PRESIDENT'S LETTER
Dear Shareholder:
Dreyfus Strategic Investing completed its latest semi-annual reporting
period on April 30, 1994, in an environment of highly volatile stock and bond
markets. This called for amending investment strategies to conform to the
changed climate.
During the first half of our fiscal year, we reduced our exposure in the
technology and gaming industries while increasing our exposure to health
care, economically sensitive and foreign securities.
As we discussed in our year-end letter to shareholders, valuations of
technology-related securities increased sharply relative to the market during
1993. These securities are usually characterized by high price volatility due
in part to high business risk associated with the industry. The Fund had a
significant weighting in technology and, in an attempt to reduce the
portfolio's volatility, we eliminated many sizable and long-held positions
including Cabletron Systems and Cisco Systems in the network communications
market, Oracle Systems in database management, and Applied Materials and Lam
Research in the semiconductor capital equipment industry.
The gaming industry had been an important theme in the portfolio.
Unfortunately, fundamental business shortfalls and severe overcapitalization
contributed to falling valuation levels. While near-term industry growth and
profitability did not meet our expectations, the sales of securities such as
Promus, Showboat and President Riverboat Casino did result in profits for our
shareholders.
After the close of the fiscal year, we took advantage of the recent rise
in energy-related securities to reduce our positions. The portfolio was
concentrated on natural gas exploration and production companies in
anticipation of better pricing for this commodity. We are now in a phase
where the rate of acceleration of gas prices is declining, though the overall
supply and demand outlook is still skewed positively. Recent price pressure
has been due in large part to new capacity from Canada. This new supply must
be digested before prices move up significantly again. We expect to keep a
small weighting in this industry, as we search for companies which we expect
will aggressively add reserves to their existing asset bases.
As mentioned earlier, our health care exposure has been increased
significantly. The health care services companies such as Sun Healthcare and
American Medical Holdings performed reasonably during the first part of 1994.
Our investments in smaller high-growth pharmaceutical companies such as IVAX
and Teva Pharmaceutical Industries A.D.R. affected group performance
negatively due essentially to shortfalls in earnings.
Holdings in cyclically sensitive industrial companies have been
increased, particularly chemicals and machine and parts manufacturers. Deere
& Co. in agricultural machinery is our largest position in the Fund. We
expect worldwide demand for farm equipment to remain strong through the next
several years. Overall, many companies reduced their breakeven levels during
the decade of the '80s. We believe worldwide growth in the '90s will present
unprecedented profit opportunities for the best positioned companies. We will
continue to search for other companies which will benefit from this trend.
At the beginning of our fiscal year, our foreign holdings were
concentrated in Hong Kong and Malaysia. These markets rose to excessive
valuation levels at the beginning of calendar 1994. We took this opportunity
to reduce profitably, but not eliminate, our positions in these markets.
Unfortunately, these markets have undergone sharp corrections and our reduced
positions still impacted performance negatively. Long term, we expect
investment in Asia to reward shareholders and we plan to increase our exposure.
In diversifying outside the U.S. further, we expect markets in Europe to
present good investment opportunities as these economies recover. We have
added positions in France and Germany, emphasizing cyclical companies which
we expect to benefit from this expected recovery.
Our investment in Mexico has proven to be untimely. A
weaker-than-expected economy, peso weakness, interest rate rises and
political uncertainty have all combined to affect valuations negatively.
Telefonos de Mexico, the Mexican telephone company, is our largest position
in Mexico. We view this security as inexpensive and we expect a better second
half when the national elections are concluded and interest rates are
lowered.
On the home front, we believe that U.S. interest rates, after declining
for over 13 years, may be in the process of a secular change in direction.
The reversal of long-term trends tends to be characterized by high volatility
as the market and its participants attempt to correctly determine the trend
of future prices. This volatility and the commensurate compression of equity
valuations in an environment of higher rates has reinforced the need for a
more cautious investment approach. We believe that this calls for more
diversified investments across industry groups and less concentrated
individual security positions.
Near-term, we expect the Federal Reserve Board's recent moves toward
higher rates to result in a slow economy. As a consequence, fears of further
rate rises should subside and a period of higher equity prices should
prevail. Though the extent and duration of this rise cannot be forecast, we
expect to stay reasonably invested to take advantage of this anticipated
move.
We remain continuously alert to developments likely to affect the Fund's
investments and are fully committed to our goal of serving your best
investment interests.
Sincerely,
(Richard C. Shields Signature Logo)
Richard C. Shields
President
June 6, 1994
New York, N.Y.
<TABLE>
<CAPTION>
PERFORMANCE
TOTAL RETURN FOR THE SIX MONTHS ENDED APRIL 30, 1994
<S> <C>
Dreyfus Strategic Investing - Class A (1) (2.65%)
Dreyfus Strategic Investing - Class B (2) (3.00%)
Standard & Poor's 500 Composite Stock Price Index (3) (2.31%)
Dow Jones Industrial Average (3) 1.39%
</TABLE>
- - ----------------------------------------------
(1) Total return represents the change during the period in a
hypothetical account with dividends reinvested, without taking into
account the maximum initial sales charge.
(2) Total return represents the change during the period in a
hypothetical account with dividends reinvested, without taking into
account the applicable contingent deferred sales charge imposed on
redemptions.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment
of income dividends and, where applicable, capital gain distributions.
Both the Dow Jones Industrial Average and the Standard & Poor's 500
Composite Stock Price Index are widely accepted unmanaged indexes of
stock market performance.
DREYFUS STRATEGIC INVESTING
ASSET ALLOCATION AS OF APRIL 30, 1994
[Exhibit A]
Call Options (1.6%)
Cash Equivalents (6.5%)
Convertible Corporate bonds (1.4%)
Common Stocks (90.5%)
<TABLE>
<CAPTION>
FIVE LARGEST SECTORS
AS OF OCTOBER 31, 1993* AS OF APRIL 30, 1994*
------------------------- ----------------------
<S> <C> <S> <C>
Capital Goods/Technology..... 23.7% Consumer Growth Staples..... 20.6%
Consumer Growth Staples...... 21.8 Basic Industries............ 16.3
Consumer Cyclical............ 14.1 Technology**................ 12.4
Finance...................... 10.5 Consumer Cyclical........... 9.4
Energy....................... 8.0 Energy..................... 9.1
* Foreign Securities amounted to 11.3% of the portfolio for the period ended October 31, 1993 and 18.7% of the portfolio
for the period ended April 30, 1994.
** Formerly Capital Goods/Technology
</TABLE>
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS AS OF APRIL 30, 1994
<S> <C>
Deere & Co...................................................... 2.5%
Anadarko Petroleum.............................................. 2.0
BMC Software.................................................... 2.0
Hercules........................................................ 1.8
Seagull Energy.................................................. 1.7
Imperial Chemical A.D.R......................................... 1.6
Mattel.......................................................... 1.6
Lands' End...................................................... 1.5
Enron Oil & Gas................................................. 1.5
Disney (Walt)................................................... 1.5
All percentages shown above are based on Total Net Assets.
</TABLE>
<TABLE>
<CAPTION>
Common Stocks (90.5%)
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS
APRIL 30, 1994 (UNAUDITED)
COMMON STOCKS--90.5% SHARES VALUE
------------- --------------
<S> <C> <C>
Basic Industries_16.3% Acerinox......................... 21,500 $ 2,257,349
American Barrick Resources....... 45,000 1,035,000
Birmingham Steel................. 75,000 2,212,500
Georgia Gulf..................... 130,000 (a) 3,753,750
Hercules......................... 50,000 5,375,000
Homestake Mining................. 45,000 855,000
Huntco, Cl. A.................... 120,000 2,280,000
Imperial Chemical A.D.R.......... 100,000 4,975,000
Lafarge.......................... 150,000 3,393,750
Lubrizol......................... 50,000 1,806,250
Michelin......................... 70,000 3,166,240
National Gypsum.................. 85,000 3,485,000
Om Group......................... 130,000 2,600,000
Pechiney Ci...................... 38,000 2,748,464
Placer Dome...................... 75,000 1,537,500
Rouge Steel, Cl. A............... 41,000 989,125
Schneider........................ 34,000 2,777,256
Wheelock......................... 760,000 1,751,800
Witco............................ 100,000 2,925,000
-------------
49,923,984
-------------
Capital Goods_7.5% Danaher.......................... 105,000 4,173,750
Deere & Co....................... 100,000 7,675,000
Parker-Hannifin.................. 85,000 3,686,875
TRINOVA.......................... 110,000 3,836,250
Thiokol.......................... 100,000 2,412,500
United Engineers................. 285,000 1,245,165
United Engineers (Rights)........ 142,500 (a) 2,993
-------------
23,032,533
-------------
Conglomerates_2.6% Cheung Kong Holdings............. 310,000 1,465,060
Grupo Carso...................... 297,000 2,951,883
Hutchinson Whampoa............... 578,000 2,376,158
Parkway Holdings................. 500,000 1,023,000
-------------
7,816,101
-------------
Consumer Cyclical_9.4% Brunswick........................ 175,000 4,046,875
Good Guys........................ 115,000 (a) 1,782,500
Lands' End....................... 100,000 4,650,000
Masland.......................... 110,000 2,007,500
Outboard Marine.................. 75,000 1,678,125
Sears "B"........................ 64,000 845,504
Spiegel, Cl. A................... 165,000 3,712,500
Standard Motor Products.......... 20,000 327,500
Triarc Cos., Cl. A............... 100,000 (a) 1,950,000
Valeo............................ 17,000 4,251,530
Williams-Sonoma.................. 100,000 (a) 3,425,000
-------------
28,677,034
-------------
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
Consumer Growth Staples_19.2% Abbey Healthcare Group........... 150,000 (a) $ 2,925,000
American Medical Holdings........ 100,000 (a) 1,937,500
Berjaya Sports Toto.............. 1,120,000 2,007,040
Cole National.................... 125,000 1,546,875
Columbia/HCA Healthcare.......... 65,000 2,754,375
Disney (Walt).................... 105,000 4,449,375
GTECH Holdings................... 120,000 (a) 3,915,000
Gap.............................. 60,000 2,827,500
Gaylord Entertainment, Cl. A..... 50,000 1,293,750
Genting Berhad................... 159,000 1,781,118
Grand Casinos.................... 30,000 (a) 648,750
Hillhaven........................ 100,000 1,987,500
Hospitality Franchise System..... 110,000 3,286,250
Immunex (Warrants)............... 95,000 (a) 1,282,500
IVAX............................. 145,000 3,516,250
Mattel........................... 190,000 4,773,750
Nordstrom........................ 100,000 4,375,000
Perseptive Biosystem............. 65,000 1,771,250
Players International............ 50,000 (a) 1,031,250
Pyxis............................ 120,000 (a) 2,730,000
Resorts World.................... 500,000 2,800,500
Sun Healthcare................... 85,000 1,763,750
Teva Pharmaceutical Industries A.D.R 115,000 3,090,625
-------------
58,494,908
-------------
Consumer Staples_4.3% Carrefour........................ 5,000 3,703,670
Castorama Dubois................. 21,100 3,093,998
Empresas La Moderna SA ADS....... 115,000 2,946,875
Pioneer Hi-Br International...... 100,000 3,500,000
-------------
13,244,543
-------------
Emerging Growth_1.4% Aramed Callable.................. 91,000 (a) 1,911,000
Genelabs Technologies............ 111,111 (a,h) 300,000
Gensia........................... 115,000 (a) 1,480,625
Gensia (Warrants)................ 135,000 (a) 556,875
-------------
4,248,500
-------------
Energy_9.1% Anadarko Petroleum............... 110,000 6,160,000
Apache........................... 115,000 3,119,375
Enron Oil & Gas.................. 95,000 4,512,500
Noble Affiliates................. 100,000 2,912,500
Nuevo Energy..................... 139,700 (a) 2,601,912
Pogo Producing................... 70,000 (a) 1,330,000
Seagull Energy................... 175,000 (a) 5,096,875
Tejas Gas........................ 30,000 (a) 1,612,500
Union Texas Petroleum............ 30,000 547,500
-------------
27,893,162
-------------
Finance_3.1% Chase Manhattan.................. 100,000 3,400,000
Guoco Group...................... 180,000 833,040
Malayan Banking Berhad........... 522,000 2,943,558
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED)
APRIL 30, 1994 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
Finance (continued) Overseas Union Bank.............. 440,000 $ 2,236,080
Overseas Union Bank (Rights)..... 400,000 (a) 169,828
-------------
9,582,506
-------------
Technology_12.4% ADC Telecommunications........... 45,000 (a) 1,895,625
Alcatel Cable.................... 6,000 694,134
American Superconductor.......... 69,000 2,070,000
Andrew........................... 55,000 (a) 2,131,250
BMC Software..................... 100,000 (a) 6,000,000
Boeing........................... 60,000 2,700,000
Bolt Beranek/Newman.............. 150,000 (a) 1,856,250
DSC Communications............... 30,000 (a) 1,800,000
Intel (Warrants)................. 135,000 (a) 1,957,500
KENETECH......................... 75,000 (a) 1,481,250
Linear Technology................ 15,000 712,500
Motorola......................... 80,000 3,570,000
Quantum.......................... 125,000 (a) 2,210,938
Rockwell International........... 50,000 1,950,000
Seagate Technology............... 135,000 (a) 3,560,625
Western Digital.................. 200,000 (a) 3,150,000
-------------
37,740,072
-------------
Transportation_2.3% Far East Livingston Shipping...... 380,000 1,601,320
Landstar System.................. 145,000 3,625,000
Sembawang Shipyard............... 220,000 1,769,020
-------------
6,995,340
-------------
Utilities_2.9% Sevillana de Electricidad......... 322,000 1,643,488
Telefonica de Espana ADS......... 75,000 3,056,250
Telefonos de Mexico ADS.......... 70,000 4,121,250
-------------
8,820,988
-------------
TOTAL COMMON STOCKS
(cost $268,061,552)........... $276,469,671
=============
PRINCIPAL
AMOUNT
-------------
CONVERTIBLE CORPORATE BONDS--1.4%
RHI Entertainment, 6.50%, 6/1/2003
(cost $3,307,906).............. $ 2,000,000 (b) $ 4,090,000
=============
CONTRACTS
SUBJECT TO
CALL
-------------
CALL OPTIONS--1.6%
German Cyclical Stocks Basket,
December '94 @ 100 (c,h)..... 2,942 $ 3,275,329
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994 (UNAUDITED)
NOTIONAL
CALL OPTIONS (CONTINUED) AMOUNT VALUE
------------- -------------
French Franc Interest Rate Swap,
July '95 (d,e,h)............. $ 80,964,375 $ 267,183
German Stocks Basket,
December '94 @ $15,875 (c,h). 15,000,000 1,437,783
G7, February '95 (f,h)........... 200,000,000 200
-------------
TOTAL CALL OPTIONS
(cost $5,641,188).............. $ 4,980,495
=============
SHORT-TERM INVESTMENTS--6.6%
PRINCIPAL
AMOUNT
-------------
U.S. Treasury Bills; 3.09%, 5/5/1994.................. $ 3,250,000 $ 3,248,850
3%, 5/19/1994.................... 16,039,000 (g) 16,010,330
3.26%, 7/14/1994................. 1,010,000 1,002,526
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $20,261,706)........... $ 20,261,706
=============
TOTAL INVESTMENTS (cost $297,272,352).......................... 100.1% $305,801,872
===== =============
LIABILITIES, LESS CASH AND RECEIVABLES......................... (.1%) $ (288,863)
===== =============
NET ASSETS..................................................... 100.0% $ 305,513,009
===== =============
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1994, this security amounted to $4,090,000 or 1.4% of net assets.
(c) Denominated in German Deutsche Marks.
(d) Denominated in French Francs.
(e) Based on fixed rate of 5.90% versus PIBOR (Paris Interbank Offering
Rate).
(f) Based on the average of the 10 year mid-market swap rate of the
group of seven countries versus 6.42%.
(g) Partially held by brokers as collateral for open short positions.
(h) Security restricted as to public resale. Investments in restricted
securities, with an aggregate market value of $5,280,495, represents
approximately 1.73% of net assets:
<TABLE>
<CAPTION>
ACQUISITION PURCHASE PERCENTAGE OF
ISSUER DATE PRICE NET ASSETS VALUATION*
- - ------ ----------- ---------- --------------- ------------
<S> <C> <C> <C> <C>
French Franc Interest Rate Swap, July '95 7/30/93 $ .013 .09% $ .0033
Genelabs Technologies................... 3/1/91 9.000 .10 2.70
German Stocks Basket,
December '94 @ $15,875.............. 4/15/94 .085 .47 .095
German Cyclical Stocks Basket,
December '94 @ 100.................. 1/3/94 9.80 1.07 11.133
G7, February '95........................ 2/14/94 .0025 .00 .00
- - ---------------------------
</TABLE>
* The valuation of these securities has been determined in good faith
under the direction of the Board of Trustees.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF SECURITIES SOLD SHORT
APRIL 30, 1994 (UNAUDITED)
COMMON STOCKS SHARES VALUE
- - --------------- ---------- ------------
<S> <C> <C>
Artra Group................................................................. 10,000 $ 57,500
Best Buy.................................................................... 50,000 1,806,250
Church & Dwight............................................................. 25,000 537,500
Compression Labs............................................................ 25,000 296,875
CrossComm................................................................... 65,000 731,250
Health Images............................................................... 40,500 212,625
Madge N.V................................................................... 25,000 359,375
Medco Research.............................................................. 65,000 804,375
PictureTel.................................................................. 25,000 318,750
Plains Resources............................................................ 50,000 287,500
Policy Management Systems................................................... 70,000 2,082,500
Sequent Computer Systems.................................................... 35,000 468,125
Storage Technology.......................................................... 50,000 1,487,500
Viacom, Cl. A............................................................... 10,500 262,500
Wall Data................................................................... 25,000 931,250
------------
TOTAL SECURITIES SOLD SHORT (proceeds $12,480,878)...................... $10,643,875
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1994 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $297,272,352)_see statement..................................... $305,801,872
Receivable from brokers for proceeds on securities sold short........... 12,480,878
Receivable for investment securities sold............................... 10,938,322
Dividends and interest receivable....................................... 485,868
Receivable for shares of Beneficial Interest subscribed................. 153,700
Prepaid expenses........................................................ 95,548
-------------
329,956,188
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 272,225
Due to Custodian........................................................ 1,855,211
Bank Loans payable_Note 2............................................... 7,700,000
Securities sold short, at value
(proceeds $12,480,878)_see statement.................................. 10,643,875
Payable for investment securities purchased............................. 3,420,734
Payable for shares of Beneficial Interest redeemed...................... 242,077
Loan commitment fees and interest payable............................... 58,958
Accrued expenses........................................................ 250,099 24,443,179
----------- -------------
NET ASSETS ................................................................ $305,513,009
==============
REPRESENTED BY:
Paid-in capital......................................................... $274,266,324
Accumulated investment income (loss) and distributions in excess of
investment
income_net_Note 1(c).................................................. (2,488,412)
Accumulated undistributed net realized gain on investments.............. 23,368,574
Accumulated net unrealized appreciation on investments_Note 4(b)........ 10,366,523
-------------
NET ASSETS at value......................................................... $305,513,009
=============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value authorized)...................... 12,789,500
=============
Class B Shares
(unlimited number of $.001 par value authorized)...................... 1,957,464
=============
NET ASSET VALUE per share:
Class A Shares ($265,285,420 / 12,789,500 shares)....................... $20.74
=======
Class B Shares ($40,227,589 / 1,957,464 shares)......................... $20.55
=======
See independent accountants' review report and notes to financial statements.
DREYFUS STRATEGIC INVESTING
STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1994 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $70,229 foreign taxes withheld at source)...... $ 1,100,577
Interest.............................................................. 551,365
-----------
TOTAL INCOME...................................................... $ 1,651,942
EXPENSES:
Management fee--Note 3(a)............................................. 1,154,370
Shareholder servicing costs_Note 3(c)................................. 597,101
Interest_Note 2....................................................... 392,468
Distribution fees (Class B shares)_Note 3(b).......................... 127,589
Custodian fees........................................................ 95,061
Dividends on securities sold short.................................... 51,866
Professional fees..................................................... 44,673
Prospectus and shareholders' reports.................................. 40,965
Registration fees..................................................... 40,864
Loan commitment fees_Note 2........................................... 37,708
Trustees' fees and expenses_Note 3(d)................................. 10,772
Miscellaneous......................................................... 3,998
-----------
TOTAL EXPENSES.................................................... 2,597,435
-----------
INVESTMENT (LOSS)--NET............................................ (945,493)
-----------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments--Note 4(a):
Long transactions (including options transactions).................... $22,806,615
Short sale transactions............................................... 829,520
Net realized (loss) on financial futures_Note 4(a)...................... (324,547)
-----------
NET REALIZED GAIN..................................................... 23,311,588
Net unrealized (depreciation) on investments and securities
sold short ........................................................... (31,098,091)
-----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (7,786,503)
-----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (8,731,996)
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF CASH FLOWS SIX MONTHS ENDED APRIL 30, 1994 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Dividends received...................................................... $ 968,492
Interest received....................................................... 208,472
Interest, loan commitment fees and dividends on securities sold short paid (524,873)
Operating expenses paid................................................. (383,358)
Paid to The Dreyfus Corporation......................................... (1,663,585) $ (1,394,852)
-------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchase of short-term portfolio securities......................... (104,389)
Purchases of portfolio securities....................................... (313,997,324)
Proceeds from sales of portfolio securities............................. 324,979,755
Net sales of securities sold short...................................... 829,520
Net variation margin.................................................... (324,547)
Options closed.......................................................... 79,993 11,463,008
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Fund shares sold.......................................... 52,224,099
Payments for Fund shares redeemed....................................... (37,473,551)
Dividend paid........................................................... (2,287,606)
Net repayment of bank loans............................................. (27,400,000) (14,937,058)
------------- -----------
Decrease in cash...................................................... (4,868,902)
Cash at beginning of period........................................... 3,013,691
-----------
Cash at end of period................................................. $ (1,855,211)
-----------
RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH USED BY OPERATING ACTIVITIES:
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $ (8,731,996)
Adjustments to reconcile net decrease in net assets resulting from
operations
to net cash used by operating activities:
Increase in interest receivable................................... (43,593)
Increase in dividends receivable.................................. (132,086)
Decrease in interest, loan commitment fees and dividends on
securities sold
short payable................................................... (42,831)
Increase in accrued operating expenses............................ 83,096
Increase in prepaid expenses...................................... (17,810)
Increase in due to The Dreyfus Corporation........................ 3,164
Net interest purchased on investments............................. 29,372
Net realized gain on investments, securities sold short and options written (23,311,588)
Net unrealized depreciation on investments and securities sold short 31,098,091
Net amortization of discount on investments....................... (328,671)
-----------
NET CASH USED BY OPERATING ACTIVITIES....................................... $ (1,394,852)
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, APRIL 30, 1994
1993 (UNAUDITED)
-------------- ----------------
OPERATIONS:
<S> <C> <C>
Investment income(loss)_net.......................................... $ 344,576 $ (945,493)
Net realized gain on investments..................................... 31,818,915 23,311,588
Net unrealized appreciation (depreciation) on investments for the period 15,782,474 (31,098,091)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.... 47,945,965 (8,731,996)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares..................................................... (549,763) ___
Class B shares..................................................... ___ ___
Net realized gain on investments:
Class A shares..................................................... ___ (26,597,900)
Class B shares..................................................... ___ (2,951,918)
Excess investment income_net:
Class A shares..................................................... ___ (1,425,741)
Class B shares..................................................... ___ (116,252)
-------------- --------------
TOTAL DIVIDENDS................................................ (549,763) (31,091,811)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................... 52,366,131 35,089,626
Class B shares..................................................... 25,107,551 16,917,766
Dividends reinvested:
Class A shares..................................................... 494,336 25,815,324
Class B shares..................................................... ___ 2,988,881
Cost of shares redeemed:
Class A shares..................................................... (66,014,198) (36,160,598)
Class B shares..................................................... (642,448) (1,169,567)
-------------- --------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS... 11,311,372 43,481,432
-------------- --------------
TOTAL INCREASE IN NET ASSETS................................. 58,707,574 3,657,625
NET ASSETS:
Beginning of period.................................................. 243,147,810 301,855,384
-------------- --------------
End of period (including accumulated investment income (loss) and
distributions
in excess of investment income_net of: ($140,172) in 1993 and
($2,488,412) in 1994).............................................. $301,855,384 $305,513,009
============= ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- ------------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, APRIL 30, 1994 OCTOBER 31, APRIL 30, 1994
1993 (UNAUDITED) 1993* (UNAUDITED)
-------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................... 2,402,790 1,603,652 1,122,136 774,671
Shares issued for dividends reinvested 24,079 1,240,295 ___ 144,600
Shares redeemed.................. (3,034,139) (1,667,525) (28,591) (55,352)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING......... (607,270) 1,176,422 1,093,545 863,919
============== ============== ============== ===============
- - ------------------------------
* From January 15, 1993 (commencement of initial offering) to October 31,
1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from information provided in the Fund's
financial statements.
CLASS A SHARES CLASS B SHARES
---------------------------------------------------------------------- ------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS YEAR ENDED SIX MONTHS
ENDED ENDED
----------------------------------------------- APRIL 30, 1994 OCTOBER 31, APRIL 30,1994
PER SHARE DATA: 1989 1990 1991 1992 1993 (UNAUDITED) 1993(1) (UNAUDITED)
---- ---- ---- ---- ---- ----------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period........... $15.85 $18.73 $18.03 $22.12 $19.90 $23.77 $21.38 $23.62
------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income
(loss)_net.......... .48 .31 .21 .06 .03 (.06) (.07) (.09)
Net realized and unrealized
gain (loss) on investments 3.70 (.35) 5.77 (.46) 3.89 (.56) 2.31 (.60)
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS.......... 4.18 (.04) 5.98 (.40) 3.92 (.62) 2.24 (.69)
------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income_net.......... (1.30) (.21) (.34) (.14) (.05) -- -- --
Dividends from net realized
gain on investments. -- (.45) (1.55) (1.68) -- (2.29) -- (2.29)
Dividends from excess
investment income-net -- -- -- -- -- (.12) -- (.09)
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS. (1.30) (.66) (1.89) (1.82) (.05) (2.41) -- (2.38)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period........... $18.73 $18.03 $22.12 $19.90 $23.77 $20.74 $23.62 $20.55
====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN (2) 28.59% (.31%) 36.50% (2.04%) 19.71% (2.65%)(3) 10.48%(3) (3.00%)(3)
RATIOS/SUPPLEMENTAL
DATA:
Ratio of operating expenses
to average net assets 1.50% 1.50% 1.35% 1.30% 1.27% .66%(3) 1.65%(3) .82%(3)
Ratio of interest expense,
loan commitment fees
and dividends on
securities sold short to
average net assets.. .59% 1.39% .58% .38% .47% .16%(3) .44%(3) .16%(3)
Ratio of net investment
income (loss) to average
net assets.......... 2.63% 1.66% 1.07% .22% .16% (.27%)(3) (.69%)(3) (.61%)(3)
Decrease reflected in above
expense ratios due to
expense limitation.. .29% .08% -- -- -- -- -- --
Portfolio Turnover Rate 228.12% 275.33% 207.10% 204.73% 237.14% 99.95%(3) 237.14% 99.95%(3)
Net Assets, end of period
(000's Omitted)..... $106,180 $102,421 $145,717 $243,148 $276,022 $265,285 $25,833 $40,228
- - ---------------------
(1) From January 15, 1993 (commencement of initial offering) to October 31, 1993.
(2) Exclusive of sales load.
(3) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the distributor of the Fund's shares. The
Distributor is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager").
The Fund offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within six years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
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. 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, except for open short positions, where the asked price is used for
valuation purposes. 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 Trustees.
Short-term investments are carried at amortized cost, which approximates
value. Investments traded in foreign currencies are translated to U.S.
dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
Dividends in excess of investment income_net for financial statement
purposes result primarily from transactions where tax treatment differs from
book treatment. During the six months ended April 30, 1994, the Fund
reclassed $139,246 from undistributed investment income-net to paid-in
capital. This amount represented amortization of organization expenses which
are not deductible for federal income tax purposes.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from all, or substantially all, Federal income
taxes.
NOTE 2--BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
$60 million under a short-term unsecured line of credit. In connection
therewith, the Fund has agreed to pay commitment fees at an annual rate of
.125 of 1% on the total line of credit. Interest on borrowings is charged at
rates which are related to the Federal Funds rate in effect from time to
time.
Outstanding borrowings on April 30, 1994 under the line of credit,
amounted to $7.7 million at an annualized interest rate of 4.66%.
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The average daily amount of short-term debt outstanding during the six
months ended April 30, 1994 was approximately $18.7 million, with a related
weighted average annualized interest rate of 4.23% (based upon actual
interest expense, not including commitment fees, for the period). The maximum
amount of such debt outstanding at any time during the six months ended April
30, 1994, was $40.5 million.
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 .75 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings (which, in the
view of Stroock & Stroock & Lavan, counsel to the Fund, also contemplates
loan commitment fees and dividends on securities sold short), brokerage and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of distribution expenses and
certain expenses as described above) exceed 2 1/2% of the first $30 million,
2% of the next $70 million and 1 1/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California "blue
sky" regulations. There was no expense reimbursement for the six months ended
April 30, 1994.
The Distributor retained $275,958 during the six months ended April 30,
1994 from commissions earned on sales of the Fund's Class A shares.
The Distributor retained $33,179 during the six months ended April 30,
1994 from contingent deferred sales charges imposed upon redemptions of the
Fund's Class B shares.
(B) Under the Distribution Plan("Class B Distribution Plan") adopted
pursuant to Rule 12b-1 under the Act, the Fund pays the Distributor, at an
annual rate of .75 of 1% of the value of the Fund's Class B shares average
daily net assets, for the costs and expenses in connection with advertising,
marketing and distributing the Fund's Class B shares. The Distributor may
make payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the Fund's
Class B shares owned by clients of the Service Agent. During the six months
ended April 30, 1994, $127,589 was charged to the Fund pursuant to the Class
B Distribution Plan.
(C) Under the Shareholder Services Plan, the Fund pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the six months ended April 30,
1994, $342,260 and $42,530 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(D) Certain officers and trustees of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each trustee
who is not an "affiliated person" receives an annual fee of $2,500 and an
attendance fee of $250 per meeting.
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(E) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Manager
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in mid-1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's board and
shareholders before completion of the merger. Shareholder approval will be
solicited by a proxy statement.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short, excluding short-term
securities and options transactions, during the six months ended April 30,
1994:
<TABLE>
<CAPTION>
PURCHASES SALES
----------------- -----------------
<S> <C> <C>
Long transactions.................................................... $296,682,684 $308,265,140
Short sale transactions.............................................. 23,241,392 20,805,657
----------------- -----------------
TOTAL.............................................................. $319,924,076 $329,070,797
================= =================
</TABLE>
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 and custodian, of cash and/or U.S. Government securities
sufficient to cover its short position. Securities sold short at April 30,
1994 and their related market values and proceeds are set forth in the
Statement of Securities Sold Short.
In addition, the following table summarizes the Fund's option
transactions for the six months ended April 30, 1994:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
--------------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding October 31, 1993...... -- $ --
Contracts written........................... 200,000 193,993
---------- -----------
200,000 193,993
---------- ------------
Contracts Terminated;
Closed.................................... 200,000 193,993 $114,000 $79,993
---------- ------------ ======== =======
Contracts outstanding April 30, 1994........ -- $ --
========== ============
</TABLE>
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
As the 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 premiums, 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 declines between those dates. At April
30, 1994, there were no written put options outstanding.
The Fund is engaged in trading financial futures contracts. 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 made or received to reflect daily unrealized
gains or losses. When the contracts are closed, the Fund recognizes a
realized gain or loss. These investments require initial margin deposits with
a custodian, which consist of cash or cash equivalents, up to approximately
10% of the contract amount. The amount of these deposits is determined by the
exchange or Board of Trade on which the contract is traded and is subject to
change. At April 30, 1994, there were no financial futures contracts
outstanding.
(B) At April 30, 1994, accumulated net unrealized appreciation on
investments was $10,366,523, consisting of $29,908,469 gross unrealized
appreciation and $19,541,946 gross unrealized depreciation.
At April 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS STRATEGIC INVESTING
REVIEW REPORT OF ERNST & YOUNG, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS STRATEGIC INVESTING
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Strategic Investing, including the statements of investments and
securities sold short, as of April 30, 1994, and the related statements of
operations and changes in net assets and financial highlights for the six
month period ended April 30, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
October 31, 1993 and financial highlights for each of the five years in the
period ended October 31, 1993 and in our report dated December 10, 1993, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
(Ernst & Young Signature Logo)
New York, New York
June 9, 1994
(Dreyfus Logo)
Strategic
Investing
Semi-Annual
Report
April 30, 1994
(Dreyfus Lion Logo)
(Dreyfus `D' Logo)
Dreyfus Strategic Investing
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 037/632SA944
Dreyfus Strategic Investing
Asset Allocation as of April 30, 1994
----------------------------------------------------------
|Common Stocks 90.5 % |
|Convertible Corporate Bonds 1.4 % |
|Call Options 1.6 % |
|Cash Equivalents 6.5 % |
----------------------------------------------------------
