PRESIDENT'S LETTER
Dear Shareholder:
We are pleased to send you this semi-annual report for the Dreyfus
Balanced Fund covering the six-month period that ended on February 28,
1994. The Fund continued its rapid growth as assets surpassed $67
million, up from $50 million at the start of the period. During the past six
months, the stock market attained a new historic high and yields on 30-
year Treasury Bonds reached their lowest levels in almost 20 years. We
continued to maintain a cautious investment stance, however, as we saw
many warning signals which could deflate investor optimism. For the past
six months, the Fund provided a 4.16% total return.* This compares quite
favorably to the Standard and Poor's 500 Composite Stock Price Index
return of 2.13%** and the Lehman Brothers Aggregate Bond Index return of
- - -0.08%.*** The portfolio's asset allocation on February 28, 1994 was 43%
invested in equities, 47% invested in fixed income obligations and 10% in
cash equivalent items.
As the Fund continued its growth, we were confronted with a difficult
environment in which to build the stock and bond sectors. With overall
stock prices continuing their upward march, the Dow Jones Industrial
Average flirted with the 4000 mark in late January. A good deal of the
enthusiasm for stock investments came from the sharp decline in interest
rates as investors sought alternatives from the low current returns on
short-term investments. We remained wary of historically high
price/earnings ratios for common stocks, a dividend yield on the S&P 500
which neared its lowest ever and individual stock problems, especially
disappointing earnings, which quickly adjusted share prices downward. By
maintaining a modest stock exposure, we remain prepared to act when
attractive situations are created.
Our strategy of favoring undervalued companies remains in force. We
continue to look closely at companies where the stock price may have been
unnecessarily punished in value because of other investors' overly
optimistic expectations. This led to our successful purchase of Amgen,
Gap Stores and Microsoft. We continue to like the pharmaceutical and
health care group (10.1% of the portfolio), which appears attractively
priced. A new area we favor is the factory outlet real estate investment
trust sector (5.0% of the portfolio). Consumers have demonstrated a
preference for shopping at factory outlet malls where sales exceed $300
per square foot. Moreover, the issues provide a very attractive dividend
yield and participation in the fastest growing segment of the retail
industry.
The turnaround at Digital Equipment is taking longer than we originally
anticipated and we decided to eliminate our position. Also, we sold our
position in Picturetel due to the anticipated profit margin pressures
stemming from significant price competition and the introduction of new
products by other vendors.
The Federal Reserve Board's increase in the Federal Funds rate in early
February unsettled both the stock and bond markets. This change in Federal
Reserve policy was designed to be a signal that the Federal Reserve would
not abandon its anti-inflation battle as economic growth picked up steam
in the fourth quarter of 1993. Investors must now be alert to the
possibility of additional rate hikes which will take some of the luster
away from stocks.
The fixed income market has not coped well at all with the move to
higher rates. The bond rally actually peaked last October as it became
more apparent that the economic expansion was gathering steam. Then
prices fell sharply in February as renewed inflationary fears, trade-
protectionist measures and the Whitewater investigation all bombarded
the market. Long-term U.S. Treasury Bonds were especially weak in
February as their prices fell sharply. For example, the 25-year Treasury
declined in price to $104.75 ($1,047.50 per bond) from $110.38 ($1,103.75
per bond). We had maintained a weighted average maturity of debt
instruments in the portfolio of approximately six years, which helped to
insulate the decline in prices. However, as long interest rates rose above
the 6.5% yield level, we increased the average maturity to nearly eight
years.
We anticipate a difficult stock market environment in the next few
months as securities will be buffeted by erratic interest rate movements,
lofty valuations, inflationary scares, political difficulties for the Clinton
Administration and simply old age for the current bull market. As such, it
is our intention to maintain a defensively postured asset allocation, but
we remain poised to seize undervalued opportunities as they arise.
Very truly yours,
(Peter Santoriello Signature Logo)
Peter Santoriello
President
March 15, 1994
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested
** 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 stock market performance.
*** The Lehman Brothers Aggregate Bond Index is a widely accepted unmanaged
index of corporate, government and government agency debt instruments.
<TABLE>
<CAPTION>
DREYFUS BALANCED FUND, INC. FEBRUARY 28, 1994
BROAD SECTOR ALLOCATION*
[Exhibit A]
Sector allocations in the pie chart are broader groupings than are listed in
the Report's Statement of Investments.
Portfolio composition is subject to change at any time.
ASSET ALLOCATION*
<S> <C> <C>
Bonds and Notes............................................................................ 47.0%
Common Stocks.............................................................................. 43.0
Cash Equivalents........................................................................... 10.0
------
100.0%
TEN LARGEST EQUITY HOLDINGS*
Intel...................................................................................... 2.5%
Grow Group................................................................................. 2.3
Blockbuster Entertainment.................................................................. 2.2
Manor Care................................................................................. 2.1
International Business Machines............................................................ 2.0
Microsoft.................................................................................. 1.9
Chelsea GCA Realty......................................................................... 1.9
Teradyne................................................................................... 1.9
Schering-Plough............................................................................ 1.9
Nike, Cl. B................................................................................ 1.9
TEN LARGEST FIXED INCOME SECURITY HOLDINGS*
U.S. Treasury Bonds, 7 1/4%, 5/15/2016..................................................... 7.4%
U.S. Treasury Bonds, 7 1/2%, 11/15/2016.................................................... 4.0
U.S. Treasury Notes, 6 3/8%, 1/15/2000..................................................... 3.0
Case Equipment Loan Trust 1994-A,
Asset Backed Notes, Cl. A-2, 4.65%, 1999............................................... 2.4
Premier Auto Trust 1994-1,
Asset Backed Ctfs., Cl. A-3, 4 3/4%, 2000.............................................. 2.2
Nationsbank, Sr. Medium-Term Notes,
3 1/4%, 1995........................................................................... 2.2
CoreStates Capital, Sr. Medium-Term Notes,
3.60%, 1996............................................................................ 1.5
Caterpillar Financial Services, Medium-Term Notes,
Ser. D, 3.86%, 1995.................................................................... 1.5
Household Affinity Credit Card Master Trust 1, Credit Card Participation Ctfs.
Ser. 1994-1, Cl. A, 3.65%, 2001........................................................ 1.4
Federal National Mortgage Association, Principal Strips, Real Estate Mortgage
Investment Conduit,
Ser. 93-128B, Zero Coupon, 12/31/1996.................................................. 1.2
* As a percentage of Total Net Assets.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-47.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
BANKING-3.2% Fleet Mortgage Group, Medium-Term Notes,
3.66%, 1996............................. $ 650,000 (a) $ 649,870
Nationsbank, Sr. Medium-Term Notes,
3 1/4%, 1995............................ 1,500,000 (a) 1,500,930
-----------
2,150,800
-----------
CONSUMER-.9% Nabisco, Deb.,
7 3/4%, 2003............................ 83,000 83,415
RJR Nabisco, Notes,
8 5/8%, 2002............................ 525,000 509,510
-----------
592,925
-----------
FINANCE-1.5% CoreStates Capital, Sr. Medium-Term Notes,
3.60%, 1996............................. 1,000,000 (a) 1,000,000
-----------
MACHINERY AND Caterpillar Financial Services:
MACHINE TOOLS-2.4% Medium-Term Notes,
Ser. D, 3.86%, 1995................. 1,000,000 (a) 998,750
Notes,
6%, 2007............................ 700,000 642,968
-----------
1,641,718
-----------
OIL AND GAS-1.0% Southern California Gas, First Mortgage,
Ser. DD, 7 1/2%, 2023................... 700,000 696,078
-----------
POLLUTION CONTROL-1.1% Waste Management, Notes,
4 5/8%, 1996............................ 750,000 743,022
-----------
TELECOMMUNICATIONS-.8% Southern Bell Telephone & Telegraph, Deb.,
8 1/2%, 2029............................ 500,000 526,715
-----------
FOREIGN-.2% Korea Development Bank, Bonds,
7.90%, 2002............................. 150,000 159,284
-----------
OTHER-7.0% Case Equipment Loan Trust 1994-A,
Asset Backed Notes,
Cl. A-2, 4.65%, 1999.................... 1,620,000 (a) 1,609,875
GMAC 1993-B Grantor Trust,
Asset Backed Ctfs.,
Cl. A, 4%, 1998......................... 614,433 613,282
Household Affinity Credit Card Master Trust 1,
Credit Card Participation Ctfs.,
Ser. 1994-1, Cl. A, 3.65%, 2001......... 950,000 (a) 950,000
Premier Auto Trust 1994-1,
Asset Backed Ctfs.,
Cl. A-3, 4 3/4%, 2000................... 1,535,000 1,523,488
World Omni 1992-A Grantor Trust,
Asset Backed Ctfs.,
Cl. A, 4 3/4%, 1998..................... 33,327 33,378
-----------
4,730,023
-----------
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
----------- -----------
U.S. GOVERNMENT Federal Farm Credit Banks,
AND AGENCIES-28.9% Consolidated Systemwide Medium-Term
Notes,
5.60%, 8/26/1997........................ $ 250,000 $ 252,395
Federal National Mortgage Association,
Principal Strips, Real Estate Mortgage
Investment Conduit:
Ser. 93-146B, Zero Coupon, 11/1/1996(b) 900,000 757,125
Ser. 93-128B, Zero Coupon, 12/31/1996(c) 1,000,000 833,750
U.S. Treasury Bonds:
7 1/4%, 5/15/2016....................... 4,750,000 4,980,822
7 1/2%, 11/15/2016...................... 2,500,000 2,691,408
U.S. Treasury Notes:
5%, 6/30/1994........................... 750,000 753,516
4 1/4%, 10/31/1994...................... 750,000 751,758
5 1/2%, 2/15/1995....................... 750,000 759,727
7 1/2%, 1/31/1996....................... 750,000 788,672
6 1/4%, 1/31/1997....................... 50,000 774,844
6%, 11/30/1997.......................... 750,000 767,227
5 5/8%, 1/31/1998....................... 700,000 706,671
5 1/8%, 3/31/1998....................... 350,000 346,445
6 3/8%, 1/15/1999....................... 750,000 775,195
6 3/8%, 1/15/2000....................... 1,970,000 2,029,716
7 1/2%, 5/15/2002....................... 750,000 818,203
5 3/4%, 8/15/2003....................... 800,000 775,375
-----------
19,562,849
-----------
TOTAL BONDS AND NOTES
(cost $32,226,813)...................... $31,803,414
===========
COMMON STOCKS-43.0% SHARES
-----------
AIRCRAFT AND AEROSPACE-1.4% McDonnell Douglas........................... 8,000 $ 954,000
-----------
CHEMICALS-4.0% American Cyanamid........................... 25,000 1,109,375
Cytec Industries............................ 3,571 (d) 54,904
Grow Group.................................. 82,700 1,550,625
-----------
2,714,904
-----------
CONSUMER-5.9% Fluor....................................... 23,500 1,042,813
Nike, Cl. B................................. 25,000 1,293,750
Pet......................................... 59,000 1,157,875
Whitman..................................... 32,900 526,400
-----------
4,020,838
-----------
ELECTRONICS-1.9% Teradyne.................................... 45,300 (d) 1,308,038
-----------
ENTERTAINMENT-2.2% Blockbuster Entertainment................... 56,800 1,498,100
-----------
FINANCIAL SERVICES-1.8% Equifax..................................... 51,000 1,198,500
-----------
HEALTH CARE-1.8% Wellpoint Health Networks, Cl. A............ 35,000 1,198,750
-----------
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1994 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
----------- -----------
HOUSING-1.2% Beazer Homes USA............................ 47,900 $ 838,250
-----------
OIL AND GAS-2.7% Atlantic Richfield.......................... 6,000 604,500
Schlumberger Ltd............................ 21,000 1,194,375
-----------
1,798,875
-----------
PHARMACEUTICALS-8.3% Amgen....................................... 26,000 (d) 1,085,500
Johnson & Johnson........................... 20,900 838,614
Manor Care.................................. 55,000 1,443,750
Merck & Co.................................. 30,000 971,250
Schering-Plough............................. 21,700 1,296,575
-----------
5,635,689
-----------
REAL ESTATE-5.0% Chelsea GCA Realty.......................... 43,800 1,314,000
Horizon Outlet Centers...................... 31,600 884,800
McArthur/Glen Realty........................ 41,800 1,159,950
-----------
3,358,750
-----------
RETAIL-.4% Starter..................................... 17,400 (d) 232,725
-----------
TECHNOLOGY-6.4% Intel....................................... 25,000 1,718,750
International Business Machines............. 25,000 1,321,875
Microsoft................................... 16,000 (d) 1,320,000
-----------
4,360,625
-----------
TOTAL COMMON STOCKS
(cost $26,464,912)...................... $29,118,044
===========
PRINCIPAL
SHORT_TERM INVESTMENTS-13.5% AMOUNT
-----------
COMMERCIAL PAPER-2.9% Ford Motor Credit,
3.38%, 3/14/1994........................ $ 2,000,000 $ 1,997,559
-----------
U.S TREASURY BILLS-10.6% 3.12%, 3/3/1994............................. 7,202,000 7,200,122
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $9,197,681)....................... $ 9,197,681
===========
TOTAL INVESTMENTS (cost $67,889,406)........................................... 103.5% $70,119,139
====== ===========
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (3.5%) $(2,392,886)
====== ===========
NET ASSETS..................................................................... 100.0% $67,726,253
====== ===========
NOTES TO STATEMENT OF INVESTMENTS:
(a) Variable rate security _ interest rate subject to periodic change.
(b) This date represents the projected maturity date, the stated maturity date is 5/15/2023.
(c) This date represents the projected maturity date, the stated maturity date is 7/25/2023.
(d) Non_income producing.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BALANCED FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $67,889,406)-see statement....................................... $70,119,139
Receivable for investment securities sold.................................. 753,418
Interest and dividends receivable.......................................... 362,297
Prepaid expenses........................................................... 52,844
-----------
71,287,698
LIABILITIES:
Due to The Dreyfus Corporation............................................. $ 38,870
Payable for investment securities purchased................................ 2,590,000
Payable for Common Stock redeemed.......................................... 517,153
Accrued expenses and other liabilities..................................... 415,422 3,561,445
----------- -----------
NET ASSETS $67,726,253
===========
REPRESENTED BY:
Paid-in capital............................................................ $65,111,948
Accumulated undistributed investment income-net............................ 309,053
Accumulated undistributed net realized gain on investments................. 75,519
Accumulated net unrealized appreciation on investments-Note 3.............. 2,229,733
-----------
NET ASSETS at value applicable to 5,021,769 outstanding shares of
Common Stock, equivalent to $13.49 per share (300 million shares of
$.001 par value authorized)................................................ $67,726,253
===========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest............................................................... $ 823,357
Cash dividends......................................................... 227,292
-----------
TOTAL INCOME................................................... $ 1,050,649
EXPENSES:
Management fee-Note 2(a)............................................... 173,785
Shareholder servicing costs-Note 2(b).................................. 115,645
Registration fees...................................................... 14,836
Auditing fees.......................................................... 12,128
Prospectus and shareholders' reports................................... 11,891
Legal fees............................................................. 8,403
Directors' fees and expenses-Note 2(c)................................. 8,267
Custodian fees......................................................... 6,604
Miscellaneous.......................................................... 11,333
-----------
362,892
Less-reduction in management fee due to
undertakings-Note 2(a)............................................. 155,480
-----------
TOTAL EXPENSES................................................. 207,412
-----------
INVESTMENT INCOME-NET.......................................... 843,237
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.................................... $ 568,735
Net unrealized appreciation on investments................................. 850,255
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................... 1,418,990
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 2,262,227
===========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BALANCED FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
AUGUST 31, FEBRUARY 28, 1994
OPERATIONS: 1993* (UNAUDITED)
----------- -----------
<S> <C> <C>
Investment income-net...................................................... $ 740,662 $ 843,237
Net realized gain on investments........................................... 101,817 568,735
Net unrealized appreciation on investments for the period.................. 1,379,478 850,255
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... 2,221,957 2,262,227
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net...................................................... (477, 477) (797,369)
Net realized gain on investments........................................... _- (595,033)
----------- -----------
TOTAL DIVIDENDS........................................................ (477,477) (1,392,402)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.............................................. 50,779,731 46,905,595
Dividends reinvested....................................................... 472,700 1,378,863
Cost of shares redeemed.................................................... (4,781,533) (29,743,408)
----------- -----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................. 46,470,898 18,541,050
TOTAL INCREASE IN NET ASSETS....................................... 48,215,378 19,410,875
NET ASSETS:
Beginning of period........................................................ 100,000 48,315,378
----------- -----------
End of period (including undistributed investment income-net:
$263,185 in 1993 and $309,053 in 1994)................................. $48,315,378 $67,726,253
=========== ===========
SHARES SHARES
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................ 3,963,947 3,475,119
Shares issued for dividends reinvested..................................... 36,706 103,783
Shares redeemed............................................................ (369,261) (2,196,525)
----------- -----------
NET INCREASE IN SHARES OUTSTANDING..................................... 3,631,392 1,382,377
=========== ===========
- - --------------------------
* From September 30, 1992 (commencement of operations) to August 31, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BALANCED FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has
been derived from i nformation provided in the Fund's financial statements.
YEAR ENDED SIX MONTHS ENDED
AUGUST 31, FEBRUARY 28, 1994
PER SHARE DATA: 1993(1) (UNAUDITED)
----------- -----------
<S> <C> <C>
Net asset value, beginning of period....................................... $12.50 $13.28
------ ------
INVESTMENT OPERATIONS:
Investment income-net...................................................... .39 .19
Net realized and unrealized gain on investments............................ .71 .36
------ ------
TOTAL FROM INVESTMENT OPERATIONS....................................... 1.10 .55
------ ------
DISTRIBUTIONS:
Dividends from investment income-net....................................... (.32) (.20)
Dividends from net realized gain on investments............................ -- (.14)
------ ------
TOTAL DISTRIBUTIONS.................................................... (.32) (.34)
------ ------
Net asset value, end of period............................................. $13.28 $13.49
====== ======
TOTAL INVESTMENT RETURN 8.88%(2) 4.16%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................................... .23%(2) .36%(2)
Ratio of net investment income to average net assets....................... 3.46%(2) 1.44%(2)
Decrease reflected in above expense ratios due to undertakings
by the Manager......................................................... 1.13%(2) .27%(2)
Portfolio Turnover Rate.................................................... 46.42%(2) 38.09%(2)
Net Assets, end of period (000's Omitted).................................. $48,315 $67,726
- - ---------------------------
(1) From September 30, 1992 (commencement of operations) to August 31, 1993.
(2) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a non-diversified open-end management investment company.
Dreyfus Service Corporation ("Distributor") acts as the exclusive
distributor of the Fund's shares, which are sold to the public without a
sales charge. The Distributor is a wholly-owned subsidiary of The Dreyfus
Corporation ("Manager").
(A) PORTFOLIO VALUATION: Most debt securities (excluding short-term
investments) are valued each business day by an independent pricing
service ("Service") approved by the Board of Directors. Debt securities for
which quoted bid prices in the judgement of the Service are readily
available and are representative of the bid side of the market 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
debt 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. Other securities
are valued at the average of the most recent bid and asked prices in the
market in which such securities are primarily traded, or at the last sales
price for securities traded primarily on an exchange or the national
securities market. In the absence of reported sales of securities traded
primarily on an exchange or national securities market, the average of the
most recent bid and asked prices is used. 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. Short-term investments are carried at amortized cost,
which approximates value. Investments denominated in foreign currencies
are translated to U.S. dollars at the prevailing rates of exchange.
DREYFUS BALANCED FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-
dividend date. Dividends from investment income-net are declared and
paid quarterly. Dividends from net realized capital gain are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the
Internal Revenue Code. To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
On March 31, 1994, the Board of Directors declared a cash dividend of
$.10 per share from
undistributed investment income-net, payable on April 4, 1994 (ex-
dividend date), to shareholders of record as of the close of business on
March 31, 1994.
(D) 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 provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from all, or substantially all,
Federal income taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .60 of 1%
of the average daily value of the Fund's net assets and is payable monthly.
The Agreement provides that the Fund may deduct from the fee to be paid
to the Manager, or the Manager will bear such excess expense, to the
extent required by state law, should the Fund's aggregate expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed the expense limitation of any state having jurisdiction
over the Fund. The most stringent state expense limitation applicable to
the Fund presently requires reimbursement of expenses in any full fiscal
year that such expenses (exclusive of certain expenses as described
above) exceed 2 1/2% of the first $30 million, 2% of the next $70 million
and 1 1/2% of the excess over $100 million of the average value of the
Fund's net assets in accordance with California "blue-sky" regulations.
However, the Manager had undertaken from September 1, 1993 through
January 27, 1994, to reduce the management fee paid by the Fund, to the
extent that the Funds aggregate expenses (excluding certain expenses as
described above) exceeded specified annual percentages of the Fund's
average daily net assets. The Manager has currently undertaken from
January 28, 1994 through June 30, 1994, or until such time as the net
assets of the Fund exceed $100 million, regardless of whether they remain
at that level, to waive receipt of the management fee payable to it by the
Fund in excess of an annual rate of .25 of 1% of the Fund's average daily
net assets. The reduction in management fee, pursuant to the
undertakings, amounted to $155,480 for the six months ended February 28,
1994.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense
reimbursement would not be less than the amount required pursuant to the
Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund
reimburses the Distributor an amount not to exceed an annual rate of .25
of 1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. During the
six months ended February 28, 1994, the Fund was charged an aggregate of
$101,776 pursuant to the Shareholder Services Plan.
(C) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each director
who is not an "affiliated person" receives an annual fee of $1,000 and an
attendance fee of $250 per meeting.
DREYFUS BALANCED FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) On December 5, 1993, the Manager entered into an Agreement and
Plan of Merger (the "Merger Agreement") providing for the merger of the
Manager with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank N.A. Closing of this merger is subject to a
number of contingencies, including receipt of certain regulatory approvals
and approvals of the stockholders of the Manager and of Mellon. The merger
is expected to occur in mid-1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's board
and shareholders before completion of the merger. Shareholder approval
will be solicited by a proxy statement.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the six months ended February
28, 1994, amounted to $35,765,296 and $19,678,568, respectively.
At February 28, 1994, accumulated net unrealized appreciation on
investments was $2,229,733, consisting of $3,217,858 gross unrealized
appreciation and $988,125 gross unrealized depreciation.
At February 28, 1994, 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).
REVIEW REPORT OF ERNST & YOUNG, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BALANCED FUND, INC.
We have reviewed the accompanying statement of assets and liabilities
of Dreyfus Balanced Fund, Inc., including the statement of investments, as
of February 28, 1994, and the related statements of operations and
changes in net assets and financial highlights for the six month period
ended February 28, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than
an audit conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the objective of
expressing an opinion regarding the financial statements and financial
highlights taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements and financial
highlights referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets and financial
highlights for the period from September 30, 1992 to August 31, 1993 and
in our report dated October 1, 1993, we expressed an unqualified opinion
on such statement of changes in net assets and financial highlights.
(ERNST & YOUNG Signature Logo)
New York, New York
April 4, 1994
(Dreyfus `D' Logo)
DREYFUS BALANCED FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 222SA942
(Dreyfus Logo)
Balanced
Fund, Inc.
Semi-Annual
Report
February 28, 1994
(Dreyfus Lion Logo)
Dreyfus Balanced Fund, Inc. February 28, 1994
Broad Sector Allocation*
| ------------------------------------------------------ |
| U.S. Government & Agency Bonds & Notes 28.9% |
| Corporate Bonds & Notes 10.9% |
| Health Care 10.1% |
| Cash Equivalents 10.0% |
| Technology 9.7% |
| Consumer 8.5% |
| Other Bonds & Notes 7.2% |
| Other Common Stocks 5.7% |
| Real Estate Investment Trusts 5.0% |
| Basic Industry 4.0% |
| ------------------------------------------------------ |
