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 811-2625
DREYFUS A BONDS PLUS, INC.
(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 (212) 922-6000
area code:
Date of fiscal year end: 3/31
Date of reporting period: 9/30/03
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Dreyfus
A Bonds Plus, Inc.
SEMIANNUAL REPORT September 30, 2003
YOU, YOUR ADVISOR
AND DREYFUS
A MELLON FINANCIAL COMPANY(SM)
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
15 Statement of Options Written
16 Statement of Assets and Liabilities
17 Statement of Operations
18 Statement of Changes in Net Assets
19 Financial Highlights
20 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus
A Bonds Plus, Inc.
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This semiannual report for Dreyfus A Bonds Plus, Inc. covers the six-month
period from April 1, 2003, through September 30, 2003. Inside, you'll find
valuable information about how the fund was managed during the reporting period,
including a discussion with Gerald E. Thunelius, portfolio manager and Director
of the Dreyfus Taxable Fixed Income Team that manages the fund.
After a prolonged period of sluggish growth, the U.S. economy has shown signs of
sustainable improvement. However, investor uncertainty regarding the strength of
the recovery has produced heightened volatility in the fixed-income markets.
After most areas of the bond market experienced sharp declines during the
summer, bond prices generally bounced back in September.
While we believe that investors generally should remain diversified across
multiple asset classes, including bonds, it may be a good time to consider
reviewing the fixed-income component of your portfolio for a potentially
stronger economic environment and the possibility that the multiyear decline of
interest rates has run its course. As always, we encourage you to talk with your
financial advisor about managing your investment portfolio as market conditions
evolve.
Thank you for your continued confidence and support.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
October 15, 2003
2
DISCUSSION OF FUND PERFORMANCE
Gerald E. Thunelius, Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus A Bonds Plus, Inc. perform relative to its benchmark?
For the six-month period ended September 30, 2003, the fund achieved a total
return of 3.49% and produced aggregate income dividends of $0.295 per share.(1)
In comparison, the fund's benchmark, the Lehman Brothers Aggregate Bond Index
(the "Index"), achieved a total return of 2.35% for the same period.(2)
We attribute the fund's strong relative performance to its greater than average
exposure to corporate bonds, which benefited from issuers' efforts to shore up
their balance sheets and improve their accounting standards in the wake of
2002' s corporate scandals. However, good performance from corporate securities
was partially offset by heightened volatility later in the reporting period
among bonds that are more sensitive to changes in interest rates, including U.S.
Treasury securities and mortgage-backed securities.
What is the fund's investment approach?
The fund seeks to maximize total return, consisting of capital appreciation and
current income. The fund invests at least 80% of its assets in bonds that, when
purchased, are rated single-A or better, or if unrated, deemed to be of
comparable quality by Dreyfus. While the fund may invest in a broad array of
bonds, the portfolio has recently concentrated primarily on corporate
securities, and we currently expect to maintain that focus for the near term. Of
course, portfolio composition is subject to change at any time.
When selecting securities for the fund, we first examine U.S. and global
economic conditions and other market factors in an effort to determine what we
believe is the likely direction of long- and short-term interest rates. Using a
research-driven investment process, we
The Fund 3
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
then attempt to identify potentially profitable sectors before they are widely
perceived by the market. Finally, we look for underpriced or mispriced
securities within those sectors that, in our opinion, appear likely to perform
well over time.
What other factors affected the fund's performance?
The fund's performance was influenced positively by our emphasis on
investment-grade corporate bonds. Such securities had been hard-hit in 2002,
well before the reporting period began, when a persistently weak economy and a
number of high-profile corporate accounting and governance scandals made
investors more risk averse. In our view, many corporate bonds had been punished
too severely, and we increased the fund's exposure to issuers that we believed
remained creditworthy. Indeed, the corporate bond market began to recover during
the fourth quarter of 2002, and the rally continued through the second quarter
of 2003, fueling the fund' s returns.
In addition, the fund benefited during the first half of the reporting period
from declining interest rates. Despite signs of stronger economic growth during
the spring of 2003, many investors expected a further reduction in short-term
interest rates at the Federal Reserve Board's (the "Fed") meeting in late June.
The Fed did not disappoint them, reducing the federal funds rate by 25 basis
points to 1% , a 45-year low, in its ongoing attempts to rekindle stronger
economic growth. As interest rates trended lower in the spring, the fund's
holdings of U.S. government securities -- including U.S. Treasury securities and
mortgage-backed securities backed by U.S. government agencies -- gained value.
However, U.S. government securities gave back virtually all of the reporting
period' s previous gains when, in July, the market suffered one of the worst
one-month declines in its history. The bond market became more volatile as
investors reacted to evidence of a stronger economy, which led many to believe
that the Fed's most recent rate-cut may have been its last of the current cycle.
As a result, many investors sold bonds, causing their prices to drop sharply.
Although U.S. government securities regained a large portion of their losses in
4
late August and September, they did not recover fully. The fund's returns were
hindered by these developments, but its relatively light position in U.S.
government securities compared to the Index helped it avoid the full brunt of
the market's weakness.
What is the fund's current strategy?
The rally among corporate bonds has caused their value to rise above historical
norms in comparison to U.S. Treasury securities. As a result, we recently
reduced the fund' s emphasis on the corporate sector, moving its allocation
closer to that of the Index but maintaining our emphasis on issuers in
industries that we believe have relatively strong pricing power, such as
insurance and health care. At the same time, we increased the fund's holdings of
mortgage-backed securities as fewer homeowners refinanced their mortgages and
the rate of prepayments slowed, which moved the fund's allocation to the
mortgage-backed sector closer to that of the benchmark. By the end of the
reporting period, the fund held a modestly overweighted position in corporate
bonds and slightly underweighted positions in mortgage-backed securities and
U.S. Treasury securities. In our view, this more Index-neutral stance is prudent
in today's changing economic and market environments.
October 15, 2003
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER INC. -- REFLECTS REINVESTMENT OF 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 5
STATEMENT OF INVESTMENTS
September 30, 2003 (Unaudited)
STATEMENT OF INVESTMENTS
Principal
BONDS AND NOTES--101.1% Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--.7%
Boeing Capital,
Sr. Notes, 4.75%, 2008 1,698,000 1,767,017
General Dynamics,
Sr. Notes, 4.5, 2010 2,308,000 2,393,447
4,160,464
AIRLINES--.3%
American Airlines,
Notes, 3.857%, 2010 1,555,000 1,555,661
Continental Airlines,
Pass-Through Ctfs.,
Ser. 1998-1, Cl. A, 6.648%, 2017 174,296 166,357
USAir,
Enhanced Equipment Notes, Ser. C, 8.93%, 2009 904,468 (b) 180,894
1,902,912
ASSET-BACKED CTFS./CREDIT CARDS--.9%
MBNA Master Credit Card Note Trust,
Ser. 2002-C1, Cl. 1, 6.8%, 2014 4,884,000 5,282,101
ASSET-BACKED CTFS./EQUIPMENT--.4%
Pegasus Aviation Lease Securitization,
Ser. 2001-1, Cl. A1, 1.745%, 2015 4,228,731 (c,d) 2,487,569
AUTO MANUFACTURING--.3%
General Motors,
Notes, 8.375%, 2033 1,632,000 1,711,225
BANKING--2.1%
Abbey National,
Capital Notes, 7.35%, 2049 3,100,000 3,488,393
Corp Andina de Fomento,
Notes, 5.2%, 2013 2,855,000 2,835,612
Dresdner Funding Trust I,
Bonds, 8.151%, 2031 1,107,000 (c) 1,214,505
Scotland International Finance BV,
Sub. Notes, 4.25%, 2013 2,948,000 (c) 2,854,858
Sovereign Bancorp,
Sr. Notes, 10.5%, 2006 1,403,000 1,671,430
12,064,798
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--2.5%
CS First Boston Mortgage Securities,
Ser. 1998-C1, Cl. C, 6.78%, 2040 5,301,000 5,942,129
6
Principal
BONDS AND NOTES (CONTINUED) Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE PASS-THROUGH CTFS. (CONTINUED)
GMAC Commercial Mortgage Securities,
Ser. 2000-C2, Cl. A1, 7.273%, 2033 905,742 999,809
GS Mortgage Securities II,
Ser. 2001-LIBA, Cl. A2, 6.615%, 2016 5,687,000 (c) 6,302,697
Morgan Stanley Dean Witter Capital I,
Ser. 2000-1345, Cl. B, 7.468%, 2015 800,000 (c) 934,971
14,179,606
COMMERCIAL SERVICES--.2%
McKesson,
Notes, 7.75%, 2012 1,188,000 1,423,879
CONSUMER PRODUCTS--.6%
Kimberly-Clark,
Notes, 5%, 2013 3,080,000 3,230,172
DIVERSIFIED FINANCIAL SERVICES--3.0%
American Express,
Notes, 4.875%, 2013 2,612,000 2,673,212
Bayer Hypo-und Vereinsbank,
Bonds, 8.741%, 2031 3,755,000 (c) 4,149,774
Farmers Exchange Capital,
Trust Surplus Note Securities, 7.05%, 2028 1,410,000 (c) 1,323,195
Ford Motor Credit,
Global Landmark Securities, 6.5%, 2007 1,674,000 (e) 1,770,414
General Electric Capital,
Medium-Term Notes, Ser. A, 6.75%, 2032 1,374,000 1,555,795
SLM,
Medium Term Notes, Ser. A, 5%, 2013 5,640,000 5,712,801
17,185,191
EDUCATION--.4%
Florida State Board of Education,
Bonds, 5%, 2011 2,150,000 2,407,914
ELECTRIC UTILITIES--2.1%
CenterPoint Energy Houston Electric,
Notes, 6.95%, 2033 2,816,000 (c) 3,135,149
Consolidated Edison of New York,
Deb., 4.875%, 2013 3,715,000 3,812,823
Public Service Co. of Colorado,
First Mortgage, 4.875%, 2013 2,487,000 (c) 2,507,485
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES (CONTINUED)
Salt River Project Agricultural Improvement & Power,
Bonds, 5%, 2012 2,000,000 2,230,780
11,686,237
FOOD & BEVERAGES--.8%
Diageo Capital,
Notes, 4.85%, 2018 2,670,000 2,631,389
Miller Brewing,
Notes, 4.25%, 2008 1,610,000 (c) 1,655,911
4,287,300
FOREIGN/GOVERNMENTAL--2.7%
Deutsche Bundesrepublik,
Bonds, Ser. 0302, 3.75%, 2013 EUR 10,167,000 11,607,923
Export Development Canada,
Bonds, 2.75%, 2005 3,500,000 3,575,341
15,183,264
HEALTH CARE--1.6%
Becton Dickinson & Co.,
Notes, 4.9%, 2018 2,500,000 2,496,087
Bristol-Myers Squibb,
Notes, 5.75%, 2011 1,755,000 1,911,377
Eli Lilly & Co.,
Notes, 4.5%, 2018 1,901,000 1,839,830
HCA,
Notes, 7.125%, 2006 1,450,000 (e) 1,570,459
Manor Care,
Notes, 6.25%, 2013 1,095,000 1,127,850
8,945,603
MANUFACTURING--.9%
General Electric,
Notes, 5%, 2013 2,913,000 2,991,727
Tyco International,
Gtd. Notes, 5.8%, 2006 1,877,000 1,956,773
4,948,500
MEDIA--1.7%
America Online,
Conv. Sub. Notes, 0%, 2019 2,817,000 (e) 1,750,061
British Sky Broadcasting,
Sr. Notes, 8.2%, 2009 869,000 1,032,495
8
Principal
BONDS AND NOTES (CONTINUED) Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA (CONTINUED)
Comcast,
Sr. Notes, 6.5%, 2015 2,667,000 2,945,472
Cox Communications,
Notes, 6.75%, 2011 1,587,000 (e) 1,803,925
InterActive,
Notes, 7%, 2013 2,151,000 2,430,484
9,962,437
MINING & METALS--1.1%
Alcoa,
Notes, 6%, 2012 2,517,000 (e) 2,776,382
Noranda,
Deb., 7%, 2005 1,660,000 1,764,104
Placer Dome,
Deb., Ser. B, 8.5%, 2045 1,715,000 1,968,523
6,509,009
MUNICIPALS--1.6%
Commonwealth of Pennsylvania,
Bonds, 5%, 2010 1,200,000 1,358,256
Golden State Tobacco Securitization,
Bonds, 5.5%, 2018 1,921,000 2,011,460
State of Arkansas,
Bonds, 5%, 2014 2,050,000 2,267,936
State of Connecticut,
Bonds, 5%, 2010 1,350,000 1,522,733
State of Maryland,
Bonds, 5%, 2011 1,800,000 2,034,504
9,194,889
OIL & GAS--.2%
Petro-Canada,
Notes, 4%, 2013 912,000 859,601
PAPER & FOREST PRODUCTS--.2%
Weyerhaeuser,
Deb., 7.375%, 2032 1,175,000 1,315,831
PROPERTY-CASUALTY INSURANCE--1.1%
Ace Capital Trust II,
Gtd. Capital Securities, 9.7%, 2030 1,100,000 1,438,239
Fund American Cos.,
Notes, 5.875%, 2013 1,420,000 1,447,585
The Fund 9
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY-CASUALTY INSURANCE (CONTINUED)
Markel,
Notes, 6.8%, 2013 1,164,000 1,272,622
Metlife,
Sr. Notes, 5.375%, 2012 2,015,000 (e) 2,101,286
6,259,732
RESIDENTIAL MORTGAGE PASS--THROUGH CTFS.--1.7%
Chase Mortgage Finance:
Ser. 1998-S5, Cl. B3, 6.5%, 2013 475,327 (c) 497,301
Ser. 1998-S5, Cl. B4, 6.5%, 2013 396,106 (c) 398,861
GE Capital Mortgage Services,
REMIC, Ser. 1998-16, Cl. B3, 6.5%, 2013 850,434 (c) 884,640
IMPAC Secured Assets Owner Trust,
Ser. 2002-1, Cl. AI3, 5.57%, 2023 231,832 231,485
Norwest Asset Securities:
Ser. 1998-13, Cl. B1, 6.25%, 2028 2,383,343 2,493,956
Ser. 1998-13, Cl. B2, 6.25%, 2028 2,284,136 2,390,148
Ser. 1998-13, Cl. B6, 6.25%, 2028 298,700 (c) 158,072
Residential Funding Mortgage Securities I:
Ser. 1998-S9, Cl. B1, 6.5%, 2013 507,833 (c) 530,393
Ser. 1998-S22, Cl. B1, 6.5%, 2013 388,859 406,847
Ser. 1998-S22, Cl. B3, 6.5%, 2013 291,719 (c) 188,888
Ser. 1998-S22, Cl. M2, 6.5%, 2013 486,264 486,954
Ser. 1998-S22, Cl. M3, 6.5%, 2013 972,149 972,586
9,640,131
RETAIL--.3%
Toys R US,
Notes, 7.625%, 2011 1,460,000 (e) 1,591,898
STRUCTURED INDEX--10.1%
AB Svensk Exportkredit,
GSCI-ER Indexed Notes, 0%, 2008 10,760,000 (c,n) 10,301,624
HSBC Bank USA TIGERS:
Medium Term Notes,
Ser. 2003-2, 3.915%, 2008 17,500,000 (c,d,f) 17,500,000
Medium Term Notes,
Ser. 2003-3, Cl. D-1, 3.915%, 2008 6,481,000 (c,d,f) 6,476,684
Lehman Brothers TRAINS,
Ser. L-2002, 7.754%, 2031 3,731,200 (c,f) 4,430,203
10
Principal
BONDS AND NOTES (CONTINUED) Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
STRUCTURED INDEX (CONTINUED)
Morgan Stanley TRACERS:
Ser. 2001-1, 7.252%, 2011 11,008,000 (c,f) 12,703,430
Ser. 2002-5, 6.799%, 2012 5,550,000 (c,e,f) 6,258,951
57,670,892
TECHNOLOGY--1.0%
Hewlett-Packard,
Notes, 5.75%, 2006 2,841,000 3,109,284
IBM,
Sr. Notes, 4.75%, 2012 2,515,000 2,581,565
5,690,849
TELECOMMUNICATIONS--.5%
Verizon Florida,
Deb., 6.125%, 2013 2,567,000 2,813,116
TRANSPORTATION--.9%
Los Angeles County Metropolitan
Transportation Authority,
Bonds, 5%, 2019 3,025,000 3,210,614
Puerto Rico Highway & Transportation Authority,
Bonds, 5.5%, 2012 1,575,000 1,832,355
5,042,969
U.S. GOVERNMENT--18.0%
U.S. Treasury Bonds,
5.375%, 2/15/2031 41,943,000 (e) 45,022,875
U.S. Treasury Inflation Protection Securities:
3.625%, 1/15/2008 15,098,000 (g) 19,302,442
Coupon Strips:
0%, 10/15/2028 750,000 (g,h) 733,983
0%, 4/15/2029 750,000 (g,h) 734,021
Principal Strips,
0%, 4/15/2029 10,000,000 (g) 5,983,498
U.S. Treasury Notes:
4.25%, 8/15/2013 26,133,000 (e) 26,797,562
7.5%, 2/15/2005 3,547,000 (e) 3,853,603
102,427,984
U.S. GOVERNMENT AGENCIES--4.2%
Federal Home Loan Banks,
Bonds, Ser. 432, 4.5%, 9/16/2013 12,500,000 (e) 12,496,813
The Fund 11
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
Federal Home Loan Mortgage Corp.,
Notes, 4.75%, 5/6/2013 2,945,000 (e) 2,930,990
Tennessee Valley Authority,
Valley Indexed Principal Securities,
3.375%, 1/15/2007 7,726,647 (g) 8,389,737
23,817,540
U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKED--39.0%
Federal Home Loan Mortgage Corp.,
5.5% 16,292,000 (i) 16,617,840
REMIC, Gtd. Multiclass Mortgage Participation Ctfs.:
Ser., 51, Cl. E, 10%, 7/15/2020 1,039,150 1,040,989
(Interest Only Obligation),
Ser. 1995, Cl. PY, 7%, 10/15/2027 2,201,267 (h) 379,355
Federal National Mortgage Association:
6%, 1/1/2019--4/1/2033 8,833,207 9,148,139
8%, 12/1/2025 161,545 176,337
REMIC Trust, Gtd. Pass-Through Ctfs.:
Ser. 1988-16, Cl. B, 9.5%, 6/25/2018 539,410 610,968
(Interest Only Obligation),
Ser. 1996-64, Cl. PM, 7%, 1/18/2012 1,448,297 (h) 166,540
Government National Mortgage Association I:
5.5% 32,121,000 (i) 32,933,983
5.5%, 4/15/2033 27,977,248 (e) 28,711,167
6% 52,925,000 (i) 54,975,844
6%, 3/15/2029--2/15/2033 10,603,863 11,032,199
6.5% 32,200,000 (i) 33,799,696
7%, 6/15/2008 19,283 20,482
9.5%, 11/15/2017 1,239,829 1,370,395
Project Loan:
6.55%, 6/15/2033 1,772,166 1,965,889
6.625%, 6/1/2033--9/15/2033 5,810,738 6,455,948
6.75%, 10/15/2033 2,145,472 2,398,811
6.86%, 10/15/2003 12,672,165 14,163,124
U.S. Government Gtd. Development Participation Ctfs.,
(Gtd. By U.S. Small Business Administration):
Ser. 1994-20K, Cl. 1, 8.65%, 11/1/2014 1,765,355 1,995,315
Ser. 1994-20L, Cl. 1, 8.4%, 12/1/2014 2,929,725 3,305,529
Ser. 1997-20J, Cl. 1, 6.55%, 10/1/2017 1,088,391 1,197,429
222,465,979
TOTAL BONDS AND NOTES
(cost $563,423,728) 576,349,592
12
PREFERRED STOCKS--.7% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--.4%
Raytheon,
Cum. Conv., $4.125 (units) 42,677 (j) 2,259,747
TELECOMMUNICATIONS--.3%
Motorola,
Cum. Conv., $3.50 (units) 39,469 (k) 1,496,664
TOTAL PREFERRED STOCKS
(cost $5,052,476 ) 3,756,411
- ------------------------------------------------------------------------------------------------------------------------------------
Face Amount
Covered by
OPTIONS--.0% Contracts ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS;
Interest Rate Swaption,
March 2004 @ 4.37%
(cost $349,030) 20,900,000 443,217
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INVESTMENTS--2.0% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES:
Dreyfus Institutional Cash Advantage Fund 3,750,666 (l) 3,750,666
Dreyfus Institutional Cash Advantage Plus Fund 3,750,667 (l) 3,750,667
Dreyfus Institutional Preferred Plus Money Market Fund 3,750,667 (l) 3,750,667
TOTAL OTHER INVESTMENTS
(cost $11,252,000) 11,252,000
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--11.3% Amount(a) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
.89%, 10/16/2003 8,385,000 8,385,000
.93%, 12/11/2003 19,595,000 19,570,506
.915%, 12/18/2003 29,022,000 (m) 28,968,600
.99%, 1/15/2004 2,760,000 2,752,520
1.03%, 2/5/2004 4,660,000 (m) 4,644,622
TOTAL SHORT-TERM INVESTMENTS
(cost $64,300,193) 64,321,248
The Fund 13
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED--15.1% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANY;
Dreyfus Institutional Preferred Money Market Fund
(cost $86,215,024) 86,215,024 86,215,024
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $730,592,451) 130.2% 742,337,492
LIABILITES, LESS CASH AND RECEIVABLES (30.2%) (172,020,490)
NET ASSETS 100.0% 570,317,002
(A) PRINCIPAL AMOUNT STATED IN U.S DOLLARS UNLESS OTHERWISE NOTED.
EUR--EURO
(B) NON-INCOME PRODUCING--SECURITY IN DEFAULT.
(C) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT SEPTEMBER 30, 2003,
THESE SECURITIES AMOUNTED TO $86,895,161 OR 15.2% OF NET ASSETS.
(D) VARIABLE RATE SECURITY--INTEREST RATE SUBJECT TO PERIODIC CHANGE.
(E) ALL OR A PORTION OF THESE SECURITIES ARE ON LOAN. AT SEPTEMBER 30, 2003,
THE TOTAL MARKET VALUE OF THE FUND'S SECURITIES ON LOAN IS $90,205,135 AND THE
TOTAL MARKET VALUE OF THE COLLATERAL HELD BY THE FUND IS $91,393,905, CONSISTING
OF CASH COLLATERAL OF $86,215,024 AND LETTERS OF CREDIT VALUED AT $5,178,881.
(F) SECURITY LINKED TO A PORTFOLIO OF DEBT SECURITIES.
(G) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED ON
CHANGES IN THE CONSUMER PRICE INDEX.
(H) NOTIONAL FACE AMOUNT SHOWN.
(I) PURCHASED ON A FORWARD COMMITMENT BASIS.
(J) WITH WARRANTS ATTACHED.
(K) UNITS REPRESENT A CONTRACT TO PURCHASE SHARES OF COMMON STOCK FOR $50 ON
NOVEMBER 16, 2004 AND A SENIOR NOTE WITH A PRINCIPAL AMOUNT OF $50.
(L) INVESTMENTS IN AFFILIATED MONEY MARKET MUTUAL FUNDS--SEE NOTE 3(D).
(M) PARTIALLY OR WHOLLY HELD BY A BROKER AS COLLATERAL FOR OPEN FINANCIAL
FUTURES POSITIONS.
(N) SECURITY LINKED TO GOLDMAN SACHS COMMODITY INDEX--EXCESS RETURN.
SEE NOTES TO FINANCIAL STATEMENTS.
14
STATEMENT OF OPTIONS WRITTEN
September 30, 2003 (Unaudited)
Face Amount
Covered by
Contracts ($) Value ($)
- --------------------------------------------------------------------------------
CALL OPTIONS
Interest Rate Swaption,
March 2004 @ 3.87% 20,900,000 164,167
PUT OPTIONS
Interest Rate Swaption,
March 2004 @ 5.62% 20,900,000 162,498
(Premiums received $349,030) 326,665
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 15
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2003 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including securities loaned,
valued at $90,205,135)--Note 1(c) 730,592,451 742,337,492
Cash 13,083,217
Receivable for investment securities sold 83,666,574
Interest receivable 4,140,044
Receivable for shares of Common Stock subscribed 222,478
Receivable for futures variation margin--Note 4 850,505
Prepaid expenses 1,125
844,301,435
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 331,420
Payable for investment securities purchased 169,518,010
Liability for securites loaned--Note 1(c) 86,215,024
Bank note payable--Note 2 15,000,000
Payable for shares of Common Stock redeemed 2,245,570
Outstanding options written, at value (premiums
received $349,030)--See Statement of Options Written 326,665
Unrealized depreciation on swaps--Note 4 84,474
Interest payable--Note 2 4,578
Accrued expenses and other liabilities 258,692
273,984,433
- --------------------------------------------------------------------------------
NET ASSETS ($) 570,317,002
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 581,263,249
Accumulated undistributed investment income--net 616,770
Accumulated net realized gain (loss) on investments (23,243,159)
Accumulated net unrealized appreciation (depreciation)
on investments, foreign currency transactions,
options and swap transactions 11,680,142
- --------------------------------------------------------------------------------
NET ASSETS ($) 570,317,002
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized) 39,842,262
NET ASSET VALUE, offering and redemption price per share ($) 14.31
SEE NOTES TO FINANCIAL STATEMENTS.
16
STATEMENT OF OPERATIONS
Six Months Ended September 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
Interest 11,328,496
Cash dividends 625,798
Income from securites lending 72,863
TOTAL INCOME 12,027,157
EXPENSES:
Management fee--Note 3(a) 1,934,575
Shareholder servicing costs--Note 3(b) 647,536
Custodian fees--Note 3(b) 40,519
Professional fees 32,582
Prospectus and shareholders' reports 31,517
Directors' fees and expenses--Note 3(c) 31,133
Registration fees 14,141
Interest expense--Note 2 4,578
Miscellaneous 12,199
TOTAL EXPENSES 2,748,780
INVESTMENT INCOME--NET 9,278,377
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency transactions:
Long transactions 10,629,258
Short sale transactions 690,961
Net realized gain (loss) on options transactions 53,650
Net realized gain (loss) on financial futures 1,268,124
Net realized gain (loss) on swap transactions (224,206)
Net realized gain (loss) on forward currency exchange contracts (133,707)
NET REALIZED GAIN (LOSS) 12,284,080
Net unrealized appreciation (depreciation) on investments,
foreign currency transactions, options and swap transactions
(including $87,456 net unrealized appreciation on financial futures)
(891,608)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 11,392,472
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 20,670,849
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 17
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
September 30, 2003 Year Ended
(Unaudited) March 31, 2003
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 9,278,377 27,079,442
Net realized gain (loss) on investments 12,284,080 11,155,121
Net unrealized appreciation (depreciation)
on investments (891,608) 19,596,533
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 20,670,849 57,831,096
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (12,504,611) (29,666,042)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 32,546,052 125,627,329
Dividends reinvested 11,074,526 26,074,297
Cost of shares redeemed (88,430,174) (146,146,837)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS (44,809,596) 5,554,789
TOTAL INCREASE (DECREASE) IN NET ASSETS (36,643,358) 33,719,843
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 606,960,360 573,240,517
END OF PERIOD 570,317,002 606,960,360
Undistributed investment income--net 616,770 3,843,004
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 2,301,473 9,158,234
Shares issued for dividends reinvested 787,007 1,905,342
Shares redeemed (6,239,216) (10,636,852)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (3,150,736) 426,724
SEE NOTES TO FINANCIAL STATEMENTS.
18
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Six Months Ended
September 30, 2003 Year Ended March 31,
----------------------------------------------------------------
(Unaudited) 2003 2002(a) 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 14.12 13.47 14.10 13.65 13.99 14.75
Investment Operations:
Investment income--net .22(b) .63(b) .81(b) .84 .85 .83
Net realized and unrealized
gain (loss) on investments .27 .71 (.56) .47 (.34) (.54)
Total from Investment Operations .49 1.34 .25 1.31 .51 .29
Distributions:
Dividends from
investment income--net (.30) (.69) (.88) (.86) (.85) (.84)
Dividends from net realized
gain on investments -- -- -- -- -- (.21)
Total Distributions (.30) (.69) (.88) (.86) (.85) (1.05)
Net asset value, end of period 14.31 14.12 13.47 14.10 13.65 13.99
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 3.49(c) 10.30 1.68 9.94 3.85 2.05
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses
to average net assets .92(d) .93 .93 .91 1.00 .96
Ratio of net investment income
to average net assets 3.11(d) 4.56 5.87 6.29 6.20 5.78
Portfolio Turnover Rate 354.33(c) 636.05 533.95 718.67 557.83 255.27
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 570,317 606,960 573,241 578,293 453,295 576,499
(A) AS REQUIRED, EFFECTIVE APRIL 1, 2001, THE FUND HAS ADOPTED THE PROVISIONS
OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES AND BEGAN
AMORTIZING DISCOUNT OR PREMIUM ON FIXED INCOME SECURITIES ON A SCIENTIFIC BASIS
AND INCLUDING PAYDOWN GAINS AND LOSSES IN INTEREST INCOME. THE EFFECT OF THESE
CHANGES FOR THE PERIOD ENDED MARCH 31, 2002 WAS TO DECREASE NET INVESTMENT
INCOME PER SHARE BY $.04, INCREASE NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS PER SHARE BY $.04 AND DECREASE THE RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS FROM 6.15% TO 5.87%. PER SHARE DATA AND RATIOS/SUPPLEMENT
DATA FOR PERIODS PRIOR TO APRIL 1, 2001 HAVE NOT BEEN RESTATED TO REFLECT THESE
CHANGES IN PRESENTATION.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 19
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus A Bonds Plus, Inc. (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 maximize
total return, consisting of capital appreciation and current income. 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 (excluding short-term
investments, other than U.S. Treasury Bills, options, financial futures, swaps
and forward currency exchange contracts) are valued each business day by an
independent pricing service (the "Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Short-term investments, excluding U.S. Treasury Bills, are carried at amortized
cost, which approximates value. Financial futures and options, which are traded
on an exchange, are valued at the last sales
20
price on the securities exchange on which such securities are primarily traded
or at the last sales price on the national securities market on each business
day. Options traded over-the-counter are priced at the mean between the bid
prices and asked prices. Swap transactions are valued daily based upon future
cash flows and other factors, such as interest rates and underlying securities.
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 and premium 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.
The fund may lend securities to qualified institutions. At origination, 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
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 monthly. Dividends
from net realized capital gain, if any, are normally declared and paid annually,
but the fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
" Code"). To the extent that net realized capital gain, can be offset by capital
loss carryovers, it is the policy of the fund not to distribute such gain.
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from accounting principles generally accepted
in the United States.
On September 30, 2003, the Board of Directors declared a cash dividend of $.039
per share from undistributed investment income-net, payable on October 1, 2003
(ex-dividend date) , to shareholders of record as of the close of business on
September 30, 2003.
(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 $34,651,353 available for
federal income tax purposes to be applied against future net securities profits,
if any, realized subsequent to March 31, 2003. The amount of this loss which can
be utilized in subsequent years is subject to an annual limitation due to the
fund's merger with Dreyfus Strategic
22
Governments Income, Inc. If not applied, $831,251 of the carryover expires in
fiscal 2004, $811,068 expires in fiscal 2006, $4,281,999 expires in fiscal 2007,
$15,846,919 expires in fiscal 2008, $10,726,778 expires in fiscal 2010 and
$2,153,338 expires in fiscal 2011.
The tax character of distributions paid to shareholders during the fiscal year
ended March 31, 2003 was as follows: ordinary income $29,666,042. The tax
character of current year distributions will be determined at the end of the
current fiscal year.
NOTE 2--Bank Lines of Credit:
The fund may borrow up to $20 million for leveraging purposes under a short-term
unsecured line of credit and participates with other Dreyfus-managed funds in a
$100 million unsecured line of credit primarily to be utilized for temporary or
emergency purposes, including the financing of redemptions. Interest is charged
to the fund based on prevailing market rates in effect at the time of
borrowings.
The average daily amount of borrowings outstanding under the leveraging
arrangement during the period ended September 30, 2003, was approximately
$628,400, with a related weighted average annualized interest rate of 1.45%.
NOTE 3--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 .65 of 1% of the value of the
fund' s average daily net assets and is payable monthly. The Agreement provides
that if in any full fiscal year the aggregate expenses of the fund, exclusive of
taxes, interest on borrowings, brokerage commissions and extraordinary expenses,
exceed 11_2% of the value of the fund's average daily net assets, the fund may
deduct from the payments to be made to the Manager, or the Manager will bear,
the amount of such excess expense. During the period ended September 30, 2003,
there was no expense reimbursement pursuant to the Agreement.
The Fund 23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(b) Under the 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 certain allocated expenses of providing personal
services and/or maintaining 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 period ended September 30, 2003, the fund was charged $201,155
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 September 30, 2003, the fund was charged $109,155 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 September 30, 2003, the fund was
charged $40,519 pursuant to the custody agreement.
(c) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000,
an attendance fee of $6,000 for each in-person meeting and $500 for telephone
meetings. 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. These fees are allocated
among the funds in the Fund Group in proportion to each fund's relative net
assets.
(d) Pursuant to an exemptive order from the Securities and Exchange Commission,
the fund may invest its available cash balances in affiliated money market
mutual funds as shown in the fund's Statement of Investments. Management fees
are not charged to these accounts. During the period ended September 30, 2003,
the fund derived
24
$212,238 in income from these investments, which is included in dividend income
in the fund's Statement of Operations.
NOTE 4--Securities Transactions:
The following summarizes the aggregate amount of purchases and sales (including
paydowns) of investment securities and securities sold short, excluding
short-term securities, financial futures, forward currency exchange contracts,
options transactions and swap transactions during the period ended September 30,
2003:
Purchases ($) Sales ($)
- --------------------------------------------------------------------------------
Long transactions 2,092,312,062 2,093,593,396
Short sale transactions 77,852,272 78,543,233
TOTAL 2,170,164,334 2,172,136,629
The fund is engaged in short-selling which obligates the fund to replace the
security borrowed by purchasing the security at current market value. The fund
would incur a loss if the price of the security increases between the date of
the short sale and the date on which the fund replaces the borrowed security.
The fund would realize a gain if the price of the security declines between
those dates. The fund's long security positions serve as collateral for the open
short positions. At September 30, 2003, there were no securities sold short
outstanding.
The following summarizes the fund' s call/put options written for the period
ended September 30, 2003:
Face Amount Options Terminated
-----------------------------------------
Covered by Premiums Net Realized
Options Written: Contracts ($) Received ($) Cost ($) Gain ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Contracts outstanding
March 31, 2003 -- --
Contracts written 41,800,000 349,030
CONTRACTS OUTSTANDING
SEPTEMBER 30, 2003 41,800,000 349,030
The fund may purchase and write (sell) put and call options in order to gain
exposure to or to protect against changes in the market.
As a writer of call options, the fund receives a premium at the outset and then
bears the market risk of unfavorable changes in the price of the financial
instrument underlying the option. Generally, the fund
The Fund 25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
would incur a gain, to the extent of the premium, if the price of the underlying
financial instrument decreases between the date the option is written and the
date on which the option is terminated. Generally, the fund would realize a
loss, if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then
bears the market risk of unfavorable changes in the price of the financial
instrument underlying the option. Generally, the fund would incur a gain, to the
extent of the premium, if the price of the underlying financial instrument
increases between the date the option is written and the date on which the
option is terminated. Generally, the fund would realize a loss, if the price of
the financial instrument decreases between those dates.
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 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 September 30, 2003, there were no
financial futures contracts outstanding.
The fund enters into forward currency exchange contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to settle foreign currency transactions. When executing forward
currency exchange contracts, the fund is obligated to buy or sell a foreign
currency at a specified rate on a certain date in the future. With respect to
sales of forward currency exchange contracts, the fund would incur a loss if the
value of the contract increases between the date the forward contract is
26
opened and the date the forward contract is closed. The fund realizes a gain if
the value of the contract decreases between those dates. With respect to
purchases of forward currency exchange contracts, the fund would incur a loss if
the value of the contract decreases between the date the forward contract is
opened and the date the forward contract is closed. The fund realizes a gain if
the value of the contract increases between those dates. The fund is also
exposed to credit risk associated with counterparty nonperformance on these
forward currency exchange contracts which is typically limited to the unrealized
gain on each open contract. At September 30, 2003, there were no forward
currency exchange contracts outstanding.
The fund may enter into swap agreements to exchange the interest rate on, or
return generated by, one nominal instrument for the return generated by another
nominal instrument.
Credit default swaps involve commitments to pay a fixed rate in exchange for
payment if a credit event affecting a third party (the referenced company)
occurs. Credit events may include a failure to pay interest, bankruptcy, or
restructuring. Net periodic interest payments to be received or paid are accrued
daily and are recorded in the Statement of Operations as an adjustment to
interest income. Credit default swaps are marked-to-market daily and the change,
if any, is recorded as unrealized appreciation or depreciation in the Statement
of Operations. The following summarizes credit default swaps entered into by the
fund at September 30, 2003:
Unrealized
Notional Appreciation
Amount ($) Description (Depreciation) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
2,300,000 Agreement with Merrill Lynch terminating 1,022
June 20, 2008 to pay a fixed rate of .34%
and receive the notional amount as a result of
interest payment default totaling $1,000,000
or principal payment default of $10,000,000
on Bear Stearns, 7.625%, 12/7/2009
2,300,000 Agreement with Merrill Lynch terminating (1,022)
June 20, 2008 to pay a fixed rate of .36%
and receive the notional amount as a result of
interest payment default totaling $1,000,000
or principal payment default of $10,000,000
on Bear Stearns, 7.625%, 12/7/2009
The Fund 27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
Unrealized
Notional Appreciation
Amount ($) Description (Depreciation) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
3,100,000 Agreement with Merrill Lynch terminating (4,330)
September 20, 2008 to pay a fixed rate of .38%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Bear Stearns, 7.625%, 12/7/2009
7,700,000 Agreement with Merrill Lynch terminating (10,878)
June 20, 2008 to pay a fixed rate of .29%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Bank of America, 6.25%, 4/15/2012
4,600,000 Agreement with Merrill Lynch terminating 25,940
June 20, 2008 to pay a fixed rate of .51%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Countrywide Home Loans, 5.625%, 7/15/2009
3,100,000 Agreement with Merrill Lynch terminating 8,438
September 20, 2008 to pay a fixed rate of .59%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Countrywide Home Loans, 5.625%, 7/15/2009
1,530,000 Agreement with Merrill Lynch terminating (1,753)
June 20, 2008 to pay a fixed rate of .42%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Goldman Sachs, 6.6%, 1/15/2012
6,130,000 Agreement with Merrill Lynch terminating (9,741)
June 20, 2008 to pay a fixed rate of .43%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Goldman Sachs, 6.6%, 1/15/2012
2,060,000 Agreement with Merrill Lynch terminating (45,085)
June 20, 2008 to pay a fixed rate of 1.15%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Kroger, 5.5%, 2/1/2013
2,060,000 Agreement with Merrill Lynch terminating (16,162)
June 20, 2008 to pay a fixed rate of .93%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Safeway, 5.8%, 8/15/2012
28
Unrealized
Notional Appreciation
Amount ($) Description (Depreciation) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
4,125,000 Agreement with Merrill Lynch terminating (44,423)
June 20, 2008 to pay a fixed rate of .57%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Target, 5.875%, 3/1/2012
4,600,000 Agreement with Merrill Lynch terminating 12,095
June 20, 2008 to pay a fixed rate of .54%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Washington Mutual, 5.625%, 1/15/2007
3,100,000 Agreement with Merrill Lynch terminating 1,425
September 20, 2008 to pay a fixed rate of .59%
and receive the notional amount as a result of
interest payment default totaling $1,000,000 or
principal payment default of $10,000,000 on
Washington Mutual, 5.625%, 1/15/2007
TOTAL (84,474)
Realized gains and losses on maturity or termination of swaps are presented in
the Statement of Operations. Risks may arise upon entering into these agreements
from the potential inability of the counterparties to meet the terms of the
agreement and are generally limited to the amount of net payments to be
received, if any, at the date of default.
At September 30, 2003, accumulated net unrealized appreciation on investments
was $11,745,041, consisting of $18,622,913 gross unrealized appreciation and
$6,877,872 gross unrealized depreciation.
At September 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).
The Fund 29
For More Information
Dreyfus
A Bonds Plus, 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.
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
A description of the policies and procedures that the fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
by calling the telephone number listed above, or by visiting the SEC's website
at http://www.sec.gov
(c) 2003 Dreyfus Service Corporation 084SA0903
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 control 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.
DREYFUS A BONDS PLUS, INC.
By: /S/STEPHEN E. CANTER
---------------------
Stephen E. Canter
President
Date: November 21, 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: November 21, 2003
By: /S/JAMES WINDELS
---------------------
James Windels
Chief Financial Officer
Date: November 21, 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)