<PAGE>
The
DREYFUS
FAMILY
of FUNDS
DREYFUS/LAUREL INTERNATIONAL FUND
FEBRUARY 28, 1995
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
EDGAR DESCRIPTIONS
DESCRIPTION OF ART WORK ON REPORT COVER
SMALL BOX ABOVE FIND NAME SHOWING A LIONS FACE.
<PAGE>
DEAR SHAREHOLDER:
As we advised shareholders six months ago, the former Laurel Family of
Funds has now been integrated with the Dreyfus Family of Funds. Accordingly,
your Fund is now known, and publicly listed, as the Dreyfus/Laurel International
Fund.
On April 19, 1995, the Fund's shareholders approved a merger of the Fund
into the Dreyfus International Equity Allocation Fund, a separate series of The
Dreyfus/Laurel Funds, Inc. We believe that the consolidation of these two Funds,
which have similar investment objectives, will foster greater efficiency in
management of your investment. The Merger is scheduled to become effective May
1, 1995, and at that time, your shares in the present Fund would be exchanged,
at no cost to you, for shares of Dreyfus International Equity Allocation Fund.
The last six months have seen a continuation of the volatility that
commenced last February when the U.S. Federal Reserve Board began to increase
interest rates. Most of the major markets fell in response to the expectation
that growth would slow and profits would decline. Continued strength in the
German mark and yen combined with tight monetary policies should constrain local
stock market performance. The dollar's weakness, however, should provide some
cushion in these markets.
In December, Mexico sparked a crisis in all emerging markets by announcing
a major devaluation of the peso. Since the date of the devaluation, Mexico is
down 54.5% and Morgan Stanley's Emerging Market Index is down 17.4%. We expect
that volatility will continue in the emerging markets for quite some time.
Your Fund benefitted from both stock selection and country allocation in
the six-month period ended February 28, 1995. The Fund enjoyed outperformance in
its stock selections in Finland, Spain, Sweden, and Hong Kong. We were less
successful in our stock picks in the Netherlands.
In terms of our country allocations, the Fund benefitted from significant
underweightings in Japan, Hong Kong, and Malaysia. The Fund benefitted from
significant overweightings in Switzerland, Germany, Finland and Belgium. The
Fund's overweighted positions in France and Austria hurt the Fund because while
these markets came down in line with the Morgan Stanley Capital International
Europe, Australia, Far East (EAFE)(R) Index, our overweight positions could have
been employed elsewhere to better advantage. The Fund did not hold any stocks in
Latin America or in any of the emerging Asian countries until late February,
when we initiated a position in Malaysia.
For the six months ended February 28, 1995, the Dreyfus/Laurel
International Fund outperformed its benchmark index, though both were in the
negative column. Your Fund produced a total return of (6.52)%* for this period.
This compares with a total return of (8.08)% for the EAFE(R) Index with net
dividends reinvested.** The total return for the average of all international
funds tracked by Lipper Analytical Services, Inc. was (11.13)%*** and the total
return for the Standard & Poor's 500 Composite Stock Price Index was 3.96%+.
1
<PAGE>
We extend a warm welcome to you as an investor in the Dreyfus Family of
Funds. We will make every effort to justify your confidence in our organization.
Sincerely,
Sandor Cseh
Portfolio Manager
April 20, 1995
New York, N.Y.
- ---------------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE)(R) Index is an unmanaged
index composed of a sample of companies representative of the market
structure of European and Pacific Basin Countries. The return indicated
includes net dividends reinvested. The Index is the property of Morgan
Stanley & Co., Incorporated.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Average total return for all
funds in the International Funds Category reflect reinvestment of
distributions. The Fund's share price and yield fluctuate.
+ 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 U.S. stock market performance.
2
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Shareholder Letter.............................................................1
Portfolio of Investments.......................................................4
Statement of Assets and Liabilities...........................................11
Statement of Operations.......................................................12
Statement of Changes in Net Assets............................................13
Financial Highlights..........................................................14
Notes to Financial Statements.................................................15
3
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ------------- ----------
COMMON STOCKS - 82.4%
<S> <C> <C>
FRANCE - 15.5%
220 Air Liquide (L') $ 31,713
500 Alcatel Alsthom Cie Generale d'Electricite 40,226
3,500 Axa Company 151,018
400 Banque Nationale de Paris 17,727
200 CarnaudMetalbox SA 6,565
200 Casino Guichard Perrachon Et Cie 5,450
100 Chargeurs 23,473
200 Cie Financiale (Paribas) 11,411
100 Compagnie Bancaire SA 9,487
200 Compagnie De St. Gobain 23,532
500 Compagnie Financiere de Suez 22,032
100 Crecie Par Reesco NV 6,409
200 Danone 28,830
400 Eaux (Cie Generale Des) 37,012
100 Euro Disney SCA+ 238
100 Finextel 1,636
100 Havas 7,149
200 Lafarge Coppee SA 12,896
200 L'Oreal Group 44,453
200 LVHM Moet Hennessey 31,947
100 Lyonnaise Des Eaux Dunez 8,493
200 Michelin(Cie Gle Des Establ.) 7,991
100 Pechiney International 2,445
100 Pernod - Ricard 6,134
100 Peugeot SA 13,636
700 Rhone-Poulenc SA 16,704
100 Schneider SA 6,876
100 Sefimeg 6,463
100 Simco-Union Pout L'Habitation 7,928
200 Societe Generale 19,032
900 Societe National Elf Aquitaine 64,570
100 Sommer-Allibert 33,973
300 Thompson + 7,428
800 Total Cie Francaise Des Petroles, Total 'B' 44,211
200 Unibail 18,038
150 Union Immobiliere De France 12,038
----------
789,164
----------
GREAT BRITAIN - 13.6%
11,000 Boots Company 82,976
15,000 BTR 74,205
12,000 National Westminster Bank 91,279
19,000 Powerscreen International 74,593
28,241 Scapa Group 85,167
11,181 Severn Trent Water 89,385
26,000 Tesco 103,104
11,171 United Newspaper 89,482
----------
690,191
----------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
Value
SHARES (NOTE 1)
- ------------- ----------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
JAPAN - 11.6%
800 Ajinomoto Company $ 9,271
900 Asahi Chemical Industry 5,951
800 Asahi Glass Company 8,857
400 Bridgestone Company 5,463
500 Canon Inc. 7,450
400 Chugai Pharmaceutical 4,015
800 Dai Nippon Printing 11,837
200 Daido Steel 983
700 Dai-Ichi Kango Bank 12,603
2,100 Daikyo Kanko, Inc. 15,189
400 Daishowa Paper Manufacturing 1,974
400 Daiwa House Industry 5,836
600 Denki Kagaku Kougyo 1,999
1,300 Fuji Bank Ltd. 27,979
200 Fuji Photo Film 4,284
800 Fujitsu Ltd. 7,301
900 Hitachi Ltd. 7,869
400 Honda Motor 6,042
220 House Food Industrial Company 4,075
200 Industrial Bank of Japan 5,070
1,700 Itochu Corporation 10,009
500 Ito-Yokado Company 22,764
600 Japan Air Lines 3,694
600 Japan Energy Corporation 2,148
420 Joyo Bank 3,303
1,300 Kajima Corporation 11,555
400 Kamigumi Company 3,311
330 Kandenko Company 5,293
600 Kansai Electric Power 13,845
2,200 Kawasaki Steel Corporation 7,876
1,800 Kinki Nippon Railway Company Ltd. 14,416
1,000 Kirin Brewery Company 10,347
600 Komatsu Ltd. 4,402
200 Kyocera Corporation 12,892
100 Kyushu Electric Power 2,307
200 Maeda Road Construction 3,477
200 Marudai Food Company Ltd. 1,349
400 Matsushita Electric Works 5,794
1,100 Mitsubishi Bank 24,130
2,700 Mitsubishi Heavy Industries 17,042
900 Mitsubishi Kasai Company 4,321
200 Mitsubishi Trust & Banking 2,835
600 Mitsui Marine & Fire 3,911
600 Mitsui Trust & Banking 5,395
400 Mitsui & Company 2,773
800 NEC Corporation 7,591
600 Nikon 4,718
50 Nintendo Company 2,597
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ------------- ----------
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
<S> <C> <C>
400 Nippon Light Metal Company $ 2,202
800 Nippon Oil Company 4,801
5,100 Nippon Steel Corporation 17,836
800 Nippon Yusen Kaisha 4,553
600 Oji Paper 5,736
1,600 Sakura Bank 19,204
200 Sanwa Shutter Corporation 1,798
242 Seven-Eleven Japan NPV 15,775
400 Shizuoka Bank 4,718
500 Snow Brand Milk Products Company Ltd. 3,399
100 Sony Corporation 4,346
400 Sumitomo Bank Ltd. 7,284
800 Sumitomo Electric Company 9,106
1,100 Sumitomo Trust & Banking 12,748
400 Taiyo Fishery Company+ 1,362
1,000 Takeda Chemical Industries 11,589
800 Tokai Bank 9,188
800 Tokio Marine & Fire 8,360
300 Tokyo Electric Power Company 8,133
1,300 Tokyu Railway Corporation 8,273
1,200 Toyobo Company 4,097
500 Toyota Motor Company 9,002
600 Ube Industries Ltd. 2,049
200 Yakult Honsha 2,835
500 Yamanouchi Pharmaceutical Company 9,778
1,000 Yasuda Trust and Banking Company Ltd. 7,315
2,900 Yokogawa Electric Corporation 26,496
----------
590,126
----------
GERMANY - 10.0%
100 BASF Group AG 21,937
100 Bayer Group AG 24,541
200 Daimler-Benz Group AG 97,207
500 Dresdner Bank AG 136,761
70 Mannesmann AG 20,346
300 RWE AG 96,082
200 Siemens AG 92,956
50 Viag AG 17,995
----------
507,825
----------
BELGIUM - 7.2%
135 ACEC Union Miniere NPV+ 8,873
20 Bekaert SA 13,062
45 CBR Cimenteries NPV 17,389
279 Delhaize-Le Lion 10,864
314 Electrabel NPV Common 61,446
50 Electrabell-Pr Reunies 9,834
500 Fortis AG 43,264
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ------------- ----------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
BELGIUM (CONTINUED)
109 Generale de Banque $ 29,673
138 Gevaert Photo Prod NPV 6,889
28 Glaverbal NPV 4,147
144 Group Brussels Lambert SA 17,492
20 Kredietbank Afv NPV 4,320
75 Kredietbank NPV 15,775
195 Petrofina SA NPV 57,238
110 Royale Belge NPV 16,274
50 Solvay Et Cie, Series A, NPV 25,834
25 Tractebel 7,579
60 Tractebel Cap NPV 18,271
----------
368,224
----------
SWITZERLAND - 6.8%
13 Brown Boveri & Cie AG, Series A 11,332
45 Ciba Geigy AG 28,519
37 Credit Suisse Holdings 15,363
75 CS Holdings 6,222
10 Forbo Holdings AG 17,887
68 Nestle SA 65,716
2 Roche Holdings, AG 19,263
12 Roche Holdings AG Genuscheine NPV 66,483
55 Sandoz Group AG 31,607
22 Schweiz Ruckversicherungs 13,195
36 Schweizerische Bankgesellschaft 30,216
86 Schweizerischer Bankverein 18,083
25 Zurich Versicherungs 24,185
----------
348,071
----------
AUSTRIA - 6.3%
100 Bwt Benchiser Wassertechnik AG 15,119
100 Constantia Industry Holdings 7,681
500 Creditanstalt Bank 31,315
100 Ea Generali AG 25,975
100 Lenzing AG 9,292
200 Oesterreichische 11,400
600 Oesterreichische El Wirtsch 36,996
500 Omev AG+ 48,502
200 Radex Heraklith 7,205
200 Steyr-Daimler-Puch AG+ 2,932
100 Universale- Bau AG+ 5,875
200 Veitscher+ 5,302
100 Wienerberger Baust 35,345
100 Z-Landerbank 4,806
1,000 Z-Laenderbank Bank Austria AG 74,467
----------
322,212
----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ------------- ----------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
SPAIN - 5.0%
500 Autopista Cesa $ 4,144
1,800 Banco Bilbao Vizcaya 47,991
1,300 Banco Central Hispano Americans 30,239
800 Banco de Santander 28,647
300 Banco Espanol De Credito 1,989
900 Empresa Nacional De Electricidad 39,195
50 Gas Natural SDG SA 4,378
3,300 Iberdrola 20,641
1,100 Repsol SA 31,220
3,600 Telefonica de Espana 44,894
----------
253,338
----------
ITALY - 4.2%
2,000 Assicurazioni Generali SpA 49,622
10,200 Fiat SpA 38,051
700 Fiat SpA di Risp 1,688
250 Fidis 565
5,200 Mediobanca SpA 40,926
400 Risanamento Napoli 6,467
30,680 Telecom Italia SpA 73,985
----------
211,304
----------
FINLAND - 1.2%
500 Kesko Group 5,595
400 Kymmene Stromberg 11,523
200 Nokia Group AB 27,478
600 Outokumpu OY, Series A 9,733
175 Stockmann AB, Series B 8,183
----------
62,512
----------
HONG KONG - 0.7%
200 Cheung Kong (Holdings) 872
240 China Light & Power 1,170
1,100 Hang Seng Bank Ltd 6,829
700 Hong Kong Telecommunications 1,259
2,100 HSBC Holdings 22,069
200 Hutchison Whampoa 848
220 Sun Hung Kai Properties 1,480
----------
34,527
----------
NETHERLANDS - 0.3%
100 ABN Amro Holdings 3,637
100 Royal Dutch Petroleum 11,271
----------
14,908
----------
TOTAL COMMON STOCKS (COST $4,328,852) 4,192,402
----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ------------- ----------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
PREFERRED STOCKS - 0.6%
300 Creditanstalt-Bankverein $ 18,207
100 Nokia 14,958
----------
TOTAL PREFERRED STOCKS (COST $26,554) 33,165
----------
WARRANTS - 0.0%
100 Euro Disney, expire 07/11/04+ 20
3 Grands Magasins Jelmoli, expire 03/29/96+ 4
----------
TOTAL WARRANTS (COST $163) 24
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C>
COMMERCIAL PAPER - 13.1% (COST $665,000)
$665,000 General Electric Capital Corporation,
6.000% due 03/01/95 665,000
----------
TOTAL INVESTMENTS (COST $5,020,569*)............................. 96.1% 4,890,591
OTHER ASSETS AND LIABILITIES (NET)............................... 3.9 199,847
---- ----------
NET ASSETS.......................................................100.0% $5,090,438
===== ==========
- ------------------------------------------------------------------------------------
</TABLE>
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
See Notes to Financial Statements.
9
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
DREYFUS/LAUREL INTERNATIONAL FUND FEBRUARY 28, 1995
At February 28, 1995, sector diversification of the Fund was as follows:
<TABLE>
<CAPTION>
PERCENTAGE VALUE
Sector Diversification OF NET ASSETS (NOTE 1)
------------- ----------
<S> <C> <C>
COMMON STOCKS:
Banking 14.9% $ 760,355
Utilities 9.7 491,876
Durable Goods 6.2 317,032
Financial Services 5.5 280,893
Manufacturing 4.4 222,085
Construction & Housing 4.1 207,483
Chemicals 3.8 191,794
Real Estate 3.7 188,210
Consumer Services 3.5 179,076
Oil & Gas 3.3 167,149
Communications 2.8 144,729
Food & Household Products 2.8 143,777
Retail 2.2 111,715
Publishing 1.8 89,482
Electronics 1.7 89,385
Transportation 1.4 72,203
Pharmaceuticals 1.4 69,678
Non-Durable 1.2 60,934
Basic Industries 1.2 59,809
Mining & Metals 1.1 56,488
Machinery 1.0 49,086
Paper Products 0.4 19,234
Technology 0.3 15,418
Other 4.0 204,511
----- ----------
TOTAL COMMON STOCKS 82.4 4,192,402
PREFERRED STOCKS 0.6 33,165
WARRANTS 0.0 24
COMMERCIAL PAPER 13.1 665,000
----- ----------
TOTAL INVESTMENTS 96.1 4,890,591
OTHER ASSETS AND LIABILITIES (Net) 3.9 199,847
----- ----------
NET ASSETS 100.0% $5,090,438
===== ==========
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
DREYFUS/LAUREL INTERNATIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (Unaudited)
- -----------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $5,020,569)(Note 1)
See accompanying schedule...................................... $ 4,890,591
Cash and foreign currency (Cost $137,328)......................... 137,012
Dividends and interest receivable................................. 45,156
Receivable from investment adviser ............................... 41,388
Receivable for investment securities sold......................... 852
-----------
Total Assets................................................... 5,114,999
LIABILITIES:
Investment management fee payable (Note 2)........................ $19,660
Distribution fee payable (Note 3)................................. 2,247
Payable for investment securities purchased....................... 1,923
Accrued Trustees' fees and expenses (Note 2)...................... 731
------
Total Liabilities.............................................. 24,561
-----------
NET ASSETS........................................................... $ 5,090,438
===========
NET ASSETS consist of:
Accumulated net investment loss................................... $ (6,865)
Accumulated net realized loss on investments,
futures contracts and currency transactions .................... (1,949,050)
Net unrealized depreciation of investments, foreign currency
transactions and net other assets............................... (130,294)
Par value......................................................... 395
Paid-in capital in excess of par value............................ 7,176,252
-----------
Total Net Assets............................................... $ 5,090,438
===========
NET ASSET VALUE:
INVESTOR SHARES:
Net asset value, offering and redemption price per share
($5,090,438 -:- 394,646 shares of beneficial interest outstanding)... $12.90
===========
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
DREYFUS/LAUREL INTERNATIONAL FUND
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1995 (Unaudited)
- ------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $2,598).......... $ 21,480
Interest ....................................................... 16,858
---------
Total Investment Income...................................... 38,338
EXPENSES:
Investment management fee (Note 2).............................. $38,176
Distribution fee (Note 3)....................................... 6,448
Trustees' fees and expenses (Note 2)............................ 516
-------
Total Expenses............................................... 45,140
---------
NET INVESTMENT LOSS................................................ (6,802)
---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 4):
Net realized loss on:
Securities transactions...................................... (30,189)
Futures contracts............................................ (16,073)
Forward foreign exchange contracts and foreign currencies.... (1,248)
---------
Net realized loss on investments during the period.............. (47,510)
---------
Net change in unrealized appreciation/(depreciation) of:
Securities................................................... (254,046)
Futures contracts............................................ (33,580)
Currencies .................................................. 5,886
---------
Net unrealized depreciation of investments during
the period................................................... (281,740)
---------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS.................... (329,250)
---------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................................... $(336,052)
=========
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
DREYFUS/LAUREL INTERNATIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
2/28/95 Ended
(Unaudited) 8/31/94
----------- -------
<S> <C> <C>
Net investment income/(loss)..................................... $ (6,802) $ 38,564
Net realized gain/(loss) on investments sold, forward foreign
exchange contracts, futures contracts and currency
transactions during the period................................ (47,510) 588,134
Net unrealized depreciation on investments, futures
contracts and currencies during the period.................... (281,740) (115,761)
---------- ----------
Net increase/(decrease) in net assets resulting from operations.. (336,052) 510,937
Distributions to shareholders from net investment income:
Investor Shares............................................... (74,099) -
Net increase/(decrease) in net assets from Fund share
transactions (Note 5):
Investor Shares............................................... (292,366) 1,496,568
---------- ----------
Net increase/(decrease) in net assets............................ (702,517) 2,007,505
NET ASSETS:
Beginning of period.............................................. 5,792,955 3,785,450
---------- ----------
End of period (including accumulated net investment
loss and undistributed net investment income
of $6,865 and $74,036, respectively).......................... $5,090,438 $5,792,955
========== ==========
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
DREFYFUS\LAUREL INTERNATIONAL FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.*
<TABLE>
<CAPTION>
Six Months
Ended Year Year Year Year Year Period
2/28/95(1) Ended Ended Ended Ended Ended Ended
(unaudited) 8/31/94+++ 8/31/93+++ 8/31/92 8/31/91 8/31/90 8/31/89*
----------- ---------- ---------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $13.99 $12.76 $10.93 $ 11.25 $ 12.25 $ 12.98 $ 12.00
------ ------ ------ ------- ------- ------- -------
Income from investment operations:
Net investment income/(loss)***................... (0.01) 0.10 0.05 0.03 0.12 0.19 0.12
Net realized and unrealized gain/(loss)
on investments................................ (0.89) 1.13 1.78 (0.14) (0.73) (0.65) 0.89
------ ------ ------ ------- ------- ------- -------
Total from investment operations................ (0.90) 1.23 1.83 (0.11) (0.61) (0.46) 1.01
Less distributions:
Distributions from net investment income.......... (0.19) -- -- (0.07) (0.17) (0.18) (0.03)
Distributions from net realized capital gains..... -- -- -- (0.14) (0.22) (0.09)
------ ------ ------ ------- ------- ------- -------
Total distributions............................. (0.19) -- -- (0.21) (0.39) (0.27) (0.03)
------ ------ ------ ------- ------- ------- -------
Net asset value, end of period.................... $12.90 $13.99 $12.76 $ 10.93 $ 11.25 $ 12.25 $ 12.98
====== ====== ====== ======= ======= ======= =======
Total return++ ................................... (6.52)% 9.64% 16.74% (1.05)% (4.88)% (3.69)% 8.40%
====== ====== ====== ======= ======= ======= =======
Ratios to average net assets/Supplemental Data:
Net assets, end of period (in 000's).............. $5,090 $5,793 $3,399 $11,435 $29,706 $31,372 $24,699
Ratio of operating expenses to average
net assets**.................................... 1.75%+ 1.84% 1.79%# 1.87% 1.63% 1.63% 1.76%+
Ratio of net investment income/(loss) to average
net assets...................................... (0.26)%+ 0.74% 0.46% 0.24% 0.97% 1.50% 1.52%+
Portfolio turnover rate........................... 10% 114% 202% 110% 145% 28% 47%
- --------------------
* The Fund commenced operations on October 12, 1988. Effective April 4, 1994 the Retail and
Institutional Classes were reclassified as a single class of shares known as Investor shares. The
amounts shown for the year ended August 31,1994 were calculated using the performance of a Retail share
outstanding from September 1, 1993 to April 3, 1994, and the performance of an Investor share
outstanding From April 4, 1994 to August 31, 1994. The Financial Highlights for the year ended August
31, 1993 and prior periods are based upon a Retail share outstanding.
** Annualized expense ratios before waiver of fees and/or reimbursement of expenses by investment adviser
and/or transfer agent and/or distributor for the years ended August 31, 1994, 1993 and 1992 were
4.21%, 3.15% and 2.11%, respectively.
*** Net investment income/(loss) before waiver and/or reimbursement by investment adviser and/or transfer
agent and/or distributor for the years ended August 31, 1994, 1993 and 1992 were $(0.21), $(0.10) and
$0.00, respectively.
# The annualized operating expense ratio excludes interest expense. The annualized ratio including
interest expense was 1.80% for the year ended August 31, 1993.
+ Annualized.
++ Total return represents aggregate total return for the periods indicated.
+++ Per share amounts have been calculated using the monthly average share method, which more
appropriately presents the per share data for this period since use of the undistributed net
investment income method does not accord with results of operations.
(1) Effective October 17,1994, The Dreyfus Corporation serves as the Fund's investment manager. From
April 4, 1994 to October 16, 1994, Mellon Bank served as the Fund's investment manager. Prior to
April 4, 1994, The Boston Company Advisors, Inc. served as the Fund's investment adviser.
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Investment Series (the "Trust") (formerly The Boston
Company Investment Series), The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
are all registered open-end investment companies that are now part of The
Dreyfus Family of Funds. The Trust is an investment company which, as of
the date of this report, consists of three funds: Dreyfus/Laurel Contrarian
Fund, Dreyfus/Laurel Short-Term Bond Fund and Dreyfus/Laurel International
Fund. This report contains financial statements for the Dreyfus/Laurel
International Fund (the "Fund"). The Trust is a Massachusetts business
trust and is registered with the Securities and Exchange Commission (the
"SEC") under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified open-end management investment company. The Fund is
currently authorized to issue two classes of shares: Investor shares and
Class R shares. As of February 28, 1995, the Fund had not issued any Class
R shares. Investor shares are sold primarily to retail investors through
the Fund's distributor and financial intermediaries and bear a distribution
fee. Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
acting on behalf of customers having a qualified trust or investment
account or relationship at such institution and bear no distribution fee.
Each class of shares has identical rights and privileges except with
respect to the distribution fee and voting rights on matters affecting a
single class. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements in accordance with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
Investments in securities traded on a national securities exchange are
valued at the last reported sales price or, in the absence of a recorded
sale, at the mean of the closing bid and asked prices. Over-the-counter
securities are valued at the mean of the closing bid and asked prices.
When market quotations for securities are not readily available, the
securities are valued at fair value, as determined in good faith by the
Board of Trustees. Bonds are valued through valuations obtained from a
commerical pricing service or at the mean of the most recent bid and asked
prices provided by investment dealers in accordance with procedures
established by the Board of Trustees. Investments in U.S. government
securities (other than short-term securities) are valued at the most recent
quoted bid price in the over-the-counter market. Short-term debt
securities with maturities of 60 days or less from the valuation day are
valued on the basis of amortized cost. Foreign securities are generally
valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time
a value was so established is likely to have changed such value, then the
fair value of those securities will be determined by consideration of other
factors by or under the direction of the Board of Trustees or its
delegates. The value of a futures contract equals the unrealized gain or
loss on the contract, which is determined by marking the contract to the
current settlement price for a like contract acquired on the day on which
the futures contract is being valued.
15
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(B) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the
terms of a typical repurchase agreement, the Fund through its custodian,
takes possession of an underlying debt obligation subject to an obligation
of the seller to repurchase, and the Fund to resell, the obligation at an
agreed-upon price and time, thereby determining the yield during the Fund's
holding period. This arrangement results in a fixed rate of return that is
not subject to market fluctuations during the Fund's holding period. The
value of the collateral is at least equal, at all times, to the total
amount of the repurchase obligations, including interest. In the event of
counterparty default, the Fund has the right to use the collateral to
offset losses incurred. There is potential loss to the Fund in the event
the Fund is delayed or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period while the Fund seeks
to assert its rights. The Fund's investment manager, acting under the
supervision of the Board of Trustees, reviews the value of the collateral
and the creditworthiness of those banks and dealers with which the Fund
enters into repurchase agreements to evaluate potential risks.
(C) FUTURES CONTRACTS
The Fund may enter into futures contracts. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash
or cash equivalents equal to a certain percentage of the contract amount.
This is known as the initial margin. Subsequent payments ("variation
margin") are made or received by the Fund each day, depending on the daily
fluctuation of the value of the contract. The daily changes in the contract
are recorded as unrealized gains or losses. The Fund recognizes a realized
gain or loss when the contract is closed.
The use of futures contracts as a hedging device involves several
risks. The change in value of futures contracts primarily corresponds with
the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, the Fund may not
be able to enter into a closing transaction because of an illiquid
secondary market.
(D) FORWARD FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in forward foreign exchange contracts. Forward
foreign currency contracts are valued at the forward rate and are marked-to-
market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's investment securities,
but it does establish a rate of exchange that can be achieved in the
future. Although forward foreign currency contracts limit the risk of loss
due to a decline in the value of the hedged currency, they also limit any
potential gain that might result should the value of the currency increase.
In addition, the Fund could be exposed to risks if the counterparties to
the contracts are unable to meet the terms of their contracts.
16
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(E) FOREIGN CURRENCY
The books and records of the Fund are maintained in United States (U.S.)
Dollars. Foreign currencies, investments and other assets and liabilities
are translated into U.S. Dollars at the exchange rates prevailing at the
end of the period, and purchases and sales of investment securities, income
and expenses are translated on the respective dates of such transactions.
Unrealized gains and losses which result from changes in foreign currency
exchange rates have been included in the unrealized
appreciation/(depreciation) of foreign currency and net other assets. Net
realized foreign currency gains and losses resulting from changes in
exchange rates include foreign currency gains and losses between trade date
and settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amount actually
received. The portion of foreign currency gains and losses related to
fluctuation in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gains and losses on
investment securities sold.
(F) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend
income is recorded on the ex-dividend date except in the case of certain
dividends from foreign securities which are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income is recorded on the
accrual basis. Securities purchased or sold on a when-issued or delayed-
delivery basis may be settled a month or more after the trade date.
Realized gains and losses from securities sold are recorded on the
identified cost basis. Investment income and realized and unrealized gains
and losses are allocated based upon the relative average daily net assets
of each class of shares.
(G) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, of the Fund are determined
on a class level and are declared and paid annually. The Fund distributes
any net realized capital gains on a Fund level annually. Distributions to
shareholders are recorded on the ex-dividend date. Additional
distributions of net investment income and capital gains for the Fund may
be made at the discretion of the Board of Trustees in order to avoid the
4.00% nondeductible Federal excise tax. Income distributions and capital
gain distributions on a Fund level are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund, timing
differences and differing characterization of distributions made by the
Fund as a whole.
(H) FEDERAL TAXES
It is the Fund's intention to qualify as a regulated investment company
by complying with the requirements of the Internal Revenue Code applicable
to regulated investment companies and by distributing substantially all of
its taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
17
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES AND OTHER RELATED PARTY
TRANSACTIONS
Effective as of October 17, 1994, the Trust's investment management
agreement with Mellon Bank, N.A. ("Mellon Bank") was transferred to The
Dreyfus Corporation (the "Manager"), a wholly-owned subsidiary of Mellon
Bank. The Manager provides, or arranges for one or more third parties to
provide, investment advisory, administrative, custody, fund accounting and
transfer agency services to the Trust. The Manager also directs the
investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at
the annual rate of 1.50% of the value of the Fund's average daily net
assets. Out of its fee, the Manager pays all of the expenses of the Fund
except brokerage fees, taxes, interest, Rule 12b-1 distribution fees and
expenses, fees and expenses of the non-interested Trustees (including
counsel fees) and extraordinary expenses. In addition, the Manager is
required to reduce its fee in an amount equal to the Fund's allocable
portion of the fees and expenses of the non-interested Trustees (including
counsel).
Prior to October 17, 1994, Mellon Bank served as the Trust's investment
manager pursuant to the investment management agreement described above.
Prior to September 23, 1994, Frank Russell Investment Management Company
(the "Administrator") served as the Fund's administrator and provided,
pursuant to an administration agreement, various administrative and
corporate secretarial services to the Fund. Mellon Bank, as investment
manager, paid the Administrator's fee out of the management fee described
above.
Prior to October 17, 1994, Funds Distributor, Inc. served as distributor
of the Trust's shares. Effective October 17, 1994, Premier Mutual Fund
Services, Inc. ("Premier") serves as the Trust's distributor. Premier also
serves as the Trust's sub-administrator and, pursuant to a sub-
administration agreement with the Manager, provides various administrative
and corporate secretarial services to the Trust.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate thereof) receives any compensation from The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal
Funds or The Dreyfus/Laurel Investment Series (collectively, "The
Dreyfus/Laurel Funds") for serving as an officer, Director or Trustee of
The Dreyfus/Laurel Funds. In addition, no officer or employee of the
Manager (or of any parent, subsidiary or affiliate thereof) serves as an
officer, Director or Trustee of The Dreyfus/Laurel Funds. The
Dreyfus/Laurel Funds pay each Director or Trustee who is not an officer or
employee of Premier (or of any parent, subsidiary or affiliate thereof) or
of the Manager, $27,000 per annum, $1,000 for each Board meeting attended
and $750 for each Audit Committee meeting attended, and reimburse each
Director or Trustee for travel and out-of-pocket expenses.
3. DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act relating to its Investor shares. Under the Plan,
the Fund may pay annually up to 0.25% of the value of the average daily net
assets attributable to its Investor shares to compensate Premier and
Dreyfus Service Corporation, an affiliate of
18
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
the Manager, for shareholder servicing activities and Premier for activities
primarily intended to result in the sale of Investor shares. Class R shares
bear no distribution fee.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of
those Trustees who are not "interested persons" of the Trust and who have
no direct to indirect financial interest in the operation of the Plan or in
any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
Purchases and proceeds from sales of securities, excluding short-term
investments and U.S. government securities, for the six months ended
February 28, 1995 aggregated $747,234 and $405,561 for the Fund. Proceeds
from sales of U.S. government securities aggregated $45,000 for the six
months ended February 28, 1995.
At February 28, 1995, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost amounted to
$235,629 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value amounted to $365,607 for
the Fund.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of
beneficial interest of each class in each separate series, with a par value
of $.001 per share. The table below summarizes transactions in Fund shares
for the periods shown in the Statement of Changes in Net Assets.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994#
SHARES AMOUNT SHARES* AMOUNT**
<S> <C> <C> <C> <C>
Investor Shares:
Sold......................... 726,726 $ 9,385,013 910,492 $11,309,382
Issued as reinvestment of
dividends and distributions.. 5,045 65,081 - -
Redeemed..................... (751,164) (9,742,460) (793,030) (9,812,814)
-------- ----------- -------- -----------
Net increase/(decrease)...... (19,393) $ (292,366) 117,462 $ 1,496,568
-------- ----------- -------- -----------
</TABLE>
* Shares include 273,052 of subscriptions and 255,176 of redemptions for
the Institutional Class up to April 4, 1994.
** Amounts include $3,497,501 of subscriptions and $3,369,970 of
redemptions for the Institutional Class up to April 4, 1994.
#Effective April 4, 1994, the Retail and Institutional Classes of shares
were reclassified as a single class of shares known as Investor shares.
As of February 28, 1995, the Fund had not issued any Class R shares.
19
<PAGE>
DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
6. LINE OF CREDIT
The Trust and several affiliated entities participate in a $20 million
line of credit provided by Bank of America (formerly known as Continental
Bank N.A.) under a Line of Credit Agreement (the "Agreement") dated
March 31, 1992, primarily for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the
untimely disposition of securities. Under this Agreement, the Trust may
borrow up to the amount specified in its Borrowing Base Certificate. As
amended effective May 21, 1994, the Trust and the other affiliated entities
are charged an aggregated commitment fee of $50,000, which is allocated
equally among each of the participants. The Agreement requires, among
other provisions, each participating fund to maintain a ratio of net assets
(not including funds borrowed pursuant to the Agreement) to aggregate
amount of indebtedness pursuant to the Agreement of no less than 4 to 1.
At February 28, 1995, the Fund had no outstanding borrowings under this
Agreement.
7. CAPITAL LOSS CARRYFORWARD
As of August 31, 1994, the Fund had available for Federal tax purposes
unused capital loss carryforward of $1,871,098 expiring in the year 2001.
8. PROPOSED MERGER
On December 20, 1994, the Trust's Board of Trustees approved a proposed
plan of reorganization pursuant to which all or substantially all of the
assets of the Fund would be acquired by The Dreyfus International Equity
Allocation Fund, a series of The Dreyfus/Laurel Funds, Inc. On April 19,
1995 a special shareholder meeting will be held to consider the plan of
reorganization which is expected to take place May 1, 1995.
20
<PAGE>
For more information on your Fund, including:
- - General Fund Information.
- - Additional Prospectus--Read the prospectus carefully before you invest.
- - Account Information.
- - Yield and Share Price Information.
CALL 1-800-645-6561
24 HOURS A DAY, 7 DAYS A WEEK.
Or write:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Further information is contained
in the Prospectus, which must
precede or accompany this report.
The Fund is distributed by:
Premier Mutual Fund Services, Inc.
One Exchange Place 10th Floor
Boston, MA 02109
