<PAGE> 1
DREMAN MUTUAL GROUP, INC.
PERFORMANCE DATA
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
HYPOTHETICAL $10K INVESTMENT
3/18/88 1988 1989 1990 1991 1992 1993 1994 1995 (2ND QTR.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRARIAN PORTFOLIO $10,000 $10,700 $12,658 $11,888 $15,043 $16,745 $18,269 $18,264 $21,997
HIGH RETURN PORTFOLIO $10,000 $11,300 $13,391 $12,235 $18,055 $21,630 $23,624 $23,390 $28,071
S&P 500 $10,000 $10,540 $13,828 $13,400 $17,460 $18,787 $20,666 $20,930 $25,156
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS ENDED 6/30/95:
1 YEAR 3 YEARS 5 YEARS SINCE INCEPTION#
------ ------- ------- ---------------
<S> <C> <C> <C> <C>
Dreman High Return Portfolio ............... 17.58% 13.78% 15.49% 15.21%
Dreman Contrarian Portfolio ............... 20.79% 12.90% 10.56% 11.41%
S&P 500 * .................................. 26.11% 13.23% 12.09% 13.52%
</TABLE>
<TABLE>
<CAPTION>
CURRENT YEAR: 1ST QTR. 2ND QTR. 6 MOS.
-------- -------- ------
<S> <C> <C> <C>
Dreman High Return Portfolio ............... 8.87% 10.20% 20.01%
Dreman Contrarian Portfolio ............... 9.96% 9.48% 20.44%
S&P 500 * .................................. 9.74% 9.53% 20.19%
</TABLE>
* Unmanaged index of common stocks.
# Inception date: March 18, 1988
+ Total return figures have been calculated using the prescribed SEC
formulas. The performance data quoted represents past performance and does
not guarantee future results. The investment return and principal value of
an investment in any Portfolio of the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
1
<PAGE> 2
DREMAN MUTUAL GROUP, INC.
PERFORMANCE DATA
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
HYPOTHETICAL $10K INVESTMENT
3/18/88 1988 1989 1990 1991 1992 1993 1994 1995 (2ND QTR.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED INCOME PORTFOLIO $10,000 $10,370 $11,316 $12,424 $13,907 $14,626 $15,524 $15,336 $16,436
SMITH BARNEY SHEARSON
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX $10,000 $10,325 $11,644 $12,710 $14,568 $15,613 $16,985 $16,658 $18,257
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS ENDED 6/30/95: 1 YEAR 3 YEARS 5 YEARS SINCE INCEPTION#
------ ------- ------- ----------------
<S> <C> <C> <C> <C>
Dreman Fixed Income Portfolio............... 7.56% 4.76% 6.89% 7.05%
Lehman Brothers Intermediate
Government/Corporate Bond Index * .......... 10.39% 6.75% 8.76% 8.61%
</TABLE>
<TABLE>
<CAPTION>
CURRENT YEAR: 1ST QTR. 2ND QTR. 6 MOS.
-------- -------- ------
<S> <C> <C> <C>
Dreman Fixed Income Portfolio .............. 3.49% 3.52% 7.17%
Lehman Brothers Intermediate
Government/Corporate Bond Index* ........... 4.39% 5.00% 9.60%
</TABLE>
* Unmanaged index of intermediate-term U.S. Government and corporate bonds.
# Inception date: March 18, 1988
+ Total return figures have been calculated using the prescribed SEC
formulas. The performance data quoted represents past performance and does
not guarantee future results. The investment return and principal value of
an investment in any Portfolio of the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
2
<PAGE> 3
DREMAN MUTUAL GROUP, INC.
PERFORMANCE DATA
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
HYPOTHETICAL $10K INVESTMENT
05/22/92 12/31/92 12/31/93 12/31/94 06/30/95
<S> <C> <C> <C> <C> <C>
SMALL CAP VALUE PORTFOLIO $10,000 $11,990 $12,295 $12,312 $15,950
RUSSELL 2000 $10,000 $11,342 $13,486 $13,240 $15,149
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS ENDED 6/30/95:
1 YEAR 3 YEARS SINCE INCEPTION#
------ ------- ----------------
<S> <C> <C> <C>
Dreman Small Cap Value Portfolio....................... 30.15% 16.21% 16.19%
Russell 2000 *......................................... 20.07% 16.45% 14.14%
</TABLE>
<TABLE>
<CAPTION>
CURRENT YEAR: 1ST QTR. 2ND QTR. 6 MOS.
-------- -------- -------
<S> <C> <C> <C>
Dreman Small Cap Value Portfolio....................... 11.28% 16.42% 29.55%
Russell 2000 *......................................... 4.61% 9.37% 14.42%
</TABLE>
* Unmanaged index of common stocks.
# Inception date: May 22, 1992
+ Total return figures have been calculated using the prescribed SEC
formulas. The performance data quoted represents past performance and does
not guarantee future results. The investment return and principal value of
an investment in any Portfolio of the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
3
<PAGE> 4
DREMAN MUTUAL GROUP, INC. SEMI-ANNUAL REPORT
JUNE 30, 1995
Fellow Shareholder:
The US markets in the first six months of 1995 have yielded their best
returns in over four years. The Dreman Contrarian and High Return Portfolios
kept pace with the market as measured by the S&P 500, and The Dreman Small Cap
Value Portfolio outperformed its yardstick index, the Russell 2000 (see
subsequent charts for full performance data). As we noted at year-end, there
was a good deal of negative sentiment in the markets during 1994 which is often
a good "contrarian" indicator of future performance. While the overall equity
market probably won't maintain the same pace throughout the second half of
1995, we see segments of the market that continue to be undervalued. We
believe this should prove to be of benefit to The Dreman Mutual Group, Inc.
portfolios in the coming months.
Returns for the first half of 1995 were influenced by excellent
corporate profits and lower interest rates. With respect to the former, close
to 80% of US corporations have reported earnings in excess of Wall Street
estimates in the first two quarters. While a majority of positive surprises is
not unusual, the extent of the plurality is astonishing in light of the gloom
overhanging the market just six months ago. While the Federal Reserve has only
lowered the Federal Funds target 1/4 of 1%, the market, the true determinant of
rates, has further readjusted rates downward in anticipation of slower economic
growth. The rapidity with which rates have risen and fallen over the past
three years has caught most investors off-guard. We would not bet against
another reversal of interest rates if economic activity picks up later this
year.
The question that has arisen with this surge in the stock market is --
Is the market overvalued? In response, we believe the best indicator of market
extremes is found in the Price/Earnings ratio. Typically, the Dow Jones
Industrial and the S&P 500 have traded at a P/E ratio of 15-17 in the postwar
period. With equities selling at 16.0 times earnings, the current market is at
the 50-year mean. Though we do not expect an uninterrrupted rise in the equity
market, we are certainly not part of the group of seers that believe a
prolonged "bear" market is imminent.
While news headlines have focused on the markets' new highs and hot
areas, there are a number of sizeable industries that have not moved with the
market. We would note the consumer cyclical stocks such as retailers and the
autos have performed poorly with the perceived slowing of the economy. Health
care stocks have been generally strong, yet within this sector, the HMO stocks
have been hit very hard amid concerns over their operating margins. Finally,
energy stocks, where we remain underweighted, have been sluggish with OPEC
potentially raising or even eliminating production ceilings. These and other
out-of-favor groups could be further emphasized in the portfolio during the
second half of the year.
4
<PAGE> 5
Second quarter returns in the Dreman Contrarian and High Return
Portfolios were led by the technology sector, including Apple (Contrarian
Portfolio 2.2%, High Return Portfolio 2.2%) , Compaq (Contrarian Portfolio
4.0%, High Return Portfolio 4.1%) and Hewlett-Packard (Contrarian Portfolio
2.3%, High Return Portfolio 1.9%). All were swept along in Wall Street's
clamoring into technology stocks that has accelerated in the past two months.
We think this new frenzy is a dangerous area of the market and have been slowly
selling into this 12-month technology surge. Our holdings remain first-rate
values selling at 11-16 times earnings, in a sector replete with companies
priced at outlandish multiples and having very questionable market liquidity.
Another area that has performed well, and in turn gained investor
optimism, is the health care sector. With good earnings and governmental
reform almost silent, this group has moved from selling at 16.8 times earnings
a year ago, to 18.9 times earnings today. While this is the largest multiple
gain of any sector, it does not approach 1989 levels. Our portfolio holdings,
which are concentrated in the ethical drug segment, still sell at just about
the multiple of the overall market.
Finally, we want to note the strength of the financial services
stocks. They continue to sell at only 60-65% of the market multiple and have
generated solid earnings gains in the first two quarters this year. These
uninterrupted gains have been particularly encouraging against the back drop of
the interest rate swings of the last several years. Financial services remains
our most heavily weighted sector for investment in both the Dreman Contrarian
and High Return Portfolios.
The Small Cap Value Portfolio was led by the gaming, medical and
transportation stocks during the first half. Grand Casinos (4.0%) rose 155%
reflecting the ongoing consolidation in the gaming industry. Likewise, Bally
Entertainment (5.1%) has been a solid contributor since its initial purchase
just three months ago. We believe these firms are among the best managed in
the industry.
In the medical services group, our two small cap holdings Research
Industries (2.0%) and Sofamor/Danek Group (4.5%) gained 67% and 72%,
respectively, over the first six months. Each company has had solid gains in
very specialized areas of surgical supplies.
One of our transportation holdings, Atlantic Southeast Airlines
(2.1%), has gained over 90% since the beginning of 1995. This company provides
the commuter air services for Delta in the southeast part of the country. With
its dominant position and the Olympic Games being held in Atlanta in 1996, this
company should be in solid shape in the coming months.
On the fixed income side, our portfolio yielded solid gains in the
first half of the year and performed in line with other short-term bond funds.
While this part of our account has lagged the longer maturity indexes, we think
there is too much unwarranted risk in longer maturity securities. When
investors are most euphoric about a segment of a market, it is usually a good
time to be leery. We would note that while most people look casually at
inflation today, commodity prices have continued to rise
5
<PAGE> 6
over the past 12 months. When these flow through to final product prices,
inflation will beon the increase. In turn, bonds, especially long bonds, could
repeat 1994's poor performance.
In summary, we believe The Dreman Mutual Group, Inc. portfolios are
well-positioned for the current market environment and do not see the need for
major changes, unless excellent opportunities become available. If you should
have any questions concerning the Dreman Family of Funds please call us at
(800) 533-1608. We appreciate your continued support and look forward to
helping you achieve your financial and investment goals.
Sincerely,
DAVID DREMAN
David Dreman
Chairman,
Dreman Value Management, LP
+ All total return figures used in this report have been calculated using the
prescribed SEC formulas. The performance data quoted, including that of
individual stocks, represents past performance and does not guarantee future
results. The investment return and principal value of an investment in any
Portfolio of the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
6
<PAGE> 7
THE DREMAN CONTRARIAN PORTFOLIO
INVESTMENT PORTFOLIO
JUNE 30, 1995
<TABLE>
<CAPTION>
SECURITY SHARES VALUE SECURITY SHARES VALUE
------------------------------------------------------ --------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS -- 98.13%
APPAREL -- 4.84% FOREST PRODUCTS -- 1.53%
Fruit Of The Loom Inc.-Class A* 11,500 $ 242,938 Louisiana Pacific Corporation 7,900 $ 207,375
Liz Claiborne, Incorporated 13,500 286,875 -----------
VF Corporation 2,300 123,625 HOUSEHOLD PRODUCTS -- 3.56%
----------- Unilever, N.V. 3,700 481,463
653,438 -----------
----------- INSURANCE/MULTILINE -- 1.60%
AUTOMOTIVE -- 4.97% American General Corporation 6,400 216,000
Ford Motor Company 22,600 672,350 -----------
----------- INSURANCE/ PROPERTY &
CASUALTY -- 2.14%
BANKS/MONEY CENTER -- 6.63% Ohio Casualty Corporation 9,200 289,800
BankAmerica Corporation 5,200 273,650 -----------
Banc One Corporation 1,800 58,050 MEDICAL SERVICES &
Bankers Trust New York Corp. 3,700 229,400 SUPPLIES -- 0.82%
First Chicago Corporation 5,600 335,300 United States Surgical
----------- Corporation 5,300 110,637
896,400 -----------
----------- NATURAL GAS -- 4.35%
BANKS/REGIONAL -- 8.50% Columbia Gas System,
Barnett Banks Incorporated 6,500 333,125 Incorporated* 18,500 587,375
First Fidelity Bancorp 2,400 141,600 -----------
First Union Corporation 3,400 153,850 PETROLEUM -- 3.35%
Nationsbank Corporation 1,500 80,437 Amoco Corporation 4,000 266,500
Norwest Corporation 7,300 209,875 Atlantic Richfield Company 1,700 186,575
PNC Bank Corporation 8,700 229,462 ------------
----------- 453,075
1,148,349 ------------
-----------
COMPUTERS -- 8.51% RETAIL -- 5.77%
Apple Computer, Incorporated 6,400 297,200 Dayton Hudson Corporation 1,100 78,925
Compaq Computer Corporation* 11,900 539,963 May Department Stores Company 9,000 374,625
Hewlett Packard Company 4,200 312,900 TJX Companies, Incorporated 19,900 263,675
----------- Woolworth Corporation 4,100 62,012
1,150,063 ------------
----------- 779,237
CONGLOMERATES -- 3.56% ------------
Hanson PLC (ADR) 26,300 463,537 THRIFTS -- 4.81%
U.S. Industries Incorporated* 1,315 17,917 Ahmanson (H.F.) & Company 13,500 297,000
----------- Great Western Financial Corp. 17,100 352,687
481,454 ------------
----------- 649,687
------------
TOBACCO -- 3.96%
DRUGS -- 12.42% Philip Morris Cos.,
American Home Products Corp. 6,400 495,200 Incorporated 7,200 535,500
Bristol-Myers Squibb Company 2,300 156,688 ------------
Eli Lilly & Company 2,400 188,400 Total Common Stocks
Marion Merrell Dow, Incorporated 12,300 313,650 (Cost $9,153,894) 13,262,654
Merck & Company, Incorporated 5,600 274,400
Upjohn Company 6,600 249,975 COMMERCIAL PAPER -- 1.48%
----------- General Electric Company
1,678,313 5.980% 7/10/95 (Cost $200,000) 200,000 200,000
----------- ----------
ELECTRICAL EQUIPMENT -- 2.67% Total Investments
General Electric Company 6,400 360,800 (Cost $9,353,894)(a) 99.61% 13,462,654
----------- Other Assets less Liabilities 0.39% 53,085
FINANCIAL SERVICES -- 12.17% -------- -----------
Federal Home Loan Mortgage Corp. 14,600 1,003,750 NET ASSETS 100.00% $13,515,739
Federal National Mortgage Assoc. 6,800 641,750 ======== ===========
----------- NET ASSET value and
1,645,500 redemption price per share
----------- ($13,515,739/940,434) $14.37
FOOD PROCESSING -- 1.97% ======
Nestles SA (ADR) 5,100 265,838
-----------
</TABLE>
------------------
* Non-income producing securities.
(a) The aggregate cost of investments for book basis and for Federal income tax
purposes is the same. At June 30, 1995, net unrealized appreciation
consisted of:
Gross Unrealized Appreciation $4,339,195
Gross Unrealized Depreciation (230,434)
----------
Net Unrealized Appreciation $4,108,761
==========
See Notes to Financial Statements
<PAGE> 8
THE DREMAN HIGH RETURN PORTFOLIO
INVESTMENT PORTFOLIO
JUNE 30, 1995
<TABLE>
<CAPTION>
SECURITY SHARES VALUE SECURITY SHARES VALUE
---------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS - 96.51% FINANCIAL SERVICES - 12.59%
AEROSPACE/DEFENSE - 0.32% Federal Home Loan Mortgage Corp. 38,100 $ 2,619,375
Boeing Company 2,300 $ 144,037 Federal National Mortgage Assoc. 29,600 2,793,500
------------- Travelers Incorporated 5,227 228,681
------------
APPAREL - 5.48% 5,641,556
------------
Burlington Coat Factory* 32,000 332,000 FOREST PRODUCTS - 2.82%
Fruit Of The Loom Inc.-Class A* 28,400 599,950 Louisiana Pacific Corporation 48,100 1,262,625
Liz Claiborne, Incorporated 41,400 879,750 ------------
VF Corporation 12,000 645,000 GROCERY - 1.39%
-------------
2,456,700 Giant Food Incorporated-Class A 21,900 621,413
AUTOMOTIVE - 4.18% ------------- ------------
Ford Motor Company 63,000 1,874,250 INSURANCE/MULTILINE - 3.45%
-------------
American General Corporation 9,900 334,125
BANKS/MONEY CENTER - 7.45% American International Group, Inc. 10,600 1,208,400
------------
BankAmerica Corporation 17,032 896,309 1,542,525
------------
Bankers Trust NY Corporation 20,200 1,252,400 INSURANCE/PROPERTY &
First Chicago Corporation 12,700 760,412 CASUALTY - 1.56%
J.P. Morgan & Co., Incorporated 6,100 427,763 Kemper Corporation 15,000 699,375
------------- ------------
3,336,884
-------------
BANKS/REGIONAL - 12.38% MEDICAL SERVICES &
Barnett Banks Incorporated 13,750 704,687 SUPPLIES - 4.14%
Capital One Financial Corp. 10,200 198,900 Becton, Dickinson & Company 9,700 565,025
First Fidelity Bancorp 14,100 831,900 Columbia/HCA Healthcare Corp. 8,757 378,740
First Union Corporation 18,100 819,025 Tenet Healthcare Corporation* 39,000 560,625
Fleet Financial Group, Inc. 7,200 267,300 United States Surgical Corporation 16,800 350,700
------------
Midlantic Corporation 21,000 840,000 1,855,090
------------
Nationsbank Corporation 8,240 441,870 NATURAL GAS - 4.76%
PNC Bank Corporation 22,300 588,163 Columbia Gas System, Inc.* 67,200 2,133,600
------------
Signet Banking Corporation 10,200 223,125
Wells Fargo & Company 3,500 630,875 RETAIL - 5.58%
-------------
5,545,845 Dayton Hudson Corporation 20,000 1,435,000
-------------
COMPUTERS - 8.24% TJX Companies, Incorporated 80,500 1,066,625
------------
Apple Computer, Incorporated 20,900 970,543 2,501,625
------------
Compaq Computer Corporation* 40,900 1,855,838 THRIFTS - 2.79%
Hewlett Packard Company 11,600 864,200 Ahmanson (H.F.) & Co. 24,500 539,000
-------------
3,690,581 Great Western Financial Corp. 34,500 711,563
------------- ------------
CONGLOMERATES - 1.34% 1,250,563
------------
Hanson PLC (ADR) 32,700 576,337 TOBACCO - 3.84%
U.S. Industries Incorporated* 1,635 22,277 Philip Morris Cos., Incorporated 23,100 1,718,063
------------ ------------
598,614 Total Common Stocks
------------
DRUGS - 10.99% (Cost $32,622,504) 43,233,021
Baxter International 12,000 436,500 COMMERCIAL PAPER - 3.35%
Incorporated
Eli Lilly & Company 15,200 1,193,200 General Electric Company
Glaxo Wellcome PLC (ADR) 20,700 504,563 5.980% 7/10/95 (Cost$1,500,000) 1,500,000 1,500,000
------------
Marion Merrell Dow, 47,600 1,213,800 Total Investments
Incorporated
Merck & Company, Incorporated 14,500 710,500 (Cost $34,122,504)(a) 99.86% 44,733,021
Upjohn Company 22,800 863,550 Liabilities in Excess of Assets 0.14% 61,534
------------ ---------- ------------
4,922,113 NET ASSETS 100.00% $44,794,555
------------ ========== ============
ELECTRICAL EQUIPMENT-3.21% NET ASSET value and
General Electric Company* 25,500 1,437,562 redemption price per share
------------ ($44,794,555/2,490,100) $17.99
======
</TABLE>
---------------
* Non-income producing securities.
(a) The aggregate cost of investments for Federal income tax purposes is
$34,134,773. At June 30, 1995, net unrealized appreciation consisted of:
Gross Unrealized Appreciation $11,868,996
Gross Unrealized Depreciation (1,258,479)
----------
Net Unrealized Appreciation $10,610,517
===========
See Notes to Financial Statements
<PAGE> 9
THE DREMAN SMALL CAP VALUE PORTFOLIO
INVESTMENT PORTFOLIO
JUNE 30, 1995
<TABLE>
<CAPTION>
SECURITY SHARES VALUE SECURITY SHARES VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS -- 92.07%
AIR TRANSPORT -- 2.10% OIL & GAS -- 5.73%
Atlantic Southeast Airlines, Inc. 8,200 $ 247,025 Giant Industries Incorporated 21,700 $ 184,450
----------- KCS Energy Incorporated 14,800 316,350
BANKS/REGIONAL -- 4.16% Valero Energy Corporation 8,500 172,125
-----------
First Commerce Corporation 5,050 148,975 672,925
-----------
Roosevelt Financial Group 10,000 166,875 REAL ESTATE/HOME
West One Bancorp 5,200 173,550 BUILDING -- 1.94%
----------- Del Webb Corporation 9,800 227,850
489,400 -----------
-----------
CEMENT -- 3.80%
Ameron Incorporated 4,200 152,250 RETAIL/SPECIALTY -- 10.09%
Texas Industries Incorporated 7,600 295,450 Blair Corporation 2,200 75,625
----------- C M L Group Incorporated 23,500 185,063
447,700 Cato Corporation - Class A 34,000 276,250
----------- J. Baker Incorporated 25,000 253,125
COMPUTER SOFTWARE & Macfrugal's Bargains Close-Outs Inc.* 22,600 395,500
SERVICES -- 0.54% -----------
GRC International, Incorporated* 4,000 63,000 1,185,563
----------- -----------
ELECTRONICS -- 1.91% SEMICONDUCTORS -- 5.77%
Magnetek Incorporated* 16,500 224,812 Exar Corporation* 15,850 467,575
----------- Cyrix Corporation* 8,700 209,887
-----------
ENVIRONMENTAL SERVICES -- 2.91% 677,462
International Technology Corp.* 114,000 342,000 SPECIALTY CHEMICAL -- 1.47% -----------
----------- Rexene Corporation 14,000 173,250
FINANCIAL SERVICES -- 2.69% -----------
Imperial Credit Industries, Inc.* 25,500 315,562 STEEL/SPECIALTY -- 2.01%
----------- Mueller Industries Inc.* 4,800 236,400
HOTEL/GAMING -- 9.06% -----------
Bally Entertainment Corporation* 48,500 594,125 THRIFTS/SAVINGS & LOAN -- 7.95%
Grand Casinos Incorporated* 13,300 470,488 Brooklyn Bancorp Inc. 6,400 216,000
----------- Cenfed Financial Corporation 7,500 151,875
1,064,613 Coast Savings Financial, Inc. De.* 5,500 113,438
----------- Firstfed Financial Corporation* 8,000 117,000
INDUSTRIAL SERVICES -- 3.37% Irwin Financial Corporation 3,800 131,100
PHH Corporation 8,900 396,050 North Side Savings Bank-Bronx, NY 8,275 204,806
----------- -----------
INSURANCE/PROPERTY & 934,219
CASUALTY -- 2.52% -----------
TOILETRIES & COSMETICS -- 2.78%
Guaranty National Corporation 16,000 296,000 Jean Philippe Fragrances, Inc.* 30,000 326,250
----------- -----------
MANUFACTURING -- 5.84% TRANSPORTATION -- 1.71%
Blount Incorporated- Class A 14,000 624,750 Airborne Freight Corporation 9,900 200,475
Matthews Int'l. Corp.-Class A 3,300 61,875 -----------
----------- Total Common Stocks
686,625 (Cost $9,605,678) 10,820,306
-----------
MEDICAL SERVICES &
SUPPLIES -- 6.46% COMMERCIAL PAPER -- 7.66%
Research Industries Corporation* 10,200 234,600 General Electric Company
Sofamor/Danek Group Incorporated* 23,200 524,900 5.980% 7/10/95 (Cost $900,000) 900,000 900,000
----------- Total Investments ----------
759,500 (Cost $10,505,678)(a) 99.73% 11,720,306
----------- Liabilities in Excess of Assets 0.27% 31,259
MULTI-FORM -- 5.02% -------- ----------
Mercer International Incorporated* 28,100 590,100 NET ASSETS 100.00% $15,751,565
----------- ======== ===========
NATURAL GAS -- 2.24% NET ASSET value and
Columbia Gas System, redemption price per share
Incorporated* 8,300 263,525 ($11,751,565/845,309) $13.90
----------- ======
</TABLE>
---------------
* Non-income producing securities.
(a) The aggregate cost of investments for Federal income tax purposes is
$10,592,473. At June 30, 1995, net unrealized depreciation consisted of:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $1,561,553
Gross Unrealized Depreciation (346,925)
----------
Net Unrealized Depreciation $1,214,628
==========
</TABLE>
See Notes to Financial Statements
<PAGE> 10
THE DREMAN FIXED INCOME PORTFOLIO
INVESTMENT PORTFOLIO
JUNE 30, 1995
<TABLE>
<CAPTION>
SECURITY PRINCIPAL VALUE
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM OBLIGATIONS - 91.99%
U.S. GOVERNMENT OBLIGATIONS - 70.70%
U.S. Treasury Notes 5.125% 03/31/96 . . . . . . . . . . . . . . . . . . . . . . . . 200,000 199,125
U.S. Treasury Notes 7.875% 07/15/96 . . . . . . . . . . . . . . . . . . . . . . . . 450,000 459,281
U.S. Treasury Notes 4.375% 11/15/96 . . . . . . . . . . . . . . . . . . . . . . . . 215,000 211,036
U.S. Treasury Notes 7.25% 02/15/98 . . . . . . . . . . . . . . . . . . . . . . . . 450,000 464,766
U.S. Treasury Notes 5.125% 03/31/98 . . . . . . . . . . . . . . . . . . . . . . . . 500,000 490,625
------------
Total Long-Term U.S. Government Obligations (Cost $1,811,759) . . . . . . . . . . . . . 1,824,833
------------
U.S. GOVERNMENT SPONSORED ENTERPRISES - 21.29%
Federal National Mortgage Association REMIC
7.00%, Series 92-20 PG 5/25/2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 251,172
Federal National Mortgage Association
7.00%, I-G 1/25/2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 298,312
------------
Total U.S. Government Sponsored Enterprises (Cost $568,656) . . . . . . . . . . . . 549,484
------------
Total Long-Term Obligations (Cost $2,380,415). . . . . . . . . . . . . . . . . . 2,374,317
------------
COMMERCIAL PAPER - 6.00%
Ford Motor Credit Corporation 5.991% 07/17/95. . . . . . . . . . . . . . . . . . . . . . . 80,000 80,000
General Motors Acceptance Corporation 6.001% 07/17/95. . . . . . . . . . . . . . . . . . . 75,000 75,000
------------
Total Commercial Paper (Cost $155,000). . . . . . . . . . . . . . . . . . . . . . . . . 155,000
------------
Total Investments (Cost $2,535,415)(a) . . . . . . . . . . . . . . . . . . . . . . . 97.99% 2,529,317
Other Assets less Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01% 51,862
------- ------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00% $2,581,179
======= ============
NET ASSET value and redemption
price per share ($2,581,179/262,575) . . . . . . . . . . . . . . . . . . . . $9.83
=====
</TABLE>
---------------
(a) The aggregate cost of investments for book basis and for Federal income tax
purposes is the same. At June 30, 1995, net unrealized depreciation
consisted of:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 27,562
Gross Unrealized Depreciation (33,660)
----------
Net Unrealized Depreciation $(6,098)
==========
</TABLE>
See Notes to Financial Statements
<PAGE> 11
THE DREMAN MUTUAL GROUP, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THE DREMAN
THE DREMAN THE DREMAN SMALL CAP
CONTRARIAN HIGH RETURN VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments in securities at market value
(Identified Cost $9,353,894, $34,122,504,
$2,535,415 and $10,505,678, respectively)
(Note 1A).................................. $13,462,654 $44,733,021 $11,720,306
Cash......................................... 183,345 507,566 352,641
Receivables:
Investment securities sold................. -- 1,001,661 825,981
Capital stock sold......................... 57,234 23,751 8,311
Dividends and interest (Note 1C)........... 31,897 94,221 7,549
----------- ----------- -----------
Total assets............................. 13,735,130 46,360,220 12,914,788
----------- ----------- -----------
LIABILITIES
Payables:
Investment securities purchased......... 200,000 1,500,000 1,144,712
Capital stock redeemed.................. -- 2,796 4,007
Accrued expenses........................ 19,391 62,869 14,504
----------- ----------- -----------
Total liabiltiies..................... 219,391 1,565,665 1,163,223
----------- ----------- -----------
NET ASSETS (applicable to 940,434, 2,490,100,
262,575 and 845,309 outstanding shares,
respectively) (Note 2).................... $13,515,739 $44,794,555 $11,751,565
=========== =========== ===========
NET ASSET VALUE, offering and redemption
price per share (Net Assets/Shares
Outstanding).............................. $14.37 $17.99 $13.90
====== ====== ======
Net Assets consists of:
Paid-in capital........................... $8,857,753 $35,130,727 $10,148,058
Undistributed net investment income....... 2,310 9,808 --
Accumulated net realized gain (loss) on
investments............................. 546,915 (956,497) 388,879
Net unrealized appreciation (depreciation)
on investments.......................... 4,108,761 10,610,517 1,214,628
----------- ----------- -----------
NET ASSETS.................................. $13,515,739 $44,794,555 $11,751,565
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
<PAGE> 12
THE DREMAN MUTUAL GROUP, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THE DREMAN THE DREMAN THE DREMAN
CONTRARIAN HIGH RETURN SMALL CAP
PORTFOLIO PORTFOLIO VALUE PORTFOLIO
---------- ----------- ---------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest (Note 1C) ............................. $ 33 $ 19,387 $ 38,236
Dividends (Note 1C)............................. 213,810 545,605 8,205
Other (Note 2A) ................................ -- -- --
----------- ------------ -----------
Total Income ................................. 213,843 564,992 46,441
----------- ------------ -----------
EXPENSES
Investment advisory fees (Note 4)............... 66,822 197,685 40,537
Custodian fees.................................. 3,424 2,123 5,302
Legal and audit fees............................ 1,018 2,743 543
Transfer agent fees............................. 12,673 24,917 12,258
Directors' fees ................................ 1,864 5,024 995
Registration fees .............................. 6,751 8,392 6,382
Accounting fees ................................ 3,309 7,669 2,176
Insurance ...................................... 1,401 3,775 747
Shareholder reports ............................ 5,334 14,379 2,846
Miscellaneous .................................. 4,055 10,932 2,164
----------- ------------ -----------
106,651 277,639 73,950
Reimbursement of expenses (Note 4).............. (22,945) (30,540) (23,278)
----------- ------------ -----------
Total expenses ................................. 83,706 247,099 50,672
----------- ------------ -----------
Net investment income ........................ 130,137 317,893 (4,231)
----------- ------------ -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) form security
transaction (Note 1C) ........................ 547,099 (581,704) 477,500
Increase in unrealizd appreciation of invesments.. 1,823,941 7,482,764 1,700,434
----------- ------------ -----------
Net gain on investments ...................... 2,370,950 6,901,060 2,177,934
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations ................ $2,501,087 $7,218,953 $2,173,703
=========== ============ ===========
</TABLE>
See Notes to Financial Statements
<PAGE> 13
THE DREMAN MUTUAL GROUP, INC.
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION> THE DREMAN THE DREMAN
CONTRARIAN PORTFOLIO HIGH RETURN PORTFOLIO
-------------------------- --------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED 6/30/95 12/31/94 ENDED 6/30/95 12/31/94
------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income............................. $ 130,137 $ 291,536 $ 317,893 $ 506,191
Net realized gain (loss) from security
transactions.................................. 547,009 1,278,455 (581,704) (362,499)
Net change in unrealized appreciation on
investments................................... 1,823,941 (1,545,091) 7,482,764 (832,988)
----------- ------------ ----------- -----------
Net increase (decrease) in net assets from
operations................................ 2,501,087 24,900 7,218,953 (689,296)
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income.......... (128,576) (291,740) (315,486) (500,118)
Distributions from net realized gains on
investments................................... (149,981) (1,128,593) -- --
CAPITAL SHARE TRANSACTIONS
Increase (decrease) in net assets resulting
from capital share transactions (Note 2)...... (1,689,404) (2,778,814) 2,886,182 7,780,880
----------- ----------- ----------- -----------
Total increase (decrease)................. 533,126 (4,174,247) 9,789,649 6,591,466
NET ASSETS
Beginning of year................................. 12,982,613 17,156,860 35,004,906 28,413,440
----------- ----------- ----------- -----------
End of year*...................................... $13,515,739 $12,982,613 $44,794,555 $35,004,906
=========== =========== =========== ===========
------------------
*Including cumulative undistributed net
investment income of: (Note 2B)................... $2,310 $749 $9,808 $7,401
====== ==== ====== ======
</TABLE>
See Notes to Financial Statements
<PAGE> 14
THE DREMAN MUTUAL GROUP, INC.
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
THE DREMAN
SMALL CAP VALUE PORTFOLIO
--------------------------------
SIX MONTHS YEAR ENDED
ENDED 6/30/95 12/31/94
------------- -----------
<S> <C> <C>
OPERATIONS
Net investment income. . . . . . . . . $ (4,231) $ (2,245)
Net realized gain (loss) from security
transactions . . . . . . . . . . . . 477,500 (3,931)
Net change in unrealized appreciation
(depreciation) on investments. . . . 1,700,434 (465,018)
---------- ----------
Net increase (decrease) in net assets
from operations . . . . . . . . . 2,173,703 (471,194)
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment
income . . . . . . . . . . . . . . . --- ---
Distributions from net realized gains
on investments . . . . . . . . . . . (84,878) (172,658)
CAPITAL SHARE TRANSACTIONS
Increase (decrease) in net assets
resulting from capital share
transactions (Note 2). . . . . . . . 2,732,082 2,699,087
---------- ----------
Total increase (decrease). . . . . 4,820,907 2,055,235
NET ASSETS
Beginning of year. . . . . . . . . . . 6,930,658 4,875,423
----------- ----------
End of year* . . . . . . . . . . . . . $11,751,565 $6,930,658
=========== ==========
--------------
* Including cumulative undistributed net
investment income of: (Note 2B) . . --- ---
</TABLE>
See Notes to Financial Statements
<PAGE> 15
THE DREMAN CONTRARIAN PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------------------
6/30/95* 1994 1993 1992 1991 1990
-------- ----------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . . . . . $12.18 $13.62 $13.50 $12.38 $10.11 $11.34
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .13 .28 .22 .25 .28 .25
Net realized and unrealized gains/(losses) on
securities . . . . . . . . . . . . . . . . . 2.33 (.28) .96 1.13 2.38 (.94)
------- ------ ------ ------ ------ ------
Total from investment operations. . . . 2.46 0.00 1.18 1.38 2.66 (.69)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net investment income. . . . (.13) (.28) (.22) (.26) (.28) (.26)
Distributions from net realized gains on
investments. . . . . . . . . . . . . . . . . (.14) (1.16) (.84) (.00) (.11) (.28)
------ ------ ------ ------ ------ ------
Total distributions. . . . . . . . . . . . . (.27) (1.44) (1.06) (.26) (.39) (.54)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period. . . . . . . . . . . . . $14.37 $12.18 $13.62 $13.50 $12.38 $10.11
====== ====== ====== ====== ====== ======
TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . 20.44% (0.03)% 9.10% 11.32% 26.53% (6.08)%
RATIOS/SUPPLEMENTAL DATA. . . . . . . . . . . . . . . .
Net Assets, End of period (000 omitted) . . . . $13,516 $12,983 $17,157 $14,884 $14,292 $11,782
Ratio of Expenses to Average Net
Assets(a). . . . . . . . . . . . . . . . . . 1.25%** 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of Net Income to Average Net
Assets(b). . . . . . . . . . . . . . . . . . 1.93%** 1.89% 1.64% 2.04% 2.35% 2.46%
Portfolio Turnover Rate . . . . . . . . . . . . 7% 16% 16% 28% 36% 37%
</TABLE>
-----------
*Unaudited
**Annualized
(a) Ratio of expenses to average net assets prior to reimbursement
of expenses by the Advisor was 1.59%**, 1.42%, 1.54%, 1.53%, 1.76%
and 1.52%, respectively.
(b) Ratio of net investment income to average net assets prior to
reimbursement of expenses by the Advisor was 1.59%**, 1.71%, 1.34%,
1.76%, 1.84% and 2.19%, respectively.
<PAGE> 16
THE DREMAN HIGH RETURN PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------------
6/30/95* 1994 1993 1992 1991 1990
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 15.11 $ 15.50 $ 14.62 $ 12.53 $ 8.85 $10.14
------- ------- ------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................... .13 .25 .21 .24 .31 .34
Net realized and unrealized gains/(losses)
on securities........................... 2.88 (.39) 1.13 2.21 3.87 (1.21)
------- ------- ------- ------- ------ ------
Total from investment operations.... 3.01 (.14) 1.34 2.45 4.18 (.87)
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS
Distributions from net investment income.... (.13) (.25) (.21) (.24) (.30) (.35)
Distributions from net realized gains on
investments............................. (.00) (.00) (.25) (.12) (.20) (.07)
------- ------- ------- ------- ------ ------
Total distributions................. (.13) (.25) (.46) (.36) (.50) (.42)
------- ------- ------- ------- ------ ------
Net Asset Value, End of Period...................... $ 17.99 $ 15.11 $ 15.50 $ 14.62 $12.53 $ 8.85
======= ======= ======= ======= ====== ======
TOTAL RETURN........................................ 20.01% (0.99)% 9.22% 19.80% 47.57% (8.63)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of period (000 omitted)..... $44,795 $35,005 $28,413 $14,425 $7,238 $3,868
Ratio of Expenses to Average Net
Assets(a)............................... 1.25%** 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of Net Income to Average Net
Assets(b)............................... 1.61%** 1.58% 1.47% 1.88% 2.52% 3.61%
Portfolio Turnover Rate..................... 2% 12% 14% 13% 37% 204%
</TABLE>
-------------
*Unaudited
**Annualized
(a) Ratio of expenses to average net assets prior to reimbursement of expenses
by the Advisor was 1.40%**, 1.39%, 1.56%, 1.70%, 2.31% and 2.38%,
respectively.
(b) Ratio of net investment income to average net assets prior to reimbursement
of expenses by the Advisor was 1.45%**, 1.44%, 1.16%, 1.43%, 1.46% and
2.48%, respectively.
<PAGE> 17
THE DREMAN FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------------------------------------------
6/30/95* 1994 1993 1992 1991 1990
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . $ 9.44 $10.09 $10.00 $10.52 $10.17 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income . . . . . . . .28 .52 .51 .64 .75 .76
Net realized and unrealized
gains/(losses) on securities. . .39 (.64) .10 (.11) .42 .19
------ ------- ------ ------- ------ ------
Total from investment
operations . . . . . . . .67 (.12) .61 .53 1.17 .95
------ ------- ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net investment
income. . . . . . . . . . . . . (.28) (.53) (.50) (.65) (.75) (.78)
Distributions from net realized
gains on investments. . . . . . (.00) (.00) (.02) (.40) (.07) (.00)
------ ------ ------ ------ ------ ------
Total distributions . . . . (.28) (.53) (.52) (1.05) (.82) (.78)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period. . . . . $ 9.83 $ 9.44 $10.09 $10.00 $10.52 $10.17
====== ====== ====== ====== ====== ======
TOTAL RETURN. . . . . . . . . . . . . . 7.17% (1.21)% 6.14% 5.17% 11.94% 9.79%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000 omitted) . . . . . . . . . $2,581 $4,511 $5,167 $3,705 $4,644 $4,278
Ratio of Expenses to Average
Net Assets(a) . . . . . . . . . .75%** .75% .75% .75% .75% .75%
Ratio of Net Income to Average
Net Assets(b) . . . . . . . . . 5.70%** 5.24% 5.10% 6.33% 7.01% 7.57%
Portfolio Turnover Rate . . . . . . 18% 5% 18% 58% 39% 54%
</TABLE>
-----------
*Unaudited
**Annualized
(a) Ratio of expenses to average net assets prior to reimbursement of expenses
by the Advisor was 2.60%**, 1.41%, 1.60%, 1.53%, 1.86% and 1.76%,
respectively.
(b) Ratio of net investment income to average net assets prior to reimbursement
of expenses by the Advisor was 3.84%**, 4.58%, 4.26%, 5.55%, 5.90% and
6.57%, respectively.
<PAGE> 18
THE DREMAN SMALL CAP VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------
6/30/95* 1994 1993 1992(A)
-------- ---- ---- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $10.85 $11.23 $11.52 $10.00
-------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . .00 .00 .06 .03
Net realized and unrealized gains/(losses)
on securities . . . . . . . . . . . . . . 3.18 .02 .23 1.95
-------- ------- ------- -------
Total from investment operations . . . . 3.18 .02 .29 1.98
-------- ------- ------- -------
LESS DISTRIBUTIONS
Distributions from net investment income. . . (.00) (.00) (.06) (.03)
Distributions from net realized gains on
investments. . . . . . . . . . . . . . . . (.13) (.40) (.52) (.43)
-------- ------- ------- -------
Total distributions . . . . . . . . . . . (.13) (.40) (.58) (.46)
-------- ------- ------- -------
Net Asset Value, End of Period. . . . . . . . . $13.90 $10.85 $11.23 $11.52
======== ======= ======= =======
TOTAL RETURN. . . . . . . . . . . . . . . . . . 29.55% .15% 2.54% 32.51%**
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000 omitted) . . . $11,752 $6,931 $4,875 $2,385
Ratio of Expenses to Average Net
Assets (b). . . . . . . . . . . . . . . . . 1.25%** 1.25% 1.25% 1.25%**
Ratio of Net Income to Average Net
Assets (c). . . . . . . . . . . . . . . . . 0.10%** (.03)% .53% .81%**
Portfolio Turnover Rate . . . . . . . . . . . 38% 140% 79% 37%
</TABLE>
_________________
* Unaudited
** Annualized
(a) For the period May 22, 1992 (commencement of operations) to December
31, 1992.
(b) Ratio of expenses to average net assets prior to reimbursement of
expenses by the Advisor was 1.81%** , 1.82%, 2.09% and 4.29%**,
respectively.
(c) Ratio of net investment income to average net assets prior to
reimbursement of expenses by the Advisor was (.68)%**, (.61)%, (.32)%
and (2.24)%**, respectively.
<PAGE> 19
THE DREMAN MUTUAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
1. Organization and Significant Accounting Policies - The Dreman Contrarian
Portfolio, The Dreman High Return Portfolio, The Dreman Fixed Income Portfolio
and The Dreman Small Cap Value Portfolio ("The Portfolios") are each a series
of shares of common stock of The Dreman Mutual Group, Inc., ("The Fund") which
is registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management company. The company was incorporated in the
state of Maryland on October 15, 1987. The following is a summary of
significant accounting policies followed by the Fund.
A. Security Valuation - The Portfolios' investments in securities are
carried at market value. Securities listed on an exchange or quoted on a
national market system are valued at the last sale price. Other securities are
valued at the mean between the most recent bid and asked prices. Fixed income
securities may be valued on the basis provided by a pricing service when such
are believed to reflect the fair market value of such securities. The prices
provided by a pricing service may be determined without regard to bid or last
sale prices but take into account institutional size trading in similar groups
of securities and any development related to specific securities. Short-term
investments are valued at amortized cost which approximates market value. The
market value of other assets and securities for which no quotations are
available are determined in good faith at fair value using methods determined
by the Board of Directors.
B. Federal Income Taxes - No provision has been made for Federal income
taxes. It is the policy of the portfolios to comply with the provision of the
Internal Revenue Code applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from all federal
income taxes.
C. Security Transactions and Related Investment Income - Security
transactions are accounted for on the trade date (the date the order to buy or
sell is executed) with gain or loss on the sale of securities being determined
based upon identified cost. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis.
D. Futures Contracts - Initial margin deposits required upon entering
into futures contracts are made by depositing cash, as collateral, for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of the
contract are recognized as unrealized gains or loss by "marking-to-market" on a
daily basis to reflect the market value of the contract at the end of each
day's trading. Variation margin payments are made or received, depending upon
whether unrealized gains or losses are incurred. When the contract is closed
the Fund records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transaction and the Fund's basis in the
contract.
The Dreman Contrarian, The Dreman High Return and The Dreman Small Cap
Value Portfolios may purchase and sell stock index futures contracts and index
options as hedges against changes resulting from market conditions in the
values of the securities held by the Portfolios or securities which they intend
to purchase or sell where such transactions are economically appropriate for
the reduction of risks inherent in the ongoing management of the Portfolios.
Futures contracts involve credit and market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The contract amounts of
these futures contracts reflect the extent of the Portfolios' exposure to
off-balance sheet risk. Further, to minimize their credit risk, the Portfolios
intend to trade in futures contracts only on exchanges or boards of trade where
there appears to be active secondary markets; however, there is no assurance
that a liquid secondary market on any exchange or board of trade will exist for
any particular contract or at any particular time. The Portfolios' assume the
market risk which arises from any changes in security values.
<PAGE> 20
THE DREMAN MUTUAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
JUNE 30, 1995
2. Capital Stock - The Dreman Mutual Group, Inc. has 500,000,000 shares of .01
par stock authorized of which each Portfolio was allocated 100,000,000 shares.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
THE DREMAN CONTRARIAN PORTFOLIO
SIX MONTHS ENDED 6/30/95* YEAR ENDED 12/31/94
------------------------- -------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold..................................... 60,353 $ 815,310 200,835 $2,800,952
Shares issued in reinvestment of distributions.. 18,826 251,874 105,352 1,306,831
---------- ----------- ---------- -----------
79,179 1,067,184 306,187 4,107,783
Shares redeemed................................. (205,059) (2,756,589) (499,681) (6,886,597)
---------- ----------- ---------- -----------
Net increase (decrease) .................... (125,880) $(1,689,405) 193,494 $(2,778,814)
========== =========== ========== ===========
<CAPTION>
THE DREMAN HIGH RETURN PORTFOLIO
--------------------------------
SIX MONTHS ENDED 6/30/95* YEAR ENDED 12/31/94
------------------------- -------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold..................................... 390,037 $6,464,964 746,899 $11,989,657
Shares issued in reinvestment of distributions.. 16,760 286,078 28,805 450,119
---------- ----------- ---------- -----------
406,797 6,751,042 775,704 12,439,776
Shares redeemed ................................ (232,680) (3,864,860) (293,063) (4,658,896)
---------- ----------- ---------- -----------
Net increase................................ 174,117 $ 2,886,182 482,641 $7,780,880
========== =========== ========== ===========
<CAPTION>
THE DREMAN SMALL CAP VALUE PORTFOLIO
------------------------------------
SIX MONTHS ENDED 6/30/95* YEAR ENDED 12/31/94
------------------------- -------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold..................................... 415,693 $5,239,122 636,591 $7,366,377
Shares issued in reinvestment of distributions.. 6,592 77,713 15,284 168,584
---------- ----------- ---------- -----------
422,285 5,316,835 651,875 7,534,961
Shares redeemed ................................ (215,983) (2,584,753) (446,924) (4,835,874)
---------- ----------- ---------- -----------
Net increase ............................... 206,302 $2,732,082 204,951 $2,699,087
========== =========== ========== ===========
</TABLE>
-----------------------------
*Unaudited
<PAGE> 21
THE DREMAN MUTUAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
2. A. For the period April 30, 1993 to March 9, 1994, inclusive, a
contingent redemption fee of 1% of the net asset value of shares redeemed,
including exchange redemptions, was charged to shareholders who redeemed shares
held less than one year. The contingent redemption fee was subtracted from the
payment to the shareholder and was deposited in the Fund for the benefit of the
remaining shareholders to offset any transaction costs that were incurred by
the Portfolio. The holding period for these redemptions was determined by
first using shares purchased with the earliest trade date. Shares purchased
through reinvestment of dividends were not subject to the contingent redemption
fee. The contingent redemption fee was not applied to investments made in any
Portfolio prior to April 30, 1993 or after March 9, 1994.
B. During the fiscal year ended December 31, 1993, the Fund adopted
Statement of Position 93-2 Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distribution by
Investment Companies. Accordingly, permanent book and tax basis differences
relating to shareholder distributions have been reclassified to additional
paid-in capital. As of January 1, 1993, the cumulative effects of such
differences totaling $17,119, $17,090, $17,096 and $0 were reclassified from
undistributed net investment income to additional paid-in capital for The
Dreman Contrarian Portfolio, The Dreman High Return Portfolio, The Dreman Fixed
Income Portfolio and The Dreman Small Cap Value Portfolio, respectively, $670
and $667 were reclassified from accumulated net realized gains to additional
paid-in capital for The Dreman High Return Portfolio and The Dreman Small Cap
Value Portfolio, respectively.
3. Purchases and Sales of Securities - Purchases and sales of securities other
than short-term investments for the six months ended June 30, 1995 were as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
The Dreman Contrarian Portfolio................ $876,893 $2,932,451
The Dreman High Return Portfolio............... $2,835,371 $954,118
The Dreman Fixed Income Portfolio.............. $449,016 $1,843,359
The Dreman Small Cap Value Portfolio .......... $4,836,862 $2,993,540
</TABLE>
At December 31, 1994, The Dreman High Return Portfolio and The Dreman Fixed
Income Portfolio had capital loss carryforwards for Federal income tax purposes
of $362,496 and $22,766, respectively, which expire in 2002.
4. Investment Advisory Fee and Other Transactions With Affiliates - The
investment advisory fee was earned by Dreman Value Management, L.P. (formerly
Dreman Value Management, Inc.) under the terms of an investment advisory
agreement which provides that the management fee shall be calculated at the
annual rate of 1% of the average value of net assets of The Dreman Contrarian
Portfolio, The Dreman High Return Portfolio and The Dreman Small Cap Value
Portfolio up to $1 billion and 3/4 of 1% annually of net assets in excess of $1
billion, and 1/2 of 1% of the average value of net assets of The Dreman Fixed
Income Portfolio. Fees were paid monthly and for the six months ended June 30,
1995 amounted to:
<TABLE>
<S> <C>
The Dreman Contrarian Portfolio .................... $66,822
The Dreman High Return Portfolio.................... $197,685
The Dreman Fixed Income Portfolio................... $6,283
The Dreman Small Cap Value Portfolio................ $40,537
</TABLE>
<PAGE> 22
THE DREMAN MUTUAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
The Advisor has undertaken to reimburse the Fund for its annual operating
expenses, exclusive of taxes, brokerage commissions, interest and extraordinary
expenses such as legal fees, to the extent necessary to satisfy the lowest
expense ratio permitted by any state in which the Fund's shares are qualified
for sale. Presently the most restrictive expense limitation is 2 1/2 % on the
first $30,000,000 of average annual net assets, 2% on the next $70,000,000 of
such assets, and 1 1/2 % on any excess. However, the Advisor has voluntarily
reimbursed more expenses than contractually obliged.
Reimbursement from the manager for the six months ended June 30, 1995 is as
follows:
<TABLE>
<S> <C>
The Dreman Contrarian Portfolio. . . . . . . . . . . . . . . . . $22,945
The Dreman High Return Portfolio . . . . . . . . . . . . . . . . $30,540
The Dreman Fixed Income Portfolio. . . . . . . . . . . . . . . . $22,946
The Dreman Small Cap Value Portfolio . . . . . . . . . . . . . . $23,278
</TABLE>
Several individuals who are officers or directors, or both of the
Portfolios, are also officers and directors, or both, of Dreman Value
Management, L.P.
