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Share Name | Share Symbol | Market | Type |
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Renasant Corporation | NASDAQ:RNST | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 26.06 | 25.51 | 26.63 | 0 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number |
811- 7123 |
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Advantage Funds, Inc. |
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(Exact name of Registrant as specified in charter) |
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c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 |
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(Address of principal executive offices) (Zip code) |
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Janette E. Farragher, Esq. 200 Park Avenue New York, New York 10166 |
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(Name and address of agent for service) |
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Registrant's telephone number, including area code: |
(212) 922-6000 |
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Date of fiscal year end:
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10/31 |
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Date of reporting period: |
10/31/2012
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The following N-CSR relates only to the Registrant’s series listed below and does not affect the other series of the Registrant, which has a different fiscal year end and, therefore, different N-CSR reporting requirements. A separate N-CSR Form will be filed for this series, as appropriate.
ADVANTAGE FUNDS, INC.
- DREYFUS GLOBAL ABSOLUTE RETURN FUND
- DREYFUS GLOBAL DYNAMIC BOND FUND
- DREYFUS GLOBAL REAL RETURN FUND
- DREYFUS TOTAL EMERGING MARKETS FUND
- DREYFUS TOTAL RETURN ADVANTAGE FUND
- GLOBAL ALPHA FUND
Dreyfus |
Global Absolute |
Return Fund |
ANNUAL REPORT October 31, 2012
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents |
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THE FUND |
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2 |
A Letter from the Chairman and CEO |
3 |
Discussion of Fund Performance |
6 |
Fund Performance |
8 |
Understanding Your Fund’s Expenses |
8 |
Comparing Your Fund’s Expenses With Those of Other Funds |
9 |
Statement of Investments |
11 |
Statement of Financial Futures |
12 |
Statement of Options Written |
13 |
Statement of Assets and Liabilities |
14 |
Statement of Operations |
15 |
Statement of Changes in Net Assets |
17 |
Financial Highlights |
20 |
Notes to Financial Statements |
38 |
Report of Independent Registered Public Accounting Firm |
39 |
Proxy Results |
40 |
Board Members Information |
42 |
Officers of the Fund |
FOR MORE INFORMATION |
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Back Cover |
Dreyfus
Global Absolute
Return Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Global Absolute Return Fund, covering the 12-month period from November 1, 2011, through October 31, 2012. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite pronounced stock market weakness during the spring of 2012, stocks generally advanced over the reporting period as investors responded to encouraging macroeconomic developments throughout the world. Employment gains in the United States, credible measures to prevent a more severe banking crisis in Europe, and the likelihood of a “soft landing” for China’s economy buoyed investor sentiment, as did aggressively accommodative monetary policies from central banks in the United States, Europe, Japan and China. Consequently, U.S. stocks across all capitalization ranges posted double-digit returns, on average, for the reporting period.
In light of the easy monetary policies adopted by many countries, we expect global growth to be slightly more robust in 2013 than in 2012.The U.S. economic recovery is likely to persist at subpar levels over the first half of the new year, as growth may remain constrained by uncertainties surrounding fiscal policy and tax reforms. However, successful resolution of the current fiscal debate may prompt corporate decision-makers to increase capital spending, which could have positive implications for the U.S. economy and domestic equity markets.As always, we encourage you to stay in touch with your financial advisor as new developments unfold.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2011, through October 31, 2012, as provided by Vassilis Dagioglu, James Stavena,Torrey Zaches and Joseph Miletich, Portfolio Managers of Mellon Capital Management Corporation, Sub-Investment Adviser
Fund and Market Performance Overview
For the 12-month period ended October 31, 2012, Dreyfus Global Absolute Return Fund’s Class A shares produced a total return of –1.16%, Class C shares returned –1.95% and Class I shares returned –0.90%. 1 In comparison, the fund’s benchmark, the Citigroup 30-Day Treasury Bill Index, produced a total return of 0.04% for the same period. 2
Amid heightened market volatility, improving economic sentiment in many parts of the world generally supported prices of global stocks and bonds, enabling them to produce modestly positive returns for the reporting period. The fund produced lower returns than its benchmark, largely due to shortfalls in our currency and asset allocation strategies.
The Fund’s Investment Approach
The fund seeks total return through investments in securities and instruments that provide exposure to global stock, bond and currency markets. For allocation among equity markets, the portfolio managers employ a bottom-up valuation approach using proprietary models to derive market level expected returns. For allocation among bond markets, the portfolio managers use proprietary models to identify temporary mispricings among the long-term government bond markets.The most relevant long-term bond yield within each country serves as the expected return for each bond market. Our quantitative investment approach is designed to identify and exploit relative misvaluations across and within major developed capital markets such as the United States, Japan and the larger Western European countries.
Markets Reacted to Macroeconomic Developments
The reporting period began in the wake of major declines in financial markets throughout the world, resulting in attractive valuations in a number of asset classes in November 2011. Indeed, by the beginning of 2012 stocks and bonds in many markets
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
were rallying amid encouraging macroeconomic developments, including U.S. employment gains, a quantitative easing program in Europe that forestalled a more severe banking crisis in the region, and less restrictive monetary and fiscal policies in China in an environment of reduced inflationary pressures. Meanwhile, corporate earnings generally remained strong, and many companies had shored up their balance sheets. Consequently, investors grew more tolerant of risks, focusing more intently on investment fundamentals and less on macroeconomic developments.
These positive influences were called into question during the spring, when the U.S. labor market’s rebound slowed, measures designed to relieve fiscal pressures in Europe encountered resistance, and the Chinese economy remained sluggish. The summer saw the market rallies resume amid more encouraging economic news, and global stocks and bonds ended the reporting period with mildly positive absolute returns, on average.
Alpha Sources Produced Mixed Results
The fund’s relative performance was constrained during the reporting period by our asset allocation strategy. The timing of our asset allocation decision between stocks and bonds negatively impacted performance during the period. Our movement to a small overweight to stocks and underweight to bonds at the end of 2011 constrained performance in the first quarter of 2012, as stocks significantly outperformed.As the strategy moved into a larger underweight to bonds in the second quarter, bonds outperformed and performance suffered. Our currency strategy also hurt the fund’s relative results, as weakness stemming from underweighted exposure to the British pound and an overweighted position in the Australian dollar were only partly offset by more successful positions in the euro and New Zealand dollar.
The fund achieved better results in global bond markets, primarily due to overweighted exposure to U.S.Treasury securities and underweighted exposure to sovereign bonds in Japan, Canada, and Australia. Indeed, only U.K. gilts proved counterproductive, and our bond market selection model ranked as the fund’s best performing alpha source during the reporting period.
Our stock market selection model also generally fared well. Overweighted exposure to German equities buoyed relative performance when Germany led European markets higher in response to policymakers’ efforts to address the region’s financial crisis.
4
Underweighted exposure to Japanese equities also contributed positively to relative returns, as Japan continued to face deflationary pressures and persistently weak conditions in its domestic economy. Relative weakness stemming from underweighted exposure to Swiss equities and overweighted positions in the United Kingdom and Italy was not enough to erase gains in other stock markets.
Identifying Opportunities in Global Markets
As of the reporting period’s end, our quantitative models have continued to identify areas of opportunity in all four of the alpha sources we consider. Equity valuations have remained attractive compared to historical norms, indicating that the fund’s overweighted exposure to global stock markets and underweighted position among fixed-income markets remains warranted. Our stock market selection model has found a number of opportunities in Germany, the Netherlands, and the United States, but fewer in Japan, Hong Kong, and Switzerland. Our bond market selection model has signaled that German and U.S. government bonds are attractive, but Canadian and U.K. debt securities are less so. Finally, our currency model has favored the Australian dollar, Canadian dollar, Swedish krona and Norwegian krone over the U.S. dollar and euro.
November 15, 2012
Investing in foreign companies involves special risks, including changes in currency rates, political, economic and social instability, a lack of comprehensive company information, differing auditing and legal standards, and less market liquidity.
Equity securities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus. Bond securities are subject generally to interest rate, credit, liquidity, call, sector and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus.
Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged.
1 Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the |
maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed |
on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past |
performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon |
redemption, fund shares may be worth more or less than their original cost. Return figures provided reflect the |
absorption of certain fund expenses by The Dreyfus Corporation pursuant to an agreement in effect until March 1, |
2014. Had these expenses not been absorbed, the fund’s returns would have been lower. |
2 SOURCE: LIPPER INC. – Citigroup 30-Day Treasury Bill Index is a market value-weighted index of public |
obligations of the U.S.Treasury with maturities of 30 days. Investors cannot invest directly in any index. |
The Fund | 5 |
FUND PERFORMANCE
† Source: Lipper Inc.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of Dreyfus Global Absolute Return Fund on 12/18/07 (inception date) to a $10,000 investment made in the Citibank 30-Day Treasury Bill Index (the “Index”) on that date.All dividends and capital gain distributions are reinvested.
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes.The Index is a market value-weighted index of public obligations of the U.S.Treasury with maturities of 30 days. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
6
Average Annual Total Returns as of 10/31/12 | |||||
Inception | From | ||||
Date | 1 Year | Inception | |||
Class A shares | |||||
with maximum sales charge (5.75%) | 12/18/07 | –6.86 | % | –0.62 | % |
without sales charge | 12/18/07 | –1.16 | % | 0.59 | % |
Class C shares | |||||
with applicable redemption charge † | 12/18/07 | –2.93 | % | –0.16 | % |
without redemption | 12/18/07 | –1.95 | % | –0.16 | % |
Class I shares | 12/18/07 | –0.90 | % | 0.88 | % |
Citibank 30-Day Treasury Bill Index | 12/31/07 | 0.04 | % | 0.34 | % †† |
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
† | The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the |
date of purchase. | |
†† | For comparative purposes, the value of the Index as of 12/31/07 is used as the beginning value on 12/18/07. |
The Fund | 7 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Global Absolute Return Fund from May 1, 2012 to October 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 7.55 | $ 11.30 | $ 6.29 | |||
Ending value (after expenses) | $ 1,001.70 | $ 998.30 | $ 1,003.30 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 7.61 | $ 11.39 | $ 6.34 | |||
Ending value (after expenses) | $ 1,017.60 | $ 1,013.83 | $ 1,018.85 |
† Expenses are equal to the fund’s annualized expense ratio of 1.50% for Class A, 2.25% for Class C and 1.25% |
for Class I, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half |
year period). |
8
STATEMENT OF INVESTMENTS
October 31, 2012
Face Amount | ||||
Covered by | ||||
Options Purchased—3.5% | Contracts ($) | Value ($) | ||
Call Options—3.3% | ||||
U.S. Treasury 10 Year Note Futures, | ||||
December 2012 @ $115 | 36,000 | a | 649,125 | |
Number of | ||||
Contracts | Value ($) | |||
Put Options—.2% | ||||
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,601 | 50 | a | 6,595 | |
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,532 | 220 | a | 22,478 | |
29,073 | ||||
Total Options Purchased | ||||
(cost $679,678) | 678,198 | |||
Principal | ||||
Short-Term Investments—81.3% | Amount ($) | Value ($) | ||
U.S. Treasury Bills: | ||||
0.09%, 11/23/12 | 750,000 | 749,963 | ||
0.10%, 11/29/12 | 3,500,000 | 3,499,776 | ||
0.10%, 12/20/12 | 1,230,000 | b | 1,229,836 | |
0.10%, 1/10/13 | 1,838,000 | 1,837,713 | ||
0.10%, 1/17/13 | 5,620,000 | 5,619,011 | ||
0.11%, 11/15/12 | 2,860,000 | 2,859,937 | ||
Total Short-Term Investments | ||||
(cost $15,795,837) | 15,796,236 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Other Investment—17.4% | Shares | Value ($) | ||
Registered Investment Company; | ||||
Dreyfus Institutional Preferred | ||||
Plus Money Market Fund | ||||
(cost $3,372,230) | 3,372,230 | c | 3,372,230 | |
Total Investments (cost $19,847,745) | 102.2 | % | 19,846,664 | |
Liabilities, Less Cash and Receivables | (2.2 | %) | (430,201 | ) |
Net Assets | 100.0 | % | 19,416,463 |
CHF—Swiss Franc | |
a | Non-income producing security. |
b | Held by or on behalf of a counterparty for open financial futures positions. |
c | Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited) † | |||
Value (%) | Value (%) | ||
Short-Term/ | Options Purchased | 3.5 | |
Money Market Investments | 98.7 | 102.2 |
† Based on net assets. |
See notes to financial statements. |
10
STATEMENT OF FINANCIAL FUTURES
October 31, 2012
Unrealized | ||||||
Market Value | Appreciation | |||||
Covered by | (Depreciation) | |||||
Contracts | Contracts ($) | Expiration | at 10/31/2012 | ($) | ||
Financial Futures Long | ||||||
Amsterdam Exchange Index | 26 | 2,220,235 | November 2012 | (6,541 | ) | |
ASX SPI 200 Index | 4 | 467,041 | December 2012 | 10,942 | ||
CAC 40 10 Euro | 19 | 843,246 | November 2012 | (16,482 | ) | |
DAX | 9 | 2,119,907 | December 2012 | (22,960 | ) | |
Euro-Bond Options | 60 | 1,685,585 | November 2012 | 23,200 | ||
FTSE 100 | 2 | 185,723 | December 2012 | (1,717 | ) | |
Standard & Poor’s 500 E-mini | 38 | 2,672,920 | December 2012 | (62,640 | ) | |
Financial Futures Short | ||||||
Australian 10 Year Bonds | 25 | (3,248,507 | ) | December 2012 | (3,394 | ) |
Canadian 10 Year Bonds | 31 | (4,251,296 | ) | December 2012 | (22,290 | ) |
Euro-Bond | 20 | (3,671,798 | ) | December 2012 | (8,191 | ) |
Hang Seng | 16 | (2,237,302 | ) | November 2012 | (534 | ) |
Japanese 10 Year Mini Bonds | 5 | (902,039 | ) | December 2012 | (527 | ) |
Long Gilt | 24 | (4,606,596 | ) | December 2012 | 60,500 | |
S&P/Toronto Stock | ||||||
Exchange 60 Index | 5 | (710,355 | ) | December 2012 | (4,553 | ) |
Topix Index | 20 | (1,854,122 | ) | December 2012 | (8,454 | ) |
U.S. Treasury 10 Year Notes | 7 | (931,219 | ) | December 2012 | (1,514 | ) |
Gross Unrealized Appreciation | 94,642 | |||||
Gross Unrealized Depreciation | (159,797 | ) | ||||
See notes to financial statements. |
The Fund | 11 |
STATEMENT OF OPTIONS WRITTEN
October 31, 2012
Number of | ||||
Contracts ($) | Value ($) | |||
Call Options: | ||||
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,601 | 50 | a | (6,244 | ) |
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,532 | 220 | a | (37,224 | ) |
(premiums received $48,603) | (43,468 | ) |
CHF—Swiss Franc |
a Non-income producing security. |
See notes to financial statements. |
12
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2012
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments: | ||||
Unaffiliated issuers | 16,475,515 | 16,474,434 | ||
Affiliated issuers | 3,372,230 | 3,372,230 | ||
Cash | 3,892 | |||
Unrealized appreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 121,091 | |||
Receivable for futures variation margin—Note 4 | 59,825 | |||
Receivable for shares of Common Stock subscribed | 515 | |||
Dividends and interest receivable | 359 | |||
Prepaid expenses | 26,337 | |||
20,058,683 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 18,549 | |||
Unrealized depreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 385,077 | |||
Payable for shares of Common Stock redeemed | 141,786 | |||
Outstanding options written, at value (premiums | ||||
received $48,603)—See Statement of Options Written—Note 4 | 43,468 | |||
Accrued expenses | 53,340 | |||
642,220 | ||||
Net Assets ($) | 19,416,463 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 19,541,082 | |||
Accumulated investment (loss)—net | (23,934 | ) | ||
Accumulated net realized gain (loss) on investments | 250,545 | |||
Accumulated net unrealized appreciation (depreciation) on | ||||
investments, options transactions and foreign currency transactions | ||||
[including ($65,155) net unrealized (depreciation) on financial futures] | (351,230 | ) | ||
Net Assets ($) | 19,416,463 | |||
Net Asset Value Per Share | ||||
Class A | Class C | Class I | ||
Net Assets ($) | 6,705,845 | 1,079,230 | 11,631,388 | |
Shares Outstanding | 561,231 | 93,388 | 963,161 | |
Net Asset Value Per Share ($) | 11.95 | 11.56 | 12.08 | |
See notes to financial statements. |
The Fund | 13 |
STATEMENT OF OPERATIONS |
Year Ended October 31, 2012 |
Investment Income ($): | ||
Income: | ||
Interest | 6,971 | |
Cash dividends; | ||
Affiliated issuers | 3,597 | |
Total Income | 10,568 | |
Expenses: | ||
Management fee—Note 3(a) | 240,215 | |
Registration fees | 52,853 | |
Auditing fees | 45,841 | |
Shareholder servicing costs—Note 3(c) | 35,646 | |
Prospectus and shareholders’ reports | 15,409 | |
Distribution fees—Note 3(b) | 8,925 | |
Custodian fees—Note 3(c) | 1,981 | |
Directors’ fees and expenses—Note 3(d) | 1,499 | |
Legal fees | 1,122 | |
Loan commitment fees—Note 2 | 230 | |
Miscellaneous | 17,636 | |
Total Expenses | 421,357 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (119,264 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (9 | ) |
Net Expenses | 302,084 | |
Investment (Loss)—Net | (291,516 | ) |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | 4,548 | |
Net realized gain (loss) on options transactions | 147,317 | |
Net realized gain (loss) on financial futures | 401,516 | |
Net realized gain (loss) on forward foreign currency exchange contracts | (63,199 | ) |
Net Realized Gain (Loss) | 490,182 | |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | (27,428 | ) |
Net unrealized appreciation (depreciation) on options transactions | 19,668 | |
Net unrealized appreciation (depreciation) on financial futures | (443,315 | ) |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (84,062 | ) |
Net Unrealized Appreciation (Depreciation) | (535,137 | ) |
Net Realized and Unrealized Gain (Loss) on Investments | (44,955 | ) |
Net (Decrease) in Net Assets Resulting from Operations | (336,471 | ) |
See notes to financial statements. |
14
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31, | ||||
2012 | 2011 | |||
Operations ($): | ||||
Investment (loss)—net | (291,516 | ) | (269,216 | ) |
Net realized gain (loss) on investments | 490,182 | 252,291 | ||
Net unrealized appreciation | ||||
(depreciation) on investments | (535,137 | ) | (52,052 | ) |
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | (336,471 | ) | (68,977 | ) |
Dividends to Shareholders from ($): | ||||
Net realized gain on investments: | ||||
Class A Shares | — | (453,969 | ) | |
Class C Shares | — | (75,261 | ) | |
Class I Shares | — | (293,950 | ) | |
Total Dividends | — | (823,180 | ) | |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 5,677,882 | 7,877,793 | ||
Class C Shares | 221,798 | 670,211 | ||
Class I Shares | 3,811,249 | 18,498,422 | ||
Dividends reinvested: | ||||
Class A Shares | — | 273,731 | ||
Class C Shares | — | 43,293 | ||
Class I Shares | — | 212,881 | ||
Cost of shares redeemed: | ||||
Class A Shares | (5,300,567 | ) | (9,145,162 | ) |
Class C Shares | (318,729 | ) | (678,711 | ) |
Class I Shares | (8,540,518 | ) | (6,249,990 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | (4,448,885 | ) | 11,502,468 | |
Total Increase (Decrease) in Net Assets | (4,785,356 | ) | 10,610,311 | |
Net Assets ($): | ||||
Beginning of Period | 24,201,819 | 13,591,508 | ||
End of Period | 19,416,463 | 24,201,819 | ||
Accumulated investment (loss)—net | (23,934 | ) | — |
The Fund | 15 |
STATEMENT OF CHANGES IN NET ASSETS (continued)
Year Ended October 31, | ||||
2012 | 2011 | |||
Capital Share Transactions: | ||||
Class A | ||||
Shares sold | 467,013 | 649,060 | ||
Shares issued for dividends reinvested | — | 22,623 | ||
Shares redeemed | (443,095 | ) | (762,454 | ) |
Net Increase (Decrease) in Shares Outstanding | 23,918 | (90,771 | ) | |
Class C | ||||
Shares sold | 19,110 | 56,150 | ||
Shares issued for dividends reinvested | — | 3,647 | ||
Shares redeemed | (27,296 | ) | (57,539 | ) |
Net Increase (Decrease) in Shares Outstanding | (8,186 | ) | 2,258 | |
Class I | ||||
Shares sold | 314,035 | 1,514,572 | ||
Shares issued for dividends reinvested | — | 17,478 | ||
Shares redeemed | (704,583 | ) | (518,505 | ) |
Net Increase (Decrease) in Shares Outstanding | (390,548 | ) | 1,013,545 | |
See notes to financial statements. |
16
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||||||
Class A Shares | 2012 | 2011 | 2010 | 2009 | 2008 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 12.09 | 12.73 | 11.91 | 10.75 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment income (loss)—net b | (.18 | ) | (.17 | ) | (.17 | ) | (.15 | ) | .12 | |
Net realized and unrealized | ||||||||||
gain (loss) on investments | .04 | .25 | .99 | 1.48 | (1.87 | ) | ||||
Total from Investment Operations | (.14 | ) | .08 | .82 | 1.33 | (1.75 | ) | |||
Distributions: | ||||||||||
Dividends from investment income—net | — | — | — | (.17 | ) | — | ||||
Dividends from net realized | ||||||||||
gain on investments | — | (.72 | ) | — | — | — | ||||
Total Distributions | — | (.72 | ) | — | (.17 | ) | — | |||
Net asset value, end of period | 11.95 | 12.09 | 12.73 | 11.91 | 10.75 | |||||
Total Return (%) c | (1.16 | ) | .66 | 6.89 | 12.52 | (14.00 | ) d | |||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 2.08 | 2.06 | 2.15 | 2.65 | 3.04 | e | ||||
Ratio of net expenses | ||||||||||
to average net assets | 1.50 | 1.50 | 1.50 | 1.50 | 1.48 | e | ||||
Ratio of net investment income | ||||||||||
(loss) to average net assets | (1.45 | ) | (1.41 | ) | (1.37 | ) | (1.29 | ) | 1.14 | e |
Portfolio Turnover Rate | — | — | — | — | — | |||||
Net Assets, end of period ($ x 1,000) | 6,706 | 6,498 | 7,995 | 8,911 | 4,630 |
a | From December 18, 2007 (commencement of operations) to October 31, 2008. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund | 17 |
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||||||
Class C Shares | 2012 | 2011 | 2010 | 2009 | 2008 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 11.79 | 12.51 | 11.79 | 10.68 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment income (loss)—net b | (.26 | ) | (.26 | ) | (.26 | ) | (.22 | ) | .03 | |
Net realized and unrealized | ||||||||||
gain (loss) on investments | .03 | .26 | .98 | 1.45 | (1.85 | ) | ||||
Total from Investment Operations | (.23 | ) | — | .72 | 1.23 | (1.82 | ) | |||
Distributions: | ||||||||||
Dividends from investment income—net | — | — | — | (.12 | ) | — | ||||
Dividends from net realized | ||||||||||
gain on investments | — | (.72 | ) | — | — | — | ||||
Total Distributions | — | (.72 | ) | — | (.12 | ) | — | |||
Net asset value, end of period | 11.56 | 11.79 | 12.51 | 11.79 | 10.68 | |||||
Total Return (%) c | (1.95 | ) | .00 | d | 6.11 | 11.64 | (14.56 | ) e | ||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 2.91 | 2.82 | 2.96 | 3.32 | 4.00 | f | ||||
Ratio of net expenses | ||||||||||
to average net assets | 2.25 | 2.25 | 2.25 | 2.25 | 2.23 | f | ||||
Ratio of net investment income | ||||||||||
(loss) to average net assets | (2.20 | ) | (2.16 | ) | (2.13 | ) | (2.03 | ) | .35 | f |
Portfolio Turnover Rate | — | — | — | — | — | |||||
Net Assets, end of period ($ x 1,000) | 1,079 | 1,197 | 1,243 | 1,440 | 997 |
a | From December 18, 2007 (commencement of operations) to October 31, 2008. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Amount represents less than .01%. |
e | Not annualized. |
f | Annualized. |
See notes to financial statements.
18
Year Ended October 31, | ||||||||||
Class I Shares | 2012 | 2011 | 2010 | 2009 | 2008 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 12.19 | 12.80 | 11.94 | 10.78 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment income (loss)—net b | (.15 | ) | (.14 | ) | (.14 | ) | (.11 | ) | .09 | |
Net realized and unrealized | ||||||||||
gain (loss) on investments | .04 | .25 | 1.00 | 1.48 | (1.81 | ) | ||||
Total from Investment Operations | (.11 | ) | .11 | .86 | 1.37 | (1.72 | ) | |||
Distributions: | ||||||||||
Dividends from investment income—net | — | — | — | (.21 | ) | — | ||||
Dividends from net realized | ||||||||||
gain on investments | — | (.72 | ) | — | — | — | ||||
Total Distributions | — | (.72 | ) | — | (.21 | ) | — | |||
Net asset value, end of period | 12.08 | 12.19 | 12.80 | 11.94 | 10.78 | |||||
Total Return (%) | (.90 | ) | .90 | 7.20 | 12.91 | (13.76 | ) c | |||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 1.77 | 1.76 | 1.89 | 2.57 | 3.12 | d | ||||
Ratio of net expenses | ||||||||||
to average net assets | 1.25 | 1.25 | 1.25 | 1.25 | 1.23 | d | ||||
Ratio of net investment income | ||||||||||
(loss) to average net assets | (1.20 | ) | (1.18 | ) | (1.12 | ) | (1.07 | ) | 1.03 | d |
Portfolio Turnover Rate | — | — | — | — | — | |||||
Net Assets, end of period ($ x 1,000) | 11,631 | 16,506 | 4,354 | 1,708 | 3,851 |
a | From December 18, 2007 (commencement of operations) to October 31, 2008. |
b | Based on average shares outstanding at each month end. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
The Fund | 19 |
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Global Absolute Return Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company that offers thirteen series, including the fund. The fund’s investment objective is to seek total return. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Mellon Capital Management Corporation (“Mellon Capital”), a subsidiary of BNY Mellon, serves as the fund’s sub-investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares.The fund is authorized to issue 400 million shares of $.001 par value Common Stock. The fund currently offers three classes of shares: Class A (200 million shares authorized), Class C (100 million shares authorized) and Class I (100 million shares authorized). Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I shares are sold at net asset value per share only to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are
20
charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications.The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
The Fund | 21 |
NOTES TO FINANCIAL STATEMENTS (continued)
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1 —unadjusted quoted prices in active markets for identical investments.
Level 2 —other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 —significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Registered investment companies that are not traded on an exchange are valued at their net asset value and are categorized within Level 1 of the fair value hierarchy.
Investments in securities excluding short-term investments (other than U.S. Treasury Bills), financial futures, options and forward foreign currency exchange contracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions.These securities are generally categorized within Level 2 of the fair value hierarchy.
22
U.S. Treasury Bills are valued at the mean price between quoted bid prices and asked prices by the Service. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service’s procedures are reviewed by Dreyfus under the general supervision of the Board.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.These securities are either categorized as Level 2 or 3 depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such
The Fund | 23 |
NOTES TO FINANCIAL STATEMENTS (continued)
securities are primarily traded or at the last sales price on the national securities market on each business day. These securities are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter are valued at the mean between the bid and asked price.These securities are generally categorized within Level 2 of the fair value hierarchy. Forward contracts are valued at the forward rate. These securities are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2012 in valuing the fund’s investments:
Level 2—Other | Level 3— | ||||||
Level 1— | Significant | Significant | |||||
Unadjusted | Observable | Unobservable | |||||
Quoted Prices | Inputs | Inputs | Total | ||||
Assets ($) | |||||||
Investments in Securities: | |||||||
Mutual Funds | 3,372,230 | — | — | 3,372,230 | |||
U.S. Treasury | — | 15,796,236 | — | 15,796,236 | |||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts † | — | 121,091 | — | 121,091 | |||
Financial Futures † | 94,642 | — | — | 94,642 | |||
Options Purchased | 678,198 | — | — | 678,198 | |||
Liabilities ($) | |||||||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts † | — | (385,077 | ) | — | (385,077 | ) | |
Financial Futures † | (159,797 | ) | — | — | (159,797 | ) | |
Options Written | (43,468 | ) | — | — | (43,468 | ) |
† | Amount shown represents unrealized appreciation (depreciation) at period end. |
At October 31, 2012, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes
24
in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on investments are included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended October 31, 2012 were as follows:
Affiliated | |||||||
Investment | Value | Value | Net | ||||
Company | 10/31/2011 | ($) | Purchases ($) | Sales ($) | 10/31/2012 | ($) | Assets (%) |
Dreyfus | |||||||
Institutional | |||||||
Preferred | |||||||
Plus Money | |||||||
Market Fund | 4,649,373 | 18,312,859 | 19,590,002 | 3,372,230 | 17.4 |
(e) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue
The Fund | 25 |
NOTES TO FINANCIAL STATEMENTS (continued)
Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the four-year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2012, the components of accumulated earnings on a tax basis were as follows: unrealized depreciation $100,685. In addition, the fund deferred for tax purposes late year ordinary losses of $23,934 to the first day of the following fiscal year.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2012 and October 31, 2011 were as follows: ordinary income $0 and $91,906 and long-term capital gains $0 and $731,274, respectively.
During the period ended October 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency gains and losses and net operating losses, the fund increased accumulated undistributed investment income-net by $267,582 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
26
(g) New Accounting Pronouncement: In December 2011, FASB issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position.They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition,ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”).ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact on the fund’s financial statement disclosures.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Effective October 10, 2012, the $225 million unsecured credit facility with Citibank, N.A., was decreased to $210 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended October 31, 2012, the fund did not borrow under the Facilities.
The Fund | 27 |
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of 1.10% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has contractually agreed, until March 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund, so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.25% of the value of the fund’s average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $119,264 during the period ended October 31, 2012.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and Mellon Capital, Dreyfus pays Mellon Capital an annual fee of .65% of the value of the fund’s average daily net assets, payable monthly.
During the period ended October 31, 2012, the Distributor retained $2,553 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended October 31, 2012, Class C shares were charged $8,925 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services.The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts.The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) in respect of these services. The Distributor determines
28
the amounts to be paid to Service Agents. During the period ended October 31, 2012, Class A and Class C shares were charged $16,982 and $2,975, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates DreyfusTransfer, Inc. (“DTI”), a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $4,155 for transfer agency services and $31 for cash management services. Cash management fees were partially offset by earnings credits of $3. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended October 31, 2012, the fund was charged $1,981 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of NewYork Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $181 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations. These fees were partially offset by earnings credits of $6.
During the period ended October 31, 2012, the fund was charged $8,517 for services performed by the Chief Compliance Officer and his staff.
The Fund | 29 |
NOTES TO FINANCIAL STATEMENTS (continued)
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $18,274, Distribution Plan fees $682, Shareholder Services Plan fees $1,680, custodian fees $664, Chief Compliance Officer fees $2,654 and transfer agency per account fees $1,151, which are offset against an expense reimbursement currently in effect in the amount of $6,556.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
During the period ended October 31, 2012, there were no purchases and sales of investment securities, excluding short-term securities, financial futures, options transactions and forward contracts.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended October 31, 2012 is discussed below.
The following tables show the fund’s exposure to different types of market risk as it relates to the statement of Assets and Liabilities and the Statement of Operations, respectively.
Fair value of derivative instruments as of October 31, 2012 is shown below:
Derivative | Derivative | |||
Assets ($) | Liabilities ($) | |||
Equity rate risk 1,2 | 40,015 | Equity risk 1,3 | (167,349 | ) |
Interest rate risk 1,2 | 732,825 | Interest rate risk 1 | (35,916 | ) |
Foreign exchange risk 4 | 121,091 | Foreign exchange risk 5 | (385,077 | ) |
Gross fair value of | ||||
derivatives contracts | 893,931 | (588,342 | ) |
Statement of Assets and Liabilities location:
1 | Includes cumulative appreciation (depreciation) on financial futures as reported in the Statement of |
Financial Futures, but only the unpaid variation margin is reported in the Statement of Assets | |
and Liabilities. | |
2 | Options purchased are included in Investments in securities–Unaffiliated issuers, at value. |
3 | Outstanding options written, at value. |
4 | Unrealized appreciation on forward foreign currency exchange contracts. |
5 | Unrealized depreciation on forward foreign currency exchange contracts. |
30
The effect of derivative instruments in the Statement of Operations during the period ended October 31, 2012 is shown below:
Amount of realized gain or (loss) on derivatives recognized in income ($)
Financial | Options | Forward | ||||||
Underlying risk | Futures 6 | Transactions 7 | Contracts 8 | Total | ||||
Equity | 657,261 | (329,473 | ) | — | 327,788 | |||
Interest rate | (255,745 | ) | 476,790 | — | 221,045 | |||
Foreign exchange | — | — | (63,199 | ) | (63,199 | ) | ||
Total | 401,516 | 147,317 | (63,199 | ) | 485,634 |
Change in unrealized appreciation or (depreciation) on derivatives recognized in income ($)
Financial | Options | Forward | |||||
Underlying risk | Futures 9 | Transactions 10 | Contracts 11 | Total | |||
Equity | (375,577 | ) | 5,767 | — | (369,810 | ) | |
Interest rate | (67,738 | ) | 13,901 | — | (53,837 | ) | |
Foreign exchange | — | — | (84,062 | ) | (84,062 | ) | |
Total | (443,315 | ) | 19,668 | (84,062 | ) | (507,709 | ) |
Statement of Operations location:
6 | Net realized gain (loss) on financial futures. |
7 | Net realized gain (loss) on options transactions. |
8 | Net realized gain (loss) on forward foreign currency exchange contracts. |
9 | Net unrealized appreciation (depreciation) on financial futures. |
10 Net unrealized appreciation (depreciation) on options transactions. | |
11 Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
Financial Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including equity price risk and interest rate risk, as a result of changes in value of underlying financial instruments.The fund invests in financial futures in order to manage its exposure to or protect against changes in the market. A financial futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents.The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change.Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations.
The Fund | 31 |
NOTES TO FINANCIAL STATEMENTS (continued)
When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Statement of Operations.There is minimal counterparty credit risk to the fund with financial futures since they are exchange traded, and the exchange’s clearinghouse guarantees the financial futures against default. Financial futures open at October 31, 2012 are set forth in the Statement of Financial Futures.
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in interest rates and the values of equities or as a substitute for an investment. The fund is subject to interest rate risk and market risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying security or securities at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying security or securities at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates.
32
As a writer of an option, the fund has no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the security underlying the written option.There is a risk of loss from a change in value of such options which may exceed the related premiums received. The Statement of Operations reflects the following: any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction.
The following summarizes the fund’s call/put options written during the period ended October 31, 2012:
Options Terminated | |||||
Number of | Premiums | Net Realized | |||
Options Written: | Contracts | Received ($) | Cost ($) | Loss ($) | |
Contracts outstanding | |||||
October 31, 2011 | 90 | 29,121 | |||
Contracts written | 1,510 | 258,268 | |||
Contracts terminated: | |||||
Contracts closed | 1,330 | 238,786 | 446,066 | (207,280 | ) |
Contracts Outstanding | |||||
October 31, 2012 | 270 | 48,603 |
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. Any
The Fund | 33 |
NOTES TO FINANCIAL STATEMENTS (continued)
realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at October 31, 2012:
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases: | ||||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 403,640 | 415,428 | 417,308 | 1,880 | ||
12/19/2012 b | 2,259,860 | 2,331,660 | 2,336,382 | 4,722 | ||
12/19/2012 c | 1,082,614 | 1,110,475 | 1,119,273 | 8,798 | ||
12/19/2012 d | 113,245 | 116,754 | 117,080 | 326 | ||
12/19/2012 e | 122,935 | 126,241 | 127,097 | 856 | ||
British Pound, | ||||||
Expiring: | ||||||
12/19/2012 b | 1,272,970 | 2,054,847 | 2,053,934 | (913 | ) | |
12/19/2012 c | 385,840 | 626,566 | 622,552 | (4,014 | ) | |
12/19/2012 e | 123,760 | 201,200 | 199,686 | (1,514 | ) | |
Canadian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 2,098,422 | 2,145,602 | 2,098,812 | (46,790 | ) | |
12/19/2012 c | 4,260,434 | 4,355,292 | 4,261,225 | (94,067 | ) | |
Euro, | ||||||
Expiring: | ||||||
12/19/2012 b | 551,720 | 712,689 | 715,473 | 2,784 | ||
12/19/2012 c | 174,592 | 225,538 | 226,411 | 873 | ||
12/19/2012 d | 38,192 | 49,312 | 49,527 | 215 | ||
12/19/2012 e | 600,746 | 777,606 | 779,051 | 1,445 | ||
Japanese Yen, | ||||||
Expiring: | ||||||
12/19/2012 a | 35,656,000 | 448,662 | 446,884 | (1,778 | ) | |
12/19/2012 b | 121,929,620 | 1,558,402 | 1,528,170 | (30,232 | ) | |
12/19/2012 c | 102,262,161 | 1,311,636 | 1,281,673 | (29,963 | ) | |
12/19/2012 d | 11,578,700 | 145,813 | 145,118 | (695 | ) | |
12/19/2012 e | 36,812,695 | 468,949 | 461,381 | (7,568 | ) | |
New Zealand Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 1,157,799 | 933,550 | 949,042 | 15,492 | ||
12/19/2012 c | 86,592 | 71,399 | 70,979 | (420 | ) | |
12/19/2012 d | 18,942 | 15,619 | 15,527 | (92 | ) | |
12/19/2012 e | 924,752 | 751,135 | 758,015 | 6,880 | ||
12/19/2012 f | 920,149 | 740,766 | 754,241 | 13,475 |
34
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases (continued): | ||||||
Norwegian Krone, | ||||||
Expiring: | ||||||
12/19/2012 a | 1,417,800 | 251,359 | 248,234 | (3,125 | ) | |
12/19/2012 b | 5,139,468 | 900,771 | 899,840 | (931 | ) | |
12/19/2012 c | 734,083 | 126,597 | 128,527 | 1,930 | ||
12/19/2012 d | 626,195 | 111,032 | 109,637 | (1,395 | ) | |
12/19/2012 e | 8,198,129 | 1,430,093 | 1,435,363 | 5,270 | ||
Swedish Krona, | ||||||
Expiring: | ||||||
12/19/2012 a | 1,112,400 | 169,273 | 167,463 | (1,810 | ) | |
12/19/2012 b | 1,831,977 | 278,420 | 275,790 | (2,630 | ) | |
12/19/2012 c | 7,323,940 | 1,103,568 | 1,102,563 | (1,005 | ) | |
12/19/2012 d | 491,310 | 74,863 | 73,963 | (900 | ) | |
12/19/2012 e | 12,953,052 | 1,952,374 | 1,949,983 | (2,391 | ) | |
Swiss Franc, | ||||||
Expiring | ||||||
12/19/2012 b | 44,007 | 47,037 | 47,290 | 253 | ||
Sales: | Proceeds ($) | |||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 29,280 | 29,773 | 30,271 | (498 | ) | |
12/19/2012 e | 260,320 | 266,303 | 269,135 | (2,832 | ) | |
British Pound, | ||||||
Expiring: | ||||||
12/19/2012 a | 99,000 | 159,675 | 159,736 | (61 | ) | |
12/19/2012 b | 111,240 | 179,159 | 179,486 | (327 | ) | |
12/19/2012 c | 774,026 | 1,246,781 | 1,248,889 | (2,108 | ) | |
12/19/2012 d | 100,628 | 162,322 | 162,363 | (41 | ) | |
12/19/2012 e | 3,452,857 | 5,522,637 | 5,571,176 | (48,539 | ) | |
Canadian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 468,600 | 476,970 | 468,687 | 8,283 | ||
12/19/2012 b | 491,022 | 493,519 | 491,113 | 2,406 | ||
12/19/2012 c | 154,230 | 158,114 | 154,259 | 3,855 | ||
12/19/2012 d | 206,965 | 210,818 | 207,003 | 3,815 | ||
12/19/2012 e | 294,270 | 298,929 | 294,325 | 4,604 | ||
Euro, | ||||||
Expiring: | ||||||
12/19/2012 a | 320,400 | 419,806 | 415,496 | 4,310 | ||
12/19/2012 b | 1,487,546 | 1,906,841 | 1,929,056 | (22,215 | ) | |
12/19/2012 d | 141,510 | 185,429 | 183,511 | 1,918 | ||
12/19/2012 e | 6,324,329 | 8,143,907 | 8,201,418 | (57,511 | ) |
The Fund | 35 |
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales (continued): | ||||||
Japanese Yen, | ||||||
Expiring: | ||||||
12/19/2012 b | 2,246,040 | 28,813 | 28,150 | 663 | ||
12/19/2012 c | 6,588,384 | 84,460 | 82,574 | 1,886 | ||
12/19/2012 d | 1,441,209 | 18,477 | 18,063 | 414 | ||
12/19/2012 e | 53,509,367 | 688,149 | 670,644 | 17,505 | ||
New Zealand Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 553,360 | 448,466 | 453,586 | (5,120 | ) | |
12/19/2012 b | 912,730 | 744,916 | 748,160 | (3,244 | ) | |
12/19/2012 c | 51,935 | 42,013 | 42,571 | (558 | ) | |
12/19/2012 d | 98,450 | 79,833 | 80,699 | (866 | ) | |
12/19/2012 e | 170,455 | 138,954 | 139,722 | (768 | ) | |
Norwegian Krone, | ||||||
Expiring: | ||||||
12/19/2012 b | 1,616,650 | 282,075 | 283,050 | (975 | ) | |
12/19/2012 e | 2,442,400 | 420,567 | 427,625 | (7,058 | ) | |
Swedish Krona, | ||||||
Expiring: | ||||||
12/19/2012 b | 4,431,330 | 669,381 | 667,104 | 2,277 | ||
12/19/2012 c | 487,520 | 73,959 | 73,392 | 567 | ||
12/19/2012 d | 106,645 | 16,168 | 16,055 | 113 | ||
12/19/2012 e | 4,346,475 | 657,605 | 654,329 | 3,276 | ||
Swiss Franc, | ||||||
Expiring | ||||||
12/19/2012 f | 114,011 | 122,392 | 122,515 | (123 | ) | |
Gross Unrealized | ||||||
Appreciation | 121,091 | |||||
Gross Unrealized | ||||||
Depreciation | (385,077 | ) |
Counterparties:
a | BNP Paribas |
b | Citigroup |
c | Goldman Sachs |
d | Standard Chartered Bank |
e | UBS |
f | Morgan Stanley |
36
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2012:
Average Market Value ($) | |
Equity financial futures | 13,571,098 |
Interest rate financial futures | 21,157,511 |
Equity options contracts | 58,635 |
Interest rate options contracts | 964,904 |
Forward contracts | 35,184,826 |
At October 31, 2012, the cost of investments for federal income tax purposes was $19,847,745; accordingly, accumulated net unrealized depreciation on investments was $1,081, consisting of $18,449 gross unrealized appreciation and $19,530 gross unrealized depreciation.
The Fund | 37 |
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dreyfus Global Absolute Return Fund
We have audited the accompanying statement of assets and liabilities, including the statements of investments, financial futures and options written, of Dreyfus Global Absolute Return Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated therein.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012 by correspondence with the custodian and others.We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Global Absolute Return Fund at October 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 27, 2012
38
PROXY RESULTS (Unaudited)
The Company held a special meeting of shareholders on August 3, 2012.The proposal considered at the meeting, and the results, are as follows:
Shares | |||
Votes For | Authority Withheld | ||
To elect additional Board Members: | |||
Lynn Martin † | 90,334,756 | 3,252,629 | |
Robin A. Melvin † | 90,449,622 | 3,137,763 | |
Philip L. Toia † | 90,229,928 | 3,357,457 |
† Each new Board Member’s term commenced on September 1, 2012. |
In addition, Peggy C. Davis, Joseph S. DiMartino, David P. Feldman, Ehud Houminer and Dr. Martin Peretz continue |
as Board Members of the Company. |
The Fund | 39 |
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (69) |
Chairman of the Board (1995) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small |
and medium size companies, Director (1997-present) |
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and busi- |
nesses, Director (2005-2009) |
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills |
and paperboard converting plants, Director (2000-2010) |
No. of Portfolios for which Board Member Serves: 157 |
——————— |
Peggy C. Davis (69) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Shad Professor of Law, New York University School of Law (1983-present) |
No. of Portfolios for which Board Member Serves: 63 |
——————— |
David P. Feldman (72) |
Board Member (1996) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• BBH Mutual Funds Group (4 registered mutual funds), Director (1992-present) |
• QMed, Inc. a healthcare company, Director (1999-2007) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Ehud Houminer (72) |
Board Member (1993) |
Principal Occupation During Past 5Years: |
• Executive-in-Residence at the Columbia Business School, Columbia University (1992-present) |
Other Public Company Board Memberships During Past 5Years: |
• Avnet Inc., an electronics distributor, Director (1993-2012) |
No. of Portfolios for which Board Member Serves: 73 |
40
Lynn Martin (72) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• President of The Martin Hall Group LLC, a human resources consulting firm, from January |
2005-present |
Other Public Company Board Memberships During Past 5Years: |
• AT&T Inc., a telecommunications company, Director (1999-2012) |
• Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012) |
• The Proctor & Gamble Co., a consumer products company, Director (1994-2009) |
• Constellation Energy Group Inc., Director (2003-2009) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Robin A. Melvin (49) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Director, Boisi Family Foundation, a private family foundation that supports youth-serving organi- |
zations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012) |
No. of Portfolios for which Board Member Serves: 83 |
——————— |
Dr. Martin Peretz (73) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Editor-in-Chief Emeritus of The New Republic Magazine (2010-present) (previously, |
Editor-in-Chief, 1974-2010) |
• Director of TheStreet.com, a financial information service on the web (1996-present) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Philip L. Toia (79) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Private Investor |
No. of Portfolios for which Board Member Serves: 56 |
——————— |
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166.Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Gloria Messinger, Emeritus Board Member
The Fund | 41 |
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009; from April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 72 investment companies (comprised of 156 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since February 1988.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 49 years old and has been an employee of the Manager since February 1984.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 39 years old and has been an employee of the Manager since July 1995.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 56 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 2000.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since April 1985.
42
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since September 1982.
GAVIN C. REILLY, Assistant Treasurer since August 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (73 investment companies, comprised of 183 portfolios). He is 55 years old and has served in various capacities with the Manager since 1980, including manager of the firmís Fund Accounting Department from 1997 through October 2001.
MATTHEW D. CONNOLLY, Anti-Money Laundering Compliance Officer since April 2012.
Anti-Money Laundering Compliance Officer of the Distributor since October 2011; from March 2010 to September 2011, Global Head, KYC Reviews and Director, UBS Investment Bank; until March 2010,AML Compliance Officer and Senior Vice President, Citi Global Wealth Management. He is an officer of 69 investment companies (comprised of 179 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Distributor since October 2011.
The Fund | 43 |
NOTES
For More Information
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
Dreyfus |
Global Dynamic |
Bond Fund |
ANNUAL REPORT October 31, 2012
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents |
|
THE FUND |
|
2 |
A Letter from the Chairman and CEO |
3 |
Discussion of Fund Performance |
6 |
Fund Performance |
8 |
Understanding Your Fund’s Expenses |
8 |
Comparing Your Fund’s Expenses With Those of Other Funds |
9 |
Statement of Investments |
17 |
Statement of Assets and Liabilities |
18 |
Statement of Operations |
19 |
Statement of Changes in Net Assets |
21 |
Financial Highlights |
24 |
Notes to Financial Statements |
37 |
Report of Independent Registered Public Accounting Firm |
38 |
Important Tax Information |
39 |
Proxy Results |
40 |
Board Members Information |
42 |
Officers of the Fund |
FOR MORE INFORMATION |
|
Back Cover |
Dreyfus
Global Dynamic
Bond Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Global Dynamic Bond Fund, covering the 12-month period from November 1, 2011, through October 31, 2012. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite heightened volatility, the U.S. bond market generally advanced over the reporting period as investors responded to encouraging macroeconomic developments throughout the world. Employment gains in the United States, credible measures to prevent a more severe banking crisis in Europe, and the likelihood of a “soft landing” for China’s economy buoyed investor sentiment, as did aggressively accommodative monetary policies from central banks in the United States, Europe, Japan and China. Consequently, riskier segments of the bond market gained value, while massive purchases of government securities by the Federal Reserve prevented yields of U.S. government securities from rising.
In light of the easy monetary policies adopted by many countries, we expect global growth to be slightly more robust in 2013 than in 2012.The U.S. economic recovery is likely to persist at subpar levels over the first half of the new year, as growth may remain constrained by uncertainties surrounding fiscal policy and tax reforms. However, successful resolution of the current fiscal debate may prompt corporate decision-makers to increase capital spending, which could have positive implications for the U.S. economy.As always, we encourage you to stay in touch with your financial advisor as new developments unfold.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2011, through October 31, 2012, as provided by Paul Brain, Howard Cunningham and Jonathan Day, Portfolio Managers of Newton Capital Management Limited, Sub-Investment Adviser
Fund and Market Performance Overview
For the 12-month period ended October 31, 2012, Dreyfus Global Dynamic Bond Fund’s Class A shares produced a total return of 8.74%, Class C shares returned 7.94% and Class I shares returned 8.98%. 1 In comparison, the fund’s performance baseline benchmark, the U.S. $1-Month London Interbank Offered Rate (LIBOR), and its broad-based securities market index, the Citibank 30-Day Treasury Bill Index, produced total returns of 0.21% and 0.04%, respectively, for the same period. 2,3
Despite shifting economic sentiment throughout the reporting period, aggressively accommodative monetary policies and an improving macroeconomic outlook helped support global bond prices.The fund produced higher returns than its benchmark, primarily due to the success of our interest rate and asset allocation strategies.
The Fund’s Investment Approach
The fund seeks total return consisting of income and capital appreciation.To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in bonds and other instruments that provide investment exposure to global bond markets, including developed and emerging capital markets.We employ a dynamic, unconstrained approach in allocating the fund’s assets among government bonds, emerging market sovereign debt, investment grade and high yield corporate instruments and currencies. We combine a top-down approach, emphasizing global economic trends and current investment themes, with bottom-up security selection based on fundamental research to allocate the fund’s investments. In choosing investments, we consider key trends in global economic variables, investment themes, relative valuations of debt securities and cash, long-term trends in currency movements, and company fundamentals.
Markets Driven by Macroeconomic Headlines
The reporting period began in the aftermath of major declines among higher yielding bonds throughout the world. One credit-rating agency’s downgrade of long-term U.S. government debt, an intensifying European debt crisis, and inflationary pressures in
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
China had triggered a flight away from risky assets. Fortunately, better U.S. economic data and remedial measures from European policymakers, particularly the Long Term Refinancing Operation (LTRO), soon stabilized many global financial markets.
By the start of 2012, global financial markets were rallying amid U.S. employment gains, quantitative easing in Europe, and less restrictive monetary and fiscal policies in China. Investors became more comfortable with riskier bond market sectors in their search for competitive levels of current income. While they returned to a risk-averse posture during the spring when austerity programs in Europe encountered resistance, more encouraging economic data over the summer enabled global bonds to end the reporting period with respectable returns. Emerging-markets bonds and corporate-backed securities fared especially well.
A More Constructive Posture Buoyed Fund Performance
The fund began the reporting period with a relatively defensive investment posture designed to cushion the effects of prevailing macroeconomic uncertainties. As conditions improved over the final weeks of 2011 and the opening months of 2012, we moved toward more constructive strategies. We increased the average duration among the fund’s core holdings of government securities, enabling it to participate more fully in market rallies. At the same time, we shifted assets from government securities to riskier market sectors, including emerging-markets bonds and high yield securities that had been severely punished during the downturn. These changes proved effective, as risker sectors rallied amid encouraging macroeconomic news.
The fund’s currency positions also shifted from tradition safe havens, such as the U.S. dollar and Japanese yen, into currencies expected to benefit from rising commodity prices, including the Mexican peso and Canadian dollar. While this move worked well overall, its benefits were undermined somewhat by relative weakness in the Singapore dollar and Polish zloty.The fund employed forward contracts to establish its currency positions.
We returned to a more defensive stance in the spring, when macroeconomic concerns resurfaced, but we maintained an emphasis on emerging-markets bonds from governments with prudent fiscal policies, such as the Czech Republic, Poland, Peru, and Uruguay. Consequently, the fund proved well positioned to participate in a renewed rally in the emerging markets over the summer, when we increased exposure to high yield bonds, and we adjusted positions in the emerging markets to emphasize more attractive relative values.
4
Positioned for a Brighter Economic Outlook
As of the reporting period’s end, we expect government bond yields to remain low as central banks pursue aggressively accommodative monetary policies, leading us to maintain a relatively long average duration among safe-haven markets with complementary positions in emerging markets where rates still have room to fall. Meanwhile, strong corporate earnings and low default rates seem likely to support prices of high yield securities, and we have retained an emphasis on high yield securities, particularly in Europe. Among currencies, we have increased the fund’s holdings of the Mexican peso, Malaysian ringgit and Polish zloty.
November 15, 2012
Bond funds are subject generally to interest rate, credit, liquidity and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.
High yield bonds are subject to increased credit risk and are considered speculative in terms of the issuer’s perceived ability to continue making interest payments on a timely basis and to repay principal upon maturity.
Foreign bonds are subject to special risks including exposure to currency fluctuations, changing political and economic conditions and potentially less liquidity.
Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time.A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by the fund and denominated in those currencies.The use of leverage may magnify the fund’s gains or losses. For derivatives with a leveraging component, adverse changes in the value or level of the underlying asset can result in a loss that is much greater than the original investment in the derivative.
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the |
maximum initial sales charge in the case of Class A shares or the applicable contingent deferred sales charge imposed |
on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Class I |
shares are not subject to any initial or deferred sales charge. Past performance is no guarantee of future results. Share |
price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their |
original cost. Return figures for Class A, Class C and Class I shares reflect the absorption of certain fund expenses by |
The Dreyfus Corporation pursuant to an agreement in effect through March 1, 2014, at which time it may be |
extended, terminated or modified. Had these expenses not been absorbed, the returns for Class A, C and I shares |
would have been lower. |
2 SOURCE: LIPPER INC. – Reflects reinvestment of dividends and, where applicable, capital gain distributions.The |
Citigroup 30-Day Treasury Bill Index is a market value-weighted index of public obligations of the U.S.Treasury |
with maturities of 30 days. Investors cannot invest directly in any index. |
3 SOURCE: BLOOMBERG – London Interbank Offered Rate (LIBOR).The rate of interest at which banks |
borrow funds, in marketable size, from other banks in the London interbank market. LIBOR is the most widely used |
benchmark or reference rate for short term interest rates, and is an international rate.The London Interbank Offered |
Rate is fixed each morning at 11 a.m. London time by the British Bankers’ Association (BBA).The rate is an |
average derived from 16 quotations provided by banks determined by the British Bankers’ Association; the four |
highest and lowest are then eliminated and an average of the remaining eight is calculated to arrive at the fix. |
Eurodollar Libor is calculated on an ACT/360 day count basis and settlement is for two days hence. |
The Fund | 5 |
FUND PERFORMANCE
† Source: Lipper Inc.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of Dreyfus Global Dynamic Bond Fund on 3/25/11 (inception date) to a $10,000 investment made in the Citibank 30-Day Treasury Bill Index (the “Index”) on that date.All dividends and capital gain distributions are reinvested.
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes.The Index is a market value-weighted index of public obligations of the U.S.Treasury with maturities of 30 days. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index.These factors can contribute to the Index potentially outperforming the fund. Further information relating to fund expenses, including expense reimbursements, if applicable, contained in the Financial Highlights section of the prospectus and elsewhere in this report.
6
Average Annual Total Returns as of 10/31/12 | |||||
Inception | From | ||||
Date | 1 Year | Inception | |||
Class A shares | |||||
with maximum sales charge (4.5%) | 3/25/11 | 3.87 | % | 2.95 | % |
without sales charge | 3/25/11 | 8.74 | % | 5.96 | % |
Class C shares | |||||
with applicable redemption charge † | 3/25/11 | 6.94 | % | 5.13 | % |
without redemption | 3/25/11 | 7.94 | % | 5.13 | % |
Class I shares | 3/25/11 | 8.98 | % | 6.20 | % |
Citibank 30-Day Treasury Bill Index | 3/31/11 | 0.04 | % | 0.04 | % †† |
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
† | The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the |
date of purchase. | |
†† | For comparative purposes, the value of the Index as of 3/31/11 is used as the beginning value on 3/25/11. |
The Fund | 7 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Global Dynamic Bond Fund from May 1, 2012 to October 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 5.67 | $ 9.52 | $ 4.39 | |||
Ending value (after expenses) | $ 1,051.80 | $ 1,047.20 | $ 1,053.20 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 5.58 | $ 9.37 | $ 4.32 | |||
Ending value (after expenses) | $ 1,019.61 | $ 1,015.84 | $ 1,020.86 |
† Expenses are equal to the fund’s annualized expense ratio of 1.10% for Class A, 1.85% for Class C and .85% |
for Class I, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half |
year period). |
8
STATEMENT OF INVESTMENTS |
October 31, 2012 |
Coupon | Maturity | Principal | ||||
Bonds and Notes—87.1% | Rate (%) | Date | Amount ($) a | Value ($) | ||
Consumer Discretionary—3.9% | ||||||
Daily Mail & General Trust, | ||||||
Sr. Unscd. Bonds | GBP | 7.50 | 3/29/13 | 50,000 | 82,513 | |
DIRECTV Holdings, | ||||||
Gtd. Notes | 4.60 | 2/15/21 | 75,000 | 83,265 | ||
Edcon Proprietary, | ||||||
Scd. Notes | EUR | 3.50 | 6/15/14 | 50,000 | b | 60,595 |
Enterprise Inns, | ||||||
First Mortgage Bonds | GBP | 6.50 | 12/6/18 | 50,000 | 72,417 | |
Unitymedia Hessen, | ||||||
Sr. Scd. Notes | EUR | 8.13 | 12/1/17 | 50,000 | 70,073 | |
Ziggo Bond, | ||||||
Gtd. Notes | EUR | 8.00 | 5/15/18 | 50,000 | 71,369 | |
440,232 | ||||||
Consumer Staples—2.8% | ||||||
Altria Group, | ||||||
Gtd. Notes | 9.95 | 11/10/38 | 56,000 | 97,095 | ||
BAT International Finance, | ||||||
Gtd. Notes | 8.13 | 11/15/13 | 95,000 | 101,770 | ||
British Sugar, | ||||||
Scd. Debs | GBP | 10.75 | 7/2/13 | 31,000 | 52,498 | |
CEDC Finance Corp. | ||||||
International, | ||||||
Sr. Scd. Notes | EUR | 8.88 | 12/1/16 | 50,000 | 42,125 | |
China Green Holdings, | ||||||
Gtd. Bonds | CNY | 3.00 | 4/12/13 | 200,000 | 16,049 | |
309,537 | ||||||
Energy—6.1% | ||||||
BG Energy Capital, | ||||||
Gtd. Notes | GBP | 5.88 | 11/13/12 | 40,000 | 64,740 | |
Chesapeake Energy, | ||||||
Gtd. Notes | 6.78 | 3/15/19 | 40,000 | 40,150 | ||
Drill Rigs Holdings, | ||||||
Sr. Scd. Notes | 6.50 | 10/1/17 | 36,000 | 35,865 | ||
EXCO Resources, | ||||||
Gtd. Notes | 7.50 | 9/15/18 | 50,000 | 47,250 | ||
Petrobras International Finance, | ||||||
Gtd. Notes | 3.88 | 1/27/16 | 90,000 | 96,060 | ||
Petrobras International Finance, | ||||||
Gtd. Notes | GBP | 6.25 | 12/14/26 | 100,000 | 183,162 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Energy (continued) | ||||||
Petrobras International Finance, | ||||||
Gtd. Notes | 7.88 | 3/15/19 | 90,000 | 114,322 | ||
Santos Finance, | ||||||
Gtd. Notes | EUR | 8.25 | 9/22/70 | 50,000 | b | 68,047 |
Statoil, | ||||||
Gtd. Notes | 1.80 | 11/23/16 | 35,000 | 36,242 | ||
685,838 | ||||||
Entertainment & Gaming—1.5% | ||||||
Cirsa Funding Luxembourg, | ||||||
Gtd. Notes | EUR | 8.75 | 5/15/18 | 50,000 | 62,539 | |
Peermont Global PTY, | ||||||
Scd. Notes | EUR | 7.75 | 4/30/14 | 50,000 | 63,025 | |
Travelport, | ||||||
Gtd. Notes | 9.88 | 9/1/14 | 60,000 | 46,650 | ||
172,214 | ||||||
Financial—23.0% | ||||||
Allied Irish Banks, | ||||||
Gov’t Gtd. Notes | EUR | 3.25 | 2/4/13 | 100,000 | 130,003 | |
Arsenal Securities, | ||||||
Sr. Scd. Bonds, Ser. A1 | GBP | 5.14 | 9/1/29 | 40,637 | 66,178 | |
Bank Nederlandse Gemeenten, | ||||||
Sr. Unscd. Notes | 0.58 | 5/3/13 | 100,000 | b | 100,019 | |
BNP Paribas, | ||||||
Jr. Sub. Bonds | GBP | 5.95 | 4/29/49 | 50,000 | b | 59,709 |
Boats Investments Netherlands, | ||||||
Sr. Scd. Notes | EUR | 11.00 | 3/31/17 | 90,785 | 61,189 | |
BUPA Finance, | ||||||
Gtd. Notes | GBP | 7.50 | 7/4/16 | 50,000 | 94,586 | |
Co-Operative Bank, | ||||||
Sub. Notes | GBP | 5.75 | 12/2/24 | 50,000 | b | 70,017 |
Direct Line Insurance Group, | ||||||
Gtd. Notes | GBP | 9.25 | 4/27/42 | 100,000 | b | 179,078 |
Eksportfinans, | ||||||
Sr. Unscd. Notes | EUR | 4.75 | 6/11/13 | 25,000 | 33,094 | |
Experian Finance, | ||||||
Gtd. Notes | GBP | 5.63 | 12/12/13 | 20,000 | 33,863 | |
F&C Commercial Property | ||||||
Finance, Sr. Scd. Notes | GBP | 5.23 | 6/30/17 | 50,000 | b | 85,296 |
10
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Financial (continued) | ||||||
Housing Finance, | ||||||
Sr. Scd. Debs | GBP | 0.00 | 12/31/12 | 50,000 | c | 80,362 |
Hutchinson Ports Finance, | ||||||
Gtd. Bonds | GBP | 6.75 | 12/7/15 | 30,000 | 55,457 | |
Permanent TSB, | ||||||
Gov’t Gtd. Notes | EUR | 4.00 | 3/10/15 | 100,000 | 129,936 | |
Juneau Investments, | ||||||
Sr. Scd. Notes | GBP | 5.90 | 2/22/21 | 30,000 | 41,877 | |
Juturna European | ||||||
Loan Conduit No 16, | ||||||
Mortgage Backed Notes | GBP | 5.06 | 8/10/33 | 48,259 | b | 85,830 |
LBG Capital No.1, | ||||||
Gtd. Bonds, Ser. 19 | GBP | 11.04 | 3/19/20 | 50,000 | 89,665 | |
Lloyds TSB Bank, | ||||||
Gov’t Gtd. Notes | GBP | 1.50 | 5/2/17 | 100,000 | 165,669 | |
Nationwide | ||||||
Building Society, | ||||||
Sub. Notes | GBP | 5.25 | 2/12/18 | 40,000 | b | 63,891 |
Offshore Group Investment, | ||||||
Sr. Scd. Notes | 11.50 | 8/1/15 | 50,000 | 55,062 | ||
Prudential, | ||||||
Jr. Sub. Notes | 11.75 | 12/29/49 | 65,000 | b | 75,075 | |
Reed Elsevier Investments, | ||||||
Gtd. Notes | GBP | 7.00 | 12/11/17 | 50,000 | 99,029 | |
Royal Bank of Scotland, | ||||||
Sr. Unscd. Notes | AUD | 5.53 | 3/10/14 | 100,000 | b | 104,587 |
SLM Student Loans, | ||||||
Asset-Backed Notes | GBP | 5.15 | 12/15/39 | 100,000 | 132,329 | |
Standard Chartered Bank, | ||||||
Sub. Notes | GBP | 6.00 | 1/25/18 | 50,000 | b | 80,562 |
Suncorp-Metway, | ||||||
Gov’t Gtd. Notes | GBP | 4.00 | 1/16/14 | 85,000 | 142,629 | |
Tesco Property Finance 3, | ||||||
Mortgage Backed Bonds | GBP | 5.74 | 4/13/40 | 49,696 | 87,907 | |
Toys R Us Property Co I, | ||||||
Gtd. Notes | 10.75 | 7/15/17 | 25,000 | 27,156 | ||
UBS, | ||||||
Sub. Notes | GBP | 5.25 | 6/21/21 | 50,000 | b | 82,284 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Financial (continued) | ||||||
Woodside Finance, | ||||||
Gtd. Notes | 8.75 | 3/1/19 | 44,000 | 58,962 | ||
2,571,301 | ||||||
Foreign/Governmental—29.6% | ||||||
Barbadian Government, | ||||||
Unscd. Bonds | GBP | 13.50 | 7/1/15 | 39,000 | 72,572 | |
Bulgarian Government, | ||||||
Sr. Unscd. Bonds | 8.25 | 1/15/15 | 90,000 | 103,860 | ||
Canadian Government, | ||||||
Bonds | CAD | 2.00 | 6/1/16 | 315,000 | 323,825 | |
Costa Rican Government, | ||||||
Sr. Unscd. Notes | 6.55 | 3/20/14 | 50,000 | 52,750 | ||
Czech Republic Government, | ||||||
Bonds, Ser. 56 | CZK | 5.00 | 4/11/19 | 1,910,000 | 119,761 | |
European Bank for | ||||||
Reconstruction & | ||||||
Development, Sr. Unscd. | ||||||
Notes | NOK | 4.00 | 5/11/17 | 180,000 | 33,702 | |
European Bank for | ||||||
Reconstruction & | ||||||
Development, | ||||||
Sr. Unscd. Notes | IDR | 6.75 | 2/19/13 | 280,000,000 | 29,246 | |
European Investment Bank | ||||||
Sr. Unscd. Bonds | GBP | 0.63 | 1/5/16 | 40,000 | b | 64,256 |
European Investment Bank, | ||||||
Sr. Unscd. Bonds | IDR | 6.00 | 4/22/14 | 160,000,000 | 16,700 | |
European Investment Bank, | ||||||
Sr. Unscd. Notes | NZD | 6.50 | 9/10/14 | 125,000 | 108,972 | |
European Investment Bank, | ||||||
Sr. Unscd. Bonds | TRY | 8.00 | 11/23/15 | 46,000 | 27,343 | |
Europeon Investment Bank, | ||||||
Sr. Unscd. Bonds | TRY | 0.00 | 3/30/16 | 59,000 | c | 26,658 |
Finnish Government, | ||||||
Sr. Unscd. Notes | GBP | 0.74 | 2/25/16 | 100,000 | b | 161,636 |
FMS Wertmanagement, | ||||||
Gov’t Gtd. Notes | EUR | 3.00 | 8/3/18 | 100,000 | 143,068 | |
Lithuanian Government, | ||||||
Sr. Unscd. Notes | 5.13 | 9/14/17 | 100,000 | 112,375 | ||
Malaysian Government, | ||||||
Sr. Unscd. Bonds, Ser. 0902 | MYR | 4.38 | 11/29/19 | 315,000 | 109,890 |
12
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Foreign/Governmental | ||||||
(continued) | ||||||
Mexican Government, | ||||||
Bonds, Ser. M10 | MXN | 7.75 | 12/14/17 | 2,170,000 | 185,256 | |
Mexican Government, | ||||||
Bonds, Ser. M | MXN | 8.00 | 6/11/20 | 1,710,000 | 151,992 | |
Netherlands Government, | ||||||
Sr. Unscd. Bonds | 1.00 | 2/24/17 | 150,000 | 151,111 | ||
New South Wales Treasury, | ||||||
Gov’t Gtd. Notes, Ser. CIB1 | AUD | 2.75 | 11/20/25 | 60,000 | d | 82,579 |
New Zealand Government, | ||||||
Sr. Unscd. Bonds, Ser. 423 | NZD | 5.50 | 4/15/23 | 320,000 | 309,171 | |
Norwegian Government, | ||||||
Bonds, Ser. 473 | NOK | 4.50 | 5/22/19 | 994,000 | 204,508 | |
Polish Government, | ||||||
Bonds, Ser. 0922 | PLN | 5.75 | 9/23/22 | 754,000 | 258,870 | |
Portugal Obrigacoes do Tesouro | ||||||
OT, Sr. Unscd. Notes | EUR | 4.75 | 6/14/19 | 75,000 | 82,194 | |
Turkish Government, | ||||||
Sr. Unscd. Notes | 7.50 | 7/14/17 | 100,000 | 121,055 | ||
Swedish Government, | ||||||
Bonds, Ser. 1054 | SEK | 3.50 | 6/1/22 | 900,000 | 159,475 | |
United Kingdom Gilt, | ||||||
Bonds, Ser. 8MO | GBP | 4.13 | 7/22/30 | 20,000 | e | 99,901 |
3,312,726 | ||||||
Health Care—1.4% | ||||||
Apria Healthcare Group, | ||||||
Sr. Scd. Notes | 11.25 | 11/1/14 | 30,000 | 30,975 | ||
Catalent Pharma Solutions, | ||||||
Gtd. Notes | EUR | 9.75 | 4/15/17 | 50,000 | 66,751 | |
Fresenius Medical Care US | ||||||
Finance II, Gtd. Notes | 5.63 | 7/31/19 | 50,000 | 53,000 | ||
150,726 | ||||||
Industrial—3.6% | ||||||
Heathrow Funding, | ||||||
Sr. Scd. Bonds | GBP | 3.00 | 6/8/15 | 100,000 | 167,012 | |
Heidelberger Druckmaschinen, | ||||||
Gtd. Notes | EUR | 9.25 | 4/15/18 | 50,000 | 54,762 | |
ISS, | ||||||
Scd. Notes | EUR | 8.88 | 5/15/16 | 50,000 | 67,075 |
The Fund | 13 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Industrial (continued) | ||||||
ISS, | ||||||
Sr. Scd. Notes | EUR | 11.00 | 6/15/14 | 50,000 | 67,448 | |
L-3 Communications, | ||||||
Gtd. Notes | 4.75 | 7/15/20 | 10,000 | 11,150 | ||
Ship Finance International, | ||||||
Gtd. Notes | 8.50 | 12/15/13 | 40,000 | 40,250 | ||
407,697 | ||||||
Materials—4.0% | ||||||
Ardagh Glass Finance, | ||||||
Gtd. Bonds | EUR | 7.13 | 6/15/17 | 50,000 | 65,617 | |
Cemex Finance, | ||||||
Sr. Scd. Notes | EUR | 9.63 | 12/14/17 | 50,000 | 69,344 | |
HeidelbergCement Finance, | ||||||
Gtd. Bonds | EUR | 7.50 | 4/3/20 | 50,000 | 74,094 | |
INEOS Group Holdings, | ||||||
Scd. Notes | EUR | 7.88 | 2/15/16 | 50,000 | 62,134 | |
Inmet Mining, | ||||||
Gtd. Notes | 8.75 | 6/1/20 | 40,000 | 41,700 | ||
Kerling, | ||||||
Sr. Scd. Notes | EUR | 10.63 | 2/1/17 | 50,000 | 60,433 | |
OI European Group, | ||||||
Gtd. Notes | EUR | 6.75 | 9/15/20 | 50,000 | 72,422 | |
445,744 | ||||||
Telecommunication | ||||||
Services—4.0% | ||||||
British Telecommunications, | ||||||
Sr. Unscd. Notes | EUR | 5.25 | 1/22/13 | 100,000 | b | 130,966 |
Clearwire Communications, | ||||||
Sr. Scd. Notes | 12.00 | 12/1/15 | 65,000 | 69,225 | ||
Nextel Communications, | ||||||
Gtd. Notes, Ser. D | 7.38 | 8/1/15 | 31,000 | 31,116 |
14
The Fund | 15 |
STATEMENT OF INVESTMENTS (continued)
Other Investment—9.9% | Shares | Value ($) | ||
Registered Investment Company; | ||||
Dreyfus Institutional Preferred | ||||
Plus Money Market Fund | ||||
(cost $1,104,264) | 1,104,264 | f | 1,104,264 | |
Total Investments (cost $11,072,219) | 101.2 | % | 11,332,444 | |
Liabilities, Less Cash and Receivables | (1.2 | %) | (138,037 | ) |
Net Assets | 100.0 | % | 11,194,407 |
a Principal amount stated in U.S. Dollars unless otherwise noted. |
AUD—Australian Dollar |
CAD—Canadian Dollar |
CNY—ChineseYuan Renminbi |
CZK—Czech Republic Koruna |
EUR—Euro |
GBP—British Pound |
IDR—Indonesian Rupiah |
MYR—Malaysian Ringgit |
MXN—Mexican New Peso |
NOK—Norwegian Krone |
NZD—New Zealand Dollar |
PLN—Polish Zloty |
SEK—Swedish Krona |
TRY—Turkish Lira |
b Variable rate security—interest rate subject to periodic change. |
c Security issued with a zero coupon. Income is recognized through the accretion of discount. |
d Principal amount for accrual purposes is periodically adjusted based on changes in the Australian Consumer Price Index. |
e Principal amount for accrual purposes is periodically adjusted based on changes in the British Consumer Price Index. |
f Investment in affiliated money market mutual fund. |
16
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2012
Cost | Value | ||
Assets ($): | |||
Investments in securities—See Statement of Investments: | |||
Unaffiliated issuers | 9,967,955 | 10,228,180 | |
Affiliated issuers | 1,104,264 | 1,104,264 | |
Dividends and interest receivable | 177,627 | ||
Unrealized appreciation on forward foreign | |||
currency exchange contracts—Note 4 | 2,946 | ||
Receivable for investment securities sold | 2,024 | ||
Prepaid expenses | 10,723 | ||
11,525,764 | |||
Liabilities ($): | |||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 670 | ||
Unrealized depreciation on forward foreign | |||
currency exchange contracts—Note 4 | 211,360 | ||
Payable for investment securities purchased | 71,781 | ||
Accrued expenses | 47,546 | ||
331,357 | |||
Net Assets ($) | 11,194,407 | ||
Composition of Net Assets ($): | |||
Paid-in capital | 10,744,235 | ||
Accumulated undistributed investment income—net | 180,835 | ||
Accumulated net realized gain (loss) on investments | 215,422 | ||
Accumulated net unrealized appreciation (depreciation) | |||
on investments and foreign currency transactions | 53,915 | ||
Net Assets ($) | 11,194,407 | ||
Net Asset Value Per Share | |||
Class A | Class C | Class I | |
Net Assets ($) | 1,131,736 | 586,891 | 9,475,780 |
Shares Outstanding | 86,843 | 45,204 | 726,717 |
Net Asset Value Per Share ($) | 13.03 | 12.98 | 13.04 |
See notes to financial statements. |
The Fund | 17 |
STATEMENT OF OPERATIONS
Year Ended October 31, 2012
Investment Income ($): | ||
Income: | ||
Interest | 400,676 | |
Dividends: | ||
Unaffiliated issuers | 27,233 | |
Affiliated issuers | 543 | |
Total Income | 428,452 | |
Expenses: | ||
Management fee—Note 3(a) | 59,777 | |
Registration fees | 48,323 | |
Auditing fees | 46,455 | |
Legal fees | 22,935 | |
Prospectus and shareholders’ reports | 11,924 | |
Custodian fees—Note 3(c) | 4,422 | |
Shareholder servicing costs—Note 3(c) | 4,078 | |
Distribution fees—Note 3(b) | 3,984 | |
Directors’ fees and expenses—Note 3(d) | 435 | |
Loan commitment fees—Note 2 | 92 | |
Miscellaneous | 36,378 | |
Total Expenses | 238,803 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (146,784 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (1 | ) |
Net Expenses | 92,018 | |
Investment Income—Net | 336,434 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | 163,734 | |
Net realized gain (loss) on forward foreign currency exchange contracts | 376,644 | |
Net Realized Gain (Loss) | 540,378 | |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 326,965 | |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (360,199 | ) |
Net Unrealized Appreciation (Depreciation) | (33,234 | ) |
Net Realized and Unrealized Gain (Loss) on Investments | 507,144 | |
Net Increase in Net Assets Resulting from Operations | 843,578 | |
See notes to financial statements. |
18
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31, | ||||
2012 | 2011 | a | ||
Operations ($): | ||||
Investment income—net | 336,434 | 104,345 | ||
Net realized gain (loss) on investments | 540,378 | (105,391 | ) | |
Net unrealized appreciation | ||||
(depreciation) on investments | (33,234 | ) | 87,149 | |
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 843,578 | 86,103 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (32,256 | ) | (1,287 | ) |
Class C Shares | (21,508 | ) | (302 | ) |
Class I Shares | (402,670 | ) | (18,798 | ) |
Net realized gain on investments: | ||||
Class A Shares | (592 | ) | — | |
Class C Shares | (575 | ) | — | |
Class I Shares | (7,931 | ) | — | |
Total Dividends | (465,532 | ) | (20,387 | ) |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 575,286 | 533,469 | ||
Class C Shares | 55,400 | 563,287 | ||
Class I Shares | 1,620,780 | 8,325,000 | ||
Dividends reinvested: | ||||
Class A Shares | 8,548 | 47 | ||
Class C Shares | 1,223 | 22 | ||
Class I Shares | 148,746 | 78 | ||
Cost of shares redeemed: | ||||
Class A Shares | (26,977 | ) | (1,297 | ) |
Class C Shares | (29,374 | ) | (23,440 | ) |
Class I Shares | (1,000,153 | ) | — | |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 1,353,479 | 9,397,166 | ||
Total Increase (Decrease) in Net Assets | 1,731,525 | 9,462,882 | ||
Net Assets ($): | ||||
Beginning of Period | 9,462,882 | — | ||
End of Period | 11,194,407 | 9,462,882 | ||
Undistributed investment income—net | 180,835 | 44,674 |
The Fund | 19 |
STATEMENT OF CHANGES IN NET ASSETS (continued)
Year Ended October 31, | ||||
2012 | 2011 | a | ||
Capital Share Transactions: | ||||
Class A | ||||
Shares sold | 45,729 | 42,683 | ||
Shares issued for dividends reinvested | 679 | 4 | ||
Shares redeemed | (2,148 | ) | (104 | ) |
Net Increase (Decrease) in Shares Outstanding | 44,260 | 42,583 | ||
Class C | ||||
Shares sold | 4,278 | 45,049 | ||
Shares issued for dividends reinvested | 99 | 2 | ||
Shares redeemed | (2,352 | ) | (1,872 | ) |
Net Increase (Decrease) in Shares Outstanding | 2,025 | 43,179 | ||
Class I | ||||
Shares sold | 128,680 | 666,294 | ||
Shares issued for dividends reinvested | 11,942 | 6 | ||
Shares redeemed | (80,205 | ) | — | |
Net Increase (Decrease) in Shares Outstanding | 60,417 | 666,300 | ||
a From March 25, 2011 (commencement of operations) to October 31, 2011. | ||||
See notes to financial statements. |
20
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||
Class A Shares | 2012 | 2011 | a | |
Per Share Data ($): | ||||
Net asset value, beginning of period | 12.58 | 12.50 | ||
Investment Operations: | ||||
Investment income—net b | .41 | .15 | ||
Net realized and unrealized gain (loss) on investments | .64 | (.04 | ) | |
Total from Investment Operations | 1.05 | .11 | ||
Distributions: | ||||
Dividends from investment income—net | (.59 | ) | (.03 | ) |
Dividends from net realized gain on investments | (.01 | ) | — | |
Total Distributions | (.60 | ) | (.03 | ) |
Net asset value, end of period | 13.03 | 12.58 | ||
Total Return (%) c | 8.74 | .89 | d | |
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assets | 2.67 | 4.26 | e | |
Ratio of net expenses to average net assets | 1.10 | 1.10 | e | |
Ratio of net investment income to average net assets | 3.21 | 2.04 | e | |
Portfolio Turnover Rate | 132.40 | 127.38 | d | |
Net Assets, end of period ($ x 1,000) | 1,132 | 536 |
a | From March 25, 2011 (commencement of operations) to October 31, 2011. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund | 21 |
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||
Class C Shares | 2012 | 2011 | a | |
Per Share Data ($): | ||||
Net asset value, beginning of period | 12.54 | 12.50 | ||
Investment Operations: | ||||
Investment income—net b | .31 | .10 | ||
Net realized and unrealized gain (loss) on investments | .65 | (.05 | ) | |
Total from Investment Operations | .96 | .05 | ||
Distributions: | ||||
Dividends from investment income—net | (.51 | ) | (.01 | ) |
Dividends from net realized gain on investments | (.01 | ) | — | |
Total Distributions | (.52 | ) | (.01 | ) |
Net asset value, end of period | 12.98 | 12.54 | ||
Total Return (%) c | 7.94 | .38 | d | |
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assets | 3.32 | 4.98 | e | |
Ratio of net expenses to average net assets | 1.85 | 1.85 | e | |
Ratio of net investment income to average net assets | 2.46 | 1.30 | e | |
Portfolio Turnover Rate | 132.40 | 127.38 | d | |
Net Assets, end of period ($ x 1,000) | 587 | 542 |
a | From March 25, 2011 (commencement of operations) to October 31, 2011. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
22
Year Ended October 31, | ||||
Class I Shares | 2012 | 2011 | a | |
Per Share Data ($): | ||||
Net asset value, beginning of period | 12.59 | 12.50 | ||
Investment Operations: | ||||
Investment income—net b | .44 | .18 | ||
Net realized and unrealized gain (loss) on investments | .64 | (.05 | ) | |
Total from Investment Operations | 1.08 | .13 | ||
Distributions: | ||||
Dividends from investment income—net | (.62 | ) | (.04 | ) |
Dividends from net realized gain on investments | (.01 | ) | — | |
Total Distributions | (.63 | ) | (.04 | ) |
Net asset value, end of period | 13.04 | 12.59 | ||
Total Return (%) | 8.98 | 1.03 | c | |
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assets | 2.31 | 3.80 | d | |
Ratio of net expenses to average net assets | .85 | .85 | d | |
Ratio of net investment income to average net assets | 3.45 | 2.33 | d | |
Portfolio Turnover Rate | 132.40 | 127.38 | c | |
Net Assets, end of period ($ x 1,000) | 9,476 | 8,386 |
a | From March 25, 2011 (commencement of operations) to October 31, 2011. |
b | Based on average shares outstanding at each month end. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
The Fund | 23 |
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Global Dynamic Bond Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering thirteen series, including the fund. The fund’s investment objective is to seek total return (consisting of income and capital appreciation). The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Newton Capital Management Limited (“Newton”), an affiliate of Dreyfus, serves as the fund’s sub-investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the Distributor of the fund’s shares.The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C and Class I. Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I shares are sold at net asset value per share only to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
As of October 31, 2012, MBC Investments Corp., an indirect subsidiary of BNY Mellon, held 40,000 Class A, 40,000 Class C and 399,808 Class I shares of the fund.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are
24
charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications.The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
The Fund | 25 |
NOTES TO FINANCIAL STATEMENTS (continued)
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1 —unadjusted quoted prices in active markets for identical investments.
Level 2 —other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 —significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Registered investment companies that are not traded on an exchange are valued at their net asset value and are categorized within Level 1 of the fair value hierarchy.
Investments in securities, excluding short-term investments (other than U.S. Treasury Bills), and forward foreign currency exchange contracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are valued as determined by the
26
Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service’s procedures are reviewed by Dreyfus under the general supervision of the Board.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.These securities are either categorized as Level 2 or 3 depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward contracts are valued at the forward rate. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Fund | 27 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following is a summary of the inputs used as of October 31, 2012 in valuing the fund’s investments:
Level 2—Other | Level 3— | |||||
Level 1— | Significant | Significant | ||||
Unadjusted | Observable | Unobservable | ||||
Quoted Prices | Inputs | Inputs | Total | |||
Assets ($) | ||||||
Investments in Securities: | ||||||
Corporate Bonds † | — | 5,773,210 | — | 5,773,210 | ||
Exchange-Traded Funds | 473,362 | — | — | 473,362 | ||
Foreign Government | — | 3,312,726 | — | 3,312,726 | ||
Mutual Funds | 1,104,264 | — | — | 1,104,264 | ||
U.S. Treasury | — | 668,882 | — | 668,882 | ||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign Currency | ||||||
Exchange Contracts †† | — | 2,946 | — | 2,946 | ||
Liabilities ($) | ||||||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign Currency | ||||||
Exchange Contracts †† | — | (211,360 | ) | — | (211,360 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Amount shown represents unrealized appreciation (depreciation) at period end. |
At October 31, 2012, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than
28
investments resulting from changes in exchange rates. Foreign currency gains and losses on investments are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended October 31, 2012 were as follows:
Affiliated | |||||||
Investment | Value | Value | Net | ||||
Company | 10/31/2011 | ($) | Purchases ($) | Sales ($) | 10/31/2012 | ($) | Assets (%) |
Dreyfus | |||||||
Institutional | |||||||
Preferred | |||||||
Plus Money | |||||||
Market Fund | 416,749 | 9,936,168 | 9,248,653 | 1,104,264 | 9.9 |
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S.These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net are declared and paid quarterly. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by
The Fund | 29 |
NOTES TO FINANCIAL STATEMENTS (continued)
capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
On October 31, 2012, the Board declared a cash dividend of $.114, $.090 and $.120 per share from undistributed investment income-net for Class A, Class C and Class I shares, respectively, payable on November 1, 2012 (ex-dividend date), to shareholders of record as of the close of business on October 31, 2012.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the two-year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2012, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $316,754, undistributed capital gains $5,792 and unrealized appreciation $127,626.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2012 and October 31, 2011 were as follows: ordinary income $464,049 and $20,387 and long-term capital gains $1,483 and $0, respectively.
During the period ended October 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for amortization of premiums and foreign currency gains and losses, the fund increased accumulated undistributed investment income-net by
30
$256,161 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
(h) New Accounting Pronouncement: In December 2011, FASB issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position. They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”).ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods.At this time, management is evaluating the implications of ASU 2011-11 and its impact on the fund’s financial statement disclosures.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Effective October 10, 2012, the $225 million unsecured credit facility with Citibank, N.A., was decreased to $210 million. In connection therewith, the fund has agreed to pay its pro rata portion of commit-
The Fund | 31 |
NOTES TO FINANCIAL STATEMENTS (continued)
ment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended October 31, 2012, the fund did not borrow under the Facilities.
NOTE 3—Investment Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of .60% of the value of the fund’s average daily net assets and is payable monthly.
Dreyfus has contractually agreed, until March 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .85% of the value of the fund’s average daily net assets. The expense reimbursement, pursuant to the undertaking, amounted to $146,784 during the period ended October 31, 2012.
During the period ended October 31, 2012, the Distributor retained $521 from commissions earned on sales of the fund’s Class A shares.
Pursuant to a sub-investment advisory agreement between Dreyfus and Newton, Dreyfus pays Newton a monthly fee at an annual rate of .29% of the value of the fund’s average daily net assets.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended October 31, 2012, Class C shares were charged $3,984 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services.The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing
32
reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2012, Class A and Class C shares were charged $2,068 and $1,328, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates DreyfusTransfer, Inc. (“DTI”), a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $334 for transfer agency services and $5 for cash management services. Cash management fees were partially offset by earnings credits of $1. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended October 31, 2012, the fund was charged $4,422 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of NewYork Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $17 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations.
The Fund | 33 |
NOTES TO FINANCIAL STATEMENTS (continued)
During the period ended October 31, 2012, the fund was charged $8,517 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $5,655, Distribution Plan fees $361, Shareholder Services Plan fees $353, custodian fees $2,400, Chief Compliance Officer fees $2,654 and transfer agency fees $60, which are offset against an expense reimbursement currently in effect in the amount of $10,813.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities and forward contracts, during the period ended October 31, 2012, amounted to $13,749,419 and $12,376,416, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended October 31, 2012 is discussed below.
Forward Foreign Currency Exchange Contracts : The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract
34
is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at October 31, 2012:
Foreign | Unrealized | |||||
forward foreign currency | Currency | Appreciation | ||||
exchange contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
P urchases: | ||||||
J apanese Yen, | ||||||
Expiring | ||||||
11/14/2012 a | 13,420,000 | 167,976 | 168,125 | 149 | ||
S ales: | Proceeds ($) | |||||
Australian Dollar, | ||||||
Expiring | ||||||
11/14/2012 b | 168,000 | 174,990 | 174,194 | 796 | ||
British Pound, | ||||||
Expiring: | ||||||
11/14/2012 a | 1,649,650 | 2,567,936 | 2,661,991 | (94,055 | ) | |
11/14/2012 b | 123,000 | 198,506 | 198,481 | 25 | ||
11/14/2012 c | 96,000 | 155,036 | 154,911 | 125 | ||
Canadian Dollar, | ||||||
Expiring | ||||||
11/14/2012 b | 329,000 | 327,603 | 329,316 | (1,713 | ) | |
Chinese Yuan Renminbi, | ||||||
Expiring | ||||||
11/14/2012 c | 150,000 | 23,580 | 24,017 | (437 | ) | |
Czech Republic Koruna, | ||||||
Expiring: | ||||||
11/14/2012 b | 2,090,000 | 101,499 | 107,980 | (6,481 | ) | |
11/14/2012 c | 280,000 | 13,739 | 14,466 | (727 | ) | |
Euro, | ||||||
Expiring: | ||||||
11/14/2012 a | 1,314,200 | 1,619,200 | 1,703,606 | (84,406 | ) | |
11/14/2012 b | 211,000 | 263,786 | 273,520 | (9,734 | ) | |
Malaysian Ringgit, | ||||||
Expiring: | ||||||
11/14/2012 a | 190,000 | 62,039 | 62,308 | (269 | ) | |
11/14/2012 b | 150,000 | 48,702 | 49,190 | (488 | ) |
The Fund | 35 |
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales (continued): | ||||||
Mexican New Peso, | ||||||
Expiring | ||||||
11/14/2012 c | 1,662,000 | 124,734 | 126,740 | (2,006 | ) | |
New Zealand Dollar, | ||||||
Expiring | ||||||
11/14/2012 c | 506,000 | 409,317 | 415,756 | (6,439 | ) | |
Norwegian Krone, | ||||||
Expiring | ||||||
11/14/2012 c | 442,163 | 73,171 | 77,516 | (4,345 | ) | |
Polish Zloty, | ||||||
Expiring | ||||||
11/14/2012 b | 815,000 | 254,670 | 254,812 | (142 | ) | |
Swedish Krona, | ||||||
Expiring | ||||||
11/14/2012 b | 1,072,000 | 163,402 | 161,551 | 1,851 | ||
Turkish Lira, | ||||||
Expiring | ||||||
11/14/2012 c | 99,000 | 55,008 | 55,126 | (118 | ) | |
Gross Unrealized | ||||||
Appreciation | 2,946 | |||||
Gross Unrealized | ||||||
Depreciation | (211,360 | ) |
Counterparties:
a | UBS |
b | Royal Bank of Scotland |
c | JPMorgan Chase & Co. |
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2012:
Average Market Value ($) | |
Forward contracts | 6,714,700 |
At October 31, 2012, the cost of investments for federal income tax purposes was $11,135,045; accordingly, accumulated net unrealized appreciation on investments was $197,399, consisting of $418,162 gross unrealized appreciation and $220,763 gross unrealized depreciation.
36
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dreyfus Global Dynamic Bond Fund
We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Global Dynamic Bond Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2012, and the related statement of operations for the year then ended, and the statement of changes in net assets and the financial highlights for the year then ended and for the period from March 25, 2011 (commencement of operations) to October 31, 2011. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting.Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012 by correspondence with the custodian and others.We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Global Dynamic Bond Fund at October 31, 2012, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period from March 25, 2011 to October 31, 2011, in conformity with U.S. generally accepted accounting principles.
New York, New York |
December 27, 2012 |
The Fund | 37 |
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund hereby reports 4.44% of ordinary dividends paid during the fiscal year ended October 31, 2012, as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31, 2012, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $27,233 represents the maximum amount that may be considered qualified dividend income. Also, the fund hereby designates $.0022 per share as a long-term capital gain and $.0113 per share as a short-term capital gain distribution paid on December 28, 2011.
38
PROXY RESULTS (Unaudited)
The Company held a special meeting of shareholders on August 3, 2012.The proposal considered at the meeting, and the results, are as follows:
Shares | |||
Votes For | Authority Withheld | ||
To elect additional Board Members: | |||
Lynn Martin † | 90,334,756 | 3,252,629 | |
Robin A. Melvin † | 90,449,622 | 3,137,763 | |
Philip L. Toia † | 90,229,928 | 3,357,457 |
† Each new Board Member’s term commenced on September 1, 2012. |
In addition, Peggy C. Davis, Joseph S. DiMartino, David P. Feldman, Ehud Houminer and Dr. Martin Peretz continue |
as Board Members of the Company. |
The Fund | 39 |
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (69) |
Chairman of the Board (1995) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small |
and medium size companies, Director (1997-present) |
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and |
businesses, Director (2005-2009) |
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard |
mills and paperboard converting plants, Director (2000-2010) |
No. of Portfolios for which Board Member Serves: 157 |
——————— |
Peggy C. Davis (69) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Shad Professor of Law, New York University School of Law (1983-present) |
No. of Portfolios for which Board Member Serves: 63 |
——————— |
David P. Feldman (72) |
Board Member (1996) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• BBH Mutual Funds Group (4 registered mutual funds), Director (1992-present) |
• QMed, Inc. a healthcare company, Director (1999-2007) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Ehud Houminer (72) |
Board Member (1993) |
Principal Occupation During Past 5Years: |
• Executive-in-Residence at the Columbia Business School, Columbia University (1992-present) |
Other Public Company Board Memberships During Past 5Years: |
• Avnet Inc., an electronics distributor, Director (1993-2012) |
No. of Portfolios for which Board Member Serves: 73 |
40
Lynn Martin (72) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• President of The Martin Hall Group LLC, a human resources consulting firm, from January |
2005-present |
Other Public Company Board Memberships During Past 5Years: |
• AT&T Inc., a telecommunications company, Director (1999-2012) |
• Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012) |
• The Proctor & Gamble Co., a consumer products company, Director (1994-2009) |
• Constellation Energy Group Inc., Director (2003-2009) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Robin A. Melvin (49) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Director, Boisi Family Foundation, a private family foundation that supports youth-serving organi- |
zations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012) |
No. of Portfolios for which Board Member Serves: 83 |
——————— |
Dr. Martin Peretz (73) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Editor-in-Chief Emeritus of The New Republic Magazine (2010-present) (previously, |
Editor-in-Chief, 1974-2010) |
• Director of TheStreet.com, a financial information service on the web (1996-present) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Philip L. Toia (79) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Private Investor |
No. of Portfolios for which Board Member Serves: 56 |
——————— |
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166.Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Gloria Messinger, Emeritus Board Member
The Fund | 41 |
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009; from April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 72 investment companies (comprised of 156 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since February 1988.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 49 years old and has been an employee of the Manager since February 1984.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 39 years old and has been an employee of the Manager since July 1995.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 56 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 2000.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since April 1985.
42
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since September 1982.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (73 investment companies, comprised of 183 portfolios). He is 55 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
MATTHEW D. CONNOLLY, Anti-Money Laundering Compliance Officer since April 2012.
Anti-Money Laundering Compliance Officer of the Distributor since October 2011; from March 2010 to September 2011, Global Head, KYC Reviews and Director, UBS Investment Bank; until March 2010,AML Compliance Officer and Senior Vice President, Citi Global Wealth Management. He is an officer of 69 investment companies (comprised of 179 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Distributor since October 2011.
The Fund | 43 |
NOTES
For More Information
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
Dreyfus |
Global Real |
Return Fund |
ANNUAL REPORT October 31, 2012
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents |
|
THE FUND |
|
2 |
A Letter from the Chairman and CEO |
3 |
Discussion of Fund Performance |
6 |
Fund Performance |
8 |
Understanding Your Fund’s Expenses |
8 |
Comparing Your Fund’s Expenses With Those of Other Funds |
9 |
Statement of Investments |
17 |
Statement of Options Written |
18 |
Statement of Assets and Liabilities |
19 |
Statement of Operations |
20 |
Statement of Changes in Net Assets |
22 |
Financial Highlights |
25 |
Notes to Financial Statements |
43 |
Report of Independent Registered Public Accounting Firm |
44 |
Important Tax Information |
44 |
Proxy Results |
45 |
Board Members Information |
47 |
Officers of the Fund |
FOR MORE INFORMATION |
|
Back Cover |
Dreyfus
Global Real
Return Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Global Real Return Fund, covering the 12-month period from November 1, 2011, through October 31, 2012. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite pronounced stock market weakness during the spring of 2012, stocks generally advanced over the reporting period as investors responded to encouraging macroeconomic developments throughout the world. Employment gains in the United States, credible measures to prevent a more severe banking crisis in Europe, and the likelihood of a “soft landing” for China’s economy buoyed investor sentiment, as did aggressively accommodative monetary policies from central banks in the United States, Europe, Japan and China. Consequently, U.S. stocks across all capitalization ranges posted double-digit returns, on average, for the reporting period.
In light of the easy monetary policies adopted by many countries, we expect global growth to be slightly more robust in 2013 than in 2012.The U.S. economic recovery is likely to persist at subpar levels over the first half of the new year, as growth may remain constrained by uncertainties surrounding fiscal policy and tax reforms. However, successful resolution of the current fiscal debate may prompt corporate decision-makers to increase capital spending, which could have positive implications for the U.S. economy and domestic equity markets.As always, we encourage you to stay in touch with your financial advisor as new developments unfold.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2011, through October 31, 2012, as provided by Suzanne Hutchins (Lead) and James Harries, Portfolio Managers of Newton Capital Management Limited, Sub-Investment Adviser
Fund and Market Performance Overview
For the 12-month period ending October 31, 2012, Dreyfus Global Real Return Fund’s Class A shares produced a total return of 5.16%, Class C shares returned 4.39% and Class I shares returned 5.45%. 1 In comparison, the fund’s performance baseline benchmark, the U.S. $ 1-Month London Interbank Offered Rate (LIBOR), and its broad-based securities market index, the Citibank 30-Day Treasury Bill Index, produced total returns of 0.25% and 0.04%, respectively, for the same period. 2,3
An improving macroeconomic outlook helped to support global stock and bond prices over the reporting period.The fund produced higher returns than its performance baseline benchmark, primarily due to favorable results from equities and corporate bonds.
The Fund’s Investment Approach
The fund seeks total return (consisting of capital appreciation and income).To pursue its goal, the fund uses an actively-managed multi-asset strategy to produce absolute or real returns with less volatility than major equity markets over a complete market cycle, typically a period of five years.The fund is not managed relative to an index, but rather seeks to provide an absolute return, with emphasis on capital preservation.
The fund is unconstrained in its approach and invests in a core of return-seeking assets, including global equities, bonds and cash. In addition to this “core”, the fund invests, generally to a lesser extent, in other asset classes, including real estate, commodities, currencies and non-traditional asset classes and strategies, in order, along with derivatives, to help protect the fund from volatility and to help it to meet the investment objective.
To allocate the fund’s assets, we combine a top-down approach emphasizing economic trends and current investment themes on a global basis, with bottom-up security selection based on fundamental research. In choosing investments, we consider economic trends as emphasized by our global investment themes, security valuations and fundamentals. Within markets and sectors, we seek attractively priced companies possessing sustainable competitive advantages, and we may invest in such companies anywhere across their capital structures. Identifying the right security characteristics for the prevailing investment environment is key to our approach, which currently emphasizes income generation.
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
Markets Driven by Macroeconomic Headlines
The reporting period began in the aftermath of major declines among stock markets and the prices of higher yielding bonds throughout the world.
Fortunately, by the start of 2012, many financial markets were rallying amid encouraging macroeconomic developments, including U.S. employment gains, efforts to forestall a more severe banking crisis in Europe, and less restrictive monetary and fiscal policies in China. Consequently, investors became more comfortable with riskier investments.While they returned to a risk-averse posture during the spring when U.S. employment gains moderated and austerity programs in Europe encountered resistance, more encouraging economic data over the summer enabled global stocks and bonds to end the reporting period with respectable returns. U.S. markets generally fared better than other regions of the world.
Riskier Assets Buoyed Fund Performance
The fund produced higher returns than its performance baseline benchmark, but with substantially less volatility. The bulk of the fund’s returns were derived from stocks and high yield bonds. Short-maturity U.S.Treasury securities also contributed positively to relative performance, as U.S. interest rates declined. However, the fund’s commodities-oriented investments generally lagged market averages.
In the fund’s equity portfolio, results from the health care sector were bolstered by pharmaceutical developers Merck & Co., Roche Holding, Sanofi and Abbott Laboratories.We increased the fund’s exposure to utilities when inflationary pressures began to rise, resulting in strong returns from Wisconsin Energy and Severn Trent.An emphasis on tobacco producers Reynolds American, British American Tobacco and JapanTobacco also boosted results. Strength in these areas was partly offset by weakness among oil and gas producers Japan’s Inpex, Petroleo Brasileiro, ADR, Cl. A and France’sTotal, as global energy demand slackened. Gold miners Newcrest Mining and Barrick Gold lost value as the prices of precious metals moderated.
Among bonds, high yield corporate securities provided robust returns with relatively little volatility, while falling interest rates boosted the value of sovereign bonds in Norway,Australia and New Zealand.
We sold call options on certain stock indices to mitigate the impact of equity market volatility upon the fund, and we employed put options and other derivative instruments to reduce the costs of our hedging strategy.We also used forward contracts to protect the fund from adverse currency fluctuations.
4
Maintaining a Cautious Investment Posture
As of the reporting period’s end, we expect heightened market volatility to persist amid uncertainty regarding Europe’s financial crisis and fiscal pressures in the United States.Therefore, we have maintained the fund’s emphasis on markets that we see as relatively healthy from a fiscal perspective, such as Germany and some of the emerging markets. Despite prevailing headwinds, we have continued to identify opportunities for attractive returns in global stock and bond markets, while limiting the fund’s exposure to various risks.
November 15, 2012
Please note, the position in any security highlighted with italicized typeface was sold during the reporting period. Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the prospectus of the fund. Bond securities are subject generally to interest rate, credit, liquidity, call, sector and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus.
The fund’s performance will be influenced by political, social and economic factors affecting investments in foreign companies. Special risks associated with such companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards.
Because the fund seeks to provide exposure to alternative or non-traditional asset categories or investment strategies, the fund’s performance will be linked to the performance of these highly volatile asset categories and strategies. Accordingly, investors should consider purchasing shares of the fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of fund shares.
The fund may, but is not required to, use derivative instruments, such as options, futures and options on futures, forward contracts and other credit derivatives.A small investment in derivatives could have a potentially large impact on the fund’s performance.The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets.
1 Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the |
maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on |
redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Return |
figures provided reflect the absorption of certain fund expenses by The Dreyfus Corporation pursuant to an agreement in |
effect through March 1, 2014, at which time it may be extended, modified or terminated. Had these expenses not been |
absorbed, the fund’s returns would have been lower. Past performance is no guarantee of future results. Share price and |
investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. |
2 SOURCE: LIPPER – Citigroup 30-Day Treasury Bill Index is a market value-weighted index of public |
obligations of the U.S.Treasury with maturities of 30 days. Investors cannot invest directly in any index. |
3 SOURCE: BLOOMBERG - London Interbank Offered Rate (LIBOR).The rate of interest at which banks |
borrow funds, in marketable size, from other banks in the London interbank market. LIBOR is the most widely used |
benchmark or reference rate for short term interest rates, and is an international rate.The London Interbank Offered |
Rate is fixed each morning at 11 a.m. London time by the British Bankers’ Association (BBA).The rate is an |
average derived from 16 quotations provided by banks determined by the British Bankers’ Association the four highest |
and lowest are then eliminated and an average of the remaining eight is calculated to arrive at the fix. Eurodollar |
Libor is calculated on an ACT/360 day count basis and settlement is for two days hence. |
The Fund | 5 |
FUND PERFORMANCE
† Source: Bloomberg L.P. |
†† Source: Lipper Inc. |
Past performance is not predictive of future performance. |
The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of Dreyfus |
Global Real Return Fund on 5/12/10 (inception date) to a $10,000 investment made in the Citibank 30-Day |
Treasury Bill Index and the U.S. $1-Month London Interbank Offered Rate (LIBOR) Index on that date.All |
dividends and capital gain distributions are reinvested. |
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A |
shares and all other applicable fees and expenses on all classes.The Citibank 30-Day Treasury Bill Index is a market |
value-weighted index of public obligations of the U.S.Treasury with maturities of 30 days.The LIBOR is the rate of |
interest at which banks borrow funds, in marketable size, from other banks in the London interbank market.The LIBOR |
is the most widely used benchmark or reference rate for short term interest rates, and is an international rate.The LIBOR |
is fixed each morning at 11 a.m. London time by the British Bankers’ Association (BBA).The rate is an average |
derived from 16 quotations provided by banks determined by the British Bankers’ Association; the four highest and |
lowest are then eliminated and an average of the remaining eight is calculated to arrive at the fix. Eurodollar LIBOR is |
calculated on an ACT/360 day count basis and settlement is for two days hence. Unlike a mutual fund, the indices are |
not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating |
to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of |
the prospectus and elsewhere in this report. |
6
Average Annual Total Returns as of 10/31/12 | |||||
Inception | From | ||||
Date | 1 Year | Inception | |||
Class A shares | |||||
with maximum sales charge (5.75%) | 5/12/10 | –0.86 | % | 2.83 | % |
without sales charge | 5/12/10 | 5.16 | % | 5.32 | % |
Class C shares | |||||
with applicable redemption charge † | 5/12/10 | 3.39 | % | 4.56 | % |
without redemption | 5/12/10 | 4.39 | % | 4.56 | % |
Class I shares | 5/12/10 | 5.45 | % | 5.59 | % |
U.S. $1-Month London Interbank | |||||
Offered Rate (LIBOR) Index | 4/30/10 | 0.25 | % | 0.26 | % †† |
Citibank 30-Day Treasury Bill Index | 4/30/10 | 0.04 | % | 0.08 | % †† |
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
† | The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the |
date of purchase. | |
†† | For comparative purposes, the value of the Index as of 4/30/10 is used as the beginning value on 5/12/10. |
The Fund | 7 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Global Real Return Fund from May 1, 2012 to October 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 7.68 | $ 11.50 | $ 6.40 | |||
Ending value (after expenses) | $ 1,036.90 | $ 1,033.50 | $ 1,038.30 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 7.61 | $ 11.39 | $ 6.34 | |||
Ending value (after expenses) | $ 1,017.60 | $ 1,013.83 | $ 1,018.85 |
† Expenses are equal to the fund’s annualized expense ratio of 1.50% for Class A, 2.25% for Class C and 1.25% |
for Class I,multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half |
year period). |
8
STATEMENT OF INVESTMENTS
October 31, 2012
Coupon | Maturity | Principal | ||||
Bonds and Notes—28.2% | Rate (%) | Date | Amount ($) a | Value ($) | ||
Australia—5.6% | ||||||
Australian Goverment, | ||||||
Sr. Unscd. Bonds, Ser. 136 | AUD | 4.75 | 4/21/27 | 840,000 | 1,003,751 | |
Australian Goverment, | ||||||
Sr. Unscd. Bonds, Ser. 133 | AUD | 5.50 | 4/21/23 | 1,660,000 | 2,086,285 | |
Queensland Treasury | ||||||
Gov. Gtd. Notes, Ser. 24 | AUD | 5.75 | 7/22/24 | 536,000 | 628,699 | |
Santos Finance, | ||||||
Gtd. Notes | EUR | 8.25 | 9/22/70 | 150,000 | b | 204,142 |
3,922,877 | ||||||
Croatia—.2% | ||||||
Agrokor, | ||||||
Gtd. Notes | EUR | 9.13 | 2/1/20 | 130,000 | 174,185 | |
El Salvador—.2% | ||||||
Telemovil Finance, | ||||||
Gtd. Notes | 8.00 | 10/1/17 | 100,000 | 106,500 | ||
Germany—.8% | ||||||
Conti-Gummi Finance, | ||||||
Sr. Scd. Notes | EUR | 7.50 | 9/15/17 | 150,000 | 209,100 | |
HeidelbergCement Finance, | ||||||
Gtd. Bonds | EUR | 7.50 | 4/3/20 | 125,000 | 185,235 | |
Unitymedia Hessen, | ||||||
Sr. Scd. Notes | EUR | 8.13 | 12/1/17 | 100,000 | 140,145 | |
534,480 | ||||||
Ireland—.5% | ||||||
Ardagh Glass Finance, | ||||||
Gtd. Bonds | EUR | 7.13 | 6/15/17 | 150,000 | 196,852 | |
Smurfit Kappa Acquisitions, | ||||||
Sr. Scd. Notes | EUR | 7.25 | 11/15/17 | 100,000 | 139,011 | |
335,863 | ||||||
Italy—.5% | ||||||
Lottomatica Group, | ||||||
Jr. Sub. Bonds | EUR | 8.25 | 3/31/66 | 150,000 | b | 194,907 |
Wind Acquisition Finance, | ||||||
Scd. Notes | EUR | 11.75 | 7/15/17 | 150,000 | 189,561 | |
384,468 | ||||||
Luxembourg—.2% | ||||||
Aguila 3, | ||||||
Sr. Scd. Notes | 7.88 | 1/31/18 | 150,000 | 158,250 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Mexico—.2% | ||||||
Satmex Escrow, | ||||||
Sr. Scd. Notes | 9.50 | 5/15/17 | 126,000 | 134,820 | ||
Netherlands—.6% | ||||||
OI European Group, | ||||||
Gtd. Notes | EUR | 6.75 | 9/15/20 | 100,000 | 144,844 | |
UPC Holding, | ||||||
Scd. Notes | EUR | 8.38 | 8/15/20 | 100,000 | 141,830 | |
Ziggo Bond, | ||||||
Gtd. Notes | EUR | 8.00 | 5/15/18 | 100,000 | 142,738 | |
429,412 | ||||||
New Zealand—1.9% | ||||||
New Zealand Government, | ||||||
Sr. Unscd. Bonds, | ||||||
Ser. 423 | NZD | 5.50 | 4/15/23 | 505,000 | 487,911 | |
New Zealand Government, | ||||||
Sr. Unscd. Bonds, | ||||||
Ser. 521 | NZD | 6.00 | 5/15/21 | 830,000 | 819,061 | |
1,306,972 | ||||||
Norway—3.7% | ||||||
Norwegian Government, | ||||||
Bonds, Ser. 474 | NOK | 3.75 | 5/25/21 | 1,045,000 | 210,664 | |
Norwegian Government, | ||||||
Bonds, Ser 473 | NOK | 4.50 | 5/22/19 | 11,705,000 | 2,408,217 | |
2,618,881 | ||||||
South Africa—.3% | ||||||
Edcon Proprietary, | ||||||
Scd. Notes | EUR | 3.50 | 6/15/14 | 150,000 | b | 181,784 |
Sweden—.5% | ||||||
Eileme 2, | ||||||
Sr. Scd. Notes | EUR | 11.75 | 1/31/20 | 110,000 | 160,540 | |
Norcell Sweden | ||||||
Holding 3, | ||||||
Sr. Scd. Notes | SEK | 9.25 | 9/29/18 | 1,000,000 | 163,955 | |
324,495 |
10
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Switzerland—.4% | ||||||
Matterhorn Mobile, | ||||||
Sr. Scd. Notes | CHF | 6.75 | 5/15/19 | 150,000 | 171,132 | |
Sunrise Communications | ||||||
International, | ||||||
Sr. Scd. Notes | EUR | 7.00 | 12/31/17 | 100,000 | 139,659 | |
310,791 | ||||||
United Kingdom—3.5% | ||||||
Anglian Water | ||||||
Services Financing, | ||||||
Sr. Scd. Notes, Ser. A8 | GBP | 3.67 | 7/30/24 | 50,000 | c | 141,437 |
Boparan Finance, | ||||||
Gtd. Notes | GBP | 9.88 | 4/30/18 | 100,000 | 177,514 | |
Cable & Wireless | ||||||
International Finance, | ||||||
Gtd. Bonds | GBP | 8.63 | 3/25/19 | 110,000 | 190,828 | |
Co-Operative Bank, | ||||||
Sub. Notes | GBP | 5.63 | 11/16/21 | 100,000 | b | 140,074 |
Dwr Cymru Financing, | ||||||
Asset Backed Bonds | GBP | 1.86 | 3/31/48 | 150,000 | c | 276,254 |
Ineos Finance, | ||||||
Sr. Scd. Notes | EUR | 7.25 | 2/15/19 | 100,000 | b | 132,531 |
ISS, | ||||||
Sr. Scd. Notes | EUR | 11.00 | 6/15/14 | 100,000 | 134,896 | |
Jaguar Land Rover, | ||||||
Gtd. Bonds | 8.13 | 5/15/21 | 150,000 | 162,375 | ||
John Lewis, | ||||||
Sr. Unscd. Bonds | GBP | 8.38 | 4/8/19 | 75,000 | 158,452 | |
Kerling, | ||||||
Sr. Scd. Notes | EUR | 10.63 | 2/1/17 | 150,000 | 181,298 | |
LBG Capital No.1, | ||||||
Gtd. Bonds, Ser. 8 | GBP | 7.87 | 8/25/20 | 70,000 | 113,359 | |
National Grid | ||||||
Electricity Transmission, | ||||||
Sr. Unscd. Bonds | GBP | 2.98 | 7/8/18 | 32,000 | c | 85,217 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
United Kingdom (continued) | ||||||
National Grid Gas, | ||||||
Gtd. Bonds | GBP | 4.19 | 12/14/22 | 19,000 | c | 61,160 |
Priory Group No. 3 | ||||||
Sr. Scd. Notes | GBP | 7.00 | 2/15/18 | 100,000 | 172,269 | |
Prudential, | ||||||
Jr. Sub. Notes | 11.75 | 12/29/49 | 181,000 | b | 209,055 | |
TESCO, | ||||||
Sr. Unscd. Notes | GBP | 4.00 | 9/8/16 | 60,000 | c | 159,785 |
2,496,504 | ||||||
United States—9.1% | ||||||
Catalent Pharma Solutions, | ||||||
Gtd. Notes | EUR | 9.75 | 4/15/17 | 150,000 | 200,254 | |
CEDC Finance Corp International, | ||||||
Sr. Scd. Notes | 9.13 | 12/1/16 | 100,000 | 66,000 | ||
Chesapeake Energy, | ||||||
Gtd. Notes | 6.78 | 3/15/19 | 170,000 | 170,638 | ||
Clearwire Communications, | ||||||
Sr. Scd. Notes | 12.00 | 12/1/15 | 150,000 | 160,430 | ||
EXCO Resources, | ||||||
Gtd. Notes | 7.50 | 9/15/18 | 185,000 | 174,825 | ||
Nextel Communications, | ||||||
Gtd. Notes, Ser. D | 7.38 | 8/1/15 | 50,000 | 50,188 | ||
Offshore Group Investment, | ||||||
Sr. Scd. Notes | 11.50 | 8/1/15 | 186,000 | 204,832 | ||
Sable International Finance, | ||||||
Sr. Scd. Notes | 7.75 | 2/15/15 | 100,000 | 107,000 | ||
U.S. Treasury Inflation | ||||||
Protected Securities, Bonds | 2.50 | 1/15/29 | 1,668,588 | d | 2,415,411 | |
U.S. Treasury Notes | 0.50 | 11/30/12 | 2,868,000 | 2,869,233 | ||
6,418,811 | ||||||
Total Bonds and Notes | ||||||
(cost $18,866,734) | 19,839,093 |
12
Common Stocks—55.3% | Shares | Value ($) |
Australia—3.1% | ||
Newcrest Mining | 53,342 | 1,463,480 |
Telstra | 175,900 | 755,939 |
2,219,419 | ||
Brazil—.8% | ||
Petroleo Brasileiro, ADR, Cl. A | 28,632 | 587,815 |
Canada—3.5% | ||
Barrick Gold | 31,188 | 1,263,114 |
Yamana Gold | 60,262 | 1,217,006 |
2,480,120 | ||
Denmark—1.2% | ||
TDC | 119,240 | 821,473 |
France—3.5% | ||
Sanofi | 11,768 | 1,034,459 |
Total | 28,544 | 1,436,227 |
2,470,686 | ||
Germany—3.6% | ||
Bayer | 21,095 | 1,837,118 |
Deutsche Telekom | 60,760 | 693,741 |
2,530,859 | ||
Japan—1.9% | ||
Asahi Group Holdings | 24,800 | 565,091 |
Japan Tobacco | 29,000 | 801,378 |
1,366,469 | ||
Luxembourg—.9% | ||
Millicom International Cellular, SDR | 7,365 | 636,244 |
Netherlands—1.7% | ||
Koninklijke KPN | 77,107 | 486,816 |
Reed Elsevier | 50,952 | 684,516 |
1,171,332 |
The Fund | 13 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Norway—.8% | |||
Statoil | 21,823 | 539,326 | |
Peru—.1% | |||
Cia de Minas Buenaventura, ADR | 1,421 | 50,815 | |
Poland—.9% | |||
Telekomunikacja Polska | 163,594 | 617,964 | |
South Africa—.9% | |||
MTN Group | 35,496 | 640,026 | |
Sweden—.8% | |||
TeliaSonera | 92,060 | 606,109 | |
Switzerland—4.8% | |||
Novartis | 21,902 | 1,318,165 | |
Roche Holding | 6,606 | 1,270,412 | |
Syngenta | 1,990 | 777,367 | |
3,365,944 | |||
United Kingdom—11.1% | |||
BAE Systems | 121,007 | 609,653 | |
British American Tobacco | 10,991 | 544,433 | |
Cable & Wireless Communications | 340,117 | 205,771 | |
Centrica | 245,227 | 1,282,587 | |
GlaxoSmithKline | 84,652 | 1,894,073 | |
Severn Trent | 31,112 | 806,330 | |
SSE | 45,275 | 1,057,953 | |
Vodafone Group | 174,236 | 473,078 | |
WM Morrison Supermarkets | 216,460 | 935,815 | |
7,809,693 | |||
United States—15.7% | |||
Abbott Laboratories | 14,843 | 972,513 | |
Accenture, Cl. A | 12,309 | 829,750 | |
Annaly Capital Management | 39,454 | e | 636,788 |
Medtronic | 15,691 | 652,432 | |
Merck & Co. | 21,004 | 958,413 | |
Newmont Mining | 8,385 | 457,402 | |
PDL BioPharma | 25,472 | 189,766 |
14
Common Stocks (continued) | Shares | Value ($) | ||
United States (continued) | ||||
PowerShares DB Gold Fund | 43,449 | f | 2,570,877 | |
Reynolds American | 34,531 | 1,437,871 | ||
Sprint Nextel | 79,639 | f | 441,200 | |
Sysco | 32,320 | 1,004,182 | ||
Wisconsin Energy | 22,708 | 873,577 | ||
11,024,771 | ||||
Total Common Stocks | ||||
(cost $36,811,648) | 38,939,065 | |||
Number of | ||||
Options Purchased—.2% | Contracts | Value ($) | ||
Call Options—.1% | ||||
CBOE Volatility Index Futures, | ||||
January 2013 @ $26 | 129 | f | 20,640 | |
CBOE Volatility Index Futures, | ||||
January 2013 @ $25 | 163 | f | 29,340 | |
49,980 | ||||
Put Options—.1% | ||||
CBOE Volatility Index Futures, | ||||
December 2012 @ $18 | 163 | f | 24,450 | |
CBOE Volatility Index Futures, | ||||
December 2012 @ $19 | 129 | f | 27,090 | |
FTSE 100 Index Futures, | ||||
December 2012 @ GBP 5,650 | 42 | f | 55,234 | |
106,774 | ||||
Total Options Purchased | ||||
(cost $167,919) | 156,754 | |||
Principal | ||||
Short-Term Investments—6.3% | Amount ($) | Value ($) | ||
U.S. Treasury Bills: | ||||
0.00%, 11/8/12 | 755,000 | 754,992 | ||
0.08%, 4/4/13 | 3,677,000 | 3,674,919 | ||
Total Short-Term Investments | ||||
(cost $4,429,835) | 4,429,911 |
The Fund | 15 |
STATEMENT OF INVESTMENTS (continued)
Other Investments—12.3% | Shares | Value ($) | ||
Registered Investment Companies: | ||||
Dreyfus Institutional Preferred | ||||
Plus Money Market Fund | 8,470,000 | g | 8,470,000 | |
NB Global Floating Rate Income Fund | 243,862 | 242,643 | ||
Total Other Investments | ||||
(cost $8,706,171) | 8,712,643 | |||
Total Investments (cost $68,982,307) | 102.3 | % | 72,077,466 | |
Liabilities, Less Cash and Receivables | (2.3 | %) | (1,636,318 | ) |
Net Assets | 100.0 | % | 70,441,148 |
ADR—American Depository Receipts
SDR—Swedish Depository Receipts
a Principal amount stated in U.S. Dollars unless otherwise noted. |
AUD—Australian Dollar |
CHF—Swiss Franc |
EUR—Euro |
GBP—British Pound |
NOK—Norwegian Krone |
NZD—New Zealand Dollar |
SEK—Swedish Krona |
b Variable rate security—interest rate subject to periodic change. |
c Principal amount for accrual purposes is periodically adjusted based on changes in the British Consumer Price Index. |
d Principal amount for accrual purposes is periodically adjusted based on changes in the U.S. Consumer Price Index. |
e Investment in real estate investment trust. |
f Non-income producing security. |
g Investment in affiliated money market mutual fund. |
16
STATEMENT OF OPTIONS WRITTEN
October 31, 2012
Number of | ||||
Contracts | Value ($) | |||
Call Options: | ||||
FTSE 100 Index Futures, | ||||
December 2012 @ GBP 6,050 | 106 | a | (31,646 | ) |
FTSE 100 Index Futures, | ||||
January 2013 @ GBP 6,150 | 42 | a | (11,861 | ) |
Put Options: | ||||
FTSE 100 Index Futures, | ||||
December 2012 @ GBP 5,350 | 42 | a | (20,332 | ) |
(premiums received $232,150) | (63,839 | ) | ||
GBP—British Pound | ||||
a Non-income producing security. | ||||
See notes to financial statements. |
The Fund | 17 |
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2012
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments: | ||||
Unaffiliated issuers | 60,512,307 | 63,607,466 | ||
Affiliated issuers | 8,470,000 | 8,470,000 | ||
Cash on initial margin—Note 4 | 350,560 | |||
Cash denominated in foreign currencies | 6,570 | 6,409 | ||
Dividends and interest receivable | 327,129 | |||
Receivable for shares of Common Stock subscribed | 90,561 | |||
Unrealized appreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 60,003 | |||
Receivable for investment securities sold | 56,471 | |||
Prepaid expenses | 17,826 | |||
72,986,425 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 65,905 | |||
Cash overdraft due to Custodian | 4,490 | |||
Unrealized depreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 1,167,582 | |||
Payable for investment securities purchased | 1,106,308 | |||
Outstanding options written, at value (premiums received | ||||
$232,150)—See Statement of Options Written—Note 4 | 63,839 | |||
Payable for shares of Common Stock redeemed | 71,396 | |||
Accrued expenses | 65,757 | |||
2,545,277 | ||||
Net Assets ($) | 70,441,148 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 67,629,030 | |||
Accumulated undistributed investment income—net | 964,437 | |||
Accumulated net realized gain (loss) on investments | (310,572 | ) | ||
Accumulated net unrealized appreciation (depreciation) on investments, | ||||
options transactions and foreign currency transactions | 2,158,253 | |||
Net Assets ($) | 70,441,148 | |||
Net Asset Value Per Share | ||||
Class A | Class C | Class I | ||
Net Assets ($) | 17,087,911 | 943,698 | 52,409,539 | |
Shares Outstanding | 1,214,649 | 67,950 | 3,717,626 | |
Net Asset Value Per Share ($) | 14.07 | 13.89 | 14.10 | |
See notes to financial statements. |
18
STATEMENT OF OPERATIONS
Year Ended October 31, 2012
Investment Income ($): | ||
Income: | ||
Cash dividends (net of $49,783 foreign taxes withheld at source): | ||
Unaffiliated issuers | 806,027 | |
Affiliated issuers | 3,186 | |
Interest | 311,320 | |
Total Income | 1,120,533 | |
Expenses: | ||
Management fee—Note 3(a) | 361,553 | |
Registration fees | 46,272 | |
Auditing fees | 43,668 | |
Shareholder servicing costs—Note 3(c) | 42,039 | |
Custodian fees—Note 3(c) | 34,022 | |
Prospectus and shareholders’ reports | 19,241 | |
Distribution fees—Note 3(b) | 4,383 | |
Directors’ fees and expenses—Note 3(d) | 2,431 | |
Legal fees | 1,752 | |
Loan commitment fees—Note 2 | 465 | |
Interest expense—Note 2 | 74 | |
Miscellaneous | 24,954 | |
Total Expenses | 580,854 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (50,461 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (15 | ) |
Net Expenses | 530,378 | |
Investment Income—Net | 590,155 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | (277,379 | ) |
Net realized gain (loss) on options transactions | (126,952 | ) |
Net realized gain (loss) on forward foreign currency exchange contracts | 543,119 | |
Net Realized Gain (Loss) | 138,788 | |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 2,701,561 | |
Net unrealized appreciation (depreciation) on options transactions | 263,019 | |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (1,154,453 | ) |
Net Unrealized Appreciation (Depreciation) | 1,810,127 | |
Net Realized and Unrealized Gain (Loss) on Investments | 1,948,915 | |
Net Increase in Net Assets Resulting from Operations | 2,539,070 |
See notes to financial statements.
The Fund | 19 |
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31, | ||||
2012 | 2011 | |||
Operations ($): | ||||
Investment income—net | 590,155 | 151,180 | ||
Net realized gain (loss) on investments | 138,788 | (84,680 | ) | |
Net unrealized appreciation | ||||
(depreciation) on investments | 1,810,127 | (48,006 | ) | |
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 2,539,070 | 18,494 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (12,051 | ) | — | |
Class I Shares | (188,051 | ) | — | |
Net realized gain on investments: | ||||
Class A Shares | (13,147 | ) | — | |
Class C Shares | (1,870 | ) | — | |
Class I Shares | (110,122 | ) | — | |
Total Dividends | (325,241 | ) | — | |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 20,229,823 | 2,125,479 | ||
Class C Shares | 754,317 | 123,078 | ||
Class I Shares | 36,736,292 | 21,104,956 | ||
Dividends reinvested: | ||||
Class A Shares | 24,685 | — | ||
Class C Shares | 637 | — | ||
Class I Shares | 279,676 | — | ||
Cost of shares redeemed: | ||||
Class A Shares | (8,799,384 | ) | (346,366 | ) |
Class C Shares | (1,022,848 | ) | — | |
Class I Shares | (7,327,473 | ) | (1,161,870 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 40,875,725 | 21,845,277 | ||
Total Increase (Decrease) in Net Assets | 43,089,554 | 21,863,771 | ||
Net Assets ($): | ||||
Beginning of Period | 27,351,594 | 5,487,823 | ||
End of Period | 70,441,148 | 27,351,594 | ||
Undistributed investment income—net | 964,437 | 35,066 |
20
The Fund | 21 |
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||
Class A Shares | 2012 | 2011 | 2010 | a | ||
Per Share Data ($): | ||||||
Net asset value, beginning of period | 13.51 | 13.44 | 12.50 | |||
Investment Operations: | ||||||
Investment income—net b | .17 | .20 | .06 | |||
Net realized and unrealized | ||||||
gain (loss) on investments | .53 | (.13 | ) | .88 | ||
Total from Investment Operations | .70 | .07 | .94 | |||
Distributions: | ||||||
Dividends from investment income—net | (.07 | ) | — | — | ||
Dividends from net realized gain on investments | (.07 | ) | — | — | ||
Total Distributions | (.14 | ) | — | — | ||
Net asset value, end of period | 14.07 | 13.51 | 13.44 | |||
Total Return (%) c | 5.16 | .52 | 7.52 | d | ||
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses to average net assets | 1.72 | 3.53 | 5.96 | e | ||
Ratio of net expenses to average net assets | 1.50 | 1.50 | 1.50 | e | ||
Ratio of net investment income | ||||||
to average net assets | 1.26 | 1.46 | .94 | e | ||
Portfolio Turnover Rate | 53.24 | 42.97 | 49.61 | d | ||
Net Assets, end of period ($ x 1,000) | 17,088 | 5,117 | 3,340 |
a | From May 12, 2010 (commencement of operations) to October 31, 2010. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
22
Year Ended October 31, | ||||||
Class C Shares | 2012 | 2011 | 2010 | a | ||
Per Share Data ($): | ||||||
Net asset value, beginning of period | 13.37 | 13.39 | 12.50 | |||
Investment Operations: | ||||||
Investment income—net b | .06 | .10 | .01 | |||
Net realized and unrealized | ||||||
gain (loss) on investments | .53 | (.12 | ) | .88 | ||
Total from Investment Operations | .59 | (.02 | ) | .89 | ||
Distributions: | ||||||
Dividends from net realized gain on investments | (.07 | ) | — | — | ||
Net asset value, end of period | 13.89 | 13.37 | 13.39 | |||
Total Return (%) c | 4.39 | (.22 | ) | 7.20 | d | |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses to average net assets | 2.56 | 4.37 | 6.75 | e | ||
Ratio of net expenses to average net assets | 2.25 | 2.25 | 2.25 | e | ||
Ratio of net investment income | ||||||
to average net assets | .51 | .75 | .20 | e | ||
Portfolio Turnover Rate | 53.24 | 42.97 | 49.61 | d | ||
Net Assets, end of period ($ x 1,000) | 944 | 1,190 | 1,071 |
a | From May 12, 2010 (commencement of operations) to October 31, 2010. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund | 23 |
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||
Class I Shares | 2012 | 2011 | 2010 | a | ||
Per Share Data ($): | ||||||
Net asset value, beginning of period | 13.56 | 13.46 | 12.50 | |||
Investment Operations: | ||||||
Investment income—net b | .21 | .18 | .07 | |||
Net realized and unrealized | ||||||
gain (loss) on investments | .53 | (.08 | ) | .89 | ||
Total from Investment Operations | .74 | .10 | .96 | |||
Distributions: | ||||||
Dividends from investment income—net | (.13 | ) | — | — | ||
Dividends from net realized gain on investments | (.07 | ) | — | — | ||
Total Distributions | (.20 | ) | — | — | ||
Net asset value, end of period | 14.10 | 13.56 | 13.46 | |||
Total Return (%) | 5.45 | .74 | 7.68 | c | ||
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses to average net assets | 1.35 | 2.33 | 5.75 | d | ||
Ratio of net expenses to average net assets | 1.25 | 1.25 | 1.25 | d | ||
Ratio of net investment income | ||||||
to average net assets | 1.55 | 1.46 | 1.19 | d | ||
Portfolio Turnover Rate | 53.24 | 42.97 | 49.61 | c | ||
Net Assets, end of period ($ x 1,000) | 52,410 | 21,044 | 1,076 |
a | From May 12, 2010 (commencement of operations) to October 31, 2010. |
b | Based on average shares outstanding at each month end. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
24
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Global Real Return Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company that offers thirteen series, including the fund.The fund’s investment objective is to seek total return (consisting of capital appreciation and income).The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Newton Capital Management Limited (“Newton”), an affiliate of BNY Mellon, serves as the fund’s sub-investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares.The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C and Class I. Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I shares are sold at net asset value per share only to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Fund | 25 |
NOTES TO FINANCIAL STATEMENTS (continued)
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications.The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not
26
orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1 —unadjusted quoted prices in active markets for identical investments.
Level 2 —other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 —significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is available. Registered
The Fund | 27 |
NOTES TO FINANCIAL STATEMENTS (continued)
investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are categorized within Level 1 of the fair value hierarchy.
Investments in debt securities excluding short-term investments (other than U.S. Treasury Bills), options and forward foreign currency exchange contracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions.These securities are generally categorized within Level 2 of the fair value hierarchy.
U.S. Treasury Bills are valued at the mean price between quoted bid prices and asked prices by the Service. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service’s procedures are reviewed by Dreyfus under the general supervision of the Board.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
28
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.These securities are either categorized as Level 2 or 3 depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Options which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. These securities are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter are valued at the mean between the bid and asked price.These securities are generally categorized within Level 2 of the fair value hierarchy. Forward contracts are valued at the forward rate. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Fund | 29 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following is a summary of the inputs used as of October 31, 2012 in valuing the fund’s investments:
Level 2—Other | Level 3— | ||||||
Level 1— | Significant | Significant | |||||
Unadjusted | Observable | Unobservable | |||||
Quoted Prices | Inputs | Inputs | Total | ||||
Assets ($) | |||||||
Investments in Securities: | |||||||
Corporate Bonds † | — | 6,909,861 | — | 6,909,861 | |||
Equity Securities—Domestic | |||||||
Common Stocks † | 8,453,894 | — | — | 8,453,894 | |||
Equity Securities—Foreign | |||||||
Common Stocks † | 27,914,294 | — | — | 27,914,294 | |||
Exchange-Traded | |||||||
Funds | 2,570,877 | — | — | 2,570,877 | |||
Foreign Government | — | 7,644,588 | — | 7,644,588 | |||
Mutual Funds | 8,712,643 | — | — | 8,712,643 | |||
U.S. Treasury | — | 9,714,555 | — | 9,714,555 | |||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts †† | — | 60,003 | — | 60,003 | |||
Options Purchased | 156,754 | — | — | 156,754 | |||
Liabilities ($) | |||||||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts †† | — | (1,167,582 | ) | — | (1,167,582 | ) | |
Options Written | (63,839 | ) | — | — | (63,839 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Amount shown represents unrealized appreciation (depreciation) at period end. |
At October 31, 2011, $1,577,653 of exchange traded foreign equity securities were classified within Level 2 of the fair value hierarchy pursuant to the fund’s fair valuation procedures.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign
30
exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on investments are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended October 31, 2012 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 10/31/2011 ($) | Purchases ($) | Sales ($) | 10/31/2012 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Preferred | |||||
Plus Money | |||||
Market Fund | — | 63,575,107 | 55,105,107 | 8,470,000 | 12.0 |
The Fund | 31 |
NOTES TO FINANCIAL STATEMENTS (continued)
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the three-year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2012, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $207,900, accumulated capital losses $58,862 and unrealized appreciation $2,663,080.
32
Under the Regulated Investment Company Modernization Act of 2010 (the “2010 Act”), the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) for an unlimited period. Furthermore, post-enactment capital loss carryovers retain their character as either short-term or long-term capital losses rather than short-term as they were under previous statute.
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to October 31, 2012.The fund has $58,862 of post-enactment short-term capital losses which can be carried forward for an unlimited period.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2012 and October 31, 2011 were as follows: ordinary income $270,888 and $0 and long-term capital gains $54,353 and $0, respectively.
During the period ended October 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency gains and losses, passive foreign investment companies and real estate investment trusts, the fund increased accumulated undistributed investment income-net by $539,318 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
(h) New Accounting Pronouncement: In December 2011, FASB issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position.They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition,ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their
The Fund | 33 |
NOTES TO FINANCIAL STATEMENTS (continued)
financial statements on the basis of International Financial Reporting Standards (“IFRS”).ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact on the fund’s financial statement disclosures.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of NewYork Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Effective October 10, 2012, the $225 million unsecured credit facility with Citibank, N.A., was decreased to $210 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing.
The average amount of borrowings outstanding under the Facilities during the period ended October 31, 2012, was approximately $6,300, with a related weighted average annualized interest rate of 1.18%.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of .90% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has contractually agreed, until March 1, 2014, to waive receipt of its fees and/or assume the direct expenses of the fund so that the expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, com-
34
mitment fees on borrowings and extraordinary expenses) exceed 1.25% of the value of the fund’s average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $50,461 during the period ended October 31, 2012.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and Newton, Dreyfus pays Newton an annual fee of .43% of the value of the fund’s average daily net assets, payable monthly.
During the period ended October 31, 2012, the Distributor retained $2,180 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended October 31, 2012, Class C shares were charged $4,383 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services.The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts.The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2012, Class A and Class C shares were charged $21,751 and $1,461, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The Fund | 35 |
NOTES TO FINANCIAL STATEMENTS (continued)
The fund compensates DreyfusTransfer, Inc. (“DTI”), a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $3,761 for transfer agency services and $67 for cash management services. Cash management fees were partially offset by earnings credits of $8. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensatesThe Bank of NewYork Mellon under a custody agreement for providing custodial services for the fund. During the period ended October 31, 2012, the fund was charged $34,022 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of NewYork Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $227 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations. These fees were partially offset by earnings credits of $7.
During the period ended October 31, 2012, the fund was charged $8,517 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $51,072, Distribution Plan fees $564, Shareholder Services Plan fees $3,774, custodian fees $10,348, Chief Compliance Officer fees $2,654 and transfer agency fees $580, which are offset against an expense reimbursement currently in effect in the amount of $3,087.
36
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, options transactions and forward contracts, during the period ended October 31, 2012, amounted to $53,026,320 and $18,572,407, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended October 31, 2012 is discussed below.
The following tables show the fund’s exposure to different types of market risk as it relates to the Statement of Assets and Liabilities and the Statement of Operations, respectively.
Fair value of derivative instruments as of October 31, 2012 is shown below:
Derivative | Derivative | |||
Assets ($) | Liabilities ($) | |||
Equity risk 1 | 156,754 | Equity risk 2 | (63,839 | ) |
Foreign exchange risk 3 | 60,003 | Foreign exchange risk 4 | (1,167,582 | ) |
Gross fair value of | ||||
derivatives contracts | 216,757 | (1,231,421 | ) |
Statement of Assets and Liabilities location:
1 | Options purchased are included in investments in securities—Unaffiliated issuers, at value. |
2 | Outstanding options written, at value. |
3 | Unrealized appreciation on forward foreign currency exchange contracts. |
4 | Unrealized depreciation on forward foreign currency exchange contracts. |
The Fund | 37 |
NOTES TO FINANCIAL STATEMENTS (continued)
The effect of derivative instruments in the Statement of Operations during the period ended October 31, 2012 is shown below:
Amount of realized gain or (loss) on derivatives recognized in income ($)
Options | Forward | ||||
Underlying risk | Transactions 5 | Contracts 6 | Total | ||
Equity | (95,766 | ) | — | (95,766 | ) |
Foreign exchange | (31,186 | ) | 543,119 | 511,933 | |
Total | (126,952 | ) | 543,119 | 416,167 |
Change in unrealized appreciation or (depreciation) on derivatives recognized in income ($)
Options | Forward | ||||
Underlying risk | Transactions 7 | Contracts 8 | Total | ||
Equity | 240,420 | — | 240,420 | ||
Foreign exchange | 22,599 | (1,154,453 | ) | (1,131,854 | ) |
Total | 263,019 | (1,154,453 | ) | (891,434 | ) |
Statement of Operations location:
5 | Net realized gain (loss) on options transactions. |
6 | Net realized gain (loss) on forward foreign currency exchange contracts. |
7 | Net unrealized appreciation (depreciation) on options transactions. |
8 | Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in the values of equities and foreign currencies, or as a substitute for an investment.The fund is subject to market risk and currency risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying security or securities at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying security or securities at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the
38
fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates.
As a writer of an option, the fund has no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the security underlying the written option.There is a risk of loss from a change in value of such options which may exceed the related premiums received. The Statement of Operations reflects the following: any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction.
The following summarizes the fund’s call/put options written during the period ended October 31, 2012:
Options Terminated | ||||
Number of | Premiums | Net Realized | ||
Options Written: | Contracts | Received ($) | Cost ($) | Gain ($) |
Contracts outstanding | ||||
October 31, 2011 | 160 | 201,111 | ||
Contracts written | 1,406 | 1,593,211 | ||
Contracts terminated: | ||||
Contracts closed | 914 | 1,043,556 | 527,919 | 515,637 |
Contracts expired | 462 | 518,616 | — | 518,616 |
Total contracts terminated | 1,376 | 1,562,172 | 527,919 | 1,034,253 |
Contracts Outstanding | ||||
October 31, 2012 | 190 | 232,150 |
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to
The Fund | 39 |
NOTES TO FINANCIAL STATEMENTS (continued)
settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future.With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates.Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations.The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at October 31, 2012:
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases: | ||||||
British Pound, | ||||||
Expiring: | ||||||
11/1/2012 a | 27,280 | 43,965 | 44,023 | 58 | ||
11/14/2012 b | 2,452,000 | 3,948,006 | 3,956,720 | 8,714 | ||
11/14/2012 c | 263,000 | 418,226 | 424,395 | 6,169 | ||
Euro, | ||||||
Expiring | ||||||
2/15/2013 b | 1,842,000 | 2,402,508 | 2,390,126 | (12,382 | ) | |
Sales: | Proceeds ($) | |||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/14/2012 a | 613,000 | 610,023 | 634,023 | (24,000 | ) | |
12/14/2012 b | 6,083,000 | 6,015,490 | 6,291,614 | (276,124 | ) | |
12/14/2012 c | 1,337,000 | 1,338,427 | 1,382,852 | (44,425 | ) | |
British Pound, | ||||||
Expiring: | ||||||
11/14/2012 a | 2,938,000 | 4,626,847 | 4,740,964 | (114,117 | ) | |
11/14/2012 b | 4,016,773 | 6,445,113 | 6,481,748 | (36,635 | ) | |
11/14/2012 c | 2,120,000 | 3,297,323 | 3,420,981 | (123,658 | ) |
40
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales (continued): | ||||||
Canadian Dollar, | ||||||
Expiring | ||||||
2/15/2013 c | 877,654 | 884,129 | 876,671 | 7,458 | ||
Danish Krone, | ||||||
Expiring | ||||||
4/15/2013 d | 4,916,000 | 856,195 | 856,764 | (569 | ) | |
Euro, | ||||||
Expiring: | ||||||
2/15/2013 a | 8,987,350 | 11,375,066 | 11,661,722 | (286,656 | ) | |
2/15/2013 c | 53,000 | 68,784 | 68,771 | 13 | ||
Japanese Yen, | ||||||
Expiring | ||||||
4/15/2013 b | 106,142,000 | 1,360,409 | 1,331,932 | 28,477 | ||
New Zealand Dollar, | ||||||
Expiring | ||||||
4/15/2013 a | 1,595,000 | 1,285,969 | 1,297,351 | (11,382 | ) | |
Norwegian Krone, | ||||||
Expiring: | ||||||
2/15/2013 a | 716,000 | 119,754 | 125,081 | (5,327 | ) | |
2/15/2013 c | 16,305,300 | 2,739,858 | 2,848,438 | (108,580 | ) | |
Polish Zloty, | ||||||
Expiring: | ||||||
2/15/2013 a | 132,000 | 39,165 | 40,856 | (1,691 | ) | |
2/15/2013 b | 276,000 | 81,603 | 85,427 | (3,824 | ) | |
2/15/2013 c | 2,056,000 | 609,710 | 636,368 | (26,658 | ) | |
South African Rand, | ||||||
Expiring: | ||||||
12/14/2012 a | 921,000 | 106,199 | 105,508 | 691 | ||
12/14/2012 b | 1,715,100 | 197,413 | 196,479 | 934 | ||
12/14/2012 c | 1,161,000 | 140,491 | 133,002 | 7,489 | ||
Swedish Krona, | ||||||
Expiring: | ||||||
2/15/2013 a | 2,576,000 | 383,434 | 387,195 | (3,761 | ) | |
2/15/2013 b | 1,083,000 | 159,703 | 162,784 | (3,081 | ) | |
2/15/2013 c | 1,661,000 | 249,372 | 249,663 | (291 | ) | |
Swiss Franc, | ||||||
Expiring: | ||||||
12/14/2012 a | 2,544,000 | 2,661,399 | 2,733,508 | (72,109 | ) | |
12/14/2012 b | 319,000 | 331,430 | 342,763 | (11,333 | ) | |
12/14/2012 c | 181,000 | 193,504 | 194,483 | (979 | ) | |
Gross Unrealized | ||||||
Appreciation | 60,003 | |||||
Gross Unrealized | ||||||
Depreciation | (1,167,582 | ) |
Counterparties:
a | Royal Bank of Scotland |
b | JPMorgan Chase & Co. |
c | UBS |
d | Barclays Capital |
The Fund | 41 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2012:
Average Market Value ($) | |
Equity options contracts | 245,050 |
Foreign currency options contracts | 919 |
Forward contracts | 24,566,934 |
At October 31, 2012, the cost of investments for federal income tax purposes was $69,077,875; accordingly, accumulated net unrealized appreciation on investments was $2,999,591, consisting of $3,981,531 gross unrealized appreciation and $981,940 gross unrealized depreciation.
42
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dreyfus Global Real Return Fund
We have audited the accompanying statement of assets and liabilities, including the statements of investments and options written, of Dreyfus Global Real Return Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012 by correspondence with the custodian and others.We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Global Real Return Fund at October 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 27, 2012
The Fund | 43 |
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund elects to provide each shareholder with their portion of the fund’s foreign taxes paid and the income sourced from foreign countries. Accordingly, the fund hereby reports the following information regarding its fiscal year ended October 31, 2012:
—the total amount of taxes paid to foreign countries was $36,024.
—the total amount of income sourced from foreign countries was $1,125,058.
For the fiscal year ended October 31, 2012, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $270,888 represents the maximum amount that may be considered qualified dividend income.Also, the fund hereby designates $.0351 per share as a long-term capital gain and $.0381 per share as a short-term capital gain distribution paid on December 29, 2011.
PROXY RESULTS (Unaudited)
The Company held a special meeting of shareholders on August 3, 2012.The proposal considered at the meeting, and the results, are as follows:
Shares | |||
Votes For | Authority Withheld | ||
To elect additional Board Members: | |||
Lynn Martin † | 90,334,756 | 3,252,629 | |
Robin A. Melvin † | 90,449,622 | 3,137,763 | |
Philip L. Toia † | 90,229,928 | 3,357,457 |
† Each new Board Member’s term commenced on September 1, 2012. |
In addition Peggy C. Davis, Joseph S. DiMartino, David P. Feldman, Ehud Houminer and Dr. Martin Peretz continue |
as Board Members of the Company. |
44
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (69) |
Chairman of the Board (1995) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small |
and medium size companies, Director (1997-present) |
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and |
businesses, Director (2005-2009) |
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard |
mills and paperboard converting plants, Director (2000-2010) |
No. of Portfolios for which Board Member Serves: 157 |
——————— |
Peggy C. Davis (69) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Shad Professor of Law, New York University School of Law (1983-present) |
No. of Portfolios for which Board Member Serves: 63 |
——————— |
David P. Feldman (72) |
Board Member (1996) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• BBH Mutual Funds Group (4 registered mutual funds), Director (1992-present) |
• QMed, Inc. a healthcare company, Director (1999-2007) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Ehud Houminer (72) |
Board Member (1993) |
Principal Occupation During Past 5Years: |
• Executive-in-Residence at the Columbia Business School, Columbia University (1992-present) |
Other Public Company Board Memberships During Past 5Years: |
• Avnet Inc., an electronics distributor, Director (1993-2012) |
No. of Portfolios for which Board Member Serves: 73 |
The Fund | 45 |
BOARD MEMBERS INFORMATION (Unaudited) (continued)
Lynn Martin (72) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• President of The Martin Hall Group LLC, a human resources consulting firm, from January |
2005-present |
Other Public Company Board Memberships During Past 5Years: |
• AT&T Inc., a telecommunications company, Director (1999-2012) |
• Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012) |
• The Proctor & Gamble Co., a consumer products company, Director (1994-2009) |
• Constellation Energy Group Inc., Director (2003-2009) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Robin A. Melvin (49) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Director, Boisi Family Foundation, a private family foundation that supports youth-serving orga- |
nizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012) |
No. of Portfolios for which Board Member Serves: 83 |
——————— |
Dr. Martin Peretz (73) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Editor-in-Chief Emeritus of The New Republic Magazine (2010-present) (previously, |
Editor-in-Chief, 1974-2010) |
• Director of TheStreet.com, a financial information service on the web (1996-present) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Philip L. Toia (79) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Private Investor |
No. of Portfolios for which Board Member Serves: 56 |
——————— |
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166.Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Gloria Messinger, Emeritus Board Member
46
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009; from April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 72 investment companies (comprised of 156 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since February 1988.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 49 years old and has been an employee of the Manager since February 1984.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 39 years old and has been an employee of the Manager since July 1995.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 56 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 2000.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since April 1985.
The Fund | 47 |
OFFICERS OF THE FUND (Unaudited) (continued)
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since September 1982.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (73 investment companies, comprised of 183 portfolios). He is 55 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
MATTHEW D. CONNOLLY, Anti-Money Laundering Compliance Officer since April 2012.
Anti-Money Laundering Compliance Officer of the Distributor since October 2011; from March 2010 to September 2011, Global Head, KYC Reviews and Director, UBS Investment Bank; until March 2010,AML Compliance Officer and Senior Vice President, Citi Global Wealth Management. He is an officer of 69 investment companies (comprised of 179 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Distributor since October 2011.
48
For More Information
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
Dreyfus |
Total Emerging |
Markets Fund |
ANNUAL REPORT October 31, 2012
Save time. Save paper. View your next shareholder report online as soon as its available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. Its simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured Not Bank-Guaranteed May Lose Value |
Contents |
|
THE FUND |
|
2 |
A Letter from the Chairman and CEO |
3 |
Discussion of Fund Performance |
6 |
Fund Performance |
8 |
Understanding Your Funds Expenses |
8 |
Comparing Your Funds Expenses With Those of Other Funds |
9 |
Statement of Investments |
18 |
Statement of Assets and Liabilities |
19 |
Statement of Operations |
20 |
Statement of Changes in Net Assets |
22 |
Financial Highlights |
25 |
Notes to Financial Statements |
39 |
Report of Independent Registered Public Accounting Firm |
40 |
Important Tax Information |
41 |
Proxy Results |
42 |
Board Members Information |
44 |
Officers of the Fund |
FOR MORE INFORMATION |
|
Back Cover |
Dreyfus
Total Emerging
Markets Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Total Emerging Markets Fund, covering the 12-month period from November 1, 2011, through October 31, 2012. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite pronounced stock market weakness during the spring of 2012, stocks generally advanced over the reporting period as investors responded to encouraging macroeconomic developments throughout the world. Employment gains in the United States, credible measures to prevent a more severe banking crisis in Europe, and the likelihood of a “soft landing” for China’s economy buoyed investor sentiment, as did aggressively accommodative monetary policies from central banks in the United States, Europe, Japan and China. Consequently, U.S. stocks across all capitalization ranges posted double-digit returns, on average, for the reporting period.
In light of the easy monetary policies adopted by many countries, we expect global growth to be slightly more robust in 2013 than in 2012.The U.S. economic recovery is likely to persist at subpar levels over the first half of the new year, as growth may remain constrained by uncertainties surrounding fiscal policy and tax reforms. However, successful resolution of the current fiscal debate may prompt corporate decision-makers to increase capital spending, which could have positive implications for the U.S. economy and domestic equity markets.As always, we encourage you to stay in touch with your financial advisor as new developments unfold.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2011, through October 31, 2012, as provided by Sean P. Fitzgibbon and Alexander Kozhemiakin, Portfolio Managers
Fund and Market Performance Overview
For the 12-month period ended October 31, 2012, Dreyfus Total Emerging Markets Fund’s Class A shares produced a total return of 3.18%, Class C shares returned 2.38% and Class I shares returned 3.38%. 1 In comparison, the Morgan Stanley Capital International Emerging Markets Index (“MSCI EM Index”), the fund’s benchmark, returned 2.63% for the same period. 2
Emerging markets generally advanced over the reporting period as hopes for global financial recovery outweighed concerns regarding a debt crisis in Europe and slowing growth in China.The fund produced higher returns than its benchmark, largely due to strong results from fixed-income securities.
The Fund’s Investment Approach
The fund seeks to maximize total return.To pursue its goal, the fund normally invests at least 80% of its assets in equities, bonds and currencies issued by, or economically tied to, emerging markets. We base asset and country allocation decisions on our global macro-economic view and top-down country-specific outlooks, along with our bottom-up valuation assessments of individual securities. Equity investments rely on in-depth fundamental analysis supported by proprietary quantitative models. Bond and currency investments rely on in-depth fundamental analysis. By constructing a portfolio that is liquid and diversified from an asset class and country perspective, we seek to reduce volatility and country concentration risk.
Economic Headlines Buffeted Markets
Investors faced uncertain global economic conditions throughout the reporting period. Slowing growth in China, a subpar U.S. recovery, and the ongoing financial crisis in Europe helped to undermine investor confidence. When these concerns intensified, risk-averse investors tended to shift assets from emerging-markets equities to perceived safe havens, such as U.S. government bonds.
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
Emerging-markets equities proved highly volatile in this environment.The MSCI EM Index dropped sharply during the first two months of the reporting period, and then rebounded in early 2012 when the European policymakers launched new efforts to address the region’s problems, China appeared to have engineered a “soft landing,” and U.S. employment trends improved.The spring saw another steep decline, followed by a second rally from August through October, enabling emerging-markets equities to end the reporting period with mild gains. Emerging-markets bonds produced substantially higher returns than equities, on average, with less volatility as interest rates generally declined in response to increasingly accommodative monetary policies.
Allocating Assets in an Uncertain Global Environment
In light of heightened levels of volatility and economic uncertainty, we positioned the fund conservatively at the beginning of the reporting period, with roughly 60% of assets allocated to bonds and 40% to stocks.As we found more attractive values among stocks, the fund’s equity exposure rose to approximately 66% by the reporting period’s end. Moreover, we identified some countries, such as Mexico, where bonds appeared more attractive than stocks. In others, including South Korea, we favored stocks over bonds. In Russia, we invested in a mix of equities and fixed-income securities.
The fund’s stock holdings benefited from an emphasis on Thailand, where the local economy recovered from devastating 2011 floods. Most notably,Thai-based residential real estate company Asian Property Development more than doubled in value. Other top performers included consumer electronic maker Samsung Electronics and tobacco producer KT&G in South Korea, and Chinese vehicle manufacturer Great Wall Motor. On a more negative note, relative performance suffered due to disappointments including Malaysian gaming conglomerate Genting , Chinese agricultural producer
China Agri-Industries Holdings and Brazilian metals minerVale.
The fund’s fixed-income positions generally added value to the fund’s performance, with especially strong results from sovereign and corporate-backed bonds denominated in U.S. dollars. Some of the better fixed-income performers during the reporting period included U.S. dollar denominated bonds in Brazil, quasi-sovereign bonds in Russia and corporate credits in Indonesia. Local currency-denominated bonds in Mexico and Russia also fared well. The fund employed forward contracts to hedge some of its currency exposures.
4
Focusing on Carefully Selected Markets
As of the reporting period’s end, we have seen signs of recovery in the Chinese economy, a primary engine of global growth. However, a number of headwinds remain, including the ongoing European financial crisis and fiscal uncertainty in the United States.Therefore, we have retained overweighted exposure to fixed-income securities, which we believe can help cushion the effects of heightened equity-markets volatility.
Among stocks, we have identified attractive relative values in markets that seem poised for growth, such as Thailand and the Philippines, but we have found fewer opportunities in Taiwan and South Africa. The fund’s fixed-income investments currently favor a diversified mix of sovereign and corporate bonds — some denominated in U.S. dollars and other in local currencies — in countries including Mexico, Russia, Korea and Brazil.
November 15, 2012
Please note, the position in any security highlighted with italicized typeface was sold during the reporting period. Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus. Bond securities are subject generally to interest rate, credit, liquidity, call, sector and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus.
Emerging markets tend to be more volatile than the markets of more mature economies and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries.The securities of companies located in emerging markets are often subject to rapid and large changes in price.An investment in this fund should be considered only as a supplement to a complete investment program for those investors willing to accept the greater risks associated with investing in emerging market countries.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic and social instability, a lack of comprehensive company information, differing auditing and legal standards and less market liquidity.These risks generally are greater with emerging market countries than with more economically and politically established foreign countries.
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the |
maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charges imposed |
on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past |
performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon |
redemption, fund shares may be worth more or less than their original cost. Return figures provided reflect the |
absorption of certain fund expenses by The Dreyfus Corporation pursuant to an agreement in effect until March 1, |
2014, at which time it may be extended, terminated or modified. Had these expenses not been absorbed, the fund’s |
returns would have been lower. |
2 SOURCE: LIPPER INC. — Reflects reinvestment of net dividends and, where applicable, capital gain distributions. |
The Morgan Stanley Capital International Emerging Markets (MSCI EM) Index is a market capitalization-weighted |
index composed of companies representative of the market structure of select designated emerging market countries in |
Europe, Latin America and the Pacific Basin. Investors cannot invest directly in any index. |
The Fund | 5 |
FUND PERFORMANCE
† | Source: Lipper Inc. – MSCI EM Index |
†† | Source: Lipper Inc. – MSCI EM Index and FactSet - JP Morgan GBI-EM Global Diversified Index and |
JP Morgan EMBI Global Index |
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of Dreyfus Total Emerging Markets Fund on 3/25/11 (inception date) to a $10,000 investment made in the Morgan Stanley Capital International Emerging Markets Index (the “MSCI EM Index”) as well as to a Hybrid Index reflecting the fund’s asset allocation baseline percentages (“Baseline”) as described below on 3/31/11.All dividends and capital gain distributions are reinvested.
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes.The MSCI EM Index is a market capitalization-weighted index composed of companies representative of the market structure of 21 emerging market countries in Europe, Latin America and the Pacific Basin.The Index excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners.The Index includes net dividends reinvested.The Hybrid Index has been prepared by the fund for purposes of more accurate comparison to the fund’s overall portfolio composition.We have combined the performance of unmanaged indices reflecting the Baseline percentage which consists of the MSCI EM Index (50%). JP Morgan GBI-EM Global Diversified Index consists of regularly traded, liquid fixed-rate, domestic currency government bonds to which international investors can gain exposure (25%). JP Morgan EMBI Global Index tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds (25%). Unlike a mutual fund, the indices are not subject to charges, fees and other expenses. Investors cannot invest directly in any index.These factors can contribute to the Index potentially outperforming the fund. Further information relating to fund expenses, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
6
Average Annual Total Returns as of 10/31/12 | |||||
Inception | From | ||||
Date | 1 Year | Inception | |||
Class A shares | |||||
with maximum sales charge (5.75%) | 3/25/11 | –2.72 | % | –7.32 | % |
without sales charge | 3/25/11 | 3.18 | % | –3.84 | % |
Class C shares | |||||
with applicable redemption charge † | 3/25/11 | 1.38 | % | –4.56 | % |
without redemption | 3/25/11 | 2.38 | % | –4.56 | % |
Class I shares | 3/25/11 | 3.38 | % | –3.61 | % |
Morgan Stanley Capital International | |||||
Emerging Markets Index | 3/31/11 | 2.63 | % | –7.11 | % †† |
Hybrid Index | 3/31/11 | 8.18 | % | 1.64 | % †† |
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
† | The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the |
date of purchase. | |
†† | For comparative purposes, the value of the Index as of 3/31/11 is used as the beginning value on 3/25/11. |
The Fund | 7 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Total Emerging Markets Fund from May 1, 2012 to October 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 8.17 | $ 11.87 | $ 6.94 | |||
Ending value (after expenses) | $ 970.50 | $ 967.00 | $ 972.20 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ | $ 8.36 | $ 12.14 | $ 7.10 | ||
Ending value (after expenses) | $ | $ 1,016.84 | $ 1,013.07 | $ 1,018.10 |
† Expenses are equal to the fund’s annualized expense ratio of 1.65% for Class A, 2.40% for Class C and 1.40% |
for Class I, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half |
year period). |
8
STATEMENT OF INVESTMENTS
October 31, 2012
Coupon | Maturity | Principal | |||
Bonds and Notes—30.4% | Rate (%) | Date | Amount ($) a | Value ($) | |
Brazil—1.7% | |||||
Banco Do Brasil, | |||||
Gtd. Notes | 3.88 | 10/10/22 | 200,000 | 199,900 | |
Gerdau Trade, | |||||
Gtd. Notes | 5.75 | 1/30/21 | 100,000 | 112,050 | |
Itau Unibanco Holding, | |||||
Sub. Notes | 5.65 | 3/19/22 | 200,000 | 212,000 | |
Odebrecht Finance, | |||||
Gtd. Notes | 5.13 | 6/26/22 | 200,000 | 218,000 | |
Oi, | |||||
Sr. Unscd. Notes | 5.75 | 2/10/22 | 200,000 | 216,500 | |
Petrobras International Finance, | |||||
Gtd. Notes | 5.75 | 1/20/20 | 110,000 | 127,433 | |
Rearden G Holdings | |||||
Gtd. Notes | 7.88 | 3/30/20 | 100,000 | 111,625 | |
1,197,508 | |||||
Canada—.5% | |||||
Pacific Rubiales Energy, | |||||
Gtd. Notes | 7.25 | 12/12/21 | 100,000 | b | 119,000 |
PTTEP Canada | |||||
International Finance, | |||||
Gtd. Notes | 6.35 | 6/12/42 | 200,000 | 254,684 | |
373,684 | |||||
Chile—.7% | |||||
Banco Santander Chile, | |||||
Sr. Unscd. Notes | 3.88 | 9/20/22 | 150,000 | b | 155,210 |
Empresa Nacional de Petroleo, | |||||
Sr. Unscd. Notes | 4.75 | 12/6/21 | 100,000 | b | 109,861 |
Telefonica Chile, | |||||
Sr. Unscd. Notes | 3.88 | 10/12/22 | 200,000 | 199,189 | |
464,260 | |||||
China—.6% | |||||
China Resources Gas Group, | |||||
Sr. Unscd. Notes | 4.50 | 4/5/22 | 200,000 | 219,948 | |
Talent Yield Investments, | |||||
Gtd. Notes | 4.50 | 4/25/22 | 200,000 | 218,924 | |
438,872 | |||||
Colombia—1.5% | |||||
Bancolombia, | |||||
Sub. Notes | 5.13 | 9/11/22 | 70,000 | 73,500 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Colombia (continued) | ||||||
Ecopetrol, | ||||||
Sr. Unscd. Notes | 7.63 | 7/23/19 | 360,000 | 468,000 | ||
Empresa de Energia de Bogota, | ||||||
Sr. Unscd. Notes | 6.13 | 11/10/21 | 200,000 | 227,000 | ||
Empresas Publicas de Medellin, | ||||||
Sr. Unscd. Bonds | COP | 8.38 | 2/1/21 | 484,000,000 | 299,104 | |
1,067,604 | ||||||
Costa Rica—.3% | ||||||
Instituto Costarricense | ||||||
de Electricidad, | ||||||
Sr. Unscd. Notes | 6.95 | 11/10/21 | 200,000 | b | 223,500 | |
Hungary—.4% | ||||||
Hungarian Government, | ||||||
Bonds, Ser. 23/A | HUF | 6.00 | 11/24/23 | 15,050,000 | 63,672 | |
Hungarian Government, | ||||||
Bonds, Ser. 22/A | HUF | 7.00 | 6/24/22 | 40,370,000 | 186,079 | |
249,751 | ||||||
India—.3% | ||||||
NTPC, | ||||||
Sr. Unscd. Notes | 4.75 | 10/3/22 | 200,000 | 205,167 | ||
Indonesia—2.4% | ||||||
Indonesia Eximbank, | ||||||
Sr. Unscd. Notes | 3.75 | 4/26/17 | 205,000 | 214,544 | ||
Indonesian Government, | ||||||
Sr. Unscd. Bonds, Ser. FR59 | IDR | 7.00 | 5/15/27 | 7,449,000,000 | 835,624 | |
Indosat Palapa, | ||||||
Gtd. Notes | 7.38 | 7/29/20 | 190,000 | 217,550 | ||
Perusahaan Listrik Negara, | ||||||
Sr. Unscd. Notes | 5.25 | 10/24/42 | 200,000 | b | 205,240 | |
PT Adaro Indonesia | ||||||
Gtd. Notes | 7.63 | 10/22/19 | 195,000 | 217,425 | ||
1,690,383 | ||||||
Kazakhstan—.6% | ||||||
Development Bank of Kazakhstan, | ||||||
Sr. Unscd. Notes | 5.50 | 12/20/15 | 175,000 | b | 191,835 | |
Kazakhstan Temir Zholy Finance, | ||||||
Gtd. Notes | 6.95 | 7/10/42 | 200,000 | b | 244,608 | |
436,443 |
10
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Lithuania—.5% | ||||||
Lithuanian Government, | ||||||
Sr. Unscd. Notes | 6.13 | 3/9/21 | 315,000 | 380,363 | ||
Malaysia—1.8% | ||||||
Export-Import Bank of Malaysia | ||||||
Sr. Unscd. Notes | 2.88 | 12/14/17 | 200,000 | 205,809 | ||
Malaysian Government, | ||||||
Unscd. Bonds, Ser. 0112 | MYR | 3.42 | 8/15/22 | 670,000 | 219,175 | |
Malaysian Government, | ||||||
Bonds, Ser. 0211 | MYR | 3.43 | 8/15/14 | 1,950,000 | 644,569 | |
Malaysian Government, | ||||||
Sr. Unscd. Bonds, Ser. 1/06 | MYR | 4.26 | 9/15/16 | 590,000 | 201,656 | |
1,271,209 | ||||||
Mexico—4.7% | ||||||
Comision Federal | ||||||
de Electricidad, | ||||||
Sr. Unscd. Notes | 5.75 | 2/14/42 | 360,000 | 412,200 | ||
Mexican Government, | ||||||
Bonds, Ser. M 10 | MXN | 7.75 | 12/14/17 | 5,800,000 | 495,153 | |
Mexican Government, | ||||||
Bonds, Ser. M | MXN | 7.00 | 6/19/14 | 7,470,000 | 591,734 | |
Mexican Government, | ||||||
Bonds, Ser. M 20 | MXN | 7.50 | 6/3/27 | 2,510,000 | 219,833 | |
Mexican Government, | ||||||
Bonds, Ser. MI10 | MXN | 8.00 | 12/19/13 | 2,035,000 | 161,079 | |
Mexican Government, | ||||||
Bonds, Ser. M 20 | MXN | 8.50 | 5/31/29 | 560,000 | 53,171 | |
Mexican Government, | ||||||
Bonds, Ser. M 30 | MXN | 8.50 | 11/18/38 | 685,000 | 65,008 | |
Mexican Government, | ||||||
Bonds, Ser. M | MXN | 9.00 | 6/20/13 | 5,465,000 | 428,754 | |
Mexican Government, | ||||||
Bonds, Ser. M 30 | MXN | 10.00 | 11/20/36 | 750,000 | 81,207 | |
Mexichem, | ||||||
Sr. Unscd. Notes | 4.88 | 9/19/22 | 200,000 | b | 212,000 | |
Petroleos Mexicanos, | ||||||
Gtd. Notes | 5.50 | 6/27/44 | 55,000 | 60,088 | ||
Sigma Alimentos, | ||||||
Gtd. Notes | 5.63 | 4/14/18 | 300,000 | 341,250 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Mexico (continued) | ||||||
Southern Copper, | ||||||
Sr. Unscd. Notes | 7.50 | 7/27/35 | 100,000 | 127,767 | ||
3,249,244 | ||||||
Nigeria—.6% | ||||||
Nigeria Treasury Bond | ||||||
Unscd. Bonds, Ser. 5YR | NGN | 15.10 | 4/27/17 | 5,285,000 | 35,803 | |
Nigeria Treasury Bond | ||||||
Unscd. Bonds, Ser. 7 | NGN | 16.00 | 6/29/19 | 14,155,000 | 101,381 | |
Nigeria Treasury Bond | ||||||
Unscd. Bonds, Ser. 10YR | NGN | 16.39 | 1/27/22 | 5,395,000 | 40,454 | |
Nigerian Government, | ||||||
Treasury Bills | NGN | 0.00 | 3/7/13 | 8,905,000 | c | 54,239 |
Nigerian Government, | ||||||
Treasury Bills | NGN | 0.00 | 3/28/13 | 4,000,000 | c | 24,207 |
Nigerian Government, | ||||||
Treasury Bills | NGN | 0.00 | 6/27/13 | 19,000,000 | c | 111,600 |
Nigerian Government, | ||||||
Treasury Bills | NGN | 0.00 | 9/26/13 | 4,000,000 | c | 22,684 |
390,368 | ||||||
Peru—.1% | ||||||
BBVA Banco Continental, | ||||||
Sr. Unscd. Notes | 5.00 | 8/26/22 | 95,000 | b | 101,413 | |
Philippines—.5% | ||||||
Alliance Global Group, | ||||||
Gtd. Notes | 6.50 | 8/18/17 | 140,000 | 154,827 | ||
Philippine Government, | ||||||
Sr. Unscd. Notes | PHP | 4.95 | 1/15/21 | 8,000,000 | 214,094 | |
368,921 | ||||||
Poland—1.2% | ||||||
Polish Government, | ||||||
Bonds, Ser. 1015 | PLN | 6.25 | 10/24/15 | 1,005,000 | 335,067 | |
Polish Government, | ||||||
Bonds, Ser. 1013 | PLN | 5.00 | 10/24/13 | 1,665,000 | 527,076 | |
862,143 |
12
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Russia—3.5% | ||||||
Gazprom, | ||||||
Sr. Unscd. Notes | 8.63 | 4/28/34 | 120,000 | 172,668 | ||
Russian Agricultural Bank, | ||||||
Sr. Unscd. Notes | RUB | 7.50 | 3/25/13 | 12,700,000 | 407,029 | |
Russian Agricultural Bank, | ||||||
Sr. Unscd. Notes | 7.75 | 5/29/18 | 150,000 | 179,219 | ||
Russian Government, | ||||||
Bonds, Ser. 5079 | RUB | 7.00 | 6/3/15 | 6,520,000 | 209,618 | |
Russian Government, | ||||||
Bonds, Ser. 6206 | RUB | 7.40 | 6/14/17 | 18,350,000 | 595,744 | |
Russian Government, | ||||||
Bonds, Ser. 6204 | RUB | 7.50 | 3/15/18 | 10,375,000 | 338,220 | |
Vnesheconombank, | ||||||
Sr. Unscd. Notes | 6.03 | 7/5/22 | 200,000 | b | 224,260 | |
Vnesheconombank, | ||||||
Sr. Unscd. Notes | 6.80 | 11/22/25 | 250,000 | 297,190 | ||
2,423,948 | ||||||
South Africa—2.0% | ||||||
South African Government, | ||||||
Sr. Unscd. Bonds, | ||||||
Ser. R207 | ZAR | 7.25 | 1/15/20 | 4,420,000 | 532,757 | |
South African Government, | ||||||
Bonds, Ser. R213 | ZAR | 7.00 | 2/28/31 | 2,925,000 | 296,565 | |
South African Government, | ||||||
Sr. Unscd. Bonds, | ||||||
Ser. R203 | ZAR | 8.25 | 9/15/17 | 2,920,000 | 370,943 | |
South African Government, | ||||||
Bonds, Ser. R186 | ZAR | 10.50 | 12/21/26 | 805,000 | 114,876 | |
South African Government, | ||||||
Unscd. Bonds, Ser. R212 | ZAR | 2.75 | 1/31/22 | 740,000 | d | 108,550 |
1,423,691 | ||||||
Supranational—.9% | ||||||
Eurasian Development Bank, | ||||||
Covered Notes | 4.77 | 9/20/22 | 600,000 | b | 615,150 |
The Fund | 13 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) a | Value ($) | ||
Thailand—1.0% | ||||||
Bangkok Bank, | ||||||
Sr. Unscd. Notes | 3.88 | 9/27/22 | 200,000 | 204,104 | ||
Thai Government, | ||||||
Sr. Unscd. Bonds, Ser. ILB | THB | 1.20 | 7/14/21 | 14,800,000 | e | 513,137 |
717,241 | ||||||
Turkey—2.5% | ||||||
Turk Eximbank, | ||||||
Sr. Unscd. Notes | 5.88 | 4/24/19 | 500,000 | b | 548,250 | |
Turk Eximbank, | ||||||
Sr. Unscd. Notes | 5.88 | 4/24/19 | 200,000 | 219,300 | ||
Turkish Government, | ||||||
Bonds | TRY | 9.00 | 1/27/16 | 360,000 | 211,381 | |
Turkish Government, | ||||||
Bonds | TRY | 11.00 | 8/6/14 | 800,000 | 476,206 | |
Turkish Government, | ||||||
Bonds, Ser. CPI | TRY | 3.00 | 7/21/21 | 135,000 | f | 88,788 |
Turkish Government, | ||||||
Bonds, Ser. CPI | TRY | 3.00 | 2/23/22 | 300,000 | f | 189,333 |
Turkish Government, | ||||||
Bonds, Ser. CPI | TRY | 4.00 | 4/29/15 | 75,000 | f | 53,003 |
1,786,261 | ||||||
Ukraine—.1% | ||||||
National JSC | ||||||
Naftogaz of Ukraine, | ||||||
Govt. Gtd. Notes | 9.50 | 9/30/14 | 95,000 | 97,261 | ||
Uruguay—.4% | ||||||
Uruguayan Government, | ||||||
Sr. Unscd. Bonds | UYU | 5.00 | 9/14/18 | 2,860,000 | 263,228 | |
Venezuela—1.3% | ||||||
Petroleos de Venezuela, | ||||||
Gtd. Notes | 8.50 | 11/2/17 | 1,030,000 | 927,000 | ||
Zambia—.3% | ||||||
Zambian Government, | ||||||
Unscd. Bonds | 5.38 | 9/20/22 | 200,000 | b | 202,500 | |
Total Bonds And Notes | ||||||
(cost $20,701,789) | 21,427,113 |
14
Common Stocks—60.5% | Shares | Value ($) | ||
Brazil—7.4% | ||||
BR Malls Participacoes | 82,600 | 1,085,852 | ||
Cia de Bebidas das Americas, ADR | 27,900 | 1,138,041 | ||
Fleury | 83,500 | 982,159 | ||
Obrascon Huarte Lain Brasil | 189,300 | 1,780,178 | ||
Rossi Residencial | 118,400 | 248,920 | ||
5,235,150 | ||||
China—11.9% | ||||
AAC Technologies Holdings | 380,000 | 1,358,185 | ||
China Petroleum & Chemical, Cl. H | 1,188,000 | 1,261,571 | ||
China Railway Construction, Cl. H | 1,701,000 | 1,690,015 | ||
China Telecom, Cl. H | 2,016,000 | 1,199,187 | ||
Great Wall Motor, Cl. H | 677,500 | 1,862,020 | ||
WuXi PharmaTech, ADR | 71,810 g | 1,018,984 | ||
8,389,962 | ||||
Hong Kong—1.7% | ||||
Focus Media Holding, ADR | 51,680 | 1,218,614 | ||
India—2.4% | ||||
ICICI Bank, ADR | 17,780 | 697,865 | ||
Sterlite Industries India, ADR | 132,490 | 992,350 | ||
1,690,215 | ||||
Malaysia—2.1% | ||||
Malayan Banking | 488,925 | 1,449,440 | ||
Mexico—2.7% | ||||
Empresas ICA | 276,100 g | 596,734 | ||
Grupo Financiero Banorte, Ser. O | 237,100 | 1,318,228 | ||
1,914,962 | ||||
Peru—1.5% | ||||
Credicorp | 8,170 | 1,056,708 | ||
Philippines—1.7% | ||||
Metropolitan Bank & Trust | 510,630 | 1,177,566 | ||
Russia—6.5% | ||||
Gazprom, ADR | 120,270 | 1,098,667 | ||
Lukoil, ADR | 16,470 | 995,612 |
The Fund | 15 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) |
Russia (continued) | ||
Mobile Telesystems, ADR | 40,040 | 686,286 |
Sberbank of Russia, ADR (EUR) | 20,500 | 240,228 |
Sberbank of Russia, ADR | 134,520 | 1,567,158 |
4,587,951 | ||
South Africa—2.1% | ||
Imperial Holdings | 33,310 | 756,737 |
MTN Group | 39,180 | 706,452 |
1,463,189 | ||
South Korea—11.4% | ||
Hyundai Motor | 14,499 | 2,984,619 |
KT&G | 17,000 | 1,295,342 |
Samsung Electronics | 3,125 | 3,753,668 |
8,033,629 | ||
Taiwan—2.5% | ||
Hon Hai Precision Industry | 570,700 | 1,732,857 |
Thailand—6.7% | ||
Asian Property Development | 4,803,000 | 1,363,331 |
Bangkok Bank | 295,900 | 1,747,403 |
CP ALL | 449,100 | 582,438 |
PTT Global Chemical | 538,446 | 1,071,621 |
4,764,793 | ||
Total Common Stocks | ||
(cost $40,322,354) | 42,715,036 | |
Preferred Stocks—4.1% | ||
Brazil | ||
Vale | ||
(cost $3,958,770) | 162,200 | 2,902,917 |
16
Other Investment—3.7% | Shares | Value ($) | |
Registered Investment Company; | |||
Dreyfus Institutional Preferred | |||
Plus Money Market Fund | |||
(cost $2,576,966) | 2,576,966 | h | 2,576,966 |
Total Investments (cost $67,559,879) | 98.7 | % | 69,622,032 |
Cash and Receivables (Net) | 1.3 | % | 914,124 |
Net Assets | 100.0 | % | 70,536,156 |
ADR—American Depository Receipts
EUR—Euro
a Principal amount stated in U.S. Dollars unless otherwise noted. |
COP—Colombian Peso |
HUF—Hungarian Forint |
IDR—Indonesian Rupiah |
MXN—Mexican New Peso |
MYR—Malaysian Ringgit |
NGN—Nigerian Naira |
PHP—Philippines Peso |
PLN—Polish Zloty |
RUB—Russian Ruble |
THB—Thai Baht |
TRY—Turkish Lira |
UYU—Uruguayan New Peso |
ZAR—South African Rand |
b Securities exempt from registration pursuant to Rule 144A under the Securities Act of 1933.These securities may be |
resold in transactions exempt from registration, normally to qualified institutional buyers.At October 31, 2012, these |
securities were valued at $3,152,827 or 4.5% of net assets. |
c Security issued with a zero coupon. Income is recognized through the accretion of discount. |
d Principal amount for accrual purposes is periodically adjusted based on changes in the South African Consumer |
Price Index. |
e Principal amount for accrual purposes is periodically adjusted based on changes in the Thai Consumer Price Index. |
f Principal amount for accrual purposes is periodically adjusted based on changes in the Turkish Consumer Price Index. |
g Non-income producing security. |
h Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited) † | |||
Value (%) | Value (%) | ||
Foreign/Governmental | 22.4 | Money Market Investment | 3.7 |
Financials | 15.7 | Telecommunication Services | 3.7 |
Consumer Discretionary | 14.2 | Consumer Staples | 3.5 |
Information Technology | 9.7 | Industrials | 3.2 |
Corporate Bonds | 8.0 | Health Care | 2.8 |
Materials | 7.0 | ||
Energy | 4.8 | 98.7 |
† Based on net assets. |
See notes to financial statements. |
The Fund | 17 |
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2012
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments: | ||||
Unaffiliated issuers | 64,982,913 | 67,045,066 | ||
Affiliated issuers | 2,576,966 | 2,576,966 | ||
Cash denominated in foreign currencies | 561,386 | 556,822 | ||
Receivable for investment securities sold | 463,661 | |||
Dividends and interest receivable | 436,559 | |||
Unrealized appreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 21,958 | |||
Prepaid expenses | 12,424 | |||
71,113,456 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 82,725 | |||
Payable for investment securities purchased | 428,034 | |||
Unrealized depreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 10,487 | |||
Accrued expenses | 56,054 | |||
577,300 | ||||
Net Assets ($) | 70,536,156 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 75,662,494 | |||
Accumulated distributions in excess of investment income—net | (167,879 | ) | ||
Accumulated net realized gain (loss) on investments | (7,027,391 | ) | ||
Accumulated net unrealized appreciation (depreciation) | ||||
on investments and foreign currency transactions | 2,068,932 | |||
Net Assets ($) | 70,536,156 | |||
Net Asset Value Per Share | ||||
Class A | Class C | Class I | ||
Net Assets ($) | 738,321 | 588,843 | 69,208,992 | |
Shares Outstanding | 64,074 | 51,458 | 5,994,865 | |
Net Asset Value Per Share ($) | 11.52 | 11.44 | 11.54 | |
See notes to financial statements. |
18
STATEMENT OF OPERATIONS
Year Ended October 31, 2012
Investment Income ($): | ||
Income: | ||
Interest | 1,134,923 | |
Cash dividends (net of $153,916 foreign taxes withheld at source): | ||
Unaffiliated issuers | 960,539 | |
Affiliated issuers | 2,609 | |
Total Income | 2,098,071 | |
Expenses: | ||
Management fee—Note 3(a) | 590,296 | |
Custodian fees—Note 3(c) | 74,669 | |
Auditing fees | 55,877 | |
Registration fees | 54,611 | |
Prospectus and shareholders’ reports | 14,502 | |
Legal fees | 12,481 | |
Shareholder servicing costs—Note 3(c) | 4,200 | |
Distribution fees—Note 3(b) | 3,944 | |
Directors’ fees and expenses—Note 3(d) | 3,844 | |
Interest expense—Note 2 | 835 | |
Loan commitment fees—Note 2 | 558 | |
Miscellaneous | 50,604 | |
Total Expenses | 866,421 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (31,755 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (2 | ) |
Net Expenses | 834,664 | |
Investment Income—Net | 1,263,407 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | (5,433,170 | ) |
Net realized gain (loss) on forward foreign currency exchange contracts | (521,230 | ) |
Net Realized Gain (Loss) | (5,954,400 | ) |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 6,310,658 | |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | 28,308 | |
Net Unrealized Appreciation (Depreciation) | 6,338,966 | |
Net Realized and Unrealized Gain (Loss) on Investments | 384,566 | |
Net Increase in Net Assets Resulting from Operations | 1,647,973 | |
See notes to financial statements. |
The Fund | 19 |
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31, | ||||
2012 | 2011 | a | ||
Operations ($): | ||||
Investment income—net | 1,263,407 | 462,858 | ||
Net realized gain (loss) on investments | (5,954,400 | ) | (1,983,532 | ) |
Net unrealized appreciation | ||||
(depreciation) on investments | 6,338,966 | (4,270,034 | ) | |
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 1,647,973 | (5,790,708 | ) | |
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (12,264 | ) | — | |
Class C Shares | (6,962 | ) | — | |
Class I Shares | (977,648 | ) | — | |
Total Dividends | (996,874 | ) | — | |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 228,016 | 837,618 | ||
Class C Shares | 110,885 | 572,076 | ||
Class I Shares | 24,923,803 | 58,486,900 | ||
Dividends reinvested: | ||||
Class A Shares | 3,944 | — | ||
Class C Shares | 922 | — | ||
Class I Shares | 808,350 | — | ||
Cost of shares redeemed: | ||||
Class A Shares | (179,771 | ) | (82,792 | ) |
Class C Shares | (52,253 | ) | — | |
Class I Shares | (9,981,933 | ) | — | |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 15,861,963 | 59,813,802 | ||
Total Increase (Decrease) in Net Assets | 16,513,062 | 54,023,094 | ||
Net Assets ($): | ||||
Beginning of Period | 54,023,094 | — | ||
End of Period | 70,536,156 | 54,023,094 | ||
Undistributed (distributions in excess of) | ||||
investment income—net | (167,879 | ) | 782,286 |
20
The Fund | 21 |
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||
Class A Shares | 2012 | 2011 | a | |
Per Share Data ($): | ||||
Net asset value, beginning of period | 11.38 | 12.50 | ||
Investment Operations: | ||||
Investment income—net b | .21 | .18 | ||
Net realized and unrealized | ||||
gain (loss) on investments | .14 | (1.30 | ) | |
Total from Investment Operations | .35 | (1.12 | ) | |
Distributions: | ||||
Dividends from investment income—net | (.21 | ) | — | |
Net asset value, end of period | 11.52 | 11.38 | ||
Total Return (%) c | 3.18 | (8.96 | ) d | |
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assets | 1.81 | 2.60 | e | |
Ratio of net expenses to average net assets | 1.65 | 1.65 | e | |
Ratio of net investment income | ||||
to average net assets | 1.86 | 2.44 | e | |
Portfolio Turnover Rate | 100.76 | 52.76 | d | |
Net Assets, end of period ($ x 1,000) | 738 | 678 |
a | From March 25, 2011 (commencement of operations) to October 31, 2011. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
22
Year Ended October 31, | ||||
Class C Shares | 2012 | 2011 | a | |
Per Share Data ($): | ||||
Net asset value, beginning of period | 11.33 | 12.50 | ||
Investment Operations: | ||||
Investment income—net b | .13 | .13 | ||
Net realized and unrealized | ||||
gain (loss) on investments | .13 | (1.30 | ) | |
Total from Investment Operations | .26 | (1.17 | ) | |
Distributions: | ||||
Dividends from investment income—net | (.15 | ) | — | |
Net asset value, end of period | 11.44 | 11.33 | ||
Total Return (%) c | 2.38 | (9.36 | ) d | |
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assets | 2.51 | 3.38 | e | |
Ratio of net expenses to average net assets | 2.40 | 2.40 | e | |
Ratio of net investment income | ||||
to average net assets | 1.15 | 1.76 | e | |
Portfolio Turnover Rate | 100.76 | 52.76 | d | |
Net Assets, end of period ($ x 1,000) | 589 | 524 |
a | From March 25, 2011 (commencement of operations) to October 31, 2011. |
b | Based on average shares outstanding at each month end. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund | 23 |
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||
Class I Shares | 2012 | 2011 | a | |
Per Share Data ($): | ||||
Net asset value, beginning of period | 11.40 | 12.50 | ||
Investment Operations: | ||||
Investment income—net b | .25 | .19 | ||
Net realized and unrealized | ||||
gain (loss) on investments | .12 | (1.29 | ) | |
Total from Investment Operations | .37 | (1.10 | ) | |
Distributions: | ||||
Dividends from investment income—net | (.23 | ) | — | |
Net asset value, end of period | 11.54 | 11.40 | ||
Total Return (%) | 3.38 | (8.80 | ) c | |
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assets | 1.45 | 1.88 | d | |
Ratio of net expenses to average net assets | 1.40 | 1.40 | d | |
Ratio of net investment income | ||||
to average net assets | 2.15 | 2.54 | d | |
Portfolio Turnover Rate | 100.76 | 52.76 | c | |
Net Assets, end of period ($ x 1,000) | 69,209 | 52,821 |
a | From March 25, 2011 (commencement of operations) to October 31, 2011. |
b | Based on average shares outstanding at each month end. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
24
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Total Emerging Markets Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering thirteen series, including the fund. The fund’s investment objective seeks to maximize total return. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares.The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C and Class I. Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I shares are sold at net asset value per share only to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
As of October 31, 2012, MBC Investments Corp., an indirect subsidiary of BNY Mellon, held 40,000 Class A, 40,000 Class C and 732,512 Class I shares of the fund.
The Fund | 25 |
NOTES TO FINANCIAL STATEMENTS (continued)
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications.The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
26
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1 —unadjusted quoted prices in active markets for identical investments.
Level 2 —other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 —significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are categorized within Level 1 of the fair value hierarchy.
Investments in debt securities excluding short-term investments (other than U.S.Treasury Bills) and forward foreign currency exchange con-
The Fund | 27 |
NOTES TO FINANCIAL STATEMENTS (continued)
tracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.These securities are either categorized as Level 2 or 3 depending on the relevant inputs used.
28
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward contracts are valued at the forward rate. These securities are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2012 in valuing the fund’s investments:
Level 2—Other | Level 3— | |||||
Level 1— | Significant | Significant | ||||
Unadjusted | Observable | Unobservable | ||||
Quoted Prices | Inputs | Inputs | Total | |||
Assets ($) | ||||||
Investments in Securities: | ||||||
Corporate Bonds † | — | 5,630,919 | — | 5,630,919 | ||
Equity Securities—Foreign | ||||||
Common Stocks † | 42,715,036 | — | — | 42,715,036 | ||
Foreign Government | — | 15,796,194 | — | 15,796,194 | ||
Mutual Funds | 2,576,966 | — | — | 2,576,966 | ||
Preferred Stocks † | 2,902,917 | — | — | 2,902,917 | ||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign | ||||||
Currency Exchange | ||||||
Contracts †† | — | 21,958 | — | 21,958 | ||
Liabilities ($) | ||||||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign | ||||||
Currency Exchange | ||||||
Contracts †† | — | (10,487 | ) | — | (10,487 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Amount shown represents unrealized appreciation (depreciation) at period end. |
The Fund | 29 |
NOTES TO FINANCIAL STATEMENTS (continued)
At October 31, 2011, $14,744,705 of exchange traded foreign equity securities were classified within Level 2 of the fair value hierarchy pursuant to the fund’s fair valuation procedures.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on investments are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended October 31, 2012 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 10/31/2011 ($) | Purchases ($) | Sales ($) | 10/31/2012 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Preferred | |||||
Plus Money | |||||
Market Fund | 3,111,098 | 53,287,516 | 53,821,648 | 2,576,966 | 3.7 |
30
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S.These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the two-year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities
The Fund | 31 |
NOTES TO FINANCIAL STATEMENTS (continued)
At October 31, 2012, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $40,435, accumulated capital losses $6,829,827 and unrealized appreciation $1,663,054.
Under the Regulated Investment Company Modernization Act of 2010 (the “2010 Act”), the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) for an unlimited period. Furthermore, post-enactment capital loss carryovers retain their character as either short-term or long-term capital losses rather than short-term as they were under previous statute.
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to October 31, 2012.The fund has $5,388,991 of post-enactment short-term capital losses and $1,440,836 of post-enactment long-term capital losses which can be carried forward for an unlimited period.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2012 and October 31, 2011 were as follows: ordinary income $996,874 and $0, respectively.
During the period ended October 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency gains and losses, the fund decreased accumulated undistributed investment income-net by $1,216,698 and increased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
(h) New Accounting Pronouncement: In December 2011, FASB issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position.They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition,ASU 2011-11
32
facilitates comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”). ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact on the fund’s financial statement disclosures.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Effective October 10, 2012, the $225 million unsecured credit facility with Citibank, N.A., was decreased to $210 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing.
The average amount of borrowings outstanding under the Facilities during the period ended October 31, 2012, was approximately $50,300 with a related weighted average annualized interest rate of 1.66%.
NOTE 3—Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of 1% of the value of the fund’s average daily net assets and is payable monthly.The Manager has
The Fund | 33 |
NOTES TO FINANCIAL STATEMENTS (continued)
contractually agreed, until March 1, 2013, to waive receipt of its fees and/or assume the expenses of the fund so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.40% of the value of the fund’s average daily net assets. The Manager has contractually agreed from March 2, 2013 until March 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund so that the direct expense of none of the classes (excluding certain expenses as described above) exceed 1.35% of the value of the fund’s average daily net assets.The reduction in expenses, pursuant to the undertaking, amounted to $31,755 during the period ended October 31, 2012.
During the period ended October 31, 2012, the Distributor retained $38 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended October 31, 2012, Class C shares were charged $3,944, pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. These services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2012, Class A and Class C shares were charged $1,598 and $1,315, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash
34
balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates Dreyfus Transfer, Inc. (“DTI”), a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $360 for transfer agency services and $11 for cash management services. Cash management fees were partially offset by earnings credits of $1. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensatesThe Bank of NewYork Mellon under a custody agreement for providing custodial services for the fund. During the period ended October 31, 2012, the fund was charged $74,669 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of NewYork Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $29 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations.These fees were partially offset by earnings credits of $1.
During the period ended October 31, 2012, the fund was charged $8,517 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $59,689, Distribution Plan fees $369, Shareholder Services Plan fees $283, custodian fees $19,600, Chief Compliance Officer fees $2,654 and transfer agency fees $130.
The Fund | 35 |
NOTES TO FINANCIAL STATEMENTS (continued)
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
(e) A 2% redemption fee is charged and retained by the fund on certain shares redeemed within sixty days following the date of issuance subject to exceptions, including redemptions made through use of the fund’s exchange privilege.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities and forward contracts, during the period ended October 31, 2012, amounted to $72,351,271 and $55,835,406, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended October 31, 2012 is discussed below.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to
36
foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at October 31, 2012.
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases: | ||||||
Brazilian Real, | ||||||
Expiring | ||||||
12/4/2012 a | 3,685,000 | 1,807,169 | 1,805,770 | (1,399 | ) | |
Chilean Peso, | ||||||
Expiring | ||||||
11/30/2012 b | 3,170,000 | 6,562 | 6,559 | (3 | ) | |
Euro, | ||||||
Expiring | ||||||
11/30/2012 c | 580,000 | 757,114 | 751,967 | (5,147 | ) | |
Nigerian Naira, | ||||||
Expiring: | ||||||
4/15/2013 c | 2,840,000 | 15,502 | 17,242 | 1,740 | ||
5/13/2013 c | 2,870,000 | 15,539 | 17,285 | 1,746 | ||
Thai Baht, | ||||||
Expiring | ||||||
11/30/2012 d | 5,050,000 | 164,110 | 164,436 | 326 | ||
Sales: | Proceeds ($) | |||||
Brazilian Real, | ||||||
Expiring | ||||||
12/4/2012 e | 940,000 | 461,553 | 460,630 | 923 | ||
Colombian Peso, | ||||||
Expiring | ||||||
11/30/2012 b | 3,259,740,000 | 1,784,398 | 1,772,787 | 11,611 | ||
Euro, | ||||||
Expiring: | ||||||
11/30/2012 f | 120,000 | 156,586 | 155,579 | 1,007 | ||
11/30/2012 g | 315,000 | 411,333 | 408,396 | 2,937 | ||
Nigerian Naira, | ||||||
Expiring: | ||||||
4/15/2013 d | 2,840,000 | 15,647 | 17,241 | (1,594 | ) | |
5/13/2013 d | 2,870,000 | 15,653 | 17,286 | (1,633 | ) | |
Peruvian New Sol, | ||||||
Expiring | ||||||
11/30/2012 b | 1,290,000 | 498,454 | 496,842 | 1,612 | ||
Philippines Peso, | ||||||
Expiring | ||||||
12/3/2012 g | 6,640,000 | 160,775 | 161,119 | (344 | ) |
The Fund | 37 |
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales (continued): | ||||||
Polish Zloty, | ||||||
Expiring | ||||||
11/2/2012 g | 146,063 | 45,805 | 45,749 | 56 | ||
South African Rand, | ||||||
Expiring | ||||||
11/30/2012 c | 3,250,000 | 372,797 | 373,164 | (367 | ) | |
Gross Unrealized | ||||||
Appreciation | 21,958 | |||||
Gross Unrealized | ||||||
Depreciation | (10,487 | ) |
Counterparties:
a | Morgan Stanley |
b | Citigroup |
c | Deutsche Bank |
d | JPMorgan Chase & Co. |
e | Goldman Sachs |
f | Bank of America |
g | Barclays Bank |
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2012:
Average Market Value ($) | |
Forward contracts | 7,639,368 |
At October 31, 2012, the cost of investments for federal income tax purposes was $67,866,552; accordingly, accumulated net unrealized appreciation on investments was $1,755,480, consisting of $4,745,248 gross unrealized appreciation and $2,989,768 gross unrealized depreciation.
38
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors Dreyfus Total Emerging Markets Fund
We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Total Emerging Markets Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2012, and the related statement of operations for the year then ended, and the statement of changes in net assets and the financial highlights for the year then ended and for the period from March 25, 2011 (commencement of operations) to October 31, 2011. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012 by correspondence with the custodian and others.We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Total Emerging Markets Fund at October 31, 2012, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for the year then ended and for the period from March 25, 2011 to October 31, 2011, in conformity with U.S. generally accepted accounting principles.
New York, New York |
December 27, 2012 |
The Fund | 39 |
IMPORTATION TAX INFORMATION (Unaudited)
For the fiscal year ended October 31, 2012, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $449,668 represents the maximum amount that may be considered qualified dividend income.
40
PROXY RESULTS (Unaudited)
The Company held a special meeting of shareholders on August 3, 2012.The proposal considered at the meeting, and the results, are as follows:
Shares | |||
Votes For | Authority Withheld | ||
To elect additional Board Members: | |||
Lynn Martin † | 90,334,756 | 3,252,629 | |
Robin A. Melvin † | 90,449,622 | 3,137,763 | |
Philip L. Toia † | 90,229,928 | 3,357,457 |
† Each new Board Member’s term commenced on September 1, 2012. |
In addition, Peggy C. Davis, Joseph S. DiMartino, David P. Feldman, Ehud Houminer and Dr. Martin Peretz continue |
as Board Members of the Company. |
The Fund | 41 |
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (69) |
Chairman of the Board (1995) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small |
and medium size companies, Director (1997-present) |
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and |
businesses, Director (2005-2009) |
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard |
mills and paperboard converting plants, Director (2000-2010) |
No. of Portfolios for which Board Member Serves: 157 |
——————— |
Peggy C. Davis (69) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Shad Professor of Law, New York University School of Law (1983-present) |
No. of Portfolios for which Board Member Serves: 63 |
——————— |
David P. Feldman (72) |
Board Member (1996) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• BBH Mutual Funds Group (4 registered mutual funds), Director (1992-present) |
• QMed, Inc. a healthcare company, Director (1999-2007) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Ehud Houminer (72) |
Board Member (1993) |
Principal Occupation During Past 5Years: |
• Executive-in-Residence at the Columbia Business School, Columbia University (1992-present) |
Other Public Company Board Memberships During Past 5Years: |
• Avnet Inc., an electronics distributor, Director (1993-2012) |
No. of Portfolios for which Board Member Serves: 73 |
42
Lynn Martin (72) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• President of The Martin Hall Group LLC, a human resources consulting firm, from January |
2005-present |
Other Public Company Board Memberships During Past 5Years: |
• AT&T Inc., a telecommunications company, Director (1999-2012) |
• Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012) |
• The Proctor & Gamble Co., a consumer products company, Director (1994-2009) |
• Constellation Energy Group Inc., Director (2003-2009) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Robin A. Melvin (49) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Director, Boisi Family Foundation, a private family foundation that supports youth-serving orga- |
nizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012) |
No. of Portfolios for which Board Member Serves: 83 |
——————— |
Dr. Martin Peretz (73) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Editor-in-Chief Emeritus of The New Republic Magazine (2010-present) (previously, |
Editor-in-Chief, 1974-2010) |
• Director of TheStreet.com, a financial information service on the web (1996-present) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Philip L. Toia (79) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Private Investor |
No. of Portfolios for which Board Member Serves: 56 |
——————— |
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166.Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Gloria Messinger, Emeritus Board Member
The Fund | 43 |
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009; from April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 72 investment companies (comprised of 156 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since February 1988.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 49 years old and has been an employee of the Manager since February 1984.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 39 years old and has been an employee of the Manager since July 1995.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 56 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 2000.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since April 1985.
44
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since September 1982.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since December 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (73 investment companies, comprised of 183 portfolios). He is 55 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
MATTHEW D. CONNOLLY, Anti-Money Laundering Compliance Officer since April 2012.
Anti-Money Laundering Compliance Officer of the Distributor since October 2011; from March 2010 to September 2011, Global Head, KYC Reviews and Director, UBS Investment Bank; until March 2010,AML Compliance Officer and Senior Vice President, Citi Global Wealth Management. He is an officer of 69 investment companies (comprised of 179 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Distributor since October 2011.
The Fund | 45 |
For More Information
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
Dreyfus |
Total Return |
Advantage Fund |
ANNUAL REPORT October 31, 2012
Save time. Save paper. View your next shareholder report online as soon as its available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. Its simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured Not Bank-Guaranteed May Lose Value |
Contents |
|
THE FUND |
|
2 |
A Letter from the Chairman and CEO |
3 |
Discussion of Fund Performance |
6 |
Fund Performance |
8 |
Understanding Your Funds Expenses |
8 |
Comparing Your Funds Expenses With Those of Other Funds |
9 |
Statement of Investments |
30 |
Statement of Financial Futures |
31 |
Statement of Securities Sold Short |
32 |
Statement of Assets and Liabilities |
33 |
Statement of Operations |
34 |
Statement of Changes in Net Assets |
36 |
Financial Highlights |
39 |
Notes to Financial Statements |
58 |
Report of Independent Registered Public Accounting Firm |
59 |
Important Tax Information |
60 |
Proxy Results |
61 |
Board Members Information |
63 |
Officers of the Fund |
FOR MORE INFORMATION |
|
Back Cover |
Dreyfus
Total Return
Advantage Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for DreyfusTotal Return Advantage Fund, covering the 12-month period from November 1, 2011, through October 31, 2012. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite heightened volatility, the U.S. bond market generally advanced over the reporting period as investors responded to encouraging macroeconomic developments throughout the world. Employment gains in the United States, credible measures to prevent a more severe banking crisis in Europe, and the likelihood of a “soft landing” for China’s economy buoyed investor sentiment, as did aggressively accommodative monetary policies from central banks in the United States, Europe, Japan and China. Consequently, riskier segments of the bond market gained value, while massive purchases of government securities by the Federal Reserve prevented yields of U.S. government securities from rising.
In light of the easy monetary policies adopted by many countries, we expect global growth to be slightly more robust in 2013 than in 2012.The U.S. economic recovery is likely to persist at subpar levels over the first half of the new year, as growth may remain constrained by uncertainties surrounding fiscal policy and tax reforms. However, successful resolution of the current fiscal debate may prompt corporate decision-makers to increase capital spending, which could have positive implications for the U.S. economy.As always, we encourage you to stay in touch with your financial advisor as new developments unfold.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2011, through October 31, 2012, as provided by David Kwan and Lowell Bennett, Portfolio Managers
Fund and Market Performance Overview
For the 12-month period ended October 31, 2012, Dreyfus Total Return Advantage Fund’s Class A shares achieved a total return of 4.71%, Class C shares returned 3.93% and Class I shares returned 4.94%. 1 In comparison, the fund’s benchmark, the Barclays U.S.Aggregate Bond Index (the “Index”), produced a total return of 5.25% for the same period. 2
Despite shifting economic sentiment throughout the reporting period, aggressively accommodative monetary policies and an improving macroeconomic outlook helped support bond prices in domestic and global markets. The fund produced lower returns than its benchmark, as shortfalls in our currency strategy weighed on results.
The Fund’s Investment Approach
The fund seeks to maximize total return from capital appreciation and income.To pursue its goal, the fund normally invests primarily in fixed income securities and other instruments that provide investment exposure to fixed income markets, including those that provide exposure to currency markets.
We employ an active core bond strategy to focus the fund’s investments on the U.S. fixed-income market.We also employ global bond and currency strategies to provide the fund with exposure to foreign and U.S. fixed-income and currency markets.
Markets Driven by Macroeconomic Headlines
The months leading into the reporting period were a period of declines among higher yielding bonds and risk assets throughout the world. One credit-rating agency’s downgrade of long-term U.S. government debt, and an intensifying European debt crisis had triggered a flight away from risky assets and toward traditional safe havens, such as U.S.Treasury securities. Fortunately, better U.S. economic data and remedial measures from European policymakers, particularly the Long Term Refinancing Operation (LTRO), soon stabilized U.S. and most international fixed-income markets as the reporting period began.
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
By the start of 2012, global financial markets were rallying amid U.S. employment gains and stabilizing central bank action in Europe. Investors became more comfortable with riskier bond market sectors in their search for competitive levels of current income. They returned to a risk-averse posture during the spring when U.S. employment gains moderated and domestic fiscal concerns intensified and austerity programs in Europe encountered resistance making a Greek exit a possibility. However, modestly more encouraging economic data over the summer enabled the fund’s benchmark to end the reporting period with positive absolute returns.
U.S. Bonds Supported Performance, but Currencies Detracted
Our core bond strategy, which comprises the bulk of the fund’s investments, fared relatively well over the reporting period as interest rates declined and the economic outlook stabilized.Although a recovering economy typically would be likely to drive longer term bond yields higher, aggressively accommodative quantitative easing monetary policy initiatives from the Federal Reserve Board helped keep rates low. In this environment, overweighted exposure to higher yielding U.S. bond market sectors, such as corporate and mortgage-backed securities, enabled the core bond portion of the portfolio to produce higher returns than the benchmark. The benefits of our allocations to riskier market sectors were only partly offset by a mildly short average duration, which prevented the core bond portfolio from participating more fully in the general bond market rally.
Our global bond strategy produced generally flat returns over the course of the reporting period.Above-average results stemming from overweighted positions in the United States and Germany were balanced by shortfalls related to underweighted exposure to the United Kingdom. Fixed-income investments in Australia, Canada and Japan had relatively little impact on the fund’s relative performance.
Our currency strategy had a modestly negative impact on overall fund performance during the reporting period. An underweighted position in the British pound and overweighted exposure to the Australian dollar weighed on the strategy’s returns. Positive results from underweighted exposure to the euro were not enough to fully offset results from our positioning in the other currencies.
4
Positioned for a Brighter Economic Outlook
As of the reporting period’s end, we expect government bond yields to remain low as central banks globally generally pursue accommodative monetary policies and Eurozone growth weighs on the global economy, leading us to establish a duration posture that is roughly in line with market averages. In the core bond portion of the portfolio, we have continued to favor higher yielding market sectors such as investment grade corporate bonds over U.S. government securities. Our global bond strategy has maintained its emphasis on the German bond market and also added exposure to Japanese bonds versus underweighted exposure to the United Kingdom, Canada and Australia bonds. Finally, our currency strategy remains underweight the euro and British pound and is overweight the Australian and Canadian dollar.
November 15, 2012
Bond funds are subject generally to interest rate, credit, liquidity and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.
Foreign bonds are subject to special risks including exposure to currency fluctuations, changing political and economic conditions, and potentially less liquidity.
Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time.A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by the fund and denominated in those currencies.
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the |
maximum initial sales charge in the case of Class A shares or the applicable contingent deferred sales charge imposed |
on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Class I |
shares are not subject to any initial or deferred sales charge. Past performance is no guarantee of future results. Share |
price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their |
original cost. Return figures provided reflect the absorption of certain fund expenses by The Dreyfus Corporation |
pursuant to an agreement in effect through March 1, 2014, at which time it may be extended, modified or |
terminated. Had these expenses not been absorbed, the fund’s returns would have been lower. |
2 SOURCE: LIPPER INC. — Reflects reinvestment of dividends and, where applicable, capital gain distributions. |
The Barclays U.S.Aggregate Bond Index is a widely accepted, unmanaged total return index of corporate, U.S. |
government and U.S. government agency debt instruments, mortgage-backed securities and asset-backed securities with |
an average maturity of 1-10 years. Index returns do not reflect fees and expenses associated with operating a mutual |
fund. Investors cannot invest directly in any index. |
The Fund | 5 |
FUND PERFORMANCE
† Source: Lipper Inc.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of Dreyfus Total Return Advantage Fund on 3/15/06 (inception date) to a $10,000 investment made in the Barclays U.S. Aggregate Bond Index (the “Index”) on that date.All dividends and capital gain distributions are reinvested.
The fund invests primarily in fixed-income securities and instruments that provide investment exposure to fixed-income markets.The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes.The Index is a widely accepted, unmanaged total return index of corporate, U.S. government and U.S. government agency debt instruments, mortgage-backed securities and asset-backed securities with an average maturity of 1-10 years. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
6
Average Annual Total Returns as of 10/31/12 | |||||||
Inception | From | ||||||
Date | 1 Year | 5 Years | Inception | ||||
Class A shares | |||||||
with maximum sales charge (4.5%) | 3/15/06 | 0.01 | % | 5.48 | % | 5.25 | % |
without sales charge | 3/15/06 | 4.71 | % | 6.45 | % | 5.99 | % |
Class C shares | |||||||
with applicable redemption charge † | 3/15/06 | 2.93 | % | 5.66 | % | 5.20 | % |
without redemption | 3/15/06 | 3.93 | % | 5.66 | % | 5.20 | % |
Class I shares | 3/15/06 | 4.94 | % | 6.73 | % | 6.25 | % |
Barclays U.S. Aggregate Bond Index | 2/28/06 | 5.25 | % | 6.38 | % | 6.11 | % †† |
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
† | The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the |
date of purchase. | |
†† | For comparative purposes, the value of the Index as of 2/28/06 is used as the beginning value on 3/15/06. |
The Fund | 7 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Total Return Advantage Fund from May 1, 2012 to October 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 4.07 | $ 7.92 | $ 2.80 | |||
Ending value (after expenses) | $ 1,024.30 | $ 1,020.60 | $ 1,025.40 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 4.06 | $ 7.91 | $ 2.80 | |||
Ending value (after expenses) | $ 1,021.11 | $ 1,017.29 | $ 1,022.37 |
† Expenses are equal to the fund’s annualized expense ratio of .80% for Class A, 1.56% for Class C and .55% |
for Class I, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half |
year period). |
8
STATEMENT OF INVESTMENTS
October 31, 2012
Coupon | Maturity | Principal | |||
Bonds and Notes—109.7% | Rate (%) | Date | Amount ($) | Value ($) | |
Asset-Backed Ctfs./ | |||||
Student Loans—.2% | |||||
SLM Student Loan Trust, | |||||
Ser. 2007-2, Cl. A2 | 0.32 | 7/25/17 | 134,594 | a | 134,369 |
Banks—4.8% | |||||
Bank of America, | |||||
Sr. Unscd. Notes, Ser. L | 5.65 | 5/1/18 | 40,000 | 46,626 | |
Bank of America, | |||||
Sr. Unscd. Notes | 5.75 | 12/1/17 | 40,000 | 46,383 | |
Bank of Nova Scotia, | |||||
Sr. Unscd. Notes | 2.38 | 12/17/13 | 50,000 | 51,105 | |
Bank of Nova Scotia, | |||||
Sr. Unscd. Notes | 3.40 | 1/22/15 | 400,000 | 424,958 | |
Barclays Bank, | |||||
Sr. Unscd. Notes | 5.20 | 7/10/14 | 120,000 | 128,356 | |
Capital One Capital V, | |||||
Gtd. Notes | 10.25 | 8/15/39 | 20,000 | 20,700 | |
Capital One Financial, | |||||
Sr. Unscd. Notes | 2.13 | 7/15/14 | 50,000 | 51,010 | |
Capital One Financial, | |||||
Sr. Unscd. Notes | 7.38 | 5/23/14 | 75,000 | 82,384 | |
Citigroup, | |||||
Sr. Unscd. Notes | 4.75 | 5/19/15 | 25,000 | 27,111 | |
Citigroup, | |||||
Sub. Notes | 5.00 | 9/15/14 | 30,000 | 31,771 | |
Citigroup, | |||||
Sub. Notes | 5.50 | 2/15/17 | 65,000 | 72,081 | |
Citigroup, | |||||
Sr. Unscd. Notes | 5.88 | 1/30/42 | 30,000 | 37,358 | |
Citigroup, | |||||
Sr. Unscd. Notes | 6.00 | 8/15/17 | 50,000 | 58,918 | |
Citigroup, | |||||
Sr. Unscd. Notes | 6.13 | 11/21/17 | 75,000 | 89,060 | |
Citigroup, | |||||
Sr. Unscd. Notes | 6.88 | 3/5/38 | 26,000 | 34,751 | |
Comerica Bank, | |||||
Sub. Notes | 5.75 | 11/21/16 | 15,000 | 17,518 | |
Credit Suisse USA, | |||||
Bank Gtd. Notes | 4.88 | 1/15/15 | 50,000 | 54,098 | |
Credit Suisse/New York, | |||||
Sr. Unscd. Notes | 3.50 | 3/23/15 | 50,000 | 52,930 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Banks (continued) | ||||
Deutsche Bank/London, | ||||
Sr. Unscd. Notes | 6.00 | 9/1/17 | 110,000 | 132,316 |
Fifth Third Bancorp, | ||||
Sr. Unscd. Notes | 6.25 | 5/1/13 | 30,000 | 30,841 |
Goldman Sachs Group, | ||||
Sr. Unscd. Notes | 5.13 | 1/15/15 | 73,000 | 78,781 |
Goldman Sachs Group, | ||||
Sr. Unscd. Notes | 5.25 | 10/15/13 | 100,000 | 104,273 |
Goldman Sachs Group, | ||||
Sr. Unscd. Notes | 5.75 | 1/24/22 | 50,000 | 58,150 |
Goldman Sachs Group, | ||||
Sub. Notes | 6.75 | 10/1/37 | 160,000 | 176,750 |
HSBC Bank USA, | ||||
Sub. Notes | 4.63 | 4/1/14 | 100,000 | 105,046 |
JPMorgan Chase & Co., | ||||
Sr. Unscd. Notes | 3.70 | 1/20/15 | 125,000 | 132,423 |
JPMorgan Chase & Co., | ||||
Sr. Unscd. Notes | 4.50 | 1/24/22 | 50,000 | 56,598 |
JPMorgan Chase & Co., | ||||
Sr. Unscd. Notes | 6.00 | 1/15/18 | 35,000 | 41,702 |
JPMorgan Chase & Co., | ||||
Sr. Unscd. Notes | 6.30 | 4/23/19 | 50,000 | 61,747 |
JPMorgan Chase & Co., | ||||
Sr. Unscd. Notes | 6.40 | 5/15/38 | 25,000 | 33,520 |
Landwirtschaftliche Rentenbank, | ||||
Govt. Gtd. Notes | 1.88 | 9/17/18 | 100,000 | 104,145 |
Landwirtschaftliche Rentenbank, | ||||
Govt. Gtd. Notes | 4.13 | 7/15/13 | 25,000 | 25,660 |
Morgan Stanley, | ||||
Sr. Unscd. Notes | 5.50 | 7/28/21 | 40,000 | 44,535 |
Morgan Stanley, | ||||
Sr. Unscd. Notes | 6.00 | 4/28/15 | 150,000 | 163,477 |
Morgan Stanley, | ||||
Sr. Unscd. Notes | 6.63 | 4/1/18 | 75,000 | 87,332 |
PNC Funding, | ||||
Bank Gtd. Notes | 2.70 | 9/19/16 | 100,000 | 106,228 |
PNC Funding, | ||||
Bank Gtd. Notes | 5.63 | 2/1/17 | 15,000 | 17,444 |
10
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Banks (continued) | |||||
Sovereign Bank, | |||||
Sub. Notes | 8.75 | 5/30/18 | 50,000 | 58,301 | |
UBS, | |||||
Notes | 4.88 | 8/4/20 | 50,000 | 57,513 | |
US Bancorp, | |||||
Sr. Unscd. Notes | 2.45 | 7/27/15 | 50,000 | 52,464 | |
Wachovia, | |||||
Sub. Notes | 5.63 | 10/15/16 | 25,000 | 29,134 | |
Wachovia, | |||||
Sr. Unscd. Notes | 5.70 | 8/1/13 | 25,000 | 26,008 | |
Wells Fargo & Co., | |||||
Sr. Unscd. Notes | 3.68 | 6/15/16 | 25,000 | a | 27,163 |
Wells Fargo & Co., | |||||
Notes | 3.75 | 10/1/14 | 200,000 | 212,351 | |
Wells Fargo & Co., | |||||
Sr. Unscd. Notes | 5.38 | 2/7/35 | 25,000 | 30,625 | |
Wells Fargo & Co., | |||||
Sr. Unscd. Notes | 5.63 | 12/11/17 | 55,000 | 65,919 | |
Wells Fargo Capital X, | |||||
Gtd. Notes | 5.95 | 12/1/86 | 20,000 | 20,481 | |
Westpac Banking, | |||||
Sr. Unscd. Notes | 4.20 | 2/27/15 | 50,000 | 53,735 | |
3,521,780 | |||||
Commercial Mortgage | |||||
Pass-Through Ctfs.—2.7% | |||||
Banc of America Merrill Lynch | |||||
Commercial Mortgage, | |||||
Ser. 2005-1, Cl. A4 | 5.07 | 11/10/42 | 200,000 | a | 206,341 |
Credit Suisse Commercial Mortgage | |||||
Trust, Ser. 2007-C1, Cl. A3 | 5.38 | 2/15/40 | 250,000 | 278,066 | |
Credit Suisse Commercial Mortgage | |||||
Trust, Ser. 2006-C3, Cl. A3 | 5.80 | 6/15/38 | 100,000 | a | 115,226 |
JP Morgan Chase Commercial | |||||
Mortgage Securities, | |||||
Ser. 2003-CB7, Cl. A4 | 4.88 | 1/12/38 | 320,067 | a | 331,332 |
JP Morgan Chase Commercial | |||||
Mortgage Securities, | |||||
Ser. 2005-LDP3, Cl. A4A | 4.94 | 8/15/42 | 102,000 | a | 112,840 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Commercial Mortgage | |||||
Pass-Through Ctfs. (continued) | |||||
LB-UBS Commercial Mortgage Trust, | |||||
Ser. 2004-C7, Cl. A1A | 4.48 | 10/15/29 | 172,320 | 182,626 | |
Merrill Lynch/Countrywide | |||||
Commercial Mortgage Trust, | |||||
Ser. 2007-5, Cl. A3 | 5.36 | 8/12/48 | 100,000 | 101,004 | |
Merrill Lynch/Countrywide | |||||
Commercial Mortgage Trust, | |||||
Ser. 2006-2, Cl. A4 | 5.89 | 6/12/46 | 100,000 | a | 116,039 |
Morgan Stanley Capital I Trust, | |||||
Ser. 2003-IQ4, Cl. A2 | 4.07 | 5/15/40 | 259,630 | 262,405 | |
Morgan Stanley Capital I Trust, | |||||
Ser. 2006-T21, Cl. A3 | 5.19 | 10/12/52 | 110,000 | a | 111,569 |
Morgan Stanley Capital I Trust, | |||||
Ser. 2006-HQ8, Cl. AJ | 5.50 | 3/12/44 | 65,000 | a | 63,396 |
Wachovia Bank Commercial Mortgage | |||||
Trust, Ser. 2005-C16, Cl. A2 | 4.38 | 10/15/41 | 3,369 | 3,367 | |
Wachovia Bank Commercial Mortgage | |||||
Trust, Ser. 2003-C8, Cl. A3 | 4.45 | 11/15/35 | 107,813 | 109,394 | |
1,993,605 | |||||
Consumer Discretionary—2.3% | |||||
Comcast, | |||||
Gtd. Notes | 5.30 | 1/15/14 | 50,000 | 52,848 | |
Comcast, | |||||
Gtd. Notes | 6.30 | 11/15/17 | 30,000 | 37,294 | |
Comcast, | |||||
Gtd. Notes | 6.45 | 3/15/37 | 50,000 | 66,046 | |
Comcast, | |||||
Gtd. Notes | 6.95 | 8/15/37 | 20,000 | 27,879 | |
CVS Caremark, | |||||
Sr. Unscd. Notes | 5.75 | 6/1/17 | 100,000 | 120,530 | |
DIRECTV Holdings, | |||||
Gtd. Notes | 3.55 | 3/15/15 | 145,000 | 153,868 | |
Discovery Communications, | |||||
Gtd. Notes | 3.70 | 6/1/15 | 140,000 | 150,408 | |
Grupo Televisa, | |||||
Sr. Unscd. Notes | 6.63 | 3/18/25 | 10,000 | 13,291 | |
Home Depot, | |||||
Sr. Unscd. Notes | 5.40 | 3/1/16 | 100,000 | 115,264 |
12
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Consumer Discretionary (continued) | |||||
Kimberly-Clark, | |||||
Sr. Unscd. Notes | 6.13 | 8/1/17 | 100,000 | 124,607 | |
NBCUniversal Media, | |||||
Sr. Unscd. Notes | 4.38 | 4/1/21 | 50,000 | 57,348 | |
News America, | |||||
Gtd. Notes | 6.15 | 3/1/37 | 110,000 | 138,582 | |
Target, | |||||
Sr. Unscd. Notes | 6.50 | 10/15/37 | 50,000 | 71,029 | |
Time Warner | |||||
Gtd. Debs. | 6.10 | 7/15/40 | 75,000 | 96,018 | |
Time Warner Cable, | |||||
Gtd. Debs. | 6.75 | 6/15/39 | 110,000 | 147,345 | |
Time Warner, | |||||
Gtd. Notes | 7.63 | 4/15/31 | 20,000 | 28,768 | |
Wal-Mart Stores, | |||||
Sr. Unscd. Notes | 3.63 | 7/8/20 | 10,000 | 11,309 | |
Wal-Mart Stores, | |||||
Sr. Unscd. Notes | 5.00 | 10/25/40 | 225,000 | 276,647 | |
1,689,081 | |||||
Consumer Staples—1.4% | |||||
Altria Group, | |||||
Gtd. Notes | 8.50 | 11/10/13 | 88,000 | 94,866 | |
Altria Group, | |||||
Gtd. Notes | 9.95 | 11/10/38 | 50,000 | 86,692 | |
Anheuser-Busch Inbev Worldwide | |||||
Gtd. Notes | 5.38 | 1/15/20 | 20,000 | 24,894 | |
Anheuser-Busch InBev Worldwide, | |||||
Gtd. Notes | 4.13 | 1/15/15 | 100,000 | 107,752 | |
Bottling Group, | |||||
Gtd. Notes | 6.95 | 3/15/14 | 100,000 | 108,738 | |
Coca-Cola, | |||||
Sr. Unscd. Notes | 3.30 | 9/1/21 | 100,000 | 111,656 | |
HJ Heinz, | |||||
Sr. Unscd. Notes | 3.13 | 9/12/21 | 100,000 | 105,659 | |
Kraft Foods Group, | |||||
Sr. Unscd. Notes | 6.13 | 8/23/18 | 73,000 | b | 90,585 |
McDonald’s, | |||||
Sr. Unscd. Notes | 5.35 | 3/1/18 | 75,000 | 91,955 |
The Fund | 13 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Consumer Staples (continued) | |||||
Mondelez International, | |||||
Sr. Unscd. Notes | 6.13 | 2/1/18 | 27,000 | 33,330 | |
PepsiCo, | |||||
Sr. Unscd. Notes | 4.65 | 2/15/13 | 100,000 | 101,204 | |
Reynolds American, | |||||
Gtd. Notes | 7.63 | 6/1/16 | 75,000 | 90,802 | |
1,048,133 | |||||
Diversified Financial | |||||
Services—4.7% | |||||
Ace INA Holdings, | |||||
Gtd. Notes | 5.88 | 6/15/14 | 15,000 | 16,241 | |
Aflac, | |||||
Sr. Unscd. Notes | 8.50 | 5/15/19 | 50,000 | 68,034 | |
Allstate, | |||||
Sr. Unscd. Notes | 5.55 | 5/9/35 | 50,000 | 62,904 | |
American Express Credit, | |||||
Sr. Unscd. Notes | 2.80 | 9/19/16 | 275,000 | 293,105 | |
American Express Credit, | |||||
Sr. Unscd. Notes | 5.13 | 8/25/14 | 135,000 | 145,800 | |
American Express Credit, | |||||
Sr. Unscd. Notes, Ser. C | 7.30 | 8/20/13 | 50,000 | 52,698 | |
American International Group, | |||||
Sr. Unscd. Notes | 5.05 | 10/1/15 | 50,000 | 55,183 | |
American International Group, | |||||
Jr. Sub. Debs. | 8.18 | 5/15/68 | 50,000 | a | 62,625 |
Ameriprise Financial, | |||||
Sr. Unscd. Notes | 5.65 | 11/15/15 | 15,000 | 17,087 | |
Bank of America, | |||||
Sr. Unscd. Notes | 3.63 | 3/17/16 | 25,000 | 26,602 | |
Bank of America, | |||||
Sr. Unscd. Notes | 5.70 | 1/24/22 | 50,000 | 59,596 | |
Bear Stearns, | |||||
Sr. Unscd. Notes | 5.70 | 11/15/14 | 100,000 | 109,411 | |
Bear Stearns, | |||||
Sr. Unscd. Notes | 6.40 | 10/2/17 | 10,000 | 12,063 | |
Berkshire Hathaway Finance, | |||||
Gtd. Notes | 5.40 | 5/15/18 | 50,000 | 60,366 |
14
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Diversified Financial | ||||
Services (continued) | ||||
Berkshire Hathaway, | ||||
Sr. Unscd. Notes | 2.20 | 8/15/16 | 100,000 | 104,779 |
BlackRock, | ||||
Sr. Unscd. Notes | 6.25 | 9/15/17 | 10,000 | 12,271 |
Boston Properties, | ||||
Sr. Unscd. Bonds | 5.63 | 11/15/20 | 50,000 | 60,168 |
Caterpillar Financial Services, | ||||
Sr. Unscd. Notes | 6.13 | 2/17/14 | 250,000 | 267,998 |
Caterpillar Financial Services, | ||||
Sr. Unscd. Notes | 7.15 | 2/15/19 | 100,000 | 132,943 |
Chubb, | ||||
Sr. Unscd. Notes | 6.00 | 5/11/37 | 50,000 | 68,340 |
ERP Operating, | ||||
Sr. Unscd. Notes | 5.13 | 3/15/16 | 50,000 | 56,251 |
General Electric Capital, | ||||
Sr. Unscd. Notes | 2.10 | 1/7/14 | 100,000 | 101,844 |
General Electric Capital, | ||||
Sr. Unscd. Notes | 4.38 | 9/16/20 | 50,000 | 56,043 |
General Electric Capital, | ||||
Sr. Unscd. Notes | 5.63 | 5/1/18 | 65,000 | 77,302 |
General Electric Capital, | ||||
Sr. Unscd. Notes | 5.88 | 1/14/38 | 105,000 | 129,742 |
General Electric Capital, | ||||
Sr. Unscd. Notes | 6.88 | 1/10/39 | 50,000 | 69,326 |
Health Care REIT, | ||||
Sr. Unscd. Notes | 6.13 | 4/15/20 | 50,000 | 58,926 |
HSBC Finance, | ||||
Sr. Sub. Notes | 6.68 | 1/15/21 | 55,000 | 65,189 |
John Deere Capital, | ||||
Sr. Unscd. Notes | 2.25 | 6/7/16 | 50,000 | 52,585 |
KeyCorp, | ||||
Sr. Unscd. Notes | 5.10 | 3/24/21 | 50,000 | 59,276 |
MBNA, | ||||
Sr. Unscd. Notes | 5.00 | 6/15/15 | 50,000 | 54,256 |
Merrill Lynch & Co., | ||||
Sr. Unscd. Notes | 6.40 | 8/28/17 | 20,000 | 23,608 |
The Fund | 15 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Diversified Financial | ||||
Services (continued) | ||||
Merrill Lynch & Co., | ||||
Sr. Unscd. Notes | 6.88 | 4/25/18 | 100,000 | 120,880 |
MetLife, | ||||
Sr. Unscd. Notes | 5.70 | 6/15/35 | 50,000 | 62,149 |
MetLife, | ||||
Sr. Unscd. Notes | 6.75 | 6/1/16 | 300,000 | 358,745 |
MetLife, | ||||
Jr. Sub. Debs. | 10.75 | 8/1/69 | 50,000 | 75,625 |
Progressive, | ||||
Sr. Unscd. Notes | 6.25 | 12/1/32 | 16,000 | 21,043 |
Prudential Financial, | ||||
Sr. Unscd. Notes | 5.70 | 12/14/36 | 50,000 | 58,615 |
Simon Property Group, | ||||
Sr. Unscd. Notes | 10.35 | 4/1/19 | 100,000 | 144,272 |
SLM, | ||||
Sr. Unscd. Notes | 8.00 | 3/25/20 | 50,000 | 58,156 |
Travelers, | ||||
Sr. Unscd. Notes | 5.80 | 5/15/18 | 20,000 | 24,498 |
3,416,545 | ||||
Energy—3.5% | ||||
Anadarko Petroleum, | ||||
Sr. Unscd. Notes | 5.95 | 9/15/16 | 100,000 | 116,263 |
Baker Hughes, | ||||
Sr. Unscd. Notes | 3.20 | 8/15/21 | 150,000 | 163,544 |
BP Capital Markets, | ||||
Gtd. Notes | 3.63 | 5/8/14 | 335,000 | 350,815 |
BP Capital Markets, | ||||
Gtd. Notes | 4.74 | 3/11/21 | 35,000 | 41,485 |
ConocoPhillips, | ||||
Gtd. Notes | 4.60 | 1/15/15 | 225,000 | 244,822 |
ConocoPhillips, | ||||
Gtd. Notes | 4.75 | 2/1/14 | 5,000 | 5,265 |
ConocoPhillips, | ||||
Gtd. Notes | 6.50 | 2/1/39 | 50,000 | 73,825 |
Devon Financing, | ||||
Gtd. Debs. | 7.88 | 9/30/31 | 50,000 | 74,752 |
El Paso Natural Gas, | ||||
Sr. Unscd. Notes | 5.95 | 4/15/17 | 35,000 | 40,759 |
16
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Energy (continued) | ||||
Encana, | ||||
Sr. Unscd. Notes | 6.50 | 2/1/38 | 25,000 | 31,352 |
Energy Transfer Partners, | ||||
Sr. Unscd. Notes | 5.95 | 2/1/15 | 100,000 | 110,472 |
Enterprise Products Operating, | ||||
Gtd. Notes, Ser. G | 5.60 | 10/15/14 | 50,000 | 54,529 |
Hess, | ||||
Sr. Unscd. Notes | 8.13 | 2/15/19 | 75,000 | 100,082 |
Kinder Morgan Energy Partners, | ||||
Sr. Unscd. Notes | 5.80 | 3/15/35 | 60,000 | 71,787 |
Nexen, | ||||
Sr. Unscd. Notes | 6.40 | 5/15/37 | 25,000 | 32,193 |
ONEOK, | ||||
Sr. Unscd. Notes | 6.00 | 6/15/35 | 45,000 | 53,028 |
Petrobras International Finance, | ||||
Gtd. Notes | 5.88 | 3/1/18 | 25,000 | 28,907 |
Petrobras International Finance, | ||||
Gtd. Notes | 6.88 | 1/20/40 | 100,000 | 130,245 |
Shell International Finance, | ||||
Gtd. Notes | 6.38 | 12/15/38 | 50,000 | 73,922 |
Suncor Energy, | ||||
Sr. Unscd. Notes | 6.50 | 6/15/38 | 25,000 | 34,167 |
Total Capital, | ||||
Gtd. Notes | 3.00 | 6/24/15 | 400,000 | 425,371 |
TransCanada Pipelines, | ||||
Sr. Unscd. Notes | 7.63 | 1/15/39 | 50,000 | 79,262 |
Transocean, | ||||
Gtd. Notes | 6.00 | 3/15/18 | 90,000 | 106,155 |
Williams Partners, | ||||
Sr. Unscd. Notes | 3.80 | 2/15/15 | 150,000 | 159,942 |
2,602,944 | ||||
Foreign/Governmental—7.0% | ||||
Asian Development Bank, | ||||
Sr. Unscd. Notes | 2.50 | 3/15/16 | 150,000 | 159,908 |
Asian Development Bank, | ||||
Sr. Unscd. Notes | 2.75 | 5/21/14 | 65,000 | 67,427 |
Brazilian Government, | ||||
Sr. Unscd. Bonds | 5.63 | 1/7/41 | 20,000 | 25,700 |
The Fund | 17 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Foreign/Governmental (continued) | ||||
Brazilian Government, | ||||
Sr. Unscd. Bonds | 6.00 | 1/17/17 | 100,000 | 118,750 |
Brazilian Government, | ||||
Unscd. Bonds | 10.13 | 5/15/27 | 75,000 | 135,750 |
Canadian Government, | ||||
Sr. Unscd. Notes | 2.38 | 9/10/14 | 100,000 | 103,868 |
China Development Bank, | ||||
Sr. Unscd. Notes | 4.75 | 10/8/14 | 25,000 | 26,791 |
Colombian Government, | ||||
Sr. Unscd. Bonds | 6.13 | 1/18/41 | 50,000 | 68,500 |
Colombian Government, | ||||
Sr. Unscd. Bonds | 8.25 | 12/22/14 | 25,000 | 29,037 |
Corp Andina de Fomento, | ||||
Sr. Unscd. Notes | 5.20 | 5/21/13 | 125,000 | 128,131 |
Council of Europe | ||||
Development Bank | ||||
Sr. Unscd. Notes | 1.25 | 9/22/16 | 100,000 | 101,416 |
European Investment Bank, | ||||
Sr. Unscd. Notes | 1.13 | 8/15/14 | 50,000 | 50,615 |
European Investment Bank, | ||||
Sr. Unscd. Notes | 1.25 | 10/14/16 | 100,000 | 101,932 |
European Investment Bank, | ||||
Sr. Unscd. Notes | 2.88 | 1/15/15 | 400,000 | 420,665 |
European Investment Bank, | ||||
Sr. Unscd. Notes | 3.00 | 4/8/14 | 150,000 | 155,549 |
European Investment Bank, | ||||
Sr. Unscd. Bonds | 5.13 | 5/30/17 | 140,000 | 166,241 |
Export-Import Bank of Korea, | ||||
Sr. Unscd. Notes | 4.38 | 9/15/21 | 250,000 | 282,245 |
Export-Import Bank of Korea, | ||||
Sr. Unscd. Notes | 8.13 | 1/21/14 | 90,000 | 97,597 |
Inter-American Development Bank, | ||||
Sr. Unscd. Notes | 3.50 | 7/8/13 | 50,000 | 51,066 |
Inter-American Development Bank, | ||||
Sr. Unscd. Bonds | 4.25 | 9/14/15 | 50,000 | 55,450 |
International Bank for | ||||
Reconstruction & Development, | ||||
Sr. Unscd. Notes | 2.13 | 3/15/16 | 50,000 | 52,155 |
18
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Foreign/Governmental (continued) | ||||
International Bank for | ||||
Reconstruction & Development, | ||||
Sr. Unscd. Notes | 2.38 | 5/26/15 | 50,000 | 52,554 |
International Bank for | ||||
Reconstruction & Development, | ||||
Sr. Unscd. Notes | 3.63 | 5/21/13 | 100,000 | 101,904 |
Italian Government, | ||||
Sr. Unscd. Notes | 5.38 | 6/15/33 | 50,000 | 49,679 |
Italian Government, | ||||
Sr. Unscd. Notes | 6.88 | 9/27/23 | 50,000 | 58,517 |
KFW, | ||||
Gov’t Gtd. Notes | 1.00 | 1/12/15 | 50,000 | 50,622 |
KFW, | ||||
Gov’t Gtd. Notes | 1.38 | 7/15/13 | 50,000 | 50,389 |
KFW, | ||||
Gov’t Gtd. Notes | 1.38 | 1/13/14 | 400,000 | 405,032 |
KFW, | ||||
Gov’t Gtd. Notes | 2.75 | 9/8/20 | 200,000 | 216,904 |
KFW, | ||||
Gov’t Gtd. Notes | 4.88 | 1/17/17 | 100,000 | 116,923 |
Korean Development Bank, | ||||
Sr. Unscd. Notes | 8.00 | 1/23/14 | 100,000 | 108,391 |
Mexican Government, | ||||
Sr. Unscd. Notes | 4.75 | 3/8/44 | 20,000 | 22,250 |
Mexican Government, | ||||
Sr. Unscd. Notes | 5.63 | 1/15/17 | 100,000 | 117,400 |
Mexican Government, | ||||
Sr. Unscd. Notes | 5.95 | 3/19/19 | 56,000 | 69,440 |
Mexican Government, | ||||
Sr. Unscd. Notes | 6.63 | 3/3/15 | 50,000 | 56,575 |
Panamanian Government, | ||||
Sr. Unscd. Bonds | 9.38 | 4/1/29 | 50,000 | 86,000 |
Pemex Project Funding Master | ||||
Trust, Gtd. Notes | 5.75 | 3/1/18 | 35,000 | 40,950 |
Peruvian Government, | ||||
Sr. Unscd. Bonds | 8.75 | 11/21/33 | 36,000 | 63,180 |
Petroleos Mexicanos, | ||||
Gtd. Notes | 5.50 | 1/21/21 | 25,000 | 29,313 |
The Fund | 19 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | ||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) |
Foreign/Governmental (continued) | ||||
Petroleos Mexicanos, | ||||
Gtd. Notes | 6.50 | 6/2/41 | 50,000 | 62,313 |
Polish Government, | ||||
Sr. Unscd. Notes | 5.13 | 4/21/21 | 25,000 | 29,441 |
Province of Manitoba Canada, | ||||
Sr. Unscd. Debs., Ser. FH | 4.90 | 12/6/16 | 5,000 | 5,839 |
Province of New Brunswick Canada, | ||||
Sr. Unscd. Bonds | 2.75 | 6/15/18 | 50,000 | 54,108 |
Province of Ontario Canada, | ||||
Sr. Unscd. Bonds | 1.38 | 1/27/14 | 400,000 | 405,336 |
Province of Ontario Canada, | ||||
Sr. Unscd. Bonds | 4.40 | 4/14/20 | 160,000 | 189,590 |
Province of Quebec Canada, | ||||
Debs., Ser. NJ | 7.50 | 7/15/23 | 150,000 | 214,569 |
Province of Quebec Canada, | ||||
Unscd. Debs., Ser. PD | 7.50 | 9/15/29 | 50,000 | 76,782 |
5,132,794 | ||||
Health Care—2.1% | ||||
Abbott Laboratories, | ||||
Sr. Unscd. Notes | 6.15 | 11/30/37 | 50,000 | 71,684 |
Aetna, | ||||
Sr. Unscd. Notes | 6.00 | 6/15/16 | 15,000 | 17,514 |
Amgen, | ||||
Sr. Unscd. Notes | 3.88 | 11/15/21 | 25,000 | 27,527 |
Amgen, | ||||
Sr. Unscd. Notes | 5.65 | 6/15/42 | 75,000 | 92,459 |
Astrazeneca, | ||||
Sr. Unscd. Notes | 5.40 | 6/1/14 | 25,000 | 26,955 |
AstraZeneca, | ||||
Sr. Unscd. Notes | 5.90 | 9/15/17 | 10,000 | 12,271 |
Astrazeneca, | ||||
Sr. Unscd. Notes | 6.45 | 9/15/37 | 30,000 | 42,658 |
Bristol-Myers Squibb, | ||||
Sr. Unscd. Notes | 5.88 | 11/15/36 | 18,000 | 23,752 |
Cigna, | ||||
Sr. Unscd. Notes | 4.00 | 2/15/22 | 50,000 | 54,753 |
GlaxoSmithKline Capital, | ||||
Gtd. Bonds | 5.65 | 5/15/18 | 100,000 | 123,069 |
20
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Health Care (continued) | |||||
Johnson & Johnson, | |||||
Sr. Unscd. Notes | 5.95 | 8/15/37 | 50,000 | 71,669 | |
Merck & Co., | |||||
Gtd. Notes | 6.50 | 12/1/33 | 50,000 | a | 74,562 |
Novartis Capital, | |||||
Gtd. Notes | 4.13 | 2/10/14 | 50,000 | 52,311 | |
Novartis Capital, | |||||
Gtd. Notes | 4.40 | 4/24/20 | 50,000 | 59,008 | |
Pfizer, | |||||
Sr. Unscd. Notes | 7.20 | 3/15/39 | 50,000 | 80,251 | |
Sanofi, | |||||
Sr. Unscd. Notes | 4.00 | 3/29/21 | 25,000 | 28,826 | |
Teva Pharmaceutical Finance II, | |||||
Gtd. Notes | 3.00 | 6/15/15 | 350,000 | 371,588 | |
Thermo Fisher Scientific, | |||||
Sr. Unscd. Notes | 3.60 | 8/15/21 | 150,000 | 163,039 | |
UnitedHealth Group, | |||||
Sr. Unscd. Notes | 5.38 | 3/15/16 | 26,000 | 29,574 | |
WellPoint, | |||||
Sr. Unscd. Notes | 2.38 | 2/15/17 | 25,000 | 25,924 | |
Wyeth, | |||||
Gtd. Notes | 5.50 | 2/1/14 | 100,000 | 106,296 | |
1,555,690 | |||||
Industrial—1.6% | |||||
Boeing, | |||||
Sr. Unscd. Notes | 3.75 | 11/20/16 | 75,000 | 83,655 | |
Burlington Northern Santa Fe, | |||||
Sr. Unscd. Debs. | 7.95 | 8/15/30 | 50,000 | 71,423 | |
Burlington Northern Sante Fe, | |||||
Sr. Unscd. Notes | 5.75 | 3/15/18 | 75,000 | 91,402 | |
CRH America, | |||||
Gtd. Notes | 6.00 | 9/30/16 | 100,000 | 112,182 | |
CSX, | |||||
Sr. Unscd. Notes | 4.75 | 5/30/42 | 50,000 | 56,140 | |
Daimler Finance North America, | |||||
Gtd. Notes | 8.50 | 1/18/31 | 45,000 | 72,126 | |
Danaher, | |||||
Sr. Unscd. Notes | 1.30 | 6/23/14 | 50,000 | 50,724 |
The Fund | 21 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Industrial (continued) | |||||
Deere & Co. | |||||
Sr. Unscd. Notes | 4.38 | 10/16/19 | 120,000 | 140,769 | |
General Electric, | |||||
Sr. Unscd. Notes | 5.00 | 2/1/13 | 100,000 | 101,164 | |
Johnson Controls, | |||||
Sr. Unscd. Notes | 5.50 | 1/15/16 | 100,000 | 113,976 | |
L-3 Communications, | |||||
Gtd. Notes | 4.95 | 2/15/21 | 25,000 | 28,331 | |
Litton Industries, | |||||
Gtd. Debs. | 7.75 | 3/15/26 | 25,000 | 34,721 | |
Norfolk Southern, | |||||
Sr. Unscd. Bonds | 4.84 | 10/1/41 | 66,000 | 77,183 | |
Union Pacific, | |||||
Sr. Unscd. Notes | 4.16 | 7/15/22 | 9,000 | 10,268 | |
United Parcel Service, | |||||
Sr. Unscd. Notes | 3.13 | 1/15/21 | 25,000 | 27,193 | |
United Technologies, | |||||
Sr. Unscd. Notes | 6.13 | 7/15/38 | 35,000 | 48,350 | |
Waste Management, | |||||
Gtd. Notes | 4.75 | 6/30/20 | 50,000 | 58,089 | |
1,177,696 | |||||
Information Technology—2.0% | |||||
Hewlett-Packard, | |||||
Sr. Unscd. Notes | 2.35 | 3/15/15 | 100,000 | 101,045 | |
Hewlett-Packard, | |||||
Sr. Unscd. Notes | 4.75 | 6/2/14 | 400,000 | 418,940 | |
HP Enterprise Services, | |||||
Sr. Unscd. Notes, Ser. B | 6.00 | 8/1/13 | 100,000 | a | 103,586 |
IBM, | |||||
Sr. Unscd. Notes | 0.88 | 10/31/14 | 400,000 | 403,675 | |
International | |||||
Business Machines, | |||||
Sr. Unscd. Notes | 5.70 | 9/14/17 | 100,000 | 122,020 | |
Microsoft, | |||||
Sr. Unscd. Notes | 5.30 | 2/8/41 | 50,000 | 66,293 | |
Oracle, | |||||
Sr. Unscd. Notes | 5.75 | 4/15/18 | 100,000 | 123,257 |
22
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Information Technology (continued) | |||||
Xerox, | |||||
Sr. Unscd. Notes | 4.25 | 2/15/15 | 130,000 | 138,170 | |
1,476,986 | |||||
Materials—1.8% | |||||
Alcoa, | |||||
Sr. Unscd. Notes | 5.55 | 2/1/17 | 29,000 | 32,178 | |
ArcelorMittal USA, | |||||
Gtd. Notes | 6.50 | 4/15/14 | 50,000 | 52,158 | |
ArcelorMittal, | |||||
Sr. Unscd. Notes | 6.00 | 3/1/21 | 50,000 | a | 48,356 |
Barrick North America Finance, | |||||
Gtd. Notes | 4.40 | 5/30/21 | 50,000 | 55,450 | |
BHP Billiton Finance USA, | |||||
Gtd. Notes | 5.50 | 4/1/14 | 185,000 | 197,885 | |
BHP Billiton Finance USA, | |||||
Gtd. Notes | 6.50 | 4/1/19 | 35,000 | 45,054 | |
Dow Chemical, | |||||
Sr. Unscd. Notes | 5.90 | 2/15/15 | 100,000 | 111,355 | |
E.I. Du Pont De Nemours & Co., | |||||
Sr. Unscd. Notes | 6.00 | 7/15/18 | 100,000 | 125,153 | |
International Paper, | |||||
Sr. Unscd. Notes | 7.95 | 6/15/18 | 100,000 | 130,192 | |
Newmont Mining, | |||||
Gtd. Notes | 5.13 | 10/1/19 | 100,000 | 116,132 | |
Rio Tinto Finance USA, | |||||
Gtd. Notes | 3.75 | 9/20/21 | 175,000 | 189,972 | |
Rohm & Haas, | |||||
Sr. Unscd. Notes | 6.00 | 9/15/17 | 75,000 | 89,829 | |
Vale Overseas, | |||||
Gtd. Notes | 6.25 | 1/23/17 | 35,000 | 40,798 | |
Vale Overseas, | |||||
Gtd. Notes | 6.88 | 11/21/36 | 50,000 | 61,794 | |
1,296,306 | |||||
Municipal Bonds—.2% | |||||
California, | |||||
GO (Various Purpose) | 5.45 | 4/1/15 | 20,000 | 22,009 |
The Fund | 23 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Municipal Bonds (continued) | |||||
California | |||||
GO (Various Purpose) | 7.55 | 4/1/39 | 20,000 | 27,916 | |
California, | |||||
GO (Build America Bonds) | 7.30 | 10/1/39 | 50,000 | 67,164 | |
New Jersey Turnpike Authority, | |||||
Turnpike Revenue (Build | |||||
America Bonds) | 7.10 | 1/1/41 | 25,000 | 36,214 | |
153,303 | |||||
Telecommunications—2.8% | |||||
America Movil SAB de CV, | |||||
Gtd. Notes | 6.38 | 3/1/35 | 10,000 | 13,310 | |
AT&T, | |||||
Sr. Unscd. Notes | 5.35 | 9/1/40 | 170,000 | 209,322 | |
AT&T, | |||||
Sr. Unscd. Notes | 5.55 | 8/15/41 | 100,000 | 127,785 | |
AT&T, | |||||
Gtd. Notes | 8.00 | 11/15/31 | 6,000 | a | 9,349 |
British Telecommunications, | |||||
Sr. Unscd. Notes | 9.63 | 12/15/30 | 50,000 | a | 81,861 |
Cellco Partnership/Verizon | |||||
Wireless Capital, | |||||
Sr. Unscd. Notes | 5.55 | 2/1/14 | 100,000 | 106,022 | |
Centurylink, | |||||
Sr. Unscd. Notes, Ser. S | 6.45 | 6/15/21 | 100,000 | 109,811 | |
Cisco Systems, | |||||
Sr. Unscd. Notes | 4.45 | 1/15/20 | 25,000 | 29,523 | |
Cisco Systems, | |||||
Sr. Unscd. Notes | 5.90 | 2/15/39 | 50,000 | 67,772 | |
Deutsche Telekom International | |||||
Finance, Gtd. Notes | 4.88 | 7/8/14 | 75,000 | 79,996 | |
Deutsche Telekom International | |||||
Finance, Gtd. Bonds | 9.25 | 6/1/32 | 20,000 | 32,864 | |
France Telecom, | |||||
Sr. Unscd. Notes | 2.13 | 9/16/15 | 200,000 | 206,594 | |
Telecom Italia Capital, | |||||
Gtd. Notes | 5.25 | 11/15/13 | 100,000 | 103,250 | |
Telefonica Emisiones, | |||||
Gtd. Notes | 3.73 | 4/27/15 | 350,000 | 357,875 | |
Telefonica Emisiones, | |||||
Gtd. Notes | 5.13 | 4/27/20 | 75,000 | 75,750 |
24
Coupon | Maturity | Principal | |||||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |||
Telecommunications (continued) | |||||||
Verizon Communications, | |||||||
Sr. Unscd. Notes | 6.40 | 2/15/38 | 50,000 | 69,682 | |||
Verizon Global Funding, | |||||||
Sr. Unscd. Notes | 4.38 | 6/1/13 | 25,000 | 25,548 | |||
Verizon Global Funding, | |||||||
Sr. Unscd. Notes | 7.75 | 12/1/30 | 50,000 | 75,915 | |||
Vodafone Group, | |||||||
Sr. Unscd. Notes | 5.75 | 3/15/16 | 150,000 | 173,814 | |||
Vodafone Group, | |||||||
Sr. Unscd. Bonds | 6.15 | 2/27/37 | 50,000 | 68,939 | |||
2,024,982 | |||||||
U.S. Government Agencies—7.2% | |||||||
Federal Home Loan Banks, | |||||||
Bonds | 5.50 | 7/15/36 | 100,000 | 139,617 | |||
Federal Home Loan Mortgage Corp., | |||||||
Notes | 2.88 | 2/9/15 | 500,000 | d | 528,634 | ||
Federal Home Loan Mortgage Corp., | |||||||
Notes | 3.75 | 3/27/19 | 144,000 | d | 167,314 | ||
Federal Home Loan Mortgage Corp., | |||||||
Notes | 5.05 | 1/26/15 | 1,700,000 | d | 1,878,260 | ||
Federal Home Loan Mortgage Corp., | |||||||
Notes | 6.25 | 7/15/32 | 100,000 | d | 150,851 | ||
Federal National Mortgage | |||||||
Association, Notes | 4.75 | 2/21/13 | 1,700,000 | d | 1,723,744 | ||
Federal National Mortgage | |||||||
Association, Bonds | 5.00 | 5/11/17 | 425,000 | d | 505,368 | ||
Federal National Mortgage | |||||||
Association, Bonds | 6.25 | 5/15/29 | 100,000 | d | 145,972 | ||
5,239,760 | |||||||
U.S. Government Agencies/ | |||||||
Mortgage-Backed—42.1% | |||||||
Federal Home Loan Mortgage Corp.: | |||||||
5.50 % | 500,000 | c,d | 543,594 | ||||
2.66%, 1/1/37 | 15,748 | a,d | 16,791 | ||||
2.99%, 2/1/37 | 18,660 | a,d | 20,059 | ||||
4.50%, 12/1/19—8/1/25 | 356,413 | d | 381,699 | ||||
4.93%, 6/1/38 | 77,236 | a,d | 82,898 | ||||
5.00%, 11/1/19—7/1/35 | 297,157 | d | 324,984 | ||||
5.50%, 12/1/27—5/1/37 | 676,806 | d | 737,454 | ||||
5.62%, 2/1/37 | 21,544 | a,d | 23,382 |
The Fund | 25 |
STATEMENT OF INVESTMENTS (continued)
Principal | |||||
Bonds and Notes (continued) | Amount ($) | Value ($) | |||
U.S. Government Agencies/ | |||||
Mortgage-Backed (continued) | |||||
Federal Home Loan Mortgage Corp. (continued): | |||||
6.00%, 10/1/19—9/1/34 | 59,522 | d | 64,642 | ||
6.50%, 8/1/32 | 321,622 | d | 373,041 | ||
7.00%, 1/1/36 | 62,864 | d | 72,812 | ||
Federal National Mortgage Association: | |||||
3.00 % | 820,000 | c,d | 865,228 | ||
3.50 % | 5,620,000 | c,d | 5,978,306 | ||
4.00 % | 2,360,000 | c,d | 2,521,997 | ||
4.50 % | 1,820,000 | c,d | 1,961,192 | ||
5.00 % | 238,000 | c,d | 258,886 | ||
5.50 % | 780,000 | c,d | 855,319 | ||
6.00 % | 580,000 | c,d | 642,894 | ||
2.01%, 10/1/37 | 29,650 | a,d | 31,920 | ||
2.51%, 12/1/34 | 71,395 | a,d | 76,130 | ||
4.00%, 4/1/19—2/1/42 | 2,261,615 | d | 2,444,091 | ||
4.50%, 6/1/29—8/1/41 | 2,824,757 | d | 3,062,785 | ||
5.00%, 9/1/29—5/1/41 | 2,039,142 | d | 2,253,148 | ||
5.50%, 7/1/17—2/1/37 | 335,117 | d | 366,688 | ||
5.56%, 4/1/37 | 29,725 | a,d | 32,203 | ||
5.70%, 9/1/38 | 111,916 | a,d | 120,826 | ||
6.00%, 11/1/16—1/1/36 | 800,952 | d | 901,107 | ||
6.50%, 7/1/33—8/1/38 | 223,942 | d | 255,552 | ||
7.00%, 4/1/32 | 33,218 | d | 39,702 | ||
Government National Mortgage Association I: | |||||
4.00 % | 710,000 | c | 776,895 | ||
5.50 % | 240,000 | c | 265,125 | ||
6.00 % | 350,000 | c | 395,992 | ||
6.50 % | 120,000 | c | 137,381 | ||
4.00%, 7/15/41 | 913,629 | 1,002,002 | |||
4.50%, 3/15/40 | 1,519,123 | 1,663,727 | |||
5.00%, 2/15/36—8/15/39 | 1,007,466 | 1,108,022 | |||
5.50%, 2/15/33—4/15/38 | 227,431 | 252,501 | |||
30,910,975 | |||||
U.S. Government Securities—21.0% | |||||
U.S. Treasury Bonds: | |||||
3.13%, 11/15/41 | 170,000 | 180,439 | |||
3.88%, 8/15/40 | 1,350,000 | 1,643,625 | |||
4.75%, 2/15/37 | 1,400,000 | 1,932,218 | |||
7.88%, 2/15/21 | 2,550,000 | 3,865,043 |
26
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
U.S. Government Securities (continued) | |||||
U.S. Treasury Notes: | |||||
0.75%, 6/15/14 | 2,000,000 | 2,015,860 | |||
0.88%, 11/30/16 | 1,400,000 | 1,417,829 | |||
2.00%, 11/15/21 | 700,000 | 727,234 | |||
2.38%, 10/31/14 | 3,500,000 | 3,644,921 | |||
15,427,169 | |||||
Utilities—2.3% | |||||
Consolidated Edison of New York, | |||||
Sr. Unscd. Debs., Ser. 05-C | 5.38 | 12/15/15 | 20,000 | 22,736 | |
Consolidated Edison of New York, | |||||
Sr. Unscd. Debs., Ser. 09-C | 5.50 | 12/1/39 | 20,000 | 26,086 | |
Dominion Resources, | |||||
Sr. Unscd. Notes, Ser. F | 5.25 | 8/1/33 | 48,000 | 55,960 | |
Dominion Resources, | |||||
Sr. Unscd. Notes, Ser. B | 5.95 | 6/15/35 | 50,000 | 64,957 | |
Duke Energy Carolinas, | |||||
Sr. Unscd. Notes | 6.45 | 10/15/32 | 8,000 | 10,664 | |
Duke Energy Indiana, | |||||
First Mortgage Bonds | 6.35 | 8/15/38 | 50,000 | 70,222 | |
Duke Energy, | |||||
Sr. Unscd. Notes | 6.30 | 2/1/14 | 100,000 | 107,011 | |
Exelon Generation, | |||||
Sr. Unscd Notes | 4.25 | 6/15/22 | 12,000 | b | 12,870 |
Exelon Generation, | |||||
Sr. Unscd Notes | 5.60 | 6/15/42 | 48,000 | b | 53,959 |
Exelon, | |||||
Sr. Unscd. Notes | 4.90 | 6/15/15 | 50,000 | 55,006 | |
FirstEnergy, | |||||
Sr. Unscd. Notes, Ser. C | 7.38 | 11/15/31 | 50,000 | 67,784 | |
Georgia Power, | |||||
Sr. Unscd. Notes | 5.40 | 6/1/40 | 50,000 | 63,005 | |
Hydro-Quebec, | |||||
Gov’t. Gtd. Debs., Ser. IO | 8.05 | 7/7/24 | 150,000 | 222,046 | |
Hydro-Quebec, | |||||
Gov’t. Gtd. Debs., Ser. HY | 8.40 | 1/15/22 | 60,000 | 86,396 | |
Indiana Michigan Power, | |||||
Sr. Unscd. Notes | 7.00 | 3/15/19 | 50,000 | 62,120 |
The Fund | 27 |
STATEMENT OF INVESTMENTS (continued)
Coupon | Maturity | Principal | |||
Bonds and Notes (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Utilities (continued) | |||||
Nevada Power, | |||||
Mortgage Notes | 7.13 | 3/15/19 | 50,000 | 65,544 | |
NextEra Energy Capital Holdings, | |||||
Gtd. Debs. | 7.88 | 12/15/15 | 100,000 | 120,476 | |
Pacific Gas & Electric, | |||||
Sr. Unscd. Bonds | 6.05 | 3/1/34 | 50,000 | 67,141 | |
Pacificorp, | |||||
First Mortgage Bonds | 4.10 | 2/1/42 | 25,000 | 27,205 | |
Pacificorp, | |||||
First Mortgage Bonds | 6.25 | 10/15/37 | 50,000 | 70,660 | |
Progress Energy Carolina, | |||||
First Mortgage Bonds | 3.00 | 9/15/21 | 100,000 | 106,731 | |
Sempra Energy, | |||||
Sr. Unscd. Notes | 6.15 | 6/15/18 | 50,000 | 61,738 | |
Southern California Edison, | |||||
First Mortgage Bonds | 3.90 | 12/1/41 | 20,000 | 21,418 | |
Southern California Edison, | |||||
First Mortgage Bonds, Ser. 05-A | 5.00 | 1/15/16 | 35,000 | 39,639 | |
Southern Power, | |||||
Sr. Unscd. Notes, Ser. D | 4.88 | 7/15/15 | 50,000 | 55,060 | |
SouthWestern Public Service, | |||||
Sr. Unscd. Notes, Ser. G | 8.75 | 12/1/18 | 50,000 | 68,246 | |
1,684,680 | |||||
Total Bonds and Notes | |||||
(cost $76,192,737) | 80,486,798 | ||||
Short-Term Investments—.1% | |||||
U.S. Treasury Bills; | |||||
0.10%, 12/20/12 | |||||
(cost $99,986) | 100,000 | e | 99,987 |
28
Other Investment—8.9% | Shares | Value ($) | ||
Registered Investment Company; | ||||
Dreyfus Institutional Preferred | ||||
Plus Money Market Fund | ||||
(cost $6,534,162) | 6,534,162 | f | 6,534,162 | |
Total Investments (cost $82,826,885) | 118.7 | % | 87,120,947 | |
Liabilities, Less Cash and Receivables | (18.7 | %) | (13,720,458 | ) |
Net Assets | 100.0 | % | 73,400,489 |
GO—General Obligation
REIT—Real Estate Investment Trust
a Variable rate security—interest rate subject to periodic change. |
b Securities exempt from registration pursuant to Rule 144A under the Securities Act of 1933.These securities may be |
resold in transactions exempt from registration, normally to qualified institutional buyers.At October 31, 2012, these |
securities were valued at $157,414 or .2% of net assets. |
c Purchased on a forward commitment basis. |
d The Federal Housing Finance Agency (“FHFA”) placed Federal Home Loan Mortgage Corporation and Federal |
National Mortgage Association into conservatorship with FHFA as the conservator.As such, the FHFA oversees the |
continuing affairs of these companies. |
e Held by or on behalf of a counterparty for open financial futures positions. |
f Investment in affiliated money market mutual fund. |
The Fund | 29 |
STATEMENT OF FINANCIAL FUTURES
October 31, 2012
Unrealized | ||||||
Market Value | Appreciation | |||||
Covered by | (Depreciation) | |||||
Contracts | Contracts ($) | Expiration | at 10/31/2012 | ($) | ||
Financial Futures Long | ||||||
Euro-Bond | 23 | 4,222,568 | December 2012 | 10,932 | ||
Japanese 10 Year Mini Bonds | 35 | 6,314,275 | December 2012 | (2,470 | ) | |
U.S. Treasury 2 Year Notes | 20 | 4,406,500 | December 2012 | (1,870 | ) | |
U.S. Treasury 5 Year Notes | 59 | 7,330,750 | December 2012 | 2,517 | ||
U.S. Treasury 10 Year Notes | 16 | 2,128,500 | December 2012 | 10,690 | ||
Financial Futures Short | ||||||
Australian 10 Year Bonds | 26 | (3,378,447 | ) | December 2012 | (5,769 | ) |
Canadian 10 Year Bonds | 27 | (3,702,741 | ) | December 2012 | (20,005 | ) |
Long Gilt | 22 | (4,222,713 | ) | December 2012 | 54,484 | |
U.S. Treasury 2 Year Notes | 25 | (5,508,125 | ) | December 2012 | 1,713 | |
U.S. Treasury 5 Year Notes | 22 | (2,733,500 | ) | December 2012 | 7,102 | |
U.S. Treasury 10 Year Notes | 23 | (3,059,719 | ) | December 2012 | (7,642 | ) |
U.S. Treasury 30 Year Bonds | 4 | (597,250 | ) | December 2012 | (8,227 | ) |
Gross Unrealized Appreciation | 87,438 | |||||
Gross Unrealized Depreciation | (45,983 | ) |
30
STATEMENT OF SECURITIES SOLD SHORT |
October 31, 2012 |
Principal | ||||
Bonds and Notes | Amount ($) | Value ($) | ||
Federal National Mortgage Association: | ||||
4.50 % | 200,000 | a,b | 215,813 | |
5.50 % | 140,000 | a,b | 151,025 | |
6.50 % | 270,000 | a,b | 304,256 | |
Government National Mortgage Association: | ||||
4.50 % | 150,000 | a,b | 163,125 | |
5.00 % | 110,000 | a,b | 120,467 | |
Total Securities Sold Short | ||||
(proceeds $956,516) | 954,686 |
a The Federal Housing Finance Agency (“FHFA”) placed Federal National Mortgage Association and Federal Home |
Loan Mortgage Corporation into conservatorship with FHFA as the conservator.As such, the FHFA oversees the |
continuing affairs of these companies. |
b Sold on a delayed delivery basis. |
See notes to financial statements.
The Fund | 31 |
STATEMENT OF ASSETS AND LIABILITIES |
October 31, 2012 |
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments: | ||||
Unaffiliated issuers | 76,292,723 | 80,586,785 | ||
Affiliated issuers | 6,534,162 | 6,534,162 | ||
Cash | 7,713 | |||
Cash on initial margin—Note 4 | 1,562,210 | |||
Receivable from brokers for proceeds on securities sold short | 956,516 | |||
Dividends and interest receivable | 525,966 | |||
Unrealized appreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 105,768 | |||
Prepaid expenses | 15,747 | |||
90,294,867 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 36,538 | |||
Payable for open mortgage—backed dollar rolls—Note 4 | 15,230,086 | |||
Securities sold short, at value (proceeds $956,516)— | ||||
See Statement of Securities Sold Short—Note 4 | 954,686 | |||
Unrealized depreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 341,062 | |||
Payable for shares of Common Stock redeemed | 257,709 | |||
Payable for futures variation margin—Note 4 | 4,586 | |||
Accrued expenses | 69,711 | |||
16,894,378 | ||||
Net Assets ($) | 73,400,489 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 69,064,291 | |||
Accumulated undistributed investment income—net | 647,329 | |||
Accumulated net realized gain (loss) on investments | (395,043 | ) | ||
Accumulated net unrealized appreciation (depreciation) on investments, | ||||
securities sold short and foreign currency transactions (including | ||||
$41,455 net unrealized appreciation on financial futures) | 4,083,912 | |||
Net Assets ($) | 73,400,489 | |||
Net Asset Value Per Share | ||||
Class A | Class C | Class I | ||
Net Assets ($) | 46,340,393 | 8,221,382 | 18,838,714 | |
Shares Outstanding | 3,341,945 | 596,679 | 1,356,471 | |
Net Asset Value Per Share ($) | 13.87 | 13.78 | 13.89 | |
See notes to financial statements. |
32
STATEMENT OF OPERATIONS |
Year Ended October 31, 2012 |
Investment Income ($): | ||
Income: | ||
Interest | 1,746,098 | |
Dividends; | ||
Affiliated issuers | 12,804 | |
Total Income | 1,758,902 | |
Expenses: | ||
Management fee—Note 3(a) | 353,162 | |
Shareholder servicing costs—Note 3(c) | 201,281 | |
Distribution fees—Note 3(b) | 63,255 | |
Registration fees | 50,338 | |
Auditing fees | 46,490 | |
Prospectus and shareholders’ reports | 20,379 | |
Custodian fees—Note 3(c) | 14,937 | |
Directors’ fees and expenses—Note 3(d) | 5,800 | |
Legal fees | 4,560 | |
Loan commitment fees—Note 2 | 731 | |
Miscellaneous | 71,635 | |
Total Expenses | 832,568 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (190,288 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (31 | ) |
Net Expenses | 642,249 | |
Investment Income—Net | 1,116,653 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions: | ||
Long transactions | 964,032 | |
Short transactions | (15,786 | ) |
Net realized gain (loss) on options transactions | (11,391 | ) |
Net realized gain (loss) on financial futures | (66,688 | ) |
Net realized gain (loss) on forward foreign currency exchange contracts | 75,258 | |
Net Realized Gain (Loss) | 945,425 | |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 1,515,236 | |
Net unrealized appreciation (depreciation) on financial futures | 97,611 | |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (142,536 | ) |
Net unrealized appreciation (depreciation) on securities sold short | 6,660 | |
Net Unrealized Appreciation (Depreciation) | 1,476,971 | |
Net Realized and Unrealized Gain (Loss) on Investments | 2,422,396 | |
Net Increase in Net Assets Resulting from Operations | 3,539,049 |
See notes to financial statements.
The Fund | 33 |
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31, | ||||
2012 | 2011 | |||
Operations ($): | ||||
Investment income—net | 1,116,653 | 1,317,547 | ||
Net realized gain (loss) on investments | 945,425 | 1,267,370 | ||
Net unrealized appreciation | ||||
(depreciation) on investments | 1,476,971 | (462,399 | ) | |
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 3,539,049 | 2,122,518 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (1,202,090 | ) | (1,372,828 | ) |
Class C Shares | (145,442 | ) | (213,881 | ) |
Class I Shares | (504,642 | ) | (301,960 | ) |
Net realized gain on investments: | ||||
Class A Shares | (231,610 | ) | (1,833,450 | ) |
Class C Shares | (36,612 | ) | (371,291 | ) |
Class I Shares | (79,729 | ) | (306,422 | ) |
Total Dividends | (2,200,125 | ) | (4,399,832 | ) |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 14,126,921 | 30,113,633 | ||
Class C Shares | 2,643,736 | 2,395,055 | ||
Class I Shares | 12,403,920 | 10,734,150 | ||
Dividends reinvested: | ||||
Class A Shares | 1,385,837 | 3,049,428 | ||
Class C Shares | 132,235 | 434,980 | ||
Class I Shares | 440,822 | 487,169 | ||
Cost of shares redeemed: | ||||
Class A Shares | (19,480,555 | ) | (30,216,195 | ) |
Class C Shares | (2,931,605 | ) | (5,108,021 | ) |
Class I Shares | (10,016,585 | ) | (2,844,896 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | (1,295,274 | ) | 9,045,303 | |
Total Increase (Decrease) in Net Assets | 43,650 | 6,767,989 | ||
Net Assets ($): | ||||
Beginning of Period | 73,356,839 | 66,588,850 | ||
End of Period | 73,400,489 | 73,356,839 | ||
Undistributed investment income—net | 647,329 | 559,926 |
34
The Fund | 35 |
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||||||
Class A Shares | 2012 | 2011 | 2010 | 2009 | 2008 | |||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 13.63 | 14.09 | 13.59 | 12.12 | 12.62 | |||||
Investment Operations: | ||||||||||
Investment income—net a | .20 | .29 | .35 | .37 | .52 | |||||
Net realized and unrealized | ||||||||||
gain (loss) on investments | .43 | .23 | .78 | 1.44 | (.48 | ) | ||||
Total from Investment Operations | .63 | .52 | 1.13 | 1.81 | .04 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.33 | ) | (.43 | ) | (.41 | ) | (.34 | ) | (.54 | ) |
Dividends from net realized | ||||||||||
gain on investments | (.06 | ) | (.55 | ) | (.22 | ) | — | — | ||
Total Distributions | (.39 | ) | (.98 | ) | (.63 | ) | (.34 | ) | (.54 | ) |
Net asset value, end of period | 13.87 | 13.63 | 14.09 | 13.59 | 12.12 | |||||
Total Return (%) b | 4.71 | 4.06 | 8.74 | 15.15 | .21 | |||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 1.05 | 1.09 | 1.14 | 1.40 | 1.90 | |||||
Ratio of net expenses | ||||||||||
to average net assets | .80 | .80 | .87 | .90 | .90 | |||||
Ratio of net investment income | ||||||||||
to average net assets | 1.43 | 2.18 | 2.58 | 2.87 | 4.16 | |||||
Portfolio Turnover Rate c | 292.31 | 351.58 | 350.15 | 377.79 | 120.92 | |||||
Net Assets, end of period ($ x 1,000) | 46,340 | 49,441 | 48,236 | 45,046 | 14,026 |
a Based on average shares outstanding at each month end. |
b Exclusive of sales charge. |
c The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended October 31, 2012, |
2011, 2010, 2009 and 2008, were 33.26%, 111.10%, 182.13%, 211.99% and 87.59%, respectively. |
See notes to financial statements.
36
Year Ended October 31, | ||||||||||
Class C Shares | 2012 | 2011 | 2010 | 2009 | 2008 | |||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 13.55 | 14.02 | 13.53 | 12.08 | 12.58 | |||||
Investment Operations: | ||||||||||
Investment income—net a | .09 | .19 | .25 | .27 | .41 | |||||
Net realized and unrealized | ||||||||||
gain (loss) on investments | .44 | .22 | .78 | 1.44 | (.47 | ) | ||||
Total from Investment Operations | .53 | .41 | 1.03 | 1.71 | (.06 | ) | ||||
Distributions: | ||||||||||
Dividends from investment income—net | (.24 | ) | (.33 | ) | (.32 | ) | (.26 | ) | (.44 | ) |
Dividends from net realized | ||||||||||
gain on investments | (.06 | ) | (.55 | ) | (.22 | ) | — | — | ||
Total Distributions | (.30 | ) | (.88 | ) | (.54 | ) | (.26 | ) | (.44 | ) |
Net asset value, end of period | 13.78 | 13.55 | 14.02 | 13.53 | 12.08 | |||||
Total Return (%) b | 3.93 | 3.25 | 7.96 | 14.32 | (.55 | ) | ||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 1.82 | 1.85 | 1.93 | 2.20 | 2.75 | |||||
Ratio of net expenses | ||||||||||
to average net assets | 1.55 | 1.55 | 1.62 | 1.65 | 1.65 | |||||
Ratio of net investment income | ||||||||||
to average net assets | .69 | 1.44 | 1.81 | 2.11 | 3.40 | |||||
Portfolio Turnover Rate c | 292.31 | 351.58 | 350.15 | 377.79 | 120.92 | |||||
Net Assets, end of period ($ x 1,000) | 8,221 | 8,237 | 10,916 | 7,256 | 2,726 |
a Based on average shares outstanding at each month end. |
b Exclusive of sales charge. |
c The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended October 31, 2012, |
2011, 2010, 2009 and 2008, were 33.26%, 111.10%, 182.13%, 211.99% and 87.59%, respectively. |
See notes to financial statements.
The Fund | 37 |
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||||||
Class I Shares | 2012 | 2011 | 2010 | 2009 | 2008 | |||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 13.65 | 14.11 | 13.61 | 12.13 | 12.62 | |||||
Investment Operations: | ||||||||||
Investment income—net a | .24 | .32 | .40 | .40 | .56 | |||||
Net realized and unrealized | ||||||||||
gain (loss) on investments | .42 | .23 | .77 | 1.44 | (.48 | ) | ||||
Total from Investment Operations | .66 | .55 | 1.17 | 1.84 | .08 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.36 | ) | (.46 | ) | (.45 | ) | (.36 | ) | (.57 | ) |
Dividends from net realized | ||||||||||
gain on investments | (.06 | ) | (.55 | ) | (.22 | ) | — | — | ||
Total Distributions | (.42 | ) | (1.01 | ) | (.67 | ) | (.36 | ) | (.57 | ) |
Net asset value, end of period | 13.89 | 13.65 | 14.11 | 13.61 | 12.13 | |||||
Total Return (%) | 4.94 | 4.38 | 9.00 | 15.38 | .54 | |||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .76 | .80 | .86 | 1.13 | 1.64 | |||||
Ratio of net expenses | ||||||||||
to average net assets | .55 | .55 | .62 | .65 | .65 | |||||
Ratio of net investment income | ||||||||||
to average net assets | 1.71 | 2.41 | 2.85 | 3.12 | 4.41 | |||||
Portfolio Turnover Rate b | 292.31 | 351.58 | 350.15 | 377.79 | 120.92 | |||||
Net Assets, end of period ($ x 1,000) | 18,839 | 15,679 | 7,437 | 1,901 | 602 |
a Based on average shares outstanding at each month end. |
b The portfolio turnover rates excluding mortgage dollar roll transactions for the periods ended October 31, 2012, |
2011, 2010, 2009 and 2008, were 33.26%, 111.10%, 182.13%, 211.99% and 87.59%, respectively. |
See notes to financial statements.
38
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Total Return Advantage Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering thirteen series, including the fund. The fund’s investment objective seeks to maximize total return through capital appreciation and income. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares.The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C and Class I. Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I shares are sold at net asset value per share only to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Fund | 39 |
NOTES TO FINANCIAL STATEMENTS (continued)
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications.The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
40
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1 —unadjusted quoted prices in active markets for identical investments.
Level 2 —other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 —significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Registered investment companies that are not traded on an exchange are valued at their net asset value and are categorized within Level 1 of the fair value hierarchy.
Investments in securities excluding short-term investments (other than U.S.Treasury Bills), financial futures, options and forward foreign currency exchange contracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are valued as determined by the Service, based on methods
The Fund | 41 |
NOTES TO FINANCIAL STATEMENTS (continued)
which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions.These securities are generally categorized within Level 2 of the fair value hierarchy.
U.S. Treasury Bills are valued at the mean price between quoted bid prices and asked prices by the Service. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service’s procedures are reviewed by Dreyfus under the general supervision of the Board.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.These securities are either categorized as Level 2 or 3 depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day.These securities are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter are
42
valued at the mean between the bid and asked price.These securities are generally categorized within Level 2 of the fair value hierarchy. Forward contracts are valued at the forward rate.These securities are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2012 in valuing the fund’s investments:
Level 2—Other | Level 3— | ||||||
Level 1— | Significant | Significant | |||||
Unadjusted | Observable | Unobservable | |||||
Quoted Prices | Inputs | Inputs | Total | ||||
Assets ($) | |||||||
Investments in Securities: | |||||||
Asset-Backed | — | 134,369 | — | 134,369 | |||
Commercial | |||||||
Mortgage-Backed | — | 1,993,605 | — | 1,993,605 | |||
Corporate Bonds † | — | 21,494,823 | — | 21,494,823 | |||
Foreign Government | — | 5,132,794 | — | 5,132,794 | |||
Municipal Bonds | — | 153,303 | — | 153,303 | |||
Mutual Funds | 6,534,162 | — | — | 6,534,162 | |||
U.S. Government | |||||||
Agencies/ | |||||||
Mortgage-Backed | — | 36,150,735 | — | 36,150,735 | |||
U.S. Treasury | — | 15,527,156 | — | 15,527,156 | |||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts †† | — | 105,768 | — | 105,768 | |||
Futures †† | 87,438 | — | — | 87,438 | |||
Liabilities ($) | |||||||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts †† | — | (341,062 | ) | — | (341,062 | ) | |
Financial Futures †† | (45,983 | ) | — | — | (45,983 | ) | |
Securities Sold Short: | |||||||
U.S. Government | |||||||
Agencies/ | |||||||
Mortgage-Backed ††† | — | (954,686 | ) | — | (954,686 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Amount shown represents unrealized appreciation (depreciation) at period end. |
††† See Statement of Securities Sold Short for additional detailed categorizations. |
The Fund | 43 |
NOTES TO FINANCIAL STATEMENTS (continued)
At October 31, 2012, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on investments are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended October 31, 2012 were as follows:
Affiliated | |||||||
Investment | Value | Value | Net | ||||
Company | 10/31/2011 ($) | Purchases ($) | Sales ($) | 10/31/2012 | ($) | Assets (%) | |
Dreyfus | |||||||
Institutional | |||||||
Preferred | |||||||
Plus Money | |||||||
Market Fund | 20,068,547 | 25,506,340 | 39,040,725 | 6,534,162 | 8.9 |
44
Certain affiliated investment companies may also invest in the fund.At October 31, 2012, approximately 59% of the outstanding Class I shares were held by other funds advised or managed by Dreyfus.
(e) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net are declared and paid on a quarterly basis. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
On October 31, 2012, the Board declared a cash dividend of $.098, $.072 and $.107 per share from undistributed investment income-net for Class A, Class C and Class I shares, respectively, payable on November 1, 2012 (ex-dividend date), to shareholders of record as of the close of business on October 31, 2012.
(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the four-year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The Fund | 45 |
NOTES TO FINANCIAL STATEMENTS (continued)
At October 31, 2012, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $1,167,036 and unrealized appreciation $3,169,162.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2012 and October 31, 2011 were as follows: ordinary income $1,852,259 and $3,164,257 and long-term capital gains $347,866 and $1,235,575, respectively.
During the period ended October 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for amortization of premiums, paydown gains and losses on mortgage-backed securities and foreign currency gains and losses, the fund increased accumulated undistributed investment income-net by $822,924 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
(g) New Accounting Pronouncements: In April 2011, FASB issued Accounting Standards Update No. 2011-03 “Transfers and Servicing (Topic 860) Reconsideration of Effective Control for Repurchase Agreements (“ASU 2011-03”) which relates to the accounting for repurchase agreements and similar agreements including mortgage dollar rolls, that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. ASU 2011-03 was effective for new transfers and existing transactions that were modified in the first interim or annual period beginning on or after December 15, 2011. The new disclosures have been implemented and there was no change in accounting for the fund. Management has determined that the fund has not entered into transactions that can be deemed “secured borrowings” as defined by ASU 2011-03.
46
In December 2011, FASB issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”).These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position.They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”).ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement.ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact on the fund’s financial statement disclosures.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Effective October 10, 2012, the $225 million unsecured credit facility with Citibank, N.A., was decreased to $210 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended October 31, 2012, the fund did not borrow under the Facilities.
The Fund | 47 |
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3—Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .45% of the value of the fund’s average daily net assets and is payable monthly.The Manager has contractually agreed, until March 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund so that the expenses of none of the classes (excluding taxes, brokerage commissions, Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, interest expense, commitment fees on borrowings and extraordinary expenses) exceed an annual rate of .55% of the value of the fund’s average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $190,288 during the period ended October 31, 2012.
During the period ended October 31, 2012, the Distributor retained $1,230 from commissions earned on sales of the fund’s Class A shares and $1,129 from CDSCs on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended October 31, 2012, Class C shares were charged $63,255, pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services.The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts.The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2012, Class A and Class C shares were charged $124,925 and $21,085, respectively, pursuant to the Shareholder Services Plan.
48
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates DreyfusTransfer, Inc. (“DTI”), a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $11,672 for transfer agency services and $119 for cash management services. Cash management fees were partially offset by earnings credits of $14. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended October 31, 2012, the fund was charged $14,937 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of NewYork Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $508 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations. These fees were partially offset by earnings credits of $17.
During the period ended October 31, 2012, the fund was charged $8,517 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees
The Fund | 49 |
NOTES TO FINANCIAL STATEMENTS (continued)
$28,444, Distribution Plan fees $5,265, Shareholder Services Plan fees $11,666, custodian fees $4,064, Chief Compliance Officer fees $2,654 and transfer agency fees $2,036, which are offset against an expense reimbursement currently in effect in the amount of $17,591.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of investment securities and securities sold short, excluding short-term securities, financial futures, options transactions and forward contracts, during the period ended October 31, 2012, of which $204,689,932 in purchases and $204,965,042 in sales were from mortgage dollar roll transactions was as follows:
Purchases ($) | Sales ($) | |
Long transactions | 239,774,974 | 231,284,250 |
Short sale transactions | 8,656,653 | 8,017,663 |
Total | 248,431,627 | 239,301,913 |
Short Sales: The fund is engaged in short-selling which obligates the fund to replace the security borrowed by purchasing the security at current market value.The fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the fund replaces the borrowed security. The fund realizes a gain if the price of the security declines between those dates. Until the fund replaces the borrowed security, the fund will maintain daily a segregated account with a broker or custodian of permissible liquid assets sufficient to cover its short positions. Securities Sold Short at October 31, 2012 and their related market values and proceeds, are set forth in the Statement of Securities Sold Short.
Mortgage Dollar Rolls: A mortgage dollar roll transaction involves a sale by the fund of mortgage related securities that it holds with an
50
agreement by the fund to repurchase similar securities at an agreed upon price and date.The securities purchased will bear the same interest rate as those sold, but generally will be collateralized by pools of mortgages with different prepayment histories than those securities sold.The fund accounts for mortgage dollar rolls as purchases and sales transactions.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended October 31, 2012 is discussed below.
The following tables show the fund’s exposure to different types of market risk as it relates to the Statement of Assets and Liabilities and the Statement of Operations, respectively.
Derivative | Derivative | |||
Assets ($) | Liabilities ($) | |||
Interest rate risk 1 | 87,438 | Interest rate risk 1 | (45,983 | ) |
Foreign exchange risk 2 | 105,768 | Foreign exchange risk 3 | (341,062 | ) |
Gross fair value of | ||||
derivatives contracts | 193,206 | (387,045 | ) |
Statement of Assets and Liabilities location:
1 | Includes cumulative appreciation (depreciation) on financial futures as reported in the Statement of |
Financial Futures, but only the unpaid variation margin is reported in the Statement of Assets | |
and Liabilities. | |
2 | Unrealized appreciation on forward foreign currency exchange contracts. |
3 | Unrealized depreciation on forward foreign currency exchange contracts. |
The effect of derivative instruments in the Statement of Operations during the period ended October 31, 2012 is shown below:
Amount of realized gain or (loss) on derivatives recognized in income ($)
Financial | Options | Forward | |||||
Underlying risk | Futures 4 | Transactions 5 | Contracts 6 | Total | |||
Interest rate | (66,688 | ) | (11,391 | ) | — | (78,079 | ) |
Foreign exchange | — | — | 75,258 | 75,258 | |||
Total | (66,688 | ) | (11,391 | ) | 75,258 | (2,821 | ) |
The Fund | 51 |
NOTES TO FINANCIAL STATEMENTS (continued)
Change in unrealized appreciation or (depreciation) on derivatives recognized in income ($)
Financial | Forward | ||||
Underlying risk | Futures 7 | Contracts 8 | Total | ||
Interest rate | 97,611 | — | 97,611 | ||
Foreign exchange | — | (142,536 | ) | (142,536 | ) |
Total | 97,611 | (142,536 | ) | (44,925 | ) |
Statement of Operations location:
4 | Net realized gain (loss) on financial futures. |
5 | Net realized gain (loss) on options transactions. |
6 | Net realized gain (loss) on forward foreign currency exchange contracts. |
7 | Net unrealized appreciation (depreciation) on financial futures. |
8 | Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
Financial Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including interest rate risk as a result of changes in value of underlying financial instruments.The fund invests in financial futures in order to manage its exposure to or protect against changes in the market.A financial futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents.The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change.Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations.When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Statement of Operations.There is minimal counterparty credit risk to the fund with financial futures since they are exchange traded, and the exchange’s clearinghouse guarantees the financial futures against default. Financial futures open at October 31, 2012 are set forth in the Statement of Financial Futures.
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in interest rates or as a substitute for an investment. The fund is subject to interest rate risk in the course of pursuing its investment objectives through its investments in options contracts.A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying
52
security or securities at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying security or securities at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates.
As a writer of an option, the fund has no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the security underlying the written option.There is a risk of loss from a change in value of such options which may exceed the related premiums received. The Statement of Operations reflects the following: any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction. At October 31, 2012, there were no options outstanding.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle
The Fund | 53 |
NOTES TO FINANCIAL STATEMENTS (continued)
foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at October 31, 2012:
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases: | ||||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 319,160 | 328,564 | 329,966 | 1,402 | ||
12/19/2012 b | 1,578,878 | 1,626,193 | 1,632,341 | 6,148 | ||
12/19/2012 c | 16,510 | 16,918 | 17,069 | 151 | ||
12/19/2012 d | 227,150 | 237,346 | 234,841 | (2,505 | ) | |
12/19/2012 e | 63,245 | 65,173 | 65,386 | 213 | ||
12/19/2012 f | 1,013,707 | 1,041,834 | 1,048,031 | 6,197 | ||
British Pound, | ||||||
Expiring: | ||||||
12/19/2012 b | 846,030 | 1,361,524 | 1,365,066 | 3,542 | ||
12/19/2012 d | 324,900 | 527,589 | 524,225 | (3,364 | ) | |
12/19/2012 f | 450,500 | 731,689 | 726,880 | (4,809 | ) | |
Canadian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 1,718,131 | 1,756,771 | 1,718,449 | (38,322 | ) | |
12/19/2012 f | 3,511,255 | 3,592,196 | 3,511,906 | (80,290 | ) |
54
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases (continued): | ||||||
Euro, | ||||||
Expiring: | ||||||
12/19/2012 b | 598,900 | 774,654 | 776,656 | 2,002 | ||
12/19/2012 c | 63,400 | 81,900 | 82,218 | 318 | ||
12/19/2012 d | 48,184 | 62,249 | 62,485 | 236 | ||
12/19/2012 e | 24,409 | 31,516 | 31,653 | 137 | ||
12/19/2012 f | 631,147 | 814,464 | 818,473 | 4,009 | ||
Japanese Yen, | ||||||
Expiring: | ||||||
12/19/2012 a | 28,281,920 | 355,790 | 354,462 | (1,328 | ) | |
12/19/2012 b | 95,399,939 | 1,218,514 | 1,195,666 | (22,848 | ) | |
12/19/2012 c | 1,270,945 | 15,919 | 15,928 | 9 | ||
12/19/2012 d | 20,011,550 | 254,959 | 250,808 | (4,151 | ) | |
12/19/2012 e | 5,765,900 | 72,548 | 72,265 | (283 | ) | |
12/19/2012 f | 110,859,094 | 1,419,104 | 1,389,419 | (29,685 | ) | |
New Zealand Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 945,013 | 762,014 | 774,621 | 12,607 | ||
12/19/2012 c | 43,600 | 35,950 | 35,738 | (212 | ) | |
12/19/2012 d | 33,136 | 27,345 | 27,161 | (184 | ) | |
12/19/2012 e | 16,786 | 13,840 | 13,759 | (81 | ) | |
12/19/2012 f | 1,496,957 | 1,215,161 | 1,227,046 | 11,885 | ||
Norwegian Krone, | ||||||
Expiring: | ||||||
12/19/2012 a | 1,126,800 | 199,768 | 197,284 | (2,484 | ) | |
12/19/2012 b | 4,409,938 | 773,287 | 772,109 | (1,178 | ) | |
12/19/2012 d | 1,089,257 | 188,916 | 190,711 | 1,795 | ||
12/19/2012 e | 272,310 | 48,283 | 47,677 | (606 | ) | |
12/19/2012 f | 7,295,592 | 1,271,280 | 1,277,342 | 6,062 | ||
Swedish Krona, | ||||||
Expiring: | ||||||
12/19/2012 a | 925,800 | 140,878 | 139,372 | (1,506 | ) | |
12/19/2012 b | 1,543,941 | 234,584 | 232,428 | (2,156 | ) | |
12/19/2012 d | 185,160 | 28,204 | 27,874 | (330 | ) | |
12/19/2012 e | 223,735 | 34,091 | 33,681 | (410 | ) | |
12/19/2012 f | 16,159,206 | 2,435,084 | 2,432,644 | (2,440 | ) | |
Swiss Franc, | ||||||
Expiring | ||||||
12/19/2012 b | 287 | 306 | 308 | 2 |
The Fund | 55 |
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales: | ||||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 22,320 | 22,695 | 23,075 | (380 | ) | |
12/19/2012 f | 246,880 | 252,826 | 255,239 | (2,413 | ) | |
British Pound, | ||||||
Expiring: | ||||||
12/19/2012 a | 85,800 | 138,385 | 138,438 | (53 | ) | |
12/19/2012 b | 97,800 | 157,487 | 157,799 | (312 | ) | |
12/19/2012 c | 125,800 | 203,076 | 202,978 | 98 | ||
12/19/2012 d | 112,768 | 182,042 | 181,951 | 91 | ||
12/19/2012 e | 69,168 | 111,574 | 111,601 | (27 | ) | |
12/19/2012 f | 3,268,603 | 5,231,446 | 5,273,881 | (42,435 | ) | |
Canadian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 426,600 | 434,220 | 426,679 | 7,541 | ||
12/19/2012 b | 545,623 | 550,155 | 545,723 | 4,432 | ||
12/19/2012 d | 85,320 | 86,872 | 85,335 | 1,537 | ||
12/19/2012 e | 103,095 | 105,014 | 103,114 | 1,900 | ||
12/19/2012 f | 411,300 | 419,003 | 411,376 | 7,627 | ||
Euro, | ||||||
Expiring: | ||||||
12/19/2012 a | 202,200 | 264,933 | 262,213 | 2,720 | ||
12/19/2012 b | 1,286,234 | 1,651,158 | 1,667,993 | (16,835 | ) | |
12/19/2012 d | 2,388,540 | 3,061,403 | 3,097,468 | (36,065 | ) | |
12/19/2012 e | 48,865 | 64,031 | 63,368 | 663 | ||
12/19/2012 f | 2,622,278 | 3,376,542 | 3,400,581 | (24,039 | ) | |
Japanese Yen, | ||||||
Expiring: | ||||||
12/19/2012 b | 12,105,880 | 153,058 | 151,725 | 1,333 | ||
12/19/2012 c | 2,229,800 | 28,584 | 27,946 | 638 | ||
12/19/2012 d | 1,694,648 | 21,725 | 21,239 | 486 | ||
12/19/2012 e | 858,473 | 11,005 | 10,759 | 246 | ||
12/19/2012 f | 43,972,999 | 565,598 | 551,122 | 14,476 | ||
New Zealand Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 443,600 | 359,604 | 363,615 | (4,011 | ) | |
12/19/2012 b | 532,020 | 433,595 | 436,093 | (2,498 | ) | |
12/19/2012 c | 40,300 | 32,600 | 33,033 | (433 | ) | |
12/19/2012 d | 161,420 | 132,209 | 132,313 | (104 | ) | |
12/19/2012 e | 73,310 | 59,428 | 60,091 | (663 | ) | |
12/19/2012 f | 244,290 | 198,451 | 200,241 | (1,790 | ) |
56
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales (continued): | ||||||
Norwegian Krone, | ||||||
Expiring: | ||||||
12/19/2012 b | 1,869,240 | 324,158 | 327,273 | (3,115 | ) | |
12/19/2012 d | 566,010 | 99,516 | 99,099 | 417 | ||
12/19/2012 f | 2,324,000 | 400,178 | 406,895 | (6,717 | ) | |
Swedish Krona, | ||||||
Expiring: | ||||||
12/19/2012 b | 2,676,360 | 403,001 | 402,905 | 96 | ||
12/19/2012n c | 203,400 | 30,856 | 30,620 | 236 | ||
12/19/2012 d | 1,168,044 | 177,954 | 175,839 | 2,115 | ||
12/19/2012m e | 78,309 | 11,871 | 11,788 | 83 | ||
12/19/2012 f | 3,429,237 | 518,561 | 516,243 | 2,318 | ||
Gross Unrealized | ||||||
Appreciation | 105,768 | |||||
Gross Unrealized | ||||||
Depreciation | (341,062 | ) |
Counterparties:
a | BNP Paribas |
b | Citigroup |
c | Goldman Sachs |
d | Royal Bank of Scotland |
e | Standard Chartered Bank |
f | UBS |
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2012:
Average Market Value ($) | |
Interest rate financial futures | 31,797,521 |
Interest rate options contracts | 3,945 |
Forward contracts | 19,902,594 |
At October 31, 2012, the cost of investments for federal income tax purposes was $83,634,033; accordingly, accumulated net unrealized appreciation on investments was $3,486,914, consisting of $4,337,426 gross unrealized appreciation and $850,512 gross unrealized depreciation.
The Fund | 57 |
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors Dreyfus Total Return Advantage Fund
We have audited the accompanying statement of assets and liabilities, including the statements of investments, financial futures and securities sold short, of Dreyfus Total Return Advantage Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012 by correspondence with the custodian and others.We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DreyfusTotal Return Advantage Fund at October 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 27, 201
2
58
IMPORTANT TAX INFORMATION (Unaudited)
For federal tax purposes the fund hereby designates 98.75% of ordinary income dividends paid during the fiscal year ended October 31, 2012 as qualifying interest related dividends. Also, the fund hereby designates $.0597 per share as a long-term capital gain distribution paid on December 27, 2011.
The Fund | 59 |
PROXY RESULTS (Unaudited)
The Company held a special meeting of shareholders on August 3, 2012.The proposal considered at the meeting, and the results, are as follows:
Shares | |||
Votes For | Authority Withheld | ||
To elect additional Board Members: | |||
Lynn Martin † | 90,334,756 | 3,252,629 | |
Robin A. Melvin † | 90,449,622 | 3,137,763 | |
Philip L. Toia † | 90,229,928 | 3,357,457 |
† Each new Board Member’s term commenced on September 1, 2012. |
In addition Peggy C. Davis, Joseph S. DiMartino, David P. Feldman, Ehud Houminer and Dr. Martin Peretz continue |
as Board Members of the Company. |
60
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (69) |
Chairman of the Board (1995) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small |
and medium size companies, Director (1997-present) |
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and |
businesses, Director (2005-2009) |
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard |
mills and paperboard converting plants, Director (2000-2010) |
No. of Portfolios for which Board Member Serves: 157 |
——————— |
Peggy C. Davis (69) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Shad Professor of Law, New York University School of Law (1983-present) |
No. of Portfolios for which Board Member Serves: 63 |
——————— |
David P. Feldman (72) |
Board Member (1996) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• BBH Mutual Funds Group (4 registered mutual funds), Director (1992-present) |
• QMed, Inc. a healthcare company, Director (1999-2007) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Ehud Houminer (72) |
Board Member (1993) |
Principal Occupation During Past 5Years: |
• Executive-in-Residence at the Columbia Business School, Columbia University (1992-present) |
Other Public Company Board Memberships During Past 5Years: |
• Avnet Inc., an electronics distributor, Director (1993-2012) |
No. of Portfolios for which Board Member Serves: 73 |
The Fund | 61 |
BOARD MEMBERS INFORMATION (Unaudited) (continued)
Lynn Martin (72) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• President of The Martin Hall Group LLC, a human resources consulting firm, from January |
2005-present |
Other Public Company Board Memberships During Past 5Years: |
• AT&T Inc., a telecommunications company, Director (1999-2012) |
• Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012) |
• The Proctor & Gamble Co., a consumer products company, Director (1994-2009) |
• Constellation Energy Group Inc., Director (2003-2009) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Robin A. Melvin (49) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Director, Boisi Family Foundation, a private family foundation that supports youth-serving orga- |
nizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012) |
No. of Portfolios for which Board Member Serves: 83 |
——————— |
Dr. Martin Peretz (73) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Editor-in-Chief Emeritus of The New Republic Magazine (2010-present) (previously, |
Editor-in-Chief, 1974-2010) |
• Director of TheStreet.com, a financial information service on the web (1996-present) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Philip L. Toia (79) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Private Investor |
No. of Portfolios for which Board Member Serves: 56 |
——————— |
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166.Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Gloria Messinger, Emeritus Board Member
62
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009; from April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 72 investment companies (comprised of 156 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since February 1988.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 49 years old and has been an employee of the Manager since February 1984.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 39 years old and has been an employee of the Manager since July 1995.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 56 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 2000.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since April 1985.
The Fund | 63 |
OFFICERS OF THE FUND (Unaudited) (continued)
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since September 1982.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (73 investment companies, comprised of 183 portfolios). He is 55 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
MATTHEW D. CONNOLLY, Anti-Money Laundering Compliance Officer since April 2012.
Anti-Money Laundering Compliance Officer of the Distributor since October 2011; from March 2010 to September 2011, Global Head, KYC Reviews and Director, UBS Investment Bank; until March 2010,AML Compliance Officer and Senior Vice President, Citi Global Wealth Management. He is an officer of 69 investment companies (comprised of 179 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Distributor since October 2011.
64
For More Information
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
Global Alpha Fund
ANNUAL REPORT October 31, 2012
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents |
|
THE FUND |
|
2 |
A Letter from the Chairman and CEO |
3 |
Discussion of Fund Performance |
6 |
Fund Performance |
8 |
Understanding Your Fund’s Expenses |
8 |
Comparing Your Fund’s Expenses With Those of Other Funds |
9 |
Statement of Investments |
58 |
Statement of Financial Futures |
59 |
Statement of Options Written |
60 |
Statement of Assets and Liabilities |
61 |
Statement of Operations |
62 |
Statement of Changes in Net Assets |
63 |
Financial Highlights |
66 |
Notes to Financial Statements |
86 |
Report of Independent Registered Public Accounting Firm |
87 |
Proxy Results |
88 |
Board Members Information |
90 |
Officers of the Fund |
FOR MORE INFORMATION |
|
Back Cover |
Global Alpha Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for Global Alpha Fund, covering the 12-month period from November 1, 2011, through October 31, 2012. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite pronounced stock market weakness during the spring of 2012, stocks generally advanced over the reporting period as investors responded to encouraging macroeconomic developments throughout the world. Employment gains in the United States, credible measures to prevent a more severe banking crisis in Europe, and the likelihood of a “soft landing” for China’s economy buoyed investor sentiment, as did aggressively accommodative monetary policies from central banks in the United States, Europe, Japan and China. Consequently, U.S. stocks across all capitalization ranges posted double-digit returns, on average, for the reporting period.
In light of the easy monetary policies adopted by many countries, we expect global growth to be slightly more robust in 2013 than in 2012.The U.S. economic recovery is likely to persist at subpar levels over the first half of the new year, as growth may remain constrained by uncertainties surrounding fiscal policy and tax reforms. However, successful resolution of the current fiscal debate may prompt corporate decision-makers to increase capital spending, which could have positive implications for the U.S. economy and domestic equity markets.As always, we encourage you to stay in touch with your financial advisor as new developments unfold.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2011, through October 31, 2012, as provided by Vassilis Dagioglu, James Stavena,Torrey Zaches and Joseph Miletich, Portfolio Managers of Mellon Capital Management Corporation, Sub-Investment Adviser
Fund and Market Performance Overview
For the 12-month period ended October 31, 2012, Global Alpha Fund’s Class A shares produced a total return of 6.39%, Class C shares returned 5.58% and Class I shares returned 6.84%. 1 In comparison, the fund’s benchmark, a hybrid index comprised of 60% Morgan Stanley Capital International World Index (half-hedged) and 40% Citigroup World Government Bond Index (half-hedged), produced a total return of 7.80% for the same period. 2 Separately, the Morgan Stanley Capital International World Index (half-hedged) produced a total return of 10.33%, and the Citigroup World Government Bond Index (half-hedged) produced a 3.66% total return for the same period.
Improving economic sentiment in many parts of the world sent global stocks and higher yielding bonds higher over the reporting period.The fund produced lower returns than its benchmark, largely due to shortfalls in our currency and asset allocation strategies.
The Fund’s Investment Approach
The fund seeks total return through investments in instruments that provide investment exposure to global stock, bond and currency markets, and in fixed-income securities. For allocation among equity markets, the portfolio managers employ a bottom-up valuation approach using proprietary models to derive market level expected returns. For allocation among bond markets, the portfolio managers use proprietary models to identify temporary mispricings among the long-term government bond markets.The most relevant long-term bond yield within each country serves as the expected return for each bond market. Our quantitative investment approach is designed to identify and exploit relative misvaluations across and within major developed capital markets such as the United States, Canada, Japan,Australia and many Western European countries.
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
Markets Reacted to Macroeconomic Developments
The reporting period began in the wake of major declines in financial markets throughout the world, resulting in attractive valuations in a number of asset classes in November 2011. Indeed, by the beginning of 2012 stocks and bonds in many markets were rallying amid encouraging macroeconomic developments, including U.S. employment gains, a quantitative easing program in Europe that forestalled a more severe banking crisis in the region, and less restrictive monetary and fiscal policies in China in an environment of reduced inflationary pressures. Meanwhile, corporate earnings generally remained strong, and many companies had shored up their balance sheets. Consequently, investors grew more tolerant of risks, focusing more intently on investment fundamentals and less on macroeconomic developments.
These positive influences were called into question during the spring, when the U.S. labor market’s rebound slowed, measures designed to relieve fiscal pressures in Europe encountered resistance, and the Chinese economy remained sluggish.The summer saw the market rallies resume amid more encouraging economic news, and global stocks and bonds ended the reporting period with positive absolute returns, on average.
Alpha Sources Produced Mixed Results
Although the fund participated to a significant degree in the financial markets’ advances over the reporting period, its relative performance was constrained by our asset allocation strategy.The timing of our asset allocation decision between stocks and bonds negatively impacted performance during the period. Our movement to a small overweight to stocks and underweight to bonds at the end of 2011 constrained performance in the first quarter of 2012, as stocks significantly outperformed. As the strategy moved into a larger underweight to bonds in the second quarter, bonds outperformed and performance suffered. Our currency strategy also hurt the fund’s relative results, as weakness stemming from underweighted exposure to the British pound and an overweighted position in the Australian dollar were only partly offset by more successful positions in the euro and New Zealand dollar.
The fund achieved better results in global bond markets, primarily due to overweighted exposure to U.S.Treasury securities and underweighted exposure to sovereign bonds in Japan, Canada, and Australia. Indeed, our bond market selection model proved to be the fund’s best performing alpha source during the reporting period.
4
Our stock market selection model also generally fared well. Overweighted exposure to German equities buoyed relative performance when Germany led European markets higher in response to policymakers’ efforts to address the region’s financial crisis. Underweighted exposure to Japanese equities also contributed positively to relative returns, as Japan continued to face deflationary pressures and persistently weak conditions in its domestic economy.
Identifying Opportunities in Global Markets
Our quantitative models have continued to identify areas of opportunity in all four of the alpha sources we consider. Equity valuations have remained attractive compared to historical norms, indicating to us that the fund’s overweighted exposure to global stock markets and underweighted position among fixed-income markets remains warranted. Our stock market selection model has found a number of opportunities in Germany, the Netherlands, and the United States, but fewer in Japan, Hong Kong, and Switzerland. Our bond market selection model has signaled that German and U.S. government bonds are attractive, but Canadian and U.K. debt securities are less so. Finally, our currency model has favored the Australian dollar, Canadian dollar, Swedish krona and Norwegian krone over the U.S. dollar and euro.
November 15, 2012
Investing in foreign companies involves special risks, including changes in currency rates, political, economic and social instability, a lack of comprehensive company information, differing auditing and legal standards, and less market liquidity.
Equity securities are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus. Bond securities are subject generally to interest rate, credit, liquidity, call, sector and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus.
Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged.
1 Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the |
maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed |
on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past |
performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon |
redemption, fund shares may be worth more or less than their original cost. |
2 SOURCE: FACTSET – Reflects reinvestment of net dividends and, where applicable, capital gain distributions.The |
Morgan Stanley Capital International (MSCI) World Index is an unmanaged index of global stock market |
performance, including the United States, Canada, Europe,Australia, New Zealand and the Far East.The Citigroup |
World Government Bond Index is a market-capitalization weighted index which includes select designated |
government bond markets of developed countries. Investors cannot invest directly in any index. |
The Fund | 5 |
FUND PERFORMANCE
† Source: FactSet
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C and Class I shares of Global Alpha Fund on May 2, 2006 (inception date) to a $10,000 investment made on that date in each of the following: Morgan Stanley Capital International World Index (the “MSCI Index”) (half-hedged); the Citigroup World Government Bond Index 1 + World Index (the “CWGB Index”) (half-hedged); and an unmanaged hybrid index composed of 60% MSCI Index and 40% CWGB Index (the “Hybrid Index”). Returns assume all dividends and capital gain distributions are reinvested.
The fund invests primarily in instruments that provide exposure to global equity, bond and currency markets.The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes.The MSCI Index (half-hedged) is an unmanaged index of global stock market performance, including the United States, Canada,Australia, New Zealand and the Far East and includes net dividends reinvested.The CWGB Index (half-hedged) is an unmanaged index that tracks the performance of 22 government bond markets. Unlike a mutual fund, the indices are not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
6
Average Annual Total Returns as of 10/31/12 | |||||||
Inception | From | ||||||
Date | 1 Year | 5 Years | Inception | ||||
Class A shares | |||||||
with maximum sales charge (5.75%) | 5/2/06 | 0.24 | % | –2.29 | % | 0.50 | % |
without sales charge | 5/2/06 | 6.39 | % | –1.12 | % | 1.42 | % |
Class C shares | |||||||
with applicable redemption charge † | 5/2/06 | 4.58 | % | –1.87 | % | 0.65 | % |
without redemption | 5/2/06 | 5.58 | % | –1.87 | % | 0.65 | % |
Class I shares | 5/2/06 | 6.84 | % | –0.74 | % | 1.77 | % |
Morgan Stanley Capital International | |||||||
World Index (half-hedged) | 4/30/06 | 10.33 | % | –2.85 | % | 1.02 | % †† |
Citigroup World Government | |||||||
Bond Index 1+ World Index | |||||||
(half-hedged) | 4/30/06 | 3.66 | % | 5.46 | % | 5.86 | % †† |
Hybrid Index | 4/30/06 | 7.80 | % | 0.88 | % | 3.33 | % †† |
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
† | The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the |
date of purchase. | |
†† | For comparative purposes, the value of the Index as of 4/30/06 is used as the beginning value on 5/2/06. |
The Fund | 7 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Global Alpha Fund from May 1, 2012 to October 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 9.13 | $ 13.01 | $ 7.26 | |||
Ending value (after expenses) | $ 1,018.80 | $ 1,014.20 | $ 1,020.20 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS
(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2012
Class A | Class C | Class I | ||||
Expenses paid per $1,000 † | $ 9.12 | $ 13.00 | $ 7.25 | |||
Ending value (after expenses) | $ 1,016.09 | $ 1,012.22 | $ 1,017.95 |
† Expenses are equal to the fund’s annualized expense ratio of 1.80% for Class A, 2.57% for Class C and 1.43% |
for Class I, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half |
year period). |
8
STATEMENT OF INVESTMENTS
October 31, 2012
Common Stocks—53.4% | Shares | Value ($) |
Australia—2.0% | ||
AGL Energy | 1,522 | 22,972 |
ALS | 875 | 8,420 |
Alumina | 4,253 | 4,260 |
Amcor | 3,650 | 29,932 |
AMP | 8,486 | 40,433 |
APA Group | 2,170 | 11,623 |
Asciano | 2,502 | 11,843 |
ASX | 453 | 13,966 |
Australia & New Zealand Banking Group | 8,568 | 226,354 |
Bendigo and Adelaide Bank | 1,032 | 8,656 |
BHP Billiton | 10,239 | 364,031 |
Boral | 2,210 | 8,236 |
Brambles | 4,667 | 35,172 |
Caltex Australia | 304 | 5,377 |
Centro Retail Australia | 4,604 | 10,275 |
CFS Retail Property Trust | 4,605 | 9,345 |
Coca-Cola Amatil | 1,607 | 22,437 |
Cochlear | 244 | 18,031 |
Commonwealth Bank of Australia | 5,069 | 303,875 |
Computershare | 1,247 | 11,249 |
Crown | 1,511 | 15,246 |
CSL | 1,690 | 83,330 |
Dexus Property Group | 19,015 | 19,443 |
Echo Entertainment Group | 2,633 | 9,594 |
Fairfax Media | 3,972 | 1,629 |
Fortescue Metals Group | 4,351 | 18,428 |
Goodman Group | 5,513 | 25,352 |
GPT Group | 3,997 | 14,771 |
Harvey Norman Holdings | 1,739 | 3,439 |
Iluka Resources | 1,543 | 15,889 |
Incitec Pivot | 5,397 | 17,704 |
Insurance Australia Group | 6,759 | 32,204 |
James Hardie Industries-CDI | 1,556 | 14,908 |
Leighton Holdings | 370 | 6,875 |
Lend Lease Group | 1,501 | 13,509 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Australia (continued) | |||
Lynas | 2,174 | a | 1,647 |
Macquarie Group | 1,149 | 38,048 | |
Metcash | 3,170 | 12,044 | |
Mirvac Group | 13,359 | 20,870 | |
National Australia Bank | 7,045 | 188,605 | |
Newcrest Mining | 2,482 | 68,096 | |
Orica | 1,007 | 26,258 | |
Origin Energy | 3,677 | 43,360 | |
OZ Minerals | 594 | 5,050 | |
Qantas Airways | 1,470 | a | 2,029 |
QBE Insurance Group | 3,576 | 48,925 | |
QR National | 4,405 | 17,102 | |
Ramsay Health Care | 282 | 6,955 | |
Rio Tinto | 1,407 | 83,163 | |
Santos | 3,004 | 35,892 | |
Sims Metal Management | 536 | 5,241 | |
Sonic Healthcare | 953 | 12,860 | |
SP AusNet | 4,972 | 5,471 | |
Stockland | 7,185 | 25,806 | |
Suncorp Group | 3,830 | 37,372 | |
Sydney Airport | 1,203 | 4,233 | |
Tabcorp Holdings | 1,233 | 3,635 | |
Tatts Group | 3,183 | 9,252 | |
Telstra | 13,465 | 57,866 | |
Toll Holdings | 2,590 | 11,937 | |
Transurban Group | 4,280 | 27,013 | |
Wesfarmers | 3,084 | 111,311 | |
Westfield Group | 7,153 | 79,153 | |
Westfield Retail Trust | 9,377 | 30,175 | |
Westpac Banking | 9,749 | 258,161 | |
Whitehaven Coal | 1,310 | 4,148 | |
Woodside Petroleum | 2,095 | 74,811 | |
Woolworths | 3,752 | 114,546 | |
WorleyParsons | 616 | 15,775 | |
2,945,618 |
10
Common Stocks (continued) | Shares | Value ($) | |
Austria—.1% | |||
Andritz | 236 | 14,215 | |
Erste Group Bank | 667 | a | 16,750 |
IMMOFINANZ | 2,952 | a | 11,402 |
OMV | 563 | 20,578 | |
Raiffeisen Bank International | 116 | 4,638 | |
Telekom Austria | 1,260 | 7,937 | |
Verbund | 172 | 4,003 | |
Vienna Insurance Group | 90 | 3,865 | |
Voestalpine | 447 | 14,079 | |
97,467 | |||
Belgium—.3% | |||
Ageas | 616 | 15,677 | |
Anheuser-Busch InBev | 2,568 | 214,721 | |
Belgacom | 383 | 11,194 | |
Colruyt | 264 | 12,058 | |
Delhaize Group | 279 | 10,666 | |
Groupe Bruxelles Lambert | 281 | 20,746 | |
Groupe Bruxelles Lambert (STRIP) | 31 | a | 0 |
KBC Groep | 548 | 12,863 | |
Mobistar | 79 | 2,090 | |
Solvay | 184 | 22,122 | |
Telenet Group Holding | 208 | 9,537 | |
UCB | 402 | 23,447 | |
Umicore | 424 | 21,760 | |
376,881 | |||
Canada—2.7% | |||
Agnico-Eagle Mines | 500 | 28,230 | |
Agrium | 500 | 52,656 | |
Alimentation Couche Tard, Cl. B | 400 | 19,649 | |
ARC Resources | 900 | 21,852 | |
Athabasca Oil | 1,288 | a | 15,591 |
Bank of Montreal | 2,000 | 118,188 | |
Bank of Nova Scotia | 3,420 | 185,767 | |
Barrick Gold | 3,077 | 124,436 | |
Baytex Energy | 455 | 20,706 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Canada (continued) | |||
BCE | 800 | 34,972 | |
Bell Aliant | 189 | 5,132 | |
Bombardier, Cl. B | 3,805 | 14,477 | |
Bonavista Energy | 773 | 13,862 | |
Brookfield Asset Management, Cl. A | 1,722 | 59,276 | |
Brookfield Office Properties | 1,000 | 15,399 | |
CAE | 1,200 | 13,204 | |
Cameco | 1,096 | 21,256 | |
Canadian Imperial Bank of Commerce | 1,300 | 102,256 | |
Canadian National Railway | 1,430 | 123,478 | |
Canadian Natural Resources | 3,500 | 105,482 | |
Canadian Oil Sands | 1,459 | 30,969 | |
Canadian Pacific Railway | 503 | 46,273 | |
Canadian Tire, Cl. A | 196 | 14,024 | |
Canadian Utilities, Cl. A | 200 | 13,417 | |
Catamaran | 600 | a | 28,175 |
Cenovus Energy | 2,407 | 84,905 | |
Centerra Gold | 297 | 3,369 | |
CGI Group, Cl. A | 613 | a | 16,038 |
CI Financial | 600 | 14,022 | |
Crescent Point Energy | 1,100 | 45,707 | |
Eldorado Gold | 1,888 | 27,902 | |
Empire, Cl. A | 100 | 5,826 | |
Enbridge | 2,300 | 91,516 | |
EnCana | 2,300 | 51,815 | |
Enerplus | 539 | 8,662 | |
Fairfax Financial Holdings | 62 | 23,000 | |
Finning International | 432 | 10,143 | |
First Quantum Minerals | 1,441 | 32,391 | |
Fortis | 500 | 16,906 | |
Franco-Nevada | 400 | 23,033 | |
George Weston | 200 | 12,984 | |
Gildan Activewear | 423 | 14,404 | |
Goldcorp | 2,500 | 113,016 | |
Great-West Lifeco | 1,100 | 25,332 | |
H&R Real Estate Investment Trust | 300 | 7,248 |
12
Common Stocks (continued) | Shares | Value ($) | |
Canada (continued) | |||
Husky Energy | 1,000 | 27,084 | |
IAMGOLD | 1,392 | 21,603 | |
IGM Financial | 300 | 11,904 | |
Imperial Oil | 870 | 38,493 | |
Industrial Alliance Insurance & Financial Services | 200 | 5,477 | |
Inmet Mining | 100 | 5,156 | |
Intact Financial | 410 | 25,144 | |
Kinross Gold | 3,509 | 34,853 | |
Loblaw | 400 | 13,865 | |
Lululemon Athletica | 350 | a | 24,153 |
Magna International | 615 | 27,340 | |
Manulife Financial | 6,000 | 74,133 | |
MEG Energy | 414 | a | 15,122 |
Metro | 300 | 17,698 | |
National Bank of Canada | 500 | 38,638 | |
New Gold | 1,700 | a | 19,898 |
Nexen | 1,561 | 37,276 | |
Onex | 400 | 16,100 | |
Open Text | 200 | a | 10,749 |
Osisko Mining | 1,328 | a | 13,044 |
Pacific Rubiales Energy | 900 | 21,167 | |
Pan American Silver | 400 | 8,775 | |
Pembina Pipeline | 795 | 22,232 | |
Pengrowth Energy | 1,700 | 10,196 | |
Penn West Petroleum | 1,500 | 19,479 | |
Potash Corporation of Saskatchewan | 2,625 | 105,526 | |
Power Corporation of Canada | 1,100 | 26,686 | |
Power Financial | 900 | 23,231 | |
Precision Drilling | 400 | a | 2,864 |
Progress Energy Resources | 600 | 12,087 | |
Research In Motion | 1,785 | a | 14,083 |
RioCan Real Estate Investment Trust | 400 | 10,910 | |
Ritchie Bros. Auctioneers | 200 | 4,436 | |
Rogers Communications, Cl. B | 1,300 | 57,063 | |
Royal Bank of Canada | 4,500 | 256,551 | |
Saputo | 343 | 15,052 |
The Fund | 13 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Canada (continued) | |||
Shaw Communications, Cl. B | 1,100 | 23,966 | |
Shoppers Drug Mart | 611 | 25,468 | |
Silver Wheaton | 1,064 | 42,880 | |
Sino-Forest | 423 | a,b | 4 |
SNC-Lavalin Group | 496 | 19,979 | |
Sun Life Financial | 2,000 | 49,602 | |
Suncor Energy | 5,018 | 168,414 | |
Talisman Energy | 3,000 | 34,003 | |
Teck Resources, Cl. B | 1,780 | 56,497 | |
TELUS (Non-Voting Shares) | 500 | 32,155 | |
Thomson Reuters | 1,200 | 33,786 | |
Tim Hortons | 600 | 29,785 | |
Toronto-Dominion Bank | 2,900 | 235,862 | |
Tourmaline Oil | 438 | a | 14,472 |
TransAlta | 800 | 12,752 | |
TransCanada | 2,200 | 99,058 | |
Turquoise Hill Resources | 1,393 | a | 10,893 |
Valeant Pharmaceuticals International | 941 | a | 52,574 |
Vermillion Energy | 238 | 11,379 | |
Viterra | 923 | 14,546 | |
Yamana Gold | 2,500 | 50,488 | |
3,963,577 | |||
China—.0% | |||
Foxconn International Holdings | 7,000 | a | 2,439 |
Yangzijiang Shipbuilding Holdings | 4,000 | 2,968 | |
5,407 | |||
Denmark—.3% | |||
AP Moller—Maersk, Cl. A | 2 | 13,247 | |
AP Moller—Maersk, Cl. B | 4 | 27,911 | |
Carlsberg, Cl. B | 307 | 26,484 | |
Coloplast, Cl. B | 81 | 17,761 | |
Danske Bank | 1,954 | a | 30,556 |
DSV | 710 | 15,963 | |
Novo Nordisk, Cl. B | 1,279 | 206,116 | |
Novozymes, Cl. B | 796 | 21,991 | |
TDC | 1,319 | 9,087 |
14
Common Stocks (continued) | Shares | Value ($) | |
Denmark (continued) | |||
Tryg | 63 | 4,116 | |
William Demant Holding | 49 | a | 4,214 |
377,446 | |||
Finland—.2% | |||
Elisa | 324 | 6,946 | |
Fortum | 1,475 | 27,282 | |
Kesko, Cl. B | 161 | 5,040 | |
Kone, Cl. B | 505 | 36,164 | |
Metso | 336 | 11,789 | |
Neste Oil | 180 | 2,250 | |
Nokia | 11,331 | 30,519 | |
Nokian Renkaat | 306 | 12,692 | |
Orion, Cl. B | 239 | 5,911 | |
Pohjola Bank, Cl. A | 426 | 5,798 | |
Sampo, Cl. A | 1,248 | 39,113 | |
Stora Enso, Cl. R | 2,061 | 13,004 | |
UPM-Kymmene | 1,729 | 18,511 | |
Wartsila | 640 | 25,890 | |
240,909 | |||
France—2.0% | |||
Accor | 396 | 12,354 | |
Aeroports de Paris | 60 | 4,639 | |
Air Liquide | 954 | 112,523 | |
Alcatel-Lucent | 5,032 | a | 5,120 |
Alstom | 613 | 20,936 | |
Arkema | 207 | 18,872 | |
Atos | 227 | 15,244 | |
AXA | 5,688 | 90,423 | |
BNP Paribas | 3,112 | 156,544 | |
Bouygues | 500 | 12,025 | |
Bureau Veritas | 175 | 18,584 | |
Cap Gemini | 387 | 16,267 | |
Carrefour | 1,726 | 41,700 | |
Casino Guichard Perrachon | 140 | 12,227 | |
Christian Dior | 181 | 25,982 | |
Cie de St-Gobain | 1,191 | 41,973 |
The Fund | 15 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
France (continued) | |||
Cie Generale d’Optique Essilor International | 595 | 53,637 | |
Cie Generale de Geophysique-Veritas | 413 | a | 13,495 |
Cie Generale des Etablissements Michelin | 533 | 45,775 | |
CNP Assurances | 276 | 3,899 | |
Credit Agricole | 3,218 | a | 24,225 |
Danone | 1,809 | 111,198 | |
Dassault Systemes | 180 | 18,965 | |
Edenred | 437 | 12,645 | |
EDF | 855 | 18,091 | |
Eurazeo | 77 | 3,525 | |
Eutelsat Communications | 355 | 11,365 | |
Fonciere Des Regions | 64 | 5,145 | |
France Telecom | 6,016 | 67,075 | |
GDF Suez | 4,014 | 92,114 | |
Gecina | 42 | 4,651 | |
Groupe Eurotunnel | 2,145 | 16,309 | |
ICADE | 48 | 4,320 | |
Iliad | 91 | 14,018 | |
Imerys | 52 | 2,921 | |
JCDecaux | 159 | 3,365 | |
Klepierre | 279 | 10,344 | |
L’Oreal | 759 | 96,675 | |
Lafarge | 564 | 33,028 | |
Lagardere | 437 | 11,943 | |
Legrand | 739 | 28,467 | |
LVMH Moet Hennessy Louis Vuitton | 774 | 125,803 | |
Natixis | 3,960 | 12,976 | |
Pernod-Ricard | 686 | 73,826 | |
Peugeot | 426 | a | 2,725 |
PPR | 226 | 39,736 | |
Publicis Groupe | 626 | 33,725 | |
Remy Cointreau | 82 | 8,505 | |
Renault | 560 | 25,049 | |
Rexel | 442 | 8,000 | |
Safran | 636 | 25,303 | |
Sanofi | 3,778 | 332,103 |
16
Common Stocks (continued) | Shares | Value ($) | |
France (continued) | |||
Schneider Electric | 1,629 | 101,844 | |
SCOR | 447 | 11,929 | |
Societe BIC | 105 | 12,804 | |
Societe Generale | 2,168 | a | 68,916 |
Sodexo | 316 | 24,317 | |
Suez Environnement | 631 | 6,701 | |
Technip | 342 | 38,521 | |
Thales | 367 | 12,908 | |
Total | 6,756 | 339,937 | |
Unibail-Rodamco | 284 | 63,995 | |
Vallourec | 251 | 10,324 | |
Veolia Environnement | 971 | 9,612 | |
Vinci | 1,417 | 62,712 | |
Vivendi | 4,113 | 84,150 | |
Wendel | 72 | 6,345 | |
Zodiac Aerospace | 113 | 11,568 | |
2,866,942 | |||
Germany—1.8% | |||
Adidas | 666 | 56,740 | |
Allianz | 1,463 | 181,396 | |
Axel Springer | 81 | 3,474 | |
BASF | 2,930 | 242,787 | |
Bayer | 2,643 | 230,173 | |
Bayerische Motoren Werke | 1,020 | 81,241 | |
Beiersdorf | 309 | 22,472 | |
Brenntag | 154 | 19,410 | |
Celesio | 112 | 2,168 | |
Commerzbank | 11,654 | a | 22,326 |
Continental | 264 | 26,461 | |
Daimler | 2,923 | 136,485 | |
Deutsche Bank | 2,894 | 131,174 | |
Deutsche Boerse | 631 | 34,154 | |
Deutsche Lufthansa | 560 | 8,558 | |
Deutsche Post | 2,727 | 54,061 | |
Deutsche Telekom | 8,797 | 100,442 | |
E.ON | 5,817 | 132,170 |
The Fund | 17 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Germany (continued) | |||
Fraport Frankfurt Airport Services Worldwide | 66 | 3,870 | |
Fresenius & Co. | 392 | 44,712 | |
Fresenius Medical Care & Co. | 618 | 43,407 | |
GEA Group | 460 | 14,363 | |
Hannover Rueckversicherung | 185 | 13,013 | |
HeidelbergCement | 491 | 26,023 | |
Henkel & Co. | 369 | 23,876 | |
Hochtief | 76 | a | 3,769 |
Hugo Boss | 91 | 9,109 | |
Infineon Technologies | 3,152 | 21,449 | |
K+S | 492 | 23,276 | |
Kabel Deutschland Holding | 315 | 22,697 | |
Lanxess | 301 | 24,864 | |
Linde | 582 | 97,878 | |
MAN | 100 | 10,085 | |
Merck | 226 | 28,883 | |
Metro | 399 | 11,494 | |
Muenchener Rueckversicherungs | 552 | 88,718 | |
RWE | 1,625 | 74,255 | |
Salzgitter | 53 | 2,293 | |
SAP | 2,947 | 214,669 | |
Siemens | 2,624 | 263,720 | |
Suedzucker | 263 | 10,191 | |
ThyssenKrupp | 1,280 | 29,125 | |
United Internet | 250 | 5,001 | |
Volkswagen | 75 | 14,620 | |
Wacker Chemie | 21 | 1,186 | |
2,612,238 | |||
Greece—.0% | |||
Coca-Cola Hellenic Bottling | 649 | a | 13,880 |
OPAP | 436 | 2,786 | |
16,666 | |||
Hong Kong—.7% | |||
AIA Group | 32,000 | 126,760 | |
ASM Pacific Technology | 400 | 4,459 | |
Bank of East Asia | 3,940 | 14,616 | |
BOC Hong Kong Holdings | 11,000 | 33,851 |
18
Common Stocks (continued) | Shares | Value ($) | |
Hong Kong (continued) | |||
Cathay Pacific Airways | 2,000 | 3,623 | |
Cheung Kong Holdings | 5,000 | 73,870 | |
Cheung Kong Infrastructure Holdings | 1,000 | 5,858 | |
CLP Holdings | 5,500 | 46,909 | |
First Pacific | 10,000 | 11,135 | |
Galaxy Entertainment Group | 6,000 | a | 20,632 |
Hang Lung Group | 3,000 | 17,768 | |
Hang Lung Properties | 6,000 | 20,864 | |
Hang Seng Bank | 2,500 | 38,387 | |
Henderson Land Development | 3,000 | 20,787 | |
Hong Kong & China Gas | 17,517 | 46,561 | |
Hong Kong Exchanges & Clearing | 3,300 | 54,460 | |
Hopewell Holdings | 1,000 | 3,606 | |
Hutchison Whampoa | 7,000 | 68,870 | |
Hysan Development | 2,000 | 8,839 | |
Kerry Properties | 3,000 | 14,884 | |
Li & Fung | 18,000 | 30,193 | |
Lifestyle International Holdings | 1,500 | 3,205 | |
Link REIT | 7,000 | 34,819 | |
MGM China Holdings | 4,400 | 7,948 | |
MTR | 5,000 | 19,548 | |
New World Development | 9,000 | 13,912 | |
Noble Group | 14,636 | 15,718 | |
NWS Holdings | 4,000 | 6,039 | |
Orient Overseas International | 500 | 3,161 | |
PCCW | 11,000 | 4,443 | |
Power Assets Holdings | 4,000 | 34,013 | |
Shangri-La Asia | 4,000 | 7,742 | |
Sino Land | 8,400 | 15,044 | |
SJM Holdings | 6,000 | 13,068 | |
Sun Hung Kai Properties | 5,000 | 69,612 | |
Swire Pacific, Cl. A | 2,000 | 23,729 | |
Wharf Holdings | 4,200 | 28,749 | |
Wheelock & Co. | 2,000 | 8,748 | |
Yue Yuen Industrial Holdings | 2,000 | 6,903 | |
983,333 |
The Fund | 19 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Ireland—.1% | |||
CRH | 2,422 | 45,080 | |
Elan | 1,424 | a | 15,725 |
Irish Bank Resolution | 3,069 | a,b | 4 |
Kerry Group, Cl. A | 496 | 26,005 | |
86,814 | |||
Israel—.1% | |||
Bank Hapoalim | 2,512 | a | 9,870 |
Bank Leumi Le-Israel | 2,777 | a | 8,938 |
Bezeq Israeli Telecommunication | 4,209 | 5,133 | |
Delek Group | 20 | 3,803 | |
Israel | 7 | 4,758 | |
Israel Chemicals | 1,543 | 19,309 | |
Mellanox Technologies | 100 | a | 7,588 |
Mizrahi Tefahot Bank | 424 | a | 3,848 |
NICE Systems | 136 | a | 4,500 |
Teva Pharmaceutical Industries | 2,881 | 117,060 | |
184,807 | |||
Italy—.5% | |||
Assicurazioni Generali | 3,758 | 61,081 | |
Atlantia | 1,231 | 20,311 | |
Autogrill | 352 | 3,597 | |
Banca Monte dei Paschi di Siena | 31,839 | a | 8,790 |
Banco Popolare | 5,205 | a | 8,298 |
Enel | 21,287 | 80,014 | |
Enel Green Power | 3,490 | 5,935 | |
Eni | 7,860 | 180,424 | |
EXOR | 146 | 3,762 | |
Fiat | 3,347 | a | 16,312 |
Fiat Industrial | 2,494 | 27,008 | |
Finmeccanica | 723 | a | 3,582 |
Intesa Sanpaolo | 32,627 | 52,396 | |
Intesa Sanpaolo-RSP | 2,248 | 2,966 | |
Luxottica Group | 298 | 11,336 | |
Mediaset | 1,052 | 1,841 | |
Mediobanca | 2,447 | 13,943 | |
Pirelli & C | 735 | 8,512 |
20
Common Stocks (continued) | Shares | Value ($) | |
Italy (continued) | |||
Prysmian | 517 | 9,944 | |
Saipem | 785 | 35,266 | |
Snam | 4,963 | 21,961 | |
STMicroelectronics | 1,644 | 9,668 | |
Telecom Italia | 33,517 | 30,866 | |
Telecom Italia-RSP | 22,331 | 17,830 | |
Tenaris | 1,422 | 26,596 | |
Terna Rete Elettrica Nazionale | 3,211 | 12,070 | |
UniCredit | 11,929 | a | 52,663 |
Unione di Banche Italiane | 1,956 | 7,687 | |
734,659 | |||
Japan—4.4% | |||
ABC-Mart | 200 | 8,769 | |
Advantest | 300 | 3,788 | |
Aeon | 2,000 | 21,821 | |
Aeon Credit Service | 300 | 6,366 | |
AEON Mall | 200 | 5,189 | |
Air Water | 1,000 | 12,527 | |
Aisin Seiki | 500 | 14,543 | |
Ajinomoto | 2,000 | 30,540 | |
Alfresa Holdings | 100 | 4,522 | |
All Nippon Airways | 2,000 | 4,234 | |
Amada | 1,000 | 5,073 | |
Aozora Bank | 2,000 | 5,637 | |
Asahi Glass | 3,000 | 20,368 | |
Asahi Group Holdings | 1,200 | 27,343 | |
Asahi Kasei | 4,000 | 21,997 | |
Asics | 500 | 7,259 | |
Astellas Pharma | 1,500 | 74,502 | |
Bank of Kyoto | 1,000 | 8,593 | |
Bank of Yokohama | 3,000 | 13,792 | |
Benesse Holdings | 200 | 9,633 | |
Bridgestone | 1,900 | 44,245 | |
Brother Industries | 1,100 | 10,362 | |
Canon | 3,500 | 113,028 | |
Casio Computer | 600 | 4,585 |
The Fund | 21 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) |
Japan (continued) | ||
Central Japan Railway | 500 | 43,029 |
Chiba Bank | 2,000 | 11,675 |
Chiyoda | 1,000 | 16,134 |
Chubu Electric Power | 2,300 | 23,712 |
Chugai Pharmaceutical | 700 | 14,188 |
Chugoku Bank | 1,000 | 13,754 |
Chugoku Electric Power | 700 | 7,523 |
Citizen Holdings | 400 | 2,029 |
Coca-Cola West | 200 | 3,064 |
Cosmo Oil | 1,000 | 1,779 |
Credit Saison | 600 | 13,175 |
Dai Nippon Printing | 2,000 | 14,155 |
Dai-ichi Life Insurance | 28 | 32,269 |
Daicel | 1,000 | 6,000 |
Daido Steel | 1,000 | 4,334 |
Daihatsu Motor | 1,000 | 17,512 |
Daiichi Sankyo | 2,000 | 30,565 |
Daikin Industries | 600 | 16,595 |
Dainippon Sumitomo Pharma | 400 | 4,595 |
Daito Trust Construction | 200 | 20,193 |
Daiwa House Industry | 2,000 | 30,289 |
Daiwa Securities Group | 6,000 | 23,901 |
DeNA | 500 | 15,602 |
Denki Kagaku Kogyo | 1,000 | 3,082 |
Denso | 1,500 | 46,956 |
Dentsu | 700 | 16,511 |
East Japan Railway | 1,100 | 75,510 |
Eisai | 900 | 40,079 |
Electric Power Development | 400 | 10,237 |
FamilyMart | 200 | 9,696 |
FANUC | 600 | 95,528 |
Fast Retailing | 200 | 44,545 |
Fuji Electric | 2,000 | 4,059 |
Fuji Heavy Industries | 2,000 | 19,216 |
FUJIFILM Holdings | 1,400 | 23,605 |
Fujitsu | 6,000 | 23,074 |
22
Common Stocks (continued) | Shares | Value ($) | |
Japan (continued) | |||
Fukuoka Financial Group | 2,000 | 7,817 | |
Furukawa Electric | 1,000 | 1,992 | |
Gree | 200 | 3,487 | |
GS Yuasa | 1,000 | 3,908 | |
Gunma Bank | 1,000 | 4,823 | |
Hachijuni Bank | 1,000 | 5,161 | |
Hakuhodo DY Holdings | 70 | 4,191 | |
Hamamatsu Photonics | 300 | 10,391 | |
Hankyu Hanshin Holdings | 3,000 | 16,610 | |
Hino Motors | 1,000 | 7,716 | |
Hirose Electric | 100 | 10,698 | |
Hisamitsu Pharmaceutical | 200 | 10,347 | |
Hitachi | 15,000 | 79,481 | |
Hitachi Chemical | 200 | 2,818 | |
Hitachi Construction Machinery | 200 | 3,284 | |
Hitachi High-Technologies | 200 | 4,377 | |
Hitachi Metals | 1,000 | 9,357 | |
Hokkaido Electric Power | 300 | 2,469 | |
Hokuriku Electric Power | 300 | 2,980 | |
Honda Motor | 5,100 | 152,687 | |
Hoya | 1,200 | 24,292 | |
Hulic | 1,200 | a | 9,515 |
Ibiden | 200 | 2,518 | |
Idemitsu Kosan | 100 | 8,606 | |
IHI | 3,000 | 6,313 | |
INPEX | 7 | 39,897 | |
Isetan Mitsukoshi Holdings | 1,280 | 12,523 | |
Isuzu Motors | 3,000 | 15,859 | |
ITOCHU | 4,700 | 47,041 | |
Itochu Techno-Solutions | 100 | 5,173 | |
Iyo Bank | 1,000 | 7,729 | |
J Front Retailing | 1,200 | 6,238 | |
Japan Petroleum Exploration | 100 | 3,764 | |
Japan Prime Realty Investment | 2 | 6,020 | |
Japan Real Estate Investment | 2 | 20,018 | |
Japan Retail Fund Investment | 4 | 7,290 |
The Fund | 23 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Japan (continued) | |||
Japan Steel Works | 1,000 | 5,925 | |
Japan Tobacco | 2,900 | 80,138 | |
JFE Holdings | 1,700 | 23,957 | |
JGC | 1,000 | 34,386 | |
Joyo Bank | 2,000 | 9,671 | |
JSR | 700 | 11,995 | |
JTEKT | 1,100 | 8,268 | |
Jupiter Telecommunications | 3 | 4,077 | |
JX Holdings | 6,640 | 35,350 | |
Kajima | 2,000 | 5,537 | |
Kamigumi | 1,000 | 8,067 | |
Kaneka | 1,000 | 4,873 | |
Kansai Electric Power | 2,900 | 22,305 | |
Kansai Paint | 1,000 | 10,760 | |
Kao | 1,800 | 50,552 | |
Kawasaki Heavy Industries | 4,000 | 8,217 | |
Kawasaki Kisen Kaisha | 1,000 | a | 1,265 |
KDDI | 800 | 62,132 | |
Keikyu | 2,000 | 18,840 | |
Keio | 2,000 | 15,182 | |
Keisei Electric Railway | 1,000 | 9,169 | |
Keyence | 121 | 32,103 | |
Kikkoman | 1,000 | 13,278 | |
Kintetsu | 5,000 | 19,604 | |
Kirin Holdings | 3,000 | 37,655 | |
Kobe Steel | 12,000 | a | 10,522 |
Koito Manufacturing | 1,000 | 12,414 | |
Komatsu | 3,100 | 64,928 | |
Konami | 200 | 4,582 | |
Konica Minolta Holdings | 2,000 | 13,278 | |
Kubota | 4,000 | 40,887 | |
Kuraray | 800 | 9,290 | |
Kurita Water Industries | 200 | 4,540 | |
Kyocera | 500 | 43,906 | |
Kyowa Hakko Kirin | 1,371 | 14,581 | |
Kyushu Electric Power | 900 | 6,821 |
24
Common Stocks (continued) | Shares | Value ($) | |
Japan (continued) | |||
Lawson | 200 | 14,706 | |
LIXIL Group | 900 | 19,899 | |
Mabuchi Motor | 200 | 8,468 | |
Makita | 400 | 15,809 | |
Marubeni | 5,000 | 32,381 | |
Marui Group | 600 | 4,314 | |
Mazda Motor | 6,000 | a | 7,140 |
McDonald’s Holdings Japan | 200 | 5,557 | |
Medipal Holdings | 500 | 6,364 | |
MEIJI Holdings | 317 | 14,514 | |
Miraca Holdings | 100 | 4,228 | |
Mitsubishi | 4,400 | 78,542 | |
Mitsubishi Chemical Holdings | 4,500 | 17,813 | |
Mitsubishi Electric | 6,000 | 44,795 | |
Mitsubishi Estate | 4,000 | 79,118 | |
Mitsubishi Gas Chemical | 1,000 | 4,935 | |
Mitsubishi Heavy Industries | 9,000 | 37,880 | |
Mitsubishi Logistics | 1,000 | 12,890 | |
Mitsubishi Materials | 4,000 | 11,625 | |
Mitsubishi Motors | 9,000 | a | 7,779 |
Mitsubishi Tanabe Pharma | 900 | 12,976 | |
Mitsubishi UFJ Financial Group | 39,960 | 180,703 | |
Mitsubishi UFJ Lease & Finance | 120 | 5,171 | |
Mitsui & Co. | 5,600 | 78,918 | |
Mitsui Chemicals | 2,000 | 4,134 | |
Mitsui Fudosan | 3,000 | 60,616 | |
Mitsui OSK Lines | 4,000 | 9,570 | |
Mizuho Financial Group | 69,700 | 109,138 | |
MS&AD Insurance Group Holdings | 1,690 | 28,643 | |
Murata Manufacturing | 600 | 29,162 | |
Nabtesco | 200 | 3,723 | |
Namco Bandai Holdings | 500 | 7,854 | |
NEC | 6,000 | a | 11,499 |
NEXON | 400 | 4,875 | |
NGK Insulators | 1,000 | 11,149 | |
NGK Spark Plug | 1,000 | 11,174 |
The Fund | 25 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Japan (continued) | |||
NHK Spring | 500 | 4,165 | |
Nidec | 300 | 21,345 | |
Nikon | 1,200 | 30,515 | |
Nintendo | 400 | 51,509 | |
Nippon Building Fund | 2 | 21,471 | |
Nippon Electric Glass | 1,000 | 5,086 | |
Nippon Express | 2,000 | 7,316 | |
Nippon Meat Packers | 1,000 | 12,401 | |
Nippon Paper Group | 200 | 2,287 | |
Nippon Steel & Sumitomo Metal | 20,880 | 46,034 | |
Nippon Telegraph & Telephone | 1,300 | 59,195 | |
Nippon Yusen | 6,000 | 11,424 | |
Nishi-Nippon City Bank | 2,000 | 4,560 | |
Nissan Motor | 8,100 | 67,779 | |
Nisshin Seifun Group | 500 | 6,245 | |
Nisshin Steel Holdings | 200 | a | 1,325 |
Nissin Foods Holdings | 100 | 3,783 | |
Nitori Holdings | 100 | 8,167 | |
Nitto Denko | 600 | 27,208 | |
NKSJ Holdings | 1,325 | 24,150 | |
NOK | 300 | 4,803 | |
Nomura Holdings | 12,200 | 44,014 | |
Nomura Real Estate Holdings | 300 | 5,385 | |
Nomura Real Estate Office Fund | 1 | 6,288 | |
Nomura Research Institute | 200 | 4,247 | |
NSK | 1,000 | 5,487 | |
NTN | 1,000 | 1,791 | |
NTT Data | 3 | 9,767 | |
NTT DoCoMo | 49 | 71,999 | |
Obayashi | 2,000 | 8,944 | |
Odakyu Electric Railway | 2,000 | 21,220 | |
Oji Holdings | 2,000 | 5,862 | |
Olympus | 900 | a | 15,716 |
Omron | 700 | 13,942 | |
Ono Pharmaceutical | 200 | 12,076 | |
ORACLE JAPAN | 100 | 4,447 |
26
Common Stocks (continued) | Shares | Value ($) |
Japan (continued) | ||
Oriental Land | 200 | 27,283 |
ORIX | 320 | 32,870 |
Osaka Gas | 6,000 | 24,728 |
OTSUKA | 100 | 8,155 |
Otsuka Holdings | 1,300 | 40,044 |
Panasonic | 6,800 | 43,783 |
Rakuten | 2,100 | 18,888 |
Resona Holdings | 5,200 | 22,473 |
Ricoh | 2,000 | 16,710 |
Rinnai | 100 | 6,827 |
Rohm | 400 | 12,902 |
Sankyo | 100 | 4,528 |
Sanrio | 100 | 3,293 |
Santen Pharmaceutical | 200 | 8,756 |
SBI Holdings | 440 | 3,076 |
Secom | 600 | 30,552 |
Sega Sammy Holdings | 500 | 9,426 |
Seiko Epson | 300 | 1,665 |
Sekisui Chemical | 1,000 | 8,205 |
Sekisui House | 2,000 | 20,418 |
Seven & I Holdings | 2,500 | 77,101 |
Seven Bank | 1,000 | 2,856 |
Sharp | 2,000 | 4,309 |
Shikoku Electric Power | 400 | 4,274 |
Shimadzu | 1,000 | 6,727 |
Shimamura | 100 | 10,422 |
Shimano | 200 | 12,602 |
Shimizu | 1,000 | 3,345 |
Shin-Etsu Chemical | 1,400 | 78,918 |
Shinsei Bank | 4,000 | 5,862 |
Shionogi & Co. | 800 | 13,268 |
Shiseido | 1,300 | 16,447 |
Shizuoka Bank | 2,000 | 20,443 |
Showa Denko | 3,000 | 4,585 |
Showa Shell Sekiyu | 500 | 2,781 |
SMC | 200 | 31,517 |
The Fund | 27 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Japan (continued) | |||
Softbank | 2,700 | 85,468 | |
Sojitz | 2,900 | 3,596 | |
Sony | 3,000 | 35,851 | |
Sony Financial Holdings | 500 | 8,919 | |
Square Enix Holdings | 200 | 2,818 | |
Stanley Electric | 300 | 4,134 | |
Sumco | 200 | a | 1,368 |
Sumitomo | 3,500 | 47,701 | |
Sumitomo Chemical | 5,000 | 14,030 | |
Sumitomo Electric Industries | 2,300 | 24,720 | |
Sumitomo Heavy Industries | 1,000 | 3,583 | |
Sumitomo Metal Mining | 2,000 | 26,331 | |
Sumitomo Mitsui Financial Group | 4,300 | 131,645 | |
Sumitomo Mitsui Trust Holdings | 8,980 | 27,222 | |
Sumitomo Realty & Development | 1,000 | 27,609 | |
Sumitomo Rubber Industries | 400 | 4,705 | |
Suruga Bank | 1,000 | 12,000 | |
Suzuken | 300 | 9,466 | |
Suzuki Motor | 1,100 | 24,913 | |
Sysmex | 200 | 9,407 | |
T&D Holdings | 1,900 | 20,754 | |
Taiheiyo Cement | 4,000 | 8,518 | |
Taisei | 5,000 | 13,779 | |
Taisho Pharmaceutical Holdings | 100 | 8,067 | |
Taiyo Nippon Sanso | 1,000 | 5,487 | |
Takashimaya | 1,000 | 6,576 | |
Takeda Pharmaceutical | 2,500 | 116,184 | |
TDK | 500 | 18,771 | |
Teijin | 2,000 | 4,585 | |
Terumo | 400 | 17,237 | |
THK | 200 | 3,325 | |
Tobu Railway | 3,000 | 15,934 | |
Toho | 200 | 3,485 | |
Toho Gas | 1,000 | 6,063 | |
Tohoku Electric Power | 1,000 | 7,366 | |
Tokio Marine Holdings | 2,200 | 58,231 |
28
Common Stocks (continued) | Shares | Value ($) | |
Japan (continued) | |||
Tokyo Electric Power | 3,000 | a | 4,885 |
Tokyo Electron | 500 | 22,454 | |
Tokyo Gas | 8,000 | 42,390 | |
Tokyu | 3,000 | 15,257 | |
Tokyu Land | 1,000 | 5,612 | |
TonenGeneral Sekiyu | 1,000 | 9,069 | |
Toppan Printing | 2,000 | 11,550 | |
Toray Industries | 4,000 | 23,350 | |
Toshiba | 13,000 | 48,202 | |
Tosoh | 1,000 | 1,954 | |
TOTO | 1,000 | 7,491 | |
Toyo Seikan Kaisha | 300 | 3,187 | |
Toyoda Gosei | 200 | 3,933 | |
Toyota Industries | 400 | 11,424 | |
Toyota Motor | 8,600 | 330,189 | |
Toyota Tsusho | 700 | 15,275 | |
Trend Micro | 300 | 8,403 | |
Tsumura & Co. | 100 | 3,194 | |
Ube Industries | 2,000 | 4,560 | |
Unicharm | 300 | 16,234 | |
Ushio | 200 | 2,109 | |
USS | 60 | 6,306 | |
West Japan Railway | 600 | 26,193 | |
Yahoo! Japan | 37 | 12,732 | |
Yakult Honsha | 400 | 18,640 | |
Yamada Denki | 270 | 11,702 | |
Yamaguchi Financial Group | 1,000 | 8,280 | |
Yamaha | 400 | 3,593 | |
Yamaha Motor | 700 | 6,690 | |
Yamato Holdings | 1,000 | 15,220 | |
Yamato Kogyo | 200 | 5,614 | |
Yamazaki Baking | 1,000 | 12,026 | |
Yaskawa Electric | 1,000 | 7,165 | |
Yokogawa Electric | 400 | 4,550 | |
6,422,666 |
The Fund | 29 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Luxembourg—.0% | |||
SES | 892 | 24,684 | |
Macau—.0% | |||
Sands China | 7,200 | 27,081 | |
Wynn Macau | 6,000 | 16,993 | |
44,074 | |||
Mexico—.0% | |||
Fresnillo | 667 | 20,656 | |
Netherlands—.6% | |||
Aegon | 5,237 | 29,242 | |
Akzo Nobel | 695 | 37,807 | |
ASML Holding | 1,365 | a | 75,104 |
Core Laboratories | 150 | 15,549 | |
Corio | 130 | 5,792 | |
DE Master Blenders1753 | 1,757 | a | 21,473 |
Delta Lloyd | 700 | 11,641 | |
European Aeronautic Defence and Space | 1,197 | 42,526 | |
Fugro | 178 | 12,034 | |
Gemalto | 234 | 21,116 | |
Heineken | 731 | 45,067 | |
Heineken Holding | 247 | 12,534 | |
ING Groep | 12,249 | a | 108,214 |
Koninklijke Ahold | 3,306 | 42,092 | |
Koninklijke Boskalis Westminster | 204 | 7,771 | |
Koninklijke DSM | 510 | 26,187 | |
Koninklijke KPN | 3,592 | 22,678 | |
Koninklijke Philips Electronics | 3,321 | 83,034 | |
Koninklijke Vopak | 176 | 12,252 | |
QIAGEN | 617 | a | 10,720 |
Randstad Holding | 336 | 10,968 | |
Reed Elsevier | 2,132 | 28,642 | |
SBM Offshore | 365 | a | 4,769 |
TNT Express | 942 | 9,922 | |
Unilever | 5,125 | 188,189 | |
Wolters Kluwer | 771 | 14,920 | |
900,243 |
30
Common Stocks (continued) | Shares | Value ($) | ||
New Zealand—.0% | ||||
Auckland International Airport | 2,415 | 5,333 | ||
Contact Energy | 460 | 2,096 | ||
Fletcher Building | 2,636 | 15,262 | ||
SKYCITY Entertainment Group | 1,940 | 6,190 | ||
Telecom Corporation of New Zealand | 4,764 | 9,423 | ||
38,304 | ||||
Norway—.2% | ||||
Aker Solutions | 651 | 12,789 | ||
DNB | 2,916 | 36,416 | ||
Gjensidige Forsikring | 483 | 7,057 | ||
Norsk Hydro | 3,336 | 15,020 | ||
Orkla | 2,628 | 20,789 | ||
Seadrill | 1,101 | 44,571 | ||
Statoil | 3,585 | 88,598 | ||
Telenor | 2,126 | 41,802 | ||
Yara International | 605 | 28,503 | ||
295,545 | ||||
Portugal—.0% | ||||
Banco Espirito Santo | 11,649 a | 11,324 | ||
Energias de Portugal | 7,102 | 19,294 | ||
Galp Energia | 600 | 9,604 | ||
Jeronimo Martins | 521 | 9,116 | ||
Portugal Telecom | 1,514 | 7,616 | ||
56,954 | ||||
Singapore—.4% | ||||
Ascendas Real Estate Investment Trust | 6,400 | 12,382 | ||
CapitaLand | 9,500 | 25,467 | ||
CapitaMall Trust | 8,000 | 13,838 | ||
CapitaMalls Asia | 4,000 | 6,067 | ||
City Developments | 2,000 | 18,790 | ||
ComfortDelGro | 5,000 | 6,927 | ||
Cosco Singapore | 3,000 | 2,164 | ||
DBS Group Holdings | 5,500 | 62,674 | ||
Flextronics International | 2,367 | a | 13,658 | |
Fraser and Neave | 3,000 | 22,528 |
The Fund | 31 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Singapore (continued) | |||
Genting Singapore | 19,000 | 20,717 | |
Global Logistic Properties | 8,150 | 17,171 | |
Golden Agri-Resources | 22,640 | 11,600 | |
Hutchison Port Holdings Trust | 14,000 | 10,920 | |
Keppel | 4,200 | 36,704 | |
Keppel Land | 3,000 | 8,362 | |
Olam International | 3,045 | 4,918 | |
Oversea-Chinese Banking | 8,000 | 59,682 | |
SembCorp Industries | 3,000 | 13,379 | |
SembCorp Marine | 2,000 | 7,723 | |
Singapore Airlines | 1,866 | 16,215 | |
Singapore Exchange | 3,000 | 16,552 | |
Singapore Press Holdings | 5,000 | 16,560 | |
Singapore Technologies Engineering | 4,000 | 11,543 | |
Singapore Telecommunications | 26,000 | 68,634 | |
StarHub | 2,000 | 6,034 | |
United Overseas Bank | 4,000 | 59,911 | |
UOL Group | 1,000 | 4,640 | |
Wilmar International | 7,000 | 17,732 | |
593,492 | |||
Spain—.6% | |||
Abertis Infraestructuras | 1,316 | 19,820 | |
Acciona | 39 | 2,393 | |
Acerinox | 192 | 2,001 | |
ACS Actividades de Construccion y Servicios | 279 | 5,956 | |
Amadeus IT Holding, Cl. A | 967 | 23,939 | |
Banco Bilbao Vizcaya Argentaria | 16,990 | 141,752 | |
Banco de Sabadell | 9,830 | a | 23,928 |
Banco Popular Espanol | 4,945 | 7,711 | |
Banco Santander | 31,413 | 235,703 | |
Bankia | 1,979 | a | 2,975 |
CaixaBank | 1,918 | 7,259 | |
Distribuidora Internacional de Alimentacion | 2,248 | 13,607 | |
Enagas | 438 | 8,709 | |
Ferrovial | 1,260 | 17,801 | |
Gas Natural SDG | 1,270 | 19,704 |
32
Common Stocks (continued) | Shares | Value ($) | |
Spain (continued) | |||
Grifols | 438 | a | 15,192 |
Iberdrola | 11,467 | 59,303 | |
Inditex | 704 | 89,825 | |
Mapfre | 1,615 | 4,475 | |
Red Electrica | 417 | 19,552 | |
Repsol | 2,754 | 55,043 | |
Telefonica | 12,417 | 163,517 | |
Zardoya Otis | 780 | 9,645 | |
949,810 | |||
Sweden—.7% | |||
Alfa Laval | 861 | 14,954 | |
Assa Abloy, Cl. B | 1,164 | 38,801 | |
Atlas Copco, Cl. A | 2,139 | 52,597 | |
Atlas Copco, Cl. B | 1,266 | 27,733 | |
Autoliv | 327 | 18,835 | |
Boliden | 746 | 13,035 | |
Electrolux, Ser. B | 610 | 15,607 | |
Elekta, Cl. B | 1,156 | 16,470 | |
Ericsson, Cl. B | 9,509 | 83,580 | |
Getinge, Cl. B | 507 | 15,593 | |
Hennes & Mauritz, Cl. B | 2,974 | 100,659 | |
Hexagon, Cl. B | 800 | 18,405 | |
Holmen, Cl. B | 75 | 2,211 | |
Husqvarna, Cl. B | 673 | 3,904 | |
Industrivarden, Cl. C | 308 | 4,344 | |
Investment AB Kinnevik, Cl. B | 553 | 10,563 | |
Investor, Cl. B | 1,466 | 32,335 | |
Lundin Petroleum | 573 | a | 13,718 |
Millicom International Cellular, SDR | 159 | 13,736 | |
Modern Times Group, Cl. B | 153 | 4,660 | |
Nordea Bank | 8,497 | 77,183 | |
Ratos, Cl. B | 875 | 7,513 | |
Sandvik | 2,960 | 41,056 | |
Scania, Cl. B | 848 | 16,147 | |
Securitas, Cl. B | 706 | 5,135 | |
Skandinaviska Enskilda Banken, Cl. A | 4,207 | 34,884 |
The Fund | 33 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
Sweden (continued) | |||
Skanska, Cl. B | 1,368 | 21,388 | |
SKF, Cl. B | 1,136 | 25,604 | |
SSAB, Cl. A | 326 | 2,333 | |
Svenska Cellulosa, Cl. B | 1,621 | 31,575 | |
Svenska Handelsbanken, Cl. A | 1,513 | 51,826 | |
Swedbank, Cl. A | 2,412 | 44,728 | |
Swedish Match | 689 | 23,476 | |
Tele2, Cl. B | 802 | 13,385 | |
TeliaSonera | 6,328 | 41,663 | |
Volvo, Cl. B | 4,289 | 57,711 | |
997,347 | |||
Switzerland—2.0% | |||
ABB | 6,717 | a | 121,026 |
Actelion | 292 | a | 14,084 |
Adecco | 446 | a | 21,570 |
Aryzta | 351 | a | 17,526 |
Baloise Holding | 176 | 14,703 | |
Banque Cantonale Vaudoise | 12 | 6,359 | |
Barry Callebaut | 7 | a | 6,682 |
Cie Financiere Richemont, Cl. A | 1,628 | 105,585 | |
Credit Suisse Group | 3,899 | a | 90,389 |
GAM Holding | 436 | a | 6,086 |
Geberit | 118 | a | 24,327 |
Givaudan | 27 | a | 27,020 |
Glencore International | 12,139 | 67,202 | |
Holcim | 676 | a | 46,129 |
Julius Baer Group | 745 | a | 25,839 |
Kuehne & Nagel International | 207 | 24,161 | |
Lindt & Spruengli-PC | 3 | a | 9,480 |
Lonza Group | 213 | a | 10,798 |
Nestle | 10,425 | 661,567 | |
Novartis | 7,288 | 438,626 | |
Pargesa Holding-BR | 64 | 4,316 | |
Partners Group Holding | 56 | 11,852 | |
Roche Holding | 2,227 | 428,278 | |
Schindler Holding | 48 | 6,211 |
34
Common Stocks (continued) | Shares | Value ($) | |
Switzerland (continued) | |||
Schindler Holding-PC | 186 | 24,506 | |
SGS | 19 | 40,232 | |
Sika-BR | 9 | 18,777 | |
Sonova Holding | 192 | a | 19,307 |
Straumann Holding | 19 | 2,344 | |
Sulzer | 73 | 10,566 | |
Swatch Group | 163 | 11,840 | |
Swatch Group-BR | 91 | 37,659 | |
Swiss Life Holding | 122 | a | 15,353 |
Swiss Prime Site | 155 | a | 12,940 |
Swiss Re | 1,144 | a | 79,047 |
Swisscom | 70 | 29,081 | |
Syngenta | 295 | 115,238 | |
UBS | 11,315 | a | 169,610 |
Zurich Insurance Group | 459 | a | 113,111 |
2,889,427 | |||
United Kingdom—5.2% | |||
3i Group | 3,060 | 10,637 | |
Aberdeen Asset Management | 2,945 | 15,422 | |
Admiral Group | 535 | 9,566 | |
Aggreko | 862 | 29,908 | |
AMEC | 829 | 14,181 | |
Anglo American | 4,321 | 132,697 | |
Antofagasta | 1,315 | 26,675 | |
ArcelorMittal | 2,934 | 43,467 | |
ARM Holdings | 4,085 | 43,838 | |
Associated British Foods | 1,185 | 26,485 | |
AstraZeneca | 3,891 | 180,683 | |
Aviva | 8,580 | 45,886 | |
Babcock International Group | 1,367 | 21,575 | |
BAE Systems | 9,508 | 47,903 | |
Balfour Beatty | 2,589 | 13,169 | |
Barclays | 35,508 | 130,361 | |
BG Group | 10,860 | 201,105 | |
BHP Billiton | 6,627 | 212,337 | |
BP | 60,293 | 431,325 |
The Fund | 35 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United Kingdom (continued) | |||
British American Tobacco | 6,216 | 307,906 | |
British Land | 2,916 | 24,870 | |
British Sky Broadcasting Group | 3,311 | 37,883 | |
BT Group | 24,620 | 84,428 | |
Bunzl | 883 | 14,606 | |
Burberry Group | 1,352 | 25,440 | |
Capita | 1,912 | 22,308 | |
Capital Shopping Centres Group | 1,567 | 8,421 | |
Carnival | 589 | 23,420 | |
Centrica | 16,692 | 87,303 | |
Cobham | 3,826 | 13,275 | |
Compass Group | 6,241 | 68,486 | |
Croda International | 414 | 14,705 | |
Diageo | 8,008 | 228,866 | |
Ensco, Cl. A | 767 | 44,348 | |
Eurasian Natural Resources | 384 | 2,031 | |
Evraz | 1,569 | 5,981 | |
Experian | 3,201 | 55,272 | |
G4S | 5,253 | 22,083 | |
GKN | 4,165 | 13,953 | |
GlaxoSmithKline | 15,920 | 356,207 | |
Hammerson | 1,831 | 13,941 | |
HSBC Holdings | 57,443 | 564,354 | |
ICAP | 1,680 | 8,814 | |
IMI | 1,012 | 15,588 | |
Imperial Tobacco Group | 3,059 | 115,514 | |
Inmarsat | 1,561 | 14,271 | |
InterContinental Hotels Group | 975 | 24,073 | |
International Consolidated Airlines Group | 4,645 | a | 12,204 |
Intertek Group | 505 | 22,973 | |
Invensys | 3,044 | 11,190 | |
Investec | 1,679 | 9,873 | |
ITV | 8,986 | 12,551 | |
J Sainsbury | 3,804 | 21,768 | |
Johnson Matthey | 713 | 25,877 | |
Kazakhmys | 828 | 9,474 |
36
Common Stocks (continued) | Shares | Value ($) | |
United Kingdom (continued) | |||
Kingfisher | 7,566 | 35,347 | |
Land Securities Group | 2,508 | 32,540 | |
Legal & General Group | 17,458 | 37,752 | |
Lloyds Banking Group | 136,148 | a | 89,148 |
London Stock Exchange Group | 734 | 11,555 | |
Lonmin | 237 | 1,962 | |
Man Group | 3,853 | 4,878 | |
Marks & Spencer Group | 4,962 | 31,533 | |
Meggitt | 1,989 | 12,390 | |
Melrose | 4,920 | 19,135 | |
National Grid | 10,894 | 124,205 | |
Next | 543 | 31,248 | |
Old Mutual | 14,433 | 40,061 | |
Pearson | 2,600 | 52,237 | |
Petrofac | 866 | 22,416 | |
Prudential | 7,974 | 109,186 | |
Randgold Resources | 301 | 35,945 | |
Reckitt Benckiser Group | 2,033 | 123,029 | |
Reed Elsevier | 3,885 | 37,993 | |
Resolution | 4,773 | 16,815 | |
Rexam | 2,610 | 18,815 | |
Rio Tinto | 4,205 | 210,667 | |
Rolls-Royce Holdings | 6,050 | a | 83,427 |
Royal Bank of Scotland Group | 5,936 | a | 26,439 |
Royal Dutch Shell, Cl. A | 11,716 | 401,770 | |
Royal Dutch Shell, Cl. B | 8,410 | 297,289 | |
RSA Insurance Group | 12,913 | 23,402 | |
SABMiller | 2,912 | 124,742 | |
Sage Group | 3,267 | 16,381 | |
Schroders | 487 | 11,977 | |
Segro | 2,854 | 10,943 | |
Serco Group | 1,291 | 11,802 | |
Severn Trent | 872 | 22,600 | |
Shire | 1,737 | 48,858 | |
Smith & Nephew | 2,482 | 26,235 | |
Smiths Group | 1,262 | 21,506 |
The Fund | 37 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United Kingdom (continued) | |||
SSE | 3,084 | 72,065 | |
Standard Chartered | 7,674 | 181,240 | |
Standard Life | 7,595 | 35,789 | |
Subsea 7 | 903 | 19,814 | |
Tate & Lyle | 1,188 | 13,919 | |
Tesco | 25,958 | 133,985 | |
TUI Travel | 1,371 | 5,553 | |
Tullow Oil | 3,023 | 68,493 | |
Unilever | 4,136 | 154,248 | |
United Utilities Group | 2,435 | 26,603 | |
Vedanta Resources | 192 | 3,514 | |
Virgin Media | 729 | 23,867 | |
Vodafone Group | 156,313 | 424,414 | |
Weir Group | 551 | 15,490 | |
Whitbread | 462 | 17,521 | |
Willis Group Holdings | 506 | 17,037 | |
WM Morrison Supermarkets | 7,148 | 30,903 | |
Wolseley | 992 | 43,367 | |
WPP | 3,899 | 50,305 | |
Xstrata | 6,584 | a | 104,029 |
7,649,861 | |||
United States—28.5% | |||
3M | 2,115 | 185,274 | |
Abbott Laboratories | 4,999 | 327,534 | |
Abercrombie & Fitch, Cl. A | 358 | 10,948 | |
Accenture, Cl. A | 1,977 | 133,270 | |
ACE | 1,025 | 80,616 | |
Activision Blizzard | 1,313 | 14,299 | |
Adobe Systems | 1,679 | a | 57,086 |
ADT | 701 | a | 29,099 |
Advance Auto Parts | 242 | 17,167 | |
Advanced Micro Devices | 1,129 | a | 2,314 |
AES | 2,129 | 22,248 | |
Aetna | 1,034 | 45,186 | |
Affiliated Managers Group | 158 | a | 19,987 |
Aflac | 1,440 | 71,683 | |
AGCO | 265 | a | 12,060 |
38
Common Stocks (continued) | Shares | Value ($) | ||
United States (continued) | ||||
Agilent Technologies | 1,023 | 36,818 | ||
Air Products & Chemicals | 650 | 50,395 | ||
Airgas | 179 | 15,926 | ||
Akamai Technologies | 628 | a | 23,858 | |
Albemarle | 267 | 14,714 | ||
Alcoa | 3,267 | 27,998 | ||
Alexion Pharmaceuticals | 572 | a | 51,697 | |
Alleghany | 36 | a | 12,514 | |
Allegheny Technologies | 240 | 6,324 | ||
Allergan | 977 | 87,852 | ||
Alliance Data Systems | 161 | a | 23,031 | |
Alliant Energy | 286 | 12,784 | ||
Allstate | 1,452 | 58,051 | ||
Altera | 955 | 29,108 | ||
Altria Group | 6,396 | 203,393 | ||
Amazon.com | 1,126 | a | 262,155 | |
Ameren | 746 | 24,528 | ||
American Capital Agency | 998 | c | 32,954 | |
American Electric Power | 1,589 | 70,615 | ||
American Express | 3,323 | 185,988 | ||
American | ||||
International Group | 3,410 | a | 119,111 | |
American Tower | 1,194 | c | 89,896 | |
American Water Works | 562 | 20,648 | ||
Ameriprise Financial | 628 | 36,656 | ||
AmerisourceBergen | 829 | 32,696 | ||
AMETEK | 748 | 26,591 | ||
Amgen | 2,492 | 215,670 | ||
Amphenol, Cl. A | 489 | 29,404 | ||
Anadarko Petroleum | 1,556 | 107,068 | ||
Analog Devices | 995 | 38,914 | ||
Annaly Capital Management | 3,293 | c | 53,149 | |
ANSYS | 274 | a | 19,421 | |
Aon | 959 | 51,738 | ||
Apache | 1,218 | 100,790 | ||
Apollo Group, Cl. A | 252 | a | 5,060 | |
Apple | 2,942 | 1,750,784 |
The Fund | 39 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Applied Materials | 3,947 | 41,838 | |
Arch Capital Group | 410 | a | 18,102 |
Archer-Daniels-Midland | 1,934 | 51,909 | |
Arrow Electronics | 394 | a | 13,881 |
Assurant | 223 | 8,432 | |
AT&T | 18,518 | 640,538 | |
Autodesk | 699 | a | 22,256 |
Automatic Data Processing | 1,539 | 88,939 | |
AutoZone | 114 | a | 42,750 |
Avago Technologies | 657 | 21,701 | |
AvalonBay Communities | 280 | c | 37,957 |
Avery Dennison | 388 | 12,563 | |
Avnet | 495 | a | 14,182 |
Avon Products | 1,419 | 21,980 | |
Axis Capital Holdings | 325 | 11,772 | |
Baker Hughes | 1,439 | 60,395 | |
Ball | 387 | 16,575 | |
Bank of America | 33,649 | 313,609 | |
Baxter International | 1,814 | 113,611 | |
BB&T | 2,152 | 62,300 | |
Beam | 460 | 25,558 | |
Becton Dickinson & Co. | 669 | 50,630 | |
Bed Bath & Beyond | 778 | a | 44,875 |
Berkshire Hathaway, Cl. B | 2,930 | a | 253,006 |
Best Buy | 981 | 14,921 | |
Biogen Idec | 742 | a | 102,559 |
BlackRock | 430 | 81,562 | |
BMC Software | 429 | a | 17,460 |
Boeing | 2,191 | 154,334 | |
BorgWarner | 341 | a | 22,445 |
Boston Properties | 506 | c | 53,788 |
Boston Scientific | 4,502 | a | 23,140 |
Bristol-Myers Squibb | 5,202 | 172,967 | |
Broadcom, Cl. A | 1,521 | a | 47,965 |
Brown-Forman, Cl. B | 422 | 27,033 | |
Bunge | 415 | 29,477 |
40
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
C.H. Robinson Worldwide | 501 | 30,225 | |
C.R. Bard | 287 | 27,607 | |
CA | 930 | 20,944 | |
Cablevision Systems (NY Group), Cl. A | 923 | 16,079 | |
Cabot Oil & Gas | 676 | 31,758 | |
Calpine | 1,071 | a | 18,850 |
Camden Property Trust | 299 | c | 19,623 |
Cameron International | 727 | a | 36,815 |
Campbell Soup | 490 | 17,282 | |
Capital One Financial | 1,813 | 109,088 | |
Cardinal Health | 1,017 | 41,829 | |
CareFusion | 775 | a | 20,584 |
CarMax | 728 | a | 24,570 |
Carnival | 1,311 | 49,661 | |
Caterpillar | 2,015 | 170,892 | |
CBRE Group, Cl. A | 797 | a | 14,362 |
CBS, Cl. B | 1,852 | 60,005 | |
Celanese, Ser. A | 533 | 20,249 | |
Celgene | 1,436 | a | 105,288 |
CenterPoint Energy | 1,169 | 25,332 | |
CenturyLink | 1,978 | 75,916 | |
Cerner | 462 | a | 35,200 |
CF Industries Holdings | 210 | 43,090 | |
Charles Schwab | 3,232 | 43,891 | |
Charter Communications, Cl. A | 142 | a | 10,992 |
Chesapeake Energy | 1,962 | 39,750 | |
Chevron | 6,229 | 686,498 | |
Chipotle Mexican Grill | 101 | a | 25,708 |
Chubb | 902 | 69,436 | |
Church & Dwight | 480 | 24,365 | |
Cigna | 978 | 49,878 | |
Cimarex Energy | 217 | 12,408 | |
Cincinnati Financial | 471 | 18,765 | |
Cintas | 477 | 19,943 | |
Cisco Systems | 17,038 | 292,031 | |
CIT Group | 588 | a | 21,885 |
The Fund | 41 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Citigroup | 9,155 | 342,305 | |
Citrix Systems | 546 | a | 33,748 |
Cliffs Natural Resources | 484 | 17,555 | |
Clorox | 441 | 31,884 | |
CME Group | 1,004 | 56,154 | |
CMS Energy | 762 | 18,532 | |
Coach | 916 | 51,342 | |
Cobalt International Energy | 481 | a | 10,010 |
Coca-Cola | 12,859 | 478,098 | |
Coca-Cola Enterprises | 927 | 29,145 | |
Cognizant Technology Solutions, Cl. A | 932 | a | 62,118 |
Colgate-Palmolive | 1,537 | 161,324 | |
Comcast, Cl. A | 6,737 | 252,705 | |
Comcast, Cl. A (Special) | 1,747 | 63,661 | |
Comerica | 678 | 20,211 | |
Computer Sciences | 425 | 12,941 | |
ConAgra Foods | 1,234 | 34,355 | |
Concho Resources | 318 | a | 27,386 |
ConocoPhillips | 3,843 | 222,318 | |
CONSOL Energy | 676 | 23,768 | |
Consolidated Edison | 902 | 54,463 | |
Constellation Brands, Cl. A | 588 | a | 20,780 |
Continental Resources | 106 | a | 7,617 |
Cooper Industries | 470 | 35,222 | |
Corning | 4,701 | 55,237 | |
Costco Wholesale | 1,326 | 130,518 | |
Coventry Health Care | 483 | 21,078 | |
Covidien | 1,460 | 80,227 | |
Cree | 298 | a | 9,038 |
Crown Castle International | 879 | a | 58,673 |
Crown Holdings | 488 | a | 18,666 |
CSX | 3,387 | 69,332 | |
Cummins | 562 | 52,592 | |
CVS Caremark | 4,110 | 190,704 | |
D.R. Horton | 735 | 15,406 | |
Danaher | 1,839 | 95,131 |
42
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Darden Restaurants | 473 | 24,889 | |
DaVita | 304 | a | 34,206 |
Deere & Co. | 1,216 | 103,895 | |
Dell | 4,454 | 41,110 | |
Delphi Automotive | 1,057 | 33,232 | |
Delta Air Lines | 612 | a | 5,894 |
Denbury Resources | 1,336 | a | 20,481 |
DENTSPLY International | 373 | 13,741 | |
Devon Energy | 1,182 | 68,804 | |
Diamond Offshore Drilling | 185 | 12,809 | |
Dick’s Sporting Goods | 299 | 14,950 | |
Digital Realty Trust | 334 | c | 20,518 |
DIRECTV | 2,017 | a | 103,089 |
Discover Financial Services | 1,628 | 66,748 | |
Discovery Communications, Cl. A | 485 | a | 28,625 |
Discovery Communications, Cl. C | 282 | a | 15,448 |
DISH Network, Cl. A | 671 | 23,908 | |
Dolby Laboratories, Cl. A | 89 | a | 2,812 |
Dollar General | 748 | a | 36,368 |
Dollar Tree | 704 | a | 28,068 |
Dominion Resources | 1,797 | 94,846 | |
Dover | 550 | 32,021 | |
Dow Chemical | 3,889 | 113,948 | |
Dr. Pepper Snapple Group | 597 | 25,581 | |
DTE Energy | 505 | 31,361 | |
Duke Energy | 2,274 | 149,379 | |
Duke Realty | 676 | c | 9,788 |
Dun & Bradstreet | 189 | 15,317 | |
E.I. du Pont de Nemours & Co. | 3,021 | 134,495 | |
Eastman Chemical | 492 | 29,146 | |
Eaton | 935 | 44,151 | |
Eaton Vance | 452 | 12,719 | |
eBay | 3,732 | a | 180,218 |
Ecolab | 896 | 62,362 | |
Edison International | 910 | 42,715 | |
Edwards Lifesciences | 340 | a | 29,522 |
The Fund | 43 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Electronic Arts | 1,266 | a | 15,635 |
Eli Lilly & Co. | 3,365 | 163,640 | |
EMC | 6,483 | a | 158,315 |
Emerson Electric | 2,244 | 108,677 | |
Energen | 195 | 9,097 | |
Energizer Holdings | 215 | 15,689 | |
Entergy | 521 | 37,814 | |
EOG Resources | 847 | 98,667 | |
EQT | 463 | 28,072 | |
Equifax | 392 | 19,616 | |
Equinix | 170 | a | 30,670 |
Equity Residential | 1,015 | c | 58,271 |
Estee Lauder, Cl. A | 697 | 42,949 | |
Everest Re Group | 202 | 22,432 | |
Exelon | 2,680 | 95,890 | |
Expedia | 230 | 13,605 | |
Expeditors International of Washington | 693 | 25,371 | |
Express Scripts Holding | 2,594 | a | 159,635 |
Exxon Mobil | 14,728 | 1,342,752 | |
F5 Networks | 247 | a | 20,373 |
Facebook, Cl. A | 1,371 | 28,949 | |
Family Dollar Stores | 376 | 24,801 | |
Fastenal | 830 | 37,101 | |
Federal Realty Investment Trust | 193 | c | 20,811 |
FedEx | 907 | 83,435 | |
Fidelity National Financial, Cl. A | 762 | 16,314 | |
Fidelity National Information Services | 858 | 28,202 | |
Fifth Third Bancorp | 2,706 | 39,318 | |
First Republic Bank | 305 | 10,477 | |
FirstEnergy | 1,406 | 64,282 | |
Fiserv | 415 | a | 31,100 |
FLIR Systems | 610 | 11,852 | |
Flowserve | 145 | 19,646 | |
Fluor | 518 | 28,930 | |
FMC | 457 | 24,459 | |
FMC Technologies | 711 | a | 29,080 |
44
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Ford Motor | 11,078 | 123,630 | |
Forest Laboratories | 855 | a | 28,822 |
Fossil | 126 | a | 10,975 |
Franklin Resources | 448 | 57,254 | |
Freeport-McMoRan Copper & Gold | 2,951 | 114,735 | |
Frontier Communications | 3,618 | 17,077 | |
GameStop, Cl. A | 315 | 7,191 | |
Gap | 906 | 32,362 | |
Garmin | 290 | 11,017 | |
General Dynamics | 933 | 63,519 | |
General Electric | 33,454 | 704,541 | |
General Growth Properties | 1,276 | c | 25,086 |
General Mills | 2,063 | 82,685 | |
General Motors | 2,483 | a | 63,317 |
Genuine Parts | 435 | 27,222 | |
Genworth Financial, Cl. A | 2,131 | a | 12,701 |
Gilead Sciences | 2,438 | a | 163,736 |
Goldman Sachs Group | 1,502 | 183,830 | |
Goodyear Tire & Rubber | 1,002 | a | 11,433 |
Google, Cl. A | 822 | a | 558,771 |
Green Mountain Coffee Roasters | 522 | a | 12,612 |
H&R Block | 998 | 17,665 | |
H.J. Heinz | 988 | 56,820 | |
Halliburton | 2,895 | 93,480 | |
Harley-Davidson | 690 | 32,264 | |
Harris | 378 | 17,305 | |
Hartford Financial Services Group | 1,308 | 28,397 | |
Hasbro | 403 | 14,504 | |
HCA Holdings | 525 | 14,915 | |
HCP | 1,386 | c | 61,400 |
Health Care REIT | 750 | c | 44,573 |
Helmerich & Payne | 395 | 18,881 | |
Henry Schein | 258 | a | 19,035 |
Herbalife | 301 | 15,456 | |
Hershey | 498 | 34,287 | |
Hertz Global Holdings | 1,132 | a | 15,022 |
The Fund | 45 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Hess | 976 | 51,006 | |
Hewlett-Packard | 6,036 | 83,599 | |
HollyFrontier | 537 | 20,744 | |
Hologic | 872 | a | 17,981 |
Home Depot | 4,875 | 299,228 | |
Honeywell International | 2,393 | 146,547 | |
Hormel Foods | 486 | 14,352 | |
Hospira | 411 | a | 12,614 |
Host Hotels & Resorts | 2,258 | c | 32,651 |
Hudson City Bancorp | 1,753 | 14,874 | |
Humana | 490 | 36,392 | |
IHS, Cl. A | 164 | a | 13,840 |
Illinois Tool Works | 1,323 | 81,140 | |
Illumina | 460 | a | 21,855 |
Ingersoll-Rand | 958 | 45,055 | |
Integrys Energy Group | 206 | 11,132 | |
Intel | 15,974 | 345,438 | |
IntercontinentalExchange | 233 | a | 30,523 |
International Business Machines | 3,461 | 673,268 | |
International Flavors & Fragrances | 314 | 20,291 | |
International Game Technology | 764 | 9,810 | |
International Paper | 1,222 | 43,784 | |
Interpublic Group of Cos. | 1,179 | 11,908 | |
Intuit | 890 | 52,884 | |
Intuitive Surgical | 121 | a | 65,609 |
Invesco | 1,284 | 31,227 | |
Iron Mountain | 417 | 14,428 | |
J.C. Penney | 496 | 11,909 | |
J.M. Smucker | 349 | 29,888 | |
Jacobs Engineering Group | 334 | a | 12,889 |
JB Hunt Transport Services | 234 | 13,736 | |
Johnson & Johnson | 8,679 | 614,647 | |
Johnson Controls | 2,280 | 58,710 | |
Joy Global | 351 | 21,920 | |
JPMorgan Chase & Co. | 12,053 | 502,369 | |
Juniper Networks | 1,688 | a | 27,970 |
46
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Kansas City Southern | 358 | 28,805 | |
KBR | 520 | 14,487 | |
Kellogg | 739 | 38,664 | |
KeyCorp | 2,939 | 24,746 | |
Kimberly-Clark | 1,229 | 102,560 | |
Kimco Realty | 1,232 | c | 24,049 |
Kinder Morgan | 1,768 | 61,367 | |
Kinder Morgan Management | 345 | a | 25,728 |
KLA-Tencor | 512 | 23,818 | |
Kohl’s | 711 | 37,882 | |
Kraft Foods Group | 1,795 | a | 81,637 |
Kroger | 1,615 | 40,730 | |
L-3 Communications Holdings | 315 | 23,247 | |
Laboratory Corp. of America Holdings | 314 | a | 26,605 |
Lam Research | 569 | a | 20,143 |
Las Vegas Sands | 1,253 | 58,189 | |
Legg Mason | 319 | 8,128 | |
Leggett & Platt | 555 | 14,724 | |
Leucadia National | 818 | 18,569 | |
Level 3 Communications | 374 | a | 7,667 |
Liberty Global, Cl. A | 371 | a | 22,271 |
Liberty Global, Ser. C | 411 | a | 23,135 |
Liberty Interactive, Cl. A | 1,630 | a | 32,600 |
Liberty Media, Cl. A | 318 | a | 35,511 |
Liberty Property Trust | 304 | c | 10,676 |
Life Technologies | 577 | a | 28,221 |
Limited Brands | 745 | 35,678 | |
Lincoln National | 879 | 21,790 | |
Linear Technology | 713 | 22,288 | |
LinkedIn, Cl. A | 219 | a | 23,418 |
Lockheed Martin | 840 | 78,683 | |
Loews | 936 | 39,574 | |
Lorillard | 409 | 47,448 | |
Lowe’s | 3,831 | 124,048 | |
LSI | 2,094 | a | 14,344 |
LyondellBasell Industries, Cl. A | 1,028 | 54,885 |
The Fund | 47 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
M&T Bank | 366 | 38,101 | |
Macerich | 410 | c | 23,370 |
Macy’s | 1,214 | 46,217 | |
Manpower | 349 | 13,241 | |
Marathon Oil | 2,162 | 64,990 | |
Marathon Petroleum | 1,015 | 55,754 | |
Marriott International, Cl. A | 797 | 29,075 | |
Marsh & McLennan | 1,674 | 56,966 | |
Martin Marietta Materials | 121 | 9,960 | |
Marvell Technology Group | 1,236 | 9,752 | |
Masco | 935 | 14,109 | |
MasterCard, Cl. A | 352 | 162,247 | |
Mattel | 1,003 | 36,890 | |
Maxim Integrated Products | 947 | 26,066 | |
McCormick & Co. | 419 | 25,819 | |
McDonald’s | 3,235 | 280,798 | |
McGraw-Hill | 832 | 45,993 | |
McKesson | 715 | 66,717 | |
MDU Resources Group | 515 | 11,191 | |
Mead Johnson Nutrition | 635 | 39,154 | |
MeadWestvaco | 581 | 17,250 | |
Medtronic | 3,214 | 133,638 | |
Merck & Co. | 9,642 | 439,964 | |
MetLife | 2,661 | 94,439 | |
MetroPCS Communications | 1,244 | a | 12,701 |
MGM Resorts International | 876 | a | 9,032 |
Microchip Technology | 721 | 22,603 | |
Micron Technology | 3,345 | a | 18,147 |
Microsoft | 23,872 | 681,188 | |
Mohawk Industries | 156 | a | 13,021 |
Molson Coors Brewing, Cl. B | 526 | 22,692 | |
Mondelez International | 5,387 | 142,971 | |
Monsanto | 1,720 | 148,040 | |
Monster Beverage | 487 | a | 21,754 |
Moody’s | 636 | 30,630 | |
Morgan Stanley | 4,568 | 79,392 |
48
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Mosaic | 1,000 | 52,340 | |
Motorola Solutions | 798 | 41,241 | |
Murphy Oil | 550 | 33,000 | |
Mylan | 1,278 | a | 32,385 |
Nabors Industries | 716 | a | 9,659 |
NASDAQ OMX Group | 383 | 9,119 | |
National Oilwell Varco | 1,328 | 97,874 | |
NetApp | 1,063 | a | 28,595 |
Netflix | 146 | a | 11,547 |
New York Community Bancorp | 1,514 | 20,984 | |
Newell Rubbermaid | 738 | 15,232 | |
Newfield Exploration | 352 | a | 9,546 |
Newmont Mining | 1,601 | 87,335 | |
News, Cl. A | 5,170 | 123,666 | |
News, Cl. B | 1,406 | 34,250 | |
NextEra Energy | 1,251 | 87,645 | |
Nielsen Holdings | 337 | a | 9,746 |
NIKE, Cl. B | 1,130 | 103,259 | |
NiSource | 992 | 25,266 | |
Noble | 812 | 30,645 | |
Noble Energy | 565 | 53,681 | |
Nordstrom | 500 | 28,385 | |
Norfolk Southern | 1,062 | 65,154 | |
Northeast Utilities | 925 | 36,353 | |
Northern Trust | 665 | 31,774 | |
Northrop Grumman | 702 | 48,220 | |
NRG Energy | 783 | 16,881 | |
Nuance Communications | 865 | a | 19,255 |
Nucor | 936 | 37,562 | |
NVIDIA | 1,772 | a | 21,211 |
NYSE Euronext | 856 | 21,195 | |
O’Reilly Automotive | 379 | a | 32,473 |
Occidental Petroleum | 2,594 | 204,822 | |
Omnicare | 318 | 10,981 | |
Omnicom Group | 802 | 38,424 | |
ONEOK | 642 | 30,367 |
The Fund | 49 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Oracle | 12,624 | 391,975 | |
Owens-Illinois | 639 | a | 12,454 |
PACCAR | 1,090 | 47,241 | |
Pall | 349 | 21,973 | |
Parker Hannifin | 446 | 35,082 | |
PartnerRe | 209 | 16,929 | |
Patterson | 260 | 8,684 | |
Paychex | 1,129 | 36,613 | |
Peabody Energy | 885 | 24,692 | |
Pentair | 663 | 28,005 | |
People’s United Financial | 1,240 | 14,917 | |
Pepco Holdings | 619 | 12,300 | |
PepsiCo | 4,969 | 344,054 | |
Perrigo | 310 | 35,653 | |
PetSmart | 317 | 21,046 | |
Pfizer | 23,680 | 588,922 | |
PG&E | 1,401 | 59,571 | |
Philip Morris International | 5,399 | 478,135 | |
Phillips 66 | 1,824 | 86,020 | |
Pinnacle West Capital | 279 | 14,779 | |
Pioneer Natural Resources | 361 | 38,140 | |
Pitney Bowes | 759 | 10,899 | |
Plains Exploration & Production | 375 | a | 13,373 |
Plum Creek Timber | 497 | c | 21,818 |
PNC Financial Services Group | 1,722 | 100,203 | |
PPG Industries | 514 | 60,179 | |
PPL | 1,693 | 50,079 | |
Praxair | 937 | 99,519 | |
Precision Castparts | 474 | 82,035 | |
priceline.com | 157 | a | 90,082 |
Principal Financial Group | 915 | 25,199 | |
Procter & Gamble | 8,663 | 599,826 | |
Progressive | 1,723 | 38,423 | |
ProLogis | 1,465 | c | 50,235 |
Prudential Financial | 1,438 | 82,038 | |
Public Service Enterprise Group | 1,568 | 50,239 |
50
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Public Storage | 479 | c | 66,404 |
PVH | 207 | 22,768 | |
QEP Resources | 451 | 13,079 | |
QUALCOMM | 5,447 | 319,058 | |
Quanta Services | 543 | a | 14,080 |
Quest Diagnostics | 475 | 27,417 | |
Rackspace Hosting | 331 | a | 21,081 |
Ralcorp Holdings | 198 | a | 14,294 |
Ralph Lauren | 188 | 28,894 | |
Range Resources | 561 | 36,667 | |
Rayonier | 310 | c | 15,193 |
Raytheon | 990 | 55,994 | |
Realty Income | 495 | c | 19,439 |
Red Hat | 546 | a | 26,847 |
Regency Centers | 238 | c | 11,429 |
Regeneron Pharmaceuticals | 264 | a | 37,567 |
Regions Financial | 4,217 | 27,495 | |
RenaissanceRe Holdings | 142 | 11,553 | |
Republic Services | 902 | 25,572 | |
Reynolds American | 1,011 | 42,098 | |
Robert Half International | 480 | 12,907 | |
Rock-Tenn, Cl. A | 182 | 13,321 | |
Rockwell Automation | 407 | 28,921 | |
Rockwell Collins | 512 | 27,433 | |
Roper Industries | 290 | 31,659 | |
Ross Stores | 670 | 40,837 | |
Rowan, Cl. A | 516 | a | 16,362 |
Royal Caribbean Cruises | 399 | 13,434 | |
Safeway | 725 | 11,825 | |
SAIC | 706 | 7,759 | |
Salesforce.com | 398 | a | 58,100 |
SanDisk | 842 | a | 35,162 |
SBA Communications, Cl. A | 425 | a | 28,318 |
SCANA | 475 | 23,313 | |
Schlumberger | 4,242 | 294,946 | |
Scripps Networks Interactive, Cl. A | 289 | 17,548 |
The Fund | 51 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Seagate Technology | 1,193 | 32,593 | |
Sealed Air | 673 | 10,916 | |
Sears Canada | 34 | 372 | |
Sears Holdings | 80 | a | 5,014 |
SEI Investments | 426 | 9,321 | |
Sempra Energy | 708 | 49,383 | |
Sensata Technologies Holding | 331 | a | 9,324 |
Sherwin-Williams | 262 | 37,356 | |
Sigma-Aldrich | 372 | 26,092 | |
Simon Property Group | 960 | c | 146,122 |
Sirius XM Radio | 12,136 | a | 33,981 |
SL Green Realty | 248 | c | 18,674 |
SLM | 1,614 | 28,374 | |
Southern | 2,819 | 132,042 | |
Southwest Airlines | 263 | 2,320 | |
Southwestern Energy | 1,111 | a | 38,552 |
Spectra Energy | 2,191 | 63,254 | |
Sprint Nextel | 8,846 | a | 49,007 |
SPX | 142 | 9,740 | |
St. Jude Medical | 1,008 | 38,566 | |
Stanley Black & Decker | 479 | 33,195 | |
Staples | 1,996 | 22,984 | |
Starbucks | 2,462 | 113,006 | |
Starwood Hotels & Resorts Worldwide | 681 | c | 35,310 |
State Street | 1,628 | 72,560 | |
Stericycle | 277 | a | 26,249 |
Stryker | 946 | 49,760 | |
SunTrust Banks | 1,578 | 42,922 | |
Superior Energy Services | 610 | a | 12,401 |
Symantec | 2,156 | a | 39,218 |
Synopsys | 393 | a | 12,655 |
Sysco | 1,810 | 56,237 | |
T. Rowe Price Group | 789 | 51,238 | |
Target | 1,940 | 123,675 | |
TD Ameritrade Holding | 489 | 7,672 | |
TE Connectivity | 1,407 | 45,277 |
52
Common Stocks (continued) | Shares | Value ($) | ||
United States (continued) | ||||
Teradata | 561 | a | 38,322 | |
Texas Instruments | 3,585 | 100,703 | ||
Textron | 976 | 24,605 | ||
Thermo Fisher Scientific | 1,121 | 68,448 | ||
Tiffany & Co. | 397 | 25,098 | ||
Time Warner | 2,958 | 128,525 | ||
Time Warner Cable | 962 | 95,344 | ||
TJX | 2,313 | 96,290 | ||
Toll Brothers | 400 | a | 13,204 | |
Torchmark | 249 | 12,597 | ||
Total System Services | 474 | 10,660 | ||
Tractor Supply | 210 | 20,210 | ||
TransDigm Group | 140 | 18,649 | ||
Transocean | 1,085 | 49,386 | ||
Travelers | 1,198 | 84,986 | ||
Trimble Navigation | 369 | a | 17,409 | |
TRW Automotive Holdings | 256 | a | 11,907 | |
Tyco International | 1,403 | 37,699 | ||
Tyson Foods, Cl. A | 758 | 12,742 | ||
U.S. Bancorp | 6,069 | 201,551 | ||
UDR | 754 | c | 18,300 | |
Ulta Salon Cosmetics & Fragrance | 178 | 16,415 | ||
Ultra Petroleum | 526 | a | 11,998 | |
Union Pacific | 1,508 | 185,529 | ||
United Continential Holdings | 247 | a | 4,745 | |
United Parcel Service, Cl. B | 2,235 | 163,714 | ||
United States Steel | 535 | 10,909 | ||
United Technologies | 2,771 | 216,581 | ||
UnitedHealth Group | 3,195 | 178,920 | ||
Unum Group | 949 | 19,246 | ||
Urban Outfitters | 444 | a | 15,877 | |
URS | 337 | 11,283 | ||
Valero Energy | 1,627 | 47,346 | ||
Varian Medical Systems | 398 | a | 26,570 | |
Ventas | 973 | c | 61,562 | |
VeriFone Systems | 353 | a | 10,463 |
The Fund | 53 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
VeriSign | 497 | a | 18,424 |
Verisk Analytics, Cl. A | 440 | a | 22,440 |
Verizon Communications | 9,011 | 402,251 | |
Vertex Pharmaceuticals | 628 | a | 30,295 |
VF | 260 | 40,685 | |
Viacom, Cl. B | 1,490 | 76,392 | |
Visa, Cl. A | 1,688 | 234,227 | |
VMware, Cl. A | 278 | a | 23,566 |
Vornado Realty Trust | 489 | c | 39,223 |
Vulcan Materials | 342 | 15,722 | |
W.R. Berkley | 398 | 15,478 | |
W.W. Grainger | 177 | 35,650 | |
Wal-Mart Stores | 5,898 | 442,468 | |
Walgreen | 2,776 | 97,798 | |
Walt Disney | 5,410 | 265,469 | |
Walter Energy | 122 | 4,265 | |
Warner Chilcott, Cl. A | 597 | 6,913 | |
Washington Post, Cl. B | 10 | 3,335 | |
Waste Management | 1,285 | 42,071 | |
Waters | 284 | a | 23,234 |
Watson Pharmaceuticals | 443 | a | 38,076 |
Weatherford | |||
International | 2,132 | a | 24,092 |
WellPoint | 1,108 | 67,898 | |
Wells Fargo & Co. | 15,969 | 537,996 | |
Western Digital | 704 | 24,098 | |
Western Union | 1,747 | 22,187 | |
Weyerhaeuser | 1,585 | c | 43,889 |
Whirlpool | 204 | 19,927 | |
Whiting Petroleum | 380 | a | 15,968 |
Whole Foods Market | 537 | 50,870 | |
Williams | 2,053 | 71,834 |
54
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Windstream | 2,205 | 21,036 | |
Wisconsin Energy | 692 | 26,621 | |
Wyndham Worldwide | 412 | 20,765 | |
Wynn Resorts | 272 | 32,928 | |
Xcel Energy | 1,431 | 40,426 | |
Xerox | 4,418 | 28,452 | |
Xilinx | 804 | 26,339 | |
XL Group | 944 | 23,355 | |
Xylem | 462 | 11,208 | |
Yahoo! | 3,895 | a | 65,475 |
Yum! Brands | 1,394 | 97,733 | |
Zimmer Holdings | 502 | 32,233 | |
41,581,784 | |||
Total Common Stocks | |||
(cost $77,726,251) | 77,957,611 | ||
Preferred Stocks—.1% | |||
Germany | |||
Bayerische Motoren Werke | 132 | 7,306 | |
Henkel & Co. | 549 | 43,841 | |
Porsche Automobil Holding | 502 | 33,327 | |
ProSiebenSat.1 Media | 436 | 12,150 | |
RWE | 68 | 2,816 | |
Volkswagen | 445 | 92,055 | |
Total Preferred Stocks | |||
(cost $128,282) | 191,495 | ||
Number of | |||
Rights—.0% | Rights | Value ($) | |
Spain | |||
Banco Santander | |||
(cost $6,029) | 31,413 | a | 6,189 |
The Fund | 55 |
STATEMENT OF INVESTMENTS (continued)
Face Amount | ||||
Covered by | ||||
Options Purchased—2.7% | Contracts ($) | Value ($) | ||
Call Options—2.6% | ||||
U.S. Treasury | ||||
10 Year Note Futures, | ||||
December 2012 @ $115 | 210,000 | a | 3,786,563 | |
Number of | ||||
Contracts | Value ($) | |||
Put Options—.1% | ||||
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,601 | 300 | a | 39,572 | |
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,532 | 990 | a | 101,152 | |
140,724 | ||||
Total Options Purchased | ||||
(cost $3,823,484) | 3,927,287 | |||
Principal | ||||
Short-Term Investments—26.8% | Amount ($) | Value ($) | ||
U.S. Treasury Bills: | ||||
0.09%, 11/23/12 | 7,000,000 | 6,999,657 | ||
0.09%, 12/13/12 | 7,000,000 | 6,999,286 | ||
0.10%, 11/29/12 | 2,500,000 | 2,499,840 | ||
0.10%, 12/6/12 | 2,000,000 | 1,999,820 | ||
0.10%, 12/20/12 | 6,170,000 | d | 6,169,179 | |
0.10%, 1/10/13 | 3,350,000 | 3,349,477 | ||
0.10%, 1/17/13 | 3,760,000 | 3,759,338 | ||
0.11%, 11/15/12 | 6,000,000 | 5,999,868 | ||
0.11%, 12/27/12 | 1,270,000 | 1,269,807 | ||
Total Short-Term Investments | ||||
(cost $39,045,745) | 39,046,272 |
56
Other investment—16.8% | Shares | Value ($) | |
Registered Investment Company; | |||
Dreyfus Institutional Preferred Plus Money Market Fund | |||
(cost $24,483,140) | 24,483,140 | e | 24,483,140 |
Total Investments (cost $145,212,931) | 99.8 | % | 145,611,994 |
Cash and Receivables (Net) | .2 | % | 273,725 |
Net Assets | 100.0 | % | 145,885,719 |
BR—Bearer Certificate
CDI—Chess Depository Interest
CHF—Swiss Franc
PC—Participation Certificate
REIT—Real Estate Investment Trust
RSP—Risparmio (Savings) Shares
SDR—Swedish Depository Receipts
STRIP—Separate Trading of Registered Interest and Principal of Securities
a Non-income producing security. |
b The valuation of these securities has been determined in good faith by management under the direction of the Board of |
Directors.At October 31, 2012, the value of these securities amounted to $8 or less than .01% of net assets. |
c Investment in real estate investment trust. |
d Held by or on behalf of a counterparty for open financial futures positions. |
e Investment in affiliated money market mutual fund. |
The Fund | 57 |
STATEMENT OF FINANCIAL FUTURES
October 31, 2012
Unrealized | ||||||
Market Value | Appreciation | |||||
Covered by | (Depreciation) | |||||
Contracts | Contracts ($) | Expiration | at 10/31/2012 | ($) | ||
Financial Futures Long | ||||||
Amsterdam Exchange Index | 130 | 11,104,054 | November 2012 | (33,433 | ) | |
ASX SPI 200 | 24 | 2,805,240 | December 2012 | 65,741 | ||
CAC 40 10 EURO | 105 | 4,661,253 | November 2012 | (75,543 | ) | |
DAX | 48 | 11,309,104 | December 2012 | (112,652 | ) | |
Euro-Bond Options | 305 | 8,570,614 | November 2012 | 167,519 | ||
FTSE 100 | 19 | 1,767,328 | December 2012 | (15,754 | ) | |
Japanese 10 Year Bond | 18 | 32,525,366 | December 2012 | (4,097 | ) | |
Standard & Poor’s 500 E-mini | 251 | 17,655,340 | December 2012 | (410,855 | ) | |
U.S. Treasury 10 Year Notes | 43 | 5,720,344 | December 2012 | 40,391 | ||
Financial Futures Short | ||||||
Australian 10 Year Bond | 118 | (15,349,346 | ) | December 2012 | 5,206 | |
Canadian 10 Year Bond | 147 | (20,174,508 | ) | December 2012 | (101,230 | ) |
Euro-Bond | 28 | (5,141,850 | ) | December 2012 | (7,445 | ) |
Hang Seng | 76 | (10,627,183 | ) | November 2012 | (5,017 | ) |
Japanese 10 Year Mini Bond | 83 | (14,992,609 | ) | December 2012 | (41,912 | ) |
Long Gilt | 97 | (18,649,571 | ) | December 2012 | 237,884 | |
S&P/ Toronto Stock | ||||||
Exchange 60 Index | 18 | (2,559,199 | ) | December 2012 | (18,793 | ) |
Topix | 95 | (8,818,113 | ) | December 2012 | (10,256 | ) |
Gross Unrealized Appreciation | 516,741 | |||||
Gross Unrealized Depreciation | (836,987 | ) | ||||
See notes to financial statements. |
58
STATEMENT OF OPTIONS WRITTEN
October 31, 2012
Number of | ||||
Contracts ($) | Value ($) | |||
Call Options: | ||||
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,601 | 300 | a | (37,462 | ) |
Swiss Market Index Futures, | ||||
December 2012 @ CHF 6,532 | 990 | a | (167,508 | ) |
(premiums received $228,996) | (204,970 | ) | ||
CHF—Swiss Franc | ||||
a Non-income producing security. | ||||
See notes to financial statements. |
The Fund | 59 |
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2012
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments: | ||||
Unaffiliated issuers | 120,729,791 | 121,128,854 | ||
Affiliated issuers | 24,483,140 | 24,483,140 | ||
Cash | 150 | |||
Cash on initial margin—Note 4 | 1,080,000 | |||
Cash denominated in foreign currencies | 812,840 | 800,793 | ||
Receivable for shares of Common Stock subscribed | 543,103 | |||
Unrealized appreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 496,796 | |||
Dividends receivable | 180,345 | |||
Prepaid expenses | 15,413 | |||
148,728,594 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 178,088 | |||
Unrealized depreciation on forward foreign | ||||
currency exchange contracts—Note 4 | 1,938,899 | |||
Payable for futures variation margin—Note 4 | 300,416 | |||
Outstanding options written, at value (premiums received | ||||
$228,996)—See Statement of Options Written—Note 4 | 204,970 | |||
Payable for shares of Common Stock redeemed | 135,836 | |||
Accrued expenses | 84,666 | |||
2,842,875 | ||||
Net Assets ($) | 145,885,719 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 224,597,468 | |||
Accumulated investment (loss)—net | (79,143 | ) | ||
Accumulated net realized gain (loss) on investments | (77,241,668 | ) | ||
Accumulated net unrealized appreciation (depreciation) on investments, | ||||
options transactions and foreign currency transactions [including | ||||
($320,246) net unrealized (depreciation) on financial futures] | (1,390,938 | ) | ||
Net Assets ($) | 145,885,719 | |||
Net Asset Value Per Share | ||||
Class A | Class C | Class I | ||
Net Assets ($) | 14,912,771 | 7,704,144 | 123,268,804 | |
Shares Outstanding | 1,194,240 | 635,703 | 9,745,816 | |
Net Asset Value Per Share ($) | 12.49 | 12.12 | 12.65 | |
See notes to financial statements. |
60
STATEMENT OF OPERATIONS
Year Ended October 31, 2012
Investment Income ($): | ||
Income: | ||
Cash dividends (net of $87,263 foreign taxes withheld at source): | ||
Unaffiliated issuers | 1,577,350 | |
Affiliated issuers | 19,085 | |
Interest | 20,625 | |
Total Income | 1,617,060 | |
Expenses: | ||
Management fee—Note 3(a) | 1,105,673 | |
Shareholder servicing costs—Note 3(c) | 107,644 | |
Custodian fees—Note 3(c) | 96,982 | |
Professional fees | 75,038 | |
Distribution fees—Note 3(b) | 62,188 | |
Registration fees | 48,211 | |
Prospectus and shareholders’ reports | 29,868 | |
Directors’ fees and expenses—Note 3(d) | 6,835 | |
Loan commitment fees—Note 2 | 996 | |
Miscellaneous | 99,621 | |
Total Expenses | 1,633,056 | |
Less—reduction in fees due to earnings credits—Note 3(c) | (31 | ) |
Net Expenses | 1,633,025 | |
Investment (Loss)—Net | (15,965 | ) |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | (322,988 | ) |
Net realized gain (loss) on options transactions | 194,762 | |
Net realized gain (loss) on financial futures | 3,323,831 | |
Net realized gain (loss) on forward foreign currency exchange contracts | 51,005 | |
Net Realized Gain (Loss) | 3,246,610 | |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 4,525,937 | |
Net unrealized appreciation (depreciation) on options transactions | 172,687 | |
Net unrealized appreciation (depreciation) on financial futures | (1,034,250 | ) |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (1,066,773 | ) |
Net Unrealized Appreciation (Depreciation) | 2,597,601 | |
Net Realized and Unrealized Gain (Loss) on Investments | 5,844,211 | |
Net Increase in Net Assets Resulting from Operations | 5,828,246 | |
See notes to financial statements. |
The Fund | 61 |
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31, | ||||
2012 | 2011 | |||
Operations ($): | ||||
Investment (loss)—net | (15,965 | ) | (195,828 | ) |
Net realized gain (loss) on investments | 3,246,610 | 2,063,426 | ||
Net unrealized appreciation | ||||
(depreciation) on investments | 2,597,601 | (31,984 | ) | |
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 5,828,246 | 1,835,614 | ||
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 1,361,750 | 1,835,994 | ||
Class C Shares | 154,884 | 228,056 | ||
Class I Shares | 84,243,260 | 33,309,183 | ||
Cost of shares redeemed: | ||||
Class A Shares | (6,241,842 | ) | (7,852,506 | ) |
Class C Shares | (2,075,851 | ) | (3,962,032 | ) |
Class I Shares | (14,762,264 | ) | (12,256,698 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 62,679,937 | 11,301,997 | ||
Total Increase (Decrease) in Net Assets | 68,508,183 | 13,137,611 | ||
Net Assets ($): | ||||
Beginning of Period | 77,377,536 | 64,239,925 | ||
End of Period | 145,885,719 | 77,377,536 | ||
Accumulated investment (loss)—net | (79,143 | ) | (40,340 | ) |
Capital Share Transactions (Shares): | ||||
Class A | ||||
Shares sold | 112,440 | 156,682 | ||
Shares redeemed | (519,883 | ) | (671,148 | ) |
Net Increase (Decrease) in Shares Outstanding | (407,443 | ) | (514,466 | ) |
Class C | ||||
Shares sold | 13,139 | 19,817 | ||
Shares redeemed | (177,256 | ) | (342,904 | ) |
Net Increase (Decrease) in Shares Outstanding | (164,117 | ) | (323,087 | ) |
Class I | ||||
Shares sold | 6,779,483 | 2,798,559 | ||
Shares redeemed | (1,204,891 | ) | (1,034,286 | ) |
Net Increase (Decrease) in Shares Outstanding | 5,574,592 | 1,764,273 | ||
See notes to financial statements. |
62
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||||||
Class A Shares | 2012 | 2011 | 2010 | 2009 | 2008 | |||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 11.74 | 11.39 | 9.98 | 8.48 | 14.25 | |||||
Investment Operations: | ||||||||||
Investment income (loss)—net a | (.03 | ) | (.04 | ) | (.06 | ) | (.01 | ) | .13 | |
Net realized and unrealized | ||||||||||
gain (loss) on investments | .78 | .39 | 1.47 | 1.87 | (5.47 | ) | ||||
Total from Investment Operations | .75 | .35 | 1.41 | 1.86 | (5.34 | ) | ||||
Distributions: | ||||||||||
Dividends from investment income—net | — | — | — | (.36 | ) | (.26 | ) | |||
Dividends from net realized | ||||||||||
gain on investments | — | — | — | — | (.17 | ) | ||||
Total Distributions | — | — | — | (.36 | ) | (.43 | ) | |||
Net asset value, end of period | 12.49 | 11.74 | 11.39 | 9.98 | 8.48 | |||||
Total Return (%) b | 6.39 | 3.07 | 14.13 | 22.83 | (38.52 | ) | ||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 1.85 | 1.88 | 2.06 | 1.98 | 1.61 | |||||
Ratio of net expenses | ||||||||||
to average net assets | 1.85 | 1.88 | 2.06 | 1.97 | 1.61 | |||||
Ratio of net investment income | ||||||||||
(loss) to average net assets | (.21 | ) | (.38 | ) | (.54 | ) | (.14 | ) | 1.09 | |
Portfolio Turnover Rate | 1.65 | 4.78 | 2.91 | 14.88 | 24.53 | |||||
Net Assets, end of period ($ x 1,000) | 14,913 | 18,797 | 24,096 | 36,670 | 74,083 |
a | Based on average shares outstanding at each month end. |
b | Exclusive of sales charge. |
See notes to financial statements.
The Fund | 63 |
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||||||
Class C Shares | 2012 | 2011 | 2010 | 2009 | 2008 | |||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 11.48 | 11.22 | 9.91 | 8.37 | 14.10 | |||||
Investment Operations: | ||||||||||
Investment income (loss)—net a | (.12 | ) | (.13 | ) | (.15 | ) | (.07 | ) | .04 | |
Net realized and unrealized | ||||||||||
gain (loss) on investments | .76 | .39 | 1.46 | 1.86 | (5.40 | ) | ||||
Total from Investment Operations | .64 | .26 | 1.31 | 1.79 | (5.36 | ) | ||||
Distributions: | ||||||||||
Dividends from investment income—net | — | — | — | (.25 | ) | (.20 | ) | |||
Dividends from net realized | ||||||||||
gain on investments | — | — | — | — | (.17 | ) | ||||
Total Distributions | — | — | — | (.25 | ) | (.37 | ) | |||
Net asset value, end of period | 12.12 | 11.48 | 11.22 | 9.91 | 8.37 | |||||
Total Return (%) b | 5.58 | 2.32 | 13.22 | 21.94 | (38.97 | ) | ||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 2.62 | 2.63 | 2.81 | 2.73 | 2.35 | |||||
Ratio of net expenses | ||||||||||
to average net assets | 2.62 | 2.63 | 2.81 | 2.72 | 2.35 | |||||
Ratio of net investment income | ||||||||||
(loss) to average net assets | (.98 | ) | (1.12 | ) | (1.43 | ) | (.89 | ) | .32 | |
Portfolio Turnover Rate | 1.65 | 4.78 | 2.91 | 14.88 | 24.53 | |||||
Net Assets, end of period ($ x 1,000) | 7,704 | 9,180 | 12,600 | 17,510 | 26,706 |
a | Based on average shares outstanding at each month end. |
b | Exclusive of sales charge. |
See notes to financial statements.
64
Year Ended October 31, | |||||||||
Class I Shares | 2012 | 2011 | 2010 | 2009 | 2008 | ||||
Per Share Data ($): | |||||||||
Net asset value, beginning of period | 11.84 | 11.44 | 9.99 | 8.52 | 14.30 | ||||
Investment Operations: | |||||||||
Investment income (loss)—net a | .02 | .00 | b | (.01 | ) | .02 | .17 | ||
Net realized and unrealized gain | |||||||||
(loss) on investments | .79 | .40 | 1.46 | 1.87 | (5.48 | ) | |||
Total from Investment Operations | .81 | .40 | 1.45 | 1.89 | (5.31 | ) | |||
Distributions: | |||||||||
Dividends from investment income—net | — | — | — | (.42 | ) | (.30 | ) | ||
Dividends from net realized | |||||||||
gain on investments | — | — | — | — | (.17 | ) | |||
Total Distributions | — | — | — | (.42 | ) | (.47 | ) | ||
Net asset value, end of period | 12.65 | 11.84 | 11.44 | 9.99 | 8.52 | ||||
Total Return (%) | 6.84 | 3.50 | 14.51 | 23.29 | (38.29 | ) | |||
Ratios/Supplemental Data (%): | |||||||||
Ratio of total expenses | |||||||||
to average net assets | 1.47 | 1.49 | 1.64 | 1.60 | 1.26 | ||||
Ratio of net expenses | |||||||||
to average net assets | 1.47 | 1.49 | 1.64 | 1.59 | 1.26 | ||||
Ratio of net investment income | |||||||||
(loss) to average net assets | .13 | .01 | (.12 | ) | .23 | 1.37 | |||
Portfolio Turnover Rate | 1.65 | 4.78 | 2.91 | 14.88 | 24.53 | ||||
Net Assets, end of period ($ x 1,000) | 123,269 | 49,400 | 27,544 | 17,691 | 21,124 |
a | Based on average shares outstanding at each month end. |
b | Amount represents less than $.01 per share. |
See notes to financial statements.
The Fund | 65 |
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Global Alpha Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company that offers thirteen series, including the fund. The fund’s investment objective is to seek total return.The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Mellon Capital Management Corporation (“Mellon Capital”), a subsidiary of BNY Mellon, serves as the fund’s sub-investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares.The fund is authorized to issue 400 million shares of $.001 par value Common Stock. The fund currently offers three classes of shares: Class A (200 million shares authorized), Class C (100 million shares authorized) and Class I (100 million shares authorized). Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I shares are sold at net asset value per share only to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are
66
charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications.The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
The Fund | 67 |
NOTES TO FINANCIAL STATEMENTS (continued)
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1 —unadjusted quoted prices in active markets for identical investments.
Level 2 —other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 —significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are categorized within Level 1 of the fair value hierarchy.
U.S. Treasury Bills are valued at the mean price between quoted bid prices and asked prices by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”).These securities are generally categorized within Level 2 of the fair value hierarchy.
68
The Service’s procedures are reviewed by Dreyfus under the general supervision of the Board.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.These securities are either categorized as Level 2 or 3 depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. These securities are generally categorized within Level 1 of the fair value hierarchy. Options traded
The Fund | 69 |
NOTES TO FINANCIAL STATEMENTS (continued)
over-the-counter are valued at the mean between the bid and asked price.These securities are generally categorized within Level 2 of the fair value hierarchy. Forward foreign currency exchange contracts (“forward contracts”) are valued at the forward rate. These securities are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2012 in valuing the fund’s investments:
Level 2—Other | Level 3— | ||||||
Level 1— | Significant | Significant | |||||
Unadjusted | Observable | Unobservable | |||||
Quoted Prices | Inputs | Inputs | Total | ||||
Assets ($) | |||||||
Investments in Securities: | |||||||
Equity Securities— | |||||||
Domestic Common | |||||||
Stocks † | 41,581,784 | — | — | 41,581,784 | |||
Equity Securities— | |||||||
Foreign Common | |||||||
Stocks † | 36,375,819 | — | 8 | 36,375,827 | |||
Mutual Funds | 24,483,140 | — | — | 24,483,140 | |||
Preferred Stocks † | 191,495 | — | — | 191,495 | |||
U.S. Treasury | — | 39,046,272 | — | 39,046,272 | |||
Rights † | 6,189 | — | — | 6,189 | |||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts †† | — | 496,796 | — | 496,796 | |||
Financial Futures †† | 516,741 | — | — | 516,741 | |||
Options Purchased | 3,927,287 | — | — | 3,927,287 | |||
Liabilities ($) | |||||||
Other Financial | |||||||
Instruments: | |||||||
Forward Foreign | |||||||
Currency Exchange | |||||||
Contracts †† | — | (1,938,899 | ) | — | (1,938,899 | ) | |
Financial Futures †† | (836,987 | ) | — | — | (836,987 | ) | |
Options Written | (204,970 | ) | — | — | (204,970 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Amount shown represents unrealized appreciation (depreciation) at period end. |
70
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
Equity Securities— | ||
Foreign Common Stocks ($) | ||
Balance as of 10/31/2011 | 583 | |
Realized gain (loss) | — | |
Change in unrealized appreciation (depreciation) | (575 | ) |
Purchases | — | |
Sales | ||
Transfers into Level 3 | — | |
Transfers out of Level 3 | — | |
Balance as of 10/31/2012 | 8 | |
The amount of total gains (losses) for the period | ||
included in earnings attributable to the change | ||
in unrealized gains (losses) relating to | ||
investments still held at 10/31/2012 | (575 | ) |
At October 31, 2011, $6,955,959 of exchange traded foreign equity securities were classified within Level 2 of the fair value hierarchy pursuant to the fund’s fair valuation procedures.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on investments are also included with net realized and unrealized gain or loss on investments.
The Fund | 71 |
NOTES TO FINANCIAL STATEMENTS (continued)
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended October 31, 2012 were as follows:
Affiliated | |||||||
Investment | Value | Value | Net | ||||
Company | 10/31/2011 | ($) | Purchases ($) | Sales ($) | 10/31/2012 | ($) | Assets (%) |
Dreyfus | |||||||
Institutional | |||||||
Preferred | |||||||
Plus Money | |||||||
Market Fund | 12,607,663 | 74,408,645 | 62,533,168 | 24,483,140 | 16.8 |
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S.These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund
72
not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the four-year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2012, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $37,549, accumulated capital losses $78,546,781 and unrealized depreciation $202,517.
Under the Regulated Investment Company Modernization Act of 2010 (the “2010 Act”), the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) for an unlimited period. Furthermore, post-enactment capital loss carryovers retain their character as either short-term or long-term capital losses rather than short-term as they were under previous statute.The 2010 Act requires post-enactment losses to be utilized before the utilization of losses incurred in taxable years prior to the effective date of the 2010 Act (“pre-enactment losses”).As a result of this ordering rule, pre-enactment losses may be more likely to expire unused.
The Fund | 73 |
NOTES TO FINANCIAL STATEMENTS (continued)
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to October 31, 2012. If not applied, $60,210,328 of the carryover expires in fiscal year 2016 and $18,336,453 expires in fiscal year 2017.
During the period ended October 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency transactions and real estate investment trusts, the fund decreased accumulated undistributed investment income-net by $22,838, increased accumulated net realized gain (loss) on investments by $22,918 and decreased paid-in capital by $80. Net assets and net asset value per share were not affected by this reclassification.
(h) New Accounting Pronouncement: In December 2011, FASB issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position.They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition,ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”).ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact on the fund’s financial statement disclosures.
74
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Effective October 10, 2012, the $225 million unsecured credit facility with Citibank, N.A., was decreased to $210 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended on October 31, 2012, the fund did not borrow under the Facilities.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of 1.10% of the value of the fund’s average daily net assets and is payable monthly.
Dreyfus has contractually agreed, from November 1, 2012 to March 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund, so that the direct expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed 1.25% of the value of the fund’s average daily net assets.
Pursuant to a sub-investment advisory agreement between Dreyfus and Mellon Capital, Dreyfus pays Mellon Capital an annual fee of .65% of the value of the fund’s average daily net assets, payable monthly.
The Fund | 75 |
NOTES TO FINANCIAL STATEMENTS (continued)
During the period ended October 31, 2012, the Distributor retained $166 from commissions earned on sales of the fund’s Class A shares and $37 from CDSCs on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended October 31, 2012, Class C shares were charged $62,188 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services.The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts.The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2012, Class A and Class C shares were charged $41,407 and $20,729, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates DreyfusTransfer, Inc. (“DTI”), a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions.
76
During the period ended October 31, 2012, the fund was charged $7,753 for transfer agency services and $112 for cash management services. Cash management fees were partially offset by earnings credits of $13. These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended October 31, 2012, the fund was charged $96,982 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of NewYork Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended October 31, 2012, the fund was charged $543 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations. These fees were partially offset by earnings credits of $18.
During the period ended October 31, 2012, the fund was charged $8,517 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $135,638, Distribution Plan fees $4,955, Shareholder Services Plan fees $4,838, custodian fees $28,003, Chief Compliance Officer fees $2,654 and transfer agency fees $2,000.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
The Fund | 77 |
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, financial futures, options transactions and forward contracts, during the period ended October 31, 2012, amounted to $28,547,494 and $947,197, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended October 31, 2012 is discussed below.
The following tables show the fund’s exposure to different types of market risk as it relates to the Statement of Assets and Liabilities and the Statement of Operations, respectively.
Fair value of derivative instruments as of October 31, 2012 is shown below:
Derivative | Derivative | |||
Assets ($) | Liabilities ($) | |||
Equity risk 1,2 | 206,465 | Equity risk 1,3 | (887,273 | ) |
Interest rate risk 1,2 | 4,237,563 | Interest rate risk 1 | (154,684 | ) |
Foreign exchange risk 4 | 496,796 | Foreign exchange risk 5 | (1,938,899 | ) |
Gross fair value of | ||||
derivative contracts | 4,940,824 | (2,980,856 | ) |
Statement of Assets and Liabilities location:
1 | Includes cumulative appreciation (depreciation) on financial futures as reported in the Statement of |
Financial Futures, but only the unpaid variation margin is reported in the Statement of Assets | |
and Liabilities. | |
2 | Options purchased are included in investments in securities – Unaffiliated issuers, at value. |
3 | Outstanding options written, at value. |
4 | Unrealized appreciation on forward foreign currency exchange contracts. |
5 | Unrealized depreciation on forward foreign currency exchange contracts. |
The effect of derivative instruments in the Statement of Operations during the period ended October 31, 2012 is shown below:
Amount of realized gain or (loss) on derivatives recognized in income ($)
Financial | Options | Forward | |||
Underlying risk | Futures 6 | Transactions 7 | Contracts 8 | Total | |
Equity | 2,422,935 | (1,002,336 | ) | — | 1,420,599 |
Interest rate | 900,896 | 1,197,098 | — | 2,097,994 | |
Foreign exchange | — | — | 51,005 | 51,005 | |
Total | 3,323,831 | 194,762 | 51,005 | 3,569,598 |
78
Change in unrealized appreciation or (depreciation) on derivatives recognized in income ($)
Financial | Options | Forward | ||||||
Underlying risk | Futures 9 Transactions 10 | Contracts 11 | Total | |||||
Equity | (1,219,289 | ) | (26,424 | ) | — | (1,245,713 | ) | |
Interest rate | 185,039 | 199,111 | — | 384,150 | ||||
Foreign exchange | — | — | (1,066,773 | ) | (1,066,773 | ) | ||
Total | (1,034,250 | ) | 172,687 | (1,066,773 | ) | (1,928,336 | ) |
Statement of Operations location:
6 | Net realized gain (loss) on financial futures. |
7 | Net realized gain (loss) on options transactions. |
8 | Net realized gain (loss) on forward foreign currency exchange contracts. |
9 | Net unrealized appreciation (depreciation) on financial futures. |
10 Net unrealized appreciation (depreciation) on options transactions. | |
11 Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
Financial Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including equity price risk and interest rate risk as a result of changes in value of underlying financial instruments.The fund invests in financial futures in order to manage its exposure to or protect against changes in the market. A financial futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents.The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change.Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations. When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Statement of Operations.There is minimal counterparty credit risk to the fund with financial futures since they are exchange traded, and the exchange’s clearinghouse guarantees the financial futures against default. Financial futures open at October 31, 2012 are set forth in the Statement of Financial Futures.
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in interest rates, the values of equities or as a substitute for an investment. The fund is subject to
The Fund | 79 |
NOTES TO FINANCIAL STATEMENTS (continued)
interest rate risk and market risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying security or securities at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying security or securities at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates.
As a writer of an option, the fund has no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the security underlying the written option.There is a risk of loss from a change in value of such options which may exceed the related premiums received. The Statement of Operations reflects the following:
80
any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction.
The following summarizes the fund’s call/put options written during the period ended October 31, 2012:
Options Terminated | |||||
Number of | Premiums | Net Realized | |||
Options Written: | Contracts | Received ($) | Cost ($) | (Loss) ($) | |
Contracts outstanding | |||||
October 31, 2011 | 200 | 63,604 | |||
Contracts written | 4,720 | 787,007 | |||
Contracts terminated: | |||||
Contracts closed | 3,630 | 621,615 | 1,288,770 | (667,155 | ) |
Contracts Outstanding | |||||
October 31, 2012 | 1,290 | 228,996 |
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated
The Fund | 81 |
NOTES TO FINANCIAL STATEMENTS (continued)
with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at October 31, 2012:
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases: | ||||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 1,335,150 | 1,376,446 | 1,380,360 | 3,914 | ||
12/19/2012 b | 4,233,112 | 4,351,211 | 4,376,451 | 25,240 | ||
12/19/2012 c | 1,954,800 | 2,024,134 | 2,020,992 | (3,142 | ) | |
12/19/2012 d | 4,259,415 | 4,369,006 | 4,403,645 | 34,639 | ||
12/19/2012 e | 4,790,631 | 4,953,846 | 4,952,849 | (997 | ) | |
12/19/2012 f | 649,530 | 669,815 | 671,524 | 1,709 | ||
12/19/2012 g | 410,631 | 421,700 | 424,536 | 2,836 | ||
British Pound, | ||||||
Expiring: | ||||||
12/19/2012 b | 2,101,620 | 3,404,494 | 3,390,959 | (13,535 | ) | |
12/19/2012 c | 3,400,860 | 5,473,716 | 5,487,279 | 13,563 | ||
12/19/2012 d | 1,433,120 | 2,327,244 | 2,312,335 | (14,909 | ) | |
12/19/2012 e | 324,480 | 527,630 | 523,548 | (4,082 | ) | |
12/19/2012 g | 135,200 | 219,799 | 218,145 | (1,654 | ) | |
Canadian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 7,688,778 | 7,861,719 | 7,690,206 | (171,513 | ) | |
12/19/2012 c | 1,148,580 | 1,175,234 | 1,148,793 | (26,441 | ) | |
12/19/2012 d | 15,470,947 | 15,815,407 | 15,473,820 | (341,587 | ) | |
12/19/2012 e | 4,032,643 | 4,096,735 | 4,033,392 | (63,343 | ) | |
12/19/2012 g | 736,840 | 753,595 | 736,977 | (16,618 | ) | |
Euro, | ||||||
Expiring: | ||||||
12/19/2012 b | 233,050 | 299,927 | 302,220 | 2,293 | ||
12/19/2012 c | 1,605,420 | 2,073,602 | 2,081,916 | 8,314 | ||
12/19/2012 d | 740,960 | 957,173 | 960,880 | 3,707 | ||
12/19/2012 e | 147,350 | 190,146 | 191,084 | 938 | ||
12/19/2012 f | 162,085 | 209,278 | 210,193 | 915 | ||
12/19/2012 g | 2,403,005 | 3,112,494 | 3,116,227 | 3,733 | ||
Japanese Yen, | ||||||
Expiring: | ||||||
12/19/2012 a | 133,548,900 | 1,683,866 | 1,673,796 | (10,070 | ) | |
12/19/2012 b | 782,673,024 | 10,012,797 | 9,809,406 | (203,391 | ) | |
12/19/2012 c | 6,605,160 | 82,764 | 82,784 | 20 | ||
12/19/2012 d | 669,597,950 | 8,596,560 | 8,392,212 | (204,348 | ) | |
12/19/2012 e | 117,113,740 | 1,474,980 | 1,467,811 | (7,169 | ) | |
12/19/2012 f | 62,699,500 | 789,690 | 785,826 | (3,864 | ) | |
12/19/2012 g | 161,790,660 | 2,066,028 | 2,027,756 | (38,272 | ) |
82
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) (Depreciation) ($) | |||
Purchases (continued): | ||||||
New Zealand Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 5,020,349 | 4,046,770 | 4,115,153 | 68,383 | ||
12/19/2012 d | 433,664 | 357,578 | 355,472 | (2,106 | ) | |
12/19/2012 e | 2,067,840 | 1,691,581 | 1,694,997 | 3,416 | ||
12/19/2012 f | 94,864 | 78,220 | 77,760 | (460 | ) | |
12/19/2012 g | 6,343,983 | 5,134,697 | 5,200,129 | 65,432 | ||
Norwegian Krone, | ||||||
Expiring: | ||||||
12/19/2012 a | 7,513,200 | 1,332,005 | 1,315,443 | (16,562 | ) | |
12/19/2012 b | 6,542,680 | 1,144,000 | 1,145,520 | 1,520 | ||
12/19/2012 c | 15,791,200 | 2,764,682 | 2,764,791 | 109 | ||
12/19/2012 d | 2,903,966 | 500,805 | 508,439 | 7,634 | ||
12/19/2012 e | 23,601,514 | 4,104,858 | 4,132,254 | 27,396 | ||
12/19/2012 f | 3,318,330 | 588,377 | 580,987 | (7,390 | ) | |
12/19/2012 g | 18,788,820 | 3,297,348 | 3,289,627 | (7,721 | ) | |
Swedish Krona, | ||||||
Expiring: | ||||||
12/19/2012 a | 6,304,200 | 959,307 | 949,049 | (10,258 | ) | |
12/19/2012n d | 31,146,945 | 4,693,208 | 4,688,934 | (4,274 | ) | |
12/19/2012 e | 17,907,341 | 2,711,331 | 2,695,813 | (15,518 | ) | |
12/19/2012 f | 2,784,355 | 424,262 | 419,163 | (5,099 | ) | |
12/19/2012 g | 46,526,237 | 7,008,851 | 7,004,169 | (4,682 | ) | |
Sales: | Proceeds ($) | |||||
Australian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 b | 113,520 | 115,432 | 117,364 | (1,932 | ) | |
12/19/2012 e | 359,480 | 365,879 | 371,653 | (5,774 | ) | |
12/19/2012 g | 94,600 | 96,123 | 97,803 | (1,680 | ) | |
British Pound, | ||||||
Expiring: | ||||||
12/19/2012 a | 652,800 | 1,052,889 | 1,053,291 | (402 | ) | |
12/19/2012 b | 334,480 | 537,916 | 539,683 | (1,767 | ) | |
12/19/2012 d | 3,815,351 | 6,145,873 | 6,156,059 | (10,186 | ) | |
12/19/2012 e | 7,743,953 | 12,373,766 | 12,494,848 | (121,082 | ) | |
12/19/2012 f | 577,224 | 931,111 | 931,349 | (238 | ) | |
12/19/2012 g | 9,782,461 | 15,664,874 | 15,783,976 | (119,102 | ) | |
Canadian Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 2,161,200 | 2,199,804 | 2,161,601 | 38,203 | ||
12/19/2012 d | 490,100 | 502,578 | 490,191 | 12,387 | ||
12/19/2012 e | 3,119,629 | 3,147,347 | 3,120,208 | 27,139 | ||
12/19/2012 f | 954,530 | 972,304 | 954,707 | 17,597 | ||
12/19/2012 g | 37,700 | 38,678 | 37,707 | 971 |
The Fund | 83 |
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Proceeds ($) | Value ($) (Depreciation) ($) | |||
Sales (continued): | ||||||
Euro, | ||||||
Expiring: | ||||||
12/19/2012 a | 1,867,800 | 2,447,296 | 2,422,171 | 25,125 | ||
12/19/2012 b | 3,968,448 | 5,056,597 | 5,146,301 | (89,704 | ) | |
12/19/2012 c | 4,288,803 | 5,554,475 | 5,561,739 | (7,264 | ) | |
12/19/2012 e | 10,564,921 | 13,563,481 | 13,700,636 | (137,155 | ) | |
12/19/2012 f | 824,945 | 1,080,975 | 1,069,792 | 11,183 | ||
12/19/2012 g | 15,200,555 | 19,567,446 | 19,712,147 | (144,701 | ) | |
Japanese Yen, | ||||||
Expiring | ||||||
12/19/2012 e | 187,518,400 | 2,412,029 | 2,350,208 | 61,821 | ||
New Zealand Dollar, | ||||||
Expiring: | ||||||
12/19/2012 a | 823,350 | 668,503 | 674,896 | (6,393 | ) | |
12/19/2012 b | 392,500 | 317,768 | 321,730 | (3,962 | ) | |
12/19/2012 c | 1,724,280 | 1,408,298 | 1,413,383 | (5,085 | ) | |
12/19/2012 d | 255,125 | 206,383 | 209,125 | (2,742 | ) | |
12/19/2012 e | 3,513,118 | 2,851,917 | 2,879,684 | (27,767 | ) | |
12/19/2012 f | 496,115 | 402,374 | 406,663 | (4,289 | ) | |
12/19/2012 g | 137,375 | 111,333 | 112,606 | (1,273 | ) | |
Norwegian Krone, | ||||||
Expiring: | ||||||
12/19/2012 b | 5,586,390 | 974,153 | 978,089 | (3,936 | ) | |
12/19/2012 c | 4,205,520 | 724,740 | 736,320 | (11,580 | ) | |
12/19/2012 g | 9,105,600 | 1,567,931 | 1,594,247 | (26,316 | ) | |
Swedish Krona, | ||||||
Expiring: | ||||||
12/19/2012 b | 5,969,130 | 906,819 | 898,607 | 8,212 | ||
12/19/2012 c | 9,948,420 | 1,497,752 | 1,497,658 | 94 | ||
12/19/2012 d | 2,238,720 | 339,627 | 337,022 | 2,605 | ||
12/19/2012 e | 3,090,000 | 464,106 | 465,176 | (1,070 | ) | |
12/19/2012 f | 489,720 | 74,242 | 73,724 | 518 | ||
12/19/2012 g | 13,781,250 | 2,088,764 | 2,074,662 | 14,102 | ||
Swiss Franc, | ||||||
Expiring: | ||||||
12/19/2012 b | 699,755 | 747,929 | 751,950 | (4,021 | ) | |
12/19/2012 d | 439,410 | 471,713 | 472,186 | (473 | ) | |
12/19/2012 g | 325,740 | 351,165 | 350,037 | 1,128 | ||
Gross Unrealized | ||||||
Appreciation | 496,796 | |||||
Gross Unrealized | ||||||
Depreciation | (1,938,899 | ) |
Counterparties:
a | BNP Paribas |
b | Citigroup |
c | Credit Suisse First Boston |
d | Goldman Sachs |
e | HSBC |
f | Standard Chartered Bank of Australia |
g | UBS |
84
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2012:
Average Market Value ($) | |
Interest rate financial futures | 73,326,011 |
Equity financial futures | 41,595,325 |
Equity options contracts | 172,593 |
Interest rate options contracts | 3,424,417 |
Forward contracts | 87,757,751 |
At October 31, 2012, the cost of investments for federal income tax purposes was $145,421,545; accordingly, accumulated net unrealized appreciation on investments was $190,449, consisting of $9,908,328 gross unrealized appreciation and $9,717,879 gross unrealized depreciation.
The Fund | 85 |
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Global Alpha Fund
We have audited the accompanying statement of assets and liabilities, including the statements of investments, financial futures and options written, of Global Alpha Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting.Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012 by correspondence with the custodian and others.We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Global Alpha Fund at October 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 27, 2012
86
PROXY RESULTS (Unaudited)
The Company held a special meeting of shareholders on August 3, 2012.The proposal considered at the meeting, and the results, are as follows:
Shares | |||
Votes For | Authority Withheld | ||
To elect additional Board Members: | |||
Lynn Martin † | 90,334,756 | 3,252,629 | |
Robin A. Melvin † | 90,449,622 | 3,137,763 | |
Philip L. Toia † | 90,229,928 | 3,357,457 |
† Each new Board Member’s term commenced on September 1, 2012. |
In addition Peggy C. Davis, Joseph S. DiMartino, David P. Feldman, Ehud Houminer and Dr. Martin Peretz continue |
as Board Members of the Company. |
The Fund | 87 |
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (69) |
Chairman of the Board (1995) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small |
and medium size companies, Director (1997-present) |
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and |
businesses, Director (2005-2009) |
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard |
mills and paperboard converting plants, Director (2000-2010) |
No. of Portfolios for which Board Member Serves: 157 |
——————— |
Peggy C. Davis (69) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Shad Professor of Law, New York University School of Law (1983-present) |
No. of Portfolios for which Board Member Serves: 63 |
——————— |
David P. Feldman (72) |
Board Member (1996) |
Principal Occupation During Past 5Years: |
• Corporate Director and Trustee |
Other Public Company Board Memberships During Past 5Years: |
• BBH Mutual Funds Group (4 registered mutual funds), Director (1992-present) |
• QMed, Inc. a healthcare company, Director (1999-2007) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Ehud Houminer (72) |
Board Member (1993) |
Principal Occupation During Past 5Years: |
• Executive-in-Residence at the Columbia Business School, Columbia University (1992-present) |
Other Public Company Board Memberships During Past 5Years: |
• Avnet Inc., an electronics distributor, Director (1993-2012) |
No. of Portfolios for which Board Member Serves: 73 |
88
Lynn Martin (72) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• President of The Martin Hall Group LLC, a human resources consulting firm, from January |
2005-present |
Other Public Company Board Memberships During Past 5Years: |
• AT&T Inc., a telecommunications company, Director (1999-2012) |
• Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012) |
• The Proctor & Gamble Co., a consumer products company, Director (1994-2009) |
• Constellation Energy Group Inc., Director (2003-2009) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Robin A. Melvin (49) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Director, Boisi Family Foundation, a private family foundation that supports youth-serving orga- |
nizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012) |
No. of Portfolios for which Board Member Serves: 83 |
——————— |
Dr. Martin Peretz (73) |
Board Member (2006) |
Principal Occupation During Past 5Years: |
• Editor-in-Chief Emeritus of The New Republic Magazine (2010-present) (previously, |
Editor-in-Chief, 1974-2010) |
• Director of TheStreet.com, a financial information service on the web (1996-present) |
No. of Portfolios for which Board Member Serves: 46 |
——————— |
Philip L. Toia (79) |
Board Member (2012) |
Principal Occupation During Past 5Years: |
• Private Investor |
No. of Portfolios for which Board Member Serves: 56 |
——————— |
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166.Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Gloria Messinger, Emeritus Board Member
The Fund | 89 |
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009; from April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 72 investment companies (comprised of 156 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since February 1988.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 49 years old and has been an employee of the Manager since February 1984.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 39 years old and has been an employee of the Manager since July 1995.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. She is 56 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Senior Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 2000.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since April 1985.
90
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 53 years old and has been an employee of the Manager since September 1982.
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 73 investment companies (comprised of 183 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (73 investment companies, comprised of 183 portfolios). He is 55 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
MATTHEW D. CONNOLLY, Anti-Money Laundering Compliance Officer since April 2012.
Anti-Money Laundering Compliance Officer of the Distributor since October 2011; from March 2010 to September 2011, Global Head, KYC Reviews and Director, UBS Investment Bank; until March 2010,AML Compliance Officer and Senior Vice President, Citi Global Wealth Management. He is an officer of 69 investment companies (comprised of 179 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Distributor since October 2011.
The Fund | 91 |
NOTES
For More Information
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.
Item 3. Audit Committee Financial Expert.
The Registrant's Board has determined that David P. Feldman, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). David P. Feldman is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees . The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $220,020 in 2011 and $225,816 in 2012.
(b) Audit-Related Fees . The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $24,000 in 2011 and $36,000 in 2012. These services consisted of one or more of the following: (i) agreed upon procedures related to compliance with Internal Revenue Code section 817(h), (ii) security counts required by Rule 17f-2 under the Investment Company Act of 1940, as amended, (iii) advisory services as to the accounting or disclosure treatment of Registrant transactions or events and (iv) advisory services to the accounting or disclosure treatment of the actual or potential impact to the Registrant of final or proposed rules, standards or interpretations by the Securities and Exchange Commission, the Financial Accounting Standards Boards or other regulatory or standard-setting bodies.
The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $-0- in 2011 and $-0- in 2012.
(c) Tax Fees . The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice, and tax planning ("Tax Services") were $30,288 in 2011 and $43,947 in 2012. These services consisted of: (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments; (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held, and (iv) determination of Passive Foreign Investment Companies. The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates, which required pre-approval by the Audit Committee were $-0- in 2011 and $-0- in 2012.
(d) All Other Fees . The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $58 in 2011 and $112 in 2012. These services consisted of a review of the Registrant's anti-money laundering program.
The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee, were $-0- in 2011 and $200,000 in 2012.
(e)(1) Audit Committee Pre-Approval Policies and Procedures . The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. The pre-approved services in the Policy can include pre-approved audit services, pre-approved audit-related services, pre-approved tax services and pre-approved all other services. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.
(e)(2) Note: None of the services described in paragraphs (b) through (d) of this Item 4 were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) None of the hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal account's full-time, permanent employees.
Non-Audit Fees . The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $18,299,198 in 2011 and $47,346,640 in 2012.
Auditor Independence . The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Auditor's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable. [CLOSED-END FUNDS ONLY]
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable. [CLOSED-END FUNDS ONLY]
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable. [CLOSED-END FUNDS ONLY, beginning with reports for periods ended on and after December 31, 2005]
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable. [CLOSED-END FUNDS ONLY]
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Advantage Funds, Inc.
By: /s/ Bradley J. Skapyak |
|
Bradley J. Skapyak, President
|
|
Date: |
December 19, 2012 |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. |
|
|
|
By: /s/ Bradley J. Skapyak |
|
Bradley J. Skapyak, President
|
|
Date: |
December 19, 2012 |
|
|
By: /s/ James Windels |
|
James Windels, Treasurer
|
|
Date: |
December 19, 2012 |
|
EXHIBIT INDEX
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)
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