LETTER TO SHAREHOLDERS
Dear Shareholder:
For the six months ended April 30, 1995, Dreyfus Strategic Income
provided shareholders with an annualized distribution rate per share of
6.84% and a total return of 7.57%. For the quarter ended April 30,
1995, your Fund had a total return of 5.55%.* The Lipper General Bond
Fund Index for the six-month period had a total return of 4.85%.**
Dividends declared from net investment income amounted to approximately
$.47 per share. There were no capital gain distributions for the
period.
The calendar year 1994 was one of the worst years for the bond
market in nearly 70 years. Since the elections last November, the
prospects for the bond market brightened significantly. The Federal
Reserve Board tightened one last time on February 1, 1995 and with that
tightening, the Federal Funds rate was raised to 6% where it has
remained since then. The yield on the 30-year Treasury bond on November
11, 1994 was 8.16%. As of April 30, 1995, that yield declined to 7.34%.
That 82 basis point move represented a substantial improvement in the
bond market.
In years such as 1994, with periods of high volatility and Federal
Reserve tightening, bond returns have often been negative and so have
the returns on bond funds.
Since July, 1994, the major strategy has been to improve the
quality of the Fund. During the last six months in particular, we have
restructured the portfolio considerably. We entered the period with
14.8% of our holdings in foreign debt; at the end of the period we held
4.4% in foreign securities. We sold such securities as Republic of
Argentina, Telefonica de Argentina S.A., Tolmex, S.A. de C.V. and Banco
Nacional de Comercio Exterior, S.N.C. Fortunately these securities were
sold before the Mexican and South American financial crisis. We have
increased our holdings by 8% in Banking, 2% in Finance, 6% in
Industrials and 12% in Government and Agency securities.
As of April 30, 1995, the Fund's average duration was
approximately 2/3 of a year longer than our benchmark, the Merrill Lynch
Domestic Master Index.*** This has enabled us to seek a better market
performance in a declining rate environment. The small percentage of
derivatives we have used in this Fund is in plain vanilla CMOs
(Collateralized Mortgage Obligations), which in our opinion are
corporate bond substitutes.
We are currently looking at the possibility of a soft economic
landing, with inflation not presenting a problem and the probability of
the Federal Reserve Bank easing its tight money policy.
Very truly yours,
(Garitt A. Kono Signature Logo)
Garitt A. Kono
Portfolio Manager
May 18, 1995
New York, N.Y.
*Annualized distribution rate per share is based upon dividends per
share paid from net investment income during the period, divided by
the maximum offering price per share at the end of the period. Total
return represents the change during the period in a hypothetical
account with dividends reinvested, based on net asset value.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment
of income dividends and, where applicable, capital gain
distributions. The Lipper General Bond Fund Index is a non-weighted
index of the 10 largest funds by assets in the Category.
***The Merrill Lynch Domestic Master Index is an unmanaged performance
benchmark for portfolios that include U.S. Government, mortgage and
BBB or higher-rated corporate securities with maturities greater than
or equal to one year.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF INVESTMENTS APRIL 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES--95.6% AMOUNT VALUE
------------ ------------
<S> <C> <C>
AEROSPACE--1.4% McDonnell Douglas,
Notes, 9 1/4%, 2002............................ $ 4,000,000 $ 4,337,328
------------
BANKING--14.6% Bank of New York,
Sub. Notes, 8 1/2%, 2004....................... 5,000,000 5,253,680
BankAmerica,
Sub. Notes, 9.70%, 2000........................ 5,000,000 5,456,450
Chemical Banking,
Sub. Deb., 7 7/8%, 2006........................ 15,000,000 14,978,235
First Chicago,
Sub. Notes, 11 1/4%, 2001...................... 3,500,000 4,084,927
Fleet Financial Group,
Sub. Notes, 8 1/8%, 2004....................... 6,000,000 6,082,470
Midland Bank plc,
Sub. Notes, 8 5/8%, 2004....................... 5,000,000 5,257,685
NationsBank,
Sub. Notes, 7 5/8%, 2005....................... 5,000,000 4,935,305
------------
46,048,752
------------
CONSUMER--7.3% Federated Department Stores,
Sr. Notes, 10%, 2001........................... 2,000,000 2,130,000
News America Holdings (Gtd. by News):
Sr. Deb., 9 1/4%, 2013......................... 5,000,000 5,197,725
Sr. Notes, 9 1/8%, 1999........................ 3,000,000 3,149,085
Rogers Cablesystems,
Sr. Secured Second Priority Deb.,
10 1/8%, 2012.................................. 5,000,000 5,075,000
Time Warner Entertainment, L.P.,
Sr. Deb., 8 3/8%, 2023......................... 8,000,000 7,637,880
------------
23,189,690
------------
FINANCE--19.1% Associates Corp. of North America:
Medium-Term Sr. Notes, Ser. G, 8 1/4%, 2004.... 5,000,000 5,155,440
Sr. Notes, 7 7/8%, 2001........................ 5,000,000 5,120,365
CIT Group Holdings,
Medium-Term Notes, 8%, 1997.................... 5,000,000 5,084,780
Commercial Credit,
Deb., 10%, 2009 ............................... 1,000,000 1,179,375
Dean Witter, Discover & Co.,
Floating Rate Notes, 6 5/8%, 2000.............. 2,000,000 (a) 2,001,240
Ford Motor Credit:
Medium-Term Notes, 9.03%, 2009................. 5,000,000 5,470,835
Notes, 7 3/4%, 2005............................ 6,000,000 6,020,076
General Electric Capital,
Global Medium-Term Notes, Ser. A, 7.84%, 1997.. 3,000,000 3,053,559
DREYFUS STRATEGIC INCOME
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
FINANCE (CONTINUED) General Motors Acceptance,
Medium-Term Notes:
7 1/2%, 5/23/2000............................. $ 5,000,000 $ 4,971,060
7 1/2%, 7/24/2000............................. 5,000,000 4,968,230
Household Finance,
Notes, 8 1/4%, 2005........................... 5,000,000 5,203,890
KfW International Finance,
Notes (Gtd. by KfW International), 7%, 2013... 5,000,000 4,533,035
McDonnell Douglas Finance,
Medium-Term Notes, 9.90%, 2000................ 2,000,000 2,096,996
United States Leasing International,
Medium-Term Notes, Ser. A, 9.88%, 2001........ 5,000,000 5,456,250
------------
60,315,131
------------
INDUSTRIAL--9.3% American Home Products,
Notes, 7.90%, 2005............................ 4,000,000 4,103,172
Archer-Daniels-Midland, Deb.:
10 1/4%, 2006................................. 1,400,000 1,681,102
8 1/8%, 2012.................................. 5,000,000 5,153,840
Bowater,
Deb., 9 1/2%, 2012............................ 5,000,000 5,443,975
Carter Holt Harvey,
Sr. Notes, 7 5/8%, 2002....................... 2,000,000 2,002,848
Cincinnati Milacron,
Notes, 8 3/8%, 2004........................... 5,000,000 4,806,250
E. I. du Pont de Nemours and Co.,
Deb., 8 1/4%, 2022............................ 3,000,000 3,025,848
Harnischfeger Industries,
Deb., 8.90%, 2022............................. 1,000,000 1,052,829
Union Carbide,
Deb., 8 3/4%, 2022............................ 2,000,000 2,060,454
------------
29,330,318
------------
INSURANCE--8.4% NAC Re,
Notes, 8%, 1999............................... 2,000,000 2,012,990
New York Life Insurance,
Surplus Notes, 7 1/2%, 2023................... 5,000,000 (b) 4,370,000
Orion Capital,
Sr. Notes, 9 1/8%, 2002....................... 3,000,000 3,195,000
Reliastar Financial,
Notes, 6 5/8%, 2003........................... 5,000,000 4,559,605
SunAmerica,
Notes, 9%, 1999............................... 5,000,000 5,236,875
USF&G,
Sr. Notes, 8 3/8%, 2001....................... 7,000,000 7,069,629
------------
26,444,099
------------
DREYFUS STRATEGIC INCOME
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
OIL AND GAS--.9% Maxus Energy,
Sinking Fund Deb., 11 1/4%, 2013.............. $ 254,000 $ 235,585
Occidental Petroleum,
Sr. Deb., 11 3/4%, 2011....................... 1,000,000 1,082,251
Triton Energy,
Sr. Sub. Notes, Zero Coupon, 1997............. 2,000,000 1,595,000
------------
2,912,836
------------
UTILITIES--3.3% AT&T,
Deb., 8.35%, 2025............................. 5,000,000 5,080,355
National Rural Utilities Cooperative Finance,
Collateral Trust Bonds, Ser. V, 9%, 2021...... 5,000,000 5,353,130
------------
10,433,485
------------
FOREIGN--4.4% Province of British Columbia,
Deb., Ser. BCCG-1, 7 3/4%, 2003............... 1,473,297 (c) 1,410,828
Province of Newfoundland,
Sinking Fund Deb., 10%, 2020.................. 1,000,000 1,162,250
Province of Quebec, Deb.:
11%, 2015..................................... 1,000,000 1,146,520
8 5/8%, 2026.................................. 5,000,000 5,123,300
Province of Saskatchewan,
Notes, 8%, 2004............................... 5,000,000 5,131,000
------------
13,973,898
------------
OTHER-2.2% Chevy Chase Master Credit Card Trust,
Floating Rate Asset Backed Ctfs.,
Ser. 1994-5, Cl. A, 6.335%, 2001.............. 5,000,000 (a) 5,000,000
GPA Holland B.V.,
Medium-Term Notes (Gtd. by GPA Group PLC),
Ser. B, 9.06%, 1999.......................... 1,000,000 (b) 742,500
Rural Electric Cooperative Grantor Trust Ctfs.
(Soyland), 9.70%, 2017........................ 1,000,000 1,095,434
------------
6,837,934
------------
U.S. GOVERNMENT
AND AGENCIES-24.7% Federal Home Loan Mortgage Corp.,
Multiclass Mortgage Participation Ctfs.,
Ser. 1166, Cl. 1166-PG, 8%, 2020.............. 5,000,000 5,053,450
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit
Trust, Pass-Through Ctfs. (Collateralized by
FNMA Pass-Through Ctfs.):
Ser. 1992, Cl. 136-PD, 6%, 2016.............. 4,240,000 3,902,326
Ser. 1990, Cl. 58-H, 7%, 2019................ 4,987,691 4,923,786
Ser. 1994, Cl. 75-N, 7%, 2024................ 5,131,555 4,668,111
DREYFUS STRATEGIC INCOME
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
U.S. GOVERNMENT
AND AGENCIES (CONTINUED) Government National Mortgage Association 1:
7%, 7/15/2023................................. $ 9,853,407 $ 9,339,159
7 1/2%, 10/15/2023............................ 11,153,978 10,895,987
8%, 8/15/2024................................. 10,046,424 10,058,982
8%, 9/15/2024................................. 12,805,758 12,821,766
U.S. Treasury Bonds,
7 5/8%, 2/15/2025............................. 1,000,000 1,034,375
U.S. Treasury Notes,
7 1/2%, 2/15/2005............................. 15,000,000 15,464,070
------------
78,162,012
------------
TOTAL BONDS AND NOTES
(cost $300,774,267)........................... $301,985,483
============
SHORT-TERM INVESTMENT--2.9%
TIME DEPOSIT; Chemical Bank (London),
6%, 5/1/1995
(cost $9,100,000)............................. $ 9,100,000 $ 9,100,000
============
TOTAL INVESTMENTS (cost $309,874,267)................................................... 98.5% $311,085,483
====== ============
CASH AND RECEIVABLES (NET).............................................................. 1.5% $ 4,847,711
====== ============
NET ASSETS.............................................................................. 100.0% $315,933,194
====== ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Variable rate security-interest rate subject to periodic change.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
April 30, 1995, these securities amounted to $5,112,500 or 1.6% of
net assets.
(c) Denominated in Canadian Dollars.
See independent accountants' review report and notes to financial
statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $309,874,267)--see statement.................................... $311,085,483
Cash.................................................................... 28,186
Receivable for investment securities sold............................... 13,180,657
Interest receivable..................................................... 5,092,656
Receivable for shares of Beneficial Interest subscribed................. 30,430
Prepaid expenses........................................................ 56,520
------------
329,473,932
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 211,479
Payable for investment securities purchased............................. 12,935,935
Payable for shares of Beneficial Interest redeemed...................... 255,593
Accrued expenses........................................................ 137,731 13,540,738
----------- ------------
NET ASSETS.................................................................. $315,933,194
============
REPRESENTED BY:
Paid-in capital......................................................... $341,934,963
Accumulated net realized (loss) on investments.......................... (27,212,985)
Accumulated net unrealized appreciation on investments--Note 4.......... 1,211,216
------------
NET ASSETS at value applicable to 23,507,135 outstanding shares of
Beneficial Interest, equivalent to $13.44 per share
(unlimited number of $.001 par value shares authorized)................. $315,933,194
============
See independent accountants' review report and notes to financial
statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 12,872,461
EXPENSES:
Management fee-Note 3(a).............................................. $ 930,715
Shareholder servicing costs--Note 3(b)................................ 579,127
Custodian fees........................................................ 27,853
Professional fees..................................................... 26,261
Trustees' fees and expenses--Note 3(c)................................ 19,306
Registration fees..................................................... 19,256
Prospectus and shareholders' reports--Note 3(b)....................... 1,789
Miscellaneous......................................................... 8,871
------------
TOTAL EXPENSES...................................................... 1,613,178
------------
INVESTMENT INCOME--NET.............................................. 11,259,283
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 4............................... $(13,627,367)
Net unrealized appreciation on investments.............................. 25,236,921
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS..................... 11,609,554
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $22,868,837
============
See independent accountants' review report and notes to financial
statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, APRIL 30, 1995
1994 (UNAUDITED)
--------------- ------------------
<S> <S> <C>
OPERATIONS:
Investment income--net............................................... $ 24,598,056 $ 11,259,283
Net realized (loss) on investments................................... (13,631,198) (13,627,367)
Net unrealized appreciation (depreciation) on investments for the period (39,799,142) 25,236,921
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.... (28,832,284) 22,868,837
------------ ------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net.......................................... (24,598,056) (11,259,283)
From net realized gain on investments................................ (9,045,367) --
In excess of net realized gain on investments........................ (122,223) --
------------ ------------
TOTAL DIVIDENDS.................................................... (33,765,646) (11,259,283)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................ 90,796,927 8,928,232
Dividends reinvested................................................. 25,835,418 8,201,842
Cost of shares redeemed.............................................. (107,007,060) (35,293,182)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 9,625,285 (18,163,108)
------------ ------------
TOTAL (DECREASE) IN NET ASSETS................................. (52,972,645) (6,553,554)
NET ASSETS:
Beginning of period.................................................. 375,459,393 322,486,748
------------ ------------
End of period........................................................ $322,486,748 $315,933,194
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 6,360,200 684,758
Shares issued for dividends reinvested............................... 1,842,973 626,272
Shares redeemed...................................................... (7,743,228) (2,715,614)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING...................... 459,945 (1,404,584)
============ ============
See independent accountants' review report and notes to financial
statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
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.
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30, 1995
------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994 (UNAUDITED)
------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $13.37 $12.35 $13.44 $14.02 $15.36 $12.95
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net.......................... 1.18 1.16 1.07 1.01 .95 .47
Net realized and unrealized gain (loss)
on investments................................ (1.02) 1.09 .58 1.41 (2.04) .49
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.......... .16 2.25 1.65 2.42 (1.09) .96
------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income--net........... (1.18) (1.16) (1.07) (1.01) (.95) (.47)
Dividends from net realized gain
on investments................................ -- -- -- (.07) (.37) --
Dividends in excess of net realized gain
on investments................................ -- -- -- -- -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS........................ (1.18) (1.16) (1.07) (1.08) (1.32) (.47)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................. $12.35 $13.44 $14.02 $15.36 $12.95 $13.44
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN (1)......................... 1.32% 18.94% 12.64% 17.93% (7.44%) 15.27%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average
net assets................................... .50% .72% .85% .84% .94% 1.04%(2)
Ratio of interest expense to average
net assets................................... .32% .15% -- -- -- --
Ratio of net investment income to average
net assets................................... 9.24% 8.93% 7.58% 6.83% 6.84% 7.26%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager
(limited to the expense limitation provision
of the management agreement)................. 1.00% .78% .40% .24% .11% --
Portfolio Turnover Rate........................ 16.40% 16.08% 72.82% 118.38% 161.35% 112.81%(3)
Net assets, end of period (000's Omitted)...... $41,927 $57,336 $149,801 $375,459 $322,487 $315,933
- ------------
(1) Exclusive of sales load.
(2) Annualized.
(3) Not annualized.
See independent accountants' review report and notes to financial
statements.
</TABLE>
DREYFUS STRATEGIC INCOME
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a 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.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-
term investments and U.S. Government obligations) are valued each
business day by an independent pricing service ("Service") approved by
the Board of Trustees. Investments for which quoted bid prices are
readily available and are representative of the bid side of the market
in the judgment of the Service are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation
of the market for such securities). Other investments (which constitute
a majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general
market conditions. Securities for which there are no such valuations are
valued at fair value as determined in good faith under the direction
of the Board of Trustees. Investments in U.S. Government
obligations are valued at the mean between quoted bid and asked prices.
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.
Interest income including, where applicable, amortization of discount on
investments, is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to
declare dividends daily from investment income-net. Such dividends are
paid monthly. 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, it is the policy of the Fund not
to distribute such gain.
(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.
The Fund has an unused capital loss carryover of approximately
$13,753,000 available for Federal income tax purposes to be applied
against future net securities profits, if any, realized subsequent to
October 31, 1994. If not applied, the carryover expires in fiscal 2002.
DREYFUS STRATEGIC INCOME
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up
to $10 million under a short-term unsecured line of credit. Interest on
borrowings is charged at rates which are related to Federal Funds rates
in effect from time to time.
There were no borrowings during the six months ended April 30, 1995.
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 .60 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 interest 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 retained $363,316 during the six months
ended April 30, 1995 from commissions earned on sales of Fund shares.
(B) Under a Service Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund, (a) reimburses the Distributor for payments to
certain Service Agents for distributing the Fund's shares and servicing
shareholder accounts and (b) pays the Manager, Dreyfus Service
Corporation or any affiliate (collectively "Dreyfus") for advertising
and marketing relating to the fund and servicing shareholder accounts,
at an aggregate annual rate of .25 of 1% of the value of the Fund's
average daily net assets. Each of the Distributor and Dreyfus may pay
Service Agents (a securities dealer, financial institution or other
industry professional) a fee in respect of the Fund's shares owned by
shareholders with whom the Service Agent has a servicing relationship or
for whom the Service Agent is the dealer or holder of record. Each of
the Distributor and Dreyfus determine the amounts to be paid to Service
Agents to which it will make payments and the basis on which such
payments are made. The Plan also separately provides for the Fund to
bear the costs of preparing, printing and distributing certain of the
Fund's prospectuses and statements of additional information and costs
associated with implementing and operating the Plan, not to exceed the
greater of $100,000 or .005 of 1% of the Fund's average daily net assets
for any full fiscal year. During the six months ended April 30, 1995,
$385,681 was charged to the Fund pursuant to the Plan.
(C) 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 $250 per meeting. The Chairman of the Board receives
an additional 25% of such compensation.
DREYFUS STRATEGIC INCOME
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the six
months ended April 30, 1995, amounted to $334,097,255 and $327,062,438,
respectively.
At April 30, 1995, accumulated net unrealized appreciation on
investments was $1,211,216 consisting of $6,589,456 gross unrealized
appreciation and $5,378,240 gross unrealized depreciation.
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 INCOME
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS STRATEGIC INCOME
We have reviewed the accompanying statement of assets and
liabilities of Dreyfus Strategic Income, including the statement of
investments, 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 5, 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 2, 1995
DREYFUS STRATEGIC INCOME
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. 031SA954
Strategic
Income
Semi-Annual
Report
April 30, 1995
(Dreyfus Lion Logo)