TABLE>
See notes to financial statements.
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for
a single Fund share. "Total return" shows how much your investment in the
Fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1999 -------------------------------------------
Investor Shares (Unaudited) 1998 1997 1996 1995 1994 a
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .012 .029 .030 .029 .032 .012
Distributions:
Dividends from investment
income--net (.012) (.029) (.029) (.029) (.032) (.012)
Dividends from net realized
gain on investments -- (.000) b (.001) -- -- --
Total Distributions (.012) (.029) (.030) (.029) (.032) (.012)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------
Total Return (%) 2.44 c 3.00 3.00 2.96 3.28 1.23 d
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .70 c .70 .72 .70 .70 .70 c
Ratio of net investment income
to average net assets 2.44 c 2.90 2.92 2.92 3.33 2.11 c
- ------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 27,911 27,301 19,486 14,074 17,764 1,161
</TABLE>
a The Fund commenced selling Investor Shares on April 20, 1994.
b Amount represents less than $.001 per share.
c Annualized.
d Not annualized.
See notes to financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1999 -------------------------------------------
Class R Shares (Unaudited) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .013 .031 .032 .031 .034 .023
Distributions:
Dividends from investment
income--net (.013) (.031) (.031) (.031) (.034) (.023)
Dividends from net realized
gain on investments -- (.000) a (.001) -- -- --
Total Distributions: (.013) (.031) (.032) (.031) (.034) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------
Total Return (%) 2.64 b 3.21 3.21 3.17 3.48 2.29
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .50 b .50 .52 .50 .50 .51 c
Ratio of net investment income
to average net assets 2.63 b 3.11 3.10 3.11 3.41 2.30
- ------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 211,018 227,639 194,158 221,178 205,373 205,105
<FN>
a Amount represents less than $.001 per share.
b Annualized.
c Annualized expense ratio before expenses reimbursed by the investment adviser
for the year ended October 31, 1994 was .61%.
See notes to financial statements.
</FN>
</TABLE>
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Municipal Reserves (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 seek income exempt from federal income tax consistent with
stability of principal by investing in tax-exempt municipal obligations. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares. The Fund is authorized to issue 1 billion shares of
$.001 par value Capital Stock in each of the following classes of shares:
Investor and Class R. Investor shares are sold primarily to retail
investors and bear a distribution fee. Class R shares are sold primarily to
bank trust departments and other financial service providers (including Mellon
Bank and its affiliates) acting on behalf of customers having a qualified trust
or investment account or relationship at such institution, and bear no
distribution fee. Each class of shares has identical rights and
privileges, except with respect to the distribution fee and voting rights
on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses)
and realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets of each class.
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
18
<PAGE>
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) 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
of 1986, as amended (the "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.
(d) Federal income taxes: It is the policy of the Fund to continue to qualify
as a regulated investment company, which can distribute tax exempt dividends,
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.
The Fund has an unused capital loss carryover of approximately $8,300
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1998. If not
applied, the carryover expires in 2005.
At April 30, 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).
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 .50% 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 manage-
20
<PAGE>
ment fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Directors.
(b) Distribution plan: Under the Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, Investor shares may pay annually up to
..25% of the value of the average daily net assets attributable to its
Investor shares to compensate the Distributor and Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities primarily intended to result in
the sale of Investor shares. The Class R shares bear no distribution fee.
During the period April 30, 1999, the Investor shares were charged $26,875
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 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 in 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.
The average amount of borrowings outstanding during the period ended April
30, 1999 was approximately $218,200 with a related weighted average
annualized interest rate of 5.25%.
The Fund 21
<PAGE>
For More Information
Dreyfus
Municipal Reserves
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999, Dreyfus Service Corporation 324/724SA994
Dreyfus
U.S. Treasury
Reserves
SEMIANNUAL REPORT
April 30, 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>
Contents
The Fund
- ---------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
7 Statement of Assets and Liabilities
8 Statement of Operations
9 Statement of Changes in Net Assets
10 Financial Highlights
12 Notes to Financial Statements
For More Information
- ---------------------------------------
Back Cover
<PAGE>
Dreyfus U.S. Treasury
Reserves
The Fund
Letter From The President
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus U.S. Treasury
Reserves, covering the six-month period from November 1, 1998 through April 30,
1999. Inside, you'll find valuable information about how the Fund was managed
during the reporting period, including a discussion with the Fund's portfolio
manager, David Hertan.
Yields on money market securities generally declined over the reporting period
in response to the Federal Reserve Board's decision in the fall of 1998 to ease
monetary policy. While the U.S. economy has continued to grow, the Federal
Reserve was concerned about persistent economic weakness abroad. Their adoption
of lower short-term interest rates was intended to stimulate not just domestic
economic growth, but the economies of other nations as well. Despite lower
nominal interest rates for most money market funds, very low inflation continued
to support above-average real returns, which are nominal yields less the rate of
inflation.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus U.S. Treasury Reserves.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
David Hertan, Portfolio Manager
How did Dreyfus U.S. Treasury Reserves perform
during the period?
For the six-month period ended April 30, 1999, Dreyfus U.S. Treasury Reserves'
Investor shares produced an annualized yield of 4.16% ,while its Class R shares
produced an annualized yield of 4.37%. After taking into account the effect of
compounding, the annualized effective yields for the Investor and Class R shares
were 4.24% and 4.46%, respectively.1
The Fund's Investor shares provided a total return of 2.08%,2 compared to the
Lipper U.S. Treasury Money Market Funds category average total return of 2.03%
for the same time period.3 The Fund's Class R shares provided a total return of
2.19%,2 compared to the Lipper Institutional U.S. Treasury Money Market Funds
category average total return of 2.19% for the same period.3 We attribute the
Fund's competitive returns to its emphasis on securities with longer maturity
dates as well as its holdings in repurchase agreements during the period.
What is the Fund's investment approach?
As a U.S. Treasury money market fund, our goal is to provide shareholders with
an investment vehicle that is made up of Treasury bills and notes issued by the
United States government as well as repurchase agreements with securities
dealers which are backed by U.S. Treasuries. A major benefit of these securities
is that they are very liquid in nature; that is, they can be converted to cash
quickly. Because U.S. Treasury bills and notes are backed by the full faith and
credit of the U.S. government, they are generally considered to be among the
highest-quality investments available. By investing in these obligations, the
Fund seeks to add an incremental degree of safety to the portfolio. The Fund is
also required to maintain an average dollar- weighted portfolio maturity of 90
days or less.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
During the past six months, the returns offered by U.S. Treasury securities,
such as those held in this Fund, declined. That's because interest rates, which
generally determine the returns for these types of investments, also declined
during the period. For example, last November, the Federal Reserve Board lowered
short-term interest rates to 4.75%, a move that came on the heels of two other
back-to-back cuts. The Fed trimmed rates primarily in response to the global
financial crisis that took place in September and October. Their action was an
attempt to stimulate what it believed was going to be slower domestic economic
growth. However, to the surprise of many industry analysts, the U.S. economy
exhibited strong growth during both the fourth quarter of 1998 and the first
quarter of 1999.
With short-term interest rates trending downward during the period, it gave even
greater importance to a key aspect of our investment strategy: managing the
portfolio's average maturity. By actively managing maturity, we attempt to
increase income and preserve or enhance return.
We were able to lock in higher returns by owning longer-term U.S. Treasury bills
and notes. This decision proved beneficial as interest rates moved lower. As of
the end of the reporting period, the Fund's average maturity was 42 days.
What other factors influenced the Fund's performance?
We invest in U.S. Treasury bills and notes as well as repurchase agreements with
securities dealers which are backed by U.S. Treasuries. During the period, the
largest portion of the Fund's assets were invested in repurchase agreements.
Commonly referred to as repos, repurchase agreements are overnight or short-term
loans to government dealers that are collateralized with U.S. Treasuries. The
primary purpose of investing in repos is to provide liquidity to the Fund.
However, because their rates were higher than comparable maturity T-bills during
the reporting period, they generated a higher return. Accordingly, we allocated
approximately 50% of the portfolio's assets to repos, a move that provided
attractive returns for the Fund.
4
<PAGE>
What is the Fund's current strategy?
We feel confident that our strategy of managing maturity as a way to attempt to
add incremental yield to the portfolio is a prudent one. We will also continue
to take advantage of the higher yields associated with repurchase agreements,
wherever possible.
We believe we've created a portfolio that is conservative in nature and can
provide investors with a competitive level of income, liquidity and preservation
of capital.
May 13, 1999
1 Annualized effective yield is based upon dividends declared daily and
reinvested monthly. An investment in the Fund is not insured or guaranteed by
the FDIC or any other government agency. Although the Fund seeks to preserve
the value of your investment at $1.00 per share, it is possible to lose money
by investing in the Fund, but also has the potential to make money.
2 Total return includes reinvestment of dividends.
3 Source: Lipper Analytical Services, Inc.
The Fund 5
<PAGE>
STATEMENTS OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--29.3% Purchase (%) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
5/6/1999 4.39 200,000,000 199,878,056
(cost $199,878,056)
- -----------------------------------------------------------------------------------------
U.S. Treasury Notes--23.6%
6.25%, 5/31/1999 5.45 30,000,000 30,016,262
6.00%, 8/15/1999 5.01 45,000,000 45,116,310
5.875%, 11/15/1999 4.56 15,000,000 15,090,844
5.625%, 11/30/1999 4.53 40,000,000 40,205,481
7.75%, 12/31/1999 4.53 10,000,000 10,194,724
8.50%, 2/15/2000 4.53 20,000,000 20,577,444
Total U.S. Treasury Notes
(cost $161,201,065) 161,201,065
- -----------------------------------------------------------------------------------------
Repurchase Agreements--46.6%
- -----------------------------------------------------------------------------------------
Lehman Brothers Inc.
dated 4/30/1999, due 5/3/1999 in the amount of
$157,378,581 (fully collateralized by
$121,440,000 U. S. Treasury Bonds,
6.375% to 12.00%, due from 8/15/2002 to
8/15/2013, value $162,198,102) 4.85 157,315,000 157,315,000
SBC Warburg Dillon Read, Inc.
dated 4/30/1999, due 5/3/1999 in the amount of
$160,065,067 (fully collateralized by
$125,178,000 U. S. Treasury Bonds
8.00%, due 11/15/2021, $161,870,801) 4.88 160,000,000 160,000,000
Total Repurchase Agreements
(cost $317,315,000) 317,315,000
- -----------------------------------------------------------------------------------------
Total Investments (cost $678,394,121) 99.5% 678,394,121
Cash and Receivables (Net) .5% 3,716,450
Net Assets 100.0% 682,110,571
</TABLE>
See notes to financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Cost Value
- -----------------------------------------------------------------------------------------
Assets ($):
<S> <C> <C>
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $317,315,000)
--Note 1(c) 678,394,121 678,394,121
Cash 673,722
Interest receivable 3,342,602
682,410,445
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 299,867
Due to Distributor 7
299,874
Net Assets ($) 682,110,571
Composition of Net Assets ($):
Paid-in capital 682,144,521
Accumulated net realized gain (loss) on investments (33,950)
Net Assets ($) 682,110,571
- ------------------------------------------------------------------------------------------
Net Asset Value Per Share
Investor Shares Class R Shares
Net Assets ($) 103,023,389 579,087,182
Shares Outstanding 103,034,498 579,110,022
Net Asset Value Per Share ($) 1.00 1.00
</TABLE>
See notes to financial statements.
The Fund 7
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Investment Income ($)
- -----------------------------------------------------------------------------------------
<S> <C>
Income
Interest Income 17,412,178
Expenses:
Management fee--Note 2(a) 1,785,652
Distribution fees (Investor Shares)--Note 2(b) 122,643
Total Expenses 1,908,295
Investment Income--Net 15,503,883
Net Realized Gain (Loss) on Investments--Note 1(b) 4,937
Net Increase in Net Assets Resulting From Operations 15,508,820
See notes to financial statements.
</TABLE>
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net 15,503,883 34,970,313
Net realized gain (loss) on investments 4,937 (38,887)
Net Increase (Decrease) in Net Assets
Resulting from Operations 15,508,820 34,931,426
- ------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Investor shares (2,555,138) (7,119,905)
Class R shares (12,948,745) (27,850,408)
Net realized gain on investments:
Investor shares -- (4,910)
Class R shares -- (18,455)
Total Dividends (15,503,883) (34,993,678)
- ------------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Investor shares 428,491,123 771,417,738
Class R shares 899,037,511 1,786,812,396
Dividends reinvested:
Investor shares 2,504,675 2,712,741
Class R shares 11,450,694 24,906,286
Cost of shares redeemed:
Investor shares (443,592,474) (771,398,333)
Class R shares (945,461,304) (1,719,791,151)
Increase (Decrease) in Net Assets from Capital Stock
Transactions (47,569,775) 94,659,677
Total Increase (Decrease) in Net Assets (47,564,838) 94,597,425
- ------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 729,675,409 635,077,984
End of Period 682,110,571 729,675,409
</TABLE>
See notes to financial statements.
The Fund 9
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single Fund share. "Total return" shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived from
the Fund's financial statements.
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
1999 Year Ended October 31,
Investor Shares (Unaudited) 1998 1997 1996 1995 1994a
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .021 .048 .048 .046 .049 .020
Distributions:
Dividends from investment
income--net (.021) (.048) (.048) (.046) (.049) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total Return (%) 4.19b 4.95 4.89 4.74 5.02 1.96c
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .70b .70 .70 .70 .70 .70b
Ratio of net investment income
to average net assets 4.17b 4.85 4.81 4.64 4.92 3.42b
Net Assets, end of period
($ x 1,000) 103,023 115,622 112,900 21,826 21,386 1,324
<FN>
a The Fund commenced selling Investor shares on April 18, 1994.
b Annualized.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
1999 Year Ended October 31,
Class R Shares (Unaudited) 1998 1997 1996 1995 1994a
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .022 .050 .050 .048 .051 .033
Distributions:
Dividends from investment
income--net (.022) (.050) (.050) (.048) (.051) (.033)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total Return (%) 4.42a 5.16 5.10 4.94 5.23 3.37
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .50a .50 .50 .50 .50 .50b
Ratio of net investment income
to average net assets 4.38a 5.03 4.98 4.79 5.14 3.62
Net Assets, end of period
($ x 1,000) 579,087 614,053 522,178 464,303 399,873 228,797
<FN>
a Annualized.
b Annualized expense ratio before expenses reimbursed by the investment
adviser for the year ended October 31, 1994
was .59%.
</FN>
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus U.S. Treasury Reserves (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 seek a high level of current income consistent with stability of principal by
investing in high-grade money market instruments. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Fund is authorized to issue 1 billion shares of $.001 par
value Capital Stock in each of the following classes of shares: Investor and
Class R. Investor shares are sold primarily to retail investors and bear a
distribution fee. Class R shares are sold primarily to bank trust departments
and other financial service providers (including Mellon Bank and its affiliates)
acting on behalf of customers having a qualified trust or investment account or
relationship at such institution, and bear no distribution fee. Each class of
shares has identical rights and privileges, except with respect to the
distribution fee and voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class. 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 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.
12
<PAGE>
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,
adjusted for amortization of premiums and discounts on investments, 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
The Fund 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
on a more frequent basis to comply with the distribution requirements of the
Internal Revenue Code of 1986, as amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $39,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1998. If not applied, the
carryover expires in fiscal 2006.
At April 30, 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 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 .50% 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, service fees and expenses, fees
and expenses of non-interested Directors (including counsel fees) and
extraordinary expenses. In addition, the
14
<PAGE>
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.
(b) Distribution plan: Under the Fund's Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act relating to its Investor shares, the Fund
may pay annually up to .25% of the value of the average daily net assets
attributable to its Investor shares to compensate the Distributor and Dreyfus
Service Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities primarily intended to result in
the sale of Investor shares. The Class R shares bear no distribution fee. During
the period April 30, 1999, Investor shares were charged $122,643 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 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 in any agreement
related to the Plan.
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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, 1999, the Fund did not
borrow under the line of credit.
16
<PAGE>
The Fund 17
<PAGE>
For More Information
Dreyfus
U.S. Treasury Reserves
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999, Dreyfus Service Corporation 326/726SA994
Dreyfus Premier
Balanced Fund
SEMIANNUAL REPORT
April 30, 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>
CONTENTS
The Fund
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
14 Statement of Financial Futures
15 Statement of Assets and Liabilities
16 Statement of Operations
17 Statement of Changes in Net Assets
19 Financial Highlights
23 Notes to Financial Statements
FOR MORE INFORMATION
- --------------------
Back Cover
<PAGE>
The Fund
Dreyfus Premier
Balanced Fund
lETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Balanced
Fund, covering the six-month period from November 1, 1998 through
April 30, 1999. Inside, you'll find valuable information about how the
Fund was managed during the reporting period, including a discussion with
the Fund's portfolio managers, Ron Gala and Laurie Carroll.
On the equity side, the past six months have been rewarding for many investors.
Strong economic growth, low inflation and high levels of consumer spending
supported continued strength in the stocks of many large companies. As a result,
several major market indices set new records, including the Dow Jones Industrial
Average's first-ever close above the 10,000 level. The broader S&P 500 Index and
the technology- laden NASDAQ Index also recorded new highs.
Through much of the reporting period the stock market's advance remained
relatively narrow, confined to a handful of highly valued growth and technology
stocks. However, in April, some previously out-of-favor market sectors rallied
strongly, including large-cap value stocks as well as small- and mid-cap stocks.
Fixed-income securities provided mixed results in this economic climate. While
U.S. Treasury securities rallied strongly last summer when stocks and other
types of bonds fell, they subsequently lost most of their gains. Other types of
bonds performed well, however, as investors shifted assets back into bond market
sectors they had previously avoided. Accordingly, many corporate bonds,
mortgage-backed securities, asset-backed securities and U.S. dollar-denominated
foreign bonds provided attractive returns over the reporting period.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Premier Balanced Fund.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
Ron Gala and Laurie Carroll, Portfolio Managers
How did Dreyfus Premier Balanced Fund perform
relative to its benchmark?
For the six-month period ended April 30, 1999, Dreyfus Premier Balanced Fund
produced a total return of 12.38%, 11.98%, 11.94% and 12.53% for its Class A,
Class B, Class C, and Class R shares respectively. 1 These returns are modestly
below those provided by the Fund's benchmark, a hybrid index, which is composed
of 60% Standard & Poor's 500 Composite Stock Price Index2 ("S&P 500") and 40%
Lehman Brothers Intermediate Government/Corporate Bond Index 3 ("Intermediate
Index"), which returned 13.59% for the same time period.
We attribute the Fund's strong performance to two factors. First, gains within
the equity component boosted performance. Second, we made timely shifts in the
Fund's equity and fixed-income allocations, thereby capitalizing on
opportunities within both areas.
What is the Fund's investment approach?
The Fund is a balanced Fund, with a "neutral" allocation of 60% stocks and 40%
bonds. However, the Fund is permitted to invest up to 75%, and as little as 40%,
of its total assets in stocks, and up to 60%, and as little as 25%, of its total
assets in bonds. When allocating assets between stocks and bonds, we assess the
relative return and risks of each asset class using a model that analyzes
several factors, including interest- rate adjusted price/earnings ratios, the
valuation and volatility levels of stocks relative to bonds, and economic
factors such as interest rates.
When selecting stocks for the portfolio, we use a valuation model that
identifies and ranks stocks within an industry or sector based on its value,
growth and financial profile. Then, we attempt to manage risk by diversifying
across companies and industries and by maintaining risk characteristics -- such
as growth, size, quality and yield -- that are similar to those of the S&P 500.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
When choosing bonds for the portfolio, we review economic, market and other
factors to measure valuations by sector, maturity and credit quality. The Fund's
bond component consists primarily of investment-grade domestic and foreign bonds
that are issued by corporations and governments. Its dollar-weighted average
maturity normally will not exceed 10 years.
What other factors influenced the Fund's performance?
The equity portion of the Fund's portfolio benefited from its holdings in some
of the best performing companies in the S&P 500, most notably America Online and
Microsoft. These two stocks are credited with producing a full third of the
index's advance in the first quarter of 1999. In addition, our holdings within
the consumer cyclicals sector, including Ford Motor, Chrysler and Wal-Mart
Stores, provided solid returns for the Fund. The Fund's utility stocks also
performed well, especially those related to the telecommunications industry,
including MCI WorldCom. On the other hand, several stocks within the basic
industries and consumer staples areas disappointed.
Our best fixed-income returns came from corporate bonds and asset-backed
securities, while our U.S. Treasury holdings produced modest returns. That's
because when the Federal Reserve Board trimmed short-term interest rates by a
total of three-quarters of a percentage point last fall, it caused bond prices,
which move inversely to interest rates, to rise. While U.S. Treasuries did not
perform as well as the portfolio's other bonds during the period, we currently
intend to continue to maintain a fairly large percentage of the Fund's assets in
these investments for liquidity purposes; that is to maintain ready access to
cash so that we can quickly take advantage of new investment opportunities.
4
<PAGE>
What is the Fund's current strategy?
We believe that the stock market is overvalued. Early in 1999, we shifted a
portion of the Fund's assets out of stocks, choosing instead to deploy those
assets into bonds, a move that positioned the portfolio more defensively. As of
April 30, 1999, approximately 42% of the Fund's assets were allocated to common
stock, 54% to Bonds and Notes, with 4% in cash equivalents. 4 This represents a
notable shift from the portfolio's stance at the end of 1998, at which time
approximately 58% of the portfolio's assets were invested in stocks, 36%
invested in bonds and 6% invested in cash equivalents. Going forward, we may
make further allocation shifts as market conditions dictate.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in
the case of Class A shares, or the applicable contingent deferred sales
charge imposed on redemptions in the case of Class B and Class C shares.
2 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.
3 SOURCE: LEHMAN BROTHERS-The Lehman Brothers Intermediate Government/
Corporate Bond Index is a widely accepted unmanaged index of government and
corporate bond market performance composed of U.S. Government, Treasury and
agency securities, fixed-income securities and nonconvertible
investment-grade corporate debt, with an average maturity of 1-10 years.
Reflects reinvestment of dividends and capital gains.
4 These asset allocations include future positions held by the Fund.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Common Stocks--50.9% Shares Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries--1.5%
Centex 18,650 681,891
Dow Chemical 18,600 2,440,087
Georgia-Pacific Group 33,900 3,135,750
USG 14,000 817,250
Union Carbide 42,950 2,228,031
9,303,009
Capital Spending-13.7%
America Online 37,000 a 5,281,750
Applied Materials 10,200 a 546,975
BMC Software 57,100 a 2,458,869
Boeing 42,800 1,738,750
Cisco Systems 44,900 a 5,121,406
Compuware 43,800 a 1,067,625
Dell Computer 116,200 a 4,785,988
EMC 25,850 a 2,816,034
General Dynamics 33,200 2,332,300
General Electric 60,550 6,388,025
Hewlett-Packard 44,500 3,509,938
Ingersoll-Rand 33,000 2,283,188
Intel 168,250 10,294,797
International Business Machines 13,800 2,886,788
Lexmark International Group, Cl. A 28,650 a 3,538,275
Lucent Technologies 96,900 5,826,113
Microsoft 164,050 a 13,339,316
Oracle 117,400 a 3,177,137
Sundstrand 4,000 287,000
Tellabs 20,100 a 2,202,206
Tyco International 31,550 2,563,438
USWeb 46,250 a 1,037,734
83,483,652
Consumer Cyclical-7.1%
Federal-Mogul 18,200 798,525
Federated Department Stores 28,200 a 1,316,587
Ford Motor 86,750 5,546,578
Fox Entertainment Group, Cl. A 40,850 1,046,781
Gannett 40,800 2,889,150
Gap 52,850 3,517,828
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclical (continued)
General Motors 24,850 2,210,097
Infinity Broadcasting, Cl. A 79,350 2,197,003
K mart 61,150 a 909,606
Mattel 51,150 1,323,506
NIKE, Cl. B 21,700 1,349,469
Safeway 58,700 a 3,166,131
Staples 47,250 a 1,417,500
TJX Cos. 101,250 3,372,891
Time Warner 24,000 1,680,000
Tommy Hilfiger 18,400 a 1,285,700
Tribune 11,700 976,219
Wal-Mart Stores 186,100 8,560,600
43,564,171
Consumer Staples-4.2%
Anheuser-Busch Cos. 15,700 1,148,063
Coca-Cola 37,200 2,529,600
Eastman Kodak 31,900 2,380,537
IBP 34,500 698,625
Kimberly-Clark 62,500 3,832,031
Philip Morris Cos. 79,950 2,803,247
Procter & Gamble 57,350 5,380,147
Ralston-Purina Group 63,900 1,948,950
Sara Lee 85,750 1,907,938
Unilever, N.V. (New York Shares) 45,750 2,970,891
25,600,029
Energy-3.4%
Chevron 17,150 1,710,712
Coastal 50,650 1,937,363
Diamond Offshore Drilling 22,700 750,519
El Paso Energy 32,100 1,179,675
Exxon 100,950 8,385,159
Royal Dutch Petroleum (New York Shares) 61,200 3,591,675
Sunoco 31,750 1,135,063
Transocean Offshore 35,350 1,049,453
UtiliCorp United 38,300 935,956
20,675,575
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care-5.9%
Abbott Laboratories 127,850 6,192,734
Amgen 74,650 a 4,586,309
Biomet 32,800 1,344,800
Bristol-Myers Squibb 85,850 5,456,841
Immunex 15,700 a 1,499,350
Johnson & Johnson 64,150 6,254,625
Lilly (Eli) 21,900 1,612,388
Schering-Plough 99,450 4,804,678
Warner-Lambert 36,650 2,489,909
Wellpoint Health Networks 21,650 a 1,520,913
35,762,547
Interest Sensitive-8.9%
Allstate 90,200 3,281,025
Ambac Financial Group 20,100 1,213,537
American Express 10,500 1,372,219
Bank One 60,300 3,557,700
BankAmerica 41,650 2,998,800
BankBoston 23,400 1,146,600
Chase Manhattan 77,250 6,392,437
Citigroup 77,200 5,809,300
Comerica 38,900 2,530,931
Edwards (A.G.) 19,250 673,750
Federal National Mortgage Association 51,700 3,667,469
Fleet Financial Group 72,450 3,119,878
Golden West Financial 12,600 1,261,575
Jefferson-Pilot 15,350 1,034,206
MBNA 45,800 1,290,988
MGIC Investment 21,050 1,022,241
Merrill Lynch 24,700 2,073,256
Morgan Stanley Dean Witter & Co. 29,850 2,960,747
SLM Holding 58,150 2,482,278
SunTrust Banks 29,650 2,119,975
Transamerica 12,600 897,750
UnionBanCal 23,200 791,700
XL Capital, Cl. A 37,650 2,284,884
53,983,246
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Mining & Metals-.5%
Alcoa 32,700 2,035,575
USX-U.S. Steel Group 26,350 797,088
2,832,663
Transportation-.5%
Burlington Northern Santa Fe 34,500 1,263,562
Delta Air Lines 24,000 1,522,500
2,786,062
Utilities-5.2%
AT&T 32,850 1,658,925
AirTouch Communications 49,950 a 4,664,081
Ameren 30,250 1,170,297
Ameritech 103,750 7,100,391
BellSouth 110,350 4,938,162
Consolidated Edison 37,150 1,688,003
FPL Group 41,450 2,336,744
MCI WorldCom 90,150 a 7,409,203
Pinnacle West Capital 20,400 791,775
31,757,581
Total Common Stocks
(cost $254,727,862) 309,748,535
- ------------------------------------------------------------------------------------------
Principal
Bonds and Notes-44.7% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------
Finance-7.5%
ABN Amro Bank, N.V., Sub. Notes,
7.55%, 6/28/2006 700,000 740,120
American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 2,500,000 2,553,212
Associates, N.A., Sr. Notes,
6.25%, 11/1/2008 2,000,000 1,984,460
Atlantic Richfield, Notes,
5.55%, 4/15/2003 5,000,000 4,972,055
Bank One, Sub. Notes,
6%, 2/17/2009 2,000,000 1,937,218
BankAmerica, Sr. Notes,
5.875%, 2/15/2009 3,000,000 2,886,906
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Finance (continued)
Chase Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-3, Cl. A,
6%, 8/15/2005 5,000,000 5,042,500
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 4,500,000 4,477,747
Citigroup, Sr. Notes,
6.60%, 8/1/2000 2,000,000 2,023,910
General Motors Acceptance, Notes,
6.625%, 10/1/2002 2,000,000 2,042,500
Household Finance:
Notes,
6.75%, 6/1/2000 2,000,000 2,027,394
Sr. Unsub.,
5.875%, 2/1/2009 2,000,000 1,907,100
International Lease Finance, Notes,
5.625%, 5/1/2002 5,000,000 4,997,400
Merrill Lynch, Notes,
6%, 2/17/2009 2,000,000 1,930,008
Republic New York, Deb.,
9.75%, 12/1/2000 1,000,000 1,060,640
US Bank, Notes,
5.70%, 12/15/2008 3,000,000 2,857,848
Wells Fargo, Sr. Notes,
6.75%, 10/1/2006 2,200,000 2,282,485
45,723,503
Industrial-4.2%
Aesop Funding, Asset Backed Ctfs.,
Ser. 1997-1A, Cl. A2,
6.40%, 10/20/2003 b 2,000,000 2,025,090
BP Amoco, Notes,
6.25%, 10/15/2004 1,500,000 1,531,896
CVS, Notes,
5.50%, 2/15/2004 b 5,000,000 4,916,460
Conoco, Sr. Notes,
5.90%, 4/15/2004 5,000,000 4,973,290
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002 3,000,000 3,080,532
Monsanto, Notes,
5.375%, 12/1/2001 b 2,900,000 2,873,590
Nordstrom, Sr. Notes,
5.625%, 1/15/2009 3,500,000 3,328,189
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial (continued)
Norfolk Southern, Notes,
6.70%, 5/1/2000 2,000,000 2,020,840
Procter & Gamble, Deb.,
8%, 11/15/2003 1,000,000 1,088,912
25,838,799
Utilities-2.0%
AT&T, Notes,
5.625%, 3/15/2004 4,000,000 3,966,496
MCI WorldCom, Sr. Notes,
6.40%, 8/15/2005 1,250,000 1,257,017
National Rural Utilities, Notes,
5.50%, 1/15/2005 3,000,000 2,934,027
PECO Energy Transition Trust,
Asset Backed Ctfs., Ser. 1999-A, Cl. A2,
5.63%, 3/1/2005 4,000,000 3,980,680
12,138,220
U.S. Government & Agencies-31.0%
Federal Home Loan Bank, Bonds:
5.50%, 7/14/2000 4,100,000 4,113,735
4.875%, 1/26/2001 4,100,000 4,073,186
5.625%, 3/19/2001 4,250,000 4,272,567
5.61%, 6/22/2001 7,700,000 7,739,231
5.125%, 2/26/2002 4,400,000 4,365,020
5.125%, 9/15/2003 2,100,000 2,061,675
Federal Home Loan Mortgage Corp., Notes,
5.75%, 3/15/2009 3,400,000 3,361,954
Federal National Mortgage Association:
Medium-Term Notes:
5.10%, 9/25/2000 5,000,000 4,993,050
6.64%, 7/2/2007 2,000,000 2,089,910
Notes:
5.25%, 1/15/2003 3,000,000 2,972,067
5.75%, 6/15/2005 5,000,000 5,023,215
5.25%, 1/15/2009 5,000,000 4,769,150
U.S. Treasury Bonds:
11.625%, 11/15/2002 500,000 600,840
12.375%, 5/15/2004 5,000,000 6,529,250
U.S. Treasury Notes:
5.125%, 8/31/2000 4,170,000 4,175,755
6.25%, 8/31/2000 5,710,000 5,799,990
6.125%, 9/30/2000 5,200,000 5,274,828
5.75%, 10/31/2000 4,550,000 4,597,138
5.625%, 11/30/2000 3,200,000 3,227,392
</TABLE>
The Fund 11
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government & Agencies (continued)
U.S. Treasury Notes (continued):
5.25%, 1/31/2001 5,200,000 5,215,860
5.625%, 2/28/2001 3,000,000 3,028,440
6.25%, 4/30/2001 3,000,000 3,065,670
5.625%, 5/15/2001 5,000,000 5,050,900
6.625%, 6/30/2001 4,000,000 4,122,080
6.625%, 7/31/2001 5,000,000 5,159,350
7.875%, 8/15/2001 5,000,000 5,294,250
6.25%, 10/31/2001 3,900,000 4,001,829
5.875%, 11/30/2001 5,300,000 5,393,916
6.125%, 12/31/2001 3,000,000 3,072,330
6.25%, 2/28/2002 5,000,000 5,139,850
6.625%, 3/31/2002 300,000 311,634
6.625%, 4/30/2002 2,750,000 2,858,817
7.50%, 5/15/2002 2,300,000 2,447,269
6.25%, 8/31/2002 1,500,000 1,545,090
5.875%, 9/30/2002 4,500,000 4,587,885
5.75%, 10/31/2002 4,400,000 4,470,708
5.625%, 12/31/2002 3,000,000 3,038,760
5.50%, 1/31/2003 2,200,000 2,218,282
6.25%, 2/15/2003 5,200,000 5,379,556
5.50%, 2/28/2003 4,000,000 4,033,920
5.50%, 3/31/2003 3,000,000 3,026,040
5.75%, 8/15/2003 2,000,000 2,037,760
5.875%, 2/15/2004 2,200,000 2,257,332
7.25%, 8/15/2004 500,000 544,390
7.875%, 11/15/2004 1,000,000 1,121,050
7.50%, 2/15/2005 2,600,000 2,876,120
5.625%, 2/15/2006 4,000,000 4,052,440
6.875%, 5/15/2006 2,750,000 2,983,008
7%, 7/15/2006 1,500,000 1,639,590
6.25%, 2/15/2007 5,000,000 5,260,250
5.50%, 2/15/2008 2,500,000 2,517,075
4.75%, 11/15/2008 1,000,000 955,620
188,747,024
Total Bonds and Notes
(cost $273,428,332) 272,447,546
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal
Short-Term Investments-7.0% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement-6.6%
Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 4.89% dated 4/30/1999, due
5/3/1999 in the amount of $40,129,346
(fully collateralized by $41,602,000
U.S. Treasury Bonds, 5.50%, 8/15/2028,
value $40,915,945) 40,113,000 40,113,000
U.S. Treasury Bills-.4%
4.30%, 6/24/1999 c
2,600,000 2,582,879
Total Short-Term Investments
(cost $42,696,862) 42,695,879
- -------------------------------------------------------------------------------------------
Total Investments (cost $570,853,056) 102.6% 624,891,960
Liabilities, Less Cash and Receivables (2.6%) (15,837,871)
Net Assets 100.0% 609,054,089
- -------------------------------------------------------------------------------------------
a Non-income producing.
b Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1999, these securities amounted to $9,815,140 or approximately 1.6% of net
assets.
c Held by the custodian in a segregated account as collateral for open
financial futures positions.
See notes to financial statements.
</TABLE>
The Fund 13
<PAGE>
STATEMENT OF FINANCIAL FUTURES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Unrealized
Market Value Appreciation/
Covered by (Depreciation)
Contracts Contracts ($) Expiration at 4/30/99 ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Futures Purchased:
5 Year U.S. Treasury Notes 582 64,683,844 June '99 (147,844)
Financial Futures Sold:
Standard & Poor's 500 182 (60,810,750) June '99 1,012,950
865,106
See notes to financial statements.
</TABLE>
14
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Cost Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities-See Statement of
Investments-Note 1(c) 570,853,056 624,891,960
Cash 4,350,757
Receivable for investment securities sold 38,929,448
Dividends and interest receivable 3,804,617
Receivable for shares of Capital Stock subscribed 2,908,079
Receivable for futures variation margin-Note 1(d) 164,644
675,049,505
- --------------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 522,830
Due to Distributor 136,101
Payable for shares of Capital Stock redeemed 60,352,085
Payable for investment securities purchased 4,984,400
65,995,416
- --------------------------------------------------------------------------------------------------
Net Assets ($) 609,054,089
- --------------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 532,895,325
Accumulated undistributed investment income-net 2,525,754
Accumulated net realized gain (loss) on investments 18,729,000
Accumulated net unrealized appreciation (depreciation)
on investments
(including $865,106 net unrealized appreciation on
financial futures)-Note 3 54,904,010
- --------------------------------------------------------------------------------------------------
Net Assets ($) 609,054,089
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Class B Class C Class R
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets ($) 78,550,416 132,300,909 31,283,445 366,919,319
Shares Outstanding 5,053,670 8,539,866 2,012,623 23,599,952
- ---------------------------------------------------------------------------------------
Net Asset Value Per Share ($) 15.54 15.49 15.54 15.55
See notes to financial statements.
</TABLE>
The Fund 15
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest 6,322,943
Cash dividends (net of $3,669 foreign taxes withheld at source) 1,140,701
Total Income 7,463,644
Expenses:
Management fee-Note 2(a) 2,182,475
Distribution and service fees-Note 2(b) 608,079
Loan commitment fees-Note 4 703
Total Expenses 2,791,257
Investment Income-Net 4,672,387
- -------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments-Note 3:
Net realized gain (loss) on investments 12,169,831
Net realized gain (loss) on financial futures 10,376,745
Net Realized Gain (Loss) 22,546,576
Net unrealized appreciation (depreciation) on investments
[including ($2,764,448) net unrealized (depreciation) on financial futures] 19,074,945
Net Realized and Unrealized Gain (Loss) on Investments 41,621,521
Net Increase in Net Assets Resulting from Operations 46,293,908
See notes to financial statements.
</TABLE>
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -----------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income-net 4,672,387 6,199,838
Net realized gain (loss) on investments 22,546,576 18,170,821
Net unrealized appreciation (depreciation)
on investments 19,074,945 12,885,989
Net Increase (Decrease) in Net Assets
Resulting from Operations 46,293,908 37,256,648
- -----------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income-net:
Class A shares (516,311) (533,044)
Class B shares (534,042) (701,190)
Class C shares (73,344) (70,788)
Class R shares (2,780,303) (4,618,084)
Net realized gain on investments:
Class A shares (2,889,067) (2,098,834)
Class B shares (4,479,684) (4,236,067)
Class C shares (646,144) (300,306)
Class R shares (13,660,063) (20,836,393)
Total Dividends (25,578,958) (33,394,706)
- -----------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 37,593,151 26,608,304
Class B shares 67,841,102 32,650,743
Class C shares 23,412,681 5,817,624
Class R shares 238,519,309 104,742,971
Dividends reinvested:
Class A shares 3,203,163 2,423,236
Class B shares 4,055,318 4,051,465
Class C shares 542,264 282,986
Class R shares 16,417,613 25,416,979
Cost of shares redeemed:
Class A shares (5,456,181) (3,869,815)
Class B shares (5,961,987) (4,536,684)
Class C shares (1,404,053) (415,387)
Class R shares (108,662,967) (73,043,662)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 270,099,413 120,128,760
Total Increase (Decrease) in Net Assets 290,814,363 123,990,702
- ------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 318,239,726 194,249,024
End of Period 609,054,089 318,239,726
Undistributed investment income-net 2,525,754 1,757,367
See notes to financial statements.
</TABLE>
The Fund 17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions:
Class A
Shares sold 2,451,874 1,865,888
Shares issued for dividends reinvested 216,913 179,977
Shares redeemed (356,355) (272,801)
Net Increase (Decrease) in Shares Outstanding 2,312,432 1,773,064
- ------------------------------------------------------------------------------------
Class B
Shares sold 4,451,156 2,307,420
Shares issued for dividends reinvested 274,896 302,337
Shares redeemed (390,124) (319,296)
Net Increase (Decrease) in Shares Outstanding 4,335,928 2,290,461
- ------------------------------------------------------------------------------------
Class C
Shares sold 1,529,524 413,223
Shares issued for dividends reinvested 36,637 20,986
Shares redeemed (91,722) (29,104)
Net Increase (Decrease) in Shares Outstanding 1,474,439 405,105
- ------------------------------------------------------------------------------------
Class R
Shares sold 15,636,976 7,480,245
Shares issued for dividends reinvested 1,112,164 1,891,491
Shares redeemed (7,068,765) (5,243,539)
Net Increase (Decrease) in Shares Outstanding 9,680,375 4,128,197
See notes to financial statements.
</TABLE>
18
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single Fund share. "Total return" shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived from
the Fund's financial statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
------------------------------------------------
Class A Shares (Unaudited) 1998 1997 1996 1995 1994 a
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 14.88 15.17 13.71 11.91 10.08 9.73
Investment Operations:
Investment income-net .17 .33 .34 .31 .28 .11
Net realized and unrealized gain
(loss) on investments 1.60 1.81 2.77 1.88 1.82 .34
Total from Investment Operations 1.77 2.14 3.11 2.19 2.10 .45
Distributions:
Dividends from investment
income-net (.18) (.37) (.28) (.31) (.27) (.10)
Dividends from net realized
gain on investments (.93) (2.06) (1.37) (.08) -- --
Total Distributions (1.11) (2.43) (1.65) (.39) (.27) (.10)
Net asset value, end of period 15.54 14.88 15.17 13.71 11.91 10.08
- ------------------------------------------------------------------------------------------
Total Return (%) b 12.38 c 16.06 25.24 18.71 21.17 4.68 c
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to
average net assets .62 c 1.25 1.25 1.25 1.25 .71 c
Ratio of net investment income
to average net assets 1.07 c 2.44 2.21 2.39 2.65 1.09 c
Portfolio Turnover Rate 60.33 c 69.71 98.88 85.21 53.20 83.00
- --------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 78,550 40,780 14,687 6,275 1,650 1,798
a The Fund commenced selling Class A shares on April 14, 1994.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
</TABLE>
The Fund 19
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
---------------------------------
Class B Shares (Unaudited) 1998 1997 1996 1995 a
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 14.83 15.12 13.68 11.89 9.76
Investment Operations:
Investment income-net .11 .24 .23 .21 .14
Net realized and unrealized gain (loss)
on investments 1.60 1.79 2.77 1.87 2.11
Total from Investment Operations 1.71 2.03 3.00 2.08 2.25
Distributions:
Dividends from investment income-net (.12) (.26) (.19) (.21) (.12)
Dividends from net realized gain on investments (.93) (2.06) (1.37) (.08) --
Total Distributions (1.05) (2.32) (1.56) (.29) (.12)
Net asset value, end of period 15.49 14.83 15.12 13.68 11.89
- ------------------------------------------------------------------------------------------
Total Return (%) b 11.98 c 15.20 24.27 17.76 23.19 c
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets .99 c 2.00 2.00 2.00 1.73 c
Ratio of net investment income
to average net assets .70 c 1.70 1.47 1.65 2.16 c
Portfolio Turnover Rate 60.33 c 69.71 98.88 85.21 53.20
- -------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 132,301 62,324 28,940 9,141 3,118
a The Fund commenced selling Class B shares on December 19, 1994.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
----------------------------------
Class C Shares (Unaudited) 1998 1997 1996 1995 a
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 14.87 15.16 13.70 11.90 9.76
Investment Operations:
Investment income-net .11 .22 .24 .25 .11
Net realized and unrealized gain (loss)
on investments 1.61 1.81 2.78 1.84 2.15
Total from Investment Operations 1.72 2.03 3.02 2.09 2.26
Distributions:
Dividends from investment income-net (.12) (.26) (.19) (.21) (.12)
Dividends from net realized gain
on investments (.93) (2.06) (1.37) (.08) --
Total Distributions (1.05) (2.32) (1.56) (.29) (.12)
Net asset value, end of period 15.54 14.87 15.16 13.70 11.90
- ---------------------------------------------------------------------------------------
Total Return (%)b 11.94 c 15.24 24.41 17.83 23.29 c
- ---------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets .99 c 2.00 2.00 2.00 1.73 c
Ratio of net investment income
to average net assets .71 c 1.69 1.47 1.62 2.16 c
Portfolio Turnover Rate 60.33 c 69.71 98.88 85.21 53.20
- ---------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 31,283 8,004 2,017 237 6
a The Fund commenced selling Class C shares on December 19, 1994.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
</TABLE>
The Fund 21
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
----------------------------------------------
Class R Shares (Unaudited) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 14.88 15.18 13.72 11.92 10.09 10.18
Investment Operations:
Investment income-net .17 .38 .36 .34 .31 .20
Net realized and unrealized gain
(loss) on investments 1.62 1.79 2.79 1.88 1.81 (.13)
Total from Investment Operations 1.79 2.17 3.15 2.22 2.12 .07
Distributions:
Dividends from investment
income-net (.19) (.41) (.32) (.34) (.29) (.16)
Dividends from net realized
gain on investments (.93) (2.06) (1.37) (.08) -- --
Total Distributions (1.12) (2.47) (1.69) (.42) (.29) (.16)
Net asset value, end of period 15.55 14.88 15.18 13.72 11.92 10.09
- ------------------------------------------------------------------------------------------
Total Return (%) 12.53 a 16.37 25.56 18.99 21.46 .68
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to
average net assets .50 a 1.00 1.00 1.00 1.00 1.04 b
Ratio of net investment income
to average net assets 1.20 a 2.71 2.44 2.68 2.89 2.23
Portfolio Turnover Rate 60.33 a 69.71 98.88 85.21 53.20 83.00
- -------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 366,919 207,132 148,605 129,744 97,881 75,720
a Not annualized.
b Expense ratio before voluntary reimbursement of expenses by
the investment adviser for the year ended October 31, 1994 was 1.09%.
See notes to financial statements.
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1-Significant Accounting Policies:
Dreyfus Premier Balanced 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 outperform a hybrid index, 60% of which is the Standard & Poor's 500
Composite Stock Price Index and 40% of which is the Lehman Brothers Intermediate
Government/Corporate Bond Index, by investing in common stocks and bonds in
proportions consistent with their expected returns and risks as determined by
the Fund's investment manager. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Fund is authorized to issue 50 million shares of $.001 par
value Capital Stock in each of the following classes of shares: Class A, Class
B, Class C and Class R. Class A, Class B and Class C shares are sold primarily
to retail investors through financial intermediaries and bear a distribution fee
and/or service fee. Class A shares are sold with a front-end sales charge and
bear a distribution fee, while Class B and Class C shares are subject to a
contingent deferred sales charge ("CDSC") and a distribution and service fee.
Class R shares are sold primarily to bank trust departments and other financial
service providers (including Mellon Bank and its affiliates) acting on behalf of
customers having a qualified trust or investment account or relationship at such
institution, and bear no distribution fee or service fee. Class R shares are
offered without a front-end sales charge or CDSC. Each class of shares has
identical rights and privileges, except with respect to distribution and service
fees and voting rights on matters affecting a single class.
The Fund 23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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 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) 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
24
<PAGE>
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) 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 (see Statement of Financial Futures). 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 contract 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. Contracts open at April 30, 1999 are set forth in the
Statement of Financial Futures.
(e) Distributions to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. 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 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.
The Fund 25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
On May 4, 1999, the Board of Directors declared dividends from net investment
income for Class A, Class B, Class C and Class R shares in the amounts of
$.0580, $.0290, $.0290 and $.0680 per share, respectively, payable on May 5,
1999 to shareholders of record on May 4, 1999.
(f) 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 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 1.00% 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, commit ment fees, Rule 12b-1 distribution fees and expenses,
service fees, 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
26
<PAGE>
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.
(b) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of its average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares may pay the Distributor for distributing shares at an
aggregate annual rate of .75% of the value of the average daily net assets of
Class B and Class C shares. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, under which Class B and Class C
shares pay Dreyfus Service Corporation or the Distributor for providing certain
services to the holders of Class B and Class C shares a fee at the annual rate
of .25% of the value of the average daily net assets of Class B and Class C
shares. During the period ended April 30, 1999, Class A, Class B and Class C
shares were charged $69,587, $342,164 and $61,705, respectively, pursuant to the
Plan. During the period ended April 30, 1999, Class B and Class C shares were
charged $114,055 and $20,568, respectively, pursuant to the service plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote
The Fund 27
<PAGE>
NOTES TO FINANCIAL STATEMENT (Unaudited) (continued)
of 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 in any agreement related to the Plan.
NOTE 3-Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the period ended April 30,
1999 amounted to $486,230,554 and $229,036,428, respectively.
At April 30, 1999, accumulated net unrealized appreciation on in vestments and
financial futures was $54,904,010, consisting of $59,716,936 gross unrealized
appreciation and $4,812,926 gross un realized depreciation.
At April 30, 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 April
30, 1999, the Fund did not borrow under the Facility.
28
<PAGE>
For More Information
Dreyfus Premier
Balanced 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or
1-800-554-4611
By mail Write to:
The Dreyfus Premier
Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation 342/642SA994
Dreyfus Institutional
Prime Money Market
Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- ---------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
FOR MORE INFORMATION
- -----------------------
Back Cover
<PAGE>
Dreyfus Institutional Prime The Fund
Money Market Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Institutional Prime
Money Market Fund, covering the six-month period from November 1, 1998 through
April 30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio manager, Laurie Carroll.
Yields on money market securities generally declined over the reporting period
in response to the Federal Reserve Board's decision in the fall of 1998 to ease
monetary policy. While the U.S. economy has continued to grow, the Federal
Reserve was concerned about persistent economic weakness abroad. Their adoption
of lower short-term interest rates was intended to stimulate not just domestic
economic growth, but the economies of other nations as well.
Despite lower nominal interest rates for most money market funds, very low
inflation continued to support above-average real returns, which are nominal
yields less the rate of inflation.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Institutional Prime Money Market Fund.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Laurie Carroll, Portfolio Manager
How did Dreyfus Institutional Prime Money Market Fund
perform during the period?
For the six-month period ended April 30, 1999, Dreyfus Institutional Prime Money
Market Fund produced an annualized yield of 4.76%, and after taking into account
the effect of compounding, the annualized effective yield was 4.86%.1 The Fund
provided a total return of 2.38%,2 compared to the Lipper Institutional Money
Market Funds category average of 2.38% for the same period.3 We attribute the
Fund's competitive returns to the fact that the Fund owned longer-term
securities, which enabled it to lock in higher returns in an environment
characterized by declining interest rates.
What is the Fund's investment approach?
As a money market fund, our goal is to provide shareholders with an investment
vehicle that is made up of high-quality income-producing securities that are
also very liquid in nature; that is, that they can be converted to cash quickly.
To meet that goal, we invest in a diversified portfolio of high-quality,
short-term debt securities, such as those issued by the United States government
or its agencies or instrumentalities, including certificates of deposit issued
by banks, repurchase agreements and commercial paper issued by corporations.
Generally, the Fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating. It is also required to
maintain an average dollar-weighted portfolio maturity of 90 days or less.
During the past six months, the returns offered by money market securities,
such as those held in this Fund, have declined. That's because interest
rates, which generally determine the returns for these types of
investments, also declined during the period. For example, last November,
the Federal Reserve Board lowered short-term interest rates to 4.75%, a
move that came on the heels of two other back-to-back cuts. The Fed trimmed
rates primarily in response to the global financial crisis that took place
in September and October and in an attempt to stimulate what it believed
was going to be slower domestic economic growth. However, to the surprise
of many industry analysts, the U.S. economy exhibited strong growth during
both the fourth quarter of 1998 and the first quarter of 1999.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
With short-term interest rates trending downward during the period, it gave even
greater importance to a key aspect of our investment strategy: managing the
portfolio's average maturity. By actively managing maturity, we attempt to
increase income and preserve or enhance total return.
We consistently tried to keep our average maturity longer, rather than shorter,
versus the benchmark's average maturity. The Fund can invest in securities with
a remaining maturity of up to 13 months. We kept our average maturity long
during the period in anticipation of what we thought would be a declining
interest rate environment. As it turns out, that decision proved beneficial and
as interest rates moved lower, we were able to lock in higher yields by owning
longer-term securities. As of the end of the reporting period, the Fund's
average maturity was 52 days.
What other factors influenced the Fund's performance?
We maintained a well-diversified portfolio, which helped reduce the risks
associated with declines in any particular area or security. As of April 30, the
largest portion of the Fund's assets were invested in repurchase agreements,
followed by asset-backed commercial paper. Repurchase agreements, commonly
referred to as repos, are overnight loans to government dealers that are
collateralized with U.S. Treasuries. The primary purpose of investing in repos
is to provide liquidity to the Fund. However, because their rates were higher
than comparable maturity T-bills during the period, they generated a higher
return. Accordingly, we allocated approximately 20% of the Fund's assets to
repos, a move that served to boost overall returns.
4
<PAGE>
What is the Fund's current strategy?
We feel confident that our strategy of managing maturity as a way to attempt to
add incremental yield to the portfolio is a prudent one. To that end, we
currently plan to remain invested in securities that have longer maturity dates.
We also intend to continue to take advantage of the higher yields associated
with repurchase agreements, wherever possible.
We believe we've created a portfolio that is conservative in nature and can
provide investors with a competitive level of income, liquidity and preservation
of capital.
May 13, 1999
1 Annualized effective yield is based upon dividends declared daily and
reinvested monthly. An investment in this Fund is not insured or
guaranteed by the FDIC or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund, but also has the
potential to make money.
2 Total return includes reinvestment of dividends.
3 Source: Lipper Analytical Services, Inc.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal
Commercial Paper--54.6% Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Amsterdam Funding Corp.
4.89%-4.94%, 7/7/99-7/14/99 11,934,000 11,819,932
Asset Portfolio Funding Corp.
4.91%, 7/8/99 8,206,000 8,130,824
British Columbia, (Province of)
4.95%, 5/7/99 10,000,000 9,991,917
BTR Dunlop Finance Inc.
4.84%, 7/28/99 5,000,000 4,942,189
Canadian Wheat Board
4.78%, 7/19/99 10,000,000 9,897,519
Centric Capital Corp.
4.93%, 7/9/99 10,000,000 9,907,042
Coca-Cola Enterprises Inc
4.97%, 10/20/99 10,000,000 9,768,756
DaimlerChrysler North America Holding Corp.
4.85%, 6/21/99 5,000,000 4,966,354
DuPont (E.I.) De Nemours & Co.
4.90%, 6/8/99 10,000,000 9,949,544
Eaton Corp.
4.87%-4.98%, 9/14/99-10/8/99 10,720,000 10,508,527
Edison Asset Secruitization LLC.
4.92%-4.96%, 7/30/99-8/20/99 15,000,000 14,790,025
Enterprise Funding Corp.
4.92%, 5/28/99 5,000,000 4,981,738
Ford Motor Credit Co. of Puerto Rico Inc.
4.88%-4.93%, 5/27/99-9/3/99 15,000,000 14,883,071
General Electric Capital Corp.
4.87%, 10/5/99 10,000,000 9,795,028
Golden Peanut Co.
4.82%, 5/14/99 5,000,000 4,991,424
Monsanto Co.
4.91%-4.94%, 7/1/99-10/19/99 16,000,000 15,746,147
New York Life Capital Corp.
4.87%, 9/24/99 10,000,000 9,809,389
Northern Rock PLC
4.89%, 6/16/99 5,000,000 4,969,269
Penney (J.C.) Funding Corp.
4.95%, 6/11/99 12,200,000 12,132,612
Repsol International Finance B.V.
4.85%-4.93%, 5/20/99-6/14/99 15,000,000 14,928,624
SAFECO Credit Co. Inc.
4.95%, 6/9/99 5,000,000 4,973,458
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal
Commercial Paper (continued) Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Siebe PLC
4.89%-4.92%, 5/13/99-8/9/99 15,000,000 14,857,506
SunTrust Banks Inc.
4.86%, 5/5/99 5,000,000 4,997,333
Transamerica Financial Corp.
4.85%, 5/24/99 5,000,000 4,984,762
UBS Finance Delaware LLC
4.90%, 7/12/99 10,000,000 9,904,400
Windmill Funding Corp.
4.91%-4.92%, 5/14/99-6/4/99 10,000,000 9,968,256
Xerox Capital (Europe) PLC
4.91%, 5/3/99 10,000,000 9,997,316
TOTAL COMMERCIAL PAPER
(cost $256,592,962) 256,592,962
</TABLE>
<TABLE>
<CAPTION>
Principal
Corporate Notes--27.5% Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Abbey National PLC
5.01%, 7/15/99a 15,000,000 14,998,065
Associates Corp. of Notth America
4.88%, 3/20/00a 10,000,000 9,993,870
Banc One Corp.
4.90%, 10/1/99a 15,000,000 14,998,764
Bear Stearns Companies Inc.
4.94%, 8/24/99a 15,000,000 15,000,000
Branch Banking & Trust Co.
5.11%, 2/22/00a 10,000,000 9,998,409
Comerica Bank
4.91%, 2/2/00a 10,000,000 9,997,766
Deer (John) Capital Corp.
4.94%, 12/8/99a 9,000,000 9,002,811
General Motors Acceptance Corp.
4.88%, 2/25/00a 10,000,000 10,001,658
Household Finance Corp.
4.88%, 10/14/99a 10,000,000 10,006,311
Morgan Guaranty Trust Co.
4.85%, 11/29/99a 10,000,000 10,005,478
National Rural Utilities Cooperative Finance Corp.
4.92%, 9/21/99a 15,000,000 15,000,000
TOTAL CORPORATE NOTES
(cost $129,003,132) 129,003,132
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal
Repurchase Agreements--18.1% Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Barclays De Zoette Wedd, Tri Party Repurchase Agreement
4.88% dated 4/30/99, due 5/3/99 in the
amount of $25,010,167 (fully collateralized
by $25,163,000 U.S.Treasury Notes 7.50%
due 10/31/99 value $25,500,637) 25,000,000 25,000,000
Donaldson, Lufkin & Jenrette Securities Inc.,
Tri Party Repurchase Agreement
4.88% dated 4/30/99, due 5/3/99 in the
amount of $25,010,167 (fully collateralized
by $19,643,000 U.S.Treasury Bonds
5.6250%-11.875%
due 10/31/99 to 11/15/2003
value $25,500,334) 25,000,000 25,000,000
Goldman, Sachs & Co., Tri Party Repurchase Agreement
4.89% dated 4/30/99, due 5/3/99 in the
amount of $35,236,814 (fully collateralized
by $23,114,000 U.S.Treasury Bonds 13875% due
5/5/2011 value $35,927,655) 35,222,461 35,222,461
TOTAL REPURCHASE AGREEMENTS
(cost $85,222,461) 85,222,461
- -------------------------------------------------------------------------------
Total Investments (cost $470,818,555) 100.2% 470,818,555
Liabilities, Less Cash and Receivables (.2%) (779,970)
Net Assets 100.0% 470,038,585
<FN>
a Variable interest rate-subject to periodic change.
</FN>
</TABLE>
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Cost Value
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Cost Value
Assets ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $85,222,461)--Note 1c 470,818,555 470,818,555
Interest receivable 705,030
471,523,585
- ---------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 30,846
Due to Distributor 62,433
Cash overdraft due to Custodian 1,391,721
1,485,000
- ---------------------------------------------------------------------------------------
Net Assets ($) 470,038,585
- ---------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 470,048,897
Accumulated net realized gain (loss) on investments (10,312)
- ---------------------------------------------------------------------------------------
Net Assets ($) 470,038,585
- ---------------------------------------------------------------------------------------
Shares Outstanding
(4 billion shares of $.001 par value Capital Stock authorized) 470,048,897
Net Asset Value, offering and redemption price per share ($) 1.00
</TABLE>
See notes to financial statements.
The Fund 9
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
<S> <C>
Income
Interest Income 13,226,710
Expenses:
Management fee--Note 2(a) 392,322
Shareholder servicing costs--Note 2(b) 392,322
Total Expenses 784,644
Investment Income--Net, representing net increase in net assets
resulting from operations 12,442,066
</TABLE>
See notes to financial statements
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net 12,442,066 31,980,219
Net realized gain (loss) from investments -- (773)
Net Increase (Decrease) in Net Assets
Resulting from Operations 12,442,066 31,979,446
- -------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net (12,442,066) (31,980,219)
- -------------------------------------------------------------------------------
Capital Stock Transactions ($1.00 per share):
Net proceeds from shares sold 1,705,658,030 3,359,541,323
Dividends reinvested 4,627,246 8,987,063
Cost of shares redeemed (1,720,112,702) (3,421,815,994)
Increase (Decrease) in Net Assets from
Capital Stock Transactions (9,827,426) (53,287,608)
Total Increase (Decrease) in Net Assets (9,827,426) (53,288,381)
- -------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 479,866,011 533,154,392
End of Period 470,038,585 479,866,011
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for each fiscal period
indicated. Total return shows how much your investment in the Fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived
from the Fund's financial statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1999 ------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Total from Investment Operations .024 .053 .053 .052 .056 .035
Distributions:
Dividends from investment
income--net (.024) (.053) (.053) (.052) (.056) (.035)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------
Total Return (%) 4.80 5.47 5.42 5.33 5.77 3.67
- -----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to
average net assets .30* .30 .30 .30 .30 .29
Ratio of net investment income
to average net assets 4.76* 5.34 5.27 5.25 5.61 3.58
Net Assets, end of period
($ x 1,000) 470,039 479,866 533,154 575,700 773,602 681,781
<FN>
* Annualized.
</FN>
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Institutional Prime 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, 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 seek a high level of current income consistent with stability of
principal by investing in high grade money market instruments. The Dreyfus
Corporation (the "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,
The Fund 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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, 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 of 1986, as
amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $10,313 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1998. If not
14
<PAGE>
applied, $167 of the carryover expires in fiscal 2004, $9,373 expires in
fiscal 2005, and $773 expires in fiscal 2006.
At April 30, 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 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, shareholder servicing 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
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
Dreyfus/Laurel Funds and the 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 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, 1999,
the Fund was charged $392,322 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, 1999, the Fund did not borrow
under the line of credit.
16
<PAGE>
For More Information
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, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999 Dreyfus Service Corporation 922SA994
Dreyfus Premier
Large Company
Stock Fund
SEMIANNUAL REPORT
April 30, 1999
(R) Dreyfus Logo
<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>
Contents
THE FUND
- ----------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
17 Financial Highlights
20 Notes to Financial Statements
For More Information
- ---------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Premier The Fund
Large Company Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier
Large Company Stock Fund, covering the six-month period from November 1, 1998
through April 30, 1999. Inside, you'll find valuable information about how the
Fund was managed during the reporting period, including a discussion with
the Fund's portfolio manager, Bert J. Mullins.
The past six months have been rewarding for many equity investors.
Strong economic growth, low inflation and high levels of consumer spending
supported continued strength in the stocks of many large companies. The
Federal Reserve Board's lowering of short-term interest rates in the fall
of 1998 appears to have helped U.S. businesses withstand the effects of
economic weakness in Japan, Asia and Latin America. As a result, several
major market indices set new records, including the Dow Jones Industrial
Average's first-ever close above the 10,000 level. The broader S&P 500 Index
and the technology-laden NASDAQ Index also recorded new highs.
Yet, until near the end of the six-month period, the stock market's
advance remained relatively narrow, confined to a handful of highly valued
growth and technology stocks. In April, however, some previously
out-of-favor market sectors rallied strongly, including large-cap cyclical
companies as well as some small- and midcap stocks.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Premier Large Company Stock Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ---------------------------------
Bert J. Mullins, Portfolio Manager
How did Dreyfus Premier Large Company Stock Fund perform relative to its
benchmark?
The Fund's total return for the six-month period ended April 30, 1999 was 20.09%
for Class A shares; 19.65% for Class B shares; 19.71% for Class C shares; and
20.25% for Class R shares.1 Although the Fund produced a strong, positive total
return, its performance fell short of the Standard & Poor's 500 Composite Stock
Price Index's ("S&P 500 Index") total return of 22.31% for the same period.2
We attribute the Fund's performance to the surprisingly rapid recovery of global
capital markets in the wake of last summer's decline, a recovery that was
especially strong among a narrow group of very large growth stocks. Since the
S&P 500 Index is heavily weighted toward just such companies, the Index rose
more rapidly than many portfolios that did not include those specific stocks.
What is the Fund's investment approach?
The Fund invests primarily in a diversified portfolio of stocks of large
companies that meet our strict standards for value and growth. We identify
potential investments through a quantitative analytical process that sifts
through a universe of approximately 2,000 stocks in search of those that are not
only undervalued according to our criteria, but that also exhibit higher than
expected earnings momentum. A team of experienced analysts examines the
fundamentals of the top-ranked candidates. Armed with these analytical insights,
the portfolio manager decides which stocks to purchase, and whether any current
holdings should be sold.
In addition to identifying attractive investment opportunities, our approach is
designed to limit the risks associated with market timing and sector and
industry exposure. Market timing refers to the practice of attempting to benefit
from gains and declines in the overall market
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
by adjusting the percentage of a fund's assets that is invested in the market at
any one time. We do not believe that the advantages of attempting to time the
market or rotate in and out of various industry sectors outweigh the risks of
such moves. Instead, our goal is to neutralize these risks by being fully
invested and remaining industry and sector neutral in relation to the S&P 500
Index.
The result of our approach during the recent six-month period was a broadly
diversified portfolio of carefully selected stocks, some of which showed notable
strength. The Fund benefited from its relatively large holdings of several of
the best-performing companies in the S&P 500 Index, including America Online,
MCI WorldCom, Cisco Systems and Wal-Mart Stores. In addition, the Fund's neutral
weighting in Microsoft and General Electric enabled us to keep pace with the
benchmark in those two stocks.
What other factors influenced the Fund's performance?
As we mentioned earlier, the strong rise of the benchmark was driven by the
performance of an extremely narrow group of companies. During the first three
months of 1999, only 18 stocks in the S&P 500 Index accounted for all of that
Index's return. While the Fund benefited from owning several of these stocks,
others failed to meet our investment criteria. Our performance, relative to our
benchmark, suffered because we did not own these stocks.
Relative performance also suffered due to the high volatility of stock prices
during the period. Sudden swings in investor sentiment caused stock prices to
rise and fall sharply, often moving several percentage points up or down over
the course of a few days, only to move just as sharply in the opposite direction
the following week. Since our quantitative model depends on using data from one
month to identify stocks that will outperform during the next month, a high
level of market volatility from month to month reduces the effectiveness of our
approach.
4
<PAGE>
Over the last few weeks of April, however, market strength broadened
considerably to include many stocks that had previously been left behind as
investors turned away from "growth at any price" to favor more reasonably priced
stocks.
What is the Fund's current investment strategy?
We continue to adhere to our disciplined investment strategy in seeking to
outperform the S&P 500 Index while managing risk.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares, or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
2 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.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Common Stocks--99.3% Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries--3.7%
AlliedSignal 11,650 684,437
Champion International 7,900 432,031
duPont (E.I.) deNemours & Co. 21,900 1,546,688
Fort James 8,000 304,000
Louisiana Pacific 15,900 330,919
Martin Marietta Materials 5,400 333,787
PPG Industries 7,600 493,525
Southdown 8,800 563,750
4,689,137
Capital Spending--21.0%
Applied Materials 7,800 a 418,275
Boeing 16,600 674,375
Cisco Systems 22,750 a 2,594,922
Dell Computer 34,100 a 1,404,494
EMC 7,000 a 762,562
General Electric 37,150 3,919,325
Gulfstream Aerospace 5,400 a 263,250
Hewlett-Packard 15,000 1,183,125
Ingersoll-Rand 8,350 577,716
Intel 45,700 2,796,269
International Business Machines 11,400 2,384,738
Lexmark International Group, Cl. A 4,900 a 605,150
Linear Technology 5,300 301,438
Lucent Technologies 38,500 2,314,812
Maxim Integrated Products 6,100 a 341,600
Nokia, A.D.S. 6,100 452,544
Pitney Bowes 6,000 419,625
Qwest Communications 2,429 a 207,528
Republic Services, Cl. A 22,200 456,488
Sun Microsystems 12,400 a 741,675
Tellabs 6,800 a 745,025
Tyco International 24,700 2,006,875
United Technologies 4,400 637,450
Waste Management 7,400 418,100
26,627,361
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclical--13.1%
Best Buy 8,800 a 420,200
CVS 12,400 590,550
Carnival 12,000 495,000
Clear Channel Communications 6,000 a 417,000
Ford Motor 15,400 984,637
Fox Entertainment Group, Cl. A 13,000 333,125
Gap 6,637 441,775
General Motors 13,200 1,173,975
Limited 17,400 761,250
Lowe's Cos. 8,000 422,000
McDonald's 15,700 665,288
MediaOne Group 11,700 a 954,281
Meyer (Fred) 10,800 a 584,550
Safeway 16,000 a 863,000
Staples 19,700 a 591,000
TJX Cos. 24,200 806,163
Time Warner 21,900 1,533,000
Tribune 5,300 442,219
Valassis Communications 4,000 a 224,000
Viacom, Cl. B 20,100 a 821,587
Wal-Mart Stores 66,500 3,059,000
16,583,600
Consumer Staples--8.7%
Anheuser-Busch Cos. 12,800 936,000
Clorox 5,000 576,875
Coca-Cola 6,500 442,000
ConAgra 17,500 435,312
Dial 14,900 506,600
Eastman Kodak 6,500 485,063
Fortune Brands 11,700 462,150
General Mills 6,500 475,313
Nabisco Holdings, Cl. A 10,400 393,250
PepsiCo 29,400 1,085,962
Philip Morris Cos. 28,550 1,001,034
Procter & Gamble 19,700 1,848,106
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples (continued)
Quaker Oats 8,800 568,150
Ralston-Purina Group 18,300 558,150
Sara Lee 22,100 491,725
Unilever, N.V. (New York Shares) 10,900 707,819
10,973,509
Energy--6.6%
Atlantic Richfield 13,100 1,099,581
Chevron 6,800 678,300
Coastal 14,900 569,925
Columbia Energy Group 10,100 485,431
Diamond Offshore Drilling 22,200 733,987
Enron 6,000 451,500
Mobil 12,800 1,340,800
Royal Dutch Petroleum (New York Shares) 27,700 1,625,644
Texaco 17,700 1,110,675
Tosco 7,600 203,300
8,299,143
Health Care--10.5%
Abbott Laboratories 24,600 1,191,562
American Home Products 22,200 1,354,200
Amgen 11,000 a 675,813
Becton, Dickinson & Co. 11,800 438,812
Biogen 3,400 a 323,213
Bristol-Myers Squibb 31,000 1,970,438
Centocor 6,100 a 270,687
Elan, A.D.S. 9,600 a 494,400
Lilly (Eli) 19,850 1,461,456
Medtronic 11,300 812,894
Merck & Co. 13,900 976,475
Mylan Laboratories 9,600 217,800
Schering-Plough 24,300 1,173,994
Warner-Lambert 22,750 1,545,578
Wellpoint Health Networks 5,300 a 372,325
13,279,647
Interest Sensitive--16.6%
ACE 13,200 399,300
Allstate 21,802 793,048
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Sensitive (continued)
Ambac Financial Group 6,200 374,325
American General 4,400 325,600
American International Group 5,875 689,945
Bank One 37,833 2,232,147
CIGNA 5,850 510,047
Chase Manhattan 18,980 1,570,595
Citigroup 24,500 1,843,625
Countrywide Credit Industries 6,700 303,594
Edwards (A.G.) 13,600 476,000
Federal National Mortgage Association 17,500 1,241,406
First Security 8,200 155,800
Fleet Financial Group 31,200 1,343,550
GreenPoint Financial 4,900 171,500
Hartford Financial Services Group 12,500 736,719
Lehman Brothers Holdings 8,300 461,169
MBNA 23,900 673,681
Merrill Lynch 8,600 721,862
Morgan Stanley Dean Witter & Co. 12,300 1,220,006
Old Republic International 7,900 154,544
PMI Group 3,600 200,925
PNC Bank 9,450 546,919
SLM Holding 11,000 469,563
SouthTrust 17,050 679,336
Summit Bancorp 10,350 438,581
SunTrust Banks 6,900 493,350
Torchmark 7,400 252,987
Washington Mutual 9,152 376,376
Wells Fargo 25,700 1,109,919
20,966,419
Mining & Metals--.7%
Alcoa 14,300 890,175
Services--7.4%
America Online 13,400 a 1,912,850
BMC Software 6,300 a 271,294
Ceridian 15,100 a 553,037
Compuware 22,400 a 546,000
Microsoft 54,100 a 4,399,006
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Services (continued)
Omnicom Group 7,800 565,500
Oracle 33,100 a 895,769
Quintiles Transnational 6,700 a 271,769
9,415,225
Transportation--1.1%
Burlington Northern Santa Fe 12,000 439,500
Canadian National Railway 4,200 265,125
US Airways Group 11,700 a 636,919
1,341,544
Utilities--9.9%
AirTouch Communications 10,500 a 980,437
Ameritech 16,600 1,136,063
Bell Atlantic 25,678 1,479,695
BellSouth 24,600 1,100,850
Energy East 13,200 348,975
Florida Progress 8,700 334,950
GPU 11,400 434,625
GTE 11,100 743,006
MCI WorldCom 27,300 a 2,243,719
PECO Energy 9,200 436,425
Pinnacle West Capital 5,600 217,350
Public Service Enterprise Group 6,000 240,000
SBC Communications 27,000 1,512,000
Telefonos de Mexico, Cl. L, A.D.S. 10,600 802,950
Texas Utilities 12,850 510,787
12,521,832
- -------------------------------------------------------------------------------------------------
Total Common Stocks
(cost $101,100,771) 125,587,592
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Short-Term Investments--1.6% Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement;
Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 4.89% dated 4/30/1999,
due 5/3/1999 in the amount of
$2,003,816 (fully collateralized
by $ 1,945,000 U.S. Treasury Notes,
5.625%, 5/15/2008, value $2,043,946)
(cost $2,003,000) 2,003,000 2,003,000
- -------------------------------------------------------------------------------------------------------------------
Total Investments (cost $103,103,771) 100.9% 127,590,592
Liabilities, Less Cash and Receivables (.9%) (1,134,302)
Net Assets 100.0% 126,456,290
</TABLE>
a Non-income producing.
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Cost Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of Investments 103,103,771 127,590,592
Cash 484,558
Receivable for investment securities sold 6,112,953
Receivable for shares of Capital Stock subscribed 946,168
Dividends and interest receivable 81,363
135,215,634
- ------------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 110,844
Due to Distributor 26,943
Payable for investment securities purchased 8,359,863
Payable for shares of Capital Stock redeemed 261,694
8,759,344
- ------------------------------------------------------------------------------------------------
Net Assets ($) 126,456,290
- ------------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 101,386,283
Accumulated investment (loss) (101,342)
Accumulated net realized gain (loss) on investments 684,528
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 24,486,821
- ------------------------------------------------------------------------------------------------
Net Assets ($) 126,456,290
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Class B Class C Class R
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets ($) 41,446,407 34,920,109 16,002,131 34,087,643
Shares Outstanding 1,782,470 1,510,425 692,247 1,466,807
- ------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($) 23.25 23.12 23.12 23.24
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
<S> <C>
Investment Income ($)
- ---------------------------------------------------------------------------------------------
Income:
Cash dividends (net of $2,714 foreign taxes withheld at source) 579,415
Interest 23,901
Total Income 603,316
Expenses:
Management fee--Note 2(a) 438,625
Distribution and service fees--Note 2(b) 201,512
Interest expense--Note 4 523
Loan commitment fees--Note 4 160
Total Expenses 640,820
Investment (Loss) (37,504)
- ---------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 779,770
Net unrealized appreciation (depreciation) on investments 15,834,308
Net Realized and Unrealized Gain (Loss) on Investments 16,614,078
Net Increase in Net Assets Resulting From Operations 16,576,574
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998 a,b
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income (loss)--net (37,504) 326,686
Net realized gain (loss) on investments 779,770 4,316,638
Net unrealized appreciation (depreciation) on investments 15,834,308 2,622,112
Net Increase (Decrease) in Net Assets
Resulting from Operations 16,576,574 7,265,436
- ---------------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Class A shares (32,979) (82,865)
Class B shares -- (3,637)
Class C shares -- (746)
Class R shares (76,598) (314,980)
Net realized gain on investments:
Class A shares (1,520,037) (402,127)
Class B shares (912,663) --
Class C shares (291,767) --
Class R shares (1,678,760) (1,808,389)
Total Dividends (4,512,804) (2,612,744)
- ---------------------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 17,630,910 24,218,455
Class B shares 18,994,718 15,700,710
Class C shares 12,637,784 3,224,367
Class R shares 793,514 4,852,159
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998 a,b
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Stock Transactions (continued) ($):
Dividends reinvested:
Class A shares 1,334,227 454,358
Class B shares 795,119 2,913
Class C shares 187,918 346
Class R shares 1,524,679 1,865,201
Cost of shares redeemed:
Class A shares (7,084,909) (6,787,604)
Class B shares (1,962,193) (1,148,312)
Class C shares (1,002,588) (49,016)
Class R shares (2,374,486) (8,747,836)
Increase (Decrease) in Net Assets from Capital Stock
Transactions 41,474,693 33,585,741
Total Increase (Decrease) in Net Assets 53,538,463 38,238,433
- ---------------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 72,917,827 34,679,394
End of Period 126,456,290 72,917,827
Undistributed investment income (Distributions in excess
of investment income)--net (101,342) 45,739
<FN>
a Effective January 16, 1998, Investor shares and Restricted shares were redesignated
Class A shares and Class R shares, respectively.
b The Fund commenced selling Class B and Class C shares January 16, 1998.
Seenotes to financial statements.
</FN>
</TABLE>
The Fund 15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998 a,b
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions:
Class A
Shares sold 794,812 1,208,092
Shares issued for dividends reinvested 63,654 24,814
Shares redeemed (319,350) (343,737)
Net Increase (Decrease) in Shares Outstanding 539,116 889,169
- -----------------------------------------------------------------------------------------------
Class B
Shares sold 854,426 764,145
Shares issued for dividends reinvested 37,823 142
Shares redeemed (88,740) (57,371)
Net Increase (Decrease) in Shares Outstanding 803,509 706,916
- -----------------------------------------------------------------------------------------------
Class C
Shares sold 574,254 157,154
Shares issued for dividends reinvested 8,995 16
Shares redeemed (45,722) (2,451)
Net Increase (Decrease) in Shares Outstanding 537,527 154,719
- -----------------------------------------------------------------------------------------------
Class R
Shares sold 36,167 251,556
Shares issued for dividends reinvested 72,842 102,492
Shares redeemed (106,963) (437,726)
Net Increase (Decrease) in Shares Outstanding 2,046 (83,678)
<FN>
a Effective January 16, 1998, Investor shares and Restricted shares were
redesignated Class A shares and Class R shares, respectively.
b The Fund commenced selling Class B and Class C shares January 16, 1998.
See notes to financial statements.
</FN>
</TABLE>
16
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for
a single Fund share. "Total return" shows how much your investment in the
Fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
----------------------------------------------
Class A Shares (Unaudited) 1998 a 1997 1996 1995 1994 b
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 20.45 18.23 14.49 12.00 9.95 10.00
Investment Operations:
Investment income--net .01 .07 .20 .27 .22 .03
Net realized and unrealized gain
(loss) on investments 3.97 3.39 4.26 2.54 2.05 (.08)
Total from Investment Operations 3.98 3.46 4.46 2.81 2.27 (.05)
Distributions:
Dividends from investment
income--net (.03) (.15) (.20) (.20) (.22) --
Dividends from net realized
gain on investments (1.15) (1.09) (.52) (.12) -- --
Total Distributions (1.18) (1.24) (.72) (.32) (.22) --
Net asset value, end of period 23.25 20.45 18.23 14.49 12.00 9.95
- -------------------------------------------------------------------------------------------
Total Return (%)c 20.09 d 19.85 32.01 23.87 23.20 (.50)d
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of operating expenses to
average net assets .57 d 1.15 1.15 1.15 1.15 .19 d
Ratio of net investment income
to average net assets .04 d .52 1.23 1.81 2.32 .44 d
Portfolio Turnover Rate 31.32 d 81.27 37.17 44.33 37.57 5.00 d
- -------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 41,446 25,421 6,456 4,599 1,714 1
<FN>
a Effective January 16, 1998, Investor shares were redesignated as Class A shares.
b The Fund commenced operations on September 2, 1994.
c Exclusive of sales load.
d Not annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 17
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
- ---------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, 1999 October 31, April 30, 1999 October 31,
(Unaudited) 1998a (Unaudited) 1998a
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 20.38 17.93 20.38 17.93
Investment Operations:
Investment (loss) (.04) (.02) (.03) (.02)
Net realized and unrealized gain
(loss) on investments 3.93 2.48 3.92 2.48
Total from Investment Operations 3.89 2.46 3.89 2.46
Distributions:
Dividends from investment
income--net -- (.01) -- (.01)
Dividends from net realized
gain on investments (1.15) .00 (1.15) --
Total Distributions (1.15) (.01) (1.15) (.01)
Net asset value, end of period 23.12 20.38 23.12 20.38
- ---------------------------------------------------------------------------------------------------
Total Return (%)b,c 19.65 13.76 19.71 13.70
- ---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of operating expenses to
average net assetsc .94 1.51 .94 1.51
Ratio of net investment income (loss)
to average net assetsc (.34) (.24) (.35) (.24)
Portfolio Turnover Rate 31.32c 81.27 31.32c 81.27
Net Assets, end of period
($ x 1,000) 34,920 14,410 16,002 3,154
<FN>
a From January 16, 1998 (commencement of initial offering) to October 31, 1998.
b Exclusive of sales load.
c Not annualized.
See notes to financial statements.
</FN>
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
----------------------------------------------
Class R Shares (Unaudited) 1998 a 1997 1996 1995 1994 b
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 20.44 18.23 14.49 12.00 9.95 10.00
Investment Operations:
Investment income--net .04 .17 .23 .21 .28 .05
Net realized and unrealized gain
(loss) on investments 3.96 3.33 4.27 2.63 2.02 (.10)
Total from Investment Operations 4.00 3.50 4.50 2.84 2.30 (.05)
Distributions:
Dividends from investment
income--net (.05) (.20) (.24) (.23) (.25) --
Dividends from net realized
gain on investments (1.15) (1.09) (.52) (.12) -- --
Total Distributions (1.20) (1.29) (.76) (.35) (.25) --
Net asset value, end of period 23.24 20.44 18.23 14.49 12.00 9.95
- -------------------------------------------------------------------------------------------------------------------
Total Return (%) 20.25c 20.10 32.25 24.18 23.48 (.50)c
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of operating expenses to
average net assets .45c .90 .90 .90 .90 .15c
Ratio of net investment income
to average net assets .18c .85 1.46 2.06 2.57 .48c
Portfolio Turnover Rate 31.32c 81.27 37.17 44.33 37.57 5.00c
- -------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 34,088 29,933 28,224 13,387 4,509 5,005
<FN>
a Effective January 16, 1998, Restricted Class shares were redesignated as Class R shares.
b The Fund commenced operations on September 2, 1994.
c Not annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Large Company Stock 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 seek investment returns (including capital appreciation and income)
consistently superior to the Standard & Poor's 500 Composite Stock Price Index
by investing in a broadly diversified list of equity securities generated by the
application of quantitative security selections and risk control techniques. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Fund is authorized to issue 100 million of $.001 par value
Capital Stock in each of the following classes of shares: Class A, Class B,
Class C and Class R shares. Class A, Class B and Class C shares are sold
primarily to retail investors through financial intermediaries and bear a
distribution fee and/or service fee. Class A shares are sold with a front-end
sales charge. Class B and Class C shares are subject to a contingent deferred
sales charge ("CDSC"). Class R shares are sold primarily to bank trust
departments and other financial service providers (including Mellon Bank and its
affiliates) acting on behalf of customers having a qualified trust or an
investment account or relationship at such institution and bear no distribution
or service fees. Class R shares are offered without a front end sales charge or
CDSC. Each class of shares has identical rights and privileges, except with
respect to distribution and service fees and voting rights and privileges on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
20
<PAGE>
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 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) 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 Fund 21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net, if any, are declared and paid on a
quarterly basis. 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 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 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 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 .90% 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
22
<PAGE>
distribution fees and expenses, service fees, 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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$2,567 during the period ended April 30, 1999 from commissions earned on sales
of the Fund shares.
(b) Distribution and service plan: Under the Distribution Plan ("Plan") adopted
pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up to .25%
of their average daily net assets to compensate the Distributor and Dreyfus
Service Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities and expenses primarily intended to
result in the sale of Class A shares. Under the Plan, Class B and Class C shares
may pay the
The Fund 23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Distributor for distributing shares at an aggregate annual rate of .75% of the
value of the average daily net assets of Class B and Class C shares. Class B
shares and Class C shares are also subject to a service plan adopted pursuant to
Rule 12b-1, under which Class B and Class C shares pay Dreyfus Service
Corporation or the Distributor for providing services to the holders of Class B
and Class C shares a fee at the annual rate of .25% of the value of the average
daily net assets of Class B and Class C shares. During the period ended April
30, 1999, Class A, Class B and Class C shares were charged $40,980, $85,023 and
$35,376, respectively, pursuant to the Plan and Class B and Class C shares were
charged $28,341 and $11,792, respectively, pursuant to the service plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote of majority of
those Directors who are not "interested persons" of the Company and who had no
direct or indirect financial interest in the operation of or in any agreement
related to the Plan or service plan.
(c) Brokerage commissions: During the period ended April 30, 1999, the Fund
incurred total brokerage commissions of $87,523, of which $27,374 was paid to
Dreyfus Investment Services Corporation, a subsidiary of Mellon Bank.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended April 30, 1999 amounted to
$66,781,266 and $30,438,091, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments was
$24,486,821, consisting of $26,103,737 gross unrealized appreciation and
$1,616,916 gross unrealized depreciation.
At April 30, 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).
24
<PAGE>
NOTE 4--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("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.
The average daily amount of borrowings outstanding during the period ended April
30, 1999 was approximately $19,900, with a related weighted average annualized
interest rate of 5.30%.
The Fund 25
<PAGE>
NOTES
<PAGE>
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Premier
Large Company Stock 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or
1-800-554-4611
By mail Write to:
The Dreyfus Premier
Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999, Dreyfus Service Corporation 318/228SA994
Dreyfus Premier
Limited Term
Income Fund
SEMIANNUAL REPORT
April 30, 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>
CONTENTS
The Fund
- --------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
14 Financial Highlights
18 Notes to Financial Statements
For More Information
- --------------------
Back Cover
<PAGE>
The Fund
Dreyfus Premier
Limited Term Income Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Limited
Term Income Fund, covering the six-month period from November 1, 1998 through
April 30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio manager, Laurie Carroll.
The past six months have been rewarding for many fixed-income investors. Lower
short-term interest rates adopted by the Federal Reserve Board and other central
banks in the fall of 1998 appear to have helped many developed nations withstand
the effects of economic weakness in Japan, Asia and Latin America. At the same
time, the U.S. economy entered its eighth year of expansion in an environment
characterized by low inflation and high levels of consumer spending.
Fixed-income securities provided mixed results in this economic climate. While
U.S. Treasury securities rallied strongly last summer when stocks and other
types of bonds fell, they subsequently gave back most of their gains. Other
types of bonds performed well, however, as investors shifted assets back into
bond market sectors they had previously avoided. Accordingly, many corporate
bonds, mortgage-backed securities, asset-backed securities and U.S.
dollar-denominated foreign bonds provided attractive returns over the reporting
period.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Premier Limited Term Income Fund.
Sincerely,
/S/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
Laurie Carroll, Portfolio Manager
How did Dreyfus Premier Limited Term Income Fund perform relative to its
benchmark?
For the six-month period ended April 30, 1999, Dreyfus Premier Limited Term
Income Fund's Class A shares provided a total return of -0.28%, its Class B
shares provided a total return of -0.61%, its Class C shares provided a -0.57%
total return and its Class R shares returned -0.15%.1 In addition, the Fund's
Class A, B, C and R shares provided income dividends (approximate per share) of
$.279, $.252, $.248 and $.293, respectively, as well as an annualized
distribution rate per share of 4.96%, 4.60%, 4.59% and 5.38%, respectively.2
These returns were modestly lower than those provided by the Fund's benchmark,
the Lehman Brothers Aggregate Bond Index, which produced a total return of 0.69%
for the same time period. 3
We attribute this performance to the Fund's tilt toward higher-quality bonds
during a period in which lower-quality bonds were in favor. In fact, as of the
end of the reporting period, the Fund's average credit quality rating was A+.
What is the Fund's investment approach?
The Fund's goal is to provide shareholders with as high a level of current
income as is consistent with safety of principal, while maintaining liquidity. A
Fund's liquidity is measured by how quickly its assets can be converted to cash.
To pursue its goal, the Fund invests primarily in various types of U.S. and
foreign investment-grade bonds, including government bonds, mortgage-backed
securities and corporate debt.
When choosing securities for the Fund, we conduct extensive research into the
credit history and current financial strength of investment-grade issuers. We
also examine such factors as the maturity of the securities, the long-term
outlook for the industry in which the issuer operates, the economy and the bond
market. Maturity refers to the length of time between the date on which a bond
is issued and the
The Fund 3
<PAGE>
date the principal amount must be paid. Generally speaking, bonds with longer
maturities tend to offer higher yields, but also fluctuate more in price than
their shorter-term counterparts.
The Fund's dollar-weighted average maturity will not exceed 10 years. During the
period, we maintained an average maturity that was neutral to that of our
benchmark, which was approximately 8.9 years as of April 30, 1999.
What other factors influenced the Fund's performance?
Of the fund's asset classes, the highest returns came from mortgage-backed
securities and corporate bonds, followed by U.S. Treasury securities. That's
because, generally speaking, corporate bonds and mortgage-backed securities
offer higher yields than Treasury bonds, since they have more credit risks
associated with them.
Last fall, the Federal Reserve Board trimmed short-term interest rates by
three-quarters of a percentage point in three consecutive moves, prompting bond
prices, which generally move inversely to interest rates, to rise. The Fed
initiated these cuts in an attempt to stimulate what it believed was going to be
slower domestic growth as a result of the global financial crises that took
place in September and October of 1998. However, to the surprise of many
industry analysts, the U.S. economy did not slow. Rather, it did just the
opposite, exhibiting strong growth during both the fourth quarter of 1998 and
the first quarter of 1999.
As of April 30, the Fund maintained a higher percentage of assets than its
benchmark in mortgage-backed securities. The Fund allocated assets to corporate
bonds, as did its benchmark. We also invested assets in U.S. Treasury
securities. As bond prices rose during the period, this asset allocation
strategy helped us take advantage of the areas within the bond market that were
reporting strong gains, and helped limit our exposure to those that were not.
What is the Fund's current strategy?
As of April 30, we remained more heavily invested in mortgage-backed securities
and corporate bonds -- as well as less heavily
4
<PAGE>
invested in Treasury securities -- than our benchmark. We currently intend to
maintain this allocation because we believe that those areas represent the bond
market's most attractive values. As market conditions change, we may adjust our
allocations accordingly.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares, or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
2 Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the maximum
offering price per share at the end of the period in the case of Class A or
the net asset value per share in the case of Class B, Class C and Class R
shares.
3 SOURCE: LEHMAN BROTHERS -- The Lehman Brothers Aggregate Bond Index is a
widely accepted unmanaged index of corporate, government and government agency
debt instruments, mortgage-backed securities and asset-backed securities.
Reflects reinvestment of dividends and capital gains.
The Fund 5
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Bonds and Notes--97.1% Amount($) Value ($)
- --------------------------------------------------------------------------------
<S> <C> <C>
Asset-Backed Securities--7.2%
American Express Credit Account Master Trust,
Ser. 1997-1, Cl. A, 6.4%, 2005 1,000,000 1,021,285
Citibank Credit Card Master Trust,
Ser. 1998-1, Cl. A, 5.75%, 2003 1,500,000 1,492,583
Discover Card Master Trust,
Ser. 1998-7, Cl. A, 5.6%, 2006 1,000,000 988,725
Peco Energy Transition Trust,
Ser. 1999-A, Cl. A2, 5.63%, 2005 1,000,000 995,170
4,497,763
Banking--1.6%
BankAmerica,
Sr. Notes, 5.875%, 2009 500,000 481,151
Washington Mutual Capital I,
Gtd. Capital Securities, 8.375%, 2027 500,000 529,008
1,010,159
Chemicals--.8%
Monsanto,
Deb., 6.6%, 2028 500,000 a 471,975
Drugs And Pharmaceuticals--.7%
Merck,
Deb., 5.95%, 2028 500,000 459,605
Energy--.8%
Atlantic Richfield,
Notes, 5.55%, 2003 500,000 497,206
Entertainment--3.4%
News America Holdings,
Deb., 7.75%, 2024 1,000,000 1,051,197
Viacom,
Sr. Notes, 7.75%, 2005 1,000,000 1,060,987
2,112,184
Financial Services--8.4%
Associates Corp. of North America,
Sr. Notes, 6.25%, 2008 1,000,000 992,230
GMAC,
Deb., 6.125%, 2027 1,000,000 983,262
Household Finance,
Sr. Notes, 5.875%, 2009 500,000 476,775
International Lease Finance,
Sr. Notes, 5.625%, 2002 1,000,000 999,480
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount($) Value ($)
- --------------------------------------------------------------------------------
Financial Services (continued)
Lehman Brothers Holdings,
Notes, 6.625%, 2004 1,300,000 1,307,587
Merrill Lynch,
Notes, 6%, 2009 500,000 482,502
5,241,836
Food & Beverages--1.6%
Archer-Daniels-Midland,
Deb., 6.75%, 2027 1,000,000 993,077
Telephone & Telegraph--2.3%
AT&T,
Notes, 5.625%, 2004 500,000 495,812
MCI WorldCom,
Notes, 6.4%, 2005 500,000 502,807
U.S. West Capital Funding,
Bonds, 6.875%, 2028 500,000 496,053
1,494,672
Transportation--.8%
Union Pacific,
Deb., 7%, 2016 500,000 493,489
Utilities--.8%
National Rural Utilities,
Sr. Notes, 5.5%, 2005 500,000 489,005
Other--1.7%
Private Export Funding, Ser. NN,
Secured Notes, 7.3%, 2002 1,000,000 1,047,134
U.S. Governments--18.7%
U.S. Treasury Bonds:
11.875%, 11/15/2003 1,150,000 1,448,471
12.375%, 5/15/2004 500,000 652,925
11.625%, 11/15/2004 500,000 647,425
11.25%, 2/15/2015 220,000 341,620
9.875%, 11/15/2015 200,000 283,480
7.25%, 5/15/2016 200,000 228,758
8.75%, 5/15/2017 500,000 655,530
8.875%, 2/15/2019 500,000 670,105
8.125%, 8/15/2019 500,000 628,445
8.125%, 5/15/2021 470,000 595,264
7.125%, 2/15/2023 130,000 149,656
6.25%, 8/15/2023 130,000 135,474
7.5%, 11/15/2024 200,000 241,638
6.5%, 11/15/2026 180,000 194,607
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount($) Value ($)
- --------------------------------------------------------------------------------
U.S. Governments (continued)
U.S. Treasury Bonds (continued):
6.375%, 8/15/2027 270,000 288,284
U.S Treasury Notes:
4.5%, 1/31/2001 500,000 495,340
6.5%, 5/31/2001 500,000 513,700
6.25%, 10/31/2001 450,000 461,750
7.5%, 11/15/2001 300,000 316,608
6.625%, 4/30/2002 750,000 779,678
7.5%, 5/15/2002 325,000 345,810
5.25%, 8/15/2003 200,000 199,982
7.25%, 8/15/2004 150,000 163,317
7.5%, 2/15/2005 200,000 221,240
6.25%, 2/15/2007 500,000 526,025
6.125%, 8/15/2007 300,000 313,533
4.75%, 11/15/2008 200,000 191,124
11,689,789
U.S. Government Agencies--48.3%
Federal Home Loan Bank:
5.125%, 2003 500,000 490,875
5.8%, 2008 1,000,000 988,574
Federal Home Loan Mortgage:
5.5%, 8/1/2013 248,937 242,092
6%, 6/1/2012-2/1/2029 1,573,349 1,542,966
6.5%, 11/1/2004-4/1/2029 3,382,546 3,383,689
7%, 3/1/2012-12/1/2027 1,967,911 2,006,764
7.5%, 12/1/2024-10/1/2028 1,117,121 1,152,936
8%, 10/1/2019-1/1/2028 432,449 452,189
Federal National Mortgage Association:
5.25%, 2003 1,000,000 990,000
5.25%, 2009 800,000 763,064
5.625%, 2001 500,000 503,080
6%, 2008 1,000,000 1,007,590
5.5%, 12/1/2013-2/1/2014 245,987 238,992
6%, 9/1/20013-2/1/2029 2,339,511 2,291,990
6.5%, 3/1/2011-3/1/2029 3,028,557 3,022,695
7%, 3/1/2012-2/1/2029 2,271,111 2,309,931
7.5%, 3/1/2012-11/1/2027 1,075,007 1,108,387
8%, 5/1/2013-9/1/2027 364,246 379,106
Government National Mortgage Association I:
6%, 1/15/2029 499,410 484,428
6.5%, 9/15/2008-1/15/2029 1,968,613 1,966,055
7%, 8/15/2025-12/15/2028 1,689,623 1,721,520
7.5%, 12/15/2025-4/15/2029 995,994 1,029,112
8
<PAGE>
- --------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount($) Value ($)
- --------------------------------------------------------------------------------
U.S. Government Agencies (continued)
Government National Mortgage Association I
(continued):
8%, 8/15/2026-12/15/2027 944,650 987,883
8.5%, 4/15/2025 403,951 428,693
9%, 10/15/2027 388,827 415,680
9.5%, 2/15/2025 252,855 273,145
30,181,436
Total Bonds and Notes
(cost $61,065,890) 60,679,330
- --------------------------------------------------------------------------------
Short-Term Investments--4.1%
- --------------------------------------------------------------------------------
Repurchase Agreement;
Goldman, Sachs & Co. Tri-Party
Repurchase Agreement, 4.89% dated
4/30/1999, due 5/3/1999 in the amount of
$2,563,160 (fully collateralized by $2,487,000
U.S. Treasury Notes, 5.625% due 5/15/2008
value $2,588,449)
(cost $2,562,116) 2,562,116 2,562,116
- --------------------------------------------------------------------------------
Total Investments (cost $63,628,006) 101.2% 63,241,446
Liabilities, Less Cash and Receivables (1.2%) (765,480)
Net Assets 100.0% 62,475,966
a Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 1999, these
securities amounted to $471,975 or .8% of net assets.
See notes to financial statements.
The Fund 9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Cost Value
- --------------------------------------------------------------------------------
Assets ($):
Investments in securities--
See Statement of Investments--Note 1(c) 63,628,006 63,241,446
Receivable for investment securities sold 1,645,425
Interest receivable 812,331
Receivable for shares of Capital Stock subscribed 210,459
Paydowns receivable 984
65,910,645
- --------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 31,065
Due to Distributor 7,158
Cash overdraft due to Custodian 73,133
Payable for investment securities purchased 3,184,906
Payable for shares of Capital Stock redeemed 138,417
3,434,679
- --------------------------------------------------------------------------------
Net Assets ($) 62,475,966
- --------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 63,323,494
Accumulated net realized gain (loss) on investments (460,968)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (386,560)
- --------------------------------------------------------------------------------
Net Assets ($) 62,475,966
- --------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Class B Class C Class R
- --------------------------------------------------------------------------------
Net Assets ($) 6,293,729 10,041,488 1,633,409 44,507,340
Shares outstanding 572,262 910,036 150,002 4,046,282
Net Asset Value Per Share ($) 11.00 11.03 10.89 11.00
See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income ($)
- --------------------------------------------------------------------------------
Income:
Interest 1,724,971
Expenses:
Management fee--Note 2(a) 175,406
Distribution and service fees--Note 2(b) 44,942
Loan commitment fees--Note 4 60
Total Expenses 220,408
Investment Income--Net 1,504,563
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 201,000
Net unrealized appreciation (depreciation) on investments (1,909,752)
Net Realized and Unrealized Gain (Loss) on Investments (1,708,752)
Net (Decrease) in Net Assets Resulting from Operations (204,189)
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- --------------------------------------------------------------------------------
Operations ($):
Investment income--net 1,504,563 2,808,242
Net realized gain (loss) on investments 201,000 1,033,599
Net unrealized appreciation (depreciation)
on investments (1,909,752) 693,732
Net Increase (Decrease) in Net Assets
Resulting from Operations (204,189) 4,535,573
- --------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Class A shares (160,268) (203,232)
Class B shares (196,577) (79,961)
Class C shares (26,554) (27,190)
Class R shares (1,121,164) (2,497,614)
Total Dividends (1,504,563) (2,807,997)
- --------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 4,698,602 5,830,588
Class B shares 8,095,563 6,356,694
Class C shares 933,166 991,778
Class R shares 8,329,841 11,394,506
Dividends reinvested:
Class A shares 109,623 114,018
Class B shares 71,177 48,757
Class C shares 15,778 22,311
Class R shares 746,688 1,699,048
Cost of shares redeemed:
Class A shares (3,684,488) (1,905,104)
Class B shares (3,242,895) (1,623,857)
Class C shares (357,099) (306,783)
Class R shares (5,335,148) (20,137,744)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 10,380,808 2,484,212
Total Increase (Decrease) in Net Assets 8,672,056 4,211,788
- --------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 53,803,910 49,592,122
End of Period 62,475,966 53,803,910
See notes to financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions (Shares):
Class A
Shares sold 420,539 527,494
Shares issued for dividends reinvested 9,838 10,267
Shares redeemed (330,949) (171,553)
Net Increase (Decrease) in Shares Outstanding 99,428 366,208
- --------------------------------------------------------------------------------
Class B
Shares sold 719,099 566,970
Shares issued for dividends reinvested 6,376 4,366
Shares redeemed (290,511) (145,521)
Net Increase (Decrease) in Shares Outstanding 434,964 425,815
- --------------------------------------------------------------------------------
Class C
Shares sold 84,778 89,566
Shares issued for dividends reinvested 1,435 2,032
Shares redeemed (32,293) (27,716)
Net Increase (Decrease) in Shares Outstanding 53,920 63,882
- --------------------------------------------------------------------------------
Class R
Shares sold 745,678 1,035,268
Shares issued for dividends reinvested 67,000 153,444
Shares redeemed (477,887) (1,813,570)
Net Increase (Decrease) in Shares Outstanding 334,791 (624,858)
See notes to financial statements.
</TABLE>
The Fund 13
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single Fund share. "Total return" shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived from
the Fund's financial statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
----------------------------------------------
Class A Shares (Unaudited) 1998 1997 1996 1995 1994a,b
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning
of period 11.31 10.96 10.78 10.84 10.22 10.49
Investment Operations:
Investment income--net .28 .58 .62 .58 .56 .28
Net realized and unrealized
gain (loss) on investments (.31) .35 .19 (.07) .62 (.27)
Total from Investment Operations (.03) .93 .81 .51 1.18 .01
Distributions:
Dividends from investment
income--net (.28) (.58) (.63) (.57) (.56) (.28)
Net asset value, end of period 11.00 11.31 10.96 10.78 10.84 10.22
- -------------------------------------------------------------------------------------------
Total Return (%) c (.56) d 8.73 7.80 4.85 11.83 .11
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses
to average net assets .85 d .85 .85 .85 .85 .83 d
Ratio of net investment income
to average net assets 5.05 d 5.20 5.80 5.38 5.33 4.47 d
Portfolio Turnover Rate 86.44 e 149.08 129.94 153.63 73.00 117.00
- -------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 6,294 5,349 1,169 1,001 1,150 932
<FN>
a The Fund commenced selling Investor shares on April 7, 1994. Effective October
17, 1994, the Fund's Investor shares were redesignated as Class A shares.
b Effective October 17, 1994, The Dreyfus Corporation began serving as the
Fund's investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served
as the Fund's investment manager.
c Exclusive of sales load.
d Annualized.
e Not annualized.
See notes to financial statements.
</FN>
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
----------------------------------
Class B Shares (Unaudited) 1998 1997 1996 1995 a
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 11.35 11.00 10.78 10.84 10.15
Investment Operations:
Investment income--net .25 .52 .56 .52 .47
Net realized and unrealized
gain (loss) on investments (.32) .35 .23 (.07) .69
Total from Investment Operations (.07) .87 .79 .45 1.16
Distributions:
Dividends from investment income--net (.25) (.52) (.57) (.51) (.47)
Net asset value, end of period 11.03 11.35 11.00 10.78 10.84
- -------------------------------------------------------------------------------------------
Total Return (%) (1.23) b 8.14 7.56 4.33 11.32
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets 1.35 b 1.35 1.35 1.35 1.35 b
Ratio of net investment income
to average net assets 4.52 b 4.49 5.06 4.86 4.85 b
Portfolio Turnover Rate 86.44 c 149.08 129.94 153.63 73.00
- -------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 10,041 $5,391 $ 542 $143 $78
<FN>
a The Fund commenced selling Class B shares on December 19, 1994.
b Annualized.
c Not annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
------------------------------------
Class C Shares (Unaudited) 1998 1997 1996 1995 a
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 11.20 10.84 10.73 10.84 10.15
Investment Operations:
Investment income (loss)--net .25 .52 (1.98) 3.05 .48
Net realized and unrealized
gain (loss) on investments (.31) .35 2.65 (2.65) .69
Total from Investment Operations (.06) .87 .67 .40 1.17
Distributions:
Dividends from investment income--net (.25) (.51) (.56) (.51) (.48)
Net asset value, end of period 10.89 11.20 10.84 10.73 10.84
- ------------------------------------------------------------------------------------------
Total Return (%) (.30) b 8.25 6.49 3.83 11.32
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets 1.35 b 1.35 1.35 1.41 --
Ratio of net investment income
to average net assets 4.50 b 4.61 4.98 5.50 --
Portfolio Turnover Rate 86.44 c 149.08 129.94 153.63 73.00
- ------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,633 1,076 349 -- --
<FN>
a The Fund commenced selling Class C shares on December 19, 1994.
b Annualized.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------------
Class R Shares (Unaudited) 1998 1997 1996 1995 1994 a,b
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning
of period 11.31 10.96 10.78 10.84 10.22 11.07
Investment Operations:
Investment income--net .29 .61 .65 .60 .58 .49 c
Net realized and unrealized
gain (loss) on investments (.31) .35 .19 (.06) .62 (.75)
Total from Investment Operations (.02) .96 .84 .54 1.20 (.26)
Distributions:
Dividends from investment
income--net (.29) (.61) (.66) (.60) (.58) (.53)
Dividends from net realized
gain on investments -- -- -- -- -- (.06)
Total Distributions (.29) (.61) (.66) (.60) (.58) (.59)
Net asset value, end of period 11.00 11.31 10.96 10.78 10.84 10.22
- ------------------------------------------------------------------------------------------
Total Return (%) (.30) d 9.02 8.09 5.12 12.11 (2.46)
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses
to average net assets .60 d .60 .60 .60 .60 .60 e
Ratio of net investment income
to average net assets 5.30 d 5.51 6.06 5.62 5.58 4.70
Portfolio Turnover Rate 86.44 f 149.08 129.94 153.63 73.00 117.00
Net Assets, end of period
($ x 1,000) 44,507 41,988 47,532 49,664 69,924 82,406
<FN>
a Effective October 17, 1994, The Dreyfus Corporation began serving as the
Fund's investment manager. Prior to October 17, 1994, Mellon Bank, N.A.
served as the Fund's investment manager.
b Any shares outstanding prior to April 4, 1994 were designated as Trust
shares. Effective October 17, 1994, the Fund's Trust shares were redesignated
as Class R shares.
c Net investment income before reimbursement of expenses by the investment
adviser was $.49 per share for the year ended October 31, 1994.
d Annualized.
e Expense ratio before reimbursement of expenses by the investment adviser was
.60% for the year ended October 31, 1994.
f Not annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Limited Term Income 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 obtain as high a level of current income as is consistent with safety of
principal and maintenance of liquidity. Although the Fund may invest in
obligations with different remaining maturities, the Fund's dollar-weighted
average maturity will be no more than 10 years. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Fund is authorized to issue 250 million of $.001 par value
Capital Stock. The Fund currently offers four classes of shares: Class A (50
million shares authorized), Class B (50 million shares authorized), Class C (50
million shares authorized) and Class R (100 million shares authorized). Class A,
Class B and Class C shares are sold primarily to retail investors through
financial intermediaries and bear a distribution fee and/or service fee. Class A
shares are sold with a front-end sales charge and bear a distribution fee, while
Class B and Class C shares are subject to a contingent deferred sales charge
("CDSC") and a distribution and service fee. Class R shares are sold primarily
to bank trust departments and other financial service providers (including
Mellon Bank and its affiliates) acting on behalf of customers having a qualified
trust or investment account or relationship at such institution, and bear no
distribution or service fees. Class R shares are offered without a front-end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
18
<PAGE>
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 (excluding short-term
investments other than U.S. Treasury Bills) are valued each business day by an
independent pricing service ("Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
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.
Short-term investments excluding U.S. Treasury Bills are carried at amortized
cost, which approximates value.
(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,
adjusted for amortization of premiums and discounts on investments, is
recognized on the accrual basis.
(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
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 of 1986, as
amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $618,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1998. If not
applied, $344,000 of the carryover expires in fiscal 2002 and $274,000 expires
in fiscal 2003.
20
<PAGE>
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 .60% 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-inter ested 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
The Fund 21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of its average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares may pay the Distributor for distributing shares at an
aggregate annual rate of .50% of the value of the average daily net assets of
Class B and Class C shares. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, under which Class B and Class C
shares pay Dreyfus Service Corporation or the Distributor for providing certain
services to the holders of Class B and Class C shares a fee at the annual rate
of .25% of the value of the average daily net assets of Class B and Class C
shares. Class R shares bear no service or distribution fee. During the period
ended April 30, 1999, Class A, Class B and Class C shares were charged $7,934,
$21,722 and $2,950, respectively, pursuant to the Plan and Class B and Class C
shares were charged $10,861 and $1,475, respectively, pursuant to the service
plan.
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of 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 in any agreement
related to the Plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales (including paydowns) of investment
securities, excluding short-term securities, during the period ended April 30,
1999, amounted to $59,949,097 and $49,050,287, respectively.
22
<PAGE>
At April 30, 1999, accumulated net unrealized depreciation on investments was
$386,560, consisting of $224,317 gross unrealized appreciation and $610,877
gross unrealized depreciation.
At April 30, 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 April
30, 1999, the Fund did not borrow under the Facility.
The Fund 23
<PAGE>
FOR MORE INFORMATION
Dreyfus Premier Limited Term
Income Fund
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
The Boston Company
Asset Management, Inc.
One Boston Place
Boston, MA 02108
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or
@ 1-800-554-4611
By mail Write to:
The Dreyfus Premier
Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation 345/645SA994
Dreyfus Disciplined
Stock Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- ---------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
15 Financial Highlights
16 Notes to Financial Statements
FOR MORE INFORMATION
- -----------------------
Back Cover
<PAGE>
Dreyfus The Fund
Disciplined Stock Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Disciplined
Stock Fund, covering the six-month period from November 1, 1998 through
April 30, 1999. Inside, you'll find valuable information about how the
Fund was managed during the reporting period, including a discussion with
the Fund's portfolio manager, Bert J. Mullins.
The past six months have been rewarding for many equity investors. Strong
economic growth, low inflation and high levels of consumer spending
supported continued strength in the stocks of many large companies. The
Federal Reserve Board's lowering of short-term interest rates in the fall
of 1998 appears to have helped U.S. businesses withstand the effects of
economic weakness in Japan, Asia and Latin America. As a result, several
major market indices set new records, including the Dow Jones Industrial
Average's first-ever close above the 10,000 level. The broader S&P 500
Index and the technology-laden NASDAQ Index also recorded new highs.
Yet, until near the end of the six-month period, the stock market's
advance remained relatively narrow, confined to a handful of highly valued
growth and technology stocks. In April, however, some previously out-of-
favor market sectors rallied strongly, including large-cap cyclical
companies as well as some small- and mid-cap stocks.
We appreciate your confidence over the past six months, and we look
forward to your continued participation in Dreyfus Disciplined Stock Fund.
Sincerely,
/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Bert J. Mullins, Portfolio Manager
How did Dreyfus Disciplined Stock Fund perform relative to its benchmark?
For the six-month period ended April 30, 1999, the Fund's total return was
20.03%.1 For the same period, the total return of the Standard & Poor's
500 Composite Stock Price Index ("S&P 500 Index"), the Fund's benchmark,
was 22.31%.2
We attribute the Fund's performance to the surprisingly rapid recovery of
global capital markets in the wake of last summer's decline, a recovery
that was especially strong among a narrow group of very large growth
stocks. Since the S&P 500 Index is heavily weighted toward just such
companies, the Index rose more rapidly than most portfolios that did not
include those specific stocks.
What is the Fund's investment approach?
Dreyfus Disciplined Stock Fund invests primarily in a diversified
portfolio of stocks of large companies that meet our strict standards for
value and growth. We identify potential investments through a quantitative
analytical process that sifts through a universe of approximately 2000
stocks in search of those that are not only undervalued according to our
criteria, but that also exhibit higher than expected earnings momentum. A
team of experienced analysts examines the fundamentals of the top-ranked
candidates. Armed with these analytical insights, the portfolio manager
decides which stocks to purchase, and whether any current holdings should
be sold.
In addition to identifying attractive investment opportunities, our
approach is designed to limit the risks associated with market timing and
sector and industry exposure. Market timing refers to the practice of
attempting to benefit from gains and declines in the overall market by
adjusting the percentage of a fund's assets that are invested in the
market at any one time. We do not believe that the advantages of
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (Unaudited)
attempting to time the market or rotate in and out of various industry
sectors outweigh the risks of such moves. Instead, our goal is to
neutralize these risks by being fully invested and remaining industry and
sector neutral in relation to the S&P 500 Index.
The result of our approach during the recent six-month period was a
broadly diversified portfolio of carefully selected stocks, some of which
showed notable strength. The Fund benefited from its relatively large
holdings of several of the best-performing companies in the S&P 500 Index,
including America Online, MCI WorldCom, Cisco Systems and Wal-Mart Stores.
In addition, the Fund's neutral weighting in Microsoft and General
Electric enabled us to keep pace with the benchmark in those two stocks.
What other factors influenced the Fund's performance?
As we mentioned earlier, the strong rise of the benchmark was driven by
the performance of an extremely narrow group of companies. During the
first three months of 1999, only 18 stocks in the S&P 500 Index accounted
for all of that Index's return. While the fund benefited from owning
several of these stocks, others failed to meet our investment criteria.
Our performance, relative to our benchmark, suffered because we did not
own these stocks.
Relative performance also suffered due to the high volatility of stock
prices during the period. Sudden swings in investor sentiment caused stock
prices to rise and fall sharply, often moving several percentage points up
or down over the course of a few days, only to move just as sharply in the
opposite direction the following week. Since our quantitative model
depends on using data from one month to identify stocks that will
outperform during the next month, a high level of market volatility from
month to month reduces the effectiveness of our approach.
4
<PAGE>
Over the last few weeks of April, however, market strength broadened
considerably to include many stocks that had previously been left behind
as investors turned away from "growth at any price" to favor more
reasonably priced stocks.
What is the Fund's current investment strategy?
We continue to adhere to our disciplined investment strategy in seeking to
outperform the S&P 500 Index while managing risk.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains
paid.
2 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.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks--99.6% Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries--3.7%
AlliedSignal 279,300 16,408,875
Champion International 193,500 10,582,031
duPont (E.I.) deNemours & Co. 536,600 37,897,375
Fort James 197,400 7,501,200
Louisiana Pacific 389,100 8,098,144
Martin Marietta Materials 122,300 7,559,669
PPG Industries 177,600 11,532,900
Southdown 209,900 13,446,719
113,026,913
Capital Spending--21.1%
Applied Materials 192,300 a 10,312,087
Boeing 407,100 16,538,437
Cisco Systems 552,775 a 63,050,898
Dell Computer 827,200 a 34,070,300
EMC 170,900 a 18,617,419
General Electric 901,600 95,118,800
Gulfstream Aerospace 132,500 a 6,459,375
Hewlett-Packard 365,600 28,836,700
Ingersoll-Rand 201,250 13,923,984
Intel 1,129,700 69,123,519
International Business Machines 277,100 57,965,856
Lexmark International Group, Cl. A 115,800 a 14,301,300
Linear Technology 112,000 6,370,000
Lucent Technologies 926,600 55,711,825
Maxim Integrated Products 159,400 a 8,926,400
Nokia, A.D.S. 140,700 10,438,181
Pitney Bowes 156,100 10,917,244
Qwest Communications 58,166 a 4,969,558
Republic Services, Cl. A 535,200 11,005,050
Sun Microsystems 296,800 a 17,752,350
Tellabs 162,400 a 17,792,950
Tyco International 601,700 48,888,125
United Technologies 103,200 14,951,100
Waste Management 193,300 10,921,450
646,962,908
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclical--13.3%
Best Buy 214,900 a 10,261,475
CVS 299,900 14,282,737
Carnival 297,000 12,251,250
Clear Channel Communications 142,700 a 9,917,650
Ford Motor 383,300 24,507,244
Fox Entertainment Group, Cl. A 315,100 8,074,437
Gap 169,175 11,260,711
General Motors 321,600 28,602,300
Limited 450,400 19,705,000
Lowe's Cos. 196,400 10,360,100
McDonald's 390,300 16,538,962
MediaOne Group 284,600 a 23,212,688
Meyer (Fred) 266,900 a 14,445,963
Safeway 394,500 a 21,278,344
Staples 484,750 a 14,542,500
TJX Cos. 590,000 19,654,375
Time Warner 535,900 37,513,000
Tribune 117,400 9,795,562
Valassis Communications 98,000 a 5,488,000
Viacom, Cl. B 477,300 a 19,509,638
Wal-Mart Stores 1,639,200 75,403,200
406,605,136
Consumer Staples--8.6%
Anheuser-Busch Cos. 305,000 22,303,125
Clorox 117,800 13,591,175
Coca-Cola 159,700 10,859,600
ConAgra 424,700 10,564,412
Dial 359,800 12,233,200
Eastman Kodak 158,400 11,820,600
Fortune Brands 280,000 11,060,000
General Mills 159,800 11,685,375
Nabisco Holdings, Cl. A 251,800 9,521,188
PepsiCo 704,200 26,011,388
Philip Morris Cos. 694,700 24,357,919
Procter & Gamble 480,200 45,048,762
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Quaker Oats 220,000 14,203,750
Ralston-Purina Group 435,600 13,285,800
Sara Lee 534,600 11,894,850
Unilever, N.V. (New York Shares) 253,500 16,461,656
264,902,800
Energy--6.6%
Atlantic Richfield 322,200 27,044,662
Chevron 162,600 16,219,350
Coastal 358,600 13,716,450
Columbia Energy Group 245,200 11,784,925
Diamond Offshore Drilling 535,500 17,704,969
Enron 142,300 10,708,075
Mobil 312,200 32,702,950
Royal Dutch Petroleum (New York Shares) 685,700 40,242,019
Texaco 426,100 26,737,775
Tosco 191,200 5,114,600
201,975,775
Health Care--10.5%
Abbott Laboratories 599,500 29,038,281
American Home Products 543,100 33,129,100
Amgen 262,200 a 16,108,913
Becton, Dickinson & Co. 284,000 10,561,250
Biogen 76,200 a 7,243,763
Bristol-Myers Squibb 752,800 47,849,850
Centocor 136,200 a 6,043,875
Elan, A.D.S. 225,100 a 11,592,650
Lilly (Eli) 481,400 35,443,075
Medtronic 278,100 20,005,819
Merck & Co. 340,600 23,927,150
Mylan Laboratories 232,100 5,265,769
Schering-Plough 583,800 28,204,837
Warner-Lambert 550,600 37,406,388
Wellpoint Health Networks 123,900 a 8,703,975
320,524,695
Interest Sensitive--16.6%
ACE 320,600 9,698,150
Allstate 533,360 19,400,970
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Interest Sensitive (continued)
Ambac Financial Group 138,100 8,337,787
American General 102,600 7,592,400
American International Group 136,179 15,992,521
Bank One 917,018 54,104,062
CIGNA 133,800 11,665,688
Chase Manhattan 466,580 38,609,495
Citigroup 590,880 44,463,720
Countrywide Credit Industries 159,800 7,240,937
Edwards (A.G.) 326,800 11,438,000
Federal National Mortgage Association 429,900 30,496,031
First Security 194,000 3,686,000
Fleet Financial Group 761,200 32,779,175
GreenPoint Financial 113,500 3,972,500
Hartford Financial Services Group 305,700 18,017,194
Lehman Brothers Holdings 203,600 11,312,525
MBNA 594,100 16,746,194
Merrill Lynch 211,500 17,752,781
Morgan Stanley Dean Witter & Co. 307,400 30,490,237
Old Republic International 201,875 3,949,180
PMI Group 87,600 4,889,175
PNC Bank 233,900 13,536,962
SLM Holding 268,500 11,461,594
SouthTrust 415,750 16,565,039
Summit Bancorp 256,650 10,875,544
SunTrust Banks 163,800 11,711,700
Torchmark 183,900 6,287,081
Washington Mutual 221,816 9,122,183
Wells Fargo 616,500 26,625,094
508,819,919
Mining & Metals--.7%
Alcoa 359,300 22,366,425
Services--7.5%
America Online 318,900 a 45,522,975
BMC Software 152,400 a 6,562,725
Ceridian 362,700 a 13,283,887
Compuware 540,200 a 13,167,375
Microsoft 1,337,400 a 108,747,338
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Services (continued)
Omnicom Group 191,700 13,898,250
Oracle 811,550 a 21,962,572
Quintiles Transnational 166,700 a 6,761,769
229,906,891
Transportation--1.0%
Burlington Northern Santa Fe 291,600 10,679,850
Canadian National Railway 95,500 6,028,437
US Airways Group 275,500 a 14,997,531
31,705,818
Utilities--10.0%
AirTouch Communications 253,600 a 23,679,900
Ameritech 404,100 27,655,594
Bell Atlantic 623,710 35,941,289
BellSouth 594,200 26,590,450
Energy East 330,100 8,727,019
Florida Progress 211,800 8,154,300
GPU 284,500 10,846,562
GTE 272,400 18,233,775
MCI WorldCom 669,000 a 54,983,438
PECO Energy 235,200 11,157,300
Pinnacle West Capital 123,900 4,808,869
Public Service Enterprise Group 144,000 5,760,000
SBC Communications 651,600 36,489,600
Telefonos de Mexico, Cl. L, A.D.S. 265,000 20,073,750
Texas Utilities 314,100 12,485,475
305,587,321
Total Common Stocks
(cost $2,193,603,121) 3,052,384,601
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal
Short-Term Investments--.5% Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement;
Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 4.89% dated 4/30/1999, due
5/3/1999 in the amount of $14,072,732
(fully collateralized by $13,654,000
U.S. Treasury Notes, 5.625%, 5/15/2008,
value $14,348,609)
(cost $14,067,000) 14,067,000 14,067,000
Total Investments (cost $2,207,670,121) 100.1% 3,066,451,601
Liabilities, Less Cash and Receivables (.1%) (2,381,371)
Net Assets 100.0% 3,064,070,230
<FN>
a Non-income producing.
</FN>
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of
Investments--Note 1(c) 2,207,670,121 3,066,451,601
Cash 479,363
Receivable for investment securities sold 150,421,531
Dividends and interest receivable 2,023,446
Receivable for shares of Capital Stock subscribed 1,004,985
3,220,380,926
- -------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 2,432,420
Due to Distributor 72,006
Payable for investment securities purchased 153,023,817
Payable for shares of Capital Stock redeemed 781,553
Loan commitment fees payable 900
156,310,696
- -------------------------------------------------------------------------------
Net Assets ($) 3,064,070,230
- -------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 2,136,828,040
Accumulated distributions in excess of
investment income (1,072,789)
Accumulated net realized gain (loss) on
investments 69,533,499
Accumulated net unrealized appreciation
(depreciation) on investments--Note 3 858,781,480
- -------------------------------------------------------------------------------
Net Assets ($) 3,064,070,230
- -------------------------------------------------------------------------------
Shares Outstanding
(245 million shares of $.001 par value Capital Stock authorized) 77,156,240
Net Asset Value, offering and redemption price per share ($) 39.71
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
<S> <C>
Income:
Cash dividends (net of $81,379 foreign taxes withheld at source) 17,067,178
Interest 367,109
Total Income 17,434,287
Expenses:
Management fee--Note 2(a) 12,646,525
Distribution fees--Note 2(b) 1,405,170
Loan commitment fees--Note 4 5,511
Interest expense--Note 4 5,351
Total Expenses 14,062,557
Investment Income--Net 3,371,730
- -------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 80,004,543
Net unrealized appreciation (depreciation) on investments 417,867,180
Net Realized and Unrealized Gain (Loss) on Investments 497,871,723
Net Increase in Net Assets Resulting From Operations 501,243,453
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF CHANGES IN NET ASSESTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998*
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net 3,371,730 12,786,219
Net realized gain (loss) on investments 80,004,543 109,282,274
Net unrealized appreciation (depreciation) on investments 417,867,180 165,127,716
Net Increase (Decrease) in Net Assets
Resulting from Operations 501,243,453 287,196,209
- ----------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Institutional shares -- (43,036)
Retail shares and New Single Class (7,116,867) (13,529,583)
Net realized gain on investments:
Retail shares and New Single Class (119,405,805) (158,377,032)
Total Dividends (126,522,672) (171,949,651)
- ----------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Institutional shares -- 26,000,037
Retail shares and New Single Class 790,693,624 1,607,539,829
Dividends reinvested:
Institutional shares -- 40,647
Retail shares and New Single Class 117,547,358 156,406,066
Cost of shares redeemed:
Institutional shares -- (33,343,597)
Retail shares and New Single Class (655,055,110) (961,519,617)
Increase (Decrease) in Net Assets from Capital Stock
Transactions 253,185,872 795,123,365
Total Increase (Decrease) in Net Assets 627,906,653 910,369,923
- ----------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 2,436,163,577 1,525,793,654
End of Period 3,064,070,230 2,436,163,577
Undistributed investment income (Distributions in
excess of investment income)--net (1,072,789) 2,672,348
- ----------------------------------------------------------------------------------------
Capital Share Transactions (Shares):
Shares sold:
Institutional shares -- 766,388
Retail shares and New Single Class 20,949,455 47,447,361
Shares issued for dividends reinvested:
Institutional shares -- 1,199
Retail shares and New Single Class 3,234,223 5,125,076
Shares redeemed:
Institutional shares -- (978,523)
Retail shares and New Single Class (17,273,614) (28,659,176)
Net Increase (Decrease) in Shares Outstanding 6,910,064 23,702,325
<FN>
* Effective December 15, 1997, Institutional shares and Retail shares were
eliminated and the Fund became a single class fund.
</FN>
</TABLE>
See notes to financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Certain information reflects financial results for a single Fund share.
"Total Return"shows how much your investment in the Fund would have incrreased
(or decreased) during each period, assuming you had reinvested all dividends
and distributions. These figures have been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------------
(Unaudited) 1998a 1997 1996b 1995 1994c
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 34.68 32.78 26.65 22.09 18.54 18.69
Investment Operations:
Investment income--net .05 .20 .25 .28 .30 .26
Net realized and unrealized gain
(loss) on investments 6.73 5.31 7.92 5.13 4.02 .25
Total from Investment Operations 6.78 5.51 8.17 5.41 4.32 .51
Distributions:
Dividends from investment
income--net (.10) (.24) (.26) (.29) (.30) (.26)
Dividends from net realized
gain on investments (1.65) (3.37) (1.78) (.56) (.47) (.40)
Total Distributions (1.75) (3.61) (2.04) (.85) (.77) (.66)
Net asset value, end of period 39.71 34.68 32.78 26.65 22.09 18.54
- ----------------------------------------------------------------------------------------
Total Return (%) 20.03b 18.37 32.32 25.14 24.33 2.82
- ----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to
average net assets .50b .99 .90 .90 .90 .90c
Ratio of net investment income
to average net assets .12b .61 .87 1.23 1.61 1.54
Portfolio Turnover Rate 38.35b 54.45 68.87 64.47 60.00 106.00
Net Assets, end of period
($ x 1,000) 3,064,070 2,436,164 1,482,176 807,680 382,646 239,069
<FN>
a Effective December 15, 1997, the Fund converted to a Single Class Fund,
with the existing Institutional shares and Retail shares converted into a
new single class of shares.
b Not annualized.
c Expense ratio before reimbursement of expenses by the adviser was .96%
for the year ended October 31, 1994.
</FN>
</TABLE>
See notes to financial statements.
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Disciplined Stock 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 seek investment returns (consisting of
capital appreciation and income) that are consistently superior to the
Standard & Poor's 500 Composite Stock Price Index. 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"). 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.
On December 2, 1997, shareholders approved a reorganization, effective
December 15, 1997, where Institutional class and Retail class converted
into a single class of shares. The performance history for the Retail
shares, the most relevant historical class, represents class outstanding
through the year.
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.
16
<PAGE>
(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) 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) 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 contract at the close of each day's trading.
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 April 30, 1999, there
were no financial futures contracts outstanding.
(e) Distributions to shareholders: Dividends are recorded on the ex-
dividend date. Dividends from investment income-net are declared and paid
on a quarterly basis. 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 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.
On May 4, 1999 the Board of Directors declared a dividend from net
investment income in the amount of $.0250 per share, payable on May 5,
1999 to shareholders of record on May 4, 1999.
(f) 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 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
18
<PAGE>
these services, the Fund is contractually obligated to pay the Manager a
fee, calculated daily and paid monthly, at the annual rate of .90% 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.
(b) Distribution plan: Under the Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, the Fund may pay annually up to .10%
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
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
in the sale of Fund shares. During the period ended April 30, 1999, the
Fund was charged $1,405,170 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 in any agreement related to the Plan.
(c) Brokerage commissions: During the period ended April 30, 1999, the
Fund incurred total brokerage commissions of $2,130,425, of which $201,248
was paid to Dreyfus Investment Services Corporation, a subsidiary of
Mellon Bank.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1999,
amounted to $1,188,714,648 and $1,076,375,778, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments
was $858,781,480, consisting of $894,598,252 gross unrealized appreciation
and $35,816,772 gross unrealized depreciation.
At April 30, 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 ("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.
20
<PAGE>
The average daily amount of borrowings outstanding during the period ended
April 30, 1999 was approximately $211,000, with a related weighted average
annualized interest rate of 5.11%.
NOTE 5--Litigation:
The Fund, along with certain related parties, are defendants in a class
action lawsuit. Former Retail class shareholders have asserted that the
adoption of the Plan, with respect to the Fund's Retail class, was in
violation of the Act and common law. On March 29, 1999, the trial court
dismissed the lawsuit with prejudice, but the plaintiffs have filed a
notice of appeal. Although it is difficult to predict the ultimate outcome
of this case, management believes, based on discussions with counsel, that
any ultimate liability will not materially affect the financial position
of the Fund.
The Fund 21
<PAGE>
For More Information
Dreyfus
Disciplined Stock 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
The Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999 Dreyfus Service Corporation 728SA994
Dreyfus Disciplined Intermediate
Bond Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- --------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
15 Financial Highlights
17 Notes to Financial Statements
FOR MORE INFORMATION
- ----------------------
Back Cover
<PAGE>
Dreyfus Disciplined The Fund
Intermediate Bond Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus
Disciplined Intermediate Bond Fund, covering the six-month
period from November 1, 1998 through April 30, 1999. Inside,
you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion
with the Fund's portfolio manager, Dan Fasciano.
The past six months have been rewarding for many fixed-
income investors. Lower short-term interest rates adopted by
the Federal Reserve Board and other central banks in the
fall of 1998 appear to have helped many developed nations
withstand the effects of economic weakness in Japan, Asia
and Latin America. At the same time, the U.S. economy
entered its eighth year of expansion in an environment
characterized by low inflation and high levels of consumer
spending.
Fixed-income securities provided mixed results in this
economic climate. While U.S. Treasury securities rallied
strongly last summer when stocks and other types of bonds
fell, they subsequently gave back most of their gains. Other
types of bonds performed well, however, as investors shifted
assets back into bond market sectors they had previously
avoided. Accordingly, many corporate bonds, mortgage-backed
securities, asset-backed securities and U.S. dollar-
denominated foreign bonds provided attractive returns over
the reporting period.
We appreciate your confidence over the past six months, and
we look forward to your continued participation in Dreyfus
Disciplined Intermediate Bond Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Dan Fasciano, Portfolio Manager
How did Dreyfus Disciplined Intermediate Bond Fund perform
relative to its benchmark?
The Fund's total return for the six-month period ended April
30, 1999 was 0.26% for Investor shares and 0.38% for
Restricted shares.1 In contrast, the Lehman Brothers
Aggregate Bond Index, which serves as the Fund's benchmark,
produced a total return of 0.69% for the same period.2
During the period, the annualized distribution rate per
share was 5.60% for the Fund's Investor shares and 5.86% for
Restricted shares.3
The positive factors affecting the Fund's performance during
the reporting period were our emphasis on corporate bonds
and mortgage-backed securities and our relatively light
investment in U.S. Treasury securities. Because there are
more credit risks associated with corporate bonds and
mortgage-backed securities, they generally offer higher
yields than Treasury bonds, thus providing the Fund with
higher income.
A negative factor affecting performance was our decision to
construct a portfolio with a longer duration. A portfolio
with a longer-than-average duration is generally more
sensitive to changes in interest rates. In a period of
rising interest rates, the portfolio's performance was hurt
compared to its benchmark because of its longer duration.
What is the Fund's investment approach?
We continue to invest primarily in a mixture of U.S.
government bonds, corporate bonds and mortgage-related
securities, keeping the portfolio's average maturity between
three and 10 years.
What other factors influenced the Fund's performance?
Investor sentiment changed radically during the reporting
period from the general belief that the global economy was
in crisis to a conviction that the U.S. economy was strong
enough to either offset the rest of the world, or even pull
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
it out of its turmoil. Last summer, high-grade corporate
bonds were valued as if the worst economic news was
imminent. As a result, we were able to purchase bonds issued
by well-known and very high quality companies, such as
International Business Machines and Ford Motor Company, at a
discounted price.
Because the global economic environment seems to have
improved since last fall, investors felt more comfortable
holding bonds such as corporates that reflect some credit
risk on the part of the issuing company. In addition,
mortgage-backed securities also appreciated because interest
rates were increasing moderately.
In contrast, mortgages usually perform poorly in a falling
interest rate environment because homeowners tend to
refinance their mortgages at lower rates, forcing mortgage
investors to reinvest their money at lower yields. By
comparison, Treasury bond performance is more one-
dimensional: when interest rates rise, Treasury bonds
generally fall in value. Having a lighter-than-average
Treasury position was helpful during the period: February
1999 was the worst one-month performance for Treasury bonds
in 17 years.
When we constructed a longer-than-average duration, we had
good reason to believe that interest rates would actually
fall. In November 1998, the first month of the fiscal
period, the Federal Reserve Board, worried about the U.S.
economy slipping into recession, cut short-term interest
rates to 4.75%. Instead, the fourth quarter of 1998 was a
period of extremely strong growth in the U.S. economy. As a
result, interest rates on longer-term securities rose, as
investors became concerned about inflation.
What is the Fund's current strategy?
While we continue to invest in high quality corporate bonds,
we have recently begun to add investment-grade bonds of
slightly lower quality in order to obtain higher yields.
4
<PAGE>
During the past six months, the best performers were the so-
called "Nifty Fifty" bonds with the highest credit quality.
With the economy continuing to improve, we believe that
there is greater opportunity to invest in bonds such as
those issued by energy and chemical companies. However, the
Fund remains highly diversified to reduce credit risk.
In addition, we are currently continuing to extend the
portfolio's duration in the belief that inflation is not a
threat and that interest rates will trend downward.
May 13, 1999
1 Total return includes reinvestment of dividends and any
capital gains paid.
2 SOURCE: LEHMAN BROTHERS -- The Lehman Brothers Aggregate
Bond Index is a widely accepted unmanaged index of
corporate, government and government agency debt
instruments, mortgage-backed securities and asset-backed
securities. It reflects the reinvestment of dividends and
capital gains.
3 Distribution rate per share is based upon dividends per
share paid from net investment income during the period
(annualized), divided by the net asset value per share at
the end of the period.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Principal
Bonds and Notes--96.4% Amount ($) Value ($)
- -------------------------------------------------------------------------------
Automobiles & Equipment--.7%
Hertz,
Notes, 6.25%, 2009 1,500,000 1,462,563
Banking--3.1%
First Union National Bank of Florida,
Medium-Term Notes, 6.18%, 2006a 2,250,000 2,221,639
Fleet Financial Group,
Notes, 6.375%, 2008 2,250,000 2,230,826
U.S. Bank, N.A.,
Sub. Notes, 5.7%, 2008 1,500,000 1,428,924
U.S. Bank, N.A. of Minneapolis, MN.,
Sub. Notes, 6.3%, 2008 1,000,000 992,397
6,873,786
Collateralized Mortgage Obligations--.0%
Countrywide Funding,
Ser. 1994-10, Cl. A5, 6%, 2009 98,033 97,903
Commercial Mortgage Pass-Through Ctfs.--1.7%
Asset Securitization:
Ser. 1995-MD IV, Cl. A1, 7.10%, 2029 685,047 713,884
Ser. 1997-D4, Cl. A-CS1, 1.266%, 2029
(Interest Only Obligation)b,c 15,053,816 418,684
GS Mortgage Securities II,
Ser. 1998-GLII, Cl. A2, 6.562%, 2031 2,500,000 2,504,675
3,637,243
Consumer--1.5%
Service International,
Notes, 6%, 2005 3,500,000 3,310,307
Finance--4.8%
Ford Motor Credit,
Sr. Notes, 5.75%, 2004 3,000,000 2,969,925
Lehman Brothers,
Notes, 7.36%, 2003 2,250,000 2,303,737
Merrill Lynch,
Notes, 6%, 2004 2,725,000 2,716,858
NYNEX Capital Funding,
Medium-Term Notes, 7.63%, 1999b,d 2,250,000 2,529,675
10,520,195
6
<PAGE>
- -------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -------------------------------------------------------------------------------
Finance/Asset-Backed--3.5%
American Airlines Pass-Through Trusts,
Pass-Through Ctfs., Ser. 1991-A1, 9.71%, 2007 964,030 1,094,290
Chemical Master Credit Card Trust I,
Asset-Backed Ctfs., Ser. 1995-3, Cl. A, 6.23%, 2005 3,000,000 3,021,300
CitiBank Credit Card Master Trust I,
Asset-Backed Ctfs., Ser. 1997-3, Cl. A, 6.839%, 2004 1,500,000 1,508,063
Green Tree Financial,
Manufactured Housing Contract Pass-Through Ctfs.,
Ser. 1996-10, Cl. A5, 6.83%, 2028 1,000,000 1,024,165
NationsBank Auto Grantor Trust 1995-A,
Asset-Backed Ctfs., Cl. A, 5.85%, 2002 12,249 12,304
Premier Auto Trust 1996-2,
Asset-Backed Notes, Cl. A-4, 6.575%, 2000 732,804 736,966
WFS Financial Owner Tust,
Auto Receivable Backed Notes,
Ser. 1996-D, Cl. A-3, 6.05%, 2001 299,448 300,729
7,697,817
Financial Services--2.8%
Associates, N.A.:
Deb., 6.95%, 2018 1,500,000 1,514,995
Notes, 7.75%, 2000e 1,500,000 1,611,935
GMAC,
Floating Rate Notes, 5.25%, 2004b 3,000,000 2,996,445
6,123,375
Food & Beverages--.8%
Dole Foods:
Notes, 6.75%, 2000 1,000,000 1,008,464
Notes, 6.375%, 2005 750,000 732,264
1,740,728
Foreign/Yankee--6.3%
ABN AMRO Bank:
Sub. Notes, 7.25%, 2005 1,125,000 1,166,568
Sub. Notes, 7.125%, 2007 1,125,000 1,170,497
Ahold Finance USA,
Notes, 6.25%, 2009 2,250,000 2,216,502
Cable & Wireless Communications,
Notes, 6.75%, 2008 3,000,000 2,992,695
Hanson Overseas,
Gtd. Sr. Notes, 7.375%, 2003 1,500,000 1,566,545
Midland Bank,
Sub. Notes, 7.65%, 2007f 1,500,000 1,544,205
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- -------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -------------------------------------------------------------------------------
Foreign/Yankee (continued)
National Australia Bank,
Sub. Notes, 6.4%, 2007b 2,250,000 2,263,133
Province of Quebec,
Medium-Term Notes, 7.295%, 2006g 1,000,000 1,042,148
13,962,293
Insurance--1.1%
American General,
Sr. Notes, 6.625%, 2029 2,500,000 2,394,105
Hotels & Motels--.6%
Hilton Hotels,
Notes, 7%, 2004 1,280,000 1,273,344
Industrial--4.8%
Coca Cola Enterprises,
Notes, 6.375%, 2001 1,025,000 1,041,979
Crown Cork & Seal,
Notes, 8.375%, 2005 1,350,000 1,446,117
General Motors,
Notes, 6.75%, 2028 1,500,000 1,467,228
IBM,
Deb., 6.5%, 2028 1,000,000 972,692
News America Holdings,
Sr. Deb., 8%, 2016 1,750,000 1,890,156
Royal Caribbean Cruises,
Sr. Notes, 7.5%, 2027 1,250,000 1,212,974
WMX Technologies,
Sr. Notes, 7.1%, 2003h 2,550,000 2,629,667
10,660,813
Municipal Obligations--.2%
Atlanta & Fulton County, Ga. Recreation Authority,
Revenue Bonds, 7%, 2028 400,000 394,000
Real Estate Investment Trusts--.5%
ERP Operating,
Notes, 7.57%, 2006h 1,125,000 1,165,501
Telecommunication/Carriers--3.4%
AT&T,
Notes, 6%, 2009 1,500,000 1,471,298
GTE North:
Deb., 6.9%, 2008 1,250,000 1,305,155
Ser. H, Deb., 5.65%, 2008 1,250,000 1,204,199
8
<PAGE>
- -------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -------------------------------------------------------------------------------
Telecommunication/Carriers (continued)
Sprint Capital,
Notes, 6.125%, 2008 3,500,000 3,387,937
7,368,589
U.S. Government Agencies--3.7%
Federal Home Loan Banks,
Deb., 5.925%, 2008 1,500,000 1,492,230
Federal Home Loan Mortgage Corp.,
Deb., 6.542%, 2008 2,000,000 2,007,900
Federal National Mortgage Association:
Medium-Term Notes, 6.36%, 2002 2,500,000 2,524,325
Medium-Term Notes, 6.16%, 2007 2,000,000 2,023,800
8,048,255
U.S. Government Agencies/Mortgage-Backed--33.0%
Federal Home Loan Mortgage Corp.:
6.505%, 3/1/2029 4,993,586 4,970,166
7%, 2/1/2029 6,868,646 6,975,935
Multiclass Mortgage Participation Ctfs., REMIC:
Ser. 1453, Cl. S, 7.848%, 2000i 400,962 402,021
Ser. 1660, Cl. H, 6.50%, 2009 2,570,000 2,632,930
Ser. 2062, Cl. PG, 6.25%, 2026 2,000,000 1,950,840
Ser. 2123, Cl. PE, 6%, 2027 2,000,000 1,935,620
Federal National Mortgage Association:
6%, 3/1/2014-2/1/2029 8,477,355 8,298,132
6.50%, 12/1/2028 4,457,087 4,433,375
7%, 6/1/2009 1,661,827 1,705,450
8%, 2/1/2013 2,637,633 2,729,107
REMIC Trust, Pass-Through Ctfs.
(collateralized by FNMA Pass-Through Ctfs.):
Ser. 1997-30, Cl. VG, 7%, 2012 2,000,000 2,028,064
Ser. 1998-M2, Cl. B, 6.247%, 2021 1,500,000 1,495,013
Government National Mortgage Assocaition I:
6%, 11/15/2008-5/15/2009 2,819,618 2,820,492
6.5%, 2/15/2024-2/15/2029 5,867,072 5,853,241
7%, 10/15/2023-6/15/2028 12,953,614 13,193,004
7.5%, 3/15/2027-12/15/2028 5,894,448 6,082,304
8%, 2/15/2008-4/15/2008 4,877,931 5,102,848
72,608,542
U.S. Government--23.9%
U.S. Treasury Bonds:
5.25%, 11/15/2028 3,000,000 2,775,960
6.375%, 8/15/2027 1,500,000 1,601,580
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- -------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -------------------------------------------------------------------------------
U.S. Government--23.9%
U.S. Treasury Bonds:
7.875%, 2/15/2021 4,000,000 4,938,440
U.S. Treasury Coupon Strips,
0%, 2/15/2017 3,700,000 1,264,068
U.S. Treasury Notes:
4.75%, 11/15/2008 750,000 716,715
5.875%, 9/30/2002 2,425,000 2,472,360
6.125%, 9/30/2000 500,000 507,195
6.125%, 8/15/2007 10,000,000 10,451,100
6.5%, 8/31/2001 4,500,000 4,635,135
6.5%, 10/15/2006 9,000,000 9,588,960
6.625%, 4/30/2002 5,500,000 5,717,635
7.875%, 11/15/2004 7,000,000 7,847,350
52,516,498
Total Bonds and Notes (cost $213,387,871) 211,855,857
Principal
Short-Term Investments--3.0% Amount ($) Value ($)
- -------------------------------------------------------------------------------
Repurchase Agreements;
Salomon Smith Barney, 4.87%
Dated 4/30/1999, due 5/3/1999 in the
amount of $6,737,733 (fully collateralized by
$6,680,000 U.S. Treasury Notes, 6.375%,
3/31/2001 value $6,873,720)
(cost $6,735,000) 6,735,000 6,735,000
- -------------------------------------------------------------------------------
Total Investments (cost $220,122,871) 99.4% 218,590,857
Cash and Receivables (net) .6% 1,222,502
Net Assets 100.0% 219,813,359
a Reflects date security can be redeemed at holder's option; the stated
maturity is 2/15/2036.
b Variable rate security--interest rate subject to periodic change.
c National face amount shown.
d Reflects date security can be redeemed at holder's option, the stated
maturity is 10/15/2009.
e Reflects date security can be redeemed at holder's option, the stated
maturity is 2/15/2005.
f Reflects date security can be redeemed at holder's option, the stated
maturity is 5/1/2025.
g Reflects date security can be redeemed at holder's option, the stated
maturity is 7/22/2026.
h Reflects date security can be redeemed at holder's option, the stated
maturity is 8/15/2026.
i Inverse floater security--interest rate subect to periodic change.
10
<PAGE>
STATEMENT OF ASSESTS AND LIABILITIES
April 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------
Assets ($):
Investments in securities--See Statement
of Investments--Note 1(c) 220,122,871 218,590,857
Cash 33,459
Interest receivable 2,493,302
Receivable for shares of Capital Stock subscribed 1,000
221,118,618
- -------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 98,173
Due to Distributor 167
Payable for shares of Capital Stock redeemed 1,206,919
1,305,259
- -------------------------------------------------------------------------------
Net Assets ($) 219,813,359
- -------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 221,360,101
Accumulated distribution in excess of investment income (7,936)
Accumulated net realized gain (loss) on investments (6,792)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (1,532,014)
- -------------------------------------------------------------------------------
Net Assets ($) 219,813,359
- -------------------------------------------------------------------------------
Net Asset Value Per Share
Investor Restricted
Shares Shares
- -------------------------------------------------------------------------------
Net Assets ($) 1,588,504 218,224,855
Shares Outstanding 128,229 17,639,602
- -------------------------------------------------------------------------------
Net Asset Value Per Share ($) 12.39 12.37
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
Income
Interest Income 6,186,870
Expenses:
Management fee--Note 2(a) 533,157
Distribution fees (Investor Shares)--Note 2(b) 1,935
Loan commitment fees--Note 4 634
Total Expenses 535,726
Investment Income--Net 5,651,144
- -------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 21,789
Net unrealized appreciation (depreciation) on investments (5,117,224)
Net Realized and Unrealized Gain (Loss) on Investments (5,095,435)
Net Increase in Net Assets Resulting from Operations 555,709
See notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSESTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net 5,651,144 8,908,277
Net realized gain (loss) on investments 21,789 2,343,195
Net unrealized appreciation (depreciation) on investments (5,117,224) 1,687,747
Net Increase (Decrease) in Net Assets
Resulting from Operations 555,709 12,939,219
- -----------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Investor shares (43,460) (37,690)
Restricted shares (5,643,822) (8,842,385)
Net realized gain on investments:
Investor shares (19,420) --
Restricted shares (2,243,985) --
Total Dividends (7,950,687) (8,880,075)
- -----------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Investor shares 912,378 1,363,480
Restricted shares 65,788,461 77,712,955
Dividends reinvested:
Investor shares 57,498 34,916
Restricted shares 3,989,559 3,916,055
Cost of shares redeemed:
Investor shares (758,979) (294,657)
Restricted shares (13,804,162) (24,773,764)
Increase (Decrease) in Net Assets from Capital Stock
Transactions 56,184,755 57,958,985
Total Increase (Decrease) in Net Assets 48,789,777 62,018,129
- -----------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 171,023,582 109,005,453
End of Period 219,813,359 171,023,582
Undistributed investment income (Distribution in excess
of investment income)--net (7,936) 28,202
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions
Investor Shares
Shares Sold 72,018 106,920
Shares Issued for dividends reinvested 4,552 2,742
Shares redeemed (60,065) (23,285)
Net Increase (Decrease) in Shares Outstanding 16,505 6,377
- -----------------------------------------------------------------------------------------
Restricted Shares
Shares Sold 5,232,176 6,153,064
Shares Issued for dividends reinvested 315,744 308,516
Shares redeemed (1,101,355) (1,951,559)
Net Increase (Decrease) in Shares Outstanding 4,446,565 4,510,021
</TABLE>
See notes to financial statements
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results
for a single Fund share. "Total return" shows how much your investment in
the Fund would have increased (or decreased) during each period, assuming
you had reinvested all dividends and distributions. These figures have been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
-------------------------
Investor Shares (Unaudited) 1998 1997 1996a
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 12.87 12.52 12.29 12.50
Investment Operations:
Investment income--net .35 .72 .74 .71
Net realized and unrealized gain (loss)
on investments (.32) .35 .23 (.21)
Total from Investment Operations .03 1.07 .97 .50
Distributions:
Dividends from investment income--net (.35) (.72) (.74) (.71)
Dividends from net realized gain on investments (.16) -- -- --
Total Distributions (.51) (.72) (.74) (.71)
Net asset value, end of period 12.39 12.87 12.52 12.29
- ----------------------------------------------------------------------------------------
Total Return (%) .52b 8.80 8.21 4.18
- ----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets .80b .80 .80 .79
Ratio of net investment income
to average net assets 5.58b 5.68 6.01 5.61
Portfolio Turnover Rate 66.20c 106.93 143.91 198.16
- ----------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,589 1,438 317 126
<FN>
a From November 1, 1995 (commencement of operations) to
October 31, 1996.
b Annualized.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
-------------------------
Restricted Shares (Unaudited) 1998 1997 1996a
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 12.85 12.52 12.29 12.50
Investment Operations:
Investment income--net .36 .76 .77 .74
Net realized and unrealized gain (loss)
on investments (.31) .32 .23 (.21)
Total from Investment Operations .05 1.08 1.00 .53
Distributions:
Dividends from investment income--net (.37) (.75) (.77) (.74)
Dividends from net realized gain on investments (.16) -- -- --
Total Distributions (.53) (.75) (.77) (.74)
Net asset value, end of period 12.37 12.85 12.52 12.29
- -----------------------------------------------------------------------------------------
Total Return (%) .77b 8.90 8.49 4.45
- -----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets .55b .55 .55 .55
Ratio of net investment income
to average net assets 5.83b 5.95 6.31 6.29
Portfolio Turnover Rate 66.20c 106.93 143.91 198.16
- -----------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 218,225 169,585 108,688 58,466
<FN>
a From November 1, 1995 (commencement of operations) to October 31, 1996
b Annualized
c Not annualized
</FN>
</TABLE>
See notes to financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Disciplined Intermediate Bond 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 outperform
the Lehman Brothers Aggregate Bond Index, while maintaining
a similar level of risk, by investing primarily in domestic
and foreign investment-grade debt securities and by actively
managing bond market and maturity exposure. The Dreyfus
Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A.
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 is authorized to
issue 100 million of $.001 par value Capital Stock in each
of the following classes of shares: Investor and Restricted.
Investor shares are offered to any investor. Restricted
shares are offered only to the clients of banks, securities
brokers or dealers and other financial institutions
(collectively, Service Agents) that have entered into
selling agreements with the Fund's distributor. Other
differences between the classes include the services offered
to and the expenses borne by each class.
Investment income, net of expenses (other than class
specific expenses) and realized and unrealized gains and
losses are allocated daily to each class of shares based
upon the relative proportion of net assets of each class.
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
(excluding short-term investments, other than U.S. Treasury
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Bills) are valued each business day by an independent
pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are
readily available and are representative of the bid side of
the market in the judgment of the Service are valued at the
mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of
the market for such securities). Other investments (which
constitute a majority of the portfolio securities) are
carried at fair value as determined by the Service, based on
methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market
conditions. 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. Short-
term investments, excluding U.S. Treasury Bills are carried
at amortized cost, which approximates value.
(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) 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
18
<PAGE>
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) Dividends 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 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 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 Code, and to make distributions
of tax-able 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
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
obligated to pay the Manager a fee, calculated daily and
paid monthly, at the annual rate of .55% 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.
(b) Distribution plan: Under the 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 average
daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation,
an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities primarily
intended to result in the sale of Investor shares. The
Restricted shares bear no distribution fee. During the
period ended April 30, 1999, Investor shares were charged
$1,935 pursuant to the Plan.
20
<PAGE>
Under its terms, the Plan shall remain in effect from year
to year, provided such continuance is approved annually by a
vote of 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 in any
agreement related to the Plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales (including
paydowns) of investment securities, excluding short-term
securities, during the period ended April 30, 1999, amounted
to $173,624,503 and $124,975,186, respectively.
At April 30, 1999, accumulated net unrealized depreciation
on investments was $1,532,014, consisting of $930,127 gross
unrealized appreciation and $2,462,141 gross unrealized
depreciation.
At April 30, 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 ("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 April 30, 1999, the Fund
did not borrow under the Facility.
The Fund 21
<PAGE>
For More Information
Dreyfus
Disciplined Intermediate Bond 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or
downloaded from: http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999 Dreyfus Service Corporation 302/702SA994
Dreyfus Institutional
U.S. Treasury
Money Market Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- ---------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
FOR MORE INFORMATION
- -----------------------
Back Cover
<PAGE>
Dreyfus Institutional U.S. Treausury The Fund
Money Market Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Institutional U.S.
Treasury Money Market Fund, covering the six-month period from November 1, 1998
through April 30, 1999. Inside, you'll find valuable information about how the
Fund was managed during the reporting period, including a discussion with the
Fund's portfolio manager, Laurie Carroll.
Yields on money market securities generally declined over the reporting period
in response to the Federal Reserve Board's decision in the fall of 1998 to ease
monetary policy. While the U.S. economy has continued to grow, the Federal
Reserve was concerned about persistent economic weakness abroad. Their adoption
of lower short-term interest rates was intended to stimulate not just domestic
economic growth, but the economies of other nations as well.
Despite lower nominal interest rates for most money market Funds, very low
inflation continued to support above-average real returns, which are nominal
yields less the rate of inflation.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Institutional U.S. Treasury Money Market
Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Laurie Carroll, Portfolio Manager
How did Dreyfus Institutional U.S. Treasury Money Market Fund perform
during the period?
For the six-month period ended April 30, 1999, Dreyfus Institutional U.S.
Treasury Money Market Fund produced an annualized yield of 4.44%, and after
taking into account the effect of compounding, the annualized effective yield
was 4.54%.1 The Fund provided a total return of 2.22%,2 compared to the Lipper
Institutional U.S. Treasury Money Market Funds category average total return of
2.19% for the same period.3 We attribute the Fund's competitive returns to the
fact that the Fund owned longer- term securities, which enabled us to lock in
higher returns in an environment characterized by declining interest rates.
What is the Fund's investment approach?
As a U.S. Treasury money market Fund, our goal is to provide shareholders with
an investment vehicle that is made up of U.S. Treasury bills, also known as
T-bills. A major benefit of these securities is that they are very liquid in
nature; that is, they can be converted to cash quickly. To meet our investment
goal, we invest in a portfolio of Treasury securities that are issued by the
United States government as well as repurchase agreements that are backed by
U.S. Treasuries. Because U.S. Treasury obligations are backed by the full faith
and credit of the U.S. government, they are generally considered to be among the
highest-quality investments available. By investing in these obligations, the
Fund seeks to add an incremental degree of safety to the portfolio. The Fund is
required to maintain an average dollar-weighted maturity of 90 days or less.
During the past six-months, the returns offered by U.S. Treasury securities,
such as those held in this Fund, have declined. That's because interest rates,
which generally determine the returns for these types of investments, also
declined during the period. For example, last
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (Unaudited)
November, the Federal Reserve Board lowered short-term interest rates to 4.75%,
a move that came on the heels of two other back-to-back cuts. The Fed trimmed
rates primarily in response to the global financial crisis that took place in
September and October and in an attempt to stimulate what it believed was going
to be slower domestic economic growth. However, to the surprise of many industry
analysts, the U.S. economy exhibited strong growth during both the fourth
quarter of 1998 and the first quarter of 1999.
With short-term interest rates trending downward during the period, it gave even
greater importance to a key aspect of our investment strategy: managing the
portfolio's average maturity. By actively managing maturity, we attempt to
increase income and preserve or enhance total return.
We consistently tried to keep our average maturity longer, rather than shorter.
The Fund can invest in securities with a remaining maturity of up to 13 months.
We kept our average maturity long during the period in anticipation of what we
thought was a declining interest rate environment. As it turns out, that
decision proved beneficial and when interest rates moved lower, we were able to
lock in higher yields by owning longer-term U.S. Treasury bills. As of the end
of the reporting period, the Fund's average maturity was 51 days.
What other factors influenced the Fund's performance?
During the period, the largest portion of the Fund's assets were invested in
repurchase agreements backed by U.S. Treasuries. Commonly referred to as repos,
repurchase agreements are overnight loans to government dealers. The primary
purpose of investing in repos is to provide liquidity to the Fund. However,
because their rates were higher than comparable maturity T-bills during the
period, they generated a higher return. During the six-month reporting period,
we allocated approximately 50% of the Fund's assets to repos, a move that served
to boost overall returns.
4
<PAGE>
What is the Fund's current strategy?
We feel confident that our strategy of managing maturity as a way to attempt to
add incremental yield to the portfolio is a prudent one. We currently plan to
remain invested in securities that have longer maturity dates. We also intend to
continue to take advantage of the higher yields associated with repurchase
agreements, wherever possible. We believe these strategies will help us maintain
a portfolio that is conservative in nature and can manage to provide investors
with a competitive level of income, liquidity, preservation of capital, and a
yield that reflects prevailing money market conditions.
May 13, 1999
1 Annualized effective yield is based upon dividends declared daily and
reinvested monthly. An investment in the Fund is not insured or
guaranteed by the FDIC or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in this Fund, but also has the
potential to make money.
2 Total return includes reinvestment of dividends.
3 Source: Lipper Analytical Services, Inc.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--29.5% Purchase (%) Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5/20/99 4.47 35,000,000 34,918,353
5/27/99 4.26 25,000,000 24,923,444
6/3/99 4.40 50,000,000 49,799,021
6/10/99 4.26 25,000,000 24,882,361
6/17/99 4.25 25,000,000 24,862,264
7/22/99 4.27 25,000,000 24,759,410
Total U.S. Treasury Bills (cost $184,144,853) 184,144,853
- -------------------------------------------------------------------------------------------------
U.S. Treasury Notes--26.6%
- -------------------------------------------------------------------------------------------------
6.00%, 6/30/99 4.36 15,000,000 15,037,208
6.75%, 6/30/99 4.31 15,000,000 15,056,435
5.875%, 7/31/99 4.73 15,000,000 15,041,163
6.875%, 7/31/99 4.49 15,000,000 15,087,487
5.875%, 8/31/99 4.53 25,000,000 25,093,034
5.75%, 9/30/99 4.53 15,000,000 15,061,798
6.00%, 10/15/99 4.54 15,000,000 15,084,421
5.875%, 11/15/99 4.53 25,000,000 25,171,007
5.625%, 11/30/99 4.52 25,000,000 25,142,969
Total U.S. Treasury Notes (cost $165,775,522) 165,775,522
- -------------------------------------------------------------------------------------------------
Repurchase Agreements--43.3%
- -------------------------------------------------------------------------------------------------
Barclays De Zoette Wedd Securities, Inc.,
Tri-Party Repurchase Agreement
dated 4/30/99, due 5/3/99 in the amount of
$50,020,333 (fully collateralized by $50,325,000
U. S. Treasury Notes, 7.50% due 10/31/99,
value $51,000,261) 4.88 50,000,000 50,000,000
Credit Suisse First Boston, Tri-Party Repurchase
Agreement dated 4/30/99, due 5/3/99 in the
amount of $25,010,062 (fully collateralized by
$18,609,000 U. S. Treasury Bonds, 10.375%,
due 11/15/20012, $25,617,820). 4.83 25,000,000 25,000,000
Donaldson, Lufkin & Jenrette Securities, Inc.,
Tri-Party Repurchase Agreement
dated 4/30/99, due 5/3/99 in the amount of
$105,042,700 (fully collateralized by $33,146,000
U. S. Treasury Notes, 5.625% to 6.625%,
due from 10/31/99 to 4/30/2002, $64,321,000,
U.S. Treasury Bonds, 5.25%-10.375% , due from
11/15/2012 to 11/15/2028, value $107,300,374). 4.88 105,000,000 105,000,000
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Annualized
Yield on
Date of Principal
Repurchase Agreements (continued) Purchase (%) Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Goldman, Sachs & Co. Tri-Party Repurchase
Agreement dated 4/30/99, due 5/3/99 in the
amount of $89,970,868 (fully collateralized by
$69,596,000 U.S. Treasury Bonds,
7.25%-13.875%, due from 5/15/2011 to
8/15/2022, value $91,733,631). 4.89 89,934,220 89,934,220
Total Repurchase Agreements
(cost $269,934,220) 269,934,220
- -------------------------------------------------------------------------------------------------
Total Investments (cost $619,854,595) 99.4% 619,854,595
Cash and Receivables (Net) .6% 3,476,302
Net Assests 100.0% 623,330,897
</TABLE>
See notes to financial statements.
The Fund 7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Cost Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $269,934,220
--Note 1(c) 619,854,595 619,854,595
Cash 847,093
Interest receivable 2,775,211
623,476,899
- ----------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 69,613
Due to Distributor 76,389
146,002
- ----------------------------------------------------------------------------------------------
Net Assets ($) 623,330,897
- ----------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 623,331,274
Accumulated net realized gain (loss) on investments (377)
- ----------------------------------------------------------------------------------------------
Net Assets ($) 623,330,897
- ----------------------------------------------------------------------------------------------
Shares Outstanding
(2 billion shares of $.001 par value Capital Stock authorized) 623,331,278
- ----------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($) 1.00
</TABLE>
See notes to financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
<S> <C>
Income:
Interest Income 15,536,030
Expenses:
Management fee--Note 2(a) 495,992
Shareholder servicing costs--Note 2(b) 495,992
Total Expenses 991,984
Investment Income--Net 14,544,046
Net Realized Gain (Loss) on Investments--Note 1(b) (377)
Net Increase in Net Assets Resulting From Operations 14,543,669
</TABLE>
See notes to financial statements.
The Fund 9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net 14,544,046 34,828,869
Net realized gain (loss) from investments (377) 160,744
Net Increase (Decrease) in Net Assets
Resulting from Operations 14,543,669 34,989,613
- ------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net (14,544,046) (34,828,869)
Net realized gain on investments (160,744) (45,754)
Total Dividends (14,704,790) (34,874,623)
Capital Stock Transactions ($1.00 per share):
Net proceeds from shares sold 2,745,126,611 5,042,928,785
Dividends reinvested 1,999,536 8,151,415
Cost of shares redeemed (2,768,931,627) (5,182,623,861)
Increase (Decrease) in Net Assets from Capital Stock
Transactions (21,805,480) (131,543,661)
Total Increase (Decrease) in Net Assets (21,966,601) (131,428,671)
- ------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 645,297,498 776,726,169
End of Period 623,330,897 645,297,498
</TABLE>
See notes to financial statements.
10
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the Fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1999 ----------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period ($) 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .022 .051 .050 .051 .054 .035
Distributions:
Dividends from investment
income--net (.022) (.051) (.050) (.051) (.054) (.035)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------
Total Return (%) 4.48a 5.22 5.16 5.17 5.57 3.55
- --------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .30a .30 .30 .30 .30 .30b
Ratio of net investment income
to average net assets 4.40a 5.10 5.04 5.06 5.44 3.55
- --------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 623,331 645,297 776,726 666,360 767,948 586,778
<FN>
a Annualized.
b Annualized expense ratio before reimbursement of expenses by the
Manager for the year ended October 31, 1994
was .31%.
</FN>
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Institutional U.S. Treasury 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, 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 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 (the "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.
12
<PAGE>
(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 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 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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
At April 30, 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).
The Fund 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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, shareholder servicing 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 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 in
fact paid directly by the Manager to the non-interested Directors.
14
<PAGE>
(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, 1999,
the Fund was charged $495,992 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, 1999, the Fund did not borrow
under the line of credit.
The Fund 15
<PAGE>
NOTES
<PAGE>
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999, Dreyfus Service Corporation 930SA994
Dreyfus Institutional
Government Money
Market Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- --------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
FOR MORE INFORMATION
- --------------------------
Back Cover
<PAGE>
Dreyfus Institutional Government The Fund
Money Market Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Institutional
Government Money Market Fund, covering the six-month period from November 1,
1998 through April 30, 1999. Inside, you'll find valuable information about
how the Fund was managed during the reporting period, including a discussion
with the Fund's portfolio manager, Laurie Carroll.
Yields on money market securities generally declined over the reporting period
in response to the Federal Reserve Board's decision in the fall of 1998 to ease
monetary policy. While the U.S. economy has continued to grow, the Federal
Reserve was concerned about persistent economic weakness abroad. Their adoption
of lower short-term interest rates was intended to stimulate not just domestic
economic growth, but the economies of other nations as well.
Despite lower nominal interest rates for most money market funds, very low
inflation continued to support above-average real returns, which are nominal
yields less the rate of inflation.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Institutional Government Money Market
Fund.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Laurie Carroll, Portfolio Manager
How did Dreyfus Institutional Government Money Market Fund
perform during the period?
For the six-month period ended April 30, 1999, Dreyfus Institutional Government
Money Market Fund produced an annualized yield of 4.57%, and after taking into
account the effect of compounding, the annualized effective yield was 4.67%.1
The Fund provided a total return of 2.29%,2 compared to the Lipper
Institutional U.S. Government Money Market Funds category average total return
of 2.32% for the same period.3 We attribute the Fund's competitive returns to
the fact that the Fund's relatively long average portfolio maturity-owned
longer-term securities, which enabled us to lock in higher returns in an
environment characterized by declining interest rates.
What is the Fund's investment approach?
As a government money market fund, our goal is to provide shareholders with an
investment vehicle that is made up of high-quality income-producing securities
that are also very liquid in nature; that is, that they can be converted to
cash quickly. To meet that goal, we invest in a portfolio of high-quality,
short-term debt securities that are issued by the United States government or
its agencies or instrumentalities, including U.S. Treasuries, as well as
repurchase agreements backed by U.S. Treasuries. Generally, the Fund is
required to invest at least 95% of its assets in the securities of issuers
with the highest credit rating. It is also required to maintain an average
dollar-weighted portfolio maturity of 90 days or less.
During the past six months, the returns offered by government money market
securities, such as those held in this Fund, have declined. That's because
interest rates, which generally determine the returns for these types of
investments, also declined during the period. For example, last November, the
Federal Reserve Board lowered short-term interest rates to 4.75%, a move that
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
came on the heels of two other back-to-back cuts. The Fed trimmed rates
primarily in response to the global financial crisis that took place in
September and October and in an attempt to stimulate what it believed was
going to be slower domestic economic growth. However, to the surprise of many
industry analysts, the U.S. economy exhibited strong growth during both the
fourth quarter of 1998 and the first quarter of 1999.
With short-term interest rates trending downward during the period, it gave
even greater importance to a key aspect of our investment strategy: managing
the portfolio's average maturity. By actively managing maturity, we attempt to
increase income and preserve or enhance total return.
We consistently tried to keep our average maturity longer, rather than shorter.
The Fund can invest in securities with a maturity of up to 13 months. We kept
our average maturity long during the period in anticipation of what we thought
would be a declining interest rate environment. As it turns out, that decision
proved beneficial and, as interest rates moved lower, we were able to lock in
higher yields by owning longer-term securities. As of the end of the reporting
period, the Fund's average maturity was 39 days.
What other factors influenced the Fund's performance?
In this Fund, we purchase U.S. Treasuries and other securities that are issued
by U.S. government-sponsored entities, as well as repurchase agreements that
are backed by U.S. Treasuries. Examples of the Fund's agency bonds include
those issued by Federal Farm Credit Banks, Federal Home Loan Banks, Federal
Home Mortgage Corporation and Federal National Mortgage Association.
As of April 30, the largest portion of the Fund's assets were invested in
repurchase agreements. Commonly referred to as repos, repurchase agreements
are overnight loans to government dealers that are collateralized with U.S.
4
<PAGE>
Treasuries. The primary purpose of investing in repos is to provide liquidity
to the Fund. However, because their rates were higher than comparable maturity
T-bills during the period, they generated a higher return. Accordingly, we
allocated approximately 25% of the Fund's assets to repos, a move that served
to boost overall returns.
What is the Fund's current strategy?
We feel confident that our strategy of managing maturity as a way to attempt to
add incremental yield to the portfolio is a prudent one. To that end, we
currently plan to remain invested in securities that have longer maturity
dates. We also intend to continue to take advantage of the higher yields
associated with repurchase agreements, wherever possible. Using these
strategies, we believe we've created a portfolio that is conservative in nature
and can provide investors with a competitive level of income, liquidity and
preservation of capital.
May 13, 1999
1 Annualized effective yield is based upon dividends declared daily and
reinvested monthly. An investment in this Fund is not insured or guaranteed
by the FDIC or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund, but also has the potential to make
money.
2 Total return includes reinvestment of dividends.
3 Source: Lipper Analytical Services, Inc.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Annualized
Yield on
Date of Principal
U.S. Government Agencies--70.5% Purchase (%) Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal Farm Credit Banks, Notes
5/3/99 4.54 10,000,000 10,000,000
6/1/99 4.76 15,000,000 15,000,000
7/1/99 4.72 10,000,000 10,000,000
8/2/99 4.59 5,000,000 5,000,000
9/1/99 4.76 5,000,000 5,000,000
10/1/99 4.75 5,000,000 5,000,000
Federal Home Loan Banks, Discount Notes
6/23/99 4.73 10,000,000 9,931,836
10/8/99 4.75 5,000,000 4,898,222
12/31/99 4.74 5,000,000 4,846,483
Federal Home Loan Mortgage Corp., Discount Notes
5/14/99 4.81 5,000,000 4,991,424
5/18/99 4.84 5,000,000 4,988,690
5/20/99 4.79 5,000,000 4,987,505
6/10/99 4.74 7,300,000 7,261,878
6/15/99 4.88 5,000,000 4,969,938
9/9/99 4.79 5,000,000 4,914,486
Federal National Mortgage Association, Discount Notes
5/6/99 4.78 5,000,000 4,996,722
5/10/99 4.77 5,000,000 4,994,113
5/19/99 4.79 5,000,000 4,988,163
6/4/99 4.86 5,000,000 4,977,333
6/11/99 4.74 10,000,000 9,947,042
7/13/99 4.76 5,000,000 4,952,347
8/24/99 4.78 2,841,000 2,798,346
Federal National Mortgage Association,
Floating Rate Notes
5/28/99a 4.93 20,000,000 9,998,842
Total U.S. Government Agencies (cost $159,443,370) 159,443,370
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Repurchase Agreements--29.1%
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Barclays De Zoette Wedd Securities Inc.,
Tri-Party Repurchase Agreement
dated 4/30/99, due 5/3/99 in the amount
of $10,004,067 (fully collateralized by
$10,065,000 U.S. Treasury Notes 7.50%,
due 10/31/99, value $10,200,052) 4.88 10,000,000 10,000,000
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Annualized
Yield on
Date of Principal
Repurchase Agreements (continued) Purchase (%) Amount ($) Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Donaldson, Lufkin & Jenrette Securities Inc.,
Tri-Party Repurchase Agreement
dated 4/30/99, due 5/3/99 in the amount
of $10,004,067 (fully collateralized by
$9,762,000 U.S. Treasury Notes 5.75%,
due 11/30/2002, value $10,200,011) 4.88 10,000,000 10,000,000
Goldman, Sachs & Co., Tri-Party Repurchase
Agreement dated 4/30/99, due 5/3/99 in
the amount of $45,781,900 (fully
collateralized by $47,462,000 U.S.
Treasury Bonds 5.50%, due 8/15/2028,
value $46,679,309) 4.89 45,763,251 45,763,251
Total Repurchase Agreements (cost $65,763,251) 65,763,251
- -------------------------------------------------------------------------------
Total Investments (cost $225,206,621) 99.6% 225,206,621
Cash and Receivables (Net) .4% 874,515
Net Assets 100.0% 226,081,136
<FN>
a Variable interest rate-subject to periodic change.
See notes to financial statements.
</FN>
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------
Assets ($):
Investments in securities--
See Statement of Investments
(including Repurchase Agreements
of $65,763,251)--Note 1 (c) 225,206,621 225,206,621
Cash 40,347
Interest receivable 908,820
226,155,788
- -------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 43,709
Due to Distributor 30,943
74,652
- -------------------------------------------------------------------------------
Net Assets ($) 226,081,136
- -------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 226,195,208
Accumulated net realized gain (loss) on investments (114,072)
- -------------------------------------------------------------------------------
Net Assets ($) 226,081,136
- -------------------------------------------------------------------------------
Shares Outstanding
(2 billion shares of $.001 par value Capital Stock authorized)
226,195,208
Net Asset Value, offering and redemption price per share ($) 1.00
See notes to financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
Income:
Interest Income 6,247,288
Expenses:
Management fee--Note 2(a) 192,190
Shareholder servicing costs--Note 2(b) 192,190
Total Expenses 384,380
Investment Income--Net 5,862,908
- -------------------------------------------------------------------------------
Net Realized Gain (Loss) on Investments--Note 1(b) (31,649)
Net Increase in Net Assets Resulting From Operations 5,831,259
See notes to financial statements.
The Fund 9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -------------------------------------------------------------------------------
Operations ($):
Investment income--net 5,862,908 11,522,861
Net realized gain (loss) from investments (31,649) (68,460)
Net Increase (Decrease) in Net Assets
Resulting from Operations 5,831,259 11,454,401
- -------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net (5,862,908) (11,522,861)
- -------------------------------------------------------------------------------
Capital Stock Transactions ($1.00 per share):
Net proceeds from shares sold 1,234,825,004 2,124,520,629
Dividends reinvested 198,081 618,577
Cost of shares redeemed (1,352,898,412) (1,972,935,967)
Increase (Decrease) in Net Assets from
Capital Stock Transactions (117,875,327) 152,203,239
Total Increase (Decrease) in Net Assets (117,906,976) 152,134,779
- -------------------------------------------------------------------------------
Net Assets ($):
Beginning of period 343,988,112 191,853,333
End of period 226,081,136 343,988,112
See notes to financial statements.
10
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends
and distributions. These figures have been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Six Months
Ended
April 30,
1999 Year Ended October 31,
------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of
period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .023 .052 .052 .051 .056 .036
Distributions:
Dividends from investment
income--net (.023) (.052) (.052) (.051) (.056) (.036)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------
Total Return (%) 4.62* 5.36 5.28 5.25 5.71 3.63
- ------------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .30* .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 4.58* 5.22 5.14 5.14 5.55 3.60
- ------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 226,081 343,988 191,853 295,434 515,812 470,007
<FN>
* Annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 11
<PAGE>
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, 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 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 (the "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.
12
<PAGE>
(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 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 of 1986,
as amended (the "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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The Fund 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The Fund has an unused capital loss carryover of approximately $82,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1998. If not
applied, $14,000 of the carryover expires in fiscal 2005 and $68,000 expires
in fiscal 2006.
At April 30, 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 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, shareholder servicing
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
14
<PAGE>
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.
(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, 1999, the Fund was charged $192,190 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, 1999, the Fund did not borrow
under the line of credit.
The Fund 15
<PAGE>
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request to [email protected]
On the Internet Information can be viewed online or downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999, Dreyfus Service Corporation 919SA994
Dreyfus Premier
Midcap Stock Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
The Fund
- --------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
15 Financial Highlights
18 Notes to Financial Statements
For More Information
- ----------------------
Back Cover
<PAGE>
Dreyfus Premier
Midcap Stock Fund
The Fund
Letter From The President
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Midcap
Stock Fund, covering the six-month period from November 1, 1998 through April
30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio manager, John O'Toole.
The past six months have been rewarding for many equity investors. The Federal
Reserve Board's lowering of short-term interest rates in the Fall of 1998
appears to have helped U.S. businesses withstand the effects of economic
weakness in Japan, Asia and Latin America. At the same time, strong U.S.
economic growth, low inflation and high levels of consumer spending supported
continued strength in many broad measures of stock market performance. As a
result, several major U.S. market indices set new records, including the Dow
Jones Industrial Average's first-ever close above the 10,000 level. The
broader S&P 500 Index and the technology-laden NASDAQ Index also recorded new
highs.
However, until near the end of the six-month period, mid-cap stocks continued
to lag their larger counterparts substantially. For most of the reporting
period, investors continued to favor large companies with predictable earnings
and tended to avoid mid-sized companies with shorter track records. In April,
however, many mid-cap stocks began to rally as investors, became increasingly
attracted by their valuation levels. In a global economic environment
currently characterized by fewer concerns, investors appear to have become
somewhat more comfortable with stocks other than the largest cap stocks.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Premier Midcap Stock Fund.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
Discussion of Fund Performance
- ------------------------------
John O'Toole, Portfolio Manager
How did Dreyfus Premier Midcap Stock Fund perform
relative to its benchmark?
The Fund's total return for the six-month period ended April 30, 1999 was
13.76% for Class A shares, 13.36% for Class B shares, 13.34% for Class C
shares and 13.87% for Class R shares.1 The total return for the Standard &
Poor's MidCap 400 Index (S&P 400), the Fund's benchmark, was 18.86% for the
same period.2
What is the Fund's investment approach?
The Fund invests primarily in a blended portfolio of growth and value stocks
of mid-cap companies chosen through a disciplined process that combines
computer analysis with human judgement. The quantitatively driven valuation
process identifies and ranks approximately 2,500 mid-capitalization stocks as
an attractive, neutral or unattractive investment, based on approximately 15
different valuation inputs. Then our investment management team conducts
fundamental research on each stock, which ultimately results in their buy and
sell recommendations. The Fund seeks to own the best performing stocks within
each economic sector of the S&P 400. By maintaining an economic sector neutral
stance, we allow individual stock selection to drive the portfolio's
performance.
The quantitative valuation process used in the management of the Fund is based
upon the degree to which companies are exposed to a series of fundamentally
based valuation factors. Some examples of these factors would include
consensus earnings estimates, profit margin, and growth in cash flow. We
believe that these types of fundamental factors can have an important
influence on stock returns. We then establish weights for each of our factors
based upon a statistical analysis of which factors are being rewarded by
investors, making adjustments along the way for the uniqueness of various
The Fund 3
<PAGE>
DISCUSSIONS OF FUND PERFORMANCE (continued)
industries and economic sectors. An example of this process may be that we see
the equity markets rewarding companies with strong growth in cash flow. If
this is the case, we would then add more weight to our growth in cash flow
factor. We then take the output of the valuation process, and build a
portfolio that is economic sector neutral compared to the S&P 400, and as is
practical fully invested. Our goal is to build a broadly diversified portfolio
of mid-capitalization stocks that allows individual stock selection based upon
our quantitative valuation model to provide the returns to meet our
performance objectives.
What other factors influenced the Fund's performance?
We are obviously disappointed by the performance of the Fund for the period
under review. Our quantitative valuation process used by the Manager did not
perform up to expectations over the past six-month period. Stock selection was
especially negative in December 1998 and April 1999. In December, performance
was impacted by our holding in BMC Software. This company provides enterprise
software products, and that industry was generally under price pressures in
late 1998. In April, the Fund felt a negative impact by not having a position
in two large Index members: E*Trade Group and QUALCOMM, which had large
positive movements in price during the month.
Some issues that had a positive impact upon return over the period under
review include Biogen, Best Buy, and SABRE Group Holdings Cl. A. Biogen is a
company that provides pharmaceutical products, and performed well during the
period on the strength of its very successful drug that treats multiple
sclerosis. Best Buy is a retailer of personal computers, consumer electronics,
and major appliances, and continues to benefit from the strong domestic
economy and booming consumer spending. Finally, SABRE Group Holdings provides
both traditional and web-based travel reservation services, and has benefited
especially from increased interest in firms providing services over the
internet.
4
<PAGE>
What is the Fund's current strategy?
We continue to follow our quantitatively driven valuation model and our
economic sector neutral portfolio construction process. Over the past six
months, we have seen our valuation model move from a modest emphasis on our
earnings oriented factors to a more neutral weighting between our earnings and
price based factors. Our goal remains to use our valuation model to allow us
to pick the best performing mid-capitalization stocks in each economic sector.
May 13, 1999x
1 Total return includes reinvestment of dividends and any capital gains
paid, and does not take into consideration the maximum initial sales charge
in the case of Class A shares, or the applicable contingent deferred sales
charge on redemptions in the case of Class B and Class C shares.
2 Source: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's MidCap 400 Index is a broad-based index of 400 companies
with market capitalizations generally ranging from $50 million to $10 billion
and is a widely accepted, unmanaged index of overall mid-cap stock market
performance.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks--98.8% Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries--7.2%
Caraustar Industries 66,600 1,698,300
Centex Construction Products 34,700 1,227,513
Crompton & Knowles 72,000 1,458,000
Cytec Industries 48,400 a 1,376,375
FMC 18,800 a 1,222,000
Georgia-Pacific (Timber Group) 25,800 664,350
Lennar 41,500 1,003,781
Louisiana-Pacific 44,900 934,481
Millennium Chemicals 77,600 2,095,200
Solutia 60,500 1,474,687
Vulcan Materials 26,900 1,284,475
14,439,162
Capital Spending--19.8%
Allied Waste Industries 43,400 a 767,637
American Power Conversion 39,900 a 1,316,700
Apple Computer 24,500 a 1,127,000
BMC Software 41,000 a 1,765,562
Cadence Design Systems 42,300 a 573,694
Citrix Systems 21,000 a 892,500
Computer Task Group 30,000 558,750
Compuware 53,900 a 1,313,813
Convergys 62,900 a 1,171,512
Crane 48,700 1,409,256
DST Systems 14,800 a 862,100
Graco 26,500 834,750
Gulfstream Aerospace 35,900 a 1,750,125
Hertz, Cl. A 50,200 2,996,312
Infoseek 9,500 a 485,094
Legato Systems 24,500 a 990,719
Lexmark International Group, Cl. A 23,600 a 2,914,600
MindSpring Enterprises 14,600 a 1,415,287
NCR 48,900 a 2,004,900
Network Associates 52,500 a 695,625
Premark International 39,600 1,457,775
Quintiles Transnational 54,500 a 2,210,656
Robert Half International 28,500 a 680,437
SABRE Group Holdings, Cl. A 58,300 a 3,038,888
Snyder Communications 27,000 a 793,125
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Capital Spending (continued)
Sterling Software 41,300 a 854,394
Sundstrand 19,600 1,406,300
Trinity Industries 38,700 1,347,244
VERITAS Software 9,500 a 674,500
Young & Rubicam 27,800 a 1,106,787
39,416,042
Consumer Cyclical--16.5%
Abercrombie & Fitch, Cl.A 19,900 a 1,892,987
Best Buy 85,800 a 4,096,950
Bob Evans Farms 47,500 869,844
Dollar Tree Stores 39,100 a 1,427,150
Federal-Mogul 20,900 916,987
Furniture Brands International 56,900 a 1,426,056
Harley-Davidson 35,000 2,086,875
Hearst-Argyle Television, Cl. A 32,127 a 819,238
IHOP 7,600 a 347,700
International Game Technology 52,300 928,325
King World Productions 25,200 a 888,300
Knight-Ridder 17,500 941,719
Leggett & Platt 44,700 1,030,894
Magna International, Cl. A 8,500 507,875
McClatchy, Cl.A 27,900 1,000,912
Meritor Automotive 42,700 904,706
Miller (Herman) 39,000 777,562
Nautica Enterprises 36,700 a 497,744
Pulitzer 19,600 878,325
Ross Stores 52,900 2,430,094
Supervalu 42,800 893,450
TJX Cos. 85,300 2,841,556
U.S. Foodservice 21,800 a 916,962
V.F 29,700 1,529,550
Zale 55,000 a 2,079,687
32,931,448
Consumer Staples--3.9%
Dial 46,100 1,567,400
Earthgrains 28,000 593,250
Hormel Foods 32,400 1,190,700
Lancaster Colony 35,100 1,035,450
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples (continued)
Lauder (Estee) 12,200 1,221,525
Universal Foods 102,500 2,152,500
7,760,825
Electronics--9.3%
Altera 58,800 a 4,248,300
Jabil Circuit 33,600 a 1,564,500
Linear Technology 60,700 3,452,312
Maxim Integrated Products 65,800 a 3,684,800
RF Micro Devices 11,500 a 642,562
Sanmina 30,000 a 1,991,250
Vitesse Semiconductor 36,300 a 1,681,144
Waters 11,500 a 1,208,937
18,473,805
Energy--6.8%
ENSCO International 45,700 848,306
El Paso Energy 44,900 1,650,075
KeySpan Energy 51,500 1,377,625
NICOR 30,100 1,094,888
National Fuel Gas 40,200 1,758,750
Questar 53,700 976,669
R&B Falcon 41,930 a 419,300
Sunoco 43,600 1,558,700
Tidewater 23,100 612,150
Tosco 35,900 960,325
Transocean Offshore 42,100 1,249,844
Vastar Resources 20,500 1,124,938
13,631,570
Health Care--8.0%
Bergen Brunswig, Cl. A 44,900 853,100
Biogen 49,600 a 4,715,100
Biomet 52,900 2,168,900
Centocor 26,800 a 1,189,250
Lincare Holdings 39,700 a 1,176,113
MedImmune 14,400 a 793,800
PacifiCare Health Systems, Cl. B 11,600 a 925,463
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Health Care (continued)
Patterson Dental 10,800 a 389,475
STERIS 92,700 a 1,645,425
Watson Pharmaceuticals 48,900 a 1,980,450
15,837,076
Interest Sensitive--15.9%
AFLAC 71,900 3,900,575
CMAC Investment 23,600 1,082,650
Centura Banks 15,400 917,263
City National 58,700 2,267,288
Cullen/Frost Bankers 28,000 1,510,250
Dime Bancorp 44,200 1,019,363
Edwards (A.G.) 47,100 1,648,500
First Tennessee National 56,400 2,432,250
Golden West Financial 13,500 1,351,688
Mercantile Bankshares 46,000 1,702,000
Nationwide Financial Services, Cl. A 34,500 1,599,938
North Fork Bancorporation 46,500 1,046,250
Old Kent Financial 46,900 2,216,025
PMI Group 28,300 1,579,494
Paine Webber Group 27,800 1,304,863
Regions Financial 49,700 1,876,175
RenaissanceRe Holdings 13,600 424,150
T. Rowe Price Associates 52,000 1,959,750
Wilmington Trust 10,700 657,381
Zions Bancorporation 17,500 1,167,031
31,662,884
Mining and Metals--.6%
AK Steel Holding 30,500 793,000
Cleveland-Cliffs 9,200 366,275
1,159,275
Transportation--1.7%
Alaska Air Group 26,300 a 1,158,844
Kansas City Southern Industries 22,300 1,328,244
Royal Caribbean Cruises 24,700 912,356
3,399,444
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continue)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Utilities--9.1%
Allegheny Energy 36,700 1,250,094
BEC Energy 71,300 3,030,250
Century Telephone Enterprises 46,950 1,889,738
Energy East 72,000 1,903,500
IPALCO Enterprises 91,400 2,107,912
OGE Energy 89,700 2,124,769
Pinnacle West Capital 56,400 2,189,025
SCANA 69,900 1,642,650
Sierra Pacific Resources 35,100 1,250,438
TECO Energy 36,400 775,775
18,164,151
Total Common Stocks
(cost $180,396,410) 196,875,682
</TABLE>
<TABLE>
<CAPTION
<S> <C> <C>
Principal
Short-Term Investments--1.2% Amount ($) Value ($)
Repurchase Agreements;
Goldman Sachs & Co.,
Tri-Party Repurchase Agreement, 4.89%
dated 4/30/1999 to be repurchased
at $2,346,956 on 5/3/99,
collateralized by $2,278,000 U.S.
Treasury Notes, 5.625% due
5/15/2008, value $2,393,887
(cost $2,346,000) 2,346,000 2,346,000
Total Investments (cost $182,742,410) 100.0% 199,221,682
Cash and Receivables (Net) .0% 70,808
Net Assets 100.0% 199,292,490
<FN>
a Non-income producing.
</FN>
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--
See Statement of Investments--Note 1(c) 182,742,410 199,221,682
Cash 380,243
Receivable for shares of Capital Stock subscribed 371,326
Dividends and interest receivable 147,309
200,120,560
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 193,944
Due to Distributor 25,722
Payable for shares of Capital Stock redeemed 608,354
Loan commitment fees payable 50
828,070
Net Assets ($) 199,292,490
Composition of Net Assets ($):
Paid-in capital 181,786,149
Investment (loss) (151,906)
Accumulated net realized gain (loss) on investments 1,178,975
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 16,479,272
Net Assets ($) 199,292,490
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Class B Class C Class R
- -------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
Net assets ($) 102,379,599 23,348,173 5,030,187 68,534,531
Shares Outstanding 6,320,149 1,455,789 313,298 4,215,289
Net Asset Value Per Share ($) 16.20 16.04 16.06 16.26
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
<S> <C>
Income:
Cash dividends (net of $1,600 foreign taxes withheld at source) 926,078
Interest 121,055
Total Income 1,047,133
Expenses:
Management fee--Note 2(a) 968,317
Distribution and service fees--Note 2(b) 230,434
Loan commitment fees--Note 4 288
Total Expenses 1,199,039
Investment (Loss) (151,906)
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 4,259,294
Net unrealized appreciation (depreciation) on investments 15,194,230
Net Realized and Unrealized Gain (Loss) on Investments 19,453,524
Net Increase In Net Assets Resulting from Operations 19,301,618
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998a,b
- -------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment (loss)--net (151,906) (83,422)
Net realized gain (loss) on investments 4,259,294 (3,136,094)
Net unrealized appreciation (depreciation)
on investments 15,194,230 (5,105,472)
Net Increase (Decrease) in Net Assets
Resulting from Operations 19,301,618 (8,324,988)
Dividends to Shareholders From ($):
Investment income--net:
Class A shares -- (4,238)
Class R shares -- (64,231)
Net realized gain on investments:
Class A shares -- (1,209,970)
Class R shares -- (4,651,856)
Total Dividends -- (5,930,295)
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 74,578,216 40,740,337
Class B shares 5,975,935 19,859,177
Class C shares 1,820,482 4,197,511
Class R shares 18,400,535 66,281,293
Dividends reinvested:
Class A shares -- 1,166,625
Class R shares -- 4,473,465
Cost of shares redeemed:
Class A shares (18,772,506) (7,916,760)
Class B shares (1,913,544) (863,005)
Class C shares (768,850) (189,956)
Class R shares (11,837,492) (39,601,301)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 67,482,776 88,147,386
Total Increase (Decrease) in Net Assets 86,784,394 73,892,103
Net Assets ($):
Beginning of Period 112,508,096 38,615,993
End of Period 199,292,490 112,508,096
<FN>
a Effective January 16, 1998, Investor shares and Restricted shares are
redesignated Class A shares and Class R shares, respectively.
b The Fund commenced selling Class B and Class C shares January 16, 1998.
</FN>
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998a,b
- -------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions:
Class A
Shares sold 4,829,163 2,705,902
Shares issued for dividends reinvested -- 82,408
Shares redeemed (1,195,572) (504,168)
Net Increase (Decrease) in Shares Outstanding 3,633,591 2,284,142
Class B
Shares sold 387,143 1,253,924
Shares redeemed (122,925) (62,353)
Net Increase (Decrease) in Shares Outstanding 264,218 1,191,571
Class C
Shares sold 116,729 259,755
Shares redeemed (49,420) (13,766)
Net Increase (Decrease) in Shares Outstanding 67,309 245,989
Class R
Shares sold 1,194,985 4,094,892
Shares issued for dividends reinvested -- 331,341
Shares redeemed (753,723) (2,517,205)
Net Increase (Decrease) in Shares Outstanding 441,262 1,909,028
<FN>
a Effective January 16, 1998, Investor shares and Restricted shares are
redesignated Class A shares and Class R shares, respectively.
b The Fund commenced selling Class B and Class C shares January 16, 1998.
</FN>
</TABLE>
See notes to financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal period indicated. Certain information reflects financial results for a
single Fund share. Total return shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived
from the Fund's financial statements.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal period indicated. Certain information reflects financial results for a
single Fund share. Total return shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived
from the Fund's financial statements.
- -------------------------------------------------------------------------------------
Six Months
Ended
April 30,
1999 Year Ended October 31,
Class A Shares (Unaudited) 1998a 1997 1996 1995 1994b
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning
of period 14.24 17.02 14.36 11.92 9.75 10.00
Investment Operations:
Investment income (loss)--net -- (.01) .02 .04 .09 .05
Net realized and unrealized
gain (loss) on investments 1.96 (.29) 4.79 2.98 2.17 (.26)
Total from Investment Operations 1.96 (.30) 4.81 3.02 2.26 (.21)
Distributions:
Dividends from investment
income--net -- (.01) (.01) (.05) (.09) (.04)
Dividends from net realized
gain on investments -- (2.47) (2.14) (.53) -- --
Total Distributions -- (2.48) (2.15) (.58) (.09) (.04)
Net asset value, end of period 16.20 14.24 17.02 14.36 11.92 9.75
Total Return (%) c 13.76d (2.16) 38.40 26.29 23.39 (2.06)d
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .67d 1.35 1.35 1.35 1.35 .80d
Ratio of net investment
income (loss) to average
net assets (.08)d (.19) .16 .28 .86 .42d
Portfolio Turnover Rate 37.36d 78.02 81.87 90.93 71.00 83.00d
Net Assets, end of period
($ x 1,000) 102,380 38,267 6,847 3,205 1,417 54
<FN>
a Effective January 16, 1998, Investor shares were redesignated as Class A
shares.
b The Fund commenced selling Investor shares on April 6, 1994.
c Exclusive of sales load.
d Not annualized.
</FN>
</TABLE>
See notes to financial statements.
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTON>
- ---------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
-------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Year Ended April 30, 1999 Year Ended
(Unaudited) October 31, 1998a (Unaudited) October 31, 1998a
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning
of period 14.16 14.65 14.17 14.65
Investment Operations:
Investment (loss)--net (.05) (.06) (.05) (.06)
Net realized and unrealized
gain (loss) on investments 1.93 (.43) 1.94 (.42)
Total from Investment Operations 1.88 (.49) 1.89 (.48)
Net asset value, end of period 16.04 14.16 16.06 14.17
Total Return (%) b,c 13.36 (3.41) 13.34 (3.28)
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets c 1.04 1.66 1.04 1.66
Ratio of net investment
(loss) to average
net assets c (.45) (.77) (.45) (.77)
Portfolio Turnover Rate 37.36c 78.02 37.36c 78.02
Net Assets, end of period
($ x 1,000) 23,348 16,867 5,030 3,485
<FN>
a From January 16, 1998 (commencement of initial offering) to October 31, 1998.
b Exclusive of sales load.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months
Ended
April 30, 1999 Year Ended October 31,
Class R Shares (Unaudited) 1998a 1997 1996 1995 1994b
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning
of period 14.28 17.03 14.36 11.92 9.76 10.00
Investment Operations:
Investment income--net .01 .01 .05 .07 .12 .09
Net realized and unrealized
gain (loss) on investments 1.97 (.26) 4.80 2.98 2.16 (.27)
Total from Investment Operations 1.98 (.25) 4.85 3.05 2.28 (.18)
Distributions:
Dividends from investment
income--net -- (.03) (.04) (.08) (.12) (.06)
Dividends from net realized
gain on investments -- (2.47) (2.14) (.53) -- --
Total Distributions -- (2.50) (2.18) (.61) (.12) (.06)
Net asset value, end of period 16.26 14.28 17.03 14.36 11.92 9.76
Total Return (%) 13.87c (1.88) 38.88 26.61 23.57 (1.77)c
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .54c 1.10 1.10 1.10 1.10 1.13c,d
Ratio of net investment
income to average
net assets .04c .05 .42 .57 1.11 .95c
Portfolio Turnover Rate 37.36c 78.02 81.87 90.93 71.00 83.00c
Net Assets, end of period
($ x 1,000) 68,535 53,888 31,769 15,644 12,129 18,169
<FN>
a Effective January 16, 1998, Restricted shares were redesignated as Class
R shares.
b The Fund commenced operations on November 12, 1993.
c Not annualized.
d Net annualized expense ratio before voluntary reimbursement of expenses
by the investment adviser for the period ended October 31, 1994 was 1.48%.
</FN>
</TABLE>
See notes to financial statements.
The Fund 17
<PAGE>
NOTES TO FINANCIAL TATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Midcap Stock 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 seek total investment returns (including capital appreciation and
income) which consistently outperform the Standard & Poor's 400 Midcap Index.
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).
Premier Mutual Fund Services, Inc. (the Distributor) is the distributor of
the Fund's shares. The Fund is authorized to issue 288 million shares of $.001
par value Capital Stock. The Fund currently offers four classes of shares:
Class A (22 million shares authorized), Class B (100 million shares
authorized), Class C (100 million shares authorized) and Class R shares (66
million shares authorized). Class A, Class B and Class C shares are sold
primarily to retail investors through financial intermediaries and bear a
distribution fee and/or service fee. Class A shares are sold with a front-end
sales charge. Class B and Class C shares are subject to a contingent deferred
sales charge (CDSC). Class R shares are sold primarily to bank trust
departments and other financial service providers (including Mellon Bank and
its affiliates) acting on behalf of customers having a qualified trust or an
investment account or relationship at such institution and bear no
distribution or service fees. Class R shares are offered without a front end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
18
<PAGE>
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 options and
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) 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
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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) 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 April 30, 1999, there were no financial futures contracts
outstanding.
(e) Distributions to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and 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 of 1986, as amended (the 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.
(f) 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
20
<PAGE>
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $2,977,000
available for Federal income tax purposes to be applied against future net
security profits, if any, realized subsequent to October 31, 1998. If not
applied, the carryover expires in fiscal 2006.
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, service fees, 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
The Fund 21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $3,078 during the period ended April 30, 1999 from commissions earned
on sales of Fund shares.
(b) Distribution and service plan: Under the Fund's Distribution Plan (the
Plan) adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay
annually up to .25% of the value of their average daily net assets to
compensate the Distributor and Dreyfus Service Corporation, for shareholder
servicing activities and the Distributor for activities and expenses primarily
intended to result in the sale of Class A shares. Under the Plan, Class B and
Class C shares may pay the Distributor for distributing their shares at an
aggregate annual rate of .75% of the value of the average daily net assets of
Class B and Class C shares. Class B shares and Class C shares are also subject
to a service plan adopted pursuant to rule 12b-1, under which Class B and
Class C shares pay Dreyfus Service Corporation or the Distributor for
providing services to the holders of Class B and Class C shares a fee at the
annual rate of .25% of the value of the average daily net assets of Class B
and Class C shares. During the period ended April 30, 1999, Class A, Class B
and Class C shares were charged $106,809, $77,082 and $15,637, respectively,
pursuant to the Plan and Class B and Class C shares were charged $25,694 and
$5,212, respectively, pursuant to the service plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote of majority of
those Directors who are not interested persons of the Company and who have
22
<PAGE>
no direct or indirect financial interest in the operation of or in any
agreement related to the Plan or service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1999,
amounted to $131,060,826 and $63,319,005, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments was
$16,479,272, consisting of $29,087,496 gross unrealized appreciation and
$12,608,224 gross unrealized depreciation.
At April 30, 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 (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
April 30, 1999, the Fund did not borrow under the Facility.
The Fund 23
<PAGE>
For More Information
Dreyfus Premier
Midcap Stock 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or
1-800-554-4611
By mail Write to:
The Dreyfus Premier
Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured Not Bank-Guaranteed May Lose Value
1999, Dreyfus Service Corporation 330/730SA994
Dreyfus Bond Market
Index Fund
SEMIANNUAL REPORT
April 30, 1999
(R) [Dreyfus Logo]
<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>
Contents
THE FUND
- --------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
21 Statement of Assets and Liabilities
22 Statement of Operations
23 Statement of Changes in Net Assets
24 Financial Highlights
26 Notes to Financial Statements
FOR MORE INFORMATION
- --------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Bond Market The Fund
Index Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Bond Market Index
Fund, covering the six-month period from November 1, 1998 through April 30,
1999. Inside, you'll find valuable information about how the fund was managed
during the reporting period, including a discussion with the Fund's portfolio
manager, Laurie Carroll.
The past six months have been rewarding for many fixed-income investors. Lower
short-term interest rates adopted by the Federal Reserve Board and other central
banks in the fall of 1998 appear to have helped many developed nations withstand
the effects of economic weakness in Japan, Asia and Latin America. At the same
time, the U.S. economy entered its eighth year of expansion in an environment
characterized by low inflation and high levels of consumer spending.
Fixed-income securities provided mixed results in this economic climate. While
U.S. Treasury securities rallied strongly last summer when stocks and other
types of bonds fell, they subsequently gave back most of their gains. Other
types of bonds performed well, however, as investors shifted assets back into
bond market sectors they had previously avoided. Accordingly, many corporate
bonds, mortgage-backed securities, asset-backed securities and U.S.
dollar-denominated foreign bonds provided attractive returns over the reporting
period.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Bond Market Index Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Laurie Carroll, Portfolio Manager
How did the Dreyfus Bond Market Index perform relative to its benchmark?
For the six-month period ended April 30, 1999, Dreyfus Bond Market Index Fund's
Investor shares and BASIC shares produced total returns of 0.37% and 0.62%,
respectively.1 The Fund's investment objective replicates the total return
provided by the Lehman Brothers Aggregate Bond Index (the "Index"). The Lehman
Brothers Aggregate Bond Index provided a total return of 0.69% for the same time
period.2 The difference in returns is accounted for by transition costs and
other Fund operating expenses. In addition, the Fund's Investor shares and BASIC
shares provided income dividends per share of approximately $.278 and $.293,
respectively, as well as an annualized distribution rate per share of 5.60% and
5.89%, respectively.3
What is the Fund's investment approach?
The Fund seeks to match the total return of the Lehman Brothers Aggregate Bond
Index. To pursue that goal, the Fund invests primarily in securities that are
included in the Index.
The Fund seeks to mirror the returns of the Index, but does not hold the same
number of bonds. Instead, the Fund holds approximately 350 securities as
compared to approximately 6,500 bonds in the Index. As a matter of policy, the
Fund's average duration generally remains neutral to its benchmark.
As of the end of the reporting period, the Fund's portfolio was allocated as
follows: 36.4% U.S. Treasuries, 39.7% mortgage-backed securities, 22.9%
corporate bonds and 2.2% U.S. agency bonds, the same general percentages as the
Index.
What other factors influenced the Fund's performance?
Of the Fund's asset classes, the highest returns during the six-month reporting
period came from our holdings in corporate bonds and
The Fund 3
<PAGE>
mortgage-backed securities, followed by U.S. Treasuries. That's because
corporate bonds and mortgage-backed securities generally offer higher yields
than Treasury bonds due to the fact that they have more credit risk associated
with them.
In addition, the Federal Reserve Board trimmed short-term interest rates by
three-quarters of a percentage point in three consecutive moves last fall,
prompting bond prices, which generally move inversely to interest rates, to
rise. The Fed initiated these cuts in an attempt to stimulate what it believed
was going to be slower domestic growth as a result of the global financial
crises that took place in September and October of 1998. However, to the
surprise of many industry analysts, the U.S. economy did not slow. Rather, it
did just the opposite, exhibiting strong growth during both the fourth quarter
of 1998 and the first quarter of 1999.
What is the Fund's current strategy?
Because the Fund is an index fund and its goal is to replicate the returns of
The Lehman Brothers Aggregate Bond Index, its strategy is to mirror the Index.
To understand how index investing works, it's important to recognize the
differences associated with a passive index manager and an active manager. The
active manager typically makes decisions about buying and selling bonds based on
economic, financial and market conditions. The passive index manager, on the
other hand, buys and holds a representative sample of the bonds in an index in
an effort to match the index's returns.
A key advantage of the passive investment approach is that lower costs are
incurred for professional research that's conducted on the securities held
within the Fund as security selection is based on the securities that are
included in the Index, which helps the Fund avoid costly proprietary research.
4
<PAGE>
Another advantage of an index fund is its buy-and-hold strategy. As a result of
the buy-and-hold strategy, funds typically incur lower trading costs and realize
fewer taxable capital gains. The lower costs can mean more of a fund's return
can be paid to shareholders, and fewer realized capital gains translate into
lower taxes for investors.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid.
2 SOURCE: LEHMAN BROTHERS--The Lehman Brothers Aggregate Bond Index is a widely
accepted unmanaged index of corporate, government and government agency debt
instruments, mortgage-backed securities and asset-backed securities. Reflects
the reinvestment of dividends and capital gains.
3 Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period, adjusted for capital gain
distributions.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes--101.2% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace and Aviation--.5%
Boeing:
Deb., 8.1%, 2006 25,000 27,609
Deb., 8.625%, 2031 10,000 12,111
Lockheed,
Notes, 6.75%, 2003 25,000 25,563
Raytheon:
Notes, 6.45%, 2002 300,000 304,856
Notes, 6.5%, 2005 25,000 25,425
Rockwell International,
Notes, 6.75%, 2002 30,000 30,752
426,316
Automotive--.9%
Daimler-Chrysler,
Deb., 7.45%, 2027 50,000 54,061
Medium-Term Notes, 7.375%, 2006 120,000 128,732
Dana,
Notes, 7%, 2028 100,000 97,948
Delphi Auto Systems,
Deb., 7.125%, 2029 125,000 122,798
General Motors:
Deb., 7.4%, 2025 10,000 10,460
Medium-Term Notes, 8.875%, 2003 25,000 27,527
Notes, 9.125%, 2001 15,000 16,007
Notes, 7%, 2003 40,000 41,346
Sr. Notes, 8.8%, 2021 150,000 182,679
681,558
Banking--1.4%
Banc One,
Sub. Notes, 9.875%, 2019 5,000 6,243
BankAmerica,
Sub. Notes, 7.75%, 2002 25,000 26,333
BankAmerica Capital II,
Gtd. Capital Securities, 8%, 2026 55,000 57,656
Bankers Trust New York,
Sub. Deb, 7.5%, 2015 75,000 77,625
Capital One Bank,
Sr. Notes, 6.375%, 2003 200,000 200,124
Chase Manhattan:
Sub. Notes, 7.75%, 1999 40,000 40,451
Sub. Notes, 6.5%, 2009 10,000 10,039
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Banking (continued)
Chemical,
Sub. Notes, 6.125%, 2008 15,000 14,856
Citicorp,
Sub. Notes, 7.125%, 2003 20,000 20,748
FBS Capital I,
Gtd. Capital Securities, 8.09%, 2026 100,000 103,505
First Bank System,
Sub. Notes, 7.625%, 2005 55,000 58,726
First Chicago,
Sub. Notes, 9.875%, 2000 20,000 21,051
First Union,
Sub. Notes, 6.3%, 2008 100,000 98,861
Fleet Financial Group,
Sr. Notes, 7.125%, 2000 40,000 40,674
Integra Financial,
Sub. Notes, 6.5%, 2000 15,000 15,141
MBNA America Bank,
Sub. Notes, 6.75%, 2008 100,000 96,363
Morgan (J.P.),
Sub. Notes, 6.25%, 2009 20,000 19,608
NCNB,
Sub. Notes, 9.375%, 2009 20,000 24,261
NationsBank:
Sub. Notes, 6.875%, 2005 10,000 10,323
Sub. Notes, 7.625%, 2005 30,000 32,092
Republic New York Corp.,
Sub. Notes, 5.875%, 2008 25,000 24,043
Wachovia,
Sub. Notes, 6.375%, 2003 15,000 15,223
Wells Fargo Capital,
Gtd. Capital Securities, 7.96%, 2026 30,000 31,490
1,045,436
Chemicals--.2%
duPont (E.I.) de Nemours:
Deb., 6.5%, 2028 100,000 97,059
Notes, 6.75%, 2002 40,000 41,316
Eastman Chemical,
Notes, 6.375%, 2004 30,000 29,891
Monsanto,
Deb., 8.2%, 2025 20,000 20,725
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Chemicals (continued)
Morton International,
Deb., 9.25%, 2020 5,000 6,219
195,210
Consumer--.3%
Clorox,
Notes, 8.8%, 2001 10,000 10,659
Maytag,
Deb., 9.75%, 2002 5,000 5,521
Procter & Gamble:
Deb., 8.7%, 2001 30,000 32,059
Notes, 5.25%, 2003 200,000 196,371
The Employee Stock
Ownership Trust of the Procter & Gamble
Profit Sharing Trust and Employee Stock
Ownership Plan
Deb., 9.36%, 2021 10,000 12,578
Whirlpool,
Notes, 9%, 2003 10,000 10,811
267,999
Entertainment/Media--1.3%
Carnival,
Notes, 7.05%, 2005 15,000 15,508
Cox Communications,
Notes, 6.375%, 2000 100,000 100,847
Disney (Walt),
Sr. Notes, 6.75%, 2006 20,000 20,726
News America Holdings:
Deb., 7.75%, 2024 15,000 15,768
Notes, 8.25%, 2018 300,000 331,901
Reed Elsevier Capital
Medium-Term Notes, 7%, 2005 200,000 206,503
TCI Communications,
Deb., 8.75%, 2015 100,000 120,562
Time Warner,
Deb., 6.95%, 2028 100,000 99,440
Viacom,
Deb., 7.625%, 2016 125,000 133,315
1,044,570
Financial Services--4.9%
Aetna Services,
Notes, 7.625%, 2026 50,000 50,434
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Financial Services (continued)
American Express Credit,
Notes, 6.125%, 2001 40,000 40,198
American General Finance,
Notes, 8.125%, 2009 10,000 11,124
Associates Corp. of North America:
Notes, 6.1%, 2005 200,000 198,223
Ser. A, Deb., 7.95%, 2010 10,000 11,004
Sr. Notes, 6.625%, 2005 10,000 10,070
Bear Stearns:
Sr. Notes, 8.75%, 2004 10,000 10,981
Sr. Notes, 7.25%, 2006 75,000 77,671
Beneficial,
Medium-Term Notes, 9.125%, 2001 5,000 5,330
Cincinnati Financial,
Deb., 6.9%, 2028 100,000 98,258
Citigroup,
Notes, 6.625%, 2028 100,000 95,230
Commercial Credit Group:
Notes, 6.7%, 1999 25,000 25,080
Notes, 10%, 2008 5,000 6,236
Dean Witter Discovery,
Notes, 6.25%, 2000 30,000 30,181
FINOVA Capital,
Notes, 9.125%, 2002 20,000 21,615
Ford Capital B.V.,
Notes, 9.875%, 2002 25,000 27,559
Ford Motor Credit:
Notes, 6.75%, 2008 20,000 20,477
Sr. Notes, 5.75%, 2004 1,000,000 989,975
GMAC,
Deb., 6%, 2011 70,000 67,279
General Electric Capital,
Notes, 8.3%, 2009 15,000 17,409
General Electric Credit,
Deb., 5.5%, 2001 10,000 9,940
Hartford Life,
Notes, 6.9%, 2004 400,000 410,894
Heller Financial,
Notes, 6.25%, 2001 200,000 201,707
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Financial Services (continued)
Household Finance:
Notes, 8%, 2004 15,000 16,195
Notes, 6.5%, 2008 200,000 199,701
International Lease Finance,
Medium-Term Notes, 6.25%, 2000 40,000 40,317
Lehman Brothers,
Notes, 6.625%, 2008 200,000 195,552
Merrill Lynch:
Notes, 8.3%, 2002 15,000 16,095
Notes, 6.875%, 2018 250,000 247,245
Norwest Financial,
Sr. Notes, 7%, 2003 15,000 15,556
Paine Webber,
Sr. Notes, 6.55%, 2008 100,000 98,156
Pitney Bowes Credit,
Notes, 9.25%, 2008 15,000 18,171
Progressive,
Sr. Notes, 6.625%, 2029 100,000 95,772
Sears, Roebuck Acceptance:
Deb., 6.75%, 2028 100,000 94,456
Notes, 7%, 2007 35,000 36,213
Toyota Motor Credit,
Notes, 5.625%, 2003 200,000 198,411
Transamerica Financial,
Sr. Notes, 6.4%, 2008 5,000 4,946
Travelers/Aetna Property & Casualty,
Sr. Notes, 6.75%, 2001 60,000 60,865
U.S. Leasing International,
Notes, 6.625%, 2003 30,000 30,330
3,804,856
Food and Beverages--1.3%
Anheuser-Busch,
Deb., 9%, 2009 225,000 274,786
Archer-Daniels-Midland:
Deb., 0%, 2002 5,000 4,226
Deb., 8.125%, 2012 40,000 45,997
Coca-Cola,
Notes, 6.625%, 2002 35,000 35,739
Coca-Cola Enterprises:
Deb., 8.5%, 2022 100,000 118,399
Notes, 7.875%, 2002 15,000 15,808
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Food and Beverages (continued)
Diageo,
Notes, 6.125%, 2005 200,000 202,091
Dole Food,
Notes, 6.75%, 2000 15,000 15,127
Heinz (H.J.),
Deb., 6.375%, 2028 100,000 95,910
Hershey Foods,
Deb., 8.8%, 2021 30,000 37,131
McDonald's,
Notes, 6.75%, 2003 20,000 20,151
Nabisco,
Deb., 7.55%, 2015 40,000 41,139
Ralston-Purina Group,
Notes, 8.625%, 2022 40,000 46,324
Seagram,
Deb., 8.35%, 2022 10,000 10,886
Supervalu,
Notes, 7.8%, 2002 15,000 15,780
Sysco,
Notes, 7%, 2006 25,000 26,286
1,005,780
Industrial--2.3%
Aluminum Co. of America,
Notes, 5.75%, 2001 50,000 50,194
Bass America,
Notes, 8.125%, 2002 15,000 15,810
Bowater,
Deb., 9.375%, 2021 10,000 12,327
Burlington Resources,
Deb., 6.875%, 2026 70,000 68,442
Caterpillar:
Deb., 9.375%, 2011 300,000 368,563
Sr. Notes, 9.375%, 2000 5,000 5,209
Comdisco,
Notes, 6.375%, 2001 155,000 155,925
Crown Cork & Seal,
Deb., 7.375%, 2026 75,000 73,428
Eaton,
Deb., 8.1%, 2022 10,000 11,009
</TABLE>
The Fund 11
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial (continued)
Emerson Electric,
Notes, 6.3%, 2005 35,000 35,506
Lucent Technologies,
Deb., 6.5%, 2028 150,000 147,012
PPG Industries,
Notes, 7.375%, 2016 45,000 47,092
Sony,
Notes, 6.125%, 2003 600,000 605,939
TRW,
Notes, 6.25%, 2010 100,000 96,341
Tenneco,
Deb., 10.2%, 2008 15,000 18,273
WMX Technologies,
Notes, 6.375%, 2003 30,000 30,166
1,741,236
Oil And Gas--.4%
Atlantic Richfield,
Deb., 9%, 2021 15,000 18,802
Occidental Petroleum,
Sr. Notes, 10.125%, 2001 15,000 16,222
Phillips Petroleum,
Notes, 6.65%, 2003 20,000 20,381
Texaco Capital,
Deb., 6.875%, 2023 25,000 24,082
Union Oil of California,
Deb., 9.125%, 2006 200,000 226,228
305,715
Paper Products--.1%
Georgia-Pacific,
Deb., 9.625%, 2022 25,000 27,966
International Paper,
Notes, 7.625%, 2007 10,000 10,629
Weyerhaeuser,
Deb., 7.95%, 2025 20,000 22,184
60,779
Retail--.5%
Dayton Hudson,
Deb., 8.5%, 2022 20,000 21,178
Federated Department Stores,
Deb., 7%, 2028 100,000 98,258
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Retail (continued)
Gap,
Notes, 6.9%, 2007 80,000 84,006
Limited,
Deb., 7.5%, 2023 10,000 9,708
May Department Stores,
Notes, 9.875%, 2002 15,000 16,906
Penney (J.C.):
Deb., 8.25%, 2022 15,000 15,989
Deb., 7.125%, 2023 15,000 14,245
Notes, 9.05%, 2001 80,000 83,716
Wal-Mart Stores,
Notes, 5.875%, 2005 25,000 24,999
369,005
Technology--.5%
Dell Computer,
Deb., 7.1%, 2028 100,000 98,864
IBM,
Deb., 7%, 2025 220,000 230,114
United Technologies,
Deb., 8.75%, 2021 50,000 61,267
Xerox,
Notes, 7.15%, 2004 15,000 15,779
406,024
Telephone And Telegraph--2.3% AT&T:
Bonds, 6%, 2009 200,000 196,173
Deb., 5.125%, 2001 50,000 49,403
Deb., 8.35%, 2025 5,000 5,401
Medium-Term Notes, 6.6%, 2005 220,000 219,818
Notes, 7%, 2005 15,000 15,668
Airtouch Communications,
Notes, 7.125%, 2001 100,000 102,778
Ameritech Capital Funding,
Notes, 6.125%, 2001 200,000 202,087
Bellsouth Telecommunications,
Deb., 6.375%, 2028 100,000 95,477
GTE,
Deb., 9.1%, 2003 35,000 38,993
MCI Worldcom,
Notes, 6.95%, 2028 120,000 119,540
</TABLE>
The Fund 13
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Telephone And Telegraph (continued)
New Jersey Bell Telephone,
Deb., 8%, 2022 25,000 28,693
New York Telephone,
Deb., 8.625%, 2010 5,000 5,933
Nortel Networks,
Notes, 8.75%, 2001 200,000 212,335
Pacific-Bell Telephone:
Deb., 7.375%, 2025 75,000 75,093
Deb., 7.125%, 2026 10,000 10,461
Southwestern Bell Telephone,
Notes, 6.625%, 2005 150,000 153,630
Sprint,
Notes, 5.7%, 2003 225,000 221,569
U.S. West Communications,
Deb., 6.875%, 2033 25,000 23,961
1,777,013
Tobacco--.1%
Fortune Brands,
Deb., 8.625%, 2021 5,000 6,051
Philip Morris:
Notes, 9.25%, 2000 40,000 41,081
Deb., 6%, 2001 20,000 20,028
Deb., 8.375%, 2017 9,000 9,286
76,446
Transportation--.6%
Canadian National Railway,
Notes, 6.9%, 2028 100,000 98,281
Delta Airlines,
Deb., 10.125%, 2010 200,000 245,086
Federal Express,
Notes, 9.875%, 2002 15,000 16,303
Norfolk Southern,
Deb., 9%, 2021 10,000 12,176
Deb., 7.8%, 2027 50,000 54,919
Ryder System
Ser J, Bond, 8.75%, 2017 9,000 9,345
United Parcel Service,
Deb., 8.375%, 2030 10,000 12,223
448,333
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities--2.7%
Alabama Power,
First Mortgage Bonds, 6%, 2000 50,000 50,220
Baltimore Gas & Electric:
First Mortgage Bonds, 7.5%, 2007 10,000 10,758
First Mortgage Bonds, 7.5%, 2023 33,000 33,075
Carolina Power & Light,
First Mortgage Bonds, 8.2%, 2022 15,000 15,667
Commonwealth Edison,
Deb., 6.4%, 2005 200,000 200,638
Florida Power & Light:
First Mortgage Bonds, 6.625%, 2003 30,000 30,202
First Mortgage Bonds, 7.75%, 2023 25,000 26,146
Gulf State Utilities,
First Mortgage Bonds, 6.41%, 2001 45,000 45,339
Houston Lighting & Power,
First Mortgage Bonds, 8.75%, 2022 150,000 162,273
MCN Investment,
Notes, 6.3%, 2001 300,000 a 299,521
New York State Electric & Gas,
First Mortgage Bonds, 9.875%, 2020 10,000 10,754
Niagara Mohawk Power,
First Mortgage Bonds, 7.75%, 2006 700,000 753,766
Northern States Power,
First Mortgage Bonds, 7.125%, 2025 100,000 103,800
Pacific Gas & Electric,
First Mortgage Bond, 8.8%, 2024 50,000 61,208
Pennsylvania Power & Light:
First Mortgage Bonds, 6.5%, 2005 20,000 20,398
First Mortgage Bonds, 6.55%, 2006 25,000 25,532
Potomac Electric & Power,
First Mortgage Bonds, 5.875%, 2002 10,000 9,934
Public Service Electric & Gas:
First Mortgage Bonds, 8.75%, 1999 25,000 25,126
First Mortgage Bonds, 6.125%, 2002 20,000 20,243
First Mortgage Bonds, 6.5%, 2004 25,000 25,494
South Carolina Electric & Gas,
First Mortgage Bonds, 9%, 2006 20,000 23,070
Southern California Gas,
First Mortgage Bonds, 7.375%, 2023 20,000 19,904
</TABLE>
The Fund 15
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities (continued)
Texas Utilities,
First Mortgage Bonds, 8.75%, 2023 35,000 37,784
Union Electric,
First Mortgage Bonds, 6.75%, 2008 25,000 26,009
Virginia Electric & Power,
First Mortgage Bonds, 7.625%, 2007 25,000 27,362
Wisconsin Electric & Power,
First Mortgage Bonds, 7.7%, 2027 20,000 20,686
2,084,909
Other--.0%
Private Export Funding,
Secured Notes, 8.4%, 2001 30,000 31,909
Foreign--2.6%
African Development Bank,
Notes, 7.75%, 2001 15,000 15,741
Bayerische Landesbank Girozentrale,
Sub. Notes, 7.375%, 2002 300,000 316,116
Dresdner Bank-New York,
Sub. Notes, 7.25%, 2015 40,000 40,724
European Invesment Bank,
Notes, 10.125%, 2000 20,000 21,282
Hydro-Quebec:
Ser. HH, Deb., 8.5%, 2029 10,000 12,117
Ser. HK, Deb., 9.375%, 2030 20,000 26,452
Ser. HQ, Deb., 9.5%, 2030 10,000 13,404
Italy Government Bonds,
Deb., 6.875%, 2023 70,000 73,635
KFW International Finance:
Deb., 9.125%, 2001 10,000 10,667
Deb., 8%, 2010 35,000 40,105
Korea Development Bank,
Bond, 7.25%, 2006 300,000 294,194
Province of British Columbia:
Bond, 7%, 2003 20,000 20,847
Bond, 6.5%, 2026 25,000 25,009
Province of Manitoba,
Deb., 8.8%, 2020 10,000 12,559
Province of New Brunswick,
Deb., 6.75%, 2013 30,000 31,454
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign (continued)
Province of Ontario:
Deb., 7%, 2005 40,000 42,317
Notes, 7.625%, 2004 150,000 161,787
Province of Quebec,
Deb., 7.5%, 2023 50,000 54,521
Republic of Finland,
Bond, 6.95%, 2026 25,000 26,320
Republic of Ireland,
Deb., 7.875%, 2001 150,000 158,119
Republic of Korea,
Notes, 8.75%, 2003 250,000 263,696
Republic of Portugal,
Notes, 5.75%, 2003 100,000 100,436
Royal Bank of Scotland,
Sub. Notes, 6.375%, 2011 60,000 58,762
Santander Finance Issuances,
Sub. Notes, 7.25%, 2006 100,000 104,046
Saskatchewan Province, C.D.A.,
Deb., 9.125%, 2021 10,000 12,966
Swiss Bank
Sub. Deb, 7%, 2015 70,000 69,917
2,007,193
U.S. Governments--36.4%
U.S. Treasury Bonds:
11.75%, 2/15/2001 155,000 172,396
15.75%, 11/15/2001 15,000 18,702
10.75%, 2/15/2003 830,000 982,936
10.75%, 5/15/2003 115,000 137,349
11.875%, 11/15/2003 10,000 12,595
11.625%, 11/15/2004 185,000 239,547
10.75%, 8/15/2005 765,000 980,149
7.625%, 2/15/2007 60,000 63,341
8.75%, 11/15/2008 225,000 254,077
12.75%, 11/15/2010 75,000 104,252
14%, 11/15/2011 30,000 45,386
12%, 8/15/2013 445,000 646,536
12.5%,8/15/ 2014 40,000 61,026
11.25%, 2/15/2015 25,000 38,821
7.25%, 5/15/2016 110,000 125,817
8.75%, 5/15/2017 300,000 393,318
</TABLE>
The Fund 17
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Governments (continued)
U.S. Treasury Bonds (continued):
8.75%, 5/15/2020 880,000 1,176,014
8.75%, 8/15/2020 290,000 388,113
7.875%, 2/15/2021 1,380,000 1,703,758
8%, 11/15/2021 1,100,000 1,381,028
7.25%, 8/15/2022 200,000 232,796
7.625%, 2/15/2025 1,200,000 1,470,504
6.625%, 2/15/2027 250,000 274,950
U.S. Treasury Notes:
6.75%, 5/31/1999 20,000 20,034
5.5%, 4/15/2000 20,000 20,106
8.75%, 8/15/2000 80,000 83,674
6.125%, 9/30/2000 3,000,000 3,043,170
8.5%, 11/15/2000 1,005,000 1,055,803
6.5%, 5/31/2001 600,000 616,440
7.875%, 8/15/2001 590,000 624,722
7.5%,11/15/2001 1,450,000 1,530,272
6.25%, 1/31/2002 2,135,000 2,193,648
6.375%, 8/15/2002 120,000 124,051
6.25%, 2/150/2003 530,000 548,301
5.75%, 4/30/2003 300,000 305,229
5.75%, 8/15/2003 480,000 489,062
5.875%, 2/15/2004 500,000 513,030
7.875%, 11/15/2004 1,000,000 1,121,050
6.875%, 5/15/2006 520,000 564,060
6.25%, 2/15/2007 500,000 526,025
6.625%, 5/15/2007 1,750,000 1,884,645
5.625%, 5/15/2008 1,950,000 1,978,197
28,144,930
U.S. Government Agencies--41.9%
Federal Farm Credit Banks,
5.25%, 2002 500,000 497,560
Federal Home Loan Banks:
5.785%, 2003 500,000 502,809
4.875%, 2022 350,000 345,379
Federal Home Loan Mortgage Corp:
5%, 2001 1,500,000 1,491,162
6.34%, 2002 500,000 501,922
5.9%, 2006 400,000 402,534
6%, 12/1/2013-1/1/2029 1,550,277 1,520,391
6.5%, 3/1/2011-3/1/2029 2,646,600 2,643,636
7%, 9/1/2011-1/25/2028 1,561,583 1,592,920
7.5%,7/1/2010-8/1/2025 1,201,047 1,244,363
8%, 5/1/2026-8/1/2026 517,149 540,421
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Bonds and Notes (continued) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Agencies (continued)
Federal National Mortgage Association:
5.125%, 2004 2,717,000 2,661,369
5.25%, 2009 550,000 524,607
5.59%, 2002 100,000 99,604
6.06%, 2003 500,000 500,104
5.5%, 3/1/2014 498,141 483,974
6%, 6/1/2011-3/1/2029 2,072,548 2,031,195
Federal National Mortgage Association (continued):
6.5%, 1/1/2005-3/1/2029 3,345,960 3,339,076
7%, 8/1/2008-3/1/2029 2,358,523 2,399,087
7.5%, 3/1/2024-9/1/2027 1,088,582 1,124,167
8%, 5/1/2027-6/1/2027 544,149 567,356
8.5%, 2/1/2025 300,024 318,305
Financing Corp.:
9.65%, 2018 10,000 13,788
8.60%, 2019 40,000 49,500
Government National Mortgage Association I:
6%, 2/15/2029 499,094 484,121
6.5%, 9/15/2008-11/15/2028 1,704,046 1,707,306
7%, 10/15/2011-11/15/2028 2,045,505 2,089,465
7.5%, 12/15/2026-10/15/2027 876,132 906,103
8%, 8/15/2024-10/15/2028 736,758 770,026
8.5%, 10/15/2026 256,419 271,805
9%, 2/15/2022-2/15/2023 461,658 496,139
Resolution Funding:
8.875%, 2020 75,000 97,152
8.625%, 2030 15,000 19,524
Tennesee Valley Authority:
Deb., 6%, 2013 200,000 199,284
Deb., 7.875, 2044 10,000 10,387
32,446,541
Total Bonds and Notes
(cost $77,651,535) 78,371,758
</TABLE>
The Fund 19
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Principal
Short-Term Investments--2.3% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement;
Goldman, Sachs & Co. Tri-Party
Repurchase Agreement, 4.89% dated 4/30/1999,
due 5/3/1999 in the amount of
$1,765,524 (fully collateralized by
$1,713,000 U.S. Treasury Notes, 5.625% due
5/15/2008, value $1,782,876)
(cost $1,764,805) 1,764,805 1,764,805
- -----------------------------------------------------------------------------------------------
Total Investments (cost $79,416,340) 103.5% 80,136,563
Liabilities, Less Cash and Receivables (3.5) (2,717,076)
Net Assets 100.0% 77,419,487
<FN>
a Reflects date security can be redeemed at holders option; the stated maturity is 4/2/2011.
</FN>
</TABLE>
20
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Cost Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of
Investments--Note 1(c) 79,416,340 80,136,563
Cash 32,448
Interest receivable 1,154,834
Receivable for shares of Capital Stock subscribed 28,769
81,352,614
- -----------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 5,718
Due to Distributor 9,029
Payable for shares of Capital Stock redeemed 3,294,411
Payable for investment securities purchased 623,969
3,933,127
- -----------------------------------------------------------------------------------------------
Net Assets ($) 77,419,487
- -----------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 76,541,771
Accumulated net realized gain (loss) on investments 157,493
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 720,223
- -----------------------------------------------------------------------------------------------
Net Assets ($) 77,419,487
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Net Asset Value Per Share
Investor Shares BASIC Shares
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Assets ($) 23,394,420 54,025,067
Shares Outstanding 2,350,179 5,420,701
Net Asset Value Per Share ($) 9.95 9.97
</TABLE>
See notes to financial statements.
The Fund 21
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Investment Income ($)
- -----------------------------------------------------------------------------------------------
<S> <C>
Interest Income 1,954,389
Expenses:
Management fee--Note 2(a) 49,058
Distribution fees (Investor shares)--Note 2(b) 11,489
Loan Commitment fees--Note 4 125
Total Expenses 60,672
Investment Income--Net 1,893,717
- -----------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments 164,243
Net unrealized appreciation (depreciation) on investments (1,520,404)
Net Realized and Unrealized Gain (Loss) on Investments (1,356,161)
Net Increase in Net Assets Resulting From Operations 537,556
</TABLE>
See notes to financial statements.
22
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- ------------------------------------------------------------------------------------------
<S> <C>
Operations ($):
Investment income--net 1,893,717 2,809,085
Net realized gain (loss) on investments 164,243 400,948
Net unrealized appreciation (depreciation)
on investments (1,520,404) 1,107,949
Net Increase (Decrease) in Net Assets
Resulting from Operations 537,556 4,317,982
- ------------------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net:
Investor shares (250,049) (54,337)
BASIC shares (1,643,668) (2,754,748)
Net realized gain on investments:
Investor shares (13,369) (3,054)
BASIC shares (389,541) (179,537)
Total Dividends (2,296,627) (2,991,676)
- ------------------------------------------------------------------------------------------
Capital Stock Transactions:
Net proceeds from shares sold:
Investor shares 25,478,615 1,651,522
BASIC shares 9,299,517 38,571,656
Dividends reinvested:
Investor shares 255,367 56,335
BASIC shares 1,991,408 2,830,224
Cost of shares redeemed:
Investor shares (3,808,175) (305,795)
BASIC shares (11,442,011) (20,080,253)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 21,774,721 22,723,689
Total Increase (Decrease) in Net Assets 20,015,650 24,049,995
- ------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period 57,403,837 33,353,842
End of Period 77,419,487 57,403,837
- ------------------------------------------------------------------------------------------
Capital Share Transactions (Shares):
Investor Shares
Shares sold 2,552,518 164,062
Shares issued for dividends reinvested 25,541 5,580
Shares redeemed (379,159) (30,352)
Net Increase (Decrease) in Shares Outstanding 2,198,900 139,290
BASIC Shares
Shares sold 919,067 3,824,182
Shares issued for dividends reinvested 196,766 280,347
Shares redeemed (1,134,383) (1,988,458)
Net Increase (Decrease) in Shares Outstanding (18,550) 2,116,071
</TABLE>
See notes to financial statements.
The Fund 23
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single Fund share. "Total return" shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived from
the Fund's financial statements.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------------
Investor Shares (Unaudited) 1998 1997a 1996b 1995 1994c
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 10.26 9.99 9.78 9.93 9.15 9.44
Investment Operations:
Investment income--net .28 .59 .57 .57 .55 .24
Net realized and unrealized
gain (loss) on investments (.24) .32 .21 (.15) .78 (.28)
Total from Investment Operations .04 .91 .78 .42 1.33 (.04)
Distributions:
Dividends from investment
income--net (.28) (.59) (.57) (.57) (.55) (.25)
Dividends from net realized
gain on investments (.07) (.05) -- -- -- --
Total Distributions (.35) (.64) (.57) (.57) (.55) (.25)
Net asset value, end of period 9.95 10.26 9.99 9.78 9.93 9.15
- ----------------------------------------------------------------------------------------
Total Return (%) .75d 9.43 8.29 4.36 15.01 (.46)
- ----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of operating expenses
to average net assets .40d .40 .60 .65 .65 .65d
Ratio of net investment income
to average net assets 5.44d 5.79 5.82 5.80 5.77 4.81d
Portfolio Turnover Rate 32.81e 43.39 48.86 42.65 40.16 188.00
- ----------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 23,384 1,552 120 80 207 38
<FN>
a Effective August 15, 1997, Institutional shares were redesignated as Investor shares.
b Effective July 15, 1996, Investor shares were redesignated as Institutional shares.
c The Fund commenced selling Investor shares on April 28, 1994.
d Annualized.
e Not annualized.
See notes to financial statements.
</FN>
</TABLE>
24
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------------
BASIC Shares (Unaudited) 1998 1997a 1996b 1995 1994c
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 10.27 10.00 9.80 9.94 9.15 10.00
Investment Operations:
Investment income--net .29 .61 .60 .59 .58 .49
Net realized and unrealized
gain (loss) on investments (.23) .32 .20 (.14) .79 (.85)
Total from Investment Operations .06 .93 .80 .45 1.37 (.36)
Distributions:
Dividends from investment
income--net (.29) (.61) (.60) (.59) (.58) (.49)
Dividends from net realized
gain on investments (.07) (.05) -- -- -- --
Total Distributions (.36) (.66) (.60) (.59) (.58) (.49)
Net asset value, end of period 9.97 10.27 10.00 9.80 9.94 9.15
- ----------------------------------------------------------------------------------------
Total Return (%) 1.25d 9.69 8.46 4.69 15.41 (3.68)
- ----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to
average net assets .15d .15 .35 .40 .40 .40d,e
Ratio of net investment income
to average net assets 5.85d 6.06 6.12 6.02 6.10 5.05d
Portfolio Turnover Rate 32.81f 43.39 48.86 42.65 40.16 188.00
Net Assets, end of period
($ x 1,000) 54,044 55,852 33,234 32,986 6,824 4,464
<FN>
a Effective August 15, 1997, Retail shares were redesignated as BASIC shares.
b Effective July 15, 1996, R shares were redesignated as Retail shares.
c The Fund commenced operations on November 30, 1993. Effective October 17, 1994 the Fund's
Trust shares were redesignated Class R shares.
d Annualized.
e Annualized expense ratio before reimbursement of expenses by investment adviser for the
period ended October 31, 1994 was 1.41%.
f Not annualized.
See notes to financial statements.
</FN>
</TABLE>
The Fund 25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Bond Market Index 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 seek to replicate the total return of the Lehman Brothers Aggregate Bond
Index. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Fund is authorized to issue 150 million of $.001 par value
Capital Stock. The Fund is currently authorized to issue two classes of shares:
Investor (50 million shares authorized) and BASIC (100 million shares
authorized). BASIC shares and Investor shares are offered to any investor.
Differences between the two classes include the services offered to and the
expenses borne by each class, as well as their minimum purchase and account
balance requirements.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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 (excluding short-term
investments other than U.S. Treasury Bills) are valued each business day by an
independent pricing service ("Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the
26
<PAGE>
quoted bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a majority of
the portfolio securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. 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. Short-term investments,
excluding U.S. Treasury Bills, are carried at amortized cost, which
approximates value.
(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,
adjusted for amortization of premiums and discounts on investments, 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
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 Manager, acting under the supervision
The Fund 27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 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 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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
NOTE 2--Investment Management Fee and Other Transactions
With Affiliates:
(a) Investment management fee: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .15% of the value of the Fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, 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
28
<PAGE>
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.
(b) Distribution plan: Under the Fund's Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, Investor shares may pay annually up to
..25% of the value of the average daily net assets to compensate the Distributor
and Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for activities primarily intended to
result in the sale of Investor shares. The BASIC shares bear no distribution
fee. During the period ended April 30, 1999, the Investor shares were charged
$11,489 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 majority of those Directors
who are not "interested persons" of the Investment Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
The Fund 29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales of investment securities, excluding
short-term securities, during the period ended April 30, 1999 amounted to
$43,659,654 and $20,565,128, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments was
$720,223, consisting of $1,026,400 gross unrealized appreciation and $306,177
gross unrealized depreciation.
At April 30, 1999, 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 ("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. For the period ended April 30,
1999, the Fund did not borrow under the Facility.
30
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Bond Market Index Fund
200 Park Avenue
New York, NY 10166
Investment Adviser
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request
to [email protected]
On the Internet Information
can be viewed online or
downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation 310/710SA994
Dreyfus
Money Market
Reserves
SEMIANNUAL REPORT
April 30, 1999
(R) [Dreyfus Logo]
<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>
Contents
THE FUND
- --------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
- --------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Money Market Reserves The Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Money Market
Reserves, covering the six-month period from November 1, 1998 through April 30,
1999. Inside, you'll find valuable information about how the Fund was managed
during the reporting period, including a discussion with the Fund's portfolio
manager, David Hertan.
Yields on money market securities generally declined over the reporting period
in response to the Federal Reserve Board's decision in the fall of 1998 to ease
monetary policy. While the U.S. economy has continued to grow, the Federal
Reserve was concerned about persistent economic weakness abroad. Their adoption
of lower short-term interest rates was intended to stimulate not just domestic
economic growth, but the economies of other nations as well.
Despite lower nominal interest rates for most money market funds, very low
inflation continued to support above-average real returns, which are nominal
yields less the rate of inflation.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Money Market Reserves.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
David Hertan, Portfolio Manager
How did Dreyfus Money Market Reserves perform during the period?
For the six-month period ended April 30, 1999, Dreyfus Money Market Reserves'
Investor shares produced an annualized yield of 4.54% while its Class R shares
produced an annualized yield of 4.75%. After taking into account the effect of
compounding, the annualized effective yields for the Investor and Class R shares
were 4.64% and 4.85%, respectively.1
The Fund's Investor shares provided a total return of 2.27%,2 compared to the
Lipper Money Market Instrument Funds category average total return of 2.16% for
the same time period.3 The Fund's Class R shares provided a total return of
2.38%,2 compared to the Lipper Institutional Money Market Funds category average
total return of 2.38% for the same time period.3
We attribute the Fund's competitive returns to its emphasis on high-quality
securities with longer maturity dates, which enabled us to lock in higher
returns before interest rates declined.
What is the Fund's investment approach?
Our goal is to provide shareholders with an investment vehicle that provides
competitive levels of income, a stable net asset value and a portfolio of
securities that are very liquid in nature; that is, that they can be converted
to cash quickly. To meet that goal, we invest in a diversified portfolio of
high-quality, short-term debt securities, such as those issued by the United
States government or its agencies, certificates of deposit issued by banks,
repurchase agreements with securities dealers, and commercial paper issued by
corporations. Generally, the Fund is required to invest at least 95% of its
assets in the securities of issuers with the highest credit rating. It is also
required to maintain an average dollar-weighted portfolio maturity of 90 days
or less.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
During the past six months, the returns offered by money market securities, such
as those held in this Fund, declined. That's because interest rates, which
generally determine the returns for these types of investments, also declined
during the period. Last November, the Federal Reserve Board lowered short-term
interest rates to 4.75%, a move that came on the heels of two other back-to-back
cuts. The Fed trimmed rates primarily in response to the global financial crisis
that took place in September and October and in an attempt to stimulate what it
believed was going to be slower domestic economic growth. However, to the
surprise of many industry analysts, the U.S. economy exhibited strong growth
during both the fourth quarter of 1998 and the first quarter of 1999.
With short-term interest rates trending downward during the period, it gave even
greater importance to a key aspect of our investment strategy: managing the
portfolio's average maturity. By actively managing maturity, we attempt to
increase income and preserve or enhance return.
As it turns out, as interest rates moved lower during the period, we were able
to lock in higher returns by owning longer-term securities. In particular, we
concentrated on purchasing one-year securities when yields appeared attractive.
As of the end of the reporting period, the Fund's average maturity was 76 days.
What other factors influenced the Fund's performance?
We maintain a well-diversified portfolio, which serves to help reduce risks
associated with declines in any particular security of market sector. During
the period, the largest portion of the Fund's assets was invested in adjustable
rate notes, followed by commercial paper and bank notes. Adjustable rate notes,
also known as floating rate notes, are securities that have a variable interest
rate that is tied to another interest rate, such as Libor. These bonds gave the
portfolio protection against increases in interest rates and also offered a
higher yield
4
<PAGE>
than other money market instruments. In addition, our investments in commercial
paper provided attractive returns during the period, as did our holdings in
bank notes.
What is the Fund's current strategy?
We feel confident that our strategy of managing maturity as a way to attempt to
add incremental yield to the portfolio is a prudent one. We will also continue
to take advantage of yields in adjustable rate notes, wherever possible.
We believe we've created a portfolio that is conservative in nature and can
provide investors with a competitive level of income, liquidity and preservation
of capital.
May 13, 1999
1 Annualized effective yield is based upon dividends declared daily and
reinvested monthly. An investment in the Fund is not insured or guaranteed by
the FDIC or any other government agency. Although the Fund seeks to preserve
the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund, but also has the potential to make money.
2 Total return includes reinvestment of dividends.
3 Source: Lipper Analytical Services, Inc.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Principal
Negotiable Bank Certificates of Deposit--23.8% Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ANZ Banking Group (Yankee)
5.74%, 7/30/99 12,000,000 11,998,866
Bank of New York (Yankee)
5.80%, 5/14/99 10,000,000 9,999,795
Bank of Nova Scotia (Yankee)
5.20%, 3/27/00 5,000,000 4,998,385
Bank of Scotland (London)
5.17%, 4/6/00 6,000,000 6,001,080
Barclays Bank of NY (Yankee)
4.88%, 6/4/99 10,000,000 9,999,268
Bayerische Hypo-und Vereinsbank (Yankee)
5.05%, 2/7/00 11,600,000 11,596,976
Bayerische Landesbank Girozentrale (Yankee)
5.72%, 7/23/99 12,000,000 11,998,051
Commerzbank AG(Yankee)
5.10%, 1/13/00 15,000,000 14,996,945
Den Danske Bank A/S (Yankee)
5.70%, 7/12/99 5,000,000 4,999,871
Deutsche Bank AG (Yankee)
5.00%, 2/02/00 15,000,000 14,997,803
National Bank of Canada (Yankee)
5.72%, 7/8/99 12,000,000 11,999,143
Rabobank Nederland N.V.(Yankee)
5.10% 4/17/00 10,100,000 10,095,776
Svenska Handelsbanken Inc. (Yankee)
5.00%-5.71%, 8/9/99-2/2/00 15,000,000 14,998,209
Toronto--Dominion Bank(Yankee)
5.20%, 3/24/00 5,000,000 4,998,270
Westpac Banking Corp. (Yankee)
5.08%, 2/11/00 15,000,000 14,997,167
Total Negotiable Bank Certificates of Deposit
(cost $158,675,605) 158,675,605
- ---------------------------------------------------------------------------------------------
Commercial Paper--25.8%
- ---------------------------------------------------------------------------------------------
Aesop Funding Corp.
4.88%, 6/11/99b 28,000,000 27,845,658
Case Equipment LN Trust
4.86%, 5/6/99 10,000,000 9,993,278
Centric Capital Corp.
4.84%-4.87%, 5/14/99 -5/28/99 18,885,000 18,830,073
Countrywide Home Loans, Inc.
4.83%, 5/21/99 1,700,000 1,695,448
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Principal
Commercial Paper (continued) Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
FPL Group Capital, Inc.
4.90%, 6/25/99 28,000,000 27,792,528
Fleet Funding Corp.
4.83%, 5/27/99 27,623,000 27,527,041
GTE Corp.
4.86%--4.95%, 5/7/99--6/3/99 28,657,000 28,585,892
General Electric Capital Corp.
4.91%, 5/14/99 5,000,000 4,991,153
Household International
4.85%, 5/28/99 25,000,000 24,909,438
Total Commercial Paper
(cost $172,170,509) 172,170,509
- ---------------------------------------------------------------------------------------------
Corporate Notes--38.6%
- ---------------------------------------------------------------------------------------------
Abbey National PLC
4.99%, 6/1/99a 11,400,000 11,398,946
American General Finance Corp.
5.63%, 6/15/99 1,005,000 1,008,268
Asset Backed Securities Investment Trust
4.93%, 8/16/99a 10,000,000 10,000,000
Associates Corp. of North America
4.95%, 7/15/99 1,500,000 1,504,303
Bankamerica Corp.
5.02%, 4/15/00 250,000 250,318
Bank of Scotland
4.94%, 8/17/99a 10,000,000 9,998,129
Caisse Centrale Du Quebec
4.94%, 5/15/00a 7,000,000 7,000,132
Caterpillar Financial Services Corp.
4.91%,9/15/99(a) 10,000,000 10,000,352
Chase Manhattan Corp.
4.92%, 1/20/00(a) 15,000,000 15,000,591
Chrysler Financial Corp.
4.88%, 5/19/99(a) 1,000,000 1,000,019
Comerica Bank
4.94%--4.95%, 6/10/99--4/17/00(a) 26,000,000 25,992,292
Deere (John) Capital Corp.
5.59%, 8/6/99 6,000,000 5,999,043
First Chicago Financial Corp.
4.91%, 6/4/99a 5,000,000 5,000,591
First National Bank of Maryland
4.95%, 10/22/99a 10,000,000 9,999,699
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Principal
Commercial Paper (continued) Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
First Union National Bank
5.07%, 8/20/99a 9,400,000 9,397,301
Fleet National Bank
4.94%, 3/15/00a 15,900,000 15,894,519
Ford Motor Credit Corp.
4.90%, 6/1/99 12,000,000 12,003,068
GMAC Ltd.
5.07%, 5/7/99a 1,500,000 1,500,000
General Electric Capital Corp.
4.95%, 4/12/00a 15,000,000 15,000,000
General Motors Acceptance Corp.
5.46%, 5/7/99 10,000,000 10,001,016
Halifax Building Society
4.90%, 9/8/99a 3,000,000 3,000,505
IBM Credit Corp.
4.97%, 6/1/99a 10,000,000 9,998,500
IBM Financial Corp.
4.98%, 7/15/99 5,000,000 4,997,644
International Lease Finance Corp.
4.90%, 7/15/99a 2,000,000 2,000,989
International Lease Finance Corp.
5.08%, 9/1/99 4,750,000 4,784,503
Merril Lynch & Co. Inc.
4.91%-5.08%, 5/25/99-5/22/00a 19,900,000 19,897,236
Morgan Stanley, Dean Witter, Discover & Co.
4.90%, 7/13/99a 10,000,000 10,006,551
National Rural Utilities Corporation
4.89%, 11/18/99 2,500,000 2,512,244
National Rural Utilities Corporation
4.94%-5.01%, 11/18/99-11/23/99a 15,200,000 15,200,863
Norwest Financial Inc.
5.08%, 10/15/99 1,000,000 1,010,756
U.S. Bank
4.88%, 8/18/99a 1,000,000 1,000,070
Wells Fargo & Co.
5.15%, 4/10/00a 5,000,000 4,998,284
Total Corporate Notes
(cost $257,356,732) 257,356,732
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Principal
Short-Term Bank Notes--5.5% Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Branch Banking & Trust Co.
4.94%-5.17%, 9/15/99-3/1/00a 15,900,000 15,930,685
First National Bank of Maryland
5.06%, 1/10/00 4,400,000 4,400,295
Huntington National Bank
4.94%, 3/3/00a 15,800,000 15,794,776
Total Short-Term Bank Notes
(cost $36,125,756) 36,125,756
- ---------------------------------------------------------------------------------------------
Time Deposits--5.4%
- ---------------------------------------------------------------------------------------------
Den Danske Bank A/S (Grand Cayman)
4.94%, 5/3/99 5,952,000 5,952,000
Societe Generale (Grand Cayman)
4.97%, 5/3/99 30,000,000 30,000,000
Total Time Deposits
(cost $35,952,000) 35,952,000
- ---------------------------------------------------------------------------------------------
Total Investments
(cost $660,280,602) 99.1% 660,280,602
Cash and Receivables (Net) .9% 6,238,988
Net Assets 100.0% 666,519,590
</TABLE>
a Variable interest rate--subject to periodic change.
b Backed by an irrevocable letter of credit.
See notes to financial statements.
The Fund 9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Cost Value
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($)
Investments in securities--See Statement of Investments 660,280,602 660,280,602
Cash 614,386
Interest receivable 5,994,419
666,889,407
- --------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 368,659
Due to Distributor 1,158
369,817
- --------------------------------------------------------------------------------------------
Net Assets ($) 666,519,590
- --------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 666,540,829
Accumulated net realized gain (loss) on investments (21,239)
- ---------------------------------------------------------------------------------------------
Net Assets ($) 666,519,590
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Net Asset Value Per Share
Investor Shares Class R Shares
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Net Assets ($) 350,598,316 315,921,274
Shares Outstanding 350,609,450 315,931,379
Net Asset Value Per Share ($) 1.00 1.00
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Investment Income ($)
- ---------------------------------------------------------------------------------------------
<S> <C>
Income
Interest Income 16,265,886
Expenses:
Management fee--Note 2(a) 1,552,902
Distribution fees (Investor Shares)--Note 2(b) 336,702
Total Expenses 1,889,604
Investment Income--Net 14,376,282
Net Realized Gain (Loss) on Investments--Note 1(b) 1,215
Net Increase in Net Assets Resulting from Operations 14,377,497
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- ---------------------------------------------------------------------------------------------
<S> <C>
Operations ($):
Investment income--net 14,376,282 25,634,106
Net realized gain (loss) on investments 1,215 84
Net Increase (Decrease) in Net Assets
Resulting from Operations 14,377,497 25,634,190
- ---------------------------------------------------------------------------------------------
Dividends to Shareholders from ($):
Investment income--net:
Investor shares (7,637,817) (12,677,662)
Class R shares (6,738,465) (12,956,444)
Total Dividends (14,376,282) (25,634,106)
- ---------------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Investor shares 515,148,195 808,775,870
Class R shares 475,556,361 511,465,128
Dividends reinvested:
Investor shares 7,417,707 12,280,513
Class R shares 3,325,911 6,738,120
Cost of shares redeemed:
Investor shares (473,440,820) (724,433,279)
Class R shares (412,376,775) (500,821,747)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 115,630,579 114,004,605
Total Increase (Decrease) in Net Assets 115,631,794 114,004,689
- ---------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 550,887,796 436,883,107
End of Period 666,519,590 550,887,796
</TABLE>
See notes to financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single Fund share. SWTotal return shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been
derived from the Fund' financial statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
------------------------------------------
Investor Shares (Unaudited) 1998 1997 1996 1995 1994a
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($)
Net asset value, beginning of period: 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .023 .050 .049 .048 .052 .021
Distributions:
Dividends from investment income--net (.023) (.050) (.049) (.048) (.052) (.021)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------
Total Return (%) 4.58b 5.13 5.04 4.94 5.28 2.14c
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets .70b .70 .70 .70 .70 .71b
Ratio of net investment income
to average net assets 4.54b 5.01 4.95 4.84 5.25 3.31b
Net Assets, end of period ($ x 1,000) 350,598 301,47 204,851 144,168 161,819 3,611
</TABLE>
a The Fund commenced selling Investor shares on April 6, 1994.
b Annualized.
c Not annualized. See notes to financial statements.
The Fund 13
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
------------------------------------------
Class R Shares (Unaudited) 1998 1997 1996 1995 1994a
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .024 .052 .051 .050 .053 .034
Distributions:
Dividends from investment income--net (.024) (.052) (.051) (.050) (.053) (.034)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------
Total Return (%) 4.80a 5.34 5.25 5.16 5.44 3.52
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data(%):
Ratio of expenses to average net assets .50a .50 .50 .50 .50 .51b
Ratio of net investment income
to average net assets 4.74a 5.21 5.13 5.01 5.40 3.51
Net Assets, end of period ($ X 1,000) 315,921 249,415 232,032 170,409 139,787 124,754
<FN>
a Annualized
b Annualized expense ratio before expenses reimbursed by the investment adviser
for the year ended October 31, 1994 was 0.64%.
See notes to financial statements.
</FN>
</TABLE>
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Money Market Reserves (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 seek a high level of current income consistent with stability of principal by
investing in high-grade money market instruments. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
Fund's shares. The Fund is authorized to issue 2 billion of $.001 par value
Capital Stock in each of the following classes of shares: Investor and Class R.
Investor shares are sold primarily to retail investors and bear a distribution
fee. Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates) acting on
behalf of customers having a qualified trust or investment account or
relationship at such institution, and bear no distribution fee. Each class of
shares has identical rights and privileges, except with respect to the
distribution fee and voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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,
adjusted for amortization of premiums and discounts on investments, 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
16
<PAGE>
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 of 1986, as amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $23,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1998. If not applied,
$10,000 of the carryover expires in fiscal 2003 and $13,000 expires in fiscal
2005.
At April 30, 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 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 .50% 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
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
(b) Distribution plan: The Fund has adopted a distribution plan (the "Plan")
pursuant to Rule 12b-1 under the Act relating to its Investor shares. Under the
Plan, the Fund may pay annually up to .25% of the value of the average daily net
assets attributable to its Investor shares to compensate the Distributor and
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for activities primarily intended to
result in the sale of Investor shares. The Class R shares bear no distribution
fee. During the period April 30, 1999, Investor shares were charged $336,702
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 majority of those Directors
who are not "interested persons" of the Company and
18
<PAGE>
who have no direct or indirect financial interest in the operation of the Plan
or in 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, 1999, the Fund did not borrow
under the line of credit.
The Fund 19
<PAGE>
NOTES
20
<PAGE>
The Fund 21
<PAGE>
For More Information
Dreyfus Money Market Reserves
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request
to [email protected]
On the Internet Information
can be viewed online or
downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation 317/717SA994
Dreyfus
Premier Small
Company Stock Fund
SEMIANNUAL REPORT
April 30, 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>
Contents
THE FUND
- --------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
16 Financial Highlights
20 Notes to Financial Statements
FOR MORE INFORMATION
- ----------------------
Back Cover
<PAGE>
Dreyfus Premier The Fund
Small Company Stock Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier Small
Company Stock Fund, covering the six-month period from November 1, 1998
through April 30, 1999. Inside, you'll find valuable information about how
the Fund was managed during the reporting period, including a discussion with
Anthony Galise, a primary portfolio manager of the Fund.
The past six months have been rewarding for many equity investors. The Federal
Reserve Board's lowering of short-term interest rates in the fall of 1998
appears to have helped U.S. businesses withstand the effects of economic
weakness in Japan, Asia and Latin America. At the same time, strong U.S.
economic growth, low inflation and high levels of consumer spending supported
continued strength in many broad measures of stock market performance. As a
result, several major U.S. market indices set new records, including the Dow
Jones Industrial Average's first-ever close above the 10,000 level. The broader
S&P 500 Index and the technology-laden NASDAQ Index also recorded new highs.
However, until near the end of the six-month period, small-cap stocks
continued to lag their larger counterparts substantially. For most of the
reporting period, investors continued to favor large companies with
predictable earnings and tended to avoid smaller companies with shorter track
records. In April, however, many smaller stocks began to rally as investors
became increasingly attracted by their valuation levels. In a global economic
environment currently characterized by fewer concerns, investors appear to
have become somewhat more comfortable with small-cap stocks.
We appreciate your confidence over the past six months, and we look forward
to your continued participation in Dreyfus Premier Small Company Stock Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Anthony Galise, Portfolio Manager
How did Dreyfus Premier Small Company Stock Fund perform relative to its
benchmark?
The Fund produced a total return of 10.02% for Class R shares, 9.81% for
Class A shares, 9.42% for Class B shares and 9.35% for Class C shares for the
six-month period ended April 30, 1999.1 The Russell 2500 Index,2 the Fund's
benchmark, produced a total return of 15.53%. Small- and mid-cap stocks
performed well in April, but trailed the large blue-chip stocks for the six-
month period.
What is the Fund's investment approach?
The Fund invests primarily in a broadly diversified portfolio that blends
growth and value stocks of small-cap companies chosen through a disciplined
process that combines computer analysis with human judgment. The computer
model identifies and ranks stocks within an industry based on three broad
concepts. The first one is relative value, or how a stock is priced relative
to its perceived intrinsic worth. The second is relative growth. The third is
relative financial strength, which looks at attributes such as a company's
level of debt.
Using the insights our analysts gained from their fundamental analysis, we
select the most attractive of the top-ranked securities. Finally, we use
portfolio construction techniques to neutralize sector and industry risks.
For example, if the Russell 2500 Index has a 10% weighting in a particular
sector, about 10% of the Fund's assets will also be invested in that sector.
For instance, our investment process identified Ames Department Stores, a
discount retailer based in New England. We believe the stock was reasonably
priced, primarily because Ames had emerged from bankruptcy, and investors were
cautious on the name. However, the company has new management, the strong
economy is helping sales, and they are located mainly in cities and towns where
they don't compete with
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
Wal-Mart Stores. In addition, earnings were accelerating, so the company fit
well into our investment strategy. During the reporting period, this holding was
a strong contributor to the Fund's overall performance.
What other factors influenced the Fund's performance?
In many cases, the best performing stocks in the Russell 2500 Index were
companies that ranked low in our investment selection process. For example,
Internet stocks performed extremely well. However, the majority of these
companies are still losing money and, in our opinion and according to our
quantitative model, many of these stocks are excessively valued. Instead of
heavily investing in this area, we prefer to rely on our investment
discipline and maintain positions in stocks that are making money and are not
excessively valued.
During the six-month reporting period, two of the Fund's strongest performers
came from the electric utility area. Calpine, a rapidly growing independent
power company, fits nicely into our investment discipline, which focuses on
growth and value. In addition, Montana Power's stock price benefited from the
company's telephone-related businesses, as the telecommunications industry
was a favorite of investors during the period. Within technology, among the
best stocks in the Fund's portfolio were Intuit, the makers of Quicken, a
personal finance software package, and TurboTax, a tax preparation software
product. Other strong performers included Excite, a profitable Internet
company, Jabil Circuit, a manufacturer that contracts with technology
companies, and Abercrombie & Fitch, a retailer specializing in youth fashion.
A factor that negatively affected performance was the market's preference for
larger-cap stocks. In this Fund, we try to maintain an average market
capitalization that is in line with our benchmark, the Russell 2500 Index.
The stocks at the highest end of the market capitalization range performed
the best, and our limited holdings in this area served to dampen overall Fund
performance.
4
<PAGE>
What is the Fund's current strategy?
Our investment strategy and methodology remain the same and our objective is
to outperform our benchmark by selecting what our investment discipline tells
us are the best stocks in each sector.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains
paid, and does not take into consideration the maximum initial sales
charge in the case of Class A shares, or the applicable contingent
deferred sales charge imposed on redemptions in the case of Class B and
Class C shares.
2 SOURCE: THE FRANK RUSSELL COMPANY -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Russell 2500 Index is a widely recognized unmanaged index of small-cap
stock performance.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks--97.9% Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries--8.1%
AptarGroup 64,720 1,812,160
Borg-Warner Automotive 47,640 2,703,570
Cabot 86,580 2,337,660
Caraustar Industries 44,870 1,144,185
Clayton Homes 147,857 1,644,909
Comfort Systems USA 45,100 a 710,325
Crompton & Knowles 95,500 1,933,875
Cytec Industries 67,990 a 1,933,466
Jacobs Engineering Group 35,980 a 1,418,961
Louisiana Pacific 81,000 1,685,813
Mail-Well 157,100 a 2,052,119
Martin Marietta Materials 19,700 1,217,706
Southdown 34,639 2,219,061
Sybron International 62,400 a 1,727,700
Temple-Inland 23,900 1,649,100
Timken 49,200 1,097,775
27,288,385
Capital Spending--16.5%
Altera 34,000 a 2,456,500
American Power Conversion 39,100 a 1,290,300
American Tower, Cl. A 37,200 a 788,175
Apple Computer 33,500 a 1,541,000
CellStar 118,400 a 873,200
Cognex 48,140 a 1,396,060
Cordant Technologies 31,480 1,452,015
Dallas Semiconductor 48,940 2,079,950
Duke Realty Investments 79,000 1,856,500
ECI Telecommunications 90,980 3,354,887
Electronics For Imaging 80,000 a 3,785,000
Fairchild, Cl. A 49,600 a 666,500
Gulfstream Aerospace 32,700 a 1,594,125
Jabil Circuit 79,000 a 3,678,437
NCR 44,100 a 1,808,100
NeoMagic 117,700 a 1,375,619
Network Appliance 45,400 a 2,284,187
OmniQuip International 96,300 1,215,787
PMC-Sierra 36,100 a 3,461,087
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Capital Spending (continued)
Plantronics 63,520 a 4,287,600
SMART Modular Technologies 110,200 a 1,473,925
SPX 33,500 2,187,969
Sanmina 46,533 a 3,088,628
Vitesse Semiconductor 39,600 a 1,833,975
Waters 34,300 a 3,605,788
Zebra Technologies, Cl. A 64,790 a 2,154,268
55,589,582
Consumer Cyclical--17.0%
Abercrombie & Fitch, Cl. A 22,500 a 2,140,312
Action Performance Cos. 44,100 a 1,493,887
Ames Department Stores 54,700 a 1,911,081
Applied Power, Cl. A 51,200 1,616,000
Bed Bath & Beyond 63,400 a 2,262,588
CKE Restaurants 34,110 558,551
Consolidated Stores 57,300 a 1,969,688
Darden Restaurants 78,100 1,742,606
Dollar Tree Stores 59,000 a 2,153,500
Ethan Allen Interiors 48,700 2,468,481
General Instrument 65,400 a 2,387,100
Heftel Broadcasting, Cl. A 39,900 a 2,169,563
Hollinger International, Cl. A 112,200 1,577,813
Interface, Cl. A 151,180 a 1,067,709
King World Productions 65,500 2,308,875
Lear 24,800 a 1,137,700
Richfood Holdings 45,915 573,938
Ross Stores 49,200 2,260,125
Ryan's Family Steak House 193,020 a 2,388,623
Sinclar Broadcast Group, Cl. A 177,800 a 2,489,200
Speedway Motorsports 60,300 a 2,615,513
Tommy Hilfiger 38,240 a 2,672,020
Tower Automotive 96,600 a 2,221,800
USA Networks 59,200 a 2,212,600
United Natural Foods 51,200 a 1,286,400
Valassis Communications 31,100 a 1,741,600
Wallace Computer Services 71,420 1,647,124
Warnaco Group, Cl. A 66,150 1,765,378
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclical (continued)
World Color Press 29,100 a 743,869
Zale 101,490 a 3,837,591
57,421,235
Consumer Staples--2.8%
Canandaigua Brands, Cl. A 26,000 a 1,339,000
Central Garden & Pet 78,100 a 1,093,400
Dial 98,700 3,355,800
Ralcorp Holdings 60,800 1,117,200
Suiza Foods 69,887 a 2,625,130
9,530,530
Energy--4.7%
BJ Services 65,100 a 1,741,425
Devon Energy 55,400 1,842,050
Holly 35,440 498,375
KN Energy 76,460 1,576,987
Newfield Exploration 62,700 a 1,685,063
Noble Affiliates 41,200 1,320,975
Sempra Energy 95,573 1,983,140
Transocean Offshore 64,600 1,917,813
Ultramar Diamond Shamrock 57,700 1,330,706
WICOR 77,580 1,832,827
15,729,361
Health Care--7.0%
AmeriSource Health, Cl. A 89,880 a 2,488,553
Bergen Brunswig, Cl. A 46,750 888,250
Biogen 15,900 a 1,511,494
Centocor 44,100 a 1,956,937
Forest Laboratories 20,700 a 921,150
Genzyme-General Division 59,300 a 2,238,575
IDEXX Laboratories 47,600 a 1,076,950
Lincare Holdings 73,580 a 2,179,807
Mylan Laboratories 73,600 a 1,669,800
Orthodontic Centers of America 146,400 a 1,811,700
STERIS 96,000 a 1,704,000
Universal Health Services, Cl. B 46,040 2,385,448
Watson Pharmaceuticals 72,660 a 2,942,730
23,775,394
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Interest Sensitive--19.1%
Ambac Financial Group 55,500 3,350,813
Amerin 66,300 a 1,553,906
Apartment Investment & Management, Cl. A 54,400 2,179,400
Bank United, Cl. A 58,910 2,378,491
Boston Properties 98,000 3,558,625
CMAC Investment 54,720 2,510,280
Camden Property Trust 63,300 1,709,100
City National 95,010 3,669,761
EVEREN Capital 91,220 2,679,587
Equity Office Properties Trust 76,315 2,103,432
FelCor Lodging Trust 44,600 1,067,613
Franchise Finance Corp. of America 59,630 1,382,671
GreenPoint Financial 43,900 1,536,500
Hambrecht & Quist Group 35,500 a 1,251,375
Health Care Property Investors 49,150 1,511,363
Hibernia, Cl. A 145,400 1,935,637
Highwoods Properties 51,700 1,331,275
Investment Technology Group 29,198 a 1,010,969
M&T Bank 5,956 3,329,404
Mack-Cali Realty 59,970 1,855,322
Mercantile Bankshares 83,400 3,085,800
Old Kent Financial 89,060 4,208,085
Pacific Gulf Properties 85,700 1,783,631
People's Bank 59,760 1,882,440
Peoples Heritage Financial Group 133,900 2,594,313
Protective Life 69,600 2,727,450
Reliance Group Holdings 150,870 1,131,525
Sovereign Bancorp 112,160 1,528,180
TCF Financial 88,400 2,563,600
Waddell & Reed Financial, Cl. A 48,100 1,085,256
64,495,804
Mining And Metals--1.2%
Homestake Mining 109,700 1,049,006
IMCO Recycling 77,880 1,323,960
USEC 128,900 1,603,194
3,976,160
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited)(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- -------------------------------------------------------------------------------
<S> <C> <C>
Services--11.5%
Avis Rent A Car 68,300 a 2,142,913
CIBER 78,400 a 1,479,800
CheckFree Holdings 19,100 a 916,800
Citrix Systems 38,100 a 1,619,250
Cognos 77,400 a 1,862,438
DST Systems 24,600 a 1,432,950
Excite 18,000 a 2,628,000
Galileo International 75,100 3,679,900
Gallagher (Arthur J.) 34,800 1,653,000
Intuit 39,800 a 3,427,775
Keane 37,200 a 923,025
Legato Systems 55,200 a 2,232,150
Mutual Risk Management 87,860 3,415,557
Outdoor Systems 57,900 a 1,458,356
Sterling Commerce 101,260 a 3,170,704
Sterling Software 95,520 a 1,976,070
SunGuard Data Systems 92,460 a 2,952,941
Young & Rubicam 48,100 a 1,914,981
38,886,610
Transportation--1.8%
Airborne Freight 54,200 1,734,400
CNF Transportation 28,200 1,231,987
Comair Holdings 68,700 1,515,693
Continental Airlines, Cl. B 36,300 1,567,706
6,049,786
Utilities--8.2%
Calpine 119,100 a 5,076,637
Cincinnati Bell 115,600 2,615,450
DQE 71,770 2,956,027
MidAmerican Energy Holding 91,740 2,952,881
Montana Power 42,800 3,191,275
New England Electric System 37,000 1,831,500
Nisource 100,500 2,788,875
Pacific Gateway Exchange 68,700 a 2,748,000
Transaction Network Services 131,600 a 3,520,300
27,680,945
Total Common Stocks
(cost $294,422,082) 330,423,792
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Short-Term Investments--2.2% Principal Value ($)
Amount $
- -------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement;
Goldman Sachs & Co., 4.89% dated
4/30/1999, due 5/3/1999 in the amount
of $7,531,068 (fully collateralized by
$7,307,000 U.S. Treasury Notes, 5.625% due
5/15/2008, value $7,678,723)
(cost $7,528,000) 7,528,000 7,528,000
- -------------------------------------------------------------------------------
Total Investments (cost $301,950,082) 100.1% 337,951,792
Liabilities, Less Cash and Receivables (.1%) (362,052)
Net Assets 100.0% 337,589,740
<FN>
a Non-income producing.
</FN>
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Cost Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--
See Statement of Investments--Note 1(c) 301,950,082 337,951,792
Cash 704,646
Receivable for shares of Capital Stock subscribed 279,429
Dividends and interest receivable 135,554
339,071,421
- -------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 337,194
Due to Distributor 26,945
Payable for investment securities purchased 975,068
Payable for shares of Capital Stock redeemed 142,474
1,481,681
- -------------------------------------------------------------------------------
Net Assets ($) 337,589,740
- -------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 317,082,022
Accumulated investment (loss) (49,036)
Accumulated net realized gain (loss) on investments (15,444,956)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 36,001,710
- -------------------------------------------------------------------------------
Net Assets ($) 337,589,740
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Class B Class C Class R
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets ($) 15,399,465 25,637,043 4,134,431 292,418,801
Shares Outstanding 923,465 1,588,925 256,101 17,408,243
- -------------------------------------------------------------------------------
Net Asset Value Per Share ($) 16.68 16.13 16.14 16.80
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Investment Income ($)
- -------------------------------------------------------------------------------
<S> <C>
Income:
Cash dividends (net of $2,876 foreign taxes withheld at source) 1,905,137
Interest 149,988
Total Income 2,055,125
Expenses:
Management fee--Note 2(a) 1,933,475
Distribution and service fees--Note 2(b) 170,109
Loan commitment fees--Note 4 577
Total Expenses 2,104,161
Investment (Loss) (49,036)
- -------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments (11,488,325)
Net unrealized appreciation (depreciation) on investments 40,153,532
Net Realized and Unrealized Gain (Loss) on Investments 28,665,207
Net Increase in Net Assets Resulting from Operations 28,616,171
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment (loss) (49,036) (547,271)
Net realized gain (loss) on investments (11,488,325) (4,033,890)
Net unrealized appreciation (depreciation)
on investments 40,153,532 (49,605,457)
Net Increase (Decrease) in Net Assets Resulting
from Operations 28,616,171 (54,186,618)
- -------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Net realized gain on investments:
Class A shares -- (462,818)
Class B shares -- (1,024,452)
Class C shares -- (203,973)
Class R shares -- (11,961,021)
Total Dividends -- (13,652,264)
- -------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 12,150,155 9,635,640
Class B shares 3,634,278 16,236,324
Class C shares 795,206 3,534,921
Class R shares 65,965,536 99,604,995
Dividends reinvested:
Class A shares -- 420,621
Class B shares -- 860,498
Class C shares -- 102,849
Class R shares -- 9,814,653
Cost of shares redeemed:
Class A shares (11,589,803) (3,002,178)
Class B shares (5,485,313) (4,968,357)
Class C shares (1,374,583) (1,905,628)
Class R shares (37,043,222) (56,959,110)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 27,052,254 73,375,228
Total Increase (Decrease) in Net Assets 55,668,425 5,536,346
- -------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 281,921,315 276,384,969
End of Period 337,589,740 281,921,315
</TABLE>
See notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Capital Share Transactions:
Class A
Shares sold 763,425 545,657
Shares issued for dividends reinvested -- 24,015
Shares redeemed (726,538) (169,516)
Net Increase (Decrease) in Shares Outstanding 36,887 400,156
- -------------------------------------------------------------------------------
Class B
Shares sold 232,659 922,997
Shares issued for dividends reinvested -- 50,219
Shares redeemed (351,434) (305,600)
Net Increase (Decrease) in Shares Outstanding (118,775) 667,616
- -------------------------------------------------------------------------------
Class C
Shares sold 50,824 202,040
Shares issued for dividends reinvested -- 6,003
Shares redeemed (87,704) (111,940)
Net Increase (Decrease) in Shares Outstanding (36,880) 96,103
- -------------------------------------------------------------------------------
Class R
Shares sold 4,052,179 5,542,571
Shares issued for dividends reinvested -- 558,142
Shares redeemed (2,288,141) (3,342,921)
Net Increase (Decrease) in Shares Outstanding 1,764,038 2,757,792
</TABLE>
See notes to financial statements.
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single Fund share. Total return shows how much your investment in the Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived
from the Fund's financial statements.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
-------------------------------------------
Class A Shares (Unaudited) 1998 1997 1996 1995 1994a
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 15.18 18.89 15.13 13.09 10.07 10.00
Investment Operations:
Investment income (loss)--net (.01) (.02) (.04) (.02) .02 .01
Net realized and unrealized
gain (loss) on investments 1.51 (2.78) 4.52 2.48 3.03 .06
Total from Investment Operations 1.50 (2.80) 4.48 2.46 3.05 .07
Distributions:
Dividends from investment
income--net -- -- -- -- (.03) --
Dividends from net realized gain
on investments -- (.91) (.72) (.42) -- --
Total Distributions -- (.91) (.72) (.42) (.03) --
Net asset value, end of period 16.68 15.18 18.89 15.13 13.09 10.07
- ----------------------------------------------------------------------------------------------
Total Return (%)b 9.81c (15.42) 30.73 19.22 30.31 .70c
- ----------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .74c 1.50 1.50 1.50 1.50 .25c
Ratio of net investment
income (loss) to average
net assets (.08)c (.32) (.35) (.16) .10 .14c
Portfolio Turnover Rate 20.73c 47.44 39.18 49.03 56.00 8.00c
- ----------------------------------------------------------------------------------------------
Net Assets, end of
period ($ X 1,000) 15,399 13,462 9,190 3,884 1,359 60
<FN>
a The Fund commenced operations on September 2, 1994.
b Exclusive of sales load.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------
Class B Shares (Unaudited) 1998 1997 1996 1995a
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 14.75 18.51 14.95 13.05 9.49
Investment Operations:
Investment (loss)--net (.09) (.11) (.03) (.07) (.03)
Net realized and unrealized
gain (loss) on investments 1.47 (2.74) 4.31 2.39 3.59
Total from Investment Operations 1.38 (2.85) 4.28 2.32 3.56
Distributions:
Dividends from net realized gain
on investments -- (.91) (.72) (.42) --
Net asset value, end of period 16.13 14.75 18.51 14.95 13.05
- ----------------------------------------------------------------------------------------------
Total Return (%) b 9.42c (16.10) 29.72 18.17 37.51c
- ----------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets 1.12c 2.25 2.25 2.24 1.95c
Ratio of net investment (loss)
to average net assets (.46)c (1.07) (1.02) (.93) (.56)c
Portfolio Turnover Rate 20.73c 47.44 39.18 49.03 56.00
- ----------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000 ) 25,637 25,183 19,257 4,633 1,025
<FN>
a The Fund commenced selling Class B shares on December 19, 1994.
b Exclusive of sales load.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
The Fund 17
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------
Class C Shares (Unaudited) 1998 1997 1996 1995a
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 14.75 18.52 14.95 13.04 9.49
Investment Operations:
Investment income (loss)--net (.11) (.14) .01 (.09) (.01)
Net realized and unrealized
gain (loss) on investments 1.50 (2.72) 4.28 2.42 3.56
Total from Investment Operations 1.39 (2.86) 4.29 2.33 3.55
Distributions:
Dividends from net realized gain
on investments -- (.91) (.72) (.42) --
Net asset value, end of period 16.14 14.75 18.52 14.95 13.04
- ----------------------------------------------------------------------------------------------
Total Return (%)b 9.35c (16.08) 29.79 18.27 37.41c
- ----------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average net assets 1.12c 2.25 2.25 2.25 1.14c
Ratio of net investment income (loss)
to average net assets (.45)c (1.08) (1.01) (.93) (.33)c
Portfolio Turnover Rate 20.73c 47.44 39.18 49.03 56.00
- ----------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 4,134 4,323 3,647 514 147
<FN>
a The Fund commenced selling Class C shares on December 19, 1994.
b Exclusive of sales load.
c Not annualized.
</FN>
</TABLE>
See notes to financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
-------------------------------------------
Class R Shares (Unaudited) 1998 1997 1996 1995 1994a
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 15.27 18.96 15.15 13.10 10.07 10.00
Investment Operations:
Investment income (loss)--net .01 (.01) -- .01 .04 .02
Net realized and unrealized
gain (loss) on investments 1.52 (2.77) 4.53 2.48 3.04 .05
Total from Investment Operations 1.53 (2.78) 4.53 2.49 3.08 .07
Distributions:
Dividends from investment
income--net -- -- -- (.02) (.05) --
Dividends from net realized gain
on investments -- (.91) (.72) (.42) -- --
Total Distributions -- (.91) (.72) (.44) (.05) --
Net asset value, end of period 16.80 15.27 18.96 15.15 13.10 10.07
- ----------------------------------------------------------------------------------------------
Total Return (%) 10.02b (15.31) 31.04 19.43 30.70 .70b
- ----------------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .62b 1.25 1.25 1.25 1.25 .21b
Ratio of net investment
income (loss) to average
net assets .04b (.07) .02 .09 .35 .18b
Portfolio Turnover Rate 20.73b 47.44 39.18 49.03 56.00 8.00b
- ----------------------------------------------------------------------------------------------
Net Assets, end of period
($ X 1,000) 292,419 238,953 244,292 112,209 44,091 10,747
<FN>
a The Fund commenced operations on September 2, 1994.
b Not annualized.
</FN>
</TABLE>
See notes to financial statements.
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Small Company Stock 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"), an open-end
management investment company and operates as a series company currently
offering nineteen series including the Premier Small Company Stock Fund (the
"Fund"). The Fund's investment objective is to consistently exceed the total
return performance of the Russell 2500 Stock Index while maintaining a
similar level of risk. 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").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares. The Fund is authorized to issue 168 million shares of
$.001 par value Capital Stock. The Fund currently offers four classes of
shares: Class A (27 million shares authorized), Class B (50 million shares
authorized), Class C (50 million shares authorized) and Class R (41 million
shares authorized). Class A, Class B and Class C shares are sold primarily to
retail investors through financial intermediaries and bear a distribution fee
and/or service fee. Class A shares are sold with a front-end sales charge,
while Class B and Class C shares are subject to a contingent deferred sales
charge ("CDSC"). Class R shares are sold primarily to bank trust departments
and other financial service providers (including Mellon Bank and its
affiliates) acting on behalf of customers having a qualified trust or
investment account or relationship at such institution, and bear no
distribution or service fees. Class R shares are offered without a front-end
sales charge or CDSC. Each class of shares has identical rights and
privileges, except with respect to distribution and service fees and voting
rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class. The
20
<PAGE>
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 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) 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 counterpart 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 Fund 21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
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: 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 Revenue Code of 1986, as amended
(the "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 Code, and to make distributions of taxable income sufficient to relieve
it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $2,362,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1998. If not
applied, the carryover expires in fiscal 2006.
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 1.25% of the value of the Fund' 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
22
<PAGE>
distribution fees and expenses, service fees, 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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $1,181 during the period ended April 30, 1999 from commissions
earned on sales of the Fund's shares.
(b) Distribution and service plan: The Fund has adopted a Distribution Plan
(the "Plan") pursuant to Rule 12b-1 under the Act relating to its Class A, B
and C shares. Under the Plan, Class A shares may pay annually up to .25% of
the value of its average daily net assets to compensate the Distributor and
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for activities and expenses
The Fund 23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares may pay the Distributor for distributing their
shares at an aggregate annual rate of .75% of the value of the average daily
net assets of Class B and Class C shares. Class B and Class C shares are also
subject to a service plan adopted pursuant to Rule 12b-1, under which Class B
and Class C shares pay Dreyfus Service Corporation or the Distributor for
providing certain services to the holders of Class B and Class C shares a fee
at the annual rate of .25% of the value of the average daily net assets of
Class B and Class C shares. During the period ended April 30, 1999, the
distribution fee for Class A, Class B and Class C shares was $18,081, $98,139
and $15,882, respectively. During the period ended April 30, 1999, the
service fee for Class B shares and Class C shares was $32,713 and $5,294,
respectively.
Under its terms, the Plan and service plan shall remain in effect from year
to year, provided such continuance is approved annually by a vote of the
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 in any agreement related to the Plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1999,
amounted to $92,324,090 and $63,699,134, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments was
$36,001,710, consisting of $60,525,001 gross unrealized appreciation and
$24,523,291 gross unrealized depreciation.
At April 30, 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 utilize for temporary or
emergency purposes, including the financing of redemptions. In connection
24
<PAGE>
therewith, the Fund has agreed to pay commitment fees on its pro rata potion
of the Facility. Interest is charges to the Fund at rates based on prevailing
market rates in effect at the time of the borrowings. During the period ended
April 30, 1999, the Fund did not borrow under the Facility.
The Fund 25
<PAGE>
For More Information
Dreyfus Premier Small Company
Stock 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street Boston, MA 02109
To obtain information:
By telephone
Call your financial representative or 1-800-554-4611
By mail Write to:
The Dreyfus Premier Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(c) 1999 Dreyfus Service Corporation 385/685SA994
Dreyfus
BASIC S&P 500
Stock Index Fund
SEMIANNUAL REPORT
April 30, 1999
[Dreyfus Logo]
<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>
Contents
THE FUND
- --------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
21 Statement of Financial Futures
22 Statement of Assets and Liabilities
23 Statement of Operations
24 Statement of Changes in Net Assets
25 Financial Highlights
26 Notes to Financial Statements
FOR MORE INFORMATION
- --------------------------------------------------------
Back Cover
<PAGE>
Dreyfus BASIC The Fund
S&P 500 Stock Index Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus BASIC S&P 500 Stock
Index Fund, covering the six-month period from November 1, 1998 through April
30, 1999. Inside, you'll find valuable information about how the Fund was
managed during the reporting period, including a discussion with the Fund's
portfolio managers, Steve Falci and Jocelin Reed.
The past six months have been rewarding for many equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. The Federal Reserve
Board's lowering of short-term interest rates in the fall of 1998 appears to
have helped U.S. businesses withstand the effects of economic weakness in Japan,
Asia and Latin America. As a result, several major market indices set new
records, including the Dow Jones Industrial Average's first-ever close above the
10,000 level. The broader S&P 500 Index and the technology-laden NASDAQ Index
also recorded new highs.
Yet, until near the end of the six-month period, the stock market's advance
remained relatively narrow, confined to a handful of highly valued growth and
technology stocks. In April, however, some previously out-of-favor market
sectors rallied strongly, including large-cap cyclical companies as well as some
small- and midcap stocks.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus BASIC S&P 500 Stock Index Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 13, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Steve Falci and Jocelin Reed, Portfolio Managers
How did Dreyfus BASIC S&P 500 Index Fund perform relative to its benchmark?
For the six-month period ended April 30, 1999, Dreyfus BASIC S&P 500 Stock Index
Fund produced a total return of 22.16%.1 The Fund's investment objective is to
replicate the return provided by the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500"). The S&P 500 provided a total return of 22.31% for the same
time period.2 The difference in returns is accounted for by transaction costs
and other Fund operating expenses.
What is the Fund's investment strategy?
The Fund seeks to match the total return of the S&P 500. To pursue that goal,
the Fund generally invests in all 500 stocks in the S&P 500 in proportion to
their weighting in the index. Often considered a barometer for the stock market
in general, the S&P 500 is made up of 500 widely held common stocks. It is
dominated by large blue chip stocks, which, when combined, cover nearly 75% of
the total U.S. stock market capitalization.
However, it is important to note that the S&P 500 is not composed of the 500
largest companies; rather, it is designed to capture the returns of many
different sectors of the U.S. economy. Generally speaking, it is currently
composed of 400 industrial, 40 utility, 40 financial, and 20 transportation
stocks. Each stock is weighted by its market capitalization; that is, larger
companies have greater representation in the index than smaller ones. The Fund
may also use stock index futures as a substitute for the sale or purchase of
stocks.
As an index fund, the Fund uses a passive management approach: all investment
decisions are made based on the Fund's objective, which is to match the
performance of the S&P 500. The Fund does not attempt to manage market
volatility.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
What other factors influenced the Fund's performance?
Continuing on the trend that has existed for some time now, the S&P 500 was
driven higher by an increasingly narrow list of highly priced growth stocks. In
fact, the Fund's portfolio, mirroring the S&P 500, benefited most notably from
two holdings. The first is Microsoft, the index's (and, accordingly, the Fund's)
second largest holding as of April 30, 1999. The second is America Online, a
stock that was added to the index in December 1998. In fact, these two stocks
performed so well that they are credited with producing a full third of the
index's advance in the first quarter of 1999.
In terms of the strongest performing groups within the S&P 500 during the
period, the largest gains came from the financial group, which includes
investment management and consumer finance companies, and the transportation
area, including airline and air freight companies. In addition, the index's
holdings within the broadcast/media area provided strong returns, as did many of
its retail apparel stocks.
On the other hand, the poorest performing returns of the S&P 500, and therefore
of the Fund as well, were generated from its tobacco holdings, primarily due to
litigation problems. In addition, the stocks of food distributing companies as
well as manufactured housing and engineering and construction firms provided
disappointing returns.
What is the Fund's current strategy?
Because the Fund is an index fund and its goal is to replicate the returns of
the S&P 500, our strategy is to mirror the S&P 500. To understand how index
investing works, it's important to recognize the differences associated with a
passive index manager and an active manager. The active manager typically makes
decisions about buying and selling stocks based on economic, financial and
market conditions. The passive index manager, on the other hand, buys and holds
the stocks
4
<PAGE>
in the index in an effort to match its returns. An advantage of the passive
management approach is that lower costs are incurred for professional research.
Another advantage of an index fund is its buy-and-hold strategy. As a result of
low trading volumes, index funds often incur lower transaction costs and realize
fewer taxable capital gains. The lower costs can mean more of a fund's return
can be paid to shareholders, and fewer realized capital gains may translate into
lower taxes for investors.
May 13, 1999
1 Total return includes reinvestment of dividends and any capital gains paid.
2 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.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
April 30, 1999 (Unaudited)
- ------------------------------------------------------------------------
Common Stocks--98.5% Shares Value ($)
- ------------------------------------------------------------------------
Basic Industries--3.0%
Air Products & Chemicals 35,200 1,654,400
Armstrong World Industries 6,100 333,975
Avery Dennison 17,792 1,214,304
Ball 4,700 258,206
Bemis 8,000 280,000
Boise Cascade 8,614 346,714
Centex 9,114 333,231
Champion International 14,700 803,906
Crown Cork & Seal 18,800 611,000
Danaher 20,500 1,361,969
Dow Chemical 33,925 4,450,536
duPont (E.I.) deNemours & Co. 172,700 12,196,938
Eastman Chemical 12,126 675,267
Engelhard 22,000 422,125
FMC 5,100 a 331,500
Fluor 11,589 386,783
Fort James 33,800 1,284,400
Fortune Brands 26,271 1,037,705
Foster Wheeler 6,200 83,700
Georgia Pacific 13,500 1,248,750
Grace (W.R.) & Co. 11,300 180,094
Great Lakes Chemical 9,103 435,237
Hercules 15,400 582,313
International Paper 47,165 2,514,484
Kaufman & Broad Home 7,300 177,481
Louisiana Pacific 16,700 347,569
Masco 52,018 1,528,029
Mead 15,654 654,533
Morton International 18,500 746,938
Nalco Chemical 10,045 367,270
Occidental Petroleum 53,100 1,071,956
Owens-Corning 8,300 295,688
Owens-Illinois 23,800 a 690,200
PPG Industries 27,021 1,754,676
Potlach 4,400 182,325
Praxair 24,200 1,252,350
Rohm & Haas 25,733 1,153,160
6
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Basic Industries (continued)
Sealed Air 12,831 a 780,285
Sherwin-Williams 26,400 821,700
Sigma-Aldrich 15,400 500,500
Temple-Inland 8,500 586,500
Tenneco 26,100 704,700
Union Camp 10,600 841,375
Union Carbide 20,422 1,059,391
Westvaco 15,400 460,075
Weyerhaeuser 30,500 2,047,313
Willamette Industries 17,000 794,750
51,846,301
Capital Goods--27.9%
Adobe Systems 9,300 589,388
Advanced Micro Devices 22,200 a 364,913
Allegheny Teledyne 30,067 672,749
AlliedSignal 85,400 5,017,250
America Online 157,600 a 22,497,400
Andrew 12,700 a 177,006
Apple Computer 20,900 a 961,400
Applied Materials 56,600 a 3,035,175
Ascend Communications 33,300 a 3,217,613
Autodesk 9,100 270,725
Automatic Data Processing 94,500 4,205,250
BMC Software 36,200 a 1,558,863
Boeing 143,844 5,843,663
Briggs & Stratton 3,600 237,375
Browning-Ferris Industries 24,300 968,963
Cabletron Systems 26,400 249,150
Case 11,300 391,263
Caterpillar 55,000 3,540,625
Cendant 121,786 a 2,192,148
Ceridian 21,966 a 804,505
Cisco Systems 242,200 a 27,625,938
Compaq Computer 258,749 5,773,337
Computer Associates International 82,650 3,528,122
Computer Sciences 24,400 1,453,325
Compuware 56,400 1,374,750
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Capital Goods (continued)
Cooper Industries 14,500 701,438
Crane 10,550 305,291
Cummins Engine 6,447 344,915
Data General 7,703 a 90,029
Deere & Co. 36,600 1,573,800
Dell Computer 390,300 a 16,075,481
Deluxe 12,300 425,888
Dover 34,200 1,263,263
Dun & Bradstreet 25,300 929,775
EG&G 6,816 213,000
EMC 77,000 a 8,388,188
Eaton 10,921 1,001,319
Electronic Data Systems 75,600 4,063,500
Emerson Electric 67,100 4,327,950
Equifax 22,600 812,188
First Data 67,900 2,881,506
Gateway 2000 24,000 a 1,588,500
General Dynamics 19,400 1,362,850
General Electric 502,600 53,024,300
Genuine Parts 27,600 828,000
Goodrich (B.F.) 11,400 453,150
Grainger (W.W.) 14,600 732,738
H&R Block 15,000 721,875
Harnischfeger Industries 7,200 70,200
Harris 12,106 418,414
Hewlett-Packard 155,700 12,280,838
Honeywell 19,300 1,828,675
IMS Health 48,900 1,467,000
ITT Industries 14,000 504,000
Ikon Office Solutions 22,700 273,819
Illinois Tool Works 38,400 2,956,800
Ingersoll-Rand 25,250 1,746,984
Intel 511,300 31,285,169
International Business Machines 141,500 29,600,031
Interpublic Group Cos. 21,300 1,652,081
KLA-Tencor 13,500 a 669,938
LSI Logic 21,691 a 737,494
8
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Capital Goods (continued)
Lockheed Martin 60,200 2,592,363
Lucent Technologies 405,356 24,372,030
McDermott International 9,100 263,900
Mckesson HBOC 42,454 1,485,890
Micron Technology 38,000 1,410,750
Microsoft 774,100 a 62,943,944
Milacron 5,900 135,700
Millipore 6,700 205,606
Minnesota Mining & Manufacturing 61,700 5,491,300
Motorola 92,000 7,371,500
National Semiconductor 25,600 a 320,000
Northern Telecom 101,820 6,942,851
Northrop Grumman 10,600 677,738
Novell 51,800 a 1,152,550
Omnicom Group 25,900 1,877,750
Oracle 220,750 a 5,974,047
Pall 19,103 352,212
Parametric Technology 41,000 a 535,563
Parker-Hannifin 16,640 781,040
Paychex 25,100 1,281,669
PeopleSoft 35,700 a 488,644
Perkin-Elmer 7,600 821,750
Pitney Bowes 41,806 2,923,807
Raychem 11,900 314,606
Raytheon, Cl. B 51,700 3,631,925
Rockwell International 29,100 1,502,288
Ryder System 11,000 290,125
Scientific-Atlanta 11,600 368,300
Seagate Technology 37,400 a 1,042,525
Service Corp. International 41,900 869,425
Shared Medical Systems 4,100 222,681
Silicon Graphics 28,800 a 367,200
Snap-On 9,000 293,063
Solectron 38,600 1,872,100
Stanley Works 13,627 414,772
Sun Microsystems 118,200 a 7,069,838
3COM 55,000 a 1,436,875
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Capital Goods (continued)
Tektronix 7,159 173,606
Tellabs 29,800 a 3,264,963
Texas Instruments 59,800 6,107,075
Textron 24,300 2,238,638
Thermo Electron 24,400 a 391,925
Thomas & Betts 8,741 367,122
Timken 9,500 211,969
Tyco International 125,201 10,172,616
Unisys 40,000 a 1,257,500
United Technologies 34,614 5,014,703
Waste Management 91,842 5,189,073
Xerox 100,548 5,907,195
474,545,995
Consumer Cyclical--13.1%
Albertson's 37,700 1,941,550
American Greetings, Cl. A 10,700 280,206
American Stores 42,200 1,331,938
AutoZone 23,000 a 690,000
Black & Decker 13,500 766,125
Brunswick 14,100 338,400
CBS 108,300 4,934,419
CVS 59,818 2,848,832
Carnival 94,000 3,877,500
Circuit City Group 15,418 948,207
Clear Channel Communications 40,400 a 2,807,800
Comcast, Cl. A 56,700 3,724,481
Consolidated Stores 16,800 a 577,500
Cooper Tire and Rubber 11,603 254,541
Costco Cos. 33,500 a 2,711,406
Dana 25,499 1,201,640
Darden Restaurants 21,100 470,794
Dayton Hudson 67,600 4,550,325
Dillard's, Cl. A 16,400 454,075
Disney (Walt) 315,300 10,010,775
Dollar General 27,150 951,947
Donnelley (R.R.) & Sons 20,600 728,725
Dow Jones & Co 14,400 784,800
10
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Consumer Cyclical (continued)
Federated Department Stores 32,200 a 1,503,338
Fleetwood Enterprises 5,300 130,844
Ford Motor 185,600 11,866,800
Fruit Of The Loom, Cl. A 11,100 a 118,631
Gannett 43,200 3,059,100
Gap 87,400 5,817,563
General Instrument 25,700 a 938,050
General Motors 100,400 8,929,325
Goodyear Tire & Rubber 23,900 1,366,781
Great Atlantic & Pacific 5,843 179,672
Harcourt General 10,900 519,794
Harrah's Entertainment 19,394 a 426,668
Hasbro 30,075 1,026,309
Hilton Hotel 40,000 625,000
Home Depot 226,100 13,551,869
Johnson Controls 13,028 950,230
Jostens 5,422 116,234
K mart 75,600 a 1,124,550
King World Productions 10,924 a 385,071
Knight-Ridder 12,000 645,750
Kohl's 24,300 a 1,614,431
Kroger 39,300 a 2,134,481
Limited 34,700 1,518,125
Liz Claiborne 9,900 327,319
Longs Drug Stores 5,938 204,119
Lowes 57,000 3,006,750
Marriott International, Cl. A 37,200 1,557,750
Mattel 44,100 1,141,088
May Department Stores 53,700 2,137,931
Maytag 13,800 943,575
McDonald's 207,500 8,792,813
McGraw-Hill Cos. 30,200 1,668,550
MediaOne Group 93,100 a 7,593,469
Meredith 7,960 292,033
Meyer (Fred) 23,800 a 1,288,175
Mirage Resorts 27,600 a 619,275
Moore 13,602 136,020
The Fund 11
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Consumer Cyclical (continued)
NIKE, Cl. B 43,300 2,692,719
Navistar International 10,200 a 533,588
New York Times, Cl. A 27,936 963,792
Nordstrom 21,800 767,088
PACCAR 12,022 673,232
Penney (J.C.) 40,400 1,843,250
Pep Boys-Manny, Moe & Jack 8,100 115,931
Reebok International 8,615 a 162,070
Rite Aid 39,700 925,506
Russell 5,514 121,997
Safeway 74,600 4,023,738
Seagram 61,200 3,511,350
Sears, Roebuck & Co. 58,800 2,704,800
Springs Industries 2,700 100,913
Staples 70,650 a 2,119,500
Supervalu 18,400 384,100
Sysco 51,104 1,517,150
TJX 49,600 1,652,300
TRW 18,400 771,650
Tandy 15,176 1,099,312
Time Warner 188,200 13,174,000
Times Mirror, Cl. A 11,039 645,782
Toys R Us 38,500 837,375
Tribune 18,222 1,520,398
Tricon Global Restaurants 23,430 a 1,508,306
V.F 18,400 947,600
Viacom, Cl. B 106,700 a 4,361,363
Wal-Mart Stores 682,000 31,372,000
Walgreen 153,100 4,114,563
Wendy's International 19,047 515,459
Whirlpool 11,700 776,588
Winn-Dixie Stores 22,800 816,525
222,717,414
Consumer Staples--8.2%
Alberto-Culver, Cl. B 8,744 217,507
Anheuser-Busch 73,300 5,360,063
Archer Daniels Midland 90,810 1,362,150
12
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Consumer Staples (continued)
Avon Products 40,236 2,185,318
Bestfoods 43,800 2,198,213
Brown-Forman, Cl. B 10,500 773,719
Campbell Soup 68,200 2,796,200
Clorox 18,000 2,076,750
Coca-Cola 378,100 25,710,800
Coca-Cola Enterprises 60,100 2,073,450
Colgate-Palmolive 44,900 4,599,444
ConAgra 75,032 1,866,421
Coors (Adolph), Cl. B 5,615 300,403
Eastman Kodak 49,700 3,708,863
Ecolab 19,800 830,363
General Mills 23,500 1,718,438
Gillette 170,100 8,877,094
Heinz (H.J.) 55,500 2,591,156
Hershey Foods 22,000 1,157,750
International Flavors & Fragrances 16,300 643,850
Kellogg 62,200 2,301,400
Kimberly-Clark 83,100 5,095,069
NACCO Industries, Cl. A 1,222 98,753
National Service Industries 6,300 245,306
Newell Rubbermaid 43,078 2,043,513
PepsiCo 225,000 8,310,938
Philip Morris 373,400 13,092,338
Pioneer Hi-Bred International 36,700 1,371,663
Polaroid 6,700 138,188
Procter & Gamble 203,600 19,100,225
Quaker Oats 20,900 1,349,356
RJR Nabisco Holdings 49,800 1,282,350
Ralston Purina Group 50,400 1,537,200
Sara Lee 139,900 3,112,775
Tupperware 8,800 208,450
UST 28,500 794,438
Unilever, N.V. 98,200 6,376,863
Wrigley, (Wm) Jr 17,800 1,578,638
139,085,415
The Fund 13
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Energy--6.7%
Amerada Hess 13,900 792,300
Anadarko Petroleum 18,500 701,844
Apache 15,000 460,313
Ashland 11,400 481,650
Atlantic Richfield 50,000 4,196,875
Baker Hughes 50,120 1,497,335
Burlington Resources 27,206 1,253,176
Chevron 100,100 9,984,975
Coastal 32,620 1,247,715
Columbia Energy Group 12,800 615,200
Consolidated Natural Gas 14,731 876,495
Eastern Enterprises 3,418 122,834
Enron 53,800 4,048,450
Exxon 372,900 30,974,006
Halliburton 67,400 2,872,925
Helmerich & Payne 7,610 195,958
Kerr-McGee 13,239 561,003
Mobil 119,600 12,528,100
Nicor 7,300 265,538
ONEOK 4,882 136,391
Peoples Energy 5,470 204,441
Phillips Petroleum 39,100 1,979,438
Rowan Cos. 12,810 a 204,960
Royal Dutch Petroleum 328,900 19,302,319
Schlumberger 83,700 5,346,338
Sempra Energy 36,842 764,472
Sonat 16,900 604,175
Sunoco 14,368 513,656
Texaco 82,000 5,145,500
Union Pacific Resources Group 38,507 539,098
Unocal 37,000 1,537,813
USX-Marathon Group 47,200 1,475,000
Williams Cos. 65,600 3,099,600
114,529,893
14
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Health Care--11.0%
ALZA 15,300 a 513,506
Abbott Laboratories 232,800 11,276,250
Allergan 10,100 907,738
American Home Products 202,100 12,328,100
Amgen 78,060 a 4,795,811
Bard (C.R.) 8,200 401,800
Bausch & Lomb 8,564 642,300
Baxter International 43,900 2,765,700
Becton, Dickinson & Co. 38,200 1,420,563
Biomet 17,200 705,200
Boston Scientific 60,300 a 2,566,519
Bristol-Myers Squibb 304,800 19,373,850
Cardinal Health 41,700 2,494,181
Columbia/HCA Healthcare 99,000 2,444,063
Guidant 46,200 2,480,363
HEALTHSOUTH 64,900 a 872,094
HCR Manor Care 17,000 a 471,750
Humana 25,700 a 350,163
Johnson & Johnson 206,200 20,104,500
Lilly (Eli) 168,700 12,420,538
Mallinckrodt Group 10,900 382,181
Medtronic 89,600 6,445,600
Merck & Co. 365,300 25,662,325
Monsanto 96,100 4,348,525
Pfizer 199,000 22,897,438
Pharmacia & Upjohn 77,900 4,362,400
Schering-Plough 225,400 10,889,638
St. Jude Medical 12,900 a 359,588
Tenet Healthcare 47,600 1,124,550
United Healthcare 28,600 1,605,175
Warner-Lambert 126,000 8,560,125
Watson Pharmaceuticals 14,600 591,300
186,563,834
The Fund 15
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Interest Sensitive--16.3%
Aetna 21,927 1,922,724
Allstate 125,800 4,575,975
American Express 69,400 9,069,713
American General 38,638 2,859,212
American International Group 188,289 22,112,189
Amsouth Bancorp 18,200 865,638
Aon 26,100 1,787,850
Associates First Capital, Cl. A 111,622 4,946,250
BB&T 47,700 1,905,019
BANKBOSTON 45,500 2,229,500
BankAmerica 265,404 19,109,088
Bank of New York 116,628 4,665,120
Bank One 180,298 10,637,582
Bankers Trust 14,600 1,314,913
Bear Stearns Cos. 17,075 796,122
CIGNA 31,700 2,763,844
Capital One Financial 10,100 1,754,244
Chase Manhattan 129,682 10,731,186
Chubb 25,000 1,481,250
Cincinnati Financial 25,600 1,033,600
Citigroup 346,258 26,055,915
Comerica 23,850 1,551,741
Conseco 49,171 1,551,960
Countrywide Credit Industries 17,300 783,906
Federal National Mortgage Association 159,000 11,279,063
Fifth Third Bancorp 40,825 2,926,642
First Union 151,934 8,413,345
Firstar 105,800 3,180,613
Fleet Financial Group 87,200 3,755,050
Franklin Resources 38,700 1,548,000
Federal Home Loan Mortgage 104,100 6,532,275
Golden West Financial 8,700 871,088
Hartford Financial Services Group 35,800 2,109,963
Household International 74,041 3,725,188
Huntington Bancshares 32,370 1,147,112
Jefferson Pilot 16,300 1,098,213
16
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Interest Sensitive (continued)
Keycorp 69,800 2,159,438
Lehman Brothers Holdings 17,400 966,788
Lincoln National 15,500 1,488,969
Loews 17,400 1,273,463
MBIA 15,200 1,022,200
MBNA 123,012 3,467,401
MGIC Investment 16,800 815,850
Marsh & McLennan Cos. 39,450 3,020,391
Mellon Bank 40,100 2,979,931
Mercantile Bancorp 24,100 1,373,700
Merrill Lynch & Co. 54,400 4,566,200
Morgan (J.P.) 26,800 3,611,300
Morgan Stanley, Dean Witter & Co. 88,555 8,783,549
National City 50,000 3,587,500
Northern Trust 17,000 1,583,125
PNC Bank 46,100 2,668,038
Progressive 11,100 1,592,850
Provident Cos. 20,700 815,063
Providian Financial 21,750 2,807,109
Pulte 6,598 149,280
Regions Financial 33,900 1,279,725
Republic New York 16,500 969,375
SLM Holding 25,400 1,084,263
St. Paul Companies 36,192 1,038,258
Safeco 20,900 830,775
Schwab (Charles) 61,450 6,744,138
SouthTrust 25,300 1,008,047
State Street 24,600 2,152,500
Summit Bancorp 26,600 1,127,175
SunTrust Banks 49,200 3,517,800
Synovus Financial 41,000 907,125
Torchmark 21,516 735,578
Transamerica 19,086 1,359,878
U.S. Bancorp 111,751 4,141,771
UNUM 21,264 1,161,546
Union Planters 21,100 903,344
The Fund 17
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Interest Sensitive (continued)
Wachovia 31,100 2,732,913
Washington Mutual 90,957 3,740,607
Wells Fargo 252,180 10,891,024
278,149,080
Mining and Metals--.7%
ASARCO 6,100 112,088
Alcan Aluminium 34,900 1,108,075
Alcoa 56,300 3,504,675
Barrick Gold 57,200 1,151,150
Battle Mountain Gold 35,200 99,000
Bethlehem Steel 19,900 a 181,588
Cyprus Amax Minerals 13,908 213,836
Freeport-McMoRan Copper, Cl. B 25,400 388,938
Homestake Mining 39,900 381,544
Inco 25,500 489,281
Newmont Mining 25,674 617,781
Nucor 13,400 786,413
Phelps Dodge 8,890 562,293
Placer Dome 38,300 540,988
Reynolds Metals 9,900 617,513
USX-U.S. Steel 13,500 408,375
Worthington Industries 14,200 196,138
11,359,676
Transportation--1.1%
AMR 28,000 a 1,954,750
Burlington Northern Santa Fe 71,917 2,633,960
CSX 33,300 1,640,025
Delta Air Lines 21,700 1,376,594
FDX 22,696 a 2,554,719
Kansas City Southern Industries 16,800 1,000,650
Laidlaw 50,600 319,413
Norfolk Southern 58,200 1,902,413
Southwest Airlines 51,575 1,679,411
US Airways Group 13,400 a 729,463
Union Pacific 37,900 2,274,000
18,065,398
18
<PAGE>
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Utilities--10.5%
AT&T 482,634 24,373,018
AES 29,400 a 1,470,000
ALLTEL 42,200 2,845,863
AirTouch Communications 87,700 a 8,188,988
Ameren 21,000 812,438
American Electric Power 29,300 1,214,119
Ameritech 168,600 11,538,563
Baltimore Gas & Electric 22,900 644,063
Bell Atlantic 238,072 13,718,899
BellSouth 299,100 13,384,725
CMS Energy 15,200 668,800
CINergy 24,300 724,444
Carolina Power & Light 23,256 937,508
Central & Southwest 32,600 808,888
Century Telephone Enterprises 21,200 853,300
Consolidated Edison 35,800 1,626,663
Corning 35,600 2,038,100
DTE Energy 22,200 906,038
Dominion Resources 30,000 1,233,750
Duke Energy 55,561 3,111,416
Edison International 54,100 1,325,450
Entergy 37,800 1,181,250
FPL Group 27,700 1,561,588
FirstEnergy 36,400 1,080,625
Frontier 26,300 1,451,431
GPU 19,600 747,250
GTE 148,000 9,906,750
MCI WorldCom 281,168 23,108,495
NEXTEL Communications, Cl. A 44,100 a 1,805,344
New Century Energies 17,500 612,500
Niagara Mohawk Power 28,700 a 383,863
Northern States Power 23,400 564,525
PG&E 58,700 1,823,369
PP&L Resources 23,200 648,150
PECO Energy 34,400 1,631,850
PacifiCorp 45,600 760,950
The Fund 19
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
- ------------------------------------------------------------------------
Common Stocks (continued) Shares Value ($)
- ------------------------------------------------------------------------
Utilities (continued)
Public Service Enterprise Group 34,200 1,368,000
Reliant Energy 43,644 1,235,671
SBC Communications 300,002 16,800,112
Southern 106,900 2,892,981
Sprint (FON Group) 68,500 7,025,531
Sprint (PCS Group) 67,500 2,860,313
Texas Utilities 43,320 1,721,970
U S West 77,154 4,036,119
UniCom 33,300 1,292,456
178,926,126
Total Common Stocks
(cost $1,098,679,022) 1,675,789,132
- ------------------------------------------------------------------------
Principal
Short-Term Investments--2.5% Amount ($) Value ($)
- ------------------------------------------------------------------------
Repurchase Agreement;--2.3%
Goldman Sachs & Co., 4.89% dated
4/30/1999, due 5/3/1999 in the amount
of $38,664,749 (fully collateralized by
$40,083,000 U.S. Treasury Bonds, 5.50%
8/15/2028, value $39,421,995) 38,649,000 38,649,000
U.S. Treasury Bills--.2%
4.30%, 6/24/1999 3,750,000 b 3,725,306
Total Short-Term Investments
(cost $42,375,712) 42,374,306
- ------------------------------------------------------------------------
Total Investments (cost $1,141,054,734) 101.0% 1,718,163,438
Liabilities, Less Cash and Receivables (1.0%) (16,222,312)
Net Assets 100.0% 1,701,941,126
a Non-income producing.
b Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
20
<PAGE>
STATEMENT OF FINANCIAL FUTURES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Market Value Unrealized
Covered Depreciation
Financial Futures Purchased Contracts by Contracts ($) Expiration at 4/30/99 ($)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Standard & Poor's 500 88 29,403,000 June `99 (81,375)
</TABLE>
See notes to financial statements.
The Fund 21
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Cost ($) Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--
See Statement of Investments--Note 1(c) 1,141,054,734 1,718,163,438
Cash 454
Receivable for investment securities sold 99,810,485
Receivable for shares of Capital Stock subscribed 2,951,464
Dividends and interest receivable 1,395,476
1,822,321,317
- ------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation 295,061
Payable for shares of Capital Stock redeemed 118,816,677
Payable for investment securities purchased 969,462
Payable for Futures variation margin--Note 1(d) 298,991
120,380,191
- ------------------------------------------------------------------------------------
Net Assets ($) 1,701,941,126
- ------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 1,119,390,964
Accumulated undistributed investment income--net 1,745,627
Accumulated net realized gain (loss) on investments 3,777,206
Accumulated net unrealized appreciation (depreciation) on investments
[including ($81,375) net unrealized depreciation of
financial futures]--Note 3 577,027,329
- ------------------------------------------------------------------------------------
Net Assets ($) 1,701,941,126
- ------------------------------------------------------------------------------------
Shares Outstanding
(70 million shares of $.001 par value Capital Stock authorized) 60,434,921
Net Asset Value, offering and redemption price per share ($) 28.16
</TABLE>
See notes to financial statements.
22
<PAGE>
STATEMENT OF OPERATIONS
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income ($)
- --------------------------------------------------------------------------------
Income:
Cash dividends (net of $13,426 foreign taxes withheld at source) 9,141,626
Interest 1,327,217
Total Income 10,468,843
Expenses:
Management fee--Note 2 1,473,867
Loan commitment fees--Note 4 2,565
Total Expenses 1,476,432
Investment Income--Net 8,992,411
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 3:
Net realized gain (loss) on investments (3,975,035)
Net realized gain (loss) on financial futures 9,380,409
Net Realized Gain (Loss) 5,405,374
Net unrealized appreciation (depreciation) on investments [including
($945,500) net unrealized depreciation on financial futures] 270,918,681
Net Realized and Unrealized Gain (Loss) on Investments 276,324,055
Net Increase in Net Assets Resulting From Operations 285,316,466
See notes to financial statements.
The Fund 23
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
- --------------------------------------------------------------------------------
Operations ($):
Investment income--net 8,992,411 15,357,976
Net realized gain (loss) on investments 5,405,374 3,351,910
Net unrealized appreciation (depreciation)
on investments 270,918,681 80,759,022
Net Increase (Decrease) in Net Assets
Resulting from Operatons 285,316,466 99,468,908
- --------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net (11,073,680) (14,638,843)
Net realized gain on investments (4,281,732) (12,006,581)
Total Dividends (15,355,412) (26,645,424)
- --------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold 638,724,740 796,141,077
Dividends reinvested 15,002,512 26,303,252
Cost of shares redeemed (354,893,732) (565,263,383)
Increase (Decrease) in Net Assets from
Capital Stock Transactions 298,833,520 257,180,946
Total Increase (Decrease) in Net Assets 568,794,574 330,004,430
- --------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 1,133,146,552 803,142,122
End of Period 1,701,941,126 1,133,146,552
Undistributed investment income--net 1,745,627 3,826,896
- --------------------------------------------------------------------------------
Capital Share Transactions (Shares):
Shares sold 24,503,084 35,271,108
Shares issued for dividends reinvested 601,526 1,249,129
Shares redeemed (13,214,664) (28,686,916)
Net Increase (Decrease) in Shares Outstanding 11,889,946 7,833,321
See notes to financial statements.
24
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the Fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Six Months Ended
April 30, 1999 Year Ended October 31,
--------------------------------------------
(Unaudited) 1998 1997 1996 1995a 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning
of period 23.34 19.73 15.38 12.75 10.42 10.23
Investment Operations:
Investment income--net .17 .31 .30 .29 .26 .21
Net realized and unrealized
gain (loss) on investments 4.96 3.89 4.52 2.69 2.37 .14
Total from Investment
Operations 5.13 4.20 4.82 2.98 2.63 .35
Distributions:
Dividends from investment
income--net (.22) (.31) (.28) (.30) (.26) (.16)
Dividends from net realized
gain on investments (.09) (.28) (.19) (.05) (.04) (.00)b
Total Distributions (.31) (.59) (.47) (.35) (.30) (.16)
Net asset value, end of
period 28.16 23.34 19.73 15.38 12.75 10.42
- ------------------------------------------------------------------------------------
Total Return (%) 22.16c 21.68 31.87 23.78 25.75 3.50
- ------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .10c .20 .20 .20 .37 .40d
Ratio of net investment
income to average net assets .61c 1.45 1.72 2.16 2.36 2.38
Portfolio Turnover Rate 8.46c 16.76 3.75 4.75 1.03 13.00
- ------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 1,701,941 1,133,147 803,142 449,123 204,278 123,994
<FN>
a Effective September 15, 1995, the Fund's Investor and Class R designations
were eleminated and the Fund became a single class fund.
b Amount represents less than $.01
c Not annualized.
d Annualized expense ratio before voluntary reimbursement of expenses by the
investment advisor for the year ended October 31, 1994 was .45%.
See notes to financial statements.
</FN>
</TABLE>
The Fund 25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC S&P 500 Stock Index 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 replicate the total return of the Standard & Poor's 500 Composite Stock Price
Index primarily through investments in equity securities. 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"). Premier Mutual Fund
Services, Inc. is the distributor of the Fund's shares, which are sold to the
public without a sales charge.
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 options and
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.
26
<PAGE>
(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) 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 contract 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. Contracts open at April
30, 1999, are set forth in the Statement of Financial Futures.
The Fund 27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(e) Distributions to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. 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 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.
(f) 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 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:
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 .20 of 1% 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, 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
28
<PAGE>
"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.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the period ended April 30,
1999, amounted to $423,694,776 and $119,662,023, respectively.
At April 30, 1999, accumulated net unrealized appreciation on investments and
financial futures was $577,027,329, consisting of $594,040,711 gross unrealized
appreciation and $17,013,382 gross unrealized depreciation.
At April 30, 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).
The Fund 29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("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 April
30, 1999, the Fund did not borrow under the Facility. *30
30
<PAGE>
The Fund 31
<PAGE>
NOTES
32
<PAGE>
The Fund 33
<PAGE>
For More Information
Dreyfus BASIC
S&P 500 Stock Index 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request
to [email protected]
On the Internet Information
can be viewed online or
downloaded from:
http://www.dreyfus.com
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
(C) 1999 Dreyfus Service Corporation 713SA994
