LETTER TO SHAREHOLDERS
Dear Fellow Shareholder:
Dreyfus Strategic Investing completed the first half of its current
fiscal year on April 30, 1995.
The Fund lagged the major market averages during the period because of a
cautious investment posture in the Fund, marked by a large amount of cash and
a substantial short position.
I became primary portfolio manager for the Fund around the middle of the
fiscal half-year. At that time we began a shift to a less bearish investment
stance. We covered most of the short positions and reduced the cash reserves
by investing in common stocks. In addition, we sold some of the smaller
holdings in the Fund. At the end of this process, the Fund was still in a
somewhat cautious posture, with a cash position somewhat higher than most
mutual funds.
For the fiscal half-year, the total return, including the reinvestment of
income dividends and capital gain distributions, was 2.70%* for the Class A
shares and 2.28%* for the Class B shares of your Fund, compared with 10.46%
for the Standard & Poor's 500 Composite Stock Price Index.**
The fiscal half-year began with the U.S. economy in a boom, to which the
Federal Reserve Board had responded by raising interest rates. The Fed
tightened for the seventh time in a year in February 1995, but then fears of
further Federal Reserve tightening eased as the economy weakened. The stock
market rose during this period because of a combination of a high level of
earnings and falling long-term interest rates. The dollar was weak during
these months, which aided the earnings of multinational companies. A
currency decline often drives inflation substantially higher. This did not
occur in this instance because the dollar was not weak against the currencies
of our major trading partners in North America and South America. There were
also offsets from such disinflationary pressures as corporate downsizing,
strong productivity growth and price-sensitive behavior among consumers. Thus
the stock market enjoyed the benefit to earnings of a weak dollar against the
yen and the European currencies without any associated inflation surge which
might have pushed up interest rates and weakened the valuation of the stock
market.
There are several long-term positive forces which have provided a
supportive background for the financial markets. First, the trend of
inflation has remained favorable in the last several years. Second, we are in
the early stages of a key demographic shift as the baby boom generation
begins to focus on the need for a permanent program of saving to provide for
future retirement income. Third, U.S. productivity growth in manufacturing
has been favorable. Finally, a broad consensus has begun to emerge on the
importance of limiting the U.S. budget deficit.
We remain cautious but not bearish about the U.S. stock market. The good
news of a high level of corporate earnings, a halt to Federal Reserve
tightening and a strong rally in the bond market has been reflected in market
values. This does not rule out further advances in stock prices if the
fundamental news remains favorable. However, we believe that the margin for
error in the event of adverse developments has been reduced by the strong
market gains which have occurred over the last several years.
We believe that the period of strongest earnings growth in the U.S.
economy is behind us. Corporate cost-cutting is very far advanced in many
companies as are the benefits of refinancing high-cost debt. The rate of
growth of the U.S. economy is decelerating. Many multinational companies have
already reaped a significant portion of the profit benefits of a decline in
the dollar. Thus we believe that strong profit growth will become
increasingly scarce over the next year. Many of the largest positions in your
Fund are companies which we believe have a good chance of sustaining strong
earnings growth even in this
more challenging environment. While overall market valuations have risen, we
continue to find good companies available in the stock market at reasonable
valuation levels.
We appreciate the willingness of our shareholders to invest in Dreyfus
Strategic Investing and will endeavor to realize a favorable return for the
shareholders commensurate with a reasonable level of risk. There is likely to
be an alternation of periods where the net asset value of the Fund declines
and periods when the net asset value rises. Our focus is on achieving a
satisfactory return for the shareholders over a period of time.
Sincerely,
(Richard B. Hoey Signature Logo)
Richard B. Hoey
Portfolio Manager
May 18, 1995
New York, N.Y.
*Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the
maximum initial sales charge in the case of Class A, or the applicable
contingent deferred sales charge imposed on redemptions in the case of
Class B shares.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the
reinvestment of income dividends and, where applicable, capital gain
distributions. Unlike the Fund, which can engage in a variety of
investment techniques, the Standard & Poor's 500 Composite Stock Price
Index is a widely accepted unmanaged index of stock market performance,
which is composed of only equity securities.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS APRIL 30, 1995 (UNAUDITED)
COMMON STOCKS-80.2% SHARES VALUE
-------------- --------------
<S> <C> <C>
BASIC AND PROCESS
INDUSTRIES-10.5% Boise Cascade.......................... 75,000 $ 2,456,250
Dow Chemical........................... 40,000 2,780,000
duPont(EI)deNemours.................... 70,000 4,611,250
Eastman Chemical....................... 30,000 1,702,500
FMC.................................... 50,000 (a) 3,068,750
Foster Wheeler......................... 50,000 1,850,000
Lukens................................. 40,000 1,295,000
Lyondell Petrochemical................. 100,000 2,487,500
OM Group............................... 75,000 1,790,625
Praxair................................ 100,000 2,375,000
Tyco International..................... 50,000 2,625,000
--------------
27,041,875
--------------
CAPITAL GOODS-8.5% Coltec Industries...................... 100,000 (a) 1,825,000
Deere & Co............................. 25,000 2,050,000
Duriron................................ 75,000 1,626,562
Emerson Electric....................... 50,000 3,362,500
Loral.................................. 50,000 2,350,000
TRINOVA................................ 100,000 3,475,000
USA Waste Service...................... 200,000 (a) 3,000,000
WMX Technologies....................... 150,000 4,087,500
--------------
21,776,562
--------------
CONSUMER-8.2% American Greetings, Cl. A............. 125,000 3,406,250
Carnival, Cl. A........................ 50,000 1,243,750
ConAgra................................ 90,000 2,992,500
Mattel................................. 70,000 1,662,500
OfficeMax.............................. 155,000 (a) 3,971,875
Premark International.................. 70,000 3,377,500
Sears, Roebuck......................... 50,000 2,712,500
Wal-Mart Stores........................ 70,000 1,662,500
--------------
21,029,375
--------------
ENERGY-12.7% Amerada Hess.......................... 75,000 3,796,875
Amoco.................................. 75,000 4,921,875
Apache................................. 70,000 1,890,000
Dresser Industries..................... 75,000 1,640,625
Lubrizol............................... 100,000 3,487,500
Murphy Oil............................. 90,000 3,937,500
Noble Affiliates....................... 40,000 1,080,000
Occidental Petroleum................... 200,000 4,600,000
Phillips Petroleum..................... 100,000 3,500,000
Tidewater.............................. 75,000 1,781,250
Triton Energy.......................... 50,000 (a) 1,925,000
--------------
32,560,625
--------------
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
FINANCIAL-5.0% Citicorp............................... 100,000 $ 4,637,500
Equitable of Iowa...................... 120,000 4,395,000
FirstFed Michigan...................... 75,000 1,818,750
Overseas Union Bank.................... 360,000 2,078,910
--------------
12,930,160
--------------
HEALTH CARE-12.8%.. AmeriSource Health, Cl. A.............. 102,000 (a) 2,256,750
Aramed Callable........................ 35,000 (a) 376,250
Bard (C.R.)............................ 600 17,475
Baxter International................... 75,000 2,606,250
Bergen Brunswig, Cl. A................. 30,000 (a) 712,500
Boston Scientific...................... 170,760 (a) 4,653,210
Genzyme................................ 75,000 3,206,250
Guidant................................ 100,000 (a) 1,987,500
Immunex................................ 65,000 (a) 780,000
McKesson............................... 100,000 3,962,500
Medtronic.............................. 50,000 3,718,750
Pfizer................................ 50,000 4,331,250
Sofamor/Danek Group.................... 50,000 (a) 1,212,500
St. Jude Medical....................... 70,000 3,010,000
--------------
32,831,185
--------------
INSURANCE-5.0%.. American International Group........... 20,000 2,135,000
Commercial Union PLC................... 200,000 1,794,097
EXEL.................................. 70,000 3,185,000
PMI Group.............................. 40,000 1,490,000
TIG Holdings........................... 125,000 2,812,500
Union des Assurances de Paris.......... 50,000 1,356,345
--------------
12,772,942
--------------
MEDIA/ENTERTAINMENT-.7% Time Warner............................ 50,000 1,831,250
--------------
MINING AND METALS-4.0% ASARCO................................ 50,000 1,362,500
Freeport McMoRan Copper & Gold, Cl. A.. 75,000 1,565,625
Inco................................... 75,000 1,940,625
Newmont Mining......................... 30,000 1,256,250
Placer Dome............................ 175,000 4,156,250
--------------
10,281,250
--------------
TECHNOLOGY-9.3% Adobe Systems......................... 50,000 2,912,500
Compaq Computer........................ 100,000 (a) 3,800,000
First Financial Management............. 35,000 2,559,375
General Instrument..................... 75,000 (a) 2,559,375
International Business Machines........ 30,000 2,842,500
National Semiconductor................. 100,000 (a) 2,287,500
Novell................................. 150,000 (a) 3,262,500
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
TECHNOLOGY (CONTINUED) PLATINUM Technology.................... 100,000 (a) $ 2,000,000
3Com................................... 30,000 (a) 1,680,000
--------------
23,903,750
--------------
TELECOMMUNICATIONS-2.3% AT&T................................... 80,000 4,060,000
General DataComm Industries............ 200,000 (a) 1,925,000
--------------
5,985,000
--------------
TRANSPORTATION-1.2% Burlington Northern.................... 50,000 2,975,000
--------------
TOTAL COMMON STOCKS
(cost $191,304,970)................... $205,918,974
==============
CONVERTIBLE PREFERRED STOCKS-1.6%
FINANCIAL; Citicorp, Cum., $1.22
(cost $3,960,000).................... 200,000 $ 4,000,000
==============
PRINCIPAL
AMOUNT
--------------
U.S. TREASURY NOTES-9.6%
4.25%, 5/15/1996....................... $ 12,500,000 $ 12,238,288
6.125%, 7/31/1996...................... 12,500,000 12,455,075
--------------
TOTAL U.S. TREASURY NOTES
(cost $24,665,095)................... $ 24,693,363
==============
SHORT-TERM INVESTMENTS-11.9%
U.S. TREASURY BILLS:
5.01%, 6/1/1995........................ $ 5,329,000 (b) $ 5,301,342
5.20%, 7/27/1995....................... 25,677,000 25,315,468
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $30,626,143)................... $ 30,616,810
==============
TOTAL INVESTMENTS (cost $250,556,208)....................................... 103.3% $265,229,147
======== ==============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (3.3%) $(8,533,836)
======== ==============
NET ASSETS.................................................................. 100.0% $256,695,311
======== ==============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by brokers as collateral for open short positions.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF SECURITIES SOLD SHORT APRIL 30, 1995 (UNAUDITED)
COMMON STOCKS SHARES VALUE
- --------------------- ------------ ------------
<S> <C> <C>
Chiron...................................................................... 75,000 $4,143,750
Nokia A.D.R................................................................. 50,000 2,050,000
------------
TOTAL SECURITIES SOLD SHORT (proceeds $5,769,946)........................... $6,193,750
=============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $250,556,208)-see statement..................................... $265,229,147
Cash.................................................................... 316,803
Receivable for investment securities sold............................... 29,708,436
Receivable from brokers for proceeds on securities sold short........... 5,769,946
Dividends and interest receivable....................................... 656,155
Receivable for shares of Beneficial Interest subscribed................. 21,073
Prepaid expenses........................................................ 50,962
--------------
301,752,522
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 158,827
Due to Distributor...................................................... 78,462
Payable for investment securities purchased............................. 37,904,824
Securities sold short, at value
(proceeds $5,769,946)-see statement................................... 6,193,750
Payable for shares of Beneficial Interest redeemed...................... 529,877
Loan commitment fees.................................................... 6,250
Accrued expenses........................................................ 185,221 45,057,211
------------- --------------
NET ASSETS ................................................................ $256,695,311
===============
REPRESENTED BY:
Paid-in capital......................................................... $240,711,438
Accumulated undistributed investment income-net......................... 522,258
Accumulated undistributed net realized gain on investments.............. 1,211,515
Accumulated net unrealized appreciation on investments and
foreign currency transactions......................................... 14,250,100
--------------
NET ASSETS at value......................................................... $256,695,311
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value authorized)...................... 10,904,634
==============
Class B Shares
(unlimited number of $.001 par value authorized)...................... 2,140,379
==============
NET ASSET VALUE per share:
Class A Shares ($215,137,073 / 10,904,634 shares)....................... $19.73
=======
Class B Shares ($41,558,238 / 2,140,379 shares)......................... $19.42
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
<S> <C> <C>
Interest.............................................................. $ 3,021,150
Cash dividends (net of $7,890 foreign taxes withheld at source)....... 1,378,589
------------
TOTAL INCOME...................................................... $4,399,739
EXPENSES:
Management fee-Note 3(a).............................................. 975,475
Shareholder servicing costs-Note 3(c)................................. 512,726
Distribution fees (Class B shares)-Note 3(b).......................... 149,686
Dividends on securities sold short.................................... 70,017
Loan commitment fees-Note 2........................................... 37,708
Professional fees..................................................... 34,030
Custodian fees........................................................ 30,294
Registration fees..................................................... 18,844
Trustees' fees and expenses-Note 3(d)................................. 18,834
Prospectus and shareholders' reports.................................. 3,767
Miscellaneous......................................................... 3,415
------------
TOTAL EXPENSES.................................................... 1,854,796
------------
INVESTMENT INCOME-NET............................................. 2,544,943
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) on investments-Note 4(a):
Long transactions (including options transactions).................... $ 2,181,474
Short sale transactions............................................... (2,260,263)
Net realized (loss) on financial futures-Note 4(a)...................... (126,425)
Net realized gain on foreign currency transactions...................... 16
------------
NET REALIZED (LOSS)................................................... (205,198)
------------
Net unrealized appreciation on investments and securities sold short ... 3,764,618
Net unrealized appreciation on translation of assets and liabilities in
foreign currencies.................................................... 965
------------
TOTAL UNREALIZED APPRECIATION......................................... 3,765,583
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 3,560,385
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,105,328
============
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, 1995
1994 (UNAUDITED)
-------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net........................................... $ (115,350) $ 2,544,943
Net realized gain (loss) on investments................................ 8,966,398 (205,198)
Net unrealized appreciation (depreciation) on investments for the period (30,980,097) 3,765,583
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...... (22,129,049) 6,105,328
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares....................................................... -- (595,708)
Class B shares....................................................... -- (52,362)
In excess of investment income-net:
Class A shares....................................................... (1,425,741) --
Class B shares....................................................... (116,253) --
From net realized gain on investments:
Class A shares....................................................... (26,597,901) (6,469,383)
Class B shares....................................................... (2,951,918) (1,137,287)
-------------- --------------
TOTAL DIVIDENDS.................................................. (31,091,813) (8,254,740)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 49,925,537 12,787,035
Class B shares....................................................... 21,282,593 2,868,915
Dividends reinvested:
Class A shares....................................................... 25,815,338 6,576,053
Class B shares....................................................... 2,988,881 1,152,348
Cost of shares redeemed:
Class A shares....................................................... (65,443,064) (41,748,448)
Class B shares....................................................... (2,932,744) (3,062,243)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 31,636,541 (21,426,340)
-------------- --------------
TOTAL (DECREASE) IN NET ASSETS................................. (21,584,321) (23,575,752)
NET ASSETS:
Beginning of period.................................................... 301,855,384 280,271,063
-------------- --------------
End of period [including distributions in excess of investment
income-net; ($1,374,615) in 1994 and undistributed investment
income-net; $522,258 in 1995]........................................ $280,271,063 $256,695,311
============== ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------ ------------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, APRIL 30, 1995 OCTOBER 31, APRIL 30, 1995
1994 (UNAUDITED) 1994 (UNAUDITED)
-------------- --------- -------------- -------------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 2,345,076 669,113 993,936 152,973
Shares issued for dividends reinvested 1,240,296 357,006 144,600 63,386
Shares redeemed..................... (3,127,724) (2,192,211) (144,563) (163,498)
-------------- ------------ ------------ ----------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING....... 457,648 (1,166,092) 993,973 52,861
============== ============ ============ ==========
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 the Fund's financial statements.
CLASS A SHARES CLASS B SHARES
--------------------------------------------------------- --------------------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
----------------------------------------- APRIL 30, 1995 ---------------------- APRIL 30, 1995
PER SHARE DATA: 1990 1991 1992 1993 1994 (UNAUDITED) 1993(1) 1994 (UNAUDITED)
------- ------- ------- ------- ------ --------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period... $18.73 $18.03 $22.12 $19.90 $23.77 $19.83 $21.38 $23.62 $19.58
------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income (loss)-net .31 .21 .06 .03 .01 .20 (.07) (.04) .13
Net realized and unrealized
gain (loss) on investments (.35) 5.77 (.46) 3.89 (1.54) .29 2.31 (1.62) .28
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS........ (.04) 5.98 (.40) 3.92 (1.53) .49 2.24 (1.66) .41
------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income-net........... (.21) (.34) (.14) (.05) -- (.05) -- -- (.03)
Dividends in excess of
investment income-net -- -- -- -- (.12) -- -- (.09) --
Dividends from net realized
gain on investments... (.45) (1.55) (1.68) -- (2.29) (.54) -- (2.29) (.54)
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS... (.66) (1.89) (1.82) (.05) (2.41) (.59) -- (2.38) (.57)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $18.03 $22.12 $19.90 $23.77 $19.83 $19.73 $23.62 $19.58 $19.42
======= ====== ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (2) (.31%) 36.50% (2.04%) 19.71% (6.92%) 2.70%(3) 10.48%(3) (7.58%) 2.28%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses
to average net assets. 1.50% 1.35% 1.30% 1.27% 1.29% .61%(3) 1.65%(3) 1.84% .98%(3)
Ratio of interest expense, loan
commitment fees and
dividends on securities sold
short to average net assets 1.39% .58% .38% .47% .25% .04%(3) .44%(3) .24% .04%(3)
Ratio of net investment income
(loss) to average net assets 1.66% 1.07% .22% .16% .04% 1.03%(3) (.69%)(3) (.61%) .65%(3)
Decrease reflected in above
expense ratios due to
expense limitation.... .08% -- -- -- -- -- -- -- --
Portfolio Turnover Rate. 275.33% 207.10% 204.73% 237.14% 199.13% 102.28%(3) 237.14% 199.13% 102.28%(3)
Net Assets, end of
period (000's Omitted) $102,421 $145,717 $243,148 $276,022 $239,407 $215,137 $25,833 $40,864 $41,558
- ----------------------------
(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. Premier Mutual
Fund Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares. The Distributor, located at One Exchange Place, Boston, Massachusetts
02109, is a wholly-owned subsidiary of FDI Distribution Services, Inc., a
provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is
Boston Institutional Group, Inc. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
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 defered 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.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Investments in forward currency exchange
contracts are valued at the offsetting rates.
(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.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of short-term securities, sales of foreign currencies, 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 at fiscal year end, resulting from changes in
exchange rates.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) 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
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
(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 Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-BANK LINE OF CREDIT:
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.
During the six months ended April 30, 1995, there were no borrowings
under the line of credit.
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, 1995.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $110,285 during the six months ended April 30, 1995 from commissions
earned on sales of the Fund's Class A shares.
(B) Under a Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund pays the Distributor for distributing the Fund's
Class B Shares at an annual rate of .75 of 1% of the value of the average
daily net assets of Class B shares. During the six months ended April 30,
1995, $149,686 was charged to the Fund pursuant to the 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,
1995, $275,263 and $49,895 were
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
charged to the Class A and Class B shares, respectively, by the Distributor
pursuant to the Shareholder Services Plan.
(D) Each trustee who is not an "affiliated person" as defined in the Act,
receives from the Fund an annual fee of $2,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
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,
1995:
<TABLE>
<CAPTION>
PURCHASES SALES
------------- -------------
<S> <C> <C>
Long transactions................................................ $227,289,895 $189,210,140
Short sale transactions.......................................... 52,462,528 22,313,269
------------- -------------
TOTAL.......................................................... $279,752,423 $211,523,409
============ ============
</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,
1995, and their related market values and proceeds are set forth in the
Statement of Securities Sold Short.
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, 1995, there were no financial futures contracts
outstanding.
(B) At April 30, 1995, accumulated net unrealized appreciation on
investments was $14,249,135, consisting of $18,244,296 gross unrealized
appreciation and $3,995,161 gross unrealized depreciation, excluding foreign
currency transactions.
At April 30, 1995, 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 LLP, 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, 1995, and the related statements of
operations and changes in net assets and financial highlights for the six
month period ended April 30, 1995. 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, 1994 and financial highlights for each of the five years in the
period ended October 31, 1994 and in our report dated December 14, 1994, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
(Ernst & Young LLP Signature Logo)
New York, New York
June 6, 1995
(Dreyfus lion "d" logo)
DREYFUS STRATEGIC INVESTING
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 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. 037/632SA954
Strategic
Investing
Semi-Annual
Report
April 30, 1995
(Dreyfus Logo)
