UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-0523
THE DREYFUS FUND INCORPORATED
(Exact name of Registrant as specified in charter)
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Address of principal executive offices) (Zip code)
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 922-6832
Date of fiscal year end: 12/31
Date of reporting period: 06-30-03
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
THE DREYFUS FUND
INCORPORATED
SEMIANNUAL REPORT June 30, 2003
The views expressed in this report reflect those of the portfolio manager only
through the end of the period covered and do not necessarily represent the views
of Dreyfus or any other person in the Dreyfus organization. Any such views are
subject to change at any time based upon market or other conditions and Dreyfus
disclaims any responsibility to update such views. These views may not be relied
on as investment advice and, because investment decisions for a Dreyfus fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any Dreyfus fund.
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
- --------------------------------------------------
2 Letter from the Chairman
3 Discussion of Fund Performance
6 Statement of Investments
12 Statement of Securities Sold Short
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
- ---------------------------------------------------------------------------
Back Cover
The Fund
The Dreyfus Fund
Incorporated
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This semiannual report for The Dreyfus Fund Incorporated covers the six-month
period from January 1, 2003, through June 30, 2003. 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, Douglas D. Ramos,
CFA, and Hilary R. Woods, CFA.
The first half of 2003 was a time of long-awaited recovery for the U.S. stock
market. Despite continued volatility leading up to the war in Iraq, stocks began
to rally as the fighting wound down and investors turned their attention back to
the prospects for the U.S. economy. Apparently, they liked what they saw.
Despite current economic weakness, investors appear to be focused on the
possibility of better economic times ahead.
If these trends persist, 2003 could mark the first positive calendar year for
stocks since 1999. In our view, investors who have the potential to benefit most
are those who steadfastly maintained their equity exposure during the bear
market. In contrast, we believe investors who avoided stocks may have missed the
market' s recent gains, a timely reminder that patience, discipline and a
long-term perspective are fundamental principles that may lead to successful
investing.
Thank you for your continued confidence and support.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
July 15, 2003
DISCUSSION OF FUND PERFORMANCE
Douglas D. Ramos, CFA, and Hilary R. Woods, CFA, Portfolio Managers
How did The Dreyfus Fund Incorporated perform relative to its benchmark?
For the six-month period ended June 30, 2003, the fund's total return was
10.20%. (1) For the same period, the total return of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"), the portfolio's benchmark, was
11.75%.(2)
We attribute these results to a pronounced surge in stock prices during the
second half of the reporting period. Decisive military action in Iraq and
improving prospects for U.S. economic growth prompted a positive shift in
investor sentiment, driving the upturn in stock prices. The fund largely
participated in the market's rise, enjoying positive contributions from holdings
in a wide range of industry groups. However, weaker than average returns in a
few areas and a small percentage of assets allocated to cash undermined returns
compared to the S&P 500 Index.
What is the fund's investment approach?
The fund seeks long-term capital growth consistent with the preservation of
capital. Current income is a secondary goal. To pursue these goals, the fund
primarily invests in common stocks issued by U.S. companies, including, to a
limited degree, those issued in initial public offerings. The fund may invest up
to 20% of its assets in foreign securities.
When choosing stocks, the fund focuses on large-capitalization companies with
strong positions in their industries and a catalyst that can trigger a price
increase. The portfolio managers use fundamental analysis to create a broadly
diversified core portfolio composed of growth stocks, value stocks and stocks
that exhibit characteristics of both investment styles. The managers select
stocks based on:
* VALUE, or how a stock is priced relative to its perceived intrinsic worth;
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
* GROWTH, in this case the sustainability or growth of earnings or cash flow;
and
* FINANCIAL PROFILE, which measures the financial health of the company.
The fund typically sells a security when the portfolio managers believe that
there has been a negative change in the fundamental factors surrounding the
company, the company has become fully valued, the company has lost favor in the
current market or economic environment, or a more attractive opportunity has
been identified.
What other factors influenced the fund's performance?
Performance benefited from the fund' s emphasis on stocks that appeared
well-positioned for a gradually improving economy. Among financial stocks, the
fund de-emphasized banks, focusing instead on financial market makers such as
J.P. Morgan Chase, mortgage lenders such as Countrywide Financial, and
diversified financial institutions such as Citigroup. Such holdings produced
stronger returns than the benchmark's financial component.
In other areas, strong individual stock selections boosted performance relative
to the benchmark. Teva Pharmaceutical Industries, a global drug developer not
included in the S&P 500 Index, proved to be one of the fund's best performers.
Medical equipment makers such as Becton Dickinson, and insurers such as Anthem
also contributed above-average returns in health care. In materials and
processing, Barrick Gold rose sharply in response to increasing gold prices,
while a variety of other commodities-related holdings benefited from favorable
supply-and-demand dynamics.
The fund' s relatively good performance in the areas cited above was offset by
weaker than average performance in other areas. In particular, our relatively
light exposure to consumer discretionary stocks hurt as interest rates continued
to fall during the reporting period, helping the sector to outperform the
benchmark. While the fund' s technology holdings posted double-digit returns,
these gains fell short of the
returns registered by the benchmark's technology group, which included several
high-flying speculative stocks that, in our view, have poor underlying business
fundamentals. Individual holdings in other areas also hurt the fund' s
performance. Most notably, Kraft Foods declined when the company revealed
unexpectedly high pension-related costs.
What is the fund's current strategy?
As of the end of the reporting period, we believe the U.S. economy appears
poised for continued, albeit slow, growth. Furthermore, we see little likelihood
that interest rates, currently near historical lows, will decline much further.
Accordingly, our disciplined investment process has led us to emphasize
technology, energy and materials and processing stocks, which we believe are
likely to benefit from these trends. We have de-emphasized the consumer
discretionary, consumer staples and financial groups, which we believe are
poorly positioned for the current stage of the economic cycle.
July 15, 2003
(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, PORTFOLIO SHARES MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAINS DISTRIBUTIONS. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S.
STOCK MARKET PERFORMANCE.
The Fund
June 30, 2003 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--100.9% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--11.1%
AOL Time Warner 960,000 (a) 15,446,400
Best Buy 100,000 (a) 4,392,000
Carnival 150,000 (b) 4,876,500
Clear Channel Communications 200,000 (a) 8,478,000
Comcast, Cl. A 235,000 (a) 7,092,300
Comcast, Special Cl. A 150,000 (a,b) 4,324,500
Disney (Walt) 540,000 10,665,000
General Motors 125,000 4,500,000
Home Depot 385,000 12,751,200
Kohl's 85,000 (a) 4,367,300
Lamar Advertising 115,000 (a) 4,049,150
Liberty Media 888,000 (a) 10,265,280
McDonald's 575,000 12,684,500
SK Equity Fund, L.P. (Units) 7.818 (a,d) 18,307,227
Staples 250,000 (a) 4,587,500
Starwood Hotels & Resorts Worldwide 185,000 5,289,150
Target 200,000 7,568,000
Viacom, Cl. B 325,000 (a) 14,189,500
153,833,507
CONSUMER STAPLES--10.3%
Altria Group 420,000 19,084,800
Anheuser-Busch Cos. 85,000 4,339,250
Archer-Daniels-Midland 330,000 4,247,100
Clorox 90,000 3,838,500
Coca-Cola 450,000 20,884,500
Gillette 260,000 8,283,600
Kimberly-Clark 80,000 4,171,200
Kroger 255,000 (a) 4,253,400
PepsiCo 375,000 16,687,500
Procter & Gamble 180,000 16,052,400
Wal-Mart Stores 675,000 36,227,250
Walgreen 155,000 4,665,500
142,735,000
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY--7.2%
Apache 99,750 6,489,735
Baker Hughes 250,000 8,392,500
ChevronTexaco 160,000 11,552,000
Devon Energy 225,000 12,015,000
Exxon Mobil 1,100,000 39,501,000
GlobalSantaFe 275,000 6,418,500
Halliburton 150,000 3,450,000
Schlumberger 250,000 11,892,500
99,711,235
FINANCE--20.0%
ACE 126,000 4,320,540
American Express 511,000 21,364,910
American International Group 632,886 34,922,648
Bank of America 200,000 15,806,000
Bank of New York 200,000 5,750,000
Bank One 150,000 5,577,000
Citigroup 885,000 37,878,000
Countrywide Financial 99,000 6,887,430
Federal Home Loan Mortgage 202,000 10,255,540
Federal National Mortgage Assoication 194,000 13,083,360
Fifth Third Bancorp 80,000 4,587,200
FleetBoston Financial 140,000 4,159,400
GE Investment Private Placement I, L.P. (Units) 1.366 (a,d) 1,000,000
Goldman Sachs Group 48,000 4,020,000
HSBC Holdings, ADR 109,674 6,482,830
J.P. Morgan Chase & Co. 278,000 9,502,040
MBNA 421,000 8,773,640
Marsh & McLennan Cos. 228,000 11,643,960
Morgan Stanley 346,000 14,791,500
St. Paul Cos. 201,900 7,371,369
Travelers Property Casualty, Cl. A 668,786 10,633,698
Travelers Property Casualty, Cl. B 54,034 852,116
U.S. Bancorp 450,000 11,025,000
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Wachovia 275,000 10,989,000
Wells Fargo 335,000 16,884,000
278,561,181
HEALTH CARE--15.3%
Abbott Laboratories 175,000 7,658,000
Allergan 54,000 4,163,400
Amgen 216,200 (a) 14,364,328
Anthem 88,000 (a) 6,789,200
Bard (C.R.) 63,000 4,492,530
Becton, Dickinson & Co. 149,000 5,788,650
Biovail 145,000 (a) 6,823,700
Bristol-Myers Squibb 259,000 7,031,850
Johnson & Johnson 349,000 18,043,300
Eli Lilly & Co. 156,800 10,814,496
Galen Partners II, L.P. (Units) 2.020 (d) 1,370,124
Medtronic 209,000 10,025,730
Merck & Co. 451,000 27,308,050
Novartis, ADR 168,000 6,688,080
Pfizer 1,124,100 38,388,015
Teva Pharmaceutical Industries, ADR 216,000 12,296,880
WellPoint Health Networks 184,000 (a) 15,511,200
Wyeth 333,000 15,168,150
212,725,683
INDUSTRIALS--10.2%
Boeing 135,000 4,633,200
Burlington Northern Santa Fe 125,000 3,555,000
Caterpillar 113,000 6,289,580
Danaher 80,000 5,444,000
Deere & Co. 175,000 7,997,500
Dover 175,000 5,243,000
Emerson Electric 135,000 6,898,500
General Electric 1,560,000 44,740,800
Illinois Tool Works 65,000 4,280,250
Lockheed Martin 145,000 6,897,650
Northrop Grumman 80,000 6,903,200
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS (CONTINUED)
Raytheon 220,000 7,224,800
3M 65,000 8,383,700
Tyco International 305,000 5,788,900
Union Pacific 70,000 4,061,400
United Technologies 100,000 7,083,000
Waste Management 235,000 5,661,150
141,085,630
INFORMATION TECHNOLOGY--18.3%
Accenture 393,600 (a) 7,120,224
Applied Materials 437,000 (a) 6,930,820
Cisco Systems 1,145,003 (a) 19,110,100
Dell Computer 514,000 (a) 16,427,440
EMC 842,700 (a) 8,823,069
First Data 240,000 9,945,600
Hewlett-Packard 320,645 6,829,739
Intel 996,000 20,700,864
International Business Machines 263,000 21,697,500
Linear Technology 186,000 5,991,060
Microsoft 1,909,000 48,889,490
Motorola 749,000 7,063,070
Nokia Oyj, ADR 415,000 6,818,450
Novellus Systems 301,000 (a,b) 11,022,921
NVIDIA 301,000 (a) 6,926,010
Oracle 1,166,800 (a) 14,024,936
SAP, ADR 228,000 6,662,160
Teradyne 294,500 (a) 5,097,795
VeriSign 495,000 (a) 6,845,850
Veritas Software 402,000 (a) 11,525,340
Xilinx 246,000 (a) 6,226,260
254,678,698
MATERIALS--3.6%
Alcan 130,000 4,067,700
Alcoa 280,000 7,140,000
Barrick Gold 320,000 5,728,000
BHP Billiton, ADR 87,500 1,014,125
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MATERIALS (CONTINUED)
du Pont (E.I.) de Nemours 130,000 5,413,200
International Paper 150,000 5,359,500
Phelps Dodge 155,000 (a) 5,942,700
PPG Industries 100,000 5,074,000
Praxair 71,000 4,267,100
Weyerhaeuser 120,000 6,480,000
50,486,325
TELECOMMUNICATION SERVICES--3.0%
BellSouth 388,400 10,343,093
SBC Communications 618,288 15,797,258
Telefonos de Mexico, ADR 229,000 7,195,180
Verizon Communications 213,000 8,402,850
41,738,381
UTILITIES--1.9%
Exelon 144,000 8,612,640
FPL Group 103,000 6,885,550
Progress Energy 98,000 4,302,200
TXU 317,000 7,116,650
26,917,040
TOTAL COMMON STOCKS
(cost $1,262,133,299) 1,402,472,680
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.4% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
1.14%, 7/10/2003 2,900,000 (c) 2,899,478
1.00%, 8/14/2003 150,000 149,859
..80%, 9/11/2003 2,500,000 2,495,850
..79%, 9/25/2003 390,000 (c) 389,228
TOTAL SHORT-TERM INVESTMENTS
(cost $5,934,254) 5,934,415
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED--.2% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANY;
Dreyfus Institutional Preferred Money Market Fund
(cost $2,767,034) 2,767,034 2,767,034
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,270,834,587) 101.5% 1,411,174,129
LIABILITIES, LESS CASH AND RECEIVABLES (1.5%) (20,707,858)
NET ASSETS 100.0% 1,390,466,271
(A) NON-INCOME PRODUCING.
(B) A PORTION OF THESE SECURITIES ARE ON LOAN. AT JUNE 30, 2003, THE TOTAL
MARKET VALUE OF THE FUND'S SECURITIES ON LOAN IS $2,673,604 AND THE TOTAL
MARKET VALUE OF THE COLLATERAL HELD BY THE PORTFOLIO IS $2,767,034.
(C) PARTIALLY HELD BY BROKER AS COLLATERAL FOR OPEN SHORT POSITIONS.
(D) SECURITIES RESTRICTED AS TO PUBLIC RESALE. INVESTMENT IN RESTRICTED
SECURITIES WITH AGGREGATE MARKET VALUE OF $20,677,351 REPRESENTING
APPROXIMATELY 1.49% OF NET ASSETS (SEE BELOW).
Net
Acquistion Purchase Assets
Issuer Date Price ($)* (%) Valuation ($)**
- ------------------------------------------------------------------------------------------------------------------------------------
GE Investment Private Placement
Partners I, L.P. (Units) 5/28/91--9/13/95 3,435,449 .07 732,064 per unit
Galen Partners II, L.P. (Units) 1/28/93--1/3/97 678,279 .10 678,279 per unit
SK Equity Fund, L.P. (Units) 2/6/92--10/30/96 941,315 1.32 2,341,677 per unit
(*) AVERAGE COST.
(**) THE VALUATION OF THESE SECURITIES HAS BEEN DETERMINED IN GOOD FAITH UNDER
THE DIRECTION OF THE BOARD OF DIRECTORS.
SEE NOTES FINANCIAL STATEMENTS.
The Fund
STATEMENT OF SECURITIES SOLD SHORT
June 30, 2003 (Unaudited)
COMMON STOCKS Shares Value ($)
- --------------------------------------------------------------------------------
Teva Pharmaceutical, ADR
(proceeds $2,537,901) 68,000 3,871,240
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including securities loaned
valued at $2,673,604)--Note 1(c) 1,270,834,587 1,411,174,129
Receivable for investment securities sold 5,365,263
Receivable from brokers for
proceeds on securities sold short 2,537,901
Dividends and interest receivable 1,475,283
Receivable for shares of Common Stock subscribed 3,243
Prepaid expenses 49,433
1,420,605,252
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 920,495
Cash overdraft due to Custodian 3,735,239
Payable for investment securities purchased 18,149,928
Securities sold short, at value (proceeds $2,537,901)
--See Statement of Securities Sold Short 3,871,240
Liability for securities loaned--Note 1(c) 2,767,034
Payable for shares of Common Stock redeemed 405,714
Accrued expenses 289,331
30,138,981
- --------------------------------------------------------------------------------
NET ASSETS ($) 1,390,466,271
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,373,628,802
Accumulated undistributed investment income--net 2,076,099
Accumulated net realized gain (loss) on investments (124,244,833)
Accumulated net unrealized appreciation
(depreciation) on investments 139,006,203
- --------------------------------------------------------------------------------
NET ASSETS ($) 1,390,466,271
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(500 million shares of $1 par value Common Stock authorized) 164,206,559
NET ASSET VALUE, offering and redemption price per share ($) 8.47
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $36,434 foreign taxes withheld at source) 10,559,454
Interest 314,942
Income on securities lending 21,114
TOTAL INCOME 10,895,510
EXPENSES:
Management fee--Note 3(a) 4,267,757
Shareholder servicing costs--Note 3(a) 572,653
Prospectus and shareholders' reports 52,260
Professional fees 46,005
Custodian fees--Note 3(a) 37,913
Registration fees 14,010
Directors' fees and expenses--Note 3(b) 11,284
Dividends on securities sold short 8,539
Loan commitment fees--Note 2 5,491
Miscellaneous 10,341
TOTAL EXPENSES 5,026,253
INVESTMENT INCOME--NET 5,869,257
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments:
Long transactions (46,846,320)
Short sale transactions 66,644
Net realized gain (loss) on financial futures 5,780,782
NET REALIZED GAIN (LOSS) (40,998,894)
Net unrealized appreciation (depreciation) on investments
(including $280,049 net unrealized appreciation on financial futures)
164,829,455
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 123,830,561
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 129,699,818
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2003 Year Ended
(Unaudited) December 31, 2002
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 5,869,257 10,742,487
Net realized gain (loss) on investments (40,998,894) (65,497,209)
Net unrealized appreciation (depreciation)
on investments 164,829,455 (344,284,090)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 129,699,818 (399,038,812)
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (5,779,396) (10,768,412)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 58,357,514 156,553,781
Dividends reinvested 4,850,153 9,034,442
Cost of shares redeemed (113,558,779) (302,322,518)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (50,351,112) (136,734,295)
TOTAL INCREASE (DECREASE) IN NET ASSETS 73,569,310 (546,541,519)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,316,896,961 1,863,438,480
END OF PERIOD 1,390,466,271 1,316,896,961
Undistributed investment income--net 2,076,099 2,220,724
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 7,223,638 16,643,433
Shares issued for dividends reinvested 614,429 1,098,812
Shares redeemed (14,300,185) (33,553,807)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (6,462,118) (15,811,562)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Six Months Ended
June 30, 2003 Year Ended December 31,
-------------------------------------------------------------------------
(Unaudited) 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 7.72 9.99 11.20 13.28 11.52 9.93
Investment Operations:
Investment income--net .04(a) .06(a) .06(a) .05(a) .05(a) .10
Net realized and unrealized
gain (loss) on investments .75 (2.27) (1.19) (1.92) 2.65 1.60
Total from Investment
Operations .79 (2.21) (1.13) (1.87) 2.70 1.70
Distributions:
Dividends from
investment income--net (.04) (.06) (.06) (.05) (.06) (.11)
Dividends from net realized
gain on investments -- -- -- (.11) (.88) --
Dividends in excess of
net realized gain
on investments -- -- (.02) (.05) -- --
Total Distributions (.04) (.06) (.08) (.21) (.94) (.11)
Net asset value,
end of period 8.47 7.72 9.99 11.20 13.28 11.52
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 10.20(b) (22.15) (10.07) (14.27) 24.07 17.15
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA (%):
Ratio of expenses
to average net assets .38(b) .76 .73 .71 .71 .73
Ratio of net investment
income to average
net assets .45(b) .68 .63 .42 .43 .82
Portfolio Turnover Rate 29.41(b) 49.46 60.55 79.41 58.61 109.61
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets,
end of period
($ x 1,000) 1,390,466 1,316,897 1,863,438 2,240,137 2,830,625 2,586,645
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Dreyfus Fund Incorporated (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as a diversified open-end
management investment company. The fund's investment objective is to provide
investors with long-term capital growth consistent with the preservation of
capital. The Dreyfus Corporation (the "Manager") serves as the fund's investment
adviser. The Manager is a wholly-owned subsidiary of Mellon Bank, N.A.
("Mellon"), which is a wholly-owned subsidiary of Mellon Financial Corporation.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of
the Manager, 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 accounting
principles generally accepted in the United States, 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. Effective April 14, 2003, the fund began pricing securities
traded on the NASDAQ stock market using the NASDAQ official closing. 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
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 and premium on investments, is recognized
on the accrual basis. Under the terms of the custody agreement, the fund
received net earnings credits of $683 during the period ended June 30, 2003,
based on available cash balances left on deposit. Income earned under this
arrangement is included in interest income.
The fund may lend securities to qualified institutions. At originations, all
loans are secured by cash collateral of at least 102% of the value of U.S.
securities loaned and 105% of the value of foreign securities loaned. Collateral
equivalent to at least 100% of the market value of securities on loan will be
maintained at all times. Cash collateral is invested in certain money market
mutual funds managed by the Manager as shown in the fund's Statement of
Investments. The fund will be entitled to receive all income on securities
loaned, in addition to income earned as a result of the lending transaction.
Although each security loaned is fully collateralized, the fund would bear the
risk of
delay in recovery of, or loss of rights in, the securities loaned should a
borrower fail to return the securities in a timely manner.
(d) Dividends 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, 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. Income and capital gain distributions are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles.
(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 $64,024,824 available for
federal income tax purposes to be applied against future net securities profits,
if any, realized subsequent to December 31, 2002. If not applied, $5,906,587 of
the carryover expires in fiscal 2009 and $58,118,237 expires in fiscal 2010.
The tax character of distributions paid to shareholders during the fiscal year
ended December 31, 2002 was as follows: ordinary income $10,768,412. The tax
character of current year distributions will be determined at the end of the
current fiscal year.
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
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
connection therewith, the fund has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the fund based on prevailing
market rates in effect at the time of borrowings. During the period ended June
30, 2003, the fund did not borrow under the Facility.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement (the "Agreement") with the Manager, the
management fee is payable monthly, based on the following annual percentages of
the value of the fund's average daily net assets: .65 of 1% of the first $1.5
billion; .625 of 1% of the next $500 million; .60 of 1% of the next $500
million; and .55 of 1% over $2.5 billion.
The Agreement provides for an expense reimbursement from the Manager should the
fund' s aggregate expenses, exclusive of taxes and brokerage commissions, exceed
1% of the value of the fund's average daily net assets for any full year. No
expense reimbursement was required pursuant to the Agreement for the period
ended June 30, 2003.
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 June 30, 2003, the fund was charged $402,806 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 June 30, 2003, the fund was
charged $37,913 pursuant to the custody agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Through December 31, 2002,
each Board member who is not an "affiliated person" as defined in the Act
receives an annual fee of $45,000 and an attendance fee of $5,000 for each in
person meeting and $500 for telephone meetings. Effective January 1, 2003, the
number of funds in the Fund Group comprising the fund increased, and the annual
fee was increased to $60,000 while the attendance fee was increased to $7,500
for each in-person meeting. These fees are allocated among the funds in the Fund
Group in proportion to each fund's relative net assets. The Chairman of the
Board receives an additional 25% of such compensation. Subject to the fund's
Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
NOTE 4--SECURITIES TRANSACTIONS:
The following summarizes the aggregate amount of purchases and sales of
investment securities and securities sold short, excluding short-term securities
and financial futures, during the period ended June 30, 2003:
Purchases ($) Sales ($)
- --------------------------------------------------------------------------------
Long transactions 374,530,184 377,641,573
Short sale transactions 7,400,040 --
TOTAL 381,930,224 377,641,573
The fund is engaged in short-selling which obligates the fund to replace the
security borrowed by purchasing the security at current market value. The fund
would incur a loss if the price of the security increases between the date of
the short sale and the date on which the fund replaces the borrowed security.
The fund would realize a gain if the price of the security declines between
those dates. Until the fund replaces the borrowed security, the fund will
maintain daily a segregated account with a broker or custodian, of permissible
liquid assets sufficient to cover its short position. Securities sold short at
June 30, 2003, and their related market values and proceeds are set forth in
Statement of Securities Sold Short.
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. Accordingly, 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
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
margin deposits with a broker, 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 June 30, 2003, there were no financial futures
contracts outstanding.
At June 30, 2003, accumulated net unrealized appreciation on investments was
$140,339,540, consisting of $190,645,470 gross unrealized appreciation and
$50,305,930 gross unrealized depreciation.
At June 30, 2003, 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).
NOTES
FOR MORE INFORMATION
The Dreyfus Fund
Incorporated
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.
200 Park Avenue
New York, NY 10166
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 info@dreyfus.com
ON THE INTERNET
Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2003 Dreyfus Service Corporation 026SA0603
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive and principal financial officers
have concluded, based on their evaluation of the Registrant's disclosure
controls and procedures as of a date within 90 days of the filing date of
this report, that the Registrant's disclosure controls and procedures are
reasonably designed to ensure that information required to be disclosed by
the Registrant on Form N-CSR is recorded, processed, summarized and reported
within the required time periods and that information required to be
disclosed by the Registrant in the reports that it files or submits on Form
N-CSR is accumulated and communicated to the Registrant's management,
including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal controls over
financial reporting that occurred during the Registrant's most recently ended
fiscal half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial
officers as required by Rule 30a-2(a) under the Investment Company Act of
1940.
(b) Certification of principal executive and principal financial officers
as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
THE DREYFUS FUND INCORPORATED
By: /S/STEPHEN E. CANTER
-----------------------
Stephen E. Canter
Chief Executive Officer
Date: September 3, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /S/STEPHEN E. CANTER
-----------------------
Stephen E. Canter
Chief Executive Officer
Date: September 3, 2003
By: /S/JAMES WINDELS
-----------------------
James Windels
Chief Financial Officer
Date: September 3, 2003
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal
financial officers as required by Rule 30a-2(a) under the
Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal
financial officers as required by Rule 30a-2(b) under the
Investment Company Act of 1940. (EX-99.906CERT)