REMEMBER

Back in the go-go days of the mid to late 1990s, this fund family was left in the dust, partly because its longstanding strengths in the bond-fund arena didn't register with stock-crazed investors. And while the fund company struggled to launch equity portfolios, Dreyfus had a hard time competing against the likes of Janus. "For such a prominent name, they weren't standing out," says Brian Portnoy, analyst at fund-tracking firm Morningstar.

The 17th largest fund family appears to picking itself up, however, as many investors are opting for more conservative plays. Still, says Portnoy, investors should examine the company's offerings individually. "It's a fund-by-fund story," he says. Unfortunately, two of its best performers are closed to new investors, namely the Dreyfus Emerging Leaders fund and Dreyfus Small Company Value fund, but savvy investors can find solid options among its 64 no-load funds. Another 47 Dreyfus offerings are load funds, found under the Dreyfus Premier name. And while the company acknowledges that most of its asset growth over the past few years has been on the load side of the equation, there are no plans to convert entirely to a load format, as Scudder Funds, for example, is in the process of doing.

In the near future, you can expect to see more equity offerings from Dreyfus, which currently has more than $150 billion in assets under management, says Thomas Eggers, Dreyfus vice chairman. The family just filed with the SEC to open a health-care fund (which will be no-load), and Eggers says he's hoping to roll out more tax-efficient funds, as well as more taxable fixed-income offerings. An energy fund is also in the planning stages, although paperwork hasn't yet been filed with the SEC.

To find four standout Dreyfus funds, we screened Morningstar's database for portfolios with five-year annualized returns that landed in the top quartile of their respective categories. They also had to beat their peers over the past year. Other requirements included annual expenses lower than the category average and minimum initial investments of no more than $5,000. Check out our finds:

Dreyfus Midcap Value
With a 19.67% return year-to-date, the Dreyfus Midcap Value fund is among the best-performing U.S. stock funds of 2001. Its long-term record is equally impressive, with a 23.03% annualized gain over the past five years, which places it among the top 5% of the midcap value group.

This performance has certainly put the spotlight on Peter Higgins, who also manages the Dreyfus Small Company Value fund, the top-ranking U.S. stock fund this year. To find the best individual stocks regardless of sector, Higgins looks closely at price-to-earnings and price-to-cash ratios, seeking out stocks that are cheap compared with their own history. Steady earnings, strong balance sheets and catalysts to future earnings are also important. Recently he picked up Bausch & Lomb, which is investing in drug-delivery systems and eye-oriented technology. He also bought poultry producer Tyson Foods, since he believes the mad-cow-disease scare will steer consumers to chicken.

Investors should note that Dreyfus plans to close the $940 million fund when its assets reach $1.4 billion. And based on the portfolio's intake of approximately $500 million between February 2000 and February 2001, that could come fairly soon. Its expense ratio stands at 1.27%, compared to a category average of 1.43%.

Dreyfus Appreciation
Bigger is indeed better at large-cap blend fund Dreyfus Appreciation, with giants such as Pfizer, Exxon Mobil and General Electric among its largest holdings. "Size begets size, and economic and financial muscle rises to the top," says Charles Sheedy, who co-manages the fund with longtime stock picker Fayez Sarofim. That philosophy has garnered the $3.3 billion portfolio a five-year annualized return of 15.98%, landing it in the top 12% of its category. Stability is also a priority here, as its three-year standard deviation is 17.63, well below the S&P 500 index at 20.15.

Bearing in mind long-term demographic trends such as aging populations and spreading industrial development, Sarofim and Sheedy focus on companies with global reach in four sectors health care, technology, financial services and consumer nondurables although energy is a clear runner-up. Overall, the portfolio's holdings generate 35% of their earnings overseas, and Sheedy believes that figure will only grow. Going forward, Sheedy sees more rational price/earnings ratios ahead, calling it a "Pete Rose market." "There will be a lot of singles and doubles," says Sheedy, "but very few will hit 75 home runs this year."

This fund's expense ratio is 0.87%, compared to 1.23% for the average large-cap blend portfolio.

Dreyfus Intermediate-Term Income
Investors looking for the full spectrum of bond sectors in one fund might consider the Dreyfus Intermediate-Term Income fund, managed by the Dreyfus taxable fixed-income team, led by Gerald Thunelius. It ranks among the top 1% of its category over the past five years, and has delivered an annualized gain of 10.66% during that period.

Flexibility is key at this fund, says Michael Heoh, a member of the investment team. The managers analyze everything from mortgage-backed to corporate bonds, as well as high-yield and convertible securities. At the moment, says Heoh, they're high on corporate bonds of the Fortune 500, specifically companies that have been "quick to make the cost cuts and get their profitability back online in terms of the growth expectations." Among their latest choices: Conseco Finance and Ford Motor Credit.

Heoh says they also like the highest-grade securities in the high-yield market, which ideally can move up to investment grade. "It's kind of like winning the fixed-income lottery," he says.

The fund, which currently offers a duration of 4.6 years and a 30-day yield of 6.37%, sports a low expense ratio of 0.65%. That compares to the average intermediate-term bond fund's expenses of 1.01%.

Dreyfus Short-Term Income
It's hard to get too excited about a short-term income fund, but conservative retirees or investors approaching retirement age may want to consider the Dreyfus Short-Term Income fund as an alternative to a money-market fund. It could also suit parents who are moving college savings out of stock funds in the years before college. After all, it sports a five-year annualized return of 7.47%, placing it among the top 1% of all short-term bond funds, according to Morningstar. Its expense ratio of 0.84%, however, just squeezes below the category average of 0.86%.

Also managed by the Dreyfus taxable fixed-income team, the fund currently offers a duration of two years, and a 30-day yield of 6.10%. For the near term, Heoh believes we'll continue to see more interest rate cuts from the Federal Reserve, so there's a likelihood that the yield curve will steepen and short-term rates will decline taking this fund's returns with them.