After adding a report item to the web site it is compulsory to select Yes
in the dialog which appears. The reason for this is that the report is a .net class and as such should be placed in the special App_Code
folder of the web site. To open the report designer afterwards you have to right-click on the report's file and choose View Designer
from the context menu.
Although it is possible to use a report in a web site project we would highly recommend that you follow the best practices and create a class library for the reports. For more information on organizing your solution, please read the Best Practices section.
Hope this helps.
the Telerik team