<PAGE>
The
DREYFUS
[LOGO]
DESCRIPTION OF ART WORK ON REPORT COVER
Small box above fund name showing a lions face.
FAMILY
of FUNDS
DREYFUS/LAUREL CONTRARIAN FUND
FEBRUARY 28, 1995
<PAGE>
DEAR SHAREHOLDER,
We are pleased to send this first letter to shareholders of the Contrarian
Fund under the imprint of our new mutual fund family, the Dreyfus Family of
Funds. As we advised shareholders six months ago, the former Laurel Family of
Funds has been integrated with the Dreyfus funds. Your Fund is now known, and
publicly listed, as the Dreyfus/Laurel Contrarian Fund.
Due to market conditions, the past six months (the fiscal period ending
February 28, 1995) have been difficult ones for the Contrarian Fund.
On the plus side, the earnings growth rate of the stocks in our portfolio was
stronger than that of the stocks in the Standard & Poor's 500 Composite Stock
Price Index (15% for the Fund versus 11.8% for
the S & P). Also, the price/earnings ratio of stocks in the Fund was 11.7,
compared to 12.5 for the S & P, an indication that the Fund held a reserve of
value. Similarly, the price-to-book-value ratio of the Fund was 1.8, compared
to 2.5 for the Standard & Poor's 500.
The Fund nonetheless underperformed its benchmark index during the
last six months. The total return for the Contrarian Fund was (6.84)%*,
for the six months ending February 28, 1995 while the S & P 500 had
a total return of 3.96%** for the same period.
The Fund was very lightly represented in technology stocks at a time when
that group did well. The portfolio was overweighted in basic cyclical
industries, which were weak due to general economic conditions. However, the
portfolio was strongly represented in health care stocks, which did well
during the six months, offsetting some of the declines in other sectors.
Since the close of the fiscal reporting period, the stock market has shown
impressive strength.
We appreciate your investment in the Contrarian Fund and extend a warm
welcome to you as an investor in the Dreyfus Family of Funds.
Sincerely,
Guy R. Scott
Portfolio Manager
March 20, 1995
New York, New York
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** 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.
1
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<PAGE>
TABLE OF CONTENTS
................................................................................
<TABLE>
<S> <C>
Shareholder Letter................................ 1
Portfolio of Investments.......................... 3
Statement of Assets and Liabilities............... 6
Statement of Operations........................... 7
Statement of Changes in Net Assets................ 8
Financial Highlights.............................. 9
Notes to Financial Statements..................... 11
</TABLE>
2
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
COMMON STOCKS -- 93.0%
BASIC INDUSTRIES -- 16.6%
2,000 Alumax, Inc.+ $ 57,250
1,000 Broken Hill Proprietary Ltd. ADR 55,000
1,000 IMC Fertilizer Group, Inc.+ 46,750
2,000 Inco Ltd. 53,750
2,000 Pentair, Inc. 85,875
3,000 Stone Container Corporation+ 70,125
----------
368,750
----------
ENERGY -- 14.8%
191 El Paso Natural Gas Company 5,873
19,600 Global Marine, Inc.+ 80,850
10,500 Rowan Companies, Inc.+ 65,625
3,300 Tidewater, Inc. 64,763
6,900 Varco International, Inc.+ 43,988
7,800 Weatherford International, Inc.+ 67,275
----------
328,374
----------
UTILITIES -- 13.5%
3,700 MCI Communications Corporation 74,462
1,400 Telecom Corporation, New Zealand ADR 77,525
1,100 Telefonica de Espana ADR 41,250
1,600 Telefonos de Mexico ADR 44,200
1,300 Telephone and Data Communications 59,312
----------
296,749
----------
HEALTH CARE -- 12.7%
2,500 Alza Corporation+ 56,875
2,000 Centocor+ 38,125
1,700 FHP International Corporation+ 45,688
1,500 Genzyme Corporation+ 58,125
270 Genzyme Corporation Tissue Repair+ 1,080
1,500 Healthtrust -- The Hospital Company+ 54,375
1,535 Nu Med, Inc+** 0
700 SmithKline Beecham ADR 27,212
----------
281,480
----------
FINANCIAL SERVICES -- 10.7%
2,000 MGIC Investment Corporation 76,250
2,600 Phoenix Re Corporation, Class A 61,100
1,000 Transatlantic Holdings, Inc. 57,500
1,000 Trenwick Group, Inc. 44,000
----------
238,850
----------
</TABLE>
See Notes to Financial Statements. 3
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
COMMON STOCKS (continued)
CONSUMER SERVICES -- 9.7%
208 Cellular Communications, Puerto Rico+ $ 7,176
1,400 Comcast Corporation, Class A 22,400
3,700 Comcast Corporation, Class A, Special (non-voting) 58,275
1,300 NEXTEL Communications, Inc., Class A+ 15,763
1,600 Rogers Cantel Mobile Communications, Inc.+ 41,400
1,600 Viacom, Inc., Class B+ 71,600
----------
216,614
----------
TRANSPORTATION -- 9.5%
4,100 Builders Transportation, Inc.+ 48,688
3,000 Canadian Pacific Ltd. 42,000
900 Delta Airlines, Inc. 52,200
2,100 SkyWest, Inc. 30,450
1,500 Werner Enterprises, Inc. 37,781
----------
211,119
----------
CAPITAL GOODS -- 3.4%
2,300 Trinity Industries Inc. 76,475
----------
OIL & GAS -- 2.1%
920 Mesa Incorporated+ 4,715
1,000 Western Atlas, Inc.+ 41,250
----------
45,965
----------
TOTAL COMMON STOCKS
(Cost $1,907,330) 2,064,376
----------
</TABLE>
4 See Notes to Financial Statements.
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<S> <C> <C> <C>
COMMERCIAL PAPER -- 5.0%
(Cost $112,000)
$112,000 General Electric Capital Corporation
6.000% due 03/01/1995 $ 112,000
---------
TOTAL INVESTMENTS
(Cost $2,019,330*) 98.0% 2,176,376
OTHER ASSETS AND LIABILITIES (NET) 2.0 44,679
----- ----------
NET ASSETS 100.0% $2,221,055
===== ==========
</TABLE>
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* Aggregate cost for Federal tax purposes.
** Security valued at fair value as determined by the Board of Trustees.
+ Non-income producing security.
See Notes to Financial Statements. 5
................................................................................
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND FEBRUARY 28, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $2,019,330) (Note 1)
See accompanying schedule $2,176,376
Cash 63,937
Receivable for investment securities sold 52,978
Dividends and interest receivable 1,402
Receivable for Fund shares sold 11
----------
TOTAL ASSETS 2,294,704
----------
LIABILITIES:
Payable for investment securities purchased $ 43,875
Accrued shareholder reports expense 8,500
Investment management fee payable (Note 2) 7,400
Accrued audit fees 7,358
Payable for Fund shares redeemed 3,689
Distribution fee payable (Note 3) 432
Accrued Trustees' fees and expenses (Note 2) 379
Accrued expenses and other payables 2,016
--------
TOTAL LIABILITIES 73,649
----------
NET ASSETS $2,221,055
==========
NET ASSETS consist of:
Accumulated net investment loss $ (3,967)
Accumulated net realized gain on investments sold 79,675
Unrealized appreciation of investments 157,046
Par value 156
Paid-in capital in excess of par value 1,988,145
----------
TOTAL NET ASSETS $2,221,055
==========
NET ASSET VALUE:
INVESTOR SHARES:
Net asset value, offering and redemption price per share
($2,221,055 / 156,157 shares of beneficial interest
outstanding) $ 14.22
==========
</TABLE>
6 See Notes to Financial Statements.
................................................................................
<PAGE>
STATEMENT OF OPERATIONS
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 12,073
Interest 3,008
---------
TOTAL INVESTMENT INCOME 15,081
---------
EXPENSES:
Investment management fee (Note 2) $ 15,619
Distribution fee (Note 3) 3,175
Trustees' fees and expenses (Note 2) 254
--------
TOTAL EXPENSES 19,048
---------
NET INVESTMENT LOSS (3,967)
---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (Notes 1
and 4):
Net realized gain on investments during the period 79,681
Net unrealized depreciation of investments during the
period (278,931)
---------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (199,250)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(203,217)
=========
</TABLE>
See Notes to Financial Statements. 7
................................................................................
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
2/28/95 ENDED
(UNAUDITED) 8/31/94
<S> <C> <C>
Net investment loss $ (3,967) $ (24,732)
Net realized gain on investments sold during the period 79,681 284,533
Net unrealized depreciation on investments during the
period (278,931) (437,148)
------------ ------------
Net decrease in net assets resulting from operations (203,217) (177,347)
Distribution to shareholders from net realized gain on
investments:
Investor shares (193,269) (166,692)
Institutional Class -- (9,767)
Net decrease in net assets from Fund share transactions
(Note 5):
Investor shares (332,589) (316,038)
------------ ------------
Net decrease in net assets (729,075) (669,844)
NET ASSETS:
Beginning of period 2,950,130 3,619,974
------------ ------------
End of period (including accumulated net investment loss
of $3,967 at February 28, 1995) $ 2,221,055 $ 2,950,130
=========== ===========
</TABLE>
8 See Notes to Financial Statements.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
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DREYFUS/LAUREL CONTRARIAN FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.*
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR
2/28/95(1) ENDED ENDED
(UNAUDITED) 8/31/94++ 8/31/93++
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.57 $ 17.81 $ 14.00
------- -------- --------
Income from investment operations:
Net investment loss*** (0.03) (0.12) (0.12)
Net realized and unrealized gain/(loss)
on investments (1.14) (0.32) 4.90
------- -------- --------
Total from investment operations (1.17) (0.44) 4.78
------- -------- --------
Less distributions:
Distributions from net investment income -- -- --
Distributions from net realized capital gains (1.18) (0.80) (0.97)
------- -------- --------
Total distributions (1.18) (0.80) (0.97)
------- -------- --------
Net asset value, end of period $ 14.22 $ 16.57 $ 17.81
------- -------- --------
Total return+ (6.84)% (2.55)% 35.97%
------- -------- --------
Ratios to average net assets/
Supplemental Data:
Net assets, end of period (in 000's) $ 2,221 $ 2,950 $ 3,503
Ratio of operating expenses to
average net assets** 1.50%+++ 1.83% 2.00%
Ratio of net investment income/(loss) to
average net assets (0.31)%+++ (0.68)% (0.81)%
Portfolio turnover rate 7% 65% 39%
</TABLE>
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<TABLE>
<S> <C>
* The Fund commenced operations on October 17, 1988. Effective April 4, 1994 the Retail and
Institutional Classes of shares 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 Class 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 Class share outstanding.
** Annualized expense ratios before waiver of fees and/or reimbursement of expenses by
investment adviser, transfer agent and custodian for the years ended August 31, 1994, 1993,
1992, 1991, 1990 and the period ended August 31, 1989 were 3.69%, 4.70%, 3.88%, 5.18%,
4.58%, and 5.28%, respectively.
*** Net investment income/(loss) before waiver of fees and/or reimbursement of expenses by
investment adviser, transfer agent and custodian for the years ended August 31, 1994, 1993,
1992, 1991, 1990 and the period ended August 31, 1989 were $(0.44), $(0.54), $(0.24),
$(0.24), $(0.14) and $(0.18), respectively.
+ 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
income method does not accord with results of operations.
+++ Annualized.
(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. 9
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL CONTRARIAN FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.*
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
8/31/92 8/31/91 8/31/90 8/31/89*
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.08 $ 12.06 $ 14.95 $ 12.00
------- -------- -------- --------
Income from investment operations:
Net investment income*** 0.04 0.13 0.15 0.18
Net realized and unrealized
gain/(loss) on investments 0.67 3.08 (1.80) 2.82
------- -------- -------- --------
Total from investment operations 0.71 3.21 (1.65) 3.00
Less distributions:
Distributions from net investment
income (0.09) (0.22) (0.14) (0.05)
Distributions from net realized
capital gains (0.70) (0.97) (1.10) --
------- -------- -------- --------
Total distributions (0.79) (1.19) (1.24) (0.05)
------- -------- -------- --------
Net asset value, end of period $ 14.00 $ 14.08 $ 12.06 $ 14.95
------- -------- -------- --------
Total return+ 5.10 % 29.93% (11.47)% 25.05%
------- -------- -------- --------
Ratios to average net assets/
Supplemental Data:
Net assets, end of period (in 000's) $ 2,666 $ 2,197 $ 1,831 $ 1,635
Ratio of operating expenses to
average net assets** 1.99 % 2.00% 2.00% 1.84%+++
Ratio of net investment income to
average net assets 0.25 % 1.09% 1.34% 1.75%+++
Portfolio turnover rate 76 % 205% 176% 93%
</TABLE>
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<TABLE>
<S> <C>
* The Fund commenced operations on October 17, 1988. Effective April 4, 1994 the Retail and
Institutional Classes of shares 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 Class 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 Class share outstanding.
** Annualized expense ratios before waiver of fees and/or reimbursement of expenses by
investment adviser, transfer agent and custodian for the years ended August 31, 1994, 1993,
1992, 1991, 1990 and the period ended August 31, 1989 were 3.69%, 4.70%, 3.88%, 5.18%,
4.58%, and 5.28%, respectively.
*** Net investment income/(loss) before waiver of fees and/or reimbursement of expenses by
investment adviser, transfer agent and custodian for the years ended August 31, 1994, 1993,
1992, 1991, 1990 and the period ended August 31, 1989 were $(0.44), $(0.54), $(0.24),
$(0.24), $(0.14) and $(0.18), respectively.
+ 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
income method does not accord with results of operations.
+++ Annualized.
(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>
10 See Notes to Financial Statements.
................................................................................
<PAGE>
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 Contrarian
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 commercial 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. Short-term debt securities with maturities of 60 days or less from
the valuation day are valued on the basis of amortized cost.
(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
11
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
................................................................................
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) 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.
(D) 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.
(E) 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.
12
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
................................................................................
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES AND 0THER 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 1.25% 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.
13
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
................................................................................
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 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
or 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 $167,464 and $759,743 for the Fund.
At February 28, 1995, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost amounted to
$421,906 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value amounted to $264,860 for the
Fund.
14
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
................................................................................
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 19,081 $ 291,612 136,619 $ 2,337,972
Issued as reinvestment of
dividends and distributions 13,473 186,335 10,218 171,464
Redeemed (54,420) (810,536) (172,032) (2,825,474)
------- --------- -------- -----------
Net decrease (21,866) $(332,589) (25,195) $ (316,038)
======== ========== ========= ============
- -------------------------------------------------------------------------------
</TABLE>
* Shares include 18,936 of subscriptions, 339 of reinvestments and 3,836 of
redemptions for the Institutional Class up to April 4, 1994.
** Amounts include $329,352 of subscriptions $5,688 of reinvestments and $66,208
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.
8. 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.
15
................................................................................
<PAGE>
FOR MORE INFORMATION ON YOUR FUND, INCLUDING:
* General Fund Information.
* Additional Prospectuses - 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
333SA952
