Dreyfus Balanced Fund, Inc.
SEMIANNUAL REPORT February 29, 2000
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by Dreyfus and
the fund's other service providers do not properly process and calculate
date-related information from and after January 1, 2000. Dreyfus has taken steps
designed to avoid year 2000-related problems in its systems and to monitor the
readiness of other service providers. 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.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
12 Statement of Financial Futures
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Balanced Fund, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Balanced Fund,
Inc., covering the six-month period from September 1, 1999 through February 29,
2000. 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, Douglas D. Ramos, CFA.
Primarily because of a fast-growing U.S. economy and rising interest rates, the
past six months have been good for stocks but difficult for bonds. The stock
market' s advance was led primarily by technology stocks, although other market
sectors also produced good results during the fourth quarter of 1999. During the
first two months of the year 2000, however, the large-cap sector of the stock
market corrected substantially, and small- and mid-cap stocks generally
outperformed large-capitalization stocks.
In the bond market, rising interest rates caused prices of U.S. Treasury and
agency securities to decline sharply. However, prices of higher yielding
securities -- such as corporate bonds and mortgage-backed securities -- fell
less severely. In an environment of robust economic growth, investors appeared
more comfortable owning bonds that are influenced primarily by credit risk, and
they avoided securities that are most affected by interest-rate risk.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Balanced Fund, Inc.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
March 23, 2000
DISCUSSION OF FUND PERFORMANCE
Douglas D. Ramos, CFA, Portfolio Manager
How did Dreyfus Balanced Fund, Inc. perform relative to its benchmark?
For the six-month period ended February 29, 2000, Dreyfus Balanced Fund, Inc.
produced a total return of 5.07% .(1) This compares favorably with the
performance of the fund's Customized Blended Index (the "Index"), which produced
a total return of 3.23% .(2) The Standard & Poor's 500 Composite Stock Price
Index ("S&P 500"), which comprised 60% of the Index, had a total return of 4.10%
for the six months ended February 29, 2000.(3) The Lehman Brothers Aggregate
Bond Index, which comprised 40% of the Index, produced a total return of 1.92%
.(4)
We attribute the fund's relatively good performance primarily to our emphasis on
the volatile technology sector and communications services sector in the equity
portion of the portfolio. In the fixed-income sector, we benefited from our
overweighted position in corporate bonds, which outperformed most other bond
sectors during the period. Of course, the fund's emphasis on any market sector
may cause it to be subject to greater than average share price fluctuations.
What is the fund's investment approach?
On the equity side, the fund invests primarily in mid- and large-sized companies
that we believe have above-average growth potential and are attractively valued
relative to the market in general. While our investment universe generally
consists of companies with market capitalizations of $1 billion or greater, we
currently tend to concentrate slightly more heavily on stocks with market
capitalizations of $5 billion or greater.
On the fixed-income side, the fund invests in a mix of debt instruments
including corporate bonds, mortgage-backed securities, asset-backed securities,
U.S. Treasuries and U.S. government agency bonds, as well as commercial
mortgage-backed securities. The fixed-income portion of the fund also includes
cash and cash equivalents.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The fund' s asset allocation parameters have been designed to provide the
portfolio management team with the flexibility to respond to changing investment
environments and to take advantage of a wide range of investment opportunities.
Under normal market conditions, the fund's equity allocation may range from 40%
to 75%, and its fixed-income allocation range from 25% to 60%, with a benchmark
of 60% in equity investments and 40% in fixed-income investments. Under adverse
market conditions, the fund may invest up to 100% of its assets in cash and cash
equivalents, including money market instruments.
What other factors influenced the fund's performance?
The fund was favorably influenced by the investment environment that prevailed
during the period, especially on the equities side. Robust consumer spending,
low rates of inflation and technology-driven productivity gains powered the U.S.
economy to its longest peacetime expansion in history. Equity markets benefited
from the economy' s strong growth, particularly the fast-growing technology
sector, in which the fund held a significant position. Key holdings include chip
manufacturers, such as LSI Logic, semiconductor equipment makers, such as
Applied Materials, communications service and equipment companies, such as
Nortel Networks, and business-related software developers, such as Oracle. We
also maintain significant investments in telecommunications-related utilities,
which have benefited from the rapid growth of wireless communications and the
build-out of the Internet.
Most other equity sectors faced less favorable market conditions. Health care,
the fund' s worst performing sector, was hurt by a variety of competitive and
regulatory pressures. Consumer staples companies came under pressure as a result
of product pricing issues and potential competition from the Internet. Consumer
cyclicals suffered from fears that the rate of economic growth might slow in
response to rising interest rates.
Rising interest rates during the reporting period produced a generally negative
effect on the fund's fixed-income performance. The Federal Reserve Board raised
interest rates during the period in an effort to slow the U.S. economy and
forestall a future rise in inflation. Since bond prices tend to decline when
interest rates rise, most fixed-
income investments provided negative returns during the period. Corporate bonds,
in which the fund held an overweighted position, generally outperformed U.S.
Treasuries because the strong economy was seen as generally favoring corporate
financial health.
What is the fund's current strategy?
On the equity side, as of the end of the reporting period, the fund remained
slightly underweighted to its benchmark in the fast-growing technology sector.
Approximately 34% of the equity portion of the portfolio was allocated among
various areas of the semiconductor, computer and communications industries.
On the fixed-income side, as of the end of the reporting period, we remain
overweighted in corporate bonds, which account for approximately 35% of the
fund' s fixed-income portfolio. We have also begun increasing our exposure to
bonds issued by emerging foreign markets, such as Korea and Chile, in light of
increasing liquidity and the economic recovery in these markets.
March 23, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: BLOOMBERG L.P. -- REFLECTS THE REINVESTMENT OF INCOME DIVIDENDS
AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. EFFECTIVE SEPTEMBER 15, 1999,
THE FUND'S CUSTOMIZED BLENDED INDEX HAS BEEN CHANGED TO A BLENDED INDEX OF 60%
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND 40% LEHMAN BROTHERS
AGGREGATE BOND INDEX. PRIOR TO SEPTEMBER 15, 1999, THE FUND'S CUSTOMIZED BLENDED
INDEX HAD BEEN A BLENDED INDEX OF 50% STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX, 40% LEHMAN BROTHERS AGGREGATE BOND INDEX AND 10% MERRILL LYNCH
3-MONTH U.S TREASURY BILL INDEX. THE INDEX WAS MODIFIED TO BETTER REFLECT HOW
THE FUND IS BEING MANAGED.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500 INDEX") IS A WIDELY ACCEPTED,
UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
(4) SOURCE: LEHMAN BROTHERS -- REFLECTS THE REINVESTMENT OF INCOME DIVIDENDS
AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS AGGREGATE
BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX OF CORPORATE, U.S.
GOVERNMENT AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS, MORTGAGE-BACKED
SECURITIES AND ASSET-BACKED SECURITIES WITH AN AVERAGE MATURITY OF 1-10 YEARS.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
STATEMENT OF INVESTMENTS
February 29, 2000 (Unaudited)
COMMON STOCKS--57.3% Shares Value ($)
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AEROSPACE & ELECTRONICS--.2%
<S> <C> <C>
Boeing 12,500 460,938
COMMERCIAL SERVICES--.4%
At Home, Cl. A 3,300 (a) 113,231
McGraw-Hill Cos. 14,000 712,250
825,481
CONSUMER DURABLES--.8%
Ford Motor 11,400 474,525
General Motors 8,500 646,531
Leggett & Platt 17,000 285,813
1,406,869
CONSUMER NON-DURABLES--2.1%
Anheuser-Busch Cos. 7,100 455,288
Estee Lauder, Cl .A 6,300 273,262
Intimate Brands 10,000 326,875
Kimberly-Clark 12,400 640,925
PepsiCo 39,800 1,283,550
Procter & Gamble 11,100 976,800
3,956,700
CONSUMER SERVICES--3.4%
AMFM 8,000 (a) 491,000
Adelphia Communications, Cl. A 11,200 (a) 615,300
CBS 24,000 (a) 1,429,500
Carnival 14,500 417,781
Cendant 55,500 (a) 988,594
Clear Channel Communications 4,000 (a) 266,500
Gannett 8,000 521,500
Infinity Broadcasting, Cl. A 10,000 (a) 319,375
McDonald's 5,900 186,219
Time Warner 13,800 1,179,900
6,415,669
ELECTRONIC TECHNOLOGY--15.8%
American Tower, Cl. A 29,100 1,433,175
Apple Computer 4,400 (a) 504,350
Applied Materials 10,000 (a) 1,829,375
Cabletron Systems 20,300 (a) 994,700
Compaq Computer 21,000 522,375
Computer Sciences 18,600 (a) 1,465,912
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONIC TECHNOLOGY (CONTINUED)
Ericsson (LM) Telephone, Cl. B, ADR 14,000 1,344,000
General Dynamics 7,000 302,750
Hewlett-Packard 8,800 1,183,600
Intel 35,600 4,022,800
International Business Machines 17,000 1,734,000
LSI Logic 52,000 (a) 3,331,250
Lexmark International Group, Cl. A 13,300 (a) 1,586,025
Motorola 11,600 1,977,800
National Semiconductor 24,400 (a) 1,833,050
Nortel Networks 11,000 1,226,500
Sun Microsystems 8,000 (a) 762,000
3COM 8,000 (a) 784,000
Teradyne 19,000 (a) 1,653,000
Texas Instruments 4,000 666,000
United Technologies 8,400 427,875
29,584,537
ENERGY MINERALS--3.1%
Burlington Resources 7,000 193,375
Conoco, Cl. A 23,000 441,312
Exxon Mobil 23,788 1,791,534
Kerr-McGee 9,300 416,175
Royal Dutch Petroleum, ADR 34,700 1,821,750
Texaco 19,500 925,031
USX-Marathon Group 9,000 194,625
5,783,802
FINANCE--7.8%
American Express 5,300 711,194
American General 8,100 422,719
American International Group 16,227 1,435,042
Associates First Capital, Cl. A 16,900 335,887
Bank of America 15,500 713,969
Bank of New York 14,000 466,375
Chase Manhattan 18,500 1,473,062
Citigroup 48,700 2,517,181
Federal Home Loan Mortgage 16,000 668,000
Federal National Mortgage Association 26,600 1,409,800
Fleet Boston Financial 14,600 397,850
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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FINANCE (CONTINUED)
Household International 5,900 188,431
John Hancock Financial Services 19,600 (a) 311,150
Morgan (J.P.) 5,100 566,100
Morgan Stanley Dean Witter 24,600 1,732,763
Wells Fargo 29,000 958,813
XL Capital, Cl. A 7,500 303,281
14,611,617
HEALTH SERVICES--1.7%
Columbia/HCA Healthcare 75,800 1,463,888
Wellpoint Health Networks 25,000 (a) 1,687,500
3,151,388
HEALTH TECHNOLOGY--3.4%
American Home Products 12,500 543,750
Baxter International 6,000 327,000
Bristol-Myers Squibb 16,900 960,131
Johnson & Johnson 12,100 868,175
Lilly (Eli) 7,500 445,781
Merck & Co. 28,400 1,748,375
Pharmacia & Upjohn 15,700 747,713
Warner-Lambert 8,000 684,500
6,325,425
INDUSTRIAL SERVICES--.8%
Schlumberger 19,900 1,470,113
NON-ENERGY MINERALS--.5%
Alcoa 5,000 342,500
Weyerhaeuser 9,700 497,731
840,231
PROCESS INDUSTRIES--1.0%
Dow Chemical 5,000 542,500
duPont (E.I.) deNemours 8,000 404,000
International Paper 4,000 147,250
PPG Industries 7,000 345,625
Rohm & Haas 12,600 508,725
1,948,100
PRODUCER MANUFACTURING--4.3%
Emerson Electric 6,000 273,375
General Electric 30,000 3,965,625
Georgia-Pacific 10,100 350,344
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER MANUFACTURING (CONTINUED)
Honeywell 33,800 1,626,625
Ingersoll-Rand 6,300 241,369
Masco 23,200 414,700
Tyco International 29,700 1,126,743
7,998,781
RETAIL TRADE--2.1%
Federated Department Stores 4,000 (a) 146,750
Gap 7,000 338,187
Lowes 22,600 1,076,325
May Department Stores 13,600 356,150
TJX Cos. 21,400 341,063
Target 28,800 1,699,200
3,957,675
TECHNOLOGY SERVICES--4.2%
BMC Software 9,100 (a) 418,600
Charter Communications, Cl. A 54,000 (a) 948,375
Computer Associates International 24,100 1,549,931
Compuware 11,200 (a) 247,800
Electronic Data Systems 20,000 1,295,000
First Data 12,000 540,000
Network Associates 27,200 (a) 827,900
Oracle 26,000 (a) 1,930,500
Synopsys 3,500 (a) 139,781
7,897,887
UTILITIES--5.7%
AT&T 33,400 1,651,212
Bell Atlantic 12,600 616,613
Coastal 31,200 1,312,350
El Paso Energy 4,600 170,488
Enron 7,000 483,000
GTE 29,800 1,758,200
MCI WorldCom 36,450 (a) 1,626,581
Niagara Mohawk Power 11,000 (a) 129,250
SBC Communications 27,400 1,041,200
Sprint (FON Group) 25,000 1,525,000
Texas Utilities 8,000 261,000
10,574,894
TOTAL COMMON STOCKS
(cost $84,274,677) 107,210,107
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES--39.4% Amount ($) Value ($)
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BANKING--.6%
Bayer HypoVereinsbank, Bonds,
8.741%, 6/30/2031 1,200,000 (b) 1,188,959
FOOD RETAILING--1.8%
Fred Meyer, Notes,
7.375%, 3/1/2005 3,400,000 3,323,415
INDUSTRIAL--3.2%
ICI Wilmington, Notes,
7.05%, 9/15/2007 1,500,000 1,422,368
Pemex Finance, Notes,
7.80%, 2/15/2013 3,000,000 (b) 2,958,300
Saks, Deb.,
8.25%, 11/15/2008 700,000 656,976
Yosemite Securities Trust I, Deb.,
8.25%, 11/15/2004 1,000,000 (b) 987,585
6,025,229
INSURANCE--.8%
Conseco, Notes,
9%, 10/15/2006 1,400,000 1,419,830
TELECOMMUNICATIONS--1.5%
VodafoneAirtouch Communications, Notes,
6.35%, 6/1/2005 3,000,000 2,840,994
TRANSPORTATION--1.5%
America West Airlines, Pass-Through Ctfs., 2,790,697 2,745,585
Ser. 1997,1C, 7.53%, 1/2/2004
UTILITIES--2.2%
Crescent Real Estate Trust, Notes,
7.50%, 9/15/2007 5,000,000 4,164,915
OTHER--3.3%
DLJ,
Medium-Term Notes, 4%, 8/7/2000 2,500,000 (b) 2,520,488
NSCOR, Residential Mortgage Securities:
Ser. 1997-11, B2, 7%, 8/25/2027 341,318 305,264
Ser. 1998-2, B2, 6.50%, 2/25/2028 736,131 632,325
New York City Tax Lien,
Collateralized Bonds,
Ser. 1997-1, Cl. D, 6.90%, 5/25/2005 555,477 (b) 552,178
Residential Funding Mortgage Securities 1,
Pass-Through Ctfs.,
Ser. 1996-s18, Cl. M3, 8%, 10/25/2026 2,334,422 2,242,084
6,252,339
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
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U.S. GOVERNMENT & AGENCIES--24.5%
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit,
Ser. 1497, Cl. FF, 6.50%, 8/15/2021 1,650,000 1,562,319
Federal National Mortgage Association, Notes,
6.50%, 8/15/2004, 1,750,000 1,708,936
U.S. Treasury Bonds,
5.25%, 2/15/2029 548,000 472,447
U.S. Treasury Notes:
5%, 4/30/2001 750,000 738,488
5.75%, 6/30/2001 1,000,000 990,970
5.50%, 8/31/2001 2,000,000 1,972,160
5.875%, 11/30/2001 4,000,000 3,956,880
7.25%, 8/15/2004 1,000,000 1,022,780
5.875%, 11/15/2004 14,000,000 (c) 13,593,440
6%, 8/15/2009 20,659,000 19,880,362
45,898,782
TOTAL BONDS AND NOTES
(cost $76,520,791) 73,860,048
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SHORT-TERM INVESTMENTS--2.8%
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U.S TREASURY BILLS:
5.19%, 3/30/2000 23,000 22,904
5.23%, 4/6/2000 144,000 143,221
5.68%, 4/27/2000 5,112,000 5,066,401
TOTAL SHORT-TERM INVESTMENTS
(cost $5,232,179) 5,232,526
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TOTAL INVESTMENTS (cost $166,027,647) 99.5% 186,302,681
CASH AND RECEIVABLES (NET) .5% 980,332
NET ASSETS 100.0% 187,283,013
(A) NON-INCOME PRODUCING.
(B) SECURITIES EXEMPT FROM REGISTRAION 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 FEBRUARY 29, 2000, THESE
SECURITIES AMOUNTED TO $8,207,510 OR APPROXIMATELY 4.4% OF THE NET ASSETS.
(C) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR
OPEN FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF FINANCIAL FUTURES
February 29, 2000 (Unaudited)
Market Value Unrealized
Covered (Depreciation)
Contracts by Contracts ($) Expiration at 2/29/2000 ($)
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FINANCIAL FUTURES LONG:
5 year U.S. Treasury Notes 31 3,009,906 June 2000 (2,664)
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 166,027,647 186,302,681
Cash 257,479
Interest receivable 1,167,699
Receivable for investment securities sold 483,013
Receivable for shares of Common Stock subscribed 3,938
Prepaid expenses 14,462
188,229,272
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 102,303
Payable for investment securities purchased 458,048
Payable for shares of Common Stock redeemed 331,520
Payable for futures variation margin--Note 4(a) 1,453
Accrued expenses 52,935
946,259
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NET ASSETS ($) 187,283,013
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 164,653,432
Accumulated undistributed investment income--net 1,164,784
Accumulated net realized gain (loss) on investments 1,192,427
Accumulated net unrealized appreciation (depreciation)
on investments [including ($2,664) net unrealized
(depreciation) on financial futures]--Note 4(b) 20,272,370
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NET ASSETS ($) 187,283,013
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SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized) 12,081,062
NET ASSET VALUE, offering and redemption price per share ($) 15.50
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 2,601,927
Cash dividends (net of $160 foreign taxes withheld at source) 615,437
TOTAL INCOME 3,217,364
EXPENSES:
Management fee--Note 3(a) 565,467
Shareholder servicing costs--Note 3(b) 319,730
Professional fees 19,283
Custodian fees--Note 3(b) 17,780
Prospectus and shareholders' reports 13,483
Directors' fees and expenses--Note 3(c) 12,749
Registration fees 7,832
Interest expense--Note 2 2,677
Loan commitment fees--Note 2 2,063
Miscellaneous 4,988
TOTAL EXPENSES 966,052
INVESTMENT INCOME--NET 2,251,312
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 2,660,695
Net realized gain (loss) on financial futures 389,430
NET REALIZED GAIN (LOSS) 3,050,125
Net unrealized appreciation (depreciation) on investments
[including ($62,695) net unrealized (depreciation) on
on financial futures] 4,045,850
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 7,095,975
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 9,347,287
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 29, 2000 Year Ended
(Unaudited) August 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 2,251,312 7,439,985
Net realized gain (loss) on investments 3,050,125 15,593,818
Net unrealized appreciation (depreciation)
on investments 4,045,850 35,589,943
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 9,347,287 58,623,746
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (2,685,296) (8,501,407)
Net realized gain on investments (17,907,317) (20,122,668)
TOTAL DIVIDENDS (20,592,613) (28,624,075)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 26,350,206 131,420,540
Dividends reinvested 20,091,163 27,427,390
Cost of shares redeemed (36,128,277) (360,153,223)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 10,313,092 (201,305,293)
TOTAL INCREASE (DECREASE) IN NET ASSETS (932,234) (171,305,622)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 188,215,247 359,520,869
END OF PERIOD 187,283,013 188,215,247
Undistributed investment income--net 1,164,784 1,598,768
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,631,667 8,145,401
Shares issued for dividends reinvested 1,288,348 1,733,807
Shares redeemed (2,236,559) (22,149,613)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 683,456 (12,270,405)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Six Months Ended
February 29, 2000 Year Ended August 31,
-----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
<S> <C> <C> <C> <C> <C> <C>
beginning of period 16.51 15.19 18.15 15.13 15.61 13.72
Investment Operations:
Investment income--net .19(a) .87(a) .47 .45 .51 .54
Net realized and unrealized
gain (loss) on investments .65 1.98 (.88) 3.65 .29 1.99
Total from Investment
Operations .84 2.85 (.41) 4.10 .80 2.53
Distributions:
Dividends from investment
income--net (.24) (.45) (.46) (.44) (.53) (.51)
Dividends from net realized
gain on investments (1.61) (1.08) (2.09) (.64) (.75) (.13)
Total Distributions (1.85) (1.53) (2.55) (1.08) (1.28) (.64)
Net asset value, end of period 15.50 16.51 15.19 18.15 15.13 15.61
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TOTAL RETURN (%) 5.07(b) 19.37 (2.99) 28.06 5.19 19.03
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses
to average net assets .51(b) .94 .91 .96 1.00 1.04
Ratio of interest expense and
loan commitment fee
to average net assets .00(c) .03 -- -- -- --
Ratio of net investment income
to average net assets 1.19(b) 2.62 2.76 2.71 3.37 3.99
Portfolio Turnover Rate 54.28(b) 162.40 177.85 235.56 186.23 72.42
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 187,283 188,215 359,521 347,259 269,869 165,909
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) NOT ANNUALIZED.
(C) AMOUNT REPRESENTS LESS THAN .01%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Balanced Fund, Inc. (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a non-diversified open-end
management investment company. The fund's investment objective is to provide
investors with long-term capital growth and current income, consistent with
reasonable investment 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"), which is a wholly-owned subsidiary of Mellon Financial
Corporation. 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: Most debt securities are valued each business day by an
independent pricing service (the "Service") approved by the Board of Directors.
Debt securities 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 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 (including financial
futures) 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. The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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. Forward currency exchange contracts are valued at the forward rate.
(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.
(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. Under the terms of the custody agreement, the fund receives net
earnings credits based on available cash balances left on deposit.
(d) 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 nor
mally 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--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 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.
The average daily amount of borrowings outstanding during the period ended
February 29, 2000 was approximately $95,700, with a related weighted average
annualized interest of 5.61%.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management fee is
computed at the annual rate of .60 of 1% of the value of the fund's average
daily net assets and is payable monthly.
(b) Under the Shareholder Services Plan, the fund reimburses Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, an amount not to exceed
an annual rate of .25 of 1% of the value of the fund's average daily net assets
for certain allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 period ended February 29, 2000, the fund was
charged $221,596 pursuant to the Shareholder Services Plan.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the fund. During the period
ended February 29, 2000, the fund was charged $36,237 pursuant to the transfer
agency agreement.
The fund compensates Mellon under a custody agreement for providing custodial
services for the fund. During the period ended February 29, 2000, the fund was
charged $17,780 pursuant to the custody agreement.
(c) Each non-affiliated director is a board member of one or more funds
comprising a certain group of funds ("Fund Group") within the Dreyfus complex.
Effective January 1, 2000, for their participation as a director in a Fund
Group, the directors receive an annual fee of $40,000 each, $6,000 for each
meeting attended in person and $500 for each telephonic meeting in which they
participate. These fees are allocated among the funds in the Fund Group. The
Chairman of the Board receives an additional 25% of such compensation. Prior to
January 1, 2000, each director who was not an "affiliated person" as defined in
the Act received from the fund an annual fee of $1,000 and an attendance fee of
$250 per meeting. The Chairman of the Board received an additional 25% of such
compensation.
(d) During the period ended February 29, 2000, the fund incurred total brokerage
commissions of $82,036, of which $3,165 was paid to Dreyfus Brokerage Services,
a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the
period ended February 29, 2000, amounted to $100,703,552 and $118,673,372,
respectively.
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. Contracts open at February 29, 2000 are set
forth in the Statement of Financial Futures.
(b) At February 29, 2000, accumulated net unrealized appreciation on investments
and financial futures was $20,272,370, consisting of $28,646,166 gross
unrealized appreciation and $8,373,796 gross unrealized depreciation.
At February 29, 2000, 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 5--Subsequent Event:
At a meeting of the fund's Board of Directors held on March 6, 2000, the Board
approved the termination of the fund' s Distribution Agreement with Premier
Mutual Fund Services, Inc., and approved a new Distribution Agreement with
Dreyfus Service Corporation. The new Distribution Agreement with Dreyfus Service
Corporation became effective on March 22, 2000.
The Fund
For More Information
Dreyfus Balanced Fund, Inc.
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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
(c) 2000 Dreyfus Service Corporation 222SA002
