LETTER TO SHAREHOLDERS
Dear Shareholder:
Dreyfus Strategic Investing completed its fiscal year October 31, 1994 in
a market environment marked by rising interest rates and weakening stock
prices.
For the 12-month period, the Class A shares had a total return of -6.92%,
and the Class B shares -7.58%.* For the same period, total return for the
Standard & Poor's 500 Composite Stock Price Index was 3.86%.**
As the fiscal year closed, the Fund held a relatively defensive net long
equity position of 43% domestic and 4.5% international. At midyear, we were
invested approximately 72% domestically and 18% internationally in
anticipation of higher equity prices if interest rate rises subsided.
Instead, economic growth has remained strong, necessitating further rate
increases by the Federal Reserve Board to stem inflationary pressures. This
has had a negative impact on equity valuations.
ECONOMIC SLOWDOWN POSSIBLE
As we look forward, we expect the U.S. economy to slow during 1995 in
response to this year's rate increases. However, we do not anticipate a steep
economic decline, and global Gross Domestic Product growth should be
reasonably strong.
Accordingly, relative to the S & P 500 we have had an overweighted
position in cyclically sensitive companies and technology. We continue to be
underweighted in consumer-related stocks and energy and, due to interest rate
concerns, we remain underweighted in financials. Health care is an average
weighting.
CYCLICAL STOCKS
Our overweight in cyclically sensitive companies performed well on a
relative basis until late in the fiscal year. Recently, these stocks have
been under sharp selling pressure as rising rates have fueled investors'
fears of a pronounced economic slowdown and a commensurate deterioration in
earnings.
At current valuations, we believe the cyclical stocks are discounting
this slowdown in earnings. Compounding this price erosion has been the fourth
quarter weakness these securities have historically exhibited. Industry
earnings in 1995 should compare favorably to 1994 and accelerate in 1996. We,
therefore, expect to take advantage of these lower prices to accumulate
larger positions.
PROCESS INDUSTRIES
In the process industries, we have exposure to paper and forest products
with positions in Georgia-Pacific and Boise Cascade; aluminum with Alcan and
Aluminum Co. of America; chemicals with FMC, Eastman Chemical, Lyondell
Petrochem and Union Carbide. In manufacturing, our results have been mixed.
Deere & Co., a manufacturer of farm equipment, and TRINOVA Corp., a
manufacturer of automotive, industrial and aerospace equipment, have fallen
in price on concerns about demand for their respective products next year. On
the other hand, Parker-Hannifin, a producer of industrial and aerospace
equipment, and Danaher, a manufacturer of tools and industrial equipment,
experienced sharp rises in share prices as product demand accelerated.
CONSUMER RELATED COMPANIES
We have generally been neutral to underweight in the consumer-related
companies. We pared our retail apparel holdings and eliminated our consumer
durable positions in Brunswick Corp. and Outboard Marine, as consumer debt
and interest rates have risen. Our largest weightings in this sector are
Mattel, a worldwide manufacturer of toys, whose earnings growth and valuation
is attractive; Avon Products, a company generating significant cash flow,
repurchasing shares and attempting to reinvigorate their product line; and
large commodity agro foods companies such as Archer-Daniels-Midland and
ConAgra Inc.
TECHNOLOGY AND HEALTH CARE
Technology was reduced from a heavily overweighted position due to our
concern with valuation and the overall popularity of the industry. While the
computer/communications industries offer an exciting future for investment,
we believe current prices reflect the dynamic growth and earnings visibility
these companies are enjoying. Overall, our investment in the group has been
profitable. At more attractive prices, we would expand our positions in
Technology.
Health care has been a core industry for investment during the past
several years. Unfortunately, this year as in 1993, our results were less
than successful. As we noted in our midyear report, our investments in IVAX
Corp. and Teva Pharmaceutical Industries A.D.R. were ill-timed and resulted
in significant losses. During the second half, deteriorating fundamentals in
many of our positions forced us to reduce or liquidate positions at a loss.
Abbey Healthcare Group, Novacare, Pyxis Corp. and Perseptive Biosystem all
reported earnings short of expectations. Gensia Inc. and its research
partner, Aramed Inc., underwent massive price erosion due to the inefficiency
of their leading compound Arasine in Phase III trials.
THE ENERGY SECTOR
As the fiscal year closed, we began to broaden our weighting in the
energy sector. The steady development of economies in Latin America and Asia
during this decade should accelerate world oil demand relative to supply. The
companies we have selected for purchase, Amoco, Occidental Petroleum and
Phillips Petroleum, provide exposure to petroleum and petrochemicals. The
other energy source, natural gas, was reduced earlier this year due to
concerns about excess supply and lower prices. In fact, this has occurred and
gas prices are now at multiyear lows. Valuations have become more attractive
and we would accumulate these securities on further price weakness.
THE INTERNATIONAL PICTURE
Historically, the Fund has held investment positions abroad, particularly
the Far East. We entered fiscal 1994 with approximately 11% of our assets
invested in Hong Kong and Malaysia. The rising trend of stock prices over the
last few years culminated in an explosive rally in late 1993. Initially,
expectation of significant long-term growth opportunities in this region
deterred us from aggressively securing profits when these markets weakened.
As the extent of interest rate increases and dollar weakness became apparent,
we took advantage of an intervening rally to reduce positions. For the first
ten months of the calendar year, the Malaysian stock index was down 13% and
Hong Kong 18.9%. Our fiscal year-end concluded with an international position
of approximately 4.5%.
Hutchinson Whampoa is our sole position in Hong Kong. As a prime
beneficiary of the dynamic Hong Kong and China trade boom,
we expect Hutchinson to remain a long-term core holding. United Engineers is
a long-term holding and should capitalize on Malaysia's need for expanded
infrastructure. Malayan Banking Berhad and Overseas Union Bank will probably
be reduced further as we expect a more adverse rate environment than
currently exists.
As we move into a new fiscal year, the Fund is in the fortunate position
of having about 30% of total assets in cash equivalents. This gives us
significant buying power to be used as the weakness in stock prices creates
attractive buying opportunities.
Sincerely,
(Richard C. Shields Signature Logo)
Richard C. Shields
Portfolio Manager
November 30, 1994
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 shares,
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. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted unmanaged index of stock market performance.
<TABLE>
<CAPTION>
<S> <C> <C>
PERFORMANCE
Total Return for the year ended October 31, 1994
Dreyfus Strategic Investing - Class A (1) (6.92)%
Dreyfus Strategic Investing - Class B (2) (7.58)%
Standard & Poor's 500 Composite Stock Price Index (3) 3.86%
Dow Jones Industrial Average (3) 9.14%
(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.
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS STRATEGIC
INVESTING CLASS A
SHARES AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
[Exhibit C]
* Source: Lipper Analytical Services, Inc.
AVERAGE ANNUAL TOTAL RETURNS
CLASS A CLASS B
- ------------------------------------------------------------ ---------------------------------------------------------------
% RETURN REFLECTING
% RETURN APPLICABLE CONTINGENT
REFLECTING % RETURN DEFERRED SALES
% RETURN WITHOUT MAXIMUM INITIAL ASSUMING NO CHARGE UPON
PERIOD ENDED 10/31/94 SALES CHARGE SALES CHARGE (4.5%) PERIOD ENDED 10/31/94 REDEMPTION REDEMPTION*
- --------------------- ------------------- ---------------------- ---------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
1 Year (6.92)% (11.11)% 1 Year (7.58)% (10.89)%
5 Years 8.23 7.24 From Inception (1/15/93) 1.17 (0.87)
From Inception (10/16/86) 12.00 11.36
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class A shares of
Dreyfus Strategic Investing on 10/16/86 (Inception Date) to a $10,000
investment made in the Standard & Poor's 500 Composite Stock Price Index on
that date. For comparative purposes, the value of the the Index on 10/31/86
is used as the beginning value on 10/16/86. All dividends and capital gain
distributions are reinvested. Performance for Class B shares will vary from
the performance of Class A shares shown above due to differences in charges
and expenses.
The Fund's performance shown in the graph takes into account the maximum
initial sales charge on Class A shares and all other applicable fees and
expenses. The Standard & Poor's 500 Composite Stock Price Index is a widely
accepted, unmanaged index of overall stock market performance which does not
take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if
applicable, is contained in the Condensed Financial Information section of
the Prospectus and elsewhere in this report.
* Maximum contingent deferred sales charge for Class B shares is 4% and is
reduced to 0% after six years.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING OCTOBER 31, 1994
ASSET ALLOCATION DIVERSIFICATION OF FOREIGN INVESTMENTS
[Exhibit A] [Exhibit B]
(Foreign Securities equal 11.1% of Total Net Assets)
<S> <C> <C>
FIVE LARGEST SECTORS
Basic Industries................................................ 18.9%
Consumer Staples................................................ 11.7
Technology...................................................... 10.2
Capital Goods................................................... 7.4
Finance......................................................... 6.6
TEN LARGEST HOLDINGS
Georgia-Pacific................................................. 2.4 %
International Business Machines................................. 1.9
FMC............................................................. 1.6
Bristol-Myers Squibb............................................ 1.6
Compaq Computer................................................. 1.4
Mattel.......................................................... 1.4
Deere & Co...................................................... 1.4
Imperial Chemical A.D.R......................................... 1.4
Pfizer.......................................................... 1.3
Malayan Banking Berhad.......................................... 1.3
</TABLE>
All percentages shown above are based on Total Net Assets.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
COMMON STOCKS--68.1% SHARES VALUE
-------------- --------------
<S> <C> <C> <C>
BASIC INDUSTRIES--18.9% ASARCO 25,000 $ 784,375
Agnico Eagle Mines............... 100,000 1,287,500
Alcan Aluminium.................. 120,000 3,210,000
Aluminum Co. of America.......... 20,000 1,705,000
Boise Cascade.................... 50,000 1,325,000
Cyprus Amax Minerals............. 60,000 1,597,500
Dow Chemical..................... 40,000 2,940,000
Eastman Chemical................. 65,000 3,510,000
Echo Bay Mines................... 100,000 1,225,000
FMC.............................. 75,000 (a) 4,575,000
Freeport McMoRan Copper & Gold, Cl. A. 50,000 1,137,500
Georgia Gulf..................... 75,000 (a) 2,906,250
Georgia-Pacific.................. 90,000 6,648,750
Huntco, Cl. A.................... 110,000 2,475,000
Imperial Chemical A.D.R.......... 75,000 3,900,000
Inco............................. 100,000 3,012,500
National Gypsum.................. 20,000 (a) 670,000
OM Group......................... 100,000 2,000,000
Placer Dome...................... 100,000 2,162,500
Reliance Steel & Aluminum........ 50,000 731,250
Rohm & Haas...................... 35,000 2,113,125
Union Carbide.................... 95,000 3,146,875
--------------
53,063,125
--------------
CAPITAL GOODS--7.4% Bethlehem Steel 75,000 (a) 1,425,000
Danaher.......................... 35,000 1,719,375
Deere & Co....................... 55,000 3,946,250
Duriron.......................... 55,000 990,000
Foster Wheeler................... 85,000 3,060,000
Parker-Hannifin.................. 75,000 3,506,250
Rohr Industries.................. 150,000 (a) 1,368,750
TRINOVA.......................... 95,000 3,325,000
United Engineers................. 245,000 1,322,511
--------------
20,663,136
--------------
CONGLOMERATES--.7% Hutchinson Whampoa 400,000 1,847,970
Parkway Holdings................. 50,000 123,978
--------------
1,971,948
--------------
CONSUMER CYCLICAL--1.1% Hospitality Franchise System 40,000 (a) 1,090,000
Nordstrom........................ 25,000 1,231,250
Spiegel, Cl. A................... 50,000 743,750
--------------
3,065,000
--------------
CONSUMER GROWTH STAPLES--.3% Immunex 65,000 (a) 877,500
--------------
CONSUMER SERVICES--5.3% Acuson 50,000 (a) 918,750
Caremark International........... 75,000 1,631,250
Columbia/HCA Healthcare.......... 75,000 3,121,875
Coram Healthcare................. 40,000 (a) 660,000
Mattel........................... 135,000 3,948,750
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
CONSUMER SERVICES (CONTINUED) Resorts World Berhad 275,000 $ 1,742,617
Sun Healthcare Group............. 125,000 (a) 2,875,000
--------------
14,898,242
--------------
CONSUMER STAPLES--11.7% Archer-Daniels-Midland 115,000 3,291,875
Avon Products.................... 50,000 3,162,500
Biogen........................... 35,000 (a) 1,715,000
Bristol-Myers Squibb............. 75,000 4,378,125
Canandaigua Wine, Cl. A.......... 55,000 (a) 1,808,125
Coca-Cola........................ 50,000 2,512,500
ConAgra.......................... 90,000 2,801,250
Genting Berhad................... 170,500 1,567,279
Glaxo Holdings PLC A.D.R......... 75,000 1,443,750
Pfizer........................... 50,000 3,706,250
Philip Morris Cos................ 50,000 3,062,500
St. Jude Medical................. 44,400 1,653,900
Upjohn........................... 50,000 1,650,000
--------------
32,753,054
--------------
EMERGING GROWTH--.4% Aramed Callable 76,000 (a) 864,500
Genelabs Technologies............ 111,111 (a,d) 212,500
Genesia (Warrants) 30,000 (a) 18,750
--------------
1,095,750
--------------
ENERGY--3.3% Amoco............................ 45,000 2,851,875
Apache........................... 20,000 562,500
Lyondell Petrochem............... 125,000 3,421,875
NL Industries.................... 25,000 (a) 318,750
Occidental Petroleum............. 50,000 1,093,750
Seagull Energy................... 35,000 (a) 910,000
--------------
9,158,750
--------------
FINANCE--6.6% Chase Manhattan 60,000 2,160,000
Equitable of Iowa................ 75,000 2,653,125
First Chicago.................... 60,000 2,940,000
FirstFed Michigan................ 65,000 1,348,750
First Security................... 75,000 1,968,750
Household International.......... 50,000 1,756,250
Malayan Banking Berhad........... 525,000 3,573,245
Overseas Union Bank.............. 360,000 2,059,945
--------------
18,460,065
--------------
OIL-CRUDE PRODUCERS--.4% Amerada Hess 25,000 1,243,750
--------------
OIL WELL EQUIPMENT & SERVICES--.6% Dresser Industries 75,000 1,584,375
--------------
TECHNOLOGY--10.2% Adobe Systems 25,000 900,000
American Superconductor.......... 20,000 675,000
BMC Software..................... 65,000 (a) 2,941,250
Boeing........................... 50,000 2,193,750
Business Objects S.A. A.D.R...... 65,000 2,136,875
Compaq Computer.................. 100,000 (a) 4,012,500
DREYFUS STRATEGIC INVESTING
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
TECHNOLOGY (CONTINUED) Data General 50,000 (a) $ 487,500
Exar............................. 50,000 (a) 1,050,000
International Business Machines.. 70,000 5,215,000
Northern Telecom................. 50,000 1,806,250
Oracle Systems................... 40,000 (a) 1,840,000
PLATINUM Technology.............. 70,000 (a) 1,548,750
Tandem Computers................. 50,000 (a) 881,250
3Com............................. 75,000 (a) 3,018,750
--------------
28,706,875
--------------
TRANSPORTATION--1.2% Landstar System 100,000 3,325,000
--------------
TOTAL COMMON STOCKS
(cost $179,068,216)............ $190,866,570
==============
PRINCIPAL
SHORT-TERM INVESTMENTS--29.0% AMOUNT
--------------
U.S. TREASURY BILLS: 4.81%, 11/10/1994 $ 21,932,000 (c) $ 21,904,828
3.20%, 11/17/1994................ 27,150,000 27,093,205
4.595%, 11/25/1994............... 6,351,000 (b) 6,332,079
4%, 12/1/1994.................... 10,064,000 (c) 10,026,649
4.65%, 12/8/1994................. 12,980,000 (c) 12,918,619
4.545%, 12/22/1994............... 2,920,000 2,900,008
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $81,175,388)............. $ 81,175,388
==============
TOTAL INVESTMENTS(cost $260,243,604)........................................ 97.1% $272,041,958
====== ==============
CASH AND RECEIVABLES (NET).................................................. 2.9% $ 8,229,105
====== ==============
NET ASSETS.................................................................. 100.0% $280,271,063
====== ==============
</TABLE>
<TABLE>
<CAPTION>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by custodian in a segregated account as collateral
for open futures positions.
(c) Partially held by brokers as collateral for open short positions.
(d) Security restricted as to public resale;
ACQUISITION PURCHASE PERCENTAGE OF
ISSUER DATE PRICE NET ASSETS VALUATION*
- ------ ------------ ---------- --------------- --------------------
<S> <C> <C> <C> <C>
Genelabs Technologies.................... 3/1/91 $9.00 .08% $1.9125 per share
</TABLE>
* The valuation of this security has been determined in good faith under
the direction of the Board of Trustees.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF FINANCIAL FUTURES
OCTOBER 31, 1994
MARKET VALUE UNREALIZED
NUMBER OF COVERED (DEPRECIATION)
FINANCIAL FUTURES SOLD SHORT; CONTRACTS BY CONTRACTS EXPIRATION AT 10/31/94
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Standard & Poor's 500........................ 90 ($21,260,250) December '94 ($711,625)
==============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF SECURITIES SOLD SHORT OCTOBER 31, 1994
COMMON STOCKS SHARES VALUE
- ----------------- ------- -------------
<S> <C> <C>
America Online.............................................................. 20,000 $ 1,415,000
AnnTaylor Stores............................................................ 22,500 933,750
Aura Systems................................................................ 25,000 117,187
Bankers Trust NY............................................................ 35,000 2,336,250
Bell Sports................................................................. 15,000 311,250
Best Buy.................................................................... 25,000 943,750
Cisco Systems............................................................... 25,000 753,125
Compression Labs............................................................ 50,000 425,000
Compuware................................................................... 40,000 1,565,000
CrossComm................................................................... 65,000 682,500
Gap......................................................................... 50,000 1,687,500
General Mills............................................................... 15,000 840,000
Health Images............................................................... 40,064 245,392
Hillenbrand Industries...................................................... 45,000 1,361,250
Intel....................................................................... 45,000 2,795,625
International Game Technology............................................... 40,000 740,000
Magna International, Cl. A.................................................. 35,000 1,242,500
McDonald's.................................................................. 50,000 1,437,500
Medco Research.............................................................. 40,000 480,000
Newbridge Networks.......................................................... 65,000 1,795,625
Novell...................................................................... 35,000 647,500
Oxford Health Plans......................................................... 5,000 410,000
PictureTel.................................................................. 50,000 987,500
Policy Management Systems................................................... 35,000 1,645,000
President Riverboat Casinos................................................. 55,000 450,313
Schwab(Chas)................................................................ 50,000 1,775,000
Seitel...................................................................... 16,000 448,000
Southwest Airlines.......................................................... 25,000 590,625
Starbucks................................................................... 5,000 135,625
Storage Technology.......................................................... 46,100 1,279,275
Texas Instruments........................................................... 15,000 1,123,125
TransTexas Gas.............................................................. 70,000 927,500
UAL......................................................................... 25,000 2,362,500
Wall Data................................................................... 45,000 1,631,250
------------
TOTAL SECURITIES SOLD SHORT (proceeds $35,919,205).......................... $36,521,417
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $260,243,604)_see statement..................................... $272,041,958
Cash.................................................................... 448,993
Receivable from brokers for proceeds on securities sold short........... 35,919,205
Receivable for investment securities sold............................... 17,698,936
Receivable for futures variation margin_Note 4(a)....................... 168,750
Receivable for shares of Beneficial Interest subscribed................. 148,246
Dividends and interest receivable....................................... 434,326
Prepaid expenses........................................................ 46,272
--------------
326,906,686
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 181,948
Securities sold short, at value
(proceeds $35,919,205)_see statement.................................. 36,521,417
Payable for investment securities purchased............................. 9,418,987
Payable for shares of Beneficial Interest redeemed...................... 189,359
Loan commitment fees and interest payable............................... 6,458
Accrued expenses and other liabilities.................................. 317,454 46,635,623
------------- --------------
NET ASSETS ................................................................ $280,271,063
==============
REPRESENTED BY:
Paid-in capital......................................................... $262,137,778
Accumulated investment (loss) and distributions in excess of
investment income_net_Note 1(c)....................................... (1,374,615)
Accumulated undistributed net realized gain on investments.............. 9,023,383
Accumulated net unrealized appreciation on investments [including
($711,625) net unrealized (depreciation) on financial futures]_Note 4(b) 10,484,517
--------------
NET ASSETS at value......................................................... $280,271,063
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value authorized)...................... 12,070,726
==============
Class B Shares
(unlimited number of $.001 par value authorized)...................... 2,087,518
==============
NET ASSET VALUE per share:
Class A Shares ($239,406,967 / 12,070,726 shares)....................... $19.83
=======
Class B Shares ($40,864,096 / 2,087,518 shares)......................... $19.58
=======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME:
<S> <C> <C>
INCOME:
Cash dividends (net of $166,124 foreign taxes withheld at source)..... $2,697,538
Interest.............................................................. 2,022,200
------------
TOTAL INCOME...................................................... $ 4,719,738
EXPENSES:
Management fee_Note 3(a).............................................. 2,259,762
Shareholder servicing costs_Note 3(c)................................. 1,142,247
Interest_Note 2....................................................... 487,446
Distribution fees (Class B shares)_Note 3(b).......................... 280,046
Dividends on securities sold short.................................... 175,857
Custodian fees........................................................ 155,110
Prospectus and shareholders' reports.................................. 82,785
Registration fees..................................................... 80,138
Loan commitment fees_Note 2........................................... 76,042
Professional fees..................................................... 58,980
Trustees' fees and expenses_Note 3(d)................................. 27,708
Miscellaneous......................................................... 8,967
------------
TOTAL EXPENSES.................................................... 4,835,088
--------------
INVESTMENT (LOSS)--NET............................................ (115,350)
--------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments_Note 4(a):
Long transactions (including options transactions).................... $7,851,818
Short sale transactions............................................... 1,439,127
Net realized (loss) on financial futures_Note 4(a)...................... (324,547)
------------
NET REALIZED GAIN..................................................... 8,966,398
Net unrealized (depreciation) on investments and securities sold short
[including ($711,625) net unrealized (depreciation) on financial futures] (30,980,097)
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (22,013,699)
--------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (22,129,049)
==============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INVESTING
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income (loss)_net............................................ $ 344,576 $ (115,350)
Net realized gain on investments........................................ 31,818,915 8,966,398
Net unrealized appreciation (depreciation) on investments for the year.. 15,782,474 (30,980,097)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... 47,945,965 (22,129,049)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income_net:
Class A shares........................................................ (549,763) ___
Class B shares........................................................ ___ ___
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)
Class B shares........................................................ ___ (2,951,918)
-------------- --------------
TOTAL DIVIDENDS................................................... (549,763) (31,091,813)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 52,366,131 49,925,537
Class B shares........................................................ 25,107,551 21,282,593
Dividends reinvested:
Class A shares........................................................ 494,336 25,815,338
Class B shares........................................................ ___ 2,988,881
Cost of shares redeemed:
Class A shares........................................................ (66,014,198) (65,443,064)
Class B shares........................................................ (642,448) (2,932,744)
-------------- --------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 11,311,372 31,636,541
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 58,707,574 (21,584,321)
NET ASSETS:
Beginning of year....................................................... 243,147,810 301,855,384
-------------- --------------
End of year [including investment (loss) and
distributions in excess of investment income_net of: ($140,172)
in 1993 and ($1,374,615) in 1994]..................................... $301,855,384 $280,271,063
============== ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
-------------------------------- --------------------------------
1993 1994 1993* 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 2,402,790 2,345,076 1,122,136 993,936
Shares issued for dividends reinvested. 24,079 1,240,296 ___ 144,600
Shares redeemed........................ (3,034,139) (3,127,724) (28,591) (144,563)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING.................... (607,270) 457,648 1,093,545 993,973
============== ============== ============= =============
</TABLE>
- ------------------
* From January 15, 1993 (commencement of initial offering) to October 31,
1993.
See notes to financial statements.
<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 year indicated. This
information has been derived from the Fund's financial statements.
CLASS A SHARES CLASS B SHARES
------------------------------------------------------- --------------------
YEAR ENDED
YEAR ENDED OCTOBER 31, OCTOBER 31,
------------------------------------------------------- --------------------
PER SHARE DATA: 1990 1991 1992 1993 1994 1993(1) 1994
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $18.73 $18.03 $22.12 $19.90 $23.77 $21.38 $23.62
------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income (loss)_net.......... .31 .21 .06 .03 .01 (.07) (.04)
Net realized and unrealized gain (loss) on
investments......................... (.35) 5.77 (.46) 3.89 (1.54) 2.31 (1.62)
------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... (.04) 5.98 (.40) 3.92 (1.53) 2.24 (1.66)
------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income_net.. (.21) (.34) (.14) (.05) -_ -_ -_
Dividends in excess of investment income_net -_ -_ -_ -_ (.12) -_ (.09)
Dividends from net realized gain on investments (.45) (1.55) (1.68) -_ (2.29) -_ (2.29)
------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.66) (1.89) (1.82) (.05) (2.41) -_ (2.38)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of year.......... $18.03 $22.12 $19.90 $23.77 $19.83 $23.62 $19.58
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(2) (.31%) 36.50% (2.04%) 19.71% (6.92%) 10.48%(3) (7.58%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average
net assets.......................... 1.50% 1.35% 1.30% 1.27% 1.29% 1.65%(3) 1.84%
Ratio of interest expense, loan commitment
fees and dividends on securities sold short
to average net assets............... 1.39% .58% .38% .47% .25% .44%(3) .24%
Ratio of net investment income (loss) to
average net assets.................. 1.66% 1.07% .22% .16% .04% (.69%)(3) (.61%)
Decrease reflected in above expense ratios
due to expense limitation........... .08% -_ -_ -_ -_ -_ -_
Portfolio Turnover Rate............... 275.33% 207.10% 204.73% 237.14% 199.13% 237.14% 199.13%
Net Assets, end of year (000's Omitted) $102,421 $145,717 $243,148 $276,022 $239,407 $25,833 $40,864
</TABLE>
- -------------------------------
(1) From January 15, 1993 (commencement of initial offering) to October 31,
1993.
(2) Exclusive of sales load.
(3) Not annualized.
See notes to financial statements.
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS
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, until August 24, 1994, acted as the distributor of the Fund's
shares. Dreyfus Service Corporation is a wholly-owned subsidiary of The
Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
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 denominated 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 year ended October 31, 1994, the Fund reclassed
$422,901 from undistributed investment income-net to paid-in capital. This
amount represents amortization of organization expenses, certain passive
foreign investment company transactions and certain foreign currency
transactions where book treatment differs from tax treatment.
(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 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.
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
At October 31, 1994 there were no outstanding borrowings under the line
of credit.
The average daily amount of short-term debt outstanding during the year
ended October 31, 1994 was approximately $11.1 million, with a related
weighted average annualized interest rate of 4.39% (based upon actual
interest expense, not including commitment fees, for the year). The maximum
amount of such debt outstanding at any time during the year ended October 31,
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 year ended
October 31, 1994.
Dreyfus Service Corporation retained $297,139 during the year ended
October 31, 1994 from commissions earned on sales of the Fund's Class A
shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $58,543
from contingent deferred sales charges imposed upon redemptions of the Fund's
Class B shares.
(B) On August 3, 1994, Fund's shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, 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.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Fund pay Dreyfus Service Corporation 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. Dreyfus Service
Corporation made payments to one or more Service Agents based on the value of
the Fund's Class B shares owned by clients of the Service Agent.
During the year ended October 31, 1994, $58,353 was charged to the Fund
pursuant to the Class B Distribution Plan and $221,693 was charged to the
Fund pursuant to the prior Class B Distribution Plan.
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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. From November 1, 1993 through August
23, 1994, $541,895 and $73,898 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
October 31, 1994, $118,010 and $19,451 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994 certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $2,500 and an attendance fee of $250 per meeting.
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 year ended October 31, 1994:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------- ----------------
<S> <C> <C>
Long transactions.............................................. $520,301,502 $612,796,892
Short sale transactions........................................ 61,909,425 83,522,824
--------------- ----------------
TOTAL...................................................... $582,210,927 $696,319,716
============== ================
</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 October 31,
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 put option
transactions for the year ended October 31, 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 October 31, 1994...... _ $ _
=========== =============
</TABLE>
DREYFUS STRATEGIC INVESTING
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As a writer of put options, the Fund receives a premium at the outset and
then bears the market risk of unfavorable changes in the price of the
financial instrument underlying the option. Generally, the Fund would incur a
gain, to the extent of the premiums received, 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.
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. Contracts open at October 31, 1994 and their related market values
and unrealized (depreciation) are set forth in the Statement of Financial
Futures.
(B) At October 31, 1994, accumulated net unrealized appreciation on
investments was $10,484,517, consisting of $20,222,306 gross unrealized
appreciation and $9,737,789 gross unrealized depreciation.
At October 31, 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
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS STRATEGIC INVESTING
We have audited the accompanying statement of assets and liabilities of
Dreyfus Strategic Investing, including the statements of investments,
financial futures and securities sold short, as of October 31, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Strategic Investing at October 31, 1994, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
December 14, 1994
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $1.678 per share as a
long-term capital gain distribution paid on December 15, 1993.
(Dreyfus `D' Logo)
DREYFUS STRATEGIC INVESTING
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
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. 037/632AR9410
(Dreyfus Logo)
Strategic
Investing
Annual Report
October 31, 1994
(Dreyfus Lion Logo)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS STRATEGIC INVESTING CLASS A SHARES AND THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
_______________________________________________
| | STANDARD | DREYFUS |
| | & POOR'S 500 | STRATEGIC |
| PERIOD | COMPOSITE STOCK | INVESTING, |
| | PRICE INDEX * |(CLASS A SHARES)|
|-----------|-----------------|----------------|
| 10/16/86 | 10,000 | 9,550 |
| 10/31/86 | 10,000 | 9,580 |
| 10/31/87 | 10,640 | 12,092 |
| 10/31/88 | 12,210 | 12,440 |
| 10/31/89 | 15,428 | 15,997 |
| 10/31/90 | 14,274 | 15,948 |
| 10/31/91 | 19,044 | 21,769 |
| 10/31/92 | 20,939 | 21,324 |
| 10/31/93 | 24,061 | 25,527 |
| 10/31/94 | 24,988 | 23,759 |
|----------------------------------------------|
*Source: Lipper Analytical Services, Inc.
Dreyfus Strategic Investing October 31, 1994
Asset Allocation
--------------------------------------------------|
|Common Stocks 68.1 % |
|Cash Equivalents 31.9 % |
--------------------------------------------------|
