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- 0523 | |||||
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| The Dreyfus Fund Incorporated |
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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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| Michael A. Rosenberg, 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:
| 12/31 |
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Date of reporting period: | 12/31/10 |
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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 |
7 | Understanding Your Fund’s Expenses |
7 | Comparing Your Fund’s Expenses With Those of Other Funds |
8 | Statement of Investments |
13 | Statement of Assets and Liabilities |
14 | Statement of Operations |
15 | Statement of Changes in Net Assets |
16 | Financial Highlights |
17 | Notes to Financial Statements |
26 | Report of Independent Registered Public Accounting Firm |
27 | Important Tax Information |
28 | Information About the Review and Approval of the Fund’s Management Agreement |
32 | Board Members Information |
34 | Officers of the Fund |
FOR MORE INFORMATION | |
Back Cover |
The Dreyfus Fund
Incorporated
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this annual report for The Dreyfus Fund Incorporated, covering the 12-month period from January 1, 2010, through December 31, 2010.
Although 2010 proved to be a volatile year for stocks, the reporting period ended with a sustained market rally that produced above-average returns across most market-cap segments for the calendar year. Investors’ early concerns regarding sovereign debt issues in Europe and stubbornly high unemployment in the United States later gave way to optimism that massive economic stimulus programs, robust growth in the world’s emerging markets, a strong holiday retail season and rising corporate earnings signaled better economic times ahead.
We are aware that stocks have recently reached higher valuations, and that any new economic setbacks could result in market volatility as investors adjust their expectations. Nonetheless, we see value in many segments of the equity market. For example, investors in volatile markets may turn to high-quality stocks of U.S. companies with track records of consistent growth in a variety of economic climates, and international equities could benefit from a declining U.S. dollar and potentially higher growth opportunities abroad.With 2011 now upon us, we suggest talking to your financial advisor, who can help you identify potential opportunities and suggest strategies suitable for your individual needs in today’s market environment.
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.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 18, 2011
2
DISCUSSION OF FUND PERFORMANCE
For the period of January 1, 2010, through December 31, 2010, as provided by Sean P. Fitzgibbon, Portfolio Manager
Market and Fund Performance Overview
For the 12-month period ended December 31, 2010, The Dreyfus Fund Incorporated produced a total return of 16.30%.1 In comparison, the Standard & Poor’s 500 Composite Stock Price Index (“S&P 500 Index”), the fund’s benchmark, provided a total return of 15.08% for the same period.2
Despite heightened market volatility early in the year, stocks rose in 2010 on the strength of corporate revenue and earnings growth and the ongoing gradual expansion of the U.S. economy. Relatively good individual stock selections, primarily in the consumer staples, energy and industrials sectors, enabled the fund to produce a higher return than its benchmark for the year.
The Fund’s Investment Approach
The fund seeks long-term capital growth consistent with the preservation of capital. Current income is a secondary goal. To pursue these goals, the fund focuses on large-capitalization U.S. companies with strong positions in their industries and catalysts that can trigger a price increase. We use fundamental analysis to create a broadly diversified portfolio composed of a blend of growth stocks, value stocks and stocks that exhibit characteristics of both investment styles. We select stocks based on how shares are priced relative to the underlying company’s perceived intrinsic worth, the sustainability or growth of earnings or cash flow, and the company’s financial health.
Political and Economic Developments Drove Market Returns
Although underlying economic trends in the United States remained generally positive, various political and economic developments exacerbated market volatility over the first half of 2010. Stocks dipped in
The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
January 2010 after disappointing holiday sales highlighted consumers’ lack of confidence and buying power. The market rose in February, March and April as the U.S. economy showed evidence of sustained recovery from recession. However, investor confidence plunged in the spring following news that a sovereign debt crisis had spread from Greece to other members of the European Union. Stocks remained depressed during much of the summer in response to persistently high levels of unemployment and ongoing troubles in housing markets in the United States, as well as potential inflationary pressures in China. However, fears of another recession faded as the U.S. economy continued to expand, and investor sentiment was further bolstered by plans for a new round of quantitative easing from the Federal Reserve Board and the end of the midterm elections. Consequently, stocks rallied during the fall, ending the year with d ouble-digit gains.
Focused on Controlling Risks and Capturing Gains
The fund began the year maintaining a close watch on valuation and risk levels, trimming positions as they reached our price targets and opportunistically redeploying assets.This cautious investment approach enabled us to maintain the fund’s exposure to the economic recovery while limiting losses when the market declined in mid-year.The fund also proved well positioned to capture gains as the market advanced in the fourth quarter of 2010.
Stock selections in the consumer staples area produced the fund’s strongest gains. Top performers included organic grocer Whole Foods Market, which delivered better-than-expected earnings; cosmetics maker Estee Lauder, which returned to historical valuation norms from previously depressed levels; and beverage bottler Coca-Cola Enterprises, which sold certain operations toThe Coca-Cola Company. Gains in the energy sector were fueled, in part, by the fund’s opportunistic investments in stocks temporarily depressed by the massive oil spill in the Gulf of Mexico, such as Anadarko Petroleum and ENSCO. Another top energy performer, Newfield Exploration, benefited from a shift to increased petroleum production and the company’s inclusion in t he S&P 500 Index.
4
Several leading materials and machinery manufacturers also contributed to the fund’s relatively good returns, including coal producer Alpha Natural Resources, engine manufacturer Cummins, industrial machinery maker Caterpillar and diversified manufacturer Dover. Strong performers in other areas included auto parts maker Autoliv and software developer VMware, one of several technology holdings that delivered good returns.
On a negative note, a few financial sector investments detracted from relative performance. Holdings such as Bank of America and JPMorgan Chase & Co. continued to suffer from the after effects of the 2008 mortgage securities meltdown, while downtrodden Citigroup rebounded, and lack of exposure hurt returns. Notably weak performers in other sectors included biotechnology developers Human Genome Sciences and Amylin Pharmaceuticals, pharmaceutical giant Pfizer, utility companies Public Service Enterprise Group and Entergy, and technology holdings QUALCOMM and Research In Motion.
Positioned for Further Recovery
As of year-end, the fund has maintained mildly overweighted exposure to the consumer discretionary and energy sectors, as well as exposure to positions in the technology, materials and financials sectors.We believe the market has the potential to advance further assuming the U.S. economy continues to recover.While we have positioned the fund to benefit from such a scenario, we remain cautious regarding valuations, seeking to keep the fund’s risks closely in line with the broader market.
January 18, 2011
Please note, the position in any security highlighted in 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. | |
1 | Total return includes reinvestment of dividends and any capital gains paid. 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 INC. — Reflects reinvestment of dividends and, where applicable, capital |
gain distributions.The Standard & Poor’s 500 Composite Stock Price Index is a widely accepted, | |
unmanaged index of U.S. stock market performance. Investors cannot invest directly in an index. |
The Fund | 5 |
FUND PERFORMANCE
Average Annual Total Returns as of 12/31/10 | |||
1 Year | 5 Years | 10 Years | |
Fund | 16.30% | 2.90% | 1.43% |
Standard & Poor’s 500 | |||
Composite Stock Price Index | 15.08% | 2.29% | 1.42% |
† Source: Lipper Inc. |
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 above graph compares a $10,000 investment made in The Dreyfus Fund Incorporated on 12/31/00 to a $10,000 |
investment made in the Standard & Poor’s 500 Composite Stock Price Index (the “Index”) on that date.All dividends |
and capital gain distributions are reinvested. |
The fund’s performance shown in the line graph takes into account all applicable fees and expenses.The Index is a |
widely accepted, unmanaged index of U.S. stock market performance. 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
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 The Dreyfus Fund Incorporated from July 1, 2010 to December 31, 2010. 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 December 31, 2010 | |
Expenses paid per $1,000† | $ 4.40 |
Ending value (after expenses) | $1,239.50 |
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 December 31, 2010 | |
Expenses paid per $1,000† | $ 3.97 |
Ending value (after expenses) | $1,021.27 |
† Expenses are equal to the fund’s annualized expense ratio of .78%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
The Fund | 7 |
STATEMENT OF INVESTMENTS |
December 31, 2010 |
Common Stocks—100.1% | Shares | Value ($) |
Consumer Discretionary—14.1% | ||
Amazon.com | 73,970 a | 13,314,600 |
Autoliv | 123,840 b | 9,775,930 |
Carnival | 240,450 | 11,087,150 |
CBS, Cl. B | 613,640 | 11,689,842 |
General Motors | 147,060 a | 5,420,632 |
Guess? | 107,050 | 5,065,606 |
Lowe’s | 351,310 | 8,810,855 |
Macy’s | 319,080 | 8,072,724 |
Newell Rubbermaid | 464,190 | 8,438,974 |
News, Cl. A | 713,836 | 10,393,452 |
Nordstrom | 202,480 b | 8,581,102 |
Omnicom Group | 238,640 | 10,929,712 |
Stanley Black & Decker | 92,330 | 6,174,107 |
Staples | 444,080 b | 10,111,702 |
Target | 199,050 | 11,968,876 |
Toll Brothers | 373,480 a,b | 7,096,120 |
146,931,384 | ||
Consumer Staples—9.5% | ||
Clorox | 27,178 b | 1,719,824 |
Dr. Pepper Snapple Group | 156,060 | 5,487,070 |
Energizer Holdings | 99,800 a | 7,275,420 |
Estee Lauder, Cl. A | 106,960 b | 8,631,672 |
PepsiCo | 258,110 | 16,862,326 |
Philip Morris International | 278,335 | 16,290,948 |
Procter & Gamble | 455,630 | 29,310,678 |
Whole Foods Market | 270,990 | 13,709,384 |
99,287,322 | ||
Energy—12.9% | ||
Alpha Natural Resources | 120,970 a | 7,261,829 |
Anadarko Petroleum | 174,690 | 13,304,390 |
Apache | 90,050 | 10,736,662 |
8
Common Stocks (continued) | Shares | Value ($) | |
Energy (continued) | |||
Chevron | 243,600 | 22,228,500 | |
ENSCO, ADR | 203,740 | 10,875,641 | |
Halliburton | 265,262 | 10,830,647 | |
Hess | 161,840 | 12,387,234 | |
Newfield Exploration | 176,260 | a | 12,710,109 |
Occidental Petroleum | 265,860 | 26,080,866 | |
Valero Energy | 320,410 | 7,407,879 | |
133,823,757 | |||
Financial—15.0% | |||
American Express | 382,730 | 16,426,772 | |
Bank of America | 1,710,970 | 22,824,340 | |
Capital One Financial | 401,550 | 17,089,968 | |
Citigroup | 5,219,010 a | 24,685,917 | |
Comerica | 140,560 b | 5,937,254 | |
Genworth Financial, Cl. A | 848,230 a | 11,145,742 | |
JPMorgan Chase & Co. | 192,060 | 8,147,185 | |
Lincoln National | 479,720 | 13,341,013 | |
MetLife | 257,260 | 11,432,634 | |
Wells Fargo & Co. | 802,020 | 24,854,600 | |
155,885,425 | |||
Health Care—11.5% | |||
Allscripts Healthcare Solutions | 386,430 | a | 7,446,506 |
AmerisourceBergen | 217,040 | 7,405,405 | |
Amylin Pharmaceuticals | 546,290 | a,b | 8,035,926 |
CIGNA | 292,360 | 10,717,918 | |
Covidien | 160,665 | 7,335,964 | |
Dendreon | 122,790 a,b | 4,287,827 | |
Emergency Medical Services, Cl. A | 91,040 a | 5,882,094 | |
Gilead Sciences | 200,020 a | 7,248,725 | |
Hospira | 112,690 a | 6,275,706 | |
Human Genome Sciences | 419,800 a,b | 10,029,022 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (continued)
Common Stocks (continued) | Shares | Value ($) |
Health Care (continued) | ||
Pfizer | 1,610,560 | 28,200,906 |
St. Jude Medical | 123,170 a | 5,265,518 |
Thermo Fisher Scientific | 98,000 a | 5,425,280 |
Zimmer Holdings | 122,300 a | 6,565,064 |
120,121,861 | ||
Industrial—11.1% | ||
Caterpillar | 208,280 | 19,507,505 |
Cummins | 119,440 | 13,139,594 |
Dover | 257,900 | 15,074,255 |
General Electric | 468,420 | 8,567,402 |
Ingersoll-Rand | 133,910 b | 6,305,822 |
KBR | 112,329 | 3,422,665 |
Norfolk Southern | 243,470 | 15,294,785 |
Raytheon | 210,030 | 9,732,790 |
Textron | 401,300 b | 9,486,732 |
Tyco International | 355,415 | 14,728,398�� |
115,259,948 | ||
Information Technology—17.7% | ||
Apple | 121,216 a | 39,099,433 |
Cree | 125,100 a,b | 8,242,839 |
F5 Networks | 63,010 a,b | 8,201,382 |
Google, Cl. A | 40,693 a | 24,170,421 |
Informatica | 269,450 a,b | 11,863,883 |
International Business Machines | 184,640 | 27,097,766 |
NetApp | 148,120 a,b | 8,140,675 |
Oracle | 624,608 | 19,550,230 |
QUALCOMM | 310,530 | 15,368,130 |
Salesforce.com | 72,340 a,b | 9,548,880 |
10
Common Stocks (continued) | Shares | Value ($) |
Information Technology (continued) | ||
VMware, Cl. A | 61,657 a | 5,481,924 |
Western Digital | 230,440 a | 7,811,916 |
184,577,479 | ||
Materials—1.6% | ||
CF Industries Holdings | 37,170 | 5,023,525 |
E.I. du Pont de Nemours & Co. | 241,390 | 12,040,533 |
17,064,058 | ||
Telecommunication | ||
Services—3.3% | ||
AT&T | 886,640 | 26,049,483 |
Verizon Communications | 237,480 | 8,497,035 |
34,546,518 | ||
Utilities—3.4% | ||
American Electric Power | 184,870 | 6,651,623 |
Entergy | 100,400 | 7,111,332 |
NextEra Energy | 180,180 | 9,367,558 |
Public Service Enterprise Group | 375,880 | 11,956,743 |
35,087,256 | ||
Total Common Stocks | ||
(cost $817,854,305) | 1,042,585,008 | |
Limited Partnership Interests—.0% | ||
Consumer Discretionary—.0% | ||
SK Equity Fund, LPa,d | 100,000 | |
Health Care—.0% | ||
Galen Partners II, LPa,d | 60,204 | |
Total Limited Partnership Interests | ||
(cost $825,919) | 160,204 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (continued)
Investment of Cash Collateral | ||
for Securities Loaned—9.0% | Shares | Value ($) |
Registered Investment Company; | ||
Dreyfus Institutional Cash Advantage Fund | ||
(cost $93,226,243) | 93,226,243 c | 93,226,243 |
Total Investments (cost $911,906,467) | 109.1% | 1,135,971,455 |
Liabilities, Less Cash and Receivables | (9.1%) | (94,445,573) |
Net Assets | 100.0% | 1,041,525,882 |
ADR—American Depository Receipts | |
a | Non-income producing security. |
b | Security, or portion thereof, on loan.At December 31, 2010, the value of the fund’s securities on loan was |
$90,531,022 and the value of the collateral held by the fund was $93,226,243. | |
c | Investment in affiliated money market mutual fund. |
d | Securities restricted as to public resale. Investment in restricted securities with aggregate value of $160,204 |
representing .02% of net assets. |
Acquisition | |||
Issuer | Date | Cost ($) | Valuation ($)† |
Galen Partners II, LP | 5/1/96-1/3/97 | 442,626 | 60,204 |
SK Equity Fund, LP | 3/8/95-9/18/96 | 383,293 | 100,000 |
160,204 | |||
† The valuation of these securities has been determined in good faith by management under the direction of the | |||
Board of Directors. |
Portfolio Summary (Unaudited)†† | |||
Value (%) | Value (%) | ||
Information Technology | 17.7 | Money Market Investment | 9.0 |
Financial | 15.0 | Consumer Staples | 9.5 |
Consumer Discretionary | 14.1 | Utilities | 3.4 |
Energy | 12.9 | Telecommunication Services | 3.3 |
Health Care | 11.5 | Materials | 1.6 |
Industrial | 11.1 | 109.1 | |
†† Based on net assets. | |||
See notes to financial statements. |
12
STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2010 |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments (including | ||
securities on loan, valued at $90,531,022)—Note 1(b): | ||
Unaffiliated issuers | 818,680,224 | 1,042,745,212 |
Affiliated issuers | 93,226,243 | 93,226,243 |
Receivable for investment securities sold | 5,921,528 | |
Dividends receivable | 682,011 | |
Receivable for shares of Common Stock subscribed | 12,201 | |
Prepaid expenses | 18,128 | |
1,142,605,323 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 3(b) | 694,985 | |
Cash overdraft due to Custodian | 211,835 | |
Liability for securities on loan—Note 1(b) | 93,226,243 | |
Payable for investment securities purchased | 6,023,360 | |
Payable for shares of Common Stock redeemed | 693,257 | |
Accrued expenses | 229,761 | |
101,079,441 | ||
Net Assets ($) | 1,041,525,882 | |
Composition of Net Assets ($): | ||
Paid-in capital | 950,150,890 | |
Accumulated undistributed investment income—net | 1,046,657 | |
Accumulated net realized gain (loss) on investments | (133,736,653) | |
Accumulated net unrealized appreciation | ||
(depreciation) on investments | 224,064,988 | |
Net Assets ($) | 1,041,525,882 | |
Shares Outstanding | ||
(500 million shares of $1 par value Common Stock authorized) | 115,907,508 | |
Net Asset Value, offering and redemption price per share ($) | 8.99 | |
See notes to financial statements. |
The Fund | 13 |
STATEMENT OF OPERATIONS |
Year Ended December 31, 2010 |
Investment Income ($): | |
Income: | |
Cash dividends (net of $41,512 foreign taxes withheld at source): | |
Unaffiliated issuers | 15,620,314 |
Affiliated issuers | 4,374 |
Income from securities lending—Note 1(b) | 5,170 |
Total Income | 15,629,858 |
Expenses: | |
Management fee—Note 3(a) | 6,295,298 |
Shareholder servicing costs—Note 3(b) | 865,111 |
Professional fees | 108,066 |
Prospectus and shareholders’ reports | 73,375 |
Custodian fees—Note 3(b) | 72,066 |
Registration fees | 29,326 |
Directors’ fees and expenses—Note 3(c) | 25,919 |
Loan commitment fees—Note 2 | 17,076 |
Interest expense—Note 2 | 181 |
Miscellaneous | 39,700 |
Total Expenses | 7,526,118 |
Less—reduction in fees due to earnings credits—Note 3(b) | (4,545) |
Net Expenses | 7,521,573 |
Investment Income—Net | 8,108,285 |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | |
Net realized gain (loss) on investments | 69,685,470 |
Net unrealized appreciation (depreciation) on investments | 70,390,154 |
Net Realized and Unrealized Gain (Loss) on Investments | 140,075,624 |
Net Increase in Net Assets Resulting from Operations | 148,183,909 |
See notes to financial statements. |
14
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31, | ||
2010 | 2009 | |
Operations ($): | ||
Investment income—net | 8,108,285 | 9,821,020 |
Net realized gain (loss) on investments | 69,685,470 | (104,547,711) |
Net unrealized appreciation | ||
(depreciation) on investments | 70,390,154 | 313,228,053 |
Net Increase (Decrease) in Net Assets | ||
Resulting from Operations | 148,183,909 | 218,501,362 |
Dividends to Shareholders from ($): | ||
Investment income—net | (8,748,028) | (11,032,978) |
Capital Stock Transactions ($): | ||
Net proceeds from shares sold | 12,729,128 | 5,367,992 |
Dividends reinvested | 7,472,198 | 9,413,428 |
Cost of shares redeemed | (84,228,755) | (72,008,197) |
Increase (Decrease) in Net Assets | ||
from Capital Stock Transactions | (64,027,429) | (57,226,777) |
Total Increase (Decrease) in Net Assets | 75,408,452 | 150,241,607 |
Net Assets ($): | ||
Beginning of Period | 966,117,430 | 815,875,823 |
End of Period | 1,041,525,882 | 966,117,430 |
Undistributed investment income—net | 1,046,657 | 1,686,400 |
Capital Share Transactions (Shares): | ||
Shares sold | 1,535,788 | 821,741 |
Shares issued for dividends reinvested | 909,181 | 1,451,107 |
Shares redeemed | (10,347,667) | (11,330,452) |
Net Increase (Decrease) in Shares Outstanding | (7,902,698) | (9,057,604) |
See notes to financial statements. |
The Fund | 15 |
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated. 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 December 31, | |||||
2010 | 2009 | 2008 | 2007 | 2006 | |
Per Share Data ($): | |||||
Net asset value, beginning of period | 7.80 | 6.14 | 10.25 | 10.48 | 10.28 |
Investment Operations: | |||||
Investment income—neta | .07 | .08 | .13 | .17 | .14 |
Net realized and unrealized | |||||
gain (loss) on investments | 1.19 | 1.67 | (3.98) | .65 | 1.43 |
Total from Investment Operations | 1.26 | 1.75 | (3.85) | .82 | 1.57 |
Distributions: | |||||
Dividends from investment income—net | (.07) | (.09) | (.13) | (.17) | (.14) |
Dividends from net realized | |||||
gain on investments | — | — | (.13) | (.88) | (1.23) |
Total Distributions | (.07) | (.09) | (.26) | (1.05) | (1.37) |
Net asset value, end of period | 8.99 | 7.80 | 6.14 | 10.25 | 10.48 |
Total Return (%) | 16.30 | 28.75 | (38.21) | 7.89 | 15.58 |
Ratios/Supplemental Data (%): | |||||
Ratio of total expenses | |||||
to average net assets | .78 | .80 | .76 | .73 | .74 |
Ratio of net expenses | |||||
to average net assets | .78 | .79 | .75 | .73 | .74 |
Ratio of net investment income | |||||
to average net assets | .84 | 1.18 | 1.48 | 1.60 | 1.35 |
Portfolio Turnover Rate | 60.06 | 77.88 | 76.31 | 44.08 | 54.66 |
Net Assets, end of period | |||||
($ x 1,000) | 1,041,526 | 966,117 | 815,876 | 1,427,655 | 1,453,898 |
a Based on average shares outstanding at each month end. | |||||
See notes to financial statements. |
16
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
The Dreyfus Fund Incorporated (the “fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified open-end management investment company. The fund’s investment objective is to seek long-term capital growth consistent with the preservation of capital. 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, which are sold to the public without a sales charge.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 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 fund 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: 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
The Fund | 17 |
NOTES TO FINANCIAL STATEMENTS (continued)
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.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 of Directors. Fair val uing 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 futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered 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.
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
18
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.
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.
The following is a summary of the inputs used as of December 31, 2010 in valuing the fund’s investments:
Level 2—Other | Level 3— | |||
Level 1— | Significant | Significant | ||
Unadjusted | Observable | Unobservable | ||
Quoted Prices | Inputs | Inputs | Total | |
Assets ($) | ||||
Investments in Securities: | ||||
Equity Securities— | ||||
Domestic† | 1,021,933,437 | — | — | 1,021,933,437 |
Equity Securities— | ||||
Foreign† | 20,651,571 | — | — | 20,651,571 |
Mutual Funds | 93,226,243 | — | — | 93,226,243 |
Limited Partnership | ||||
Interests† | — | — | 160,204 | 160,204 |
† See Statement of Investments for additional detailed categorizations. |
The Fund | 19 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
Investment in Limited | |
Partnership Interests ($) | |
Balance as of 12/31/2009 | 89,067 |
Realized gain (loss) | 221,818 |
Change in unrealized appreciation (depreciation) | 72,585 |
Net purchases (sales) | (223,266) |
Transfers in and/or out of Level 3 | — |
Balance as of 12/31/2010 | 160,204 |
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 12/31/2010 | 72,585 |
In January 2010, FASB issued Accounting Standards Update (“ASU”) No. 2010-06 “Improving Disclosures about Fair Value Measurements”. The portions of ASU No. 2010-06 which require reporting entities to prepare new disclosures surrounding amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3 have been adopted by the fund. No significant transfers between Level 1 or Level 2 fair value measurements occurred at December 31, 2010. The remaining portion of ASU No. 2010-06 requires reporting entities to make new disclosures about information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of activity in Level 3 fair value measurements.These new an d revised disclosures are required to be implemented for fiscal years beginning after December 15, 2010. Management is currently evaluating the impact that the adoption of this remaining portion of ASU No. 2010-06 may have on the fund’s financial statement disclosures.
(b) 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.
20
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, the fund may lend securities to qualified institutions. It is the fund’s policy, that at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Manager, U.S. Government and Agency securities or letters of credit.The fund is entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund bears the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner. During the period ended December 31, 2010, The Bank of New York Mellon earned $2,216 from lending portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act.
The fund may invest in shares of certain affiliated investment companies also advised or managed by Dreyfus. Investments in affiliated investment companies for the period ended December 31, 2010 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 12/31/2009 ($) | Purchases ($) | Sales ($) | 12/31/2010 ($) Assets (%) | |
Dreyfus | |||||
Institutional | |||||
Preferred | |||||
Plus Money | |||||
Market Fund | — | 116,320,000 | 116,320,000 | — | — |
Dreyfus | |||||
Institutional | |||||
Cash | |||||
Advantage | |||||
Fund | — | 151,929,111 | 58,702,868 | 93,226,243 | 9.0 |
Total | — | 268,249,111 175,022,868 | 93,226,243 | 9.0 |
The Fund | 21 |
NOTES TO FINANCIAL STATEMENTS (continued)
(d) 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.
(e) 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 December 31, 2010, 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 December 31, 2010 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At December 31, 2010, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $1,046,657, accumulated capital losses $133,736,653 and unrealized appreciation $224,064,988.
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to December 31, 2010. If not applied, the carryover expires in fiscal 2017.
22
The tax character of distributions paid to shareholders during the fiscal periods ended December 31, 2010 and December 31, 2009 were as follows: ordinary income $8,748,028 and $11,032,978, respectively.
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. 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 December 31, 2010 was approximately $12,600 with a related weighted average annualized interest rate of 1.43%.
NOTE 3—Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement (the “Agreement”) with the Manager, the management fee is payable monthly, based on the following annual percentages of the value of the fund’s average daily net assets: .65% of the first $1.5 billion; .625% of the next $500 million; .60% of the next $500 million; and .55% over $2.5 billion.
The Agreement also provides for an expense reimbursement from the Manager should the fund’s aggregate expenses, exclusive of taxes and brokerage commissions, exceed 1% of the value of the fund’s average daily net assets for any full fiscal year. No expense reimbursement was required pursuant to the Agreement during the period ended December 31, 2010.
The Fund | 23 |
NOTES TO FINANCIAL STATEMENTS (continued)
(b) The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended December 31, 2010, the fund was charged $498,873 pursuant to the transfer agency agreement, which is included in Shareholder servicing costs in the Statement of Operations.
The fund has arrangements with the custodian and cash management bank whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset custody and cash management fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended December 31, 2010, the fund was charged $74,959 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 $4,545.
The fund also compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended December 31, 2010, the fund was charged $72,066 pursuant to the custody agreement.
During the period ended December 31, 2010, the fund was charged $6,243 for services performed by the Chief Compliance Officer.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $558,119, custodian fees $18,138, chief compliance officer fees $1,728 and transfer agency per account fees $117,000.
(c) 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.
24
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended December 31, 2010, amounted to $574,088,725 and $634,312,924, respectively.
The provisions of ASC Topic 815 “Derivatives and Hedging” require qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.The fund held no derivatives during the period ended December 31, 2010.
At December 31, 2010, the cost of investments for federal income tax purposes was $911,906,467; accordingly, accumulated net unrealized appreciation on investments was $224,064,988, consisting of $238,390,415 gross unrealized appreciation and $14,325,427 gross unrealized depreciation.
The Fund | 25 |
REPORT OF INDEPENDENT REGISTERED |
PUBLIC ACCOUNTING FIRM |
Shareholders and Board of Directors
The Dreyfus Fund Incorporated
We have audited the accompanying statement of assets and liabilities of The Dreyfus Fund Incorporated, including the statement of investments, as of December 31, 2010, 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 years 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 December 31, 2010 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 The Dreyfus Fund Incorporated at December 31, 2010, 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 years, in conformity with U.S. generally accepted accounting principles.
New York, New York
February 28, 2011
26
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund hereby designates 100% of the ordinary dividends paid during the fiscal year ended December 31, 2010 as qualifying for the corporate dividends received deduction. For the fiscal year ended December 31, 2010, 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, $8,748,028 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in early 2011 of the percentage applicable to the preparation of their 2010 income tax returns.
The Fund | 27 |
INFORMATION ABOUT THE REVIEW AND APPROVAL |
OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board of Directors held on July 14 and 15, 2010, the Board considered the re-approval for an annual period (through August 31, 2011) of the fund’s Management Agreement with Dreyfus, pursuant to which Dreyfus provides the fund with investment advisory and administrative services. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of Dreyfus.
Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members received a presentation from representatives of Dreyfus regarding services provided to the fund and other funds in the Dreyfus fund complex, and discussed the nature, extent and quality of the services provided to the fund by Dreyfus pursuant to the Management Agreement. Dreyfus’ representatives reviewed the fund’s distribution of accounts and the relationships Dreyfus has with various intermediaries and the different needs of each. Dreyfus’ representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and Dreyfus’ corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribu tion channel, including those of the fund. Dreyfus also provided the number of shareholder accounts in the fund, as well as the fund’s asset size.
The Board members also considered Dreyfus’ research and portfolio management capabilities and that Dreyfus also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements.The Board members also considered Dreyfus’ extensive administrative, accounting and compliance infrastructure. The Board also considered Dreyfus’ brokerage policies and practices, the standards applied in seeking best execution and Dreyfus’ policies and practices regarding soft dollars.
28
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and comparisons to a group of retail no-load large-cap core funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional large-cap core funds (the “Performance Universe”), selected and provided by Lipper, Inc., an independent provider of investment company data.The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below). The Board members discussed the results of the comparisons for various periods ended May 31, 2010.The Board members noted that the fund’s total return perfor mance was above the Performance Group and Performance Universe medians for all periods except the ten-year period ended May 31, 2010, when it was below the Performance Group and Performance Universe medians. Dreyfus also provided a comparison of the fund’s calendar year total returns to the returns of its benchmark index.
The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios as compared to a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper. The Board members noted that the fund’s contractual management fee was higher than the Expense Group median, the fund’s actual management fee was higher than the Expense Group and Expense Universe medians and the fund’s total expense ratio was lower than the Expense Group and Expense Universe medians.
Representatives of Dreyfus reviewed with the Board members the advisory fees paid by mutual funds managed by Dreyfus or its affiliates with similar investment objectives, policies and strategies, and included within the fund’s Lipper category (the “Similar Funds”). Representatives of
The Fund | 29 |
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE |
FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued) |
Dreyfus also noted that there were no other accounts managed by Dreyfus or its affiliates with similar investment objectives, policies and strategies as the fund.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.
Analysis of Profitability and Economies of Scale. Dreyfus’ representatives reviewed the dollar amount of expenses allocated and profit received by Dreyfus and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding Dreyfus’ approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board members also had been informed that the methodology had been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability an alysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors. The Board members also considered potential benefits to Dreyfus from acting as investment adviser, including soft dollar arrangements with respect to trading the fund’s investments.
It was noted that the Board members should consider Dreyfus’ profitability with respect to the fund as part of their evaluation of whether the fee under the Management Agreement bears a reasonable relationship to the mix of services provided by Dreyfus, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that Dreyfus may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered.
30
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.
The Board concluded that the nature, extent and quality of the services provided by Dreyfus are adequate and appropriate.
The Board was satisfied with the fund’s relative performance.
The Board concluded that the fee paid by the fund to Dreyfus was reasonable in light of the services provided, comparative performance, expense and management fee information, costs of the services pro- vided and profits to be realized and benefits derived or to be derived by Dreyfus from its relationship with the fund.
The Board determined that the economies of scale which may accrue to Dreyfus and its affiliates in connection with the manage- ment of the fund had been adequately considered by Dreyfus in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the Management Agreement was in the best interests of the fund and its shareholders.
The Fund | 31 |
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 76 investment companies (comprised of 169 portfolios) managed by the Manager. He is 52 years old and has been an employee of the Manager since February 1988.
PHILLIP N. MAISANO, Executive Vice President since July 2007.
Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 76 investment companies (comprised of 169 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or Board member of certain other investment management subsidiaries of The Bank of New York Mellon Corporation, each of which is an affiliate of the Manager. He is 63 years old and has been an employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004.
MICHAEL A. ROSENBERG, Vice President and Secretary since August 2005.
Assistant General Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since October 1991.
KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010.
Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. She is 37 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 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 44 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 77 investment companies (comprised of 194 portfolios) managed by the Manager. She is 55 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 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since June 2000.
KATHLEEN DENICHOLAS, Vice President and Assistant Secretary since January 2010.
Senior Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. She is 36 years old and has been an employee of the Manager since February 2001.
JANETTE E. FARRAGHER, Vice President and Assistant Secretary since August 2005.
Assistant General Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. She is 48 years old and has been an employee of the Manager since February 1984.
34
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since February 1991.
M. CRISTINA MEISER, Vice President and Assistant Secretary since January 2010.
Senior Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. She is 40 years old and has been an employee of the Manager since August 2001.
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 45 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 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 52 years old and has been an employee of the Manager since April 1985.
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 51 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 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 42 years old and has been an employee of the Manager since April 1991.
ROBERT ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 46 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 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since June 1989.
The Fund | 35 |
OFFICERS OF THE FUND (Unaudited) (continued)
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 194 portfolios) managed by the Manager. He is 43 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 (77 investment companies, comprised of 194 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon’s Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 53 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.
NATALIA GRIBAS, Anti-Money Laundering Compliance Officer since July 2010.
Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 73 investment companies (comprised of 190 portfolios) managed by the Manager. She is 40 years old and has been an employee of the Distributor since September 2008.
36
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 Joseph S. DiMartino, 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"). Joseph S. DiMartino 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 $ 39,709 in 2009 and $40,909 in 2010.
(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 $5,276 in 2009 and $5,382 in 2010. These services consisted 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 t he 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 2009 and $0 in 2010.
(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 $3,638 in 2009 and $ 3,181 in 2010. 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 2009 and $0 in 2010.
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(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 $244 in 2009 and $342 in 2010. [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 2009 and $0 in 2010.
(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 $24,975,296 in 2009 and $39,552,052 in 2010.
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.
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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.
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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.
The Dreyfus Fund Incorporated
By: /s/ Bradley J. Skapyak | |
Bradley J. Skapyak, President
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Date: | February 23, 2011 |
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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. | |
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By: /s/ Bradley J. Skapyak | |
Bradley J. Skapyak, President
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Date: | February 23, 2011 |
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By: /s/ James Windels | |
James Windels, Treasurer
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Date: | February 23, 2011 |
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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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Exhibit A
Persons Covered by the Code of Ethics
Bradley J. Skapyak | President | (Principal Executive Officer) |
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James Windels |
Treasurer | (Principal Financial and Accounting Officer) |
Revised as of January 1, 2010
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