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 | 811-3940 | |||||
|
| |||||
| Strategic Funds, Inc |
| ||||
| (Exact name of Registrant as specified in charter) |
| ||||
|
|
| ||||
|
c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 |
| ||||
| (Address of principal executive offices) (Zip code) |
| ||||
|
|
| ||||
| John Pak, Esq. 200 Park Avenue New York, New York 10166 |
| ||||
| (Name and address of agent for service) |
| ||||
| ||||||
Registrant's telephone number, including area code: | (212) 922-6000 | |||||
|
| |||||
Date of fiscal year end:
| 11/30 |
| ||||
Date of reporting period: | 5/31/13 |
| ||||
The following N-CSR relates only to the Registrant’s series listed below and does not affect the other series of the Registrant, which have different fiscal year ends and, therefore, different N-CSR reporting requirements. Separate N-CSR Forms will be filed for these series, as appropriate.
Dreyfus Select Managers Small Cap Value Fund
Dreyfus U.S. Equity Fund
Global Stock Fund
International Stock Fund
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/smscvncsrx1x1.jpg)
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.
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/smscvncsrx2x1.jpg)
Contents | |
THE FUND | |
2 | A Letter from the President |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
22 | Statement of Assets and Liabilities |
23 | Statement of Operations |
24 | Statement of Changes in Net Assets |
26 | Financial Highlights |
29 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus
Select Managers
Small Cap Value Fund
The Fund
A LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Select Managers Small Cap Value Fund, covering the six-month period from December 1, 2012, through May 31, 2013. 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.
The U.S. economic recovery gained traction over the reporting period, but remained slower than historical norms. On one hand, the expansion has been fueled by gradually falling unemployment, recovering housing markets, rapid growth in domestic oil and gas production, and, perhaps most significant, the aggressively stimulative monetary policy of the Federal Reserve Board (the “Fed”). On the other hand, several factors have weighed on the nation’s economic growth rate, including relatively sluggish demand for exports to Europe and the emerging markets, higher tax rates for some Americans, and more restrictive fiscal policies stemming from sequestration. Investors appear to have adopted a more optimistic outlook, as several major stock market indices reached new record highs by the reporting period’s end.
In our analysis, real GDP growth seems poised to accelerate modestly over the remainder of 2013. In fact, we expect the relatively mild economic expansion to remain intact domestically and globally over the next several years. The moderate pace of the recovery implies that the risks of consumer price inflation are limited, making it unlikely that the Fed will adopt expansion-threatening, restrictive policies anytime soon. As always, we encourage you to discuss our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/smscvncsrx4x1.jpg)
J. Charles Cardona
President
The Dreyfus Corporation
June 17, 2013
2
DISCUSSION OF FUND PERFORMANCE
For the period of December 1, 2012, through May 31, 2013, as provided by Keith L. Stransky and Robert B. Mayerick, Portfolio Allocation Managers, EACM Advisors LLC
Fund and Market Performance Overview
For the six-month period ended May 31, 2013, Dreyfus Select Managers Small Cap Value Fund’s Class A shares produced a total return of 20.52%, Class C shares returned 20.06% and Class I shares returned 20.73%.1 In comparison, the Russell 2000 Value Index (the “Index”), the fund’s benchmark, returned 19.69% for the same period.2
Improving U.S. economic trends generally drove small-cap value stocks higher during the reporting period. The fund outperformed its benchmark, primarily due to successful stock selection in six of the 10 market sectors represented in the Index.
The Fund’s Investment Approach
The fund seeks capital appreciation.To pursue its goal, the fund normally invests at least 80% of its net assets in the stocks of small-cap companies. The fund uses a “multi-manager” approach by selecting one or more sub-advisers to manage its assets. As the fund’s portfolio allocation managers, we seek sub-advisers that complement one another’s style of investing, consistent with the fund’s investment goal.We monitor and evaluate the performance of the sub-advisers and will make corresponding recommendations to Dreyfus and the fund’s Board based on our evaluations.
The fund’s assets are currently under the day-to-day portfolio management of seven sub-advisers, each acting independently of one another and using their own methodology to select portfolio investments.As of the end of the reporting period, 17% of the fund’s assets are under the management ofThompson, Siegel, andWalmsley, LLC, which employs a combination of quantitative and qualitative security selection methods based on a four-factor valuation model. Approximately 23% of the fund’s assets are under the management of Walthausen & Co., LLC, which uses a proprietary valuation model to identify companies that are trading at a discount to their intrinsic values.Approximately 14% of the fund’s assets are under the management of Neuberger Berman Management LLC, which uses fundamental analysis and a bottom-up stock selection process to identify publicly traded small-cap companies selling at a material discount to their intrinsic value.Approximately 21% of the fund’s assets are under the
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
management of Lombardia Capital Partners, which uses fundamental analysis and a bottom-up value-oriented approach in seeking stocks trading below their intrinsic values. Approximately 10% of the fund’s assets are under the management of Iridian Asset Management LLC, which employs bottom-up stock selection and a disciplined valuation process to identify and invest in corporate change.Approximately 10% of the fund’s assets are under the management of Vulcan Value Partners, LLC, which seeks companies with sustainable competitive advantages that may enable them to earn superior cash returns on capital. Approximately 5% of the fund’s assets are under the management of Kayne Anderson Rudnick Investment Management, LLC, which employs a fundamental, bottom-up, research-driven investment process in seeking to identify high-quality companies whose securities are trading at attractive valuations. These percentages can change over time, within ranges described in the prospectus.
Recovering Economy Fueled Market Gains
The reporting period began amid uncertainty surrounding automatic U.S. tax hikes and spending cuts scheduled for the start of 2013, but last-minute legislation to address the tax increases helped alleviate investors’ worries. Subsequently, investors responded positively to improved U.S. employment and housing market trends, and aggressively accommodative monetary policies adopted by the Federal Reserve Board and other central banks. Continued corporate earnings strength and encouraging economic data supported stock prices over the first five months of 2013, enabling some broad measures of stock market performance to set new record highs by the reporting period’s end. Small-cap stocks produced higher returns than their large-cap counterparts, but small-cap value stocks underperformed small-cap growth stocks, on average.
Stock Selections Buoyed Fund Results
The fund achieved particularly strong results in the financials sector. Real estate investment trusts (“REITs”) fared particularly well—including health care REITs Omega Healthcare Investors and Medical Properties Trust—as investors reached for high dividend yields. In the industrials sector, trucking company Arkansas Best was acquired at a premium to its stock price at the time, and seaborne shipping provider Danaos, which primarily traffics in consumer goods, benefited from improved consumer sentiment and recovering housing markets.
4
Disappointments were concentrated mainly in the consumer discretionary sector, where battery manufacturer ExideTechnologies reported lower-than-expected quarterly earnings from margin compression, and toymaker JAKKS Pacific posted an earnings shortfall stemming from a shift in consumers’ preferences from traditional toys to videogames.The fund’s investments in the energy sector also lagged market averages, as oil-and-gas exploration company Halcon Resources Corp. encountered subpar results in the Utica Shale formation.
A Constructive Outlook
The fund’s sub-advisers generally have been encouraged by recent trends among small-cap companies. It is expected that these companies will continue to benefit from increasing mergers-and-acquisitions activity, a strong domestic economy and reasonably attractive valuations. Recent value-oriented opportunities have been found in the information technology and industrials sectors, but relatively fewer among financial institutions.
June 17, 2013
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.
The prices of small company stocks tend to be more volatile than the prices of large company stocks, mainly because these companies have less established and more volatile earnings histories.They also tend to be less liquid than larger company stocks.
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 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 undertaking in effect through April 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 the reinvestment of dividends and, where applicable, capital gain |
distributions.The Russell 2000 Value Index is an unmanaged index, which measures the performance of those |
Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. Investors cannot invest |
directly in any index. |
The Fund 5
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 Select Managers Small CapValue Fund from December 1, 2012 to May 31, 2013. 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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 7.26 | $ | 11.41 | $ | 5.28 |
Ending value (after expenses) | $ | 1,205.20 | $ | 1,200.60 | $ | 1,207.30 |
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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 6.64 | $ | 10.45 | $ | 4.84 |
Ending value (after expenses) | $ | 1,018.35 | $ | 1,014.56 | $ | 1,020.14 |
† Expenses are equal to the fund’s annualized expense ratio of 1.32% for Class A, 2.08% for Class C and .96% |
for Class I, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half |
year period). |
6
STATEMENT OF INVESTMENTS
May 31, 2013 (Unaudited)
Common Stocks—95.9% | Shares | Value ($) | |
Automobiles & Components—1.2% | |||
Cooper Tire & Rubber | 43,100 | 1,113,704 | |
Dana Holding | 34,800 | 658,416 | |
Gentherm | 69,000 | a | 1,270,980 |
Modine Manufacturing | 89,600 | a | 918,400 |
Thor Industries | 66,096 | 2,822,960 | |
6,784,460 | |||
Banks—9.8% | |||
Astoria Financial | 45,300 | 446,658 | |
BancorpSouth | 23,039 | 395,349 | |
Bank of Hawaii | 18,513 | b | 932,685 |
Bank of the Ozarks | 12,600 | 549,990 | |
BankUnited | 35,500 | 872,590 | |
BBCN Bancorp | 129,180 | 1,665,130 | |
BofI Holding | 4,800 | a | 224,736 |
Brookline Bancorp | 55,184 | 467,960 | |
Bryn Mawr Bank | 53,520 | 1,213,834 | |
Centerstate Banks | 91,120 | 781,810 | |
City Holding | 40,250 | b | 1,594,705 |
City National | 13,000 | 815,880 | |
Columbia Banking System | 56,700 | 1,238,328 | |
Comerica | 30,827 | 1,217,358 | |
Community Bank System | 54,269 | b | 1,593,338 |
CVB Financial | 125,100 | 1,434,897 | |
Dime Community Bancshares | 67,230 | 968,784 | |
East West Bancorp | 88,132 | 2,321,397 | |
F.N.B | 113,895 | 1,309,793 | |
First Bancorp | 11,100 | b | 158,175 |
First Commonwealth Financial | 150,600 | 1,085,826 | |
First Financial Bankshares | 40,080 | b | 2,204,400 |
First Merchants | 39,447 | 653,242 | |
First Midwest Bancorp | 55,178 | 726,142 | |
First Niagara Financial Group | 328,530 | 3,209,738 | |
FirstMerit | 109,962 | 2,074,983 | |
Flushing Financial | 33,145 | 518,056 | |
Hancock Holding | 99,548 | 2,842,095 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Banks (continued) | |||
Heritage Financial Group | 54,789 | 782,935 | |
Huntington Bancshares | 170,810 | 1,323,778 | |
IBERIABANK | 29,800 | 1,535,892 | |
Independent Bank | 13,740 | 452,733 | |
Investors Bancorp | 23,272 | 460,320 | |
MGIC Investment | 96,100 | a | 593,898 |
National Bank Holdings, Cl. A | 30,099 | 545,996 | |
Ocwen Financial | 84,250 | a | 3,604,215 |
Park Sterling | 124,360 | a | 727,506 |
Rockville Financial | 53,488 | b | 697,484 |
SVB Financial Group | 20,100 | a | 1,555,539 |
TCF Financial | 95,100 | 1,369,440 | |
Texas Capital Bancshares | 55,000 | a | 2,428,800 |
Trustmark | 49,345 | b | 1,257,804 |
Umpqua Holdings | 181,710 | 2,456,719 | |
Union First Market Bankshares | 37,374 | 748,227 | |
Washington Federal | 28,928 | 505,951 | |
Westamerica Bancorporation | 20,510 | b | 923,565 |
Wintrust Financial | 38,600 | 1,456,764 | |
56,945,445 | |||
Capital Goods—11.0% | |||
AAON | 38,147 | 1,268,006 | |
AAR | 2,756 | 55,285 | |
Aegion | 23,575 | a | 538,217 |
Aerovironment | 18,850 | a | 378,319 |
Albany International, Cl. A | 51,190 | 1,624,771 | |
CAI International | 84,520 | a | 2,162,022 |
CLARCOR | 20,415 | 1,107,310 | |
Columbus McKinnon | 79,360 | a | 1,678,464 |
Curtiss-Wright | 47,968 | 1,744,116 | |
DigitalGlobe | 35,700 | a | 1,079,211 |
Donaldson | 35,929 | 1,347,697 | |
DXP Enterprises | 16,000 | a | 945,120 |
Dycom Industries | 31,990 | a | 727,773 |
EnerSys | 27,664 | 1,378,497 | |
ESCO Technologies | 28,400 | 912,208 |
8
Common Stocks (continued) | Shares | Value ($) | |
Capital Goods (continued) | |||
Flow International | 198,320 | a | 787,330 |
Foster Wheeler | 55,538 | a | 1,278,485 |
Franklin Electric | 24,601 | 831,760 | |
FreightCar America | 33,214 | 602,502 | |
Generac Holdings | 34,200 | b | 1,385,100 |
General Cable | 23,240 | 821,766 | |
Gibraltar Industries | 34,330 | a | 557,176 |
Graco | 24,085 | 1,552,278 | |
GrafTech International | 141,690 | a,b | 1,188,779 |
Granite Construction | 22,520 | 694,967 | |
H&E Equipment Services | 30,900 | 691,542 | |
Harsco | 26,550 | 620,739 | |
Hexcel | 110,412 | a | 3,839,025 |
Hyster-Yale Materials Handling | 30,530 | 1,886,754 | |
II-VI | 30,020 | a | 498,332 |
ITT | 42,800 | 1,290,420 | |
John Bean Technologies | 62,110 | 1,341,576 | |
KBR | 47,500 | 1,714,750 | |
Lawson Products | 37,730 | 562,177 | |
Lincoln Electric Holdings | 36,452 | 2,179,830 | |
LSI Industries | 66,925 | 545,439 | |
Lydall | 38,121 | a | 551,230 |
Manitowoc | 47,400 | 995,874 | |
Meritor | 78,700 | a | 569,788 |
Miller Industries | 35,700 | 584,409 | |
Mistras Group | 27,678 | a | 591,756 |
Moog, Cl. A | 9,820 | a | 491,687 |
National Presto Industries | 7,350 | b | 565,436 |
NCI Building Systems | 100,750 | a | 1,455,838 |
Nordson | 14,445 | 1,028,773 | |
Orion Marine Group | 69,673 | a | 836,773 |
Spirit Aerosystems Holdings, Cl. A | 66,030 | a | 1,426,908 |
Standex International | 47,200 | 2,462,424 | |
Teledyne Technologies | 15,800 | a | 1,220,076 |
Textron | 37,600 | 1,013,696 | |
Titan International | 80,420 | b | 1,876,199 |
The Fund 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Capital Goods (continued) | |||
TriMas | 62,690 | a | 2,021,753 |
Trinity Industries | 14,000 | 573,020 | |
Triumph Group | 6,390 | 496,184 | |
Tutor Perini | 81,347 | a | 1,506,546 |
Twin Disc | 30,100 | b | 750,393 |
Woodward | 22,947 | 898,375 | |
63,734,881 | |||
Commercial & Professional Services—4.1% | |||
ABM Industries | 54,200 | 1,310,556 | |
Acacia Research | 38,850 | 971,250 | |
ACCO Brands | 289,166 | a | 2,067,537 |
ARC Document Solutions | 38,274 | a | 146,207 |
Avery Dennison | 53,970 | 2,347,695 | |
The Brink’s Company | 37,600 | 1,008,808 | |
CBIZ | 181,074 | a,b | 1,205,953 |
CDI | 48,833 | 666,570 | |
Ceco Environmental | 43,480 | 524,804 | |
Clean Harbors | 10,200 | a | 583,440 |
Corporate Executive Board | 22,370 | 1,368,820 | |
Covanta Holding | 63,800 | 1,304,710 | |
Deluxe | 86,937 | 3,251,444 | |
Dun & Bradstreet | 13,209 | b | 1,296,331 |
Ennis | 43,662 | 747,057 | |
FTI Consulting | 68,120 | a | 2,587,879 |
Insperity | 5,200 | 156,832 | |
Korn/Ferry International | 117,500 | a | 2,056,250 |
23,602,143 | |||
Consumer Durables & Apparel—2.6% | |||
Crocs | 100,130 | a | 1,766,293 |
CSS Industries | 40,200 | 1,111,530 | |
Deckers Outdoor | 23,300 | a,b | 1,250,744 |
Harman International Industries | 27,533 | 1,462,002 | |
Iconix Brand Group | 125,421 | a | 3,773,917 |
JAKKS Pacific | 60,229 | b | 608,313 |
M/I Homes | 80,690 | a | 2,005,147 |
10
Common Stocks (continued) | Shares | Value ($) | |
Consumer Durables & Apparel (continued) | |||
Standard Pacific | 73,280 | a,b | 648,528 |
Tupperware Brands | 19,971 | 1,617,252 | |
Unifi | 51,790 | a | 972,616 |
15,216,342 | |||
Consumer Services—3.1% | |||
Coinstar | 25,700 | a,b | 1,496,768 |
Cracker Barrel Old Country Store | 13,291 | 1,189,013 | |
Hillenbrand | 121,775 | 2,905,552 | |
Ignite Restaurant Group | 35,420 | 648,186 | |
Interval Leisure Group | 25,337 | 547,533 | |
Krispy Kreme Doughnuts | 44,600 | a | 772,472 |
LifeLock | 73,900 | a | 762,648 |
Multimedia Games Holding Company | 49,100 | a | 1,256,469 |
Regis | 39,020 | b | 718,358 |
Ruth’s Hospitality Group | 50,452 | 565,062 | |
Scientific Games, Cl. A | 70,550 | a | 768,290 |
SHFL Entertainment | 59,200 | a | 1,021,200 |
Sonic | 82,634 | a | 1,084,984 |
Strayer Education | 11,000 | 588,390 | |
Universal Technical Institute | 195,264 | 2,300,210 | |
Wendy’s | 259,660 | 1,544,977 | |
18,170,112 | |||
Diversified Financials—5.2% | |||
Ares Capital | 156,241 | 2,681,096 | |
Asta Funding | 60,630 | 557,190 | |
Cash America International | 22,300 | 1,063,933 | |
DFC Global | 67,900 | a | 1,011,710 |
Eaton Vance | 61,764 | 2,563,824 | |
Encore Capital Group | 49,600 | a,b | 1,769,232 |
Fifth Street Finance | 86,202 | b | 905,122 |
First Cash Financial Services | 51,070 | a | 2,748,077 |
ING US | 30,590 | b | 872,733 |
Investment Technology Group | 17,288 | a | 238,747 |
Leucadia National | 20,540 | 644,545 | |
MSCI | 29,551 | a | 1,041,377 |
The Fund 11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Diversified Financials (continued) | |||
NASDAQ OMX Group | 72,303 | 2,274,652 | |
Oppenheimer Holdings | 38,760 | 769,774 | |
PHH | 138,530 | a | 2,792,764 |
PICO Holdings | 38,187 | a | 862,644 |
Stifel Financial | 38,285 | a | 1,377,877 |
Waddell & Reed Financial, Cl. A | 34,729 | 1,598,923 | |
Walter Investment Management | 60,872 | a | 2,216,350 |
World Acceptance | 23,984 | a,b | 2,215,162 |
30,205,732 | |||
Energy—4.9% | |||
Adams Resources & Energy, | 3,000 | 187,920 | |
Atwood Oceanics | 19,003 | a | 997,848 |
Cal Dive International | 450,120 | a,b | 931,748 |
Callon Petroleum | 74,673 | a | 277,784 |
CARBO Ceramics | 14,900 | b | 981,910 |
Dawson Geophysical | 6,700 | a | 240,597 |
Delek US Holdings | 46,140 | 1,662,424 | |
Energy XXI | 58,100 | 1,483,293 | |
EPL Oil & Gas | 52,007 | a | 1,583,613 |
GulfMark Offshore, Cl. A | 19,726 | 904,634 | |
Helix Energy Solutions Group | 50,400 | a | 1,202,544 |
ION Geophysical | 101,000 | a | 645,390 |
Kodiak Oil & Gas | 97,808 | a | 858,754 |
McDermott International | 78,680 | a | 751,394 |
Newpark Resources | 243,150 | a,b | 2,711,123 |
PetroQuest Energy | 100,880 | a | 462,030 |
Stone Energy | 137,407 | a | 3,093,031 |
Synergy Resources | 162,220 | a | 1,098,229 |
Tesco | 53,020 | a | 676,535 |
TETRA Technologies | 131,000 | a | 1,363,710 |
Tidewater | 39,463 | 2,174,017 | |
Ultra Petroleum | 16,560 | a | 377,237 |
Warren Resources | 266,219 | a | 780,022 |
Western Refining | 31,860 | b | 1,063,168 |
12
Common Stocks (continued) | Shares | Value ($) | |
Energy (continued) | |||
World Fuel Services | 37,125 | 1,512,101 | |
WPX Energy | 20,670 | a,b | 398,104 |
28,419,160 | |||
Exchange-Traded Funds—.2% | |||
iShares Russell 2000 Index Fund | 11,550 | b | 1,129,590 |
Food & Staples Retailing—.6% | |||
Andersons | 17,100 | 871,074 | |
Harris Teeter Supermarkets | 26,543 | 1,247,521 | |
Nash Finch | 43,651 | 948,536 | |
Village Super Market, Cl. A | 5,000 | 187,000 | |
3,254,131 | |||
Food, Beverage & Tobacco—.9% | |||
Crimson Wine Group | 72,190 | a,b | 633,106 |
Darling International | 107,880 | a | 2,115,527 |
Hillshire Brands | 24,050 | 833,092 | |
National Beverage | 62,825 | 1,032,215 | |
Seaboard | 130 | 358,186 | |
Smithfield Foods | 11,900 | a | 391,986 |
5,364,112 | |||
Health Care Equipment & Services—4.1% | |||
Acadia Healthcare | 44,375 | a | 1,481,681 |
Accuray | 66,370 | a,b | 356,407 |
Air Methods | 42,500 | b | 1,591,200 |
Allscripts Healthcare Solutions | 142,810 | a | 1,977,919 |
AmSurg | 38,875 | a | 1,381,229 |
AngioDynamics | 65,859 | a | 716,546 |
Antares Pharma | 68,600 | a,b | 278,516 |
Chemed | 9,100 | b | 637,182 |
CryoLife | 77,737 | 481,192 | |
Given Imaging | 25,400 | a | 364,236 |
Health Net | 23,460 | a | 747,670 |
HealthSouth | 16,630 | a | 487,093 |
Hill-Rom Holdings | 58,008 | 2,095,829 | |
Kindred Healthcare | 154,259 | a | 2,082,497 |
The Fund 13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Health Care Equipment & | |||
Services (continued) | |||
Magellan Health Services | 38,870 | a | 2,118,415 |
Natus Medical | 45,756 | a | 644,702 |
NxStage Medical | 34,170 | a | 476,672 |
Owens & Minor | 41,035 | b | 1,402,576 |
Symmetry Medical | 122,865 | a | 1,146,330 |
Syneron Medical | 63,040 | a | 561,056 |
Team Health Holdings | 34,900 | a | 1,363,543 |
Teleflex | 6,140 | 480,946 | |
Universal American | 79,150 | 721,848 | |
23,595,285 | |||
Household & Personal Products—1.2% | |||
Church & Dwight | 7,770 | 472,494 | |
Medifast | 58,000 | a | 1,670,980 |
Nu Skin Enterprises, Cl. A | 54,201 | b | 3,187,019 |
WD-40 | 27,520 | 1,492,685 | |
6,823,178 | |||
Insurance—6.1% | |||
American Equity Investment Life Holding | 223,474 | 3,620,279 | |
American Financial Group | 6,990 | 339,434 | |
American National Insurance | 7,950 | 794,046 | |
Argo Group International Holdings | 17,644 | 698,879 | |
Aspen Insurance Holdings | 26,500 | 973,610 | |
Assurant | 9,310 | 463,079 | |
Donegal Group, Cl. A | 12,186 | 180,353 | |
Endurance Specialty Holdings | 70,104 | 3,528,334 | |
Everest Re Group | 16,966 | 2,198,963 | |
FBL Financial Group, Cl. A | 18,119 | 744,510 | |
Fidelity National Financial, Cl. A | 45,440 | 1,195,526 | |
HCC Insurance Holdings | 44,666 | 1,913,938 | |
Horace Mann Educators | 43,300 | 1,052,190 | |
Maiden Holdings | 56,300 | 601,284 | |
Navigators Group | 40,633 | a | 2,369,717 |
Platinum Underwriters Holdings | 35,140 | 2,006,494 | |
Primerica | 51,010 | 1,796,572 | |
ProAssurance | 21,312 | 1,069,862 | |
RLI | 40,055 | 3,007,330 |
14
Common Stocks (continued) | Shares | Value ($) | |
Insurance (continued) | |||
Stewart Information Services | 17,800 | 492,882 | |
The Hanover Insurance Group | 38,639 | 1,940,837 | |
Tower Group International | 158,115 | 3,056,363 | |
Validus Holdings | 32,537 | 1,174,911 | |
35,219,393 | |||
Materials—6.3% | |||
American Vanguard | 26,100 | 795,006 | |
AptarGroup | 6,000 | 340,320 | |
Balchem | 13,460 | 646,215 | |
Carpenter Technology | 8,110 | 390,578 | |
Chemtura | 64,100 | a | 1,469,813 |
Crown Holdings | 35,100 | a | 1,486,485 |
Cytec Industries | 7,500 | 536,025 | |
FutureFuel | 85,300 | 1,192,494 | |
Glatfelter | 93,719 | 2,317,671 | |
Greif, Cl. A | 25,761 | 1,342,148 | |
Haynes International | 27,080 | 1,325,295 | |
Headwaters | 92,800 | a | 984,608 |
Kaiser Aluminum | 31,310 | 1,986,306 | |
KMG Chemicals | 111,701 | 2,480,879 | |
Kraton Performance Polymers | 98,300 | a | 2,038,742 |
LSB Industries | 47,290 | a | 1,596,983 |
Materion | 61,880 | 1,844,024 | |
Mercer International | 180,915 | a | 1,244,695 |
NewMarket | 1,907 | 522,976 | |
Noranda Aluminum Holding | 136,200 | 550,248 | |
Olympic Steel | 31,430 | b | 796,122 |
OMNOVA Solutions | 101,840 | a | 754,634 |
PolyOne | 70,230 | 1,804,209 | |
RPM International | 21,092 | 698,778 | |
RTI International Metals | 36,410 | a | 1,056,254 |
Sealed Air | 57,700 | 1,385,954 | |
Sensient Technologies | 36,006 | 1,485,968 | |
Sonoco Products | 32,447 | 1,136,294 | |
Stillwater Mining | 48,310 | a,b | 579,237 |
Worthington Industries | 49,700 | 1,708,686 | |
36,497,647 |
The Fund 15
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Media—.7% | |||
John Wiley & Sons, Cl. A | 76,764 | 3,047,531 | |
Starz—Liberty Capital | 32,320 | a | 745,946 |
3,793,477 | |||
Pharmaceuticals, Biotech & | |||
Life Sciences—1.9% | |||
Affymetrix | 109,400 | a,b | 410,250 |
Auxilium Pharmaceuticals | 26,180 | a | 390,606 |
Cambrex | 57,500 | a | 791,200 |
Charles River Laboratories International | 39,300 | a | 1,702,083 |
Flamel Technologies, ADR | 219,557 | a,b | 1,058,265 |
Furiex Pharmaceuticals | 18,300 | a | 676,551 |
Impax Laboratories | 21,900 | a | 415,005 |
PerkinElmer | 69,422 | 2,174,297 | |
Questcor Pharmaceuticals | 31,100 | b | 1,062,687 |
Sagent Pharmaceuticals | 35,020 | a,b | 630,710 |
Santarus | 69,700 | a | 1,552,219 |
10,863,873 | |||
Real Estate—2.6% | |||
Altisource Portfolio Solutions | 38,753 | a | 3,653,245 |
Capstead Mortgage | 82,500 | c | 1,013,100 |
EPR Properties | 14,900 | c | 781,058 |
First Potomac Realty Trust | 41,462 | c | 567,200 |
Hersha Hospitality Trust | 322,884 | c | 1,846,896 |
LaSalle Hotel Properties | 27,555 | c | 727,452 |
Lexington Realty Trust | 78,700 | c | 990,833 |
Medical Properties Trust | 137,345 | c | 2,038,200 |
Omega Healthcare Investors | 72,316 | c | 2,343,762 |
Ramco-Gershenson Properties Trust | 57,465 | c | 897,029 |
14,858,775 | |||
Retailing—5.0% | |||
Aeropostale | 16,990 | a | 248,224 |
Ascena Retail Group | 103,422 | a | 2,102,569 |
Barnes & Noble | 51,700 | a,b | 1,163,250 |
Bebe Stores | 106,206 | 579,885 | |
Big Lots | 12,230 | a | 416,431 |
Chico’s FAS | 38,750 | 699,825 | |
Express | 27,700 | a | 603,860 |
16
Common Stocks (continued) | Shares | Value ($) | |
Retailing (continued) | |||
Finish Line, Cl. A | 33,607 | 707,763 | |
Genesco | 33,782 | a | 2,282,988 |
JOS. A. Bank Clothiers | 67,642 | a,b | 3,039,155 |
Kirkland’s | 47,740 | a | 714,190 |
Men’s Wearhouse | 33,000 | 1,194,600 | |
OfficeMax | 174,100 | 2,268,523 | |
PEP Boys-Manny Moe & Jack | 35,400 | a | 436,836 |
RadioShack | 644,870 | b | 2,386,019 |
Rent-A-Center | 164,918 | 6,032,700 | |
Select Comfort | 40,192 | a | 891,860 |
Shutterfly | 20,200 | a | 984,548 |
Sonic Automotive, Cl. A | 64,971 | 1,479,390 | |
Travelcenters of America | 68,500 | a | 762,405 |
28,995,021 | |||
Semiconductors & Semiconductor | |||
Equipment—2.6% | |||
Axcelis Technologies | 532,745 | a | 852,392 |
Cabot Microelectronics | 45,215 | 1,616,436 | |
Ceva | 28,200 | a | 472,914 |
FormFactor | 182,412 | a | 1,074,407 |
Freescale Semiconductor | 54,270 | a,b | 863,978 |
GT Advanced Technologies | 541,700 | a,b | 2,410,565 |
Ikanos Communications | 76,600 | a | 103,410 |
Integrated Silicon Solution | 66,036 | a | 714,510 |
Kulicke & Soffa Industries | 88,850 | a | 1,101,740 |
LTX-Credence | 99,532 | a | 564,346 |
Mellanox Technologies | 6,760 | a,b | 350,641 |
Rambus | 119,950 | a | 945,206 |
Silicon Image | 214,100 | a | 1,303,869 |
Spansion, Cl. A | 63,640 | a | 871,868 |
Teradyne | 29,050 | a,b | 521,157 |
Ultratech | 29,300 | a | 1,068,278 |
14,835,717 | |||
Software & Services—10.4% | |||
Accelrys | 84,200 | a | 702,228 |
ACI Worldwide | 46,128 | a | 2,145,413 |
Acxiom | 72,454 | a | 1,593,263 |
The Fund 17
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Software & Services (continued) | |||
American Software, Cl. A | 113,863 | 967,835 | |
AVG Technologies | 73,100 | a,b | 1,332,613 |
Bankrate | 26,750 | a,b | 382,792 |
CACI International, Cl. A | 34,297 | a,b | 2,199,810 |
Cadence Design Systems | 60,900 | a | 921,417 |
Cardtronics | 49,900 | a | 1,423,647 |
Cass Information Systems | 28,168 | 1,264,180 | |
Computer Services | 22,135 | 648,777 | |
Comverse | 28,893 | a | 862,745 |
Convergys | 147,650 | 2,682,801 | |
CoreLogic | 58,300 | a | 1,527,460 |
DealerTrack Technologies | 39,600 | a | 1,276,704 |
Digital River | 94,100 | a | 1,643,927 |
DST Systems | 19,300 | 1,315,874 | |
Ebix | 24,500 | b | 486,080 |
Fair Isaac | 39,233 | 1,925,556 | |
FalconStor Software | 415,478 | a | 556,741 |
Global Payments | 41,408 | 1,985,928 | |
Hackett Group | 42,500 | 214,200 | |
Heartland Payment Systems | 85,978 | b | 2,756,455 |
Jack Henry & Associates | 32,540 | 1,527,102 | |
Lender Processing Services | 140,780 | 4,658,410 | |
MoneyGram International | 53,700 | a | 1,056,816 |
NetScout Systems | 62,100 | a | 1,512,135 |
NeuStar, Cl. A | 53,693 | a | 2,601,963 |
Open Text | 21,244 | 1,443,742 | |
Rovi | 67,310 | a | 1,736,598 |
SeaChange International | 70,600 | a,b | 759,656 |
SS&C Technologies Holdings | 45,300 | a | 1,432,839 |
SYKES Enterprises | 60,900 | a | 962,829 |
Syntel | 23,385 | b | 1,494,535 |
TIBCO Software | 22,000 | a | 469,260 |
TiVo | 85,700 | a | 1,108,958 |
Tyler Technologies | 16,300 | a | 1,124,863 |
Unwired Planet | 234,632 | a | 483,342 |
ValueClick | 167,272 | a | 4,405,945 |
18
Common Stocks (continued) | Shares | Value ($) | |
Software & Services (continued) | |||
Velti | 72,400 | a,b | 127,424 |
VeriFone Systems | 27,120 | a | 632,710 |
Verint Systems | 46,088 | a | 1,547,179 |
59,902,752 | |||
Technology Hardware & Equipment—7.9% | |||
ADTRAN | 35,775 | b | 827,118 |
Anixter International | 15,489 | 1,188,471 | |
ARRIS Group | 81,800 | a | 1,237,634 |
Aviat Networks | 201,248 | a | 533,307 |
Badger Meter | 22,325 | 994,802 | |
Benchmark Electronics | 33,815 | a | 659,392 |
Black Box | 53,090 | 1,428,652 | |
Brocade Communications Systems | 207,700 | a | 1,127,811 |
Ciena | 37,600 | a,b | 629,424 |
Cognex | 15,746 | 707,468 | |
CTS | 131,452 | 1,580,053 | |
Dolby Laboratories, Cl. A | 22,700 | b | 794,500 |
Electronics for Imaging | 51,725 | a | 1,442,610 |
Emulex | 204,800 | a | 1,275,904 |
GSI Group | 67,570 | a | 550,020 |
Infinera | 110,200 | a,b | 1,160,406 |
Ingram Micro, Cl. A | 9,367 | a | 179,003 |
Itron | 20,440 | a | 858,480 |
Ituran Location and Control | 96,904 | 1,640,585 | |
Lexmark International, Cl. A | 83,110 | b | 2,535,686 |
Mercury Systems | 44,300 | a | 387,182 |
Methode Electronics | 123,580 | 1,943,913 | |
Oplink Communications | 84,549 | a | 1,439,024 |
Park Electrochemical | 49,335 | 1,191,440 | |
Plantronics | 57,987 | 2,678,999 | |
Plexus | 99,954 | a | 2,916,658 |
Pulse Electronics | 36,128 | a,b | 119,222 |
QLogic | 147,165 | a | 1,433,388 |
Quantum | 712,769 | a | 1,104,792 |
Radisys | 86,093 | a | 430,465 |
Rofin-Sinar Technologies | 67,590 | a | 1,808,708 |
The Fund 19
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Technology Hardware & | |||
Equipment (continued) | |||
ScanSource | 37,617 | a | 1,201,111 |
Sierra Wireless | 58,400 | a,b | 661,672 |
SYNNEX | 37,280 | a | 1,511,704 |
Vishay Intertechnology | 239,780 | a,b | 3,491,196 |
Vishay Precision Group | 38,170 | a | 551,938 |
Zebra Technologies, Cl. A | 31,289 | a | 1,428,656 |
45,651,394 | |||
Telecommunication Services—.2% | |||
Leap Wireless International | 122,800 | a,b | 693,820 |
MagicJack VocalTec | 37,150 | a,b | 554,650 |
1,248,470 | |||
Transportation—1.5% | |||
Air Transport Services Group | 151,567 | a | 916,980 |
Arkansas Best | 37,055 | 707,380 | |
Atlas Air Worldwide Holdings | 16,200 | a | 752,004 |
Con-way | 30,500 | 1,159,610 | |
Danaos | 122,600 | a | 529,632 |
Hawaiian Holdings | 114,400 | a | 681,824 |
Landstar System | 28,760 | 1,518,240 | |
Ryder System | 19,300 | 1,216,672 | |
SkyWest | 20,800 | 291,824 | |
Werner Enterprises | 46,547 | 1,165,071 | |
8,939,237 | |||
Utilities—1.8% | |||
Atmos Energy | 29,276 | 1,236,033 | |
Dynegy | 26,000 | a | 633,620 |
Empire District Electric | 55,600 | 1,208,188 | |
NorthWestern | 47,100 | 1,938,636 | |
NRG Energy | 35,421 | 903,944 | |
Ormat Technologies | 43,200 | b | 985,824 |
PNM Resources | 42,200 | 946,124 | |
Portland General Electric | 57,017 | 1,735,597 | |
UNS Energy | 19,400 | 909,472 | |
10,497,438 | |||
Total Common Stocks | |||
(cost $452,538,050) | 554,547,765 |
20
Investment of Cash Collateral | ||||
for Securities Loaned—9.0% | Shares | Value ($) | ||
Registered Investment Company; | ||||
Dreyfus Institutional Cash | ||||
Advantage Fund | ||||
(cost $51,928,680) | 51,928,680 | d | 51,928,680 | |
Total Investments (cost $504,466,730) | 104.9 | % | 606,476,445 | |
Liabilities, Less Cash and Receivables | (4.9 | %) | (28,342,156 | ) |
Net Assets | 100.0 | % | 578,134,289 |
ADR—American Depository Receipts
a Non-income producing security. |
b Security, or portion thereof, on loan.At May 31, 2013, the value of the fund’s securities on loan was $49,497,987 |
and the value of the collateral held by the fund was $51,928,680. |
c Investment in real estate investment trust. |
d Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited)† | |||
Value (%) | Value (%) | ||
Capital Goods | 11.0 | Semiconductors & | |
Software & Services | 10.4 | Semiconductor Equipment | 2.6 |
Banks | 9.8 | Pharmaceuticals, Biotech & | |
Money Market Investments | 9.0 | Life Sciences | 1.9 |
Technology Hardware & Equipment | 7.9 | Utilities | 1.8 |
Materials | 6.3 | Transportation | 1.5 |
Insurance | 6.1 | Automobiles & Components | 1.2 |
Diversified Financials | 5.2 | Household & Personal Products | 1.2 |
Retailing | 5.0 | Food, Beverage & Tobacco | .9 |
Energy | 4.9 | Media | .7 |
Commercial & Professional Services | 4.1 | Food & Staples Retailing | .6 |
Health Care Equipment & Services | 4.1 | Exchange-Traded Funds | .2 |
Consumer Services | 3.1 | Telecommunication Services | .2 |
Consumer Durables & Apparel | 2.6 | ||
Real Estate | 2.6 | 104.9 | |
† Based on net assets. | |||
See notes to financial statements. |
The Fund 21
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2013 (Unaudited)
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments (including | ||
securities on loan, valued at $49,497,987)—Note 1(b): | ||
Unaffiliated issuers | 452,538,050 | 554,547,765 |
Affiliated issuers | 51,928,680 | 51,928,680 |
Cash | 26,053,956 | |
Receivable for investment securities sold | 3,897,340 | |
Dividends and securities lending income receivable | 442,310 | |
Receivable for shares of Common Stock subscribed | 250,203 | |
Prepaid expenses | 26,758 | |
637,147,012 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 459,530 | |
Liability for securities on loan—Note 1(b) | 51,928,680 | |
Payable for investment securities purchased | 6,380,092 | |
Payable for shares of Common Stock redeemed | 181,995 | |
Accrued expenses | 62,426 | |
59,012,723 | ||
Net Assets ($) | 578,134,289 | |
Composition of Net Assets ($): | ||
Paid-in capital | 456,656,242 | |
Accumulated undistributed investment income—net | 2,274,407 | |
Accumulated net realized gain (loss) on investments | 17,193,925 | |
Accumulated net unrealized appreciation | ||
(depreciation) on investments | 102,009,715 | |
Net Assets ($) | 578,134,289 |
Net Asset Value Per Share | |||
Class A | Class C | Class I | |
Net Assets ($) | 1,258,561 | 156,956 | 576,718,772 |
Shares Outstanding | 55,982 | 7,250 | 25,412,407 |
Net Asset Value Per Share ($) | 22.48 | 21.65 | 22.69 |
See notes to financial statements. |
22
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2013 (Unaudited)
Investment Income ($): | ||
Income: | ||
Cash dividends (net of $9,385 foreign taxes withheld at source): | 4,349,627 | |
Income from securities lending—Note 1(b) | 289,997 | |
Total Income | 4,639,624 | |
Expenses: | ||
Management fee—Note 3(a) | 2,263,217 | |
Custodian fees—Note 3(c) | 44,271 | |
Registration fees | 34,105 | |
Professional fees | 30,967 | |
Directors’ fees and expenses—Note 3(d) | 16,761 | |
Prospectus and shareholders’ reports | 8,588 | |
Shareholder servicing costs—Note 3(c) | 3,161 | |
Loan commitment fees—Note 2 | 1,483 | |
Distribution fees—Note 3(b) | 540 | |
Miscellaneous | 11,161 | |
Total Expenses | 2,414,254 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (100 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (7 | ) |
Net Expenses | 2,414,147 | |
Investment Income—Net | 2,225,477 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments | 21,536,581 | |
Net unrealized appreciation (depreciation) on investments | 69,467,221 | |
Net Realized and Unrealized Gain (Loss) on Investments | 91,003,802 | |
Net Increase in Net Assets Resulting from Operations | 93,229,279 | |
See notes to financial statements. |
The Fund 23
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Operations ($): | ||||
Investment income—net | 2,225,477 | 1,908,421 | ||
Net realized gain (loss) on investments | 21,536,581 | 18,752,627 | ||
Net unrealized appreciation | ||||
(depreciation) on investments | 69,467,221 | 28,174,786 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 93,229,279 | 48,835,834 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (8 | ) | — | |
Class I Shares | (1,841,668 | ) | (639,291 | ) |
Net realized gain on investments: | ||||
Class A Shares | (41,592 | ) | (75,831 | ) |
Class C Shares | (6,501 | ) | (14,596 | ) |
Class I Shares | (21,618,710 | ) | (25,288,419 | ) |
Total Dividends | (23,508,479 | ) | (26,018,137 | ) |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 324,685 | 118,438 | ||
Class C Shares | 33,211 | 506 | ||
Class I Shares | 98,408,360 | 147,573,196 | ||
Dividends reinvested: | ||||
Class A Shares | 41,600 | 75,831 | ||
Class C Shares | 6,501 | 14,596 | ||
Class I Shares | 11,970,795 | 13,220,617 | ||
Cost of shares redeemed: | ||||
Class A Shares | (140,844 | ) | (421,174 | ) |
Class C Shares | (67,469 | ) | (22,518 | ) |
Class I Shares | (32,949,492 | ) | (50,912,127 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 77,627,347 | 109,647,365 | ||
Total Increase (Decrease) in Net Assets | 147,348,147 | 132,465,062 | ||
Net Assets ($): | ||||
Beginning of Period | 430,786,142 | 298,321,080 | ||
End of Period | 578,134,289 | 430,786,142 | ||
Undistributed investment income—net | 2,274,407 | 1,890,606 |
24
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Capital Share Transactions: | ||||
Class Aa | ||||
Shares sold | 15,494 | 6,248 | ||
Shares issued for dividends reinvested | 2,155 | 4,401 | ||
Shares redeemed | (6,985 | ) | (22,730 | ) |
Net Increase (Decrease) in Shares Outstanding | 10,664 | (12,081 | ) | |
Class Ca | ||||
Shares sold | 1,590 | 30 | ||
Shares issued for dividends reinvested | 349 | 869 | ||
Shares redeemed | (3,372 | ) | (1,216 | ) |
Net Increase (Decrease) in Shares Outstanding | (1,433 | ) | (317 | ) |
Class I | ||||
Shares sold | 4,711,503 | 7,796,955 | ||
Shares issued for dividends reinvested | 614,943 | 761,027 | ||
Shares redeemed | (1,569,191 | ) | (2,677,729 | ) |
Net Increase (Decrease) in Shares Outstanding | 3,757,255 | 5,880,253 |
a During the period ended May 31, 2013, 1,060 Class C shares representing $22,840 were exchanged for 1,021 |
Class A shares. |
See notes to financial statements.
The Fund 25
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||
Class A Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 19.62 | 18.66 | 19.63 | 15.24 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment income (loss)—netb | .06 | .02 | (.04 | ) | (.05 | ) | (.00 | )c | ||
Net realized and unrealized | ||||||||||
gain (loss) on investments | 3.80 | 2.56 | .23 | 4.47 | 2.74 | |||||
Total from Investment Operations | 3.86 | 2.58 | .19 | 4.42 | 2.74 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.00 | )c | — | — | — | — | ||||
Dividends from net realized | ||||||||||
gain on investments | (1.00 | ) | (1.62 | ) | (1.16 | ) | (.03 | ) | — | |
Total Distributions | (1.00 | ) | (1.62 | ) | (1.16 | ) | (.03 | ) | — | |
Net asset value, end of period | 22.48 | 19.62 | 18.66 | 19.63 | 15.24 | |||||
Total Return (%)d | 20.52 | e | 15.04 | .62 | 29.05 | 21.92 | e | |||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 1.33 | f | 1.40 | 1.29 | 1.34 | 2.94 | f | |||
Ratio of net expenses | ||||||||||
to average net assets | 1.32 | f | 1.36 | 1.27 | 1.32 | 1.40 | f | |||
Ratio of net investment income | ||||||||||
(loss) to average net assets | .54 | f | .12 | (.18 | ) | (.27 | ) | (.02 | )f | |
Portfolio Turnover Rate | 38.64 | e | 74.74 | 67.49 | 56.03 | 48.43 | e | |||
Net Assets, end of period ($ x 1,000) | 1,259 | 889 | 1,071 | 7,308 | 6,289 |
a | From December 17, 2008 (commencement of operations) to November 30, 2009. |
b | Based on average shares outstanding at each month end. |
c | Amount represents less than $.01 per share. |
d | Exclusive of sales charge. |
e | Not annualized. |
f | Annualized. |
See notes to financial statements.
26
Six Months Ended | ||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||
Class C Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 19.00 | 18.25 | 19.34 | 15.13 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment (loss)—netb | (.01 | ) | (.12 | ) | (.18 | ) | (.18 | ) | (.10 | ) |
Net realized and unrealized | ||||||||||
gain (loss) on investments | 3.66 | 2.49 | .25 | 4.42 | 2.73 | |||||
Total from Investment Operations | 3.65 | 2.37 | .07 | 4.24 | 2.63 | |||||
Distributions: | ||||||||||
Dividends from net realized | ||||||||||
gain on investments | (1.00 | ) | (1.62 | ) | (1.16 | ) | (.03 | ) | — | |
Net asset value, end of period | 21.65 | 19.00 | 18.25 | 19.34 | 15.13 | |||||
Total Return (%)c | 20.06 | d | 14.16 | (.03 | ) | 28.07 | 21.04 | d | ||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | 2.10 | e | 2.15 | 2.03 | 2.10 | 3.70 | e | |||
Ratio of net expenses | ||||||||||
to average net assets | 2.08 | e | 2.12 | 2.02 | 2.08 | 2.15 | e | |||
Ratio of net investment (loss) | ||||||||||
to average net assets | (.11 | )e | (.64 | ) | (.92 | ) | (1.02 | ) | (.77 | )e |
Portfolio Turnover Rate | 38.64 | d | 74.74 | 67.49 | 56.03 | 48.43 | d | |||
Net Assets, end of period ($ x 1,000) | 157 | 165 | 164 | 916 | 617 |
a | From December 17, 2008 (commencement of operations) to November 30, 2009. |
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 27
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||
Class I Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, | ||||||||||
beginning of period | 19.84 | 18.83 | 19.72 | 15.28 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment income—netb | .09 | .10 | .04 | .00 | c | .03 | ||||
Net realized and unrealized | ||||||||||
gain (loss) on investments | 3.84 | 2.57 | .23 | 4.47 | 2.75 | |||||
Total from Investment Operations | 3.93 | 2.67 | .27 | 4.47 | 2.78 | |||||
Distributions: | ||||||||||
Dividends from | ||||||||||
investment income—net | (.08 | ) | (.04 | ) | — | (.00 | )c | — | ||
Dividends from net realized | ||||||||||
gain on investments | (1.00 | ) | (1.62 | ) | (1.16 | ) | (.03 | ) | — | |
Total Distributions | (1.08 | ) | (1.66 | ) | (1.16 | ) | (.03 | ) | — | |
Net asset value, end of period | 22.69 | 19.84 | 18.83 | 19.72 | 15.28 | |||||
Total Return (%) | 20.73 | d | 15.45 | 1.04 | 29.32 | 22.24 | d | |||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .96 | e | .99 | .99 | 1.07 | 1.91 | e | |||
Ratio of net expenses | ||||||||||
to average net assets | .96 | e | .99 | .99 | 1.06 | 1.15 | e | |||
Ratio of net investment income | ||||||||||
to average net assets | .89 | e | .52 | .20 | .02 | .26 | e | |||
Portfolio Turnover Rate | 38.64 | d | 74.74 | 67.49 | 56.03 | 48.43 | d | |||
Net Assets, end of period | ||||||||||
($ x 1,000) | 576,719 | 429,732 | 297,086 | 243,304 | 63,379 |
a | From December 17, 2008 (commencement of operations) to November 30, 2009. |
b | Based on average shares outstanding at each month end. |
c | Amount represents less than $.01 per share. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
28
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus Select Managers Small CapValue Fund (the “fund”) is a separate non-diversified series of Strategic 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 nine series, including the fund.The fund’s investment objective is to seek capital appreciation. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary ofThe Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. EACM Advisors LLC (“EACM”), a subsidiary of BNY Mellon and an affiliate of Dreyfus, serves as the fund’s portfolio allocation manager. Thompson, Siegel and Walmsley, LLC (“TS&W”), Walthausen & Co., LLC (“Walthausen”), Neuberger Berman Management LLC (“Neuberger Berman”), Lombardia Capital Partners, LLC (“Lombardia”), Iridian Asset Management LLC (“Iridian”),VulcanValue Partners, LLC (“Vulcan”) and Kayne Anderson Rudnick Investment Management, LLC (“Kayne”) serve as the fund’s sub-investment advisers, each managing an allocated portion of the fund’s portfolio.
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 generally 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 29
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The sales charge may be reduced or waived for certain purchases of Class A shares. Effective April 1, 2013, pursuant to new/modified front-end sales charge waivers, Class A shares of the fund may be purchased at net asset value without payment of a sales charge by (a) investors who participate in a self-directed investment brokerage account program offered by financial intermediaries that have entered into an agreement with the fund’s Distributor (financial intermediaries offering self-directed investment brokerage accounts may or may not charge their customers a transaction fee) and (b) investors who purchase Class A shares directly through the fund’s Distributor, and either (i) have, or whose spouse or minor children have, beneficially owned shares and continuously maintained an open account with the Distributor in a Dreyfus-managed fund since on or before February 28, 2006, or (ii) such purchase is for a self-directed investment account that may or may not be subject to a transaction fee.
On April 29, 2013, the Company’s Board of Directors (the “Board”) authorized the fund to offer Class Y shares, as a new class of shares, to certain investors, including certain institutional investors. Effective July 1, 2013, ClassY shares will be offered at net asset value and will not be subject to certain fees, including Distribution Plan and Shareholder Services Plan fees. The Board approved an increase in the authorized shares of the fund from 300 million to 400 million and authorized 100 million ClassY shares.
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
30
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.
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 Fund 31
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
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
32
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 within Level 2 or 3 of the fair value hierarchy 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.
The following is a summary of the inputs used as of May 31, 2013 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† | 542,724,694 | — | — | 542,724,694 |
Equity Securities— | ||||
Foreign | ||||
Common | ||||
Stocks† | 10,693,481 | — | — | 10,693,481 |
Exchange | ||||
Traded Funds | 1,129,590 | — | — | 1,129,590 |
Mutual Funds | 51,928,680 | — | — | 51,928,680 |
† See Statement of Investments for additional detailed categorizations. |
At May 31, 2013, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(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.
The Fund 33
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 Dreyfus, 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 May 31, 2013, The Bank of NewYork Mellon earned $96,666 from lending portfolio securities, pursuant to the securities lending agreement.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended May 31, 2013 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 11/30/2012($) | Purchases ($) | Sales($) | 5/31/2013 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Cash | |||||
Advantage | |||||
Fund | 43,410,240 | 107,862,507 | 99,344,067 | 51,928,680 | 9.0 |
(d) 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
34
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 May 31, 2013, 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 tax year in the three-year period ended November 30, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2012 was as follows: ordinary income $7,650,223 and long-term capital gains $18,367,914.The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $210 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
The Fund 35
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 May 31, 2013, 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 .90% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus had contractually agreed, from December 1, 2012 through April 1, 2013, to waive receipt of its fees and/or assume the 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, commitment fees on borrowings and extraordinary expenses) exceeded 1.15% of the value of the fund’s average daily net assets. Thereafter, Dreyfus has contractually agreed from April 2, 2013 through July 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 (exclusive of certain expenses as described above) exceed 1.05% of the value of the fund’s average daily net assets.The reduction in expenses, pursuant to the undertaking, amounted to $100 during the period ended May 31, 2013.
Pursuant to a Portfolio Allocation Agreement between Dreyfus and EACM, Dreyfus pays EACM a monthly fee at an annual percentage of the value of the fund’s average daily net assets.
Pursuant to separate Sub-Investment Advisory Agreements between Dreyfus and TS&W, Walthausen, Neuberger Berman, Lombardia, Iridian,Vulcan and Kayne, Dreyfus pays each sub-investment adviser separate monthly fees at an annual percentage of the value of the fund’s average daily net assets managed by such sub-investment adviser.
During the period ended May 31, 2013, the Distributor retained $766 from commissions earned on sales of the fund’s Class A shares.
36
(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 its average daily net assets. During the period ended May 31, 2013, Class C shares were charged $540 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) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2013, Class A and Class C shares were charged $1,278 and $180, 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 Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $1,253 for transfer agency services and $43 for cash management services. Cash management fees were partially offset by earnings credits of $7.These fees are included in Shareholder servicing costs in the Statement of Operations.
The Fund 37
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The fund compensatesThe Bank of NewYork Mellon under a custody agreement for providing custodial services for the fund. During the period ended May 31, 2013, the fund was charged $44,271 pursuant to the custody agreement.
The fund compensates The Bank of New York Mellon under a cash management agreement for performing certain cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $26 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations.
During the period ended May 31, 2013, the fund was charged $4,558 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 $431,881, Distribution Plan fees $101, Shareholder Services Plan fees $286, custodian fees $22,883, Chief Compliance Officer fees $3,830 and transfer agency fees $573, which are offset against an expense reimbursement currently in effect in the amount of $24.
(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, during the period ended May 31, 2013, amounted to $235,896,834 and $186,399,842, respectively.
At May 31, 2013, accumulated net unrealized appreciation on investments was $102,009,715, consisting of $111,992,927 gross unrealized appreciation and $9,983,212 gross unrealized depreciation.
At May 31, 2013, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
38
NOTES
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/smscvncsrx44x1.jpg)
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/usencsrx1x1.jpg)
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.
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/usencsrx2x1.jpg)
Contents | |
THE FUND | |
2 | A Letter from the President |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
11 | Statement of Assets and Liabilities |
12 | Statement of Operations |
13 | Statement of Changes in Net Assets |
15 | Financial Highlights |
18 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus
U.S. Equity Fund
The Fund
A LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus U.S. Equity Fund, covering the six-month period from December 1, 2012, through May 31, 2013. 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.
The U.S. economic recovery gained traction over the reporting period, but remained slower than historical norms. On one hand, the expansion has been fueled by gradually falling unemployment, recovering housing markets, rapid growth in domestic oil and gas production, and, perhaps most significant, the aggressively stimulative monetary policy of the Federal Reserve Board (the “Fed”). On the other hand, several factors have weighed on the nation’s economic growth rate, including relatively sluggish demand for exports to Europe and the emerging markets, higher tax rates for some Americans, and more restrictive fiscal policies stemming from sequestration. Investors appear to have adopted a more optimistic outlook, as several major stock market indices reached new record highs by the reporting period’s end.
In our analysis, real GDP growth seems poised to accelerate modestly over the remainder of 2013. In fact, we expect the relatively mild economic expansion to remain intact domestically and globally over the next several years. The moderate pace of the recovery implies that the risks of consumer price inflation are limited, making it unlikely that the Fed will adopt expansion-threatening, restrictive policies anytime soon. As always, we encourage you to discuss our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/usencsrx4x1.jpg)
J. Charles Cardona
President
The Dreyfus Corporation
June 17, 2013
2
DISCUSSION OF FUND PERFORMANCE
For the period of December 1, 2012, through May 31, 2013, as provided by Charlie Macquaker and Roy Leckie of Walter Scott & Partners Limited (Walter Scott), Sub-investment adviser
Fund and Market Performance Overview
For the six-month period ended May 31, 2013, Dreyfus U.S. Equity Fund’s Class A shares achieved a return of 13.80%, Class C shares returned 13.29%, and Class I shares returned 14.03%.1 In comparison, the fund’s benchmark, the Morgan Stanley Capital International USA Index (“MSCI USA Index”), achieved a 15.92% return over the same period.2
Despite occasional bouts of market volatility, stocks generally rallied over the reporting period when investors responded positively to improved economic trends. The fund produced lower returns than its benchmark, mainly due to its conservative investment posture in a rising market.
The Fund’s Investment Approach
The fund seeks long-term real returns by investing in stocks of companies that are located in the United States.When selecting stocks,Walter Scott seeks companies with fundamental strengths that indicate the potential for sustainable growth. The firm focuses on individual stock selection through extensive fundamental research. Candidates are initially selected for research if they meet certain broad absolute and trend criteria. Financial statements are analyzed in an effort to identify the nature of their cash generation and to understand the variables that add value to their businesses. Companies meeting the financial criteria are subjected to a detailed investigation of their products, costs and pricing, competition, industry position, and outlook.
Recovering Economy Fueled Market Gains
The reporting period began in the midst of a strong stock market rally after various global macroeconomic concerns failed to materialize. Instead, investor sentiment responded positively to improved U.S. employment and housing market trends, a new quantitative easing program from the European Central Bank, and expectations that new economic policies in China would boost global growth. Investors also were
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
encouraged by the launch of a new, open-ended round of quantitative easing by the Federal Reserve Board (the “Fed”) and the implementation of an aggressively accommodative monetary policy by a new government in Japan.
Investor optimism faltered briefly toward year-end 2012 due to uncertainty surrounding automatic U.S. tax hikes and spending cuts scheduled for the start of 2013, but last-minute legislation to address the increases helped alleviate investors’ worries. Continued corporate earnings strength and encouraging economic data lent further support to stock prices over the first five months of 2013 as the U.S. unemployment rate continued to decline and housing prices rebounded. Some financial markets encountered heightened volatility in May when remarks by Fed Chairman Ben Bernanke were widely interpreted as a signal that the central bank would back away from its quantitative easing program sooner than many had expected, but equity investors remained optimistic about the future as evidenced by new record highs established by several stock market indices.
Conservative Positioning Weighed on Fund Performance
The fund’s conservative approach typically fares better than market averages when markets fall, but generally lags during rallies.The reporting period was no exception, as the fund did not fully participate in gains posted by more speculative stocks. In addition, relative performance suffered due to the fund’s lack of holdings in the financials sector, which we have long regarded as an unattractive industry group where risks outweigh potential rewards.
Among individual holdings, laggards during the reporting period included oil & gas production materials supplier CARBO Ceramics, which was hurt by a slowdown in production trends and competition from Chinese rivals. Discount retailer Family Dollar Stores posted lower-than-expected earnings due to constrained spending by its customers. Logistics company C.H. Robinson Worldwide proved unable to pass through higher costs to its customers. Health care equipment maker Varian Medical Systems saw weaker demand from hospitals due to uncertainty surrounding implementation of the Affordable Care Act.Telecommunications systems developer QUALCOMM lost a degree of value despite strong underlying fundamentals when investors favored more speculative industry groups.
4
The fund achieved better results with biotechnology firm Celgene, which raised earnings guidance after several new products moved closer to regulatory approval. Online media giant Google, Cl. A benefited from strong sales of its smartphone operating system and lower costs related to online advertising. In the information technology sector, U.S. software giant Microsoft reported better-than-expected quarterly sales and earnings, and equipment maker Cisco Systems achieved higher profit margins across its various business segments.Aircraft manufacturer Boeing also advanced more strongly than market averages.
A new position was purchased during the reporting period in industrial parts distributor W.W. Grainger, where recent strategic initiatives appear to be gaining traction.
Finding Opportunities Among Individual Companies
While Walter Scott has been somewhat encouraged by recent domestic and global economic news, we remain concerned that the market’s gains over the reporting period were not fully supported by underlying business fundamentals. Consequently, we have retained a generally cautious investment posture and an emphasis on individual companies that, in our analysis, are poised for growth on their own merits, independent of economic conditions.
June 17, 2013
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, 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 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 net dividends and, where applicable, capital gain distributions. |
The Morgan Stanley Capital International USA (MSCI USA) Index is an unmanaged, market capitalization |
weighted index that is designed to measure the performance of publicly traded stocks issued by companies in the |
United States. Investors cannot invest directly in any index. |
The Fund 5
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 U.S. Equity Fund from December 1, 2012 to May 31, 2013. 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 May 31, 2013 |
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 6.13 | $ | 10.90 | $ | 4.27 |
Ending value (after expenses) | $ | 1,138.00 | $ | 1,132.90 | $ | 1,140.30 |
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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 5.79 | $ | 10.30 | $ | 4.03 |
Ending value (after expenses) | $ | 1,019.20 | $ | 1,014.71 | $ | 1,020.94 |
† Expenses are equal to the fund’s annualized expense ratio of 1.15% for Class A, 2.05% for Class C and .80% |
for Class I, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half |
year period). |
6
STATEMENT OF INVESTMENTS
May 31, 2013 (Unaudited)
Common Stocks—96.8% | Shares | Value ($) | |
Capital Goods—17.6% | |||
Boeing | 152,900 | 15,140,158 | |
Donaldson | 371,400 | 13,931,214 | |
Emerson Electric | 242,700 | 13,945,542 | |
Fastenal | 244,100 | 12,737,138 | |
Flowserve | 93,200 | 15,669,716 | |
MSC Industrial Direct, Cl. A | 155,500 | 12,855,185 | |
Precision Castparts | 67,860 | 14,516,611 | |
Rockwell Collins | 203,800 | 13,196,050 | |
W.W. Grainger | 27,100 | 6,976,624 | |
118,968,238 | |||
Consumer Durables & Apparel—3.8% | |||
Coach | 191,000 | 11,127,660 | |
NIKE, Cl. B | 235,700 | 14,533,262 | |
25,660,922 | |||
Consumer Services—5.1% | |||
McDonald’s | 128,900 | 12,447,873 | |
Panera Bread, Cl. A | 36,200 | a | 6,944,246 |
Starbucks | 239,900 | 15,130,493 | |
34,522,612 | |||
Energy—9.4% | |||
Apache | 145,000 | 11,908,850 | |
CARBO Ceramics | 161,700 | b | 10,656,030 |
EOG Resources | 101,460 | 13,098,486 | |
Occidental Petroleum | 140,900 | 12,972,663 | |
Schlumberger | 197,750 | 14,441,682 | |
63,077,711 | |||
Food & Staples Retailing—2.1% | |||
Wal-Mart Stores | 188,900 | 14,137,276 | |
Food, Beverage & Tobacco—1.8% | |||
Coca-Cola | 312,000 | 12,476,880 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Health Care Equipment & | |||
Services—9.7% | |||
C.R. Bard | 105,450 | 10,870,840 | |
Meridian Bioscience | 566,900 | b | 12,250,709 |
ResMed | 356,800 | b | 17,126,400 |
Stryker | 200,700 | 13,324,473 | |
Varian Medical Systems | 174,400 | a | 11,686,544 |
65,258,966 | |||
Household & Personal Products—2.1% | |||
Colgate-Palmolive | 247,200 | 14,298,048 | |
Materials—5.9% | |||
Monsanto | 139,100 | 13,999,024 | |
Praxair | 107,600 | 12,301,908 | |
Sigma-Aldrich | 160,100 | 13,393,966 | |
39,694,898 | |||
Pharmaceuticals, Biotech & | |||
Life Sciences—4.0% | |||
Celgene | 109,800 | a | 13,576,770 |
Johnson & Johnson | 160,500 | 13,510,890 | |
27,087,660 | |||
Retailing—8.0% | |||
Family Dollar Stores | 210,400 | 12,865,960 | |
The TJX Companies | 315,300 | 15,957,333 | |
Tractor Supply | 122,500 | 13,717,550 | |
Urban Outfitters | 274,200 | a | 11,497,206 |
54,038,049 | |||
Semiconductors & Semiconductor | |||
Equipment—2.0% | |||
Intel | 555,000 | 13,475,400 |
8
Common Stocks (continued) | Shares | Value ($) | |
Software & Services—15.0% | |||
Adobe Systems | 291,300 | a | 12,499,683 |
Automatic Data Processing | 222,200 | 15,269,584 | |
Google, Cl. A | 16,960 | a | 14,762,154 |
MasterCard, Cl. A | 28,370 | 16,177,993 | |
Microsoft | 433,100 | 15,106,528 | |
Oracle | 405,300 | 13,682,928 | |
Paychex | 372,000 | b | 13,849,560 |
101,348,430 | |||
Technology Hardware & | |||
Equipment—6.2% | |||
Amphenol, Cl. A | 172,800 | 13,461,120 | |
Cisco Systems | 592,700 | 14,272,216 | |
QUALCOMM | 218,500 | 13,870,380 | |
41,603,716 | |||
Transportation—4.1% | |||
C.H. Robinson Worldwide | 241,900 | 13,713,311 | |
Expeditors International | |||
of Washington | 354,000 | 13,816,620 | |
27,529,931 | |||
Total Common Stocks | |||
(cost $512,304,241) | 653,178,737 | ||
Other Investment—4.2% | |||
Registered | |||
Investment Company; | |||
Dreyfus Institutional Preferred | |||
Plus Money Market Fund | |||
(cost $27,999,000) | 27,999,000 | c | 27,999,000 |
The Fund 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Investment of Cash Collateral | ||||
for Securities Loaned—4.4% | Shares | Value ($) | ||
Registered Investment Company; | ||||
Dreyfus Institutional Cash Advantage Fund | ||||
(cost $29,644,207) | 29,644,207 | c | 29,644,207 | |
Total Investments (cost $569,947,448) | 105.4 | % | 710,821,944 | |
Liabilities, Less Cash and Receivables | (5.4 | %) | (36,441,578 | ) |
Net Assets | 100.0 | % | 674,380,366 |
a Non-income producing security. |
b Security, or portion thereof, on loan.At May 31, 2013, the value of the fund’s securities on loan was $27,949,757 |
and the value of the collateral held by the fund was $29,644,207. |
c Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited)† | |||
Value (%) | Value (%) | ||
Capital Goods | 17.6 | Pharmaceuticals, | |
Software & Services | 15.0 | Biotech & Life Sciences | 4.0 |
Health Care Equipment & Services | 9.7 | Consumer Durables & Apparel | 3.8 |
Energy | 9.4 | Food & Staples Retailing | 2.1 |
Money Market Investments | 8.6 | Household & Personal Products | 2.1 |
Retailing | 8.0 | Semiconductors & | |
Technology Hardware & Equipment | 6.2 | Semiconductor Equipment | 2.0 |
Materials | 5.9 | Food, Beverage & Tobacco | 1.8 |
Consumer Services | 5.1 | ||
Transportation | 4.1 | 105.4 | |
† Based on net assets. | |||
See notes to financial statements. |
10
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2013 (Unaudited)
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments (including | ||
securities on loan, valued at $27,949,757)—Note 1(b): | ||
Unaffiliated issuers | 512,304,241 | 653,178,737 |
Affiliated issuers | 57,643,207 | 57,643,207 |
Cash | 470,462 | |
Dividends and securities lending income receivable | 1,116,279 | |
Receivable for shares of Common Stock subscribed | 655,490 | |
Prepaid expenses | 38,235 | |
713,102,410 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 445,167 | |
Liability for securities on loan—Note 1(b) | 29,644,207 | |
Payable for investment securities purchased | 7,841,069 | |
Payable for shares of Common Stock redeemed | 729,222 | |
Accrued expenses | 62,379 | |
38,722,044 | ||
Net Assets ($) | 674,380,366 | |
Composition of Net Assets ($): | ||
Paid-in capital | 530,527,983 | |
Accumulated undistributed investment income—net | 1,676,615 | |
Accumulated net realized gain (loss) on investments | 1,301,272 | |
Accumulated net unrealized appreciation | ||
(depreciation) on investments | 140,874,496 | |
Net Assets ($) | 674,380,366 |
Net Asset Value Per Share | |||
Class A | Class C | Class I | |
Net Assets ($) | 1,556,553 | 324,530 | 672,499,283 |
Shares Outstanding | 89,169 | 19,138 | 38,408,591 |
Net Asset Value Per Share ($) | 17.46 | 16.96 | 17.51 |
See notes to financial statements. |
The Fund 11
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2013 (Unaudited)
Investment Income ($): | ||
Income: | ||
Cash dividends: | ||
Unaffiliated issuers | 4,848,686 | |
Affiliated issuers | 8,627 | |
Income from securities lending—Note 1(b) | 81,027 | |
Total Income | 4,938,340 | |
Expenses: | ||
Management fee—Note 3(a) | 2,262,910 | |
Professional fees | 32,913 | |
Registration fees | 31,709 | |
Directors’ fees and expenses—Note 3(d) | 27,517 | |
Custodian fees—Note 3(c) | 22,152 | |
Shareholder servicing costs—Note 3(c) | 5,460 | |
Prospectus and shareholders’ reports | 3,930 | |
Loan commitment fees—Note 2 | 2,154 | |
Distribution fees—Note 3(b) | 1,172 | |
Miscellaneous | 14,005 | |
Total Expenses | 2,403,922 | |
Less—reduction in fees due to earnings credits—Note 3(c) | (13 | ) |
Net Expenses | 2,403,909 | |
Investment Income—Net | 2,534,431 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments | 4,705,839 | |
Net unrealized appreciation (depreciation) on investments | 70,508,436 | |
Net Realized and Unrealized Gain (Loss) on Investments | 75,214,275 | |
Net Increase in Net Assets Resulting from Operations | 77,748,706 | |
See notes to financial statements. |
12
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Operations ($): | ||||
Investment income—net | 2,534,431 | 4,547,140 | ||
Net realized gain (loss) on investments | 4,705,839 | (733,670 | ) | |
Net unrealized appreciation | ||||
(depreciation) on investments | 70,508,436 | 36,376,747 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 77,748,706 | 40,190,217 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (11,577 | ) | — | |
Class I Shares | (5,289,594 | ) | (1,914,449 | ) |
Total Dividends | (5,301,171 | ) | (1,914,449 | ) |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 394,853 | 1,520,589 | ||
Class C Shares | 46,816 | 119,955 | ||
Class I Shares | 114,699,672 | 200,047,673 | ||
Dividends reinvested: | ||||
Class A Shares | 10,342 | — | ||
Class I Shares | 1,722,258 | 606,842 | ||
Cost of shares redeemed: | ||||
Class A Shares | (864,759 | ) | (782,606 | ) |
Class C Shares | (38,813 | ) | (75,248 | ) |
Class I Shares | (51,143,854 | ) | (80,298,753 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 64,826,515 | 121,138,452 | ||
Total Increase (Decrease) in Net Assets | 137,274,050 | 159,414,220 | ||
Net Assets ($): | ||||
Beginning of Period | 537,106,316 | 377,692,096 | ||
End of Period | 674,380,366 | 537,106,316 | ||
Undistributed investment income—net | 1,676,615 | 4,443,355 |
The Fund 13
STATEMENT OF CHANGES IN NET ASSETS (continued)
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Capital Share Transactions: | ||||
Class A | ||||
Shares sold | 24,140 | 101,027 | ||
Shares issued for dividends reinvested | 675 | — | ||
Shares redeemed | (52,811 | ) | (53,436 | ) |
Net Increase (Decrease) in Shares Outstanding | (27,996 | ) | 47,591 | |
Class C | ||||
Shares sold | 2,909 | 8,430 | ||
Shares redeemed | (2,314 | ) | (5,290 | ) |
Net Increase (Decrease) in Shares Outstanding | 595 | 3,140 | ||
Class I | ||||
Shares sold | 6,931,014 | 13,460,380 | ||
Shares issued for dividends reinvested | 112,273 | 42,645 | ||
Shares redeemed | (3,126,416 | ) | (5,385,690 | ) |
Net Increase (Decrease) in Shares Outstanding | 3,916,871 | 8,117,335 | ||
See notes to financial statements. |
14
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | |||||||||||
May 31, 2013 | Year Ended November 30, | ||||||||||
Class A Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | a | ||||
Per Share Data ($): | |||||||||||
Net asset value, | |||||||||||
beginning of period | 15.45 | 14.20 | 12.83 | 11.68 | 9.14 | 12.50 | |||||
Investment Operations: | |||||||||||
Investment income—netb | .04 | .08 | .04 | .01 | .04 | .02 | |||||
Net realized and unrealized | |||||||||||
gain (loss) on investments | 2.08 | 1.17 | 1.39 | 1.16 | 2.53 | (3.38 | ) | ||||
Total from | |||||||||||
Investment Operations | 2.12 | 1.25 | 1.43 | 1.17 | 2.57 | (3.36 | ) | ||||
Distributions: | |||||||||||
Dividends from | |||||||||||
investment income—net | (.11 | ) | — | — | (.02 | ) | (.03 | ) | — | ||
Dividends from net realized | |||||||||||
gain on investments | — | — | (.06 | ) | — | — | — | ||||
Total Distributions | (.11 | ) | — | (.06 | ) | (.02 | ) | (.03 | ) | — | |
Net asset value, end of period | 17.46 | 15.45 | 14.20 | 12.83 | 11.68 | 9.14 | |||||
Total Return (%)c | 13.80 | d | 8.80 | 11.17 | 10.01 | 28.19 | (26.88 | )d | |||
Ratios/Supplemental Data (%): | |||||||||||
Ratio of total expenses | |||||||||||
to average net assets | 1.15 | e | 1.22 | 1.15 | 1.76 | 4.65 | 5.54 | e | |||
Ratio of net expenses | |||||||||||
to average net assets | 1.15 | e | 1.22 | 1.15 | 1.40 | 1.40 | 1.40 | e | |||
Ratio of net investment income | |||||||||||
to average net assets | .53 | e | .57 | .29 | .04 | .42 | .33 | e | |||
Portfolio Turnover Rate | 1.73 | d | 5.73 | 10.61 | 13.62 | 31.79 | 7.98 | d | |||
Net Assets, end of period | |||||||||||
($ x 1,000) | 1,557 | 1,810 | 988 | 2,424 | 3,884 | 2,618 |
a | From May 30, 2008 (commencement of operations) to November 30, 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 15
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class C Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | a | |||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 14.97 | 13.88 | 12.65 | 11.58 | 9.11 | 12.50 | ||||||
Investment Operations: | ||||||||||||
Investment (loss)—netb | (.03 | ) | (.05 | ) | (.06 | ) | (.09 | ) | (.03 | ) | (.02 | ) |
Net realized and unrealized | ||||||||||||
gain (loss) on investments | 2.02 | 1.14 | 1.35 | 1.16 | 2.50 | (3.37 | ) | |||||
Total from | ||||||||||||
Investment Operations | 1.99 | 1.09 | 1.29 | 1.07 | 2.47 | (3.39 | ) | |||||
Distributions: | ||||||||||||
Dividends from net realized | ||||||||||||
gain on investments | — | — | (.06 | ) | — | — | — | |||||
Net asset value, end of period | 16.96 | 14.97 | 13.88 | 12.65 | 11.58 | 9.11 | ||||||
Total Return (%)c | 13.29 | d | 7.85 | 10.22 | 9.24 | 27.11 | (27.12 | )d | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | 2.05 | e | 2.08 | 1.94 | 2.52 | 5.83 | 6.30 | e | ||||
Ratio of net expenses | ||||||||||||
to average net assets | 2.05 | e | 2.08 | 1.94 | 2.15 | 2.15 | 2.14 | e | ||||
Ratio of net investment (loss) | ||||||||||||
to average net assets | (.42 | )e | (.33 | ) | (.47 | ) | (.71 | ) | (.27 | ) | (.41 | )e |
Portfolio Turnover Rate | 1.73 | d | 5.73 | 10.61 | 13.62 | 31.79 | 7.98 | d | ||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 325 | 278 | 214 | 312 | 497 | 374 |
a | From May 30, 2008 (commencement of operations) to November 30, 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.
16
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class I Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | a | |||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 15.51 | 14.27 | 12.88 | 11.70 | 9.16 | 12.50 | ||||||
Investment Operations: | ||||||||||||
Investment income—netb | .07 | .14 | .09 | .07 | .05 | .03 | ||||||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | 2.08 | 1.17 | 1.38 | 1.15 | 2.54 | (3.37 | ) | |||||
Total from | ||||||||||||
Investment Operations | 2.15 | 1.31 | 1.47 | 1.22 | 2.59 | (3.34 | ) | |||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.15 | ) | (.07 | ) | (.02 | ) | (.04 | ) | (.05 | ) | — | |
Dividends from net realized | ||||||||||||
gain on investments | — | — | (.06 | ) | — | — | — | |||||
Total Distributions | (.15 | ) | (.07 | ) | (.08 | ) | (.04 | ) | (.05 | ) | — | |
Net asset value, end of period | 17.51 | 15.51 | 14.27 | 12.88 | 11.70 | 9.16 | ||||||
Total Return (%) | 14.03 | c | 9.23 | 11.46 | 10.47 | 28.36 | (26.72 | )c | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .80 | d | .80 | .82 | .94 | 3.77 | 5.25 | d | ||||
Ratio of net expenses | ||||||||||||
to average net assets | .80 | d | .80 | .82 | .94 | 1.15 | 1.14 | d | ||||
Ratio of net investment income | ||||||||||||
to average net assets | .84 | d | .95 | .67 | .56 | .54 | .59 | d | ||||
Portfolio Turnover Rate | 1.73 | c | 5.73 | 10.61 | 13.62 | 31.79 | 7.98 | c | ||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 672,499 | 535,019 | 376,490 | 144,771 | 1,870 | 366 |
a | From May 30, 2008 (commencement of operations) to November 30, 2008. |
b | Based on average shares outstanding at each month end. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
The Fund 17
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus U.S. Equity Fund (the “fund”) is a separate diversified series of Strategic 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 nine series, including the fund.The fund’s investment objective is to seek long-term 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.Walter Scott & Partners Limited (“Walter Scott”), a subsidiary of BNY Mellon and 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 generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) 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 sales charge may be reduced or waived for certain purchases of Class A shares. Effective April 1, 2013, pursuant to new/modified front-end sales charge waivers, Class A shares of the fund may be purchased at net asset value without payment of a sales charge by (a) investors who participate in a self-directed investment brokerage
18
account program offered by financial intermediaries that have entered into an agreement with the fund’s Distributor (financial intermediaries offering self-directed investment brokerage accounts may or may not charge their customers a transaction fee) and (b) investors who purchase Class A shares directly through the fund’s Distributor, and either (i) have, or whose spouse or minor children have, beneficially owned shares and continuously maintained an open account with the Distributor in a Dreyfus-managed fund since on or before February 28, 2006, or (ii) such purchase is for a self-directed investment account that may or may not be subject to a transaction fee.
On April 29, 2013, the Company’s Board of Directors (the “Board”) authorized the fund to offer Class Y shares, as a new class of shares, to certain investors, including certain institutional investors. Effective July 1, 2013, ClassY shares will be offered at net asset value and will not be subject to certain fees, including Distribution Plan and Shareholder Services Plan fees. The Board approved an increase in the authorized shares of the fund from 300 million to 400 million and authorized 100 million ClassY shares.
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 Fund 19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
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.
20
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.
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 invest-
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
ments 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 within Level 2 or 3 of the fair value hierarchy 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.
The following is a summary of the inputs used as of May 31, 2013 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† | 653,178,737 | — | — | 653,178,737 |
Mutual Funds | 57,643,207 | — | — | 57,643,207 |
† See Statement of Investments for additional detailed categorizations. |
At May 31, 2013, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(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.
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
22
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 Dreyfus, 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 May 31, 2013, The Bank of NewYork Mellon earned $34,726 from lending portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended May 31, 2013 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 11/30/2012($) | Purchases ($) | Sales ($) | 5/31/2013 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Preferred | |||||
Plus Money | |||||
Market | |||||
Fund | 18,726,000 | 74,326,000 | 65,053,000 | 27,999,000 | 4.2 |
Dreyfus | |||||
Institutional | |||||
Cash | |||||
Advantage | |||||
Fund | 4,361,023 | 140,868,200 | 115,585,016 | 29,644,207 | 4.4 |
Total | 23,087,023 | 215,194,200 | 180,638,016 | 57,643,207 | 8.6 |
(d) 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
The Fund 23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 May 31, 2013, 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 tax year in the three-year period ended November 30, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
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 has an unused capital loss carryover of $1,790,028 available for federal income tax purposes to be applied against future net real-
24
ized capital gains, if any, realized subsequent to November 30, 2012. If not applied, the carryover expires in fiscal year 2019.
The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2012 was as follows: ordinary income $1,914,449. The tax character of current year distributions will be determined at the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $210 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. During the period ended May 31, 2013, 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 .75% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus had contractually agreed from, December 1, 2012 through April 1, 2013, 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, commitment fees on borrowings and extraordinary expenses) exceeded 1.15% of the value of the fund’s average daily net assets. Thereafter, Dreyfus has contractually agreed, from April 2, 2013 through July 1, 2014, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the expenses of
The Fund 25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
none of the classes (excluding certain expenses as described above) exceed .90% of the value of the fund’s average daily net assets. During the period ended May 31, 2013, there were no reduction in expenses pursuant to the undertaking.
Pursuant to a sub-investment advisory agreement between Dreyfus and Walter Scott, Dreyfus pays Walter Scott a monthly fee at an annual percentage of the fund’s average daily net assets.
During the period ended May 31, 2013, the Distributor retained $682 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 its average daily net assets. During the period ended May 31, 2013, Class C shares were charged $1,172, 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) with respect to these services.The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2013, Class A and Class C shares were charged $2,079 and $391, 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.
26
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $2,543 for transfer agency services and $75 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 compensatesThe Bank of NewYork Mellon under a custody agreement for providing custodial services for the fund. During the period ended May 31, 2013, the fund was charged $22,152 pursuant to the custody agreement.
The fund compensates The Bank of New York Mellon under a cash management agreement for performing certain cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $46 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations.
During the period ended May 31, 2013, the fund was charged $4,558 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 $428,764, Distribution Plan fees $214, Shareholder Services Plan fees $414, custodian fees $11,100, Chief Compliance Officer fees $3,830 and transfer agency fees $845.
(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 27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended May 31, 2013, amounted to $65,742,324 and $10,100,292, respectively.
At May 31, 2013, accumulated net unrealized appreciation on investments was $140,874,496, consisting of $149,685,561 gross unrealized appreciation and $8,811,065 gross unrealized depreciation.
At May 31, 2013, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
28
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/usencsrx32x1.jpg)
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/gsncsrx1x1.jpg)
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.
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/gsncsrx2x1.jpg)
Contents | |
THE FUND | |
2 | A Letter from the President |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
10 | Statement of Assets and Liabilities |
11 | Statement of Operations |
12 | Statement of Changes in Net Assets |
14 | Financial Highlights |
17 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
Global Stock Fund
The Fund
A LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Global Stock Fund, covering the six-month period from December 1, 2012, through May 31, 2013. 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.
Although a sustained global economic recovery generally gained traction over the second half of 2012, we more recently have seen reports of slower growth in some parts of the world as evidenced by declining commodity prices.The recent slowdown is due to a combination of factors, including the final months of recession in Europe, more restrictive U.S. fiscal policies stemming from sequestration, and some rebalancing in China. Consequently, global equity markets advanced strongly early in the reporting period when economic conditions seemed poised for improvement, but subsequent gains were more subdued, on average.
We believe the current subcycle of slower growth is likely to be temporary. We anticipate a mild acceleration of global economic growth near the end of 2013 and throughout 2014, fueled by aggressively stimulative monetary policies from central banks throughout the world. Some economists have expressed concern that low interest rates and quantitative easing programs may spark an acceleration of consumer price inflation, but we believe these fears are premature. In fact, the relatively sluggish pace of the recovery implies that inflation risks are limited, making it unlikely that central banks will adopt expansion-threatening, restrictive policies anytime soon. As always, we encourage you to discuss our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/gsncsrx4x1.jpg)
J. Charles Cardona
President
The Dreyfus Corporation
June 17, 2013
2
DISCUSSION OF FUND PERFORMANCE
For the period of December 1, 2012, through May 31, 2013, as provided by Charlie Macquaker and Roy Leckie of Walter Scott & Partners Limited (Walter Scott), Sub-investment adviser
Fund and Market Performance Overview
For the six-month period ended May 31, 2013, Global Stock Fund’s Class A shares produced a total return of 9.36%, Class C shares returned 8.97%, and Class I shares returned 9.49%.1 In comparison, the fund’s benchmark, the Morgan Stanley Capital International World Index (the “MSCI World Index”), achieved a 13.26% return over the same period.2
Despite bouts of heightened volatility, global equities generally advanced when economic trends began to show some signs of improvement, particularly in developed markets. The fund produced lower returns than its benchmark, mainly due to its relatively conservative investment posture.
The Fund’s Investment Approach
The fund seeks long-term real returns by investing in high-quality companies capable of sustainable growth and wealth creation over a long time horizon.The firm focuses on individual stock selection through extensive fundamental research. Candidates are initially selected for research if they meet certain broad absolute and trend criteria. Financial statements are analyzed in an effort to identify the nature of the cash generation that is looked for in any investment and to understand the variables that demonstrate robust financial health and define long-term competitive advantage. Companies meeting the financial criteria are then subjected to a detailed investigation of products, costs and pricing, competition, industry position, and outlook.
Developed Markets Outpaced Emerging Markets
Sustained stock market rallies began throughout the world in the weeks prior to the reporting period when various global macroeconomic concerns failed to materialize. Instead, investors were encouraged by a new quantitative easing program from the European Central Bank that appeared to forestall a more severe banking crisis in the region, expectations that new government leadership in China might adopt policies more conducive to stronger regional growth, and actions by a new Japanese govern-
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
ment that sought to address longstanding economic stagnation and deflationary pressures. In addition, investors responded positively to gradually improving U.S. employment and housing market trends, which were sparked in part by the Federal Reserve Board’s aggressively accommodative monetary policy.
However, investors’ optimism at the time may have been overblown, as the global economy expanded at a relatively sluggish rate during the reporting period amid an ongoing financial crisis and fiscal austerity in Europe and slackening demand from the emerging markets for energy and construction materials.
These developments helped produce widely disparate returns across individual stock markets, as strength in developed markets was balanced by relative weakness in many emerging markets. More specifically, Japan, the United States, and, to a lesser degree, Europe led global markets higher, while China, India, and Brazil either barely advanced or lost a modest amount of value.
Conservative Positioning Weighed on Fund Performance
The fund’s conservative approach typically fares better than market averages when markets fall, but generally lags during rallies.The reporting period was no exception, the fund did not fully participate in gains posted by more speculative stocks.
For example, the fund’s holdings in Japan focused mainly on large, multinational exporters at a time when smaller, domestically focused companies rallied from depressed levels. For example, Japanese robotics maker FANUC and air conditioning systems specialist Daikin Industries were hurt by lackluster demand in Asian emerging markets. In China, a sluggish economy undermined energy producer China Shenhua Energy, Cl. H as coal prices declined, and offshore oil& gas and exploration& production company CNOOC struggled with rising costs and narrower profit margins. In other regions, WM Morrison Supermarkets in the United Kingdom failed to benefit from recent store format changes, leading to its elimination from the fund. From an industry group perspective, substantially underweighted exposure to the financials sector weighed on relative performance.
The fund achieved better results in the information technology sector, where U.S. software giant Microsoft reported better-than-expected quarterly sales and earnings, and equipment maker Cisco Systems achieved higher profit margins across its various
4
business segments. Among consumer discretionary companies, U.S. sports apparel company, NIKE, Cl. B offset weakness in Asian markets with robust sales in North America, and Japanese auto parts seller Denso achieved higher profit margins in a consolidating industry. Gains in Japanese real estate developer Mitsubishi Estate were driven by falling vacancies and rising rents in a recovering domestic economy.
Two new positions were purchased during the reporting period in two health care companies. Roche Holding has built a leading franchise in oncology pharmaceuticals, and medical devices producer Stryker Corporation has exhibited strong growth trends.
Finding Opportunities Among Individual Companies
While Walter Scott has been somewhat encouraged by recent economic news, we remain concerned that the market’s gains over the reporting period were not fully supported by underlying business fundamentals. Consequently, we have retained a generally cautious investment posture and an emphasis on individual companies that, in our analysis, are poised for growth on their own merits, independent of economic conditions.
June 17, 2013
Please note, the position in any security highlighted with italicized typeface as 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.
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 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: LIPPER INC. — 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. |
Investors cannot invest directly in any index. |
The Fund 5
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 Stock Fund from December 1, 2012 to May 31, 2013. 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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 6.42 | $ | 10.47 | $ | 4.75 |
Ending value (after expenses) | $ | 1,093.60 | $ | 1,089.70 | $ | 1,094.90 |
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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 6.19 | $ | 10.10 | $ | 4.58 |
Ending value (after expenses) | $ | 1,018.80 | $ | 1,014.91 | $ | 1,020.39 |
† Expenses are equal to the fund’s annualized expense ratio of 1.23% for Class A, 2.01% for Class C and .91% |
for Class I, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half |
year period). |
6
STATEMENT OF INVESTMENTS
May 31, 2013 (Unaudited)
Common Stocks—97.0% | Shares | Value ($) |
Australia—3.4% | ||
CSL | 385,300 | 21,842,432 |
Woodside Petroleum | 663,900 | 22,624,250 |
44,466,682 | ||
Brazil—1.5% | ||
Petroleo Brasileiro, ADR | 1,044,300 | 19,465,752 |
Canada—1.4% | ||
Suncor Energy | 611,200 | 18,540,863 |
China—2.4% | ||
China Shenhua Energy, Cl. H | 3,182,000 | 10,250,273 |
CNOOC | 11,577,000 | 20,356,298 |
30,606,571 | ||
Denmark—1.9% | ||
Novo Nordisk, Cl. B | 153,000 | 24,562,688 |
France—3.9% | ||
Essilor International | 226,200 | 24,651,643 |
L’Oreal | 154,000 | 25,816,426 |
50,468,069 | ||
Hong Kong—4.4% | ||
China Mobile | 2,124,500 | 22,207,615 |
CLP Holdings | 1,301,000 | 10,963,329 |
Hong Kong & China Gas | 8,287,668 | 23,402,741 |
56,573,685 | ||
Japan—13.1% | ||
Canon | 584,800 | 20,128,376 |
Chugai Pharmaceutical | 371,100 | 7,439,663 |
Denso | 614,100 | 25,487,157 |
FANUC | 148,000 | 21,871,662 |
Honda Motor | 619,300 | 22,903,994 |
Keyence | 33,557 | 10,283,592 |
Komatsu | 1,094,000 | 27,599,855 |
Mitsubishi Estate | 382,000 | 9,380,088 |
Shin-Etsu Chemical | 368,600 | 23,180,151 |
168,274,538 | ||
Singapore—2.0% | ||
DBS Group Holdings | 1,888,074 | 25,553,486 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Spain—1.6% | |||
Inditex | 171,300 | 21,231,848 | |
Sweden—1.7% | |||
Hennes & Mauritz, Cl. B | 643,300 | 21,982,912 | |
Switzerland—7.2% | |||
Nestle | 332,000 | 21,907,642 | |
Novartis | 150,700 | 10,798,519 | |
Roche Holding | 94,100 | 23,284,133 | |
SGS | 5,000 | 11,182,723 | |
Syngenta | 67,000 | 26,291,096 | |
93,464,113 | |||
Taiwan—2.0% | |||
Taiwan Semiconductor Manufacturing, ADR | 1,346,800 | 25,131,288 | |
United Kingdom—9.2% | |||
BG Group | 1,309,000 | 23,823,793 | |
HSBC Holdings | 2,072,000 | 22,696,787 | |
Reckitt Benckiser Group | 344,000 | 24,542,802 | |
Standard Chartered | 1,105,000 | 25,409,868 | |
Tesco | 4,120,300 | 22,738,163 | |
119,211,413 | |||
United States—41.3% | |||
Adobe Systems | 574,500 | a | 24,651,795 |
Amphenol, Cl. A | 165,400 | 12,884,660 | |
Automatic Data Processing | 377,400 | 25,934,928 | |
C.R. Bard | 79,700 | 8,216,273 | |
Cisco Systems | 1,110,700 | 26,745,656 | |
Colgate-Palmolive | 434,400 | 25,125,696 | |
EOG Resources | 182,400 | 23,547,840 | |
Fastenal | 210,000 | 10,957,800 | |
Google, Cl. A | 31,200 | a | 27,156,792 |
Intel | 1,110,700 | 26,967,796 | |
Johnson & Johnson | 275,500 | 23,191,590 | |
MasterCard, Cl. A | 45,600 | 26,003,400 | |
Microsoft | 801,800 | 27,966,784 | |
NIKE, Cl. B | 446,400 | 27,525,024 | |
Oracle | 771,000 | 26,028,960 | |
Praxair | 205,700 | 23,517,681 |
8
Common Stocks (continued) | Shares | Value ($) | |
United States (continued) | |||
Precision Castparts | 139,500 | 29,841,840 | |
QUALCOMM | 352,100 | 22,351,308 | |
Schlumberger | 337,600 | 24,654,928 | |
Sigma-Aldrich | 166,400 | 13,921,024 | |
Stryker | 393,900 | 26,151,021 | |
The TJX Companies | 481,900 | 24,388,959 | |
Wal-Mart Stores | 327,200 | 24,487,648 | |
532,219,403 | |||
Total Common Stocks | |||
(cost $1,038,719,024) | 1,251,753,311 | ||
Other Investment—2.4% | |||
Registered Investment Company; | |||
Dreyfus Institutional Preferred | |||
Plus Money Market Fund | |||
(cost $30,406,000) | 30,406,000 | b | 30,406,000 |
Total Investments (cost $1,069,125,024) | 99.4 | % | 1,282,159,311 |
Cash and Receivables (Net) | .6 | % | 7,125,413 |
Net Assets | 100.0 | % | 1,289,284,724 |
ADR—American Depository Receipts
a | Non-income producing security. |
b | Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited)† | |||
Value (%) | Value (%) | ||
Information Technology | 23.4 | Materials | 6.7 |
Health Care | 13.2 | Financial | 6.4 |
Energy | 12.7 | Utilities | 2.7 |
Consumer Staples | 11.2 | Money Market Investment | 2.4 |
Consumer Discretionary | 11.1 | Telecommunication Services | 1.7 |
Industrial | 7.9 | 99.4 | |
† Based on net assets. | |||
See notes to financial statements. |
The Fund 9
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2013 (Unaudited)
Cost | Value | ||
Assets ($): | |||
Investments in securities—See Statement of Investments: | |||
Unaffiliated issuers | 1,038,719,024 | 1,251,753,311 | |
Affiliated issuers | 30,406,000 | 30,406,000 | |
Cash | 3,128,746 | ||
Cash denominated in foreign currencies | 545,498 | 541,841 | |
Dividends receivable | 5,879,353 | ||
Receivable for investment securities sold | 2,717,351 | ||
Receivable for shares of Common Stock subscribed | 184,474 | ||
Prepaid expenses | 61,245 | ||
1,294,672,321 | |||
Liabilities ($): | |||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 1,038,238 | ||
Payable for investment securities purchased | 3,802,825 | ||
Payable for shares of Common Stock redeemed | 412,290 | ||
Unrealized depreciation on forward foreign | |||
currency exchange contracts—Note 4 | 10,166 | ||
Accrued expenses | 124,078 | ||
5,387,597 | |||
Net Assets ($) | 1,289,284,724 | ||
Composition of Net Assets ($): | |||
Paid-in capital | 1,073,502,534 | ||
Accumulated undistributed investment income—net | 8,520,318 | ||
Accumulated net realized gain (loss) on investments | (5,653,919 | ) | |
Accumulated net unrealized appreciation (depreciation) | |||
on investments and foreign currency transactions | 212,915,791 | ||
Net Assets ($) | 1,289,284,724 |
Net Asset Value Per Share | |||
Class A | Class C | Class I | |
Net Assets ($) | 72,035,523 | 18,817,879 | 1,198,431,322 |
Shares Outstanding | 4,407,613 | 1,173,938 | 72,404,117 |
Net Asset Value Per Share ($) | 16.34 | 16.03 | 16.55 |
See notes to financial statements. |
10
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2013 (Unaudited)
Investment Income ($): | ||
Income: | ||
Cash dividends (net of $996,661 foreign taxes withheld at source): | ||
Unaffiliated issuers | 14,331,282 | |
Affiliated issuers | 20,331 | |
Total Income | 14,351,613 | |
Expenses: | ||
Management fee—Note 3(a) | 4,708,207 | |
Shareholder servicing costs—Note 3(c) | 195,391 | |
Custodian fees—Note 3(c) | 98,239 | |
Registration fees | 91,311 | |
Distribution fees—Note 3(b) | 65,712 | |
Professional fees | 44,985 | |
Directors’ fees and expenses—Note 3(d) | 22,085 | |
Loan commitment fees—Note 2 | 3,638 | |
Prospectus and shareholders’ reports | 2,529 | |
Miscellaneous | 27,216 | |
Total Expenses | 5,259,313 | |
Less—reduction in fees due to earnings credits—Note 3(c) | (58 | ) |
Net Expenses | 5,259,255 | |
Investment Income—Net | 9,092,358 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | (207,932 | ) |
Net realized gain (loss) on forward foreign currency exchange contracts | (501,656 | ) |
Net Realized Gain (Loss) | (709,588 | ) |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 81,072,967 | |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (10,166 | ) |
Net Unrealized Appreciation (Depreciation) | 81,062,801 | |
Net Realized and Unrealized Gain (Loss) on Investments | 80,353,213 | |
Net Increase in Net Assets Resulting from Operations | 89,445,571 | |
See notes to financial statements. |
The Fund 11
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Operations ($): | ||||
Investment income—net | 9,092,358 | 6,765,358 | ||
Net realized gain (loss) on investments | (709,588 | ) | (1,806,095 | ) |
Net unrealized appreciation | ||||
(depreciation) on investments | 81,062,801 | 73,510,804 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 89,445,571 | 78,470,067 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (320,140 | ) | (361,165 | ) |
Class C Shares | — | (5,282 | ) | |
Class I Shares | (6,883,220 | ) | (5,003,982 | ) |
Net realized gain on investments: | ||||
Class A Shares | — | (446,761 | ) | |
Class C Shares | — | (130,675 | ) | |
Class I Shares | — | (4,313,537 | ) | |
Total Dividends | (7,203,360 | ) | (10,261,402 | ) |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 18,990,895 | 25,765,348 | ||
Class C Shares | 3,033,447 | 3,753,627 | ||
Class I Shares | 513,652,237 | 281,322,507 | ||
Dividends reinvested: | ||||
Class A Shares | 309,658 | 778,549 | ||
Class C Shares | — | 91,613 | ||
Class I Shares | 4,696,245 | 4,912,548 | ||
Cost of shares redeemed: | ||||
Class A Shares | (14,374,947 | ) | (19,549,231 | ) |
Class C Shares | (1,541,504 | ) | (3,380,751 | ) |
Class I Shares | (63,475,010 | ) | (151,541,785 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 461,291,021 | 142,152,425 | ||
Total Increase (Decrease) in Net Assets | 543,533,232 | 210,361,090 | ||
Net Assets ($): | ||||
Beginning of Period | 745,751,492 | 535,390,402 | ||
End of Period | 1,289,284,724 | 745,751,492 | ||
Undistributed investment income—net | 8,520,318 | 6,631,320 |
12
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Capital Share Transactions: | ||||
Class Aa | ||||
Shares sold | 1,184,507 | 1,825,152 | ||
Shares issued for dividends reinvested | 20,095 | 59,567 | ||
Shares redeemed | (910,893 | ) | (1,387,430 | ) |
Net Increase (Decrease) in Shares Outstanding | 293,709 | 497,289 | ||
Class Ca | ||||
Shares sold | 192,446 | 270,088 | ||
Shares issued for dividends reinvested | — | 7,107 | ||
Shares redeemed | (97,917 | ) | (245,232 | ) |
Net Increase (Decrease) in Shares Outstanding | 94,529 | 31,963 | ||
Class I | ||||
Shares sold | 32,203,847 | 19,533,004 | ||
Shares issued for dividends reinvested | 301,235 | 371,881 | ||
Shares redeemed | (3,950,618 | ) | (10,561,836 | ) |
Net Increase (Decrease) in Shares Outstanding | 28,554,464 | 9,343,049 |
a During the period ended May 31, 2013, 10,068 Class C shares representing $168,940 were exchanged for 9,874 |
Class A shares. |
See notes to financial statements.
The Fund 13
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class A Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 15.02 | 13.51 | 12.99 | 12.23 | 8.91 | 13.73 | ||||||
Investment Operations: | ||||||||||||
Investment income—neta | .10 | .11 | .11 | .07 | .06 | .05 | ||||||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | 1.30 | 1.62 | .52 | .75 | 3.28 | (4.70 | ) | |||||
Total from Investment Operations | 1.40 | 1.73 | .63 | .82 | 3.34 | (4.65 | ) | |||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.08 | ) | (.10 | ) | (.07 | ) | (.06 | ) | (.02 | ) | (.08 | ) |
Dividends from net realized | ||||||||||||
gain on investments | — | (.12 | ) | (.04 | ) | — | — | (.09 | ) | |||
Total Distributions | (.08 | ) | (.22 | ) | (.11 | ) | (.06 | ) | (.02 | ) | (.17 | ) |
Net asset value, end of period | 16.34 | 15.02 | 13.51 | 12.99 | 12.23 | 8.91 | ||||||
Total Return (%)b | 9.36 | c | 13.08 | 4.86 | 6.70 | 37.57 | (34.32 | ) | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | 1.23 | d | 1.28 | 1.27 | 1.32 | 1.38 | 1.59 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | 1.23 | d | 1.28 | 1.27 | 1.32 | 1.38 | 1.47 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | 1.24 | d | .80 | .80 | .56 | .53 | .44 | |||||
Portfolio Turnover Rate | 1.65 | c | 6.05 | 8.54 | 7.50 | 12.75 | 15.54 | |||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 72,036 | 61,806 | 48,872 | 37,152 | 8,212 | 3,329 |
a | Based on average shares outstanding at each month end. |
b | Exclusive of sales charge. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
14
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class C Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 14.71 | 13.24 | 12.78 | 12.07 | 8.83 | 13.64 | ||||||
Investment Operations: | ||||||||||||
Investment income (loss)—neta | .04 | .01 | .01 | (.02 | ) | (.01 | ) | (.04 | ) | |||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | 1.28 | 1.59 | .50 | .73 | 3.25 | (4.68 | ) | |||||
Total from Investment Operations | 1.32 | 1.60 | .51 | .71 | 3.24 | (4.72 | ) | |||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | — | (.01 | ) | (.01 | ) | (.00 | )b | — | — | |||
Dividends from net realized | ||||||||||||
gain on investments | — | (.12 | ) | (.04 | ) | — | — | (.09 | ) | |||
Total Distributions | — | (.13 | ) | (.05 | ) | (.00 | )b | — | (.09 | ) | ||
Net asset value, end of period | 16.03 | 14.71 | 13.24 | 12.78 | 12.07 | 8.83 | ||||||
Total Return (%)c | 8.97 | d | 12.21 | 4.01 | 5.90 | 36.69 | (34.82 | ) | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | 2.01 | e | 2.05 | 2.03 | 2.09 | 2.12 | 2.36 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | 2.01 | e | 2.05 | 2.03 | 2.09 | 2.09 | 2.22 | |||||
Ratio of net investment income | ||||||||||||
(loss) to average net assets | .48 | e | .05 | .05 | (.17 | ) | (.11 | ) | (.29 | ) | ||
Portfolio Turnover Rate | 1.65 | d | 6.05 | 8.54 | 7.50 | 12.75 | 15.54 | |||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 18,818 | 15,883 | 13,872 | 10,243 | 1,873 | 695 |
a | Based on average shares outstanding at each month end. |
b | Amount represents less than $.01 per share. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund 15
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class I Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 15.24 | 13.70 | 13.15 | 12.36 | 8.99 | 13.76 | ||||||
Investment Operations: | ||||||||||||
Investment income—neta | .14 | .16 | .16 | .12 | .11 | .10 | ||||||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | 1.30 | 1.64 | .53 | .76 | 3.31 | (4.76 | ) | |||||
Total from Investment Operations 1.44 | 1.80 | .69 | .88 | 3.42 | (4.66 | ) | ||||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.13 | ) | (.14 | ) | (.10 | ) | (.09 | ) | (.05 | ) | (.02 | ) |
Dividends from net realized | ||||||||||||
gain on investments | — | (.12 | ) | (.04 | ) | — | — | (.09 | ) | |||
Total Distributions | (.13 | ) | (.26 | ) | (.14 | ) | (.09 | ) | (.05 | ) | (.11 | ) |
Net asset value, end of period | 16.55 | 15.24 | 13.70 | 13.15 | 12.36 | 8.99 | ||||||
Total Return (%) | 9.49 | b | 13.49 | 5.23 | 7.12 | 38.22 | (34.12 | ) | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .91 | c | .93 | .93 | .96 | .99 | 1.17 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | .91 | c | .93 | .93 | .96 | .99 | 1.15 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | 1.69 | c | 1.14 | 1.13 | .94 | 1.05 | .83 | |||||
Portfolio Turnover Rate | 1.65 | b | 6.05 | 8.54 | 7.50 | 12.75 | 15.54 | |||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 1,198,431 | 668,063 | 472,646 | 364,688 | 263,694 | 72,656 |
a | Based on average shares outstanding at each month end. |
b | Not annualized. |
c | Annualized. |
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Global Stock Fund (the “fund”) is a separate diversified series of Strategic 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 nine series, including the fund.The fund’s investment objective is to seek long-term total return. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Walter Scott & Partners Limited (“Walter Scott”), a subsidiary of BNY Mellon and 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 generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) 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 sales charge may be reduced or waived for certain purchases of Class A shares. Effective April 1, 2013, pursuant to new/modified front-end sales charge waivers, Class A shares of the fund may be purchased at net asset value without payment of a sales charge by (a) investors who participate in a self-directed investment brokerage account program
The Fund 17
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
offered by financial intermediaries that have entered into an agreement with the fund’s Distributor (financial intermediaries offering self-directed investment brokerage accounts may or may not charge their customers a transaction fee) and (b) investors who purchase Class A shares directly through the fund’s Distributor, and either (i) have, or whose spouse or minor children have, beneficially owned shares and continuously maintained an open account with the Distributor in a Dreyfus-managed fund since on or before February 28, 2006, or (ii) such purchase is for a self-directed investment account that may or may not be subject to a transaction fee.
On April 29, 2013, the Company’s Board of Directors (the “Board”) authorized the fund to offer ClassY shares, as a new class of shares, to certain investors, including certain institutional investors. Effective July 1, 2013, Class Y shares will be offered at net asset value and will not be subject to certain fees, including Distribution Plan and Shareholder Services Plan fees.The Board approved an increase in the authorized shares of the fund from 300 million to 400 million and authorized 100 million Class Y shares.
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.
18
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.
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 Fund 19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
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
20
issuers.These securities are either categorized within Level 2 or 3 of the fair value hierarchy 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 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 May 31, 2013 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† | 532,219,403 | — | — | 532,219,403 | ||
Equity Securities— | ||||||
Foreign | ||||||
Common Stocks† | 44,597,040 | 674,936,868 | †† | — | 719,533,908 | |
Mutual Funds | 30,406,000 | — | — | 30,406,000 | ||
Liabilities ($) | ||||||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign | ||||||
Currency Exchange | ||||||
Contracts††† | — | (10,166 | ) | — | (10,166 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Securities classified as Level 2 at period end as the values were determined pursuant to the |
fund’s fair valuation procedures. | |
††† | Amount shown represents unrealized (depreciation) at period end. |
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
At November 30, 2012, no exchange traded foreign equity securities were classified within 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 foreign currency transactions 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” under the Act. Investments in affiliated investment companies during the period ended May 31, 2013 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 11/30/2012 ($) | Purchases ($) | Sales ($) | 5/31/2013 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Preferred | |||||
Plus Money | |||||
Market | |||||
Fund | 15,460,000 | 434,446,000 | 419,500,000 | 30,406,000 | 2.4 |
22
(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 May 31, 2013, 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 tax year in the three-year period ended November 30, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The Fund 23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 fund has an unused capital loss carryover of $4,741,012 available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to November 30, 2012. The fund has $239,900 of post-enactment short-term capital losses and $4,501,112 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 year ended November 30, 2012 was as follows: ordinary income $7,714,574 and long-term capital gains $2,546,828.The tax character of current year distributions will be determined at the end of the current fiscal year.
(h) New Accounting Pronouncement: In January 2013, FASB issued Accounting Standards Update No. 2013-01 (“ASU 2013-01”), “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”, which replaced Accounting Standards Update No. 2011-11 (“ASU 2011-11”), “Disclosures about Offsetting Assets and Liabilities”. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 was intended to enhance disclosure requirements on the offsetting of financial assets and liabilities.ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting arrangement or similar agreement. Management is currently evaluating the application of ASU 2013-01 and its impact on the fund’s financial statements.
24
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $210 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. 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 May 31, 2013, 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 .85% of the value of the fund’s average daily net assets and is payable monthly.
Pursuant to a sub-investment advisory agreement between Dreyfus and Walter Scott, Dreyfus pays Walter Scott a monthly fee at an annual percentage of the value of the fund’s average daily net assets.
During the period ended May 31, 2013, the Distributor retained $4,574 from commissions earned on sales of the fund’s Class A shares and $368 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 its average daily net assets. During the period ended May 31, 2013, Class C shares were charged $65,712, 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 ser-
The Fund 25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
vices 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) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2013, Class A and Class C shares were charged $82,430 and $21,904, 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 Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $7,992 for transfer agency services and $342 for cash management services. Cash management fees were partially offset by earnings credits of $57.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 May 31, 2013, the fund was charged $98,239 pursuant to the custody agreement.
The fund compensates The Bank of New York Mellon under a cash management agreement for performing certain cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $198 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.
26
During the period ended May 31, 2013, the fund was charged $4,558 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 $956,878, Distribution Plan fees $12,246, Shareholder Services Plan fees $19,586, custodian fees $42,061, Chief Compliance Officer fees $3,830 and transfer agency fees $3,637.
(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 and forward contracts, during the period ended May 31, 2013, amounted to $460,884,434 and $17,508,549, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended May 31, 2013 is discussed below.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates.With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes
The Fund 27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract.The following summarizes open forward contracts at May 31, 2013:
Foreign | ||||||
Forward Foreign Currency | Currency | Unrealized | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) | (Depreciation) ($) | ||
Purchases: | ||||||
British Pound, | ||||||
Expiring | ||||||
6/3/2013a | 767,081 | 1,165,810 | 1,165,511 | (299 | ) | |
Swiss Franc, | ||||||
Expiring: | ||||||
6/3/2013a | 1,657,428 | 1,736,617 | 1,733,258 | (3,359 | ) | |
6/4/2013a | 867,175 | 909,656 | 906,849 | (2,807 | ) | |
Sales: | Proceeds ($) | |||||
Japanese Yen, | ||||||
Expiring | ||||||
6/5/2013a | 272,971,456 | 2,713,650 | 2,717,351 | (3,701 | ) | |
(10,166 | ) | |||||
Counterparty: | ||||||
a National Australia Bank |
The following summarizes the average market value of derivatives outstanding during the period ended May 31, 2013:
Average Market Value ($) | |
Forward contracts | 17,908,625 |
At May 31, 2013, accumulated net unrealized appreciation on investments was $213,034,287, consisting of $225,855,332 gross unrealized appreciation and $12,821,045 gross unrealized depreciation.
At May 31, 2013, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
28
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/gsncsrx32x1.jpg)
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/isncsrx1x1.jpg)
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.
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/isncsrx2x1.jpg)
Contents | |
THE FUND | |
2 | A Letter from the President |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
10 | Statement of Assets and Liabilities |
11 | Statement of Operations |
12 | Statement of Changes in Net Assets |
14 | Financial Highlights |
17 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
International
Stock Fund
The Fund
A LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for International Stock Fund, covering the six-month period from December 1, 2012, through May 31, 2013. 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.
Although a sustained global economic recovery generally gained traction over the second half of 2012, we more recently have seen reports of slower growth in some parts of the world as evidenced by declining commodity prices.The recent slowdown is due to a combination of factors, including the final months of recession in Europe, more restrictive U.S. fiscal policies stemming from sequestration, and some rebal-ancing in China. Consequently, global equity markets advanced strongly early in the reporting period when economic conditions seemed poised for improvement, but subsequent gains were more subdued, on average.
We believe the current subcycle of slower growth is likely to be temporary. We anticipate a mild acceleration of global economic growth near the end of 2013 and throughout 2014, fueled by aggressively stimulative monetary policies from central banks throughout the world. Some economists have expressed concern that low interest rates and quantitative easing programs may spark an acceleration of consumer price inflation, but we believe these fears are premature. In fact, the relatively sluggish pace of the recovery implies that inflation risks are limited, making it unlikely that central banks will adopt expansion-threatening, restrictive policies anytime soon. As always, we encourage you to discuss our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/isncsrx4x1.jpg)
J. Charles Cardona
President
The Dreyfus Corporation
June 17, 2013
2
DISCUSSION OF FUND PERFORMANCE
For the period of December 1, 2012, through May 31, 2013, as provided by Charlie Macquaker and Roy Leckie of Walter Scott & Partners Limited (Walter Scott), Sub-investment adviser
Fund and Market Performance Overview
For the six-month period ended May 31, 2013, International Stock Fund’s Class A shares achieved a return of 5.05%, Class C shares returned 4.68%, and Class I shares returned 5.29%.1 In comparison, the fund’s benchmark index, the Morgan Stanley Capital International Europe,Australasia, Far East Index (the “MSCI EAFE Index”), achieved an 11.39% return over the same period.2
Despite bouts of heightened volatility, international equities advanced when economic trends began to show signs of improvement, particularly in developed markets.The fund produced lower returns than its benchmark, mainly due to its conservative investment posture.
The Fund’s Investment Approach
The fund seeks long-term real return by investing in high-quality companies capable of sustainable growth and wealth creation over a long time horizon.The fund invests in stocks of foreign companies that are predominantly located in the world’s developed markets outside of the United States. When selecting stocks, Walter Scott seeks companies with fundamental strengths that indicate the potential for sustainable growth.The firm focuses on individual stock selection through extensive fundamental research. Candidates are initially selected for research if they meet certain broad absolute and trend criteria. Financial statements are analyzed in an effort to identify the nature of their cash generation and to understand the variables that could add value to their businesses. Companies meeting the financial criteria are subjected to a detailed investigation of products, costs and pricing, competition, industry position, and outlook.
Developed Markets Outpaced Emerging Markets
Sustained stock market rallies began throughout the world prior to the reporting period when various global macroeconomic concerns failed to materialize. Instead, investors were encouraged by a new quantitative easing program from the European
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
Central Bank, expectations that new government leadership in China might adopt policies more conducive to stronger regional growth, and actions by a new Japanese government that sought to address longstanding economic stagnation and deflation-ary pressures. In addition, international investors responded positively to gradually improving U.S. economic trends.
However, investors’ optimism at the time may have been overblown, as the global economy expanded at a relatively sluggish rate during the reporting period amid an ongoing financial crisis and fiscal austerity in Europe and slackening demand for commodities from the emerging markets.
These developments helped produce widely disparate returns across individual stock markets, as strength in developed markets was balanced by relative weakness in many emerging markets. More specifically, Japan and, to a lesser degree, Europe led international markets higher, while China, India, and Brazil either barely advanced or lost a modest amount of value.
Conservative Positioning Weighed on Fund Performance
The fund’s conservative approach typically fares better than market averages when markets fall, but generally lags during rallies.The reporting period was no exception, the fund did not fully participate in gains posted by more speculative stocks.
For example, the fund’s holdings in Japan focused mainly on large, multinational exporters at a time when smaller, domestically focused companies rallied from depressed levels. In China, a sluggish economy undermined energy producer China Shenhua Energy, Cl. H as coal prices declined, and offshore oil & gas exploration & production company CNOOC struggled with rising costs and narrower profit margins. In other regions, Australian bottler Coca-Cola Amatil reduced guidance due to weakness in the domestic grocery segment. From an industry group perspective, results in the consumer discretionary, energy, and health care sectors proved most disappointing.
The fund achieved better results among individual stocks across a variety of regions and sectors. In Japan, gains in real estate developer Mitsubishi Estate were driven by falling vacancies and rising rents in a recovering domestic economy, and auto
4
parts seller Denso achieved higher profit margins in a consolidating industry. Swiss pharmaceuticals developer Roche Holding benefited from a leading franchise in oncology drugs. French beauty products seller L’Oreal achieved year-over-year sales growth in all of its geographic markets.The German sports apparel company, Adidas, expanded its gross profit margin after raising prices.
Two new positions were purchased during the reporting period. Hong Kong-based shopping mall developer Hang Lung Properties is expected to benefit from expansion into mainland China, and U.K.-based food services provider Compass Group is growing as more corporations outsource non-core activities.
Finding Opportunities Among Individual Companies
While Walter Scott has been somewhat encouraged by recent economic news, we remain concerned that the market’s gains over the reporting period were not fully supported by underlying business fundamentals. Consequently, we have retained a generally cautious investment posture and an emphasis on individual companies that, in our analysis, are poised for growth on their own merits, independent of economic conditions.
June 17, 2013
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.
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.
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 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 net dividends and, where applicable, capital gain distributions. |
The Morgan Stanley Capital International Europe,Australasia, Far East (MSCI EAFE) Index is an unmanaged |
index composed of a sample of companies representative of the market structure of European and Pacific Basin |
countries. Returns are calculated on a month-end basis. Investors cannot invest directly in any index. |
The Fund 5
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 International Stock Fund from December 1, 2012 to May 31, 2013. 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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 6.65 | $ | 10.41 | $ | 4.71 |
Ending value (after expenses) | $ | 1,050.50 | $ | 1,046.80 | $ | 1,052.90 |
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 May 31, 2013
Class A | Class C | Class I | ||||
Expenses paid per $1,000† | $ | 6.54 | $ | 10.25 | $ | 4.63 |
Ending value (after expenses) | $ | 1,018.45 | $ | 1,014.76 | $ | 1,020.34 |
† Expenses are equal to the fund’s annualized expense ratio of 1.30% for Class A, 2.04% for Class C and .92% |
for Class I, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half |
year period). |
6
STATEMENT OF INVESTMENTS
May 31, 2013 (Unaudited)
Common Stocks—94.2% | Shares | Value ($) |
Australia—8.7% | ||
Coca-Cola Amatil | 4,763,000 | 58,565,322 |
Cochlear | 356,600 | 21,948,312 |
CSL | 1,019,000 | 57,766,516 |
Woodside Petroleum | 1,692,000 | 57,659,635 |
Woolworths | 1,865,000 | 58,540,905 |
254,480,690 | ||
Belgium—1.5% | ||
Colruyt | 849,000 | 43,167,964 |
Brazil—1.9% | ||
Petroleo Brasileiro, ADR | 2,917,800 | 54,387,792 |
Canada—1.8% | ||
Suncor Energy | 1,711,000 | 51,903,497 |
China—2.8% | ||
China Shenhua Energy, Cl. H | 9,062,500 | 29,193,305 |
CNOOC | 29,894,000 | 52,563,805 |
81,757,110 | ||
Denmark—1.9% | ||
Novo Nordisk, Cl. B | 341,100 | 54,760,346 |
Finland—1.0% | ||
Kone, Cl. B | 318,000 | 27,955,445 |
France—7.8% | ||
Air Liquide | 450,100 | 57,427,595 |
Danone | 742,000 | 54,505,626 |
Essilor International | 507,576 | 55,316,457 |
L’Oreal | 366,700 | 61,473,270 |
228,722,948 | ||
Germany—4.1% | ||
Adidas | 603,300 | 65,507,709 |
SAP | 728,000 | 55,448,804 |
120,956,513 | ||
Hong Kong—6.5% | ||
China Mobile | 5,309,000 | 55,495,519 |
CLP Holdings | 6,249,000 | 52,659,370 |
Hang Lung Properties | 8,164,000 | 28,516,860 |
Hong Kong & China Gas | 19,166,206 | 54,121,587 |
190,793,336 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) |
Italy—.6% | ||
Tenaris, ADR | 388,800 | 16,352,928 |
Japan—19.8% | ||
AEON Mall | 866,900 | 22,639,125 |
Canon | 1,347,200 | 46,369,611 |
Chugai Pharmaceutical | 628,000 | 12,589,890 |
Daito Trust Construction | 586,700 | 54,686,776 |
Denso | 1,309,100 | 54,331,927 |
FANUC | 370,900 | 54,812,159 |
Honda Motor | 1,333,700 | 49,325,136 |
INPEX | 12,500 | 52,810,148 |
Keyence | 98,520 | 30,191,599 |
Komatsu | 2,451,400 | 61,844,866 |
Mitsubishi Estate | 836,000 | 20,528,151 |
Shimamura | 204,300 | 23,398,341 |
Shin-Etsu Chemical | 906,500 | 57,007,073 |
Tokio Marine Holdings | 1,336,200 | 38,772,183 |
579,306,985 | ||
Singapore—1.9% | ||
DBS Group Holdings | 2,363,305 | 31,985,336 |
Oversea-Chinese Banking | 2,715,061 | 22,116,424 |
54,101,760 | ||
Spain—1.9% | ||
Inditex | 442,300 | 54,821,054 |
Sweden—1.8% | ||
Hennes & Mauritz, Cl. B | 1,566,000 | 53,513,508 |
Switzerland—8.6% | ||
Nestle | 879,000 | 58,002,460 |
Novartis | 776,200 | 55,619,180 |
Roche Holding | 238,400 | 58,989,769 |
SGS | 11,090 | 24,803,280 |
Syngenta | 138,000 | 54,151,809 |
251,566,498 | ||
Taiwan—2.1% | ||
Taiwan Semiconductor Manufacturing, ADR | 3,346,000 | 62,436,360 |
United Kingdom—19.5% | ||
BG Group | 3,575,000 | 65,064,981 |
8
Common Stocks (continued) | Shares | Value ($) | |
United Kingdom (continued) | |||
Burberry Group | 2,506,000 | 54,619,708 | |
Centrica | 9,895,000 | 57,041,999 | |
Compass Group | 4,369,900 | 57,353,599 | |
HSBC Holdings | 5,347,000 | 58,571,293 | |
Reckitt Benckiser Group | 798,000 | 56,933,593 | |
SABMiller | 1,086,000 | 54,625,718 | |
Smith & Nephew | 4,995,000 | 58,058,873 | |
Standard Chartered | 2,331,000 | 53,602,174 | |
Tesco | 9,900,000 | 54,633,841 | |
570,505,779 | |||
Total Common Stocks | |||
(cost $2,418,629,618) | 2,751,490,513 | ||
Other Investment—3.5% | |||
Registered Investment Company; | |||
Dreyfus Institutional Preferred | |||
Plus Money Market Fund | |||
(cost $101,000,000) | 101,000,000 | a | 101,000,000 |
Total Investments (cost $2,519,629,618) | 97.7 | % | 2,852,490,513 |
Cash and Receivables (Net) | 2.3 | % | 66,724,450 |
Net Assets | 100.0 | % | 2,919,214,963 |
ADR—American Depository Receipts | |||
a Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited)† | |||
Value (%) | Value (%) | ||
Consumer Staples | 17.1 | Industrial | 5.8 |
Consumer Discretionary | 14.1 | Materials | 5.8 |
Financial | 11.4 | Utilities | 5.6 |
Energy | 13.0 | Money Market Investment | 3.5 |
Health Care | 12.8 | Telecommunication Services | 1.9 |
Information Technology | 6.7 | 97.7 | |
† Based on net assets. | |||
See notes to financial statements. |
The Fund 9
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2013 (Unaudited)
Cost | Value | ||
Assets ($): | |||
Investments in securities—See Statement of Investments: | |||
Unaffiliated issuers | 2,418,629,618 | 2,751,490,513 | |
Affiliated issuers | 101,000,000 | 101,000,000 | |
Cash | 93,027,708 | ||
Cash denominated in foreign currencies | 2,549,945 | 2,560,414 | |
Dividends receivable | 16,189,395 | ||
Receivable for investment securities sold | 6,259,106 | ||
Receivable for shares of Common Stock subscribed | 5,030,359 | ||
Unrealized appreciation on forward foreign | |||
currency exchange contracts—Note 4 | 1,561 | ||
Prepaid expenses | 125,514 | ||
2,975,684,570 | |||
Liabilities ($): | |||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 2,364,788 | ||
Payable for investment securities purchased | 52,468,042 | ||
Payable for shares of Common Stock redeemed | 953,917 | ||
Unrealized depreciation on forward foreign | |||
currency exchange contracts—Note 4 | 396,505 | ||
Accrued expenses | 286,355 | ||
56,469,607 | |||
Net Assets ($) | 2,919,214,963 | ||
Composition of Net Assets ($): | |||
Paid-in capital | 2,623,738,759 | ||
Accumulated undistributed investment income—net | 22,976,039 | ||
Accumulated net realized gain (loss) on investments | (59,818,445 | ) | |
Accumulated net unrealized appreciation (depreciation) | |||
on investments and foreign currency transactions | 332,318,610 | ||
Net Assets ($) | 2,919,214,963 |
Net Asset Value Per Share | |||
Class A | Class C | Class I | |
Net Assets ($) | 239,955,554 | 33,635,852 | 2,645,623,557 |
Shares Outstanding | 16,375,862 | 2,332,870 | 179,071,472 |
Net Asset Value Per Share ($) | 14.65 | 14.42 | 14.77 |
See notes to financial statements. |
10
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2013 (Unaudited)
Investment Income ($): | ||
Income: | ||
Cash dividends (net of $3,623,191 foreign taxes withheld at source): | ||
Unaffiliated issuers | 41,039,072 | |
Affiliated issuers | 40,110 | |
Total Income | 41,079,182 | |
Expenses: | ||
Management fee—Note 3(a) | 10,943,883 | |
Shareholder servicing costs—Note 3(c) | 622,487 | |
Custodian fees—Note 3(c) | 341,532 | |
Registration fees | 156,724 | |
Distribution fees—Note 3(b) | 111,057 | |
Directors’ fees and expenses—Note 3(d) | 108,221 | |
Professional fees | 81,910 | |
Prospectus and shareholders’ reports | 27,288 | |
Loan commitment fees—Note 2 | 11,960 | |
Miscellaneous | 61,099 | |
Total Expenses | 12,466,161 | |
Less—reduction in fees due to earnings credits—Note 3(c) | (268 | ) |
Net Expenses | 12,465,893 | |
Investment Income—Net | 28,613,289 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments and foreign currency transactions | 6,424,829 | |
Net realized gain (loss) on forward foreign currency exchange contracts | (121,902 | ) |
Net Realized Gain (Loss) | 6,302,927 | |
Net unrealized appreciation (depreciation) on | ||
investments and foreign currency transactions | 75,996,607 | |
Net unrealized appreciation (depreciation) on | ||
forward foreign currency exchange contracts | (394,944 | ) |
Net Unrealized Appreciation (Depreciation) | 75,601,663 | |
Net Realized and Unrealized Gain (Loss) on Investments | 81,904,590 | |
Net Increase in Net Assets Resulting from Operations | 110,517,879 | |
See notes to financial statements. |
The Fund 11
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Operations ($): | ||||
Investment income—net | 28,613,289 | 32,588,010 | ||
Net realized gain (loss) on investments | 6,302,927 | (26,607,763 | ) | |
Net unrealized appreciation | ||||
(depreciation) on investments | 75,601,663 | 229,692,690 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 110,517,879 | 235,672,937 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net: | ||||
Class A Shares | (2,453,861 | ) | (1,727,130 | ) |
Class C Shares | (156,624 | ) | (33,444 | ) |
Class I Shares | (32,893,538 | ) | (14,304,931 | ) |
Total Dividends | (35,504,023 | ) | (16,065,505 | ) |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A Shares | 82,720,931 | 69,431,573 | ||
Class C Shares | 10,993,204 | 6,334,328 | ||
Class I Shares | 789,876,897 | 952,851,615 | ||
Dividends reinvested: | ||||
Class A Shares | 2,370,457 | 1,702,274 | ||
Class C Shares | 110,933 | 23,020 | ||
Class I Shares | 22,258,109 | 7,414,889 | ||
Cost of shares redeemed: | ||||
Class A Shares | (25,853,459 | ) | (108,468,076 | ) |
Class C Shares | (2,324,377 | ) | (8,328,062 | ) |
Class I Shares | (169,812,732 | ) | (338,580,321 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 710,339,963 | 582,381,240 | ||
Total Increase (Decrease) in Net Assets | 785,353,819 | 801,988,672 | ||
Net Assets ($): | ||||
Beginning of Period | 2,133,861,144 | 1,331,872,472 | ||
End of Period | 2,919,214,963 | 2,133,861,144 | ||
Undistributed investment income—net | 22,976,039 | 29,866,773 |
12
Six Months Ended | ||||
May 31, 2013 | Year Ended | |||
(Unaudited) | November 30, 2012 | |||
Capital Share Transactions: | ||||
Class Aa | ||||
Shares sold | 5,583,574 | 5,272,552 | ||
Shares issued for dividends reinvested | 164,615 | 140,566 | ||
Shares redeemed | (1,746,989 | ) | (8,325,957 | ) |
Net Increase (Decrease) in Shares Outstanding | 4,001,200 | (2,912,839 | ) | |
Class Ca | ||||
Shares sold | 754,395 | 485,056 | ||
Shares issued for dividends reinvested | 7,807 | 1,923 | ||
Shares redeemed | (158,810 | ) | (648,380 | ) |
Net Increase (Decrease) in Shares Outstanding | 603,392 | (161,401 | ) | |
Class I | ||||
Shares sold | 53,327,016 | 72,715,136 | ||
Shares issued for dividends reinvested | 1,535,042 | 608,776 | ||
Shares redeemed | (11,445,899 | ) | (25,572,016 | ) |
Net Increase (Decrease) in Shares Outstanding | 43,416,159 | 47,751,896 |
a During the period ended May 31, 2013, 6,275 Class C shares representing $95,883 were exchanged for 6,174 |
Class A shares. |
See notes to financial statements.
The Fund 13
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class A Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 14.13 | 12.58 | 12.83 | 11.97 | 8.43 | 13.72 | ||||||
Investment Operations: | ||||||||||||
Investment income—neta | .14 | .21 | .15 | .09 | .05 | .09 | ||||||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | .57 | 1.46 | (.31 | ) | .86 | 3.58 | (5.28 | ) | ||||
Total from Investment Operations | .71 | 1.67 | (.16 | ) | .95 | 3.63 | (5.19 | ) | ||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.19 | ) | (.12 | ) | (.09 | ) | (.09 | ) | (.09 | ) | (.02 | ) |
Dividends from net realized | ||||||||||||
gain on investments | — | — | — | — | — | (.08 | ) | |||||
Total Distributions | (.19 | ) | (.12 | ) | (.09 | ) | (.09 | ) | (.09 | ) | (.10 | ) |
Net asset value, end of period | 14.65 | 14.13 | 12.58 | 12.83 | 11.97 | 8.43 | ||||||
Total Return (%)b | 5.05 | c | 13.40 | (1.32 | ) | 7.99 | 43.33 | (38.07 | ) | |||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | 1.30 | d | 1.31 | 1.27 | 1.34 | 1.43 | 1.43 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | 1.30 | d | 1.31 | 1.27 | 1.34 | 1.42 | 1.41 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | 1.85 | d | 1.62 | 1.08 | .69 | .50 | .79 | |||||
Portfolio Turnover Rate | .72 | c | 5.47 | 5.07 | 5.91 | 21.67 | 13.18 | |||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 239,956 | 174,825 | 192,351 | 124,347 | 18,059 | 1,126 |
a | Based on average shares outstanding at each month end. |
b | Exclusive of sales charge. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
14
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class C Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 13.86 | 12.33 | 12.64 | 11.83 | 8.32 | 13.64 | ||||||
Investment Operations: | ||||||||||||
Investment income (loss)—neta | .08 | .12 | .04 | (.02 | ) | (.01 | ) | .00 | b | |||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | .57 | 1.43 | (.30 | ) | .87 | 3.53 | (5.24 | ) | ||||
Total from Investment Operations | .65 | 1.55 | (.26 | ) | .85 | 3.52 | (5.24 | ) | ||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.09 | ) | (.02 | ) | (.05 | ) | (.04 | ) | (.01 | ) | — | |
Dividends from net realized | ||||||||||||
gain on investments | — | — | — | — | — | (.08 | ) | |||||
Total Distributions | (.09 | ) | (.02 | ) | (.05 | ) | (.04 | ) | (.01 | ) | (.08 | ) |
Net asset value, end of period | 14.42 | 13.86 | 12.33 | 12.64 | 11.83 | 8.32 | ||||||
Total Return (%)c | 4.68 | d | 12.58 | (2.08 | ) | 7.18 | 42.31 | (38.58 | ) | |||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | 2.04 | e | 2.06 | 2.05 | 2.13 | 2.25 | 2.24 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | 2.04 | e | 2.06 | 2.05 | 2.13 | 2.22 | 2.20 | |||||
Ratio of net investment income | ||||||||||||
(loss) to average net assets | 1.13 | e | .90 | .33 | (.12 | ) | (.13 | ) | .03 | |||
Portfolio Turnover Rate | .72 | d | 5.47 | 5.07 | 5.91 | 21.67 | 13.18 | |||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 33,636 | 23,962 | 23,319 | 13,959 | 1,224 | 197 |
a | Based on average shares outstanding at each month end. |
b | Amount represents less than $.01 per share. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund 15
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||||||||
May 31, 2013 | Year Ended November 30, | |||||||||||
Class I Shares | (Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 14.26 | 12.70 | 12.93 | 12.04 | 8.47 | 13.76 | ||||||
Investment Operations: | ||||||||||||
Investment income—neta | .17 | .26 | .19 | .14 | .12 | .14 | ||||||
Net realized and unrealized | ||||||||||||
gain (loss) on investments | .58 | 1.46 | (.31 | ) | .86 | 3.57 | (5.30 | ) | ||||
Total from | ||||||||||||
Investment Operations | .75 | 1.72 | (.12 | ) | 1.00 | 3.69 | (5.16 | ) | ||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.24 | ) | (.16 | ) | (.11 | ) | (.11 | ) | (.12 | ) | (.05 | ) |
Dividends from net realized | ||||||||||||
gain on investments | — | — | — | — | — | (.08 | ) | |||||
Total Distributions | (.24 | ) | (.16 | ) | (.11 | ) | (.11 | ) | (.12 | ) | (.13 | ) |
Net asset value, | ||||||||||||
end of period | 14.77 | 14.26 | 12.70 | 12.93 | 12.04 | 8.47 | ||||||
Total Return (%) | 5.29 | b | 13.74 | (1.01 | ) | 8.38 | 43.98 | (37.82 | ) | |||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .92 | c | .93 | .93 | .97 | 1.01 | 1.03 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | .92 | c | .93 | .93 | .97 | 1.01 | 1.02 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | 2.27 | c | 1.96 | 1.41 | 1.11 | 1.18 | 1.19 | |||||
Portfolio Turnover Rate | .72 | b | 5.47 | 5.07 | 5.91 | 21.67 | 13.18 | |||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 2,645,624 | 1,935,074 | 1,116,202 | 688,992 | 339,535 | 119,650 |
a | Based on average shares outstanding at each month end. |
b | Not annualized. |
c | Annualized. |
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
International Stock Fund (the “fund”) is a separate diversified series of Strategic 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 nine series, including the fund.The fund’s investment objective is to seek long-term 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. Walter Scott & Partners Limited (“Walter Scott”), a subsidiary of BNY Mellon and an affiliate of Dreyfus, serves as the fund’s sub-investment adviser. Effective as of the close of business on or about July 29, 2013, the fund will be closed to new investors.
On April 29, 2013, the Company’s Board of Directors (the “Board”) approved an increase in authorized shares of the fund from 400 million to 500 million and an increase in the authorized shares of Class I from 200 million to 300 million.
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 500 million shares of $.001 par value Common Stock.The fund currently offers three classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized) and Class I (300 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) 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 17
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The sales charge may be reduced or waived for certain purchases of Class A shares. Effective April 1, 2013, pursuant to new/modified front-end sales charge waivers, Class A shares of the fund may be purchased at net asset value without payment of a sales charge by (a) investors who participate in a self-directed investment brokerage account program offered by financial intermediaries that have entered into an agreement with the fund’s Distributor (financial intermediaries offering self-directed investment brokerage accounts may or may not charge their customers a transaction fee) and (b) investors who purchase Class A shares directly through the fund’s Distributor, and either (i) have, or whose spouse or minor children have, beneficially owned shares and continuously maintained an open account with the Distributor in a Dreyfus-managed fund since on or before February 28, 2006, or (ii) such purchase is for a self-directed investment account that may or may not be subject to a transaction fee.
On April 29, 2013, the Board authorized the fund to offer Class Y shares, as a new class of shares, to certain investors, including certain institutional investors. Effective July 1, 2013, Class Y shares will be offered at net asset value and will not be subject to certain fees, including Distribution Plan and Shareholder Services Plan fees. The Board also approved an increase in the authorized shares of the fund from 500 million to 600 million and authorized 100 million ClassY shares.
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.
18
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.
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:
The Fund 19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
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 within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
20
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 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 May 31, 2013 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— | ||||||
Foreign | ||||||
Common | ||||||
Stocks† | 133,177,080 | 2,618,313,433 | †† | — | 2,751,490,513 | |
Mutual Funds | 101,000,000 | — | — | 101,000,000 | ||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign | ||||||
Currency Exchange | ||||||
Contracts††† | — | 1,561 | — | 1,561 | ||
Liabilities ($) | ||||||
Other Financial | ||||||
Instruments: | ||||||
Forward Foreign | ||||||
Currency Exchange | ||||||
Contracts††† | — | (396,505 | ) | — | (396,505 | ) |
† | See Statement of Investments for additional detailed categorizations. |
†† | Securities classified as Level 2 at period end as the values were determined pursuant to the fund's |
fair valuation procedures. | |
††† Amount shown represents unrealized appreciation (depreciation) at period end. |
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
At November 30, 2012, no exchange traded foreign equity securities were classified within 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 foreign currency transactions 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” under the Act. Investments in affiliated investment companies during the period ended May 31, 2013 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 11/30/2012($) | Purchases ($) | Sales ($) | 5/31/2013 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Preferred | |||||
Plus Money | |||||
Market | |||||
Fund | 47,720,000 | 533,140,000 | 479,860,000 | 101,000,000 | 3.5 |
22
(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 May 31, 2013, 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 tax year in the three-year period ended November 30, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The Fund 23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 has an unused capital loss carryover of $63,186,457 available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to November 30, 2012. If not applied, $598,805 of the carryover expires in fiscal year 2016, $15,114,500 expires in fiscal year 2017 and $16,297,830 expires in fiscal year 2019.The fund has $4,753,073 of post-enactment short-term capital losses and $26,422,249 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 year ended November 30, 2012 was as follows: ordinary income $16,065,505. The tax character of current year distributions will be determined at the end of the current fiscal year.
(h) New Accounting Pronouncement: In January 2013, FASB issued Accounting Standards Update No. 2013-01 (“ASU 2013-01”), “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”, which replaced Accounting Standards Update No. 2011-11 (“ASU 2011-11”),“Disclosures about Offsetting Assets and Liabilities”. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 was intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to deriva-
24
tives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting arrangement or similar agreement. Management is currently evaluating the application of ASU 2013-01 and its impact on the fund’s financial statements.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $210 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. 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 May 31, 2013, 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 .85% of the value of the fund’s average daily net assets and is payable monthly.
Pursuant to a sub-investment advisory agreement between Dreyfus and Walter Scott, Dreyfus pays Walter Scott a monthly fee at an annual percentage of the value of the fund’s average daily net assets.
During the period ended May 31, 2013, the Distributor retained $12,665 from commissions earned on sales of the fund’s Class A shares and $2,960 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
The Fund 25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
shares at an annual rate of .75% of the value of its average daily net assets. During the period ended May 31, 2013, Class C shares were charged $111,057, 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) with respect to these services.The Distributor determines the amounts to be paid to Service Agents. During the period ended May 31, 2013, Class A and Class C shares were charged $267,303 and $37,019, 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 Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency services for the fund and cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $36,839 for transfer agency services and $1,584 for cash management services. Cash management fees were partially offset by earnings credits of $265. 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 May 31, 2013, the fund was charged $341,532 pursuant to the custody agreement.
26
The fund compensates The Bank of New York Mellon under a cash management agreement for performing certain cash management services related to fund subscriptions and redemptions. During the period ended May 31, 2013, the fund was charged $902 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 $3.
During the period ended May 31, 2013, the fund was charged $4,558 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 $2,121,593, Distribution Plan fees $21,820, Shareholder Services Plan fees $59,419, custodian fees $144,343, Chief Compliance Officer fees $3,830 and transfer agency fees $13,783.
(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 and forward contracts, during the period ended May 31, 2013, amounted to $608,878,966 and $17,757,732, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. Each type of derivative instrument that was held by the fund during the period ended May 31, 2013 is discussed below.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy.
The Fund 27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed.The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is typically limited to the unrealized gain on each open contract. The following summarizes open forward contracts at May 31, 2013:
Foreign | Unrealized | |||||
Forward Foreign Currency | Currency | Appreciation | ||||
Exchange Contracts | Amounts | Cost ($) | Value ($) | (Depreciation) ($) | ||
Purchases: | ||||||
Australian Dollar, | ||||||
Expiring | ||||||
6/4/2013a | 38,340,806 | 37,069,463 | 36,693,980 | (375,483 | ) | |
Hong Kong Dollar, | ||||||
Expiring | ||||||
6/3/2013a | 72,400,073 | 9,325,220 | 9,326,781 | 1,561 | ||
Swiss Franc, | ||||||
Expiring | ||||||
6/3/2013a | 6,165,212 | 6,459,778 | 6,447,281 | (12,497 | ) | |
Sales: | Proceeds ($) | |||||
Japanese Yen, | ||||||
Expiring | ||||||
6/5/2013a | 628,758,471 | 6,250,581 | 6,259,106 | (8,525 | ) | |
Gross Unrealized | ||||||
Appreciation | 1,561 | |||||
Gross Unrealized | ||||||
Depreciation | (396,505 | ) |
Counterparty: |
a National Australia Bank |
28
The following summarizes the average market value of derivatives outstanding during the period ended May 31, 2013:
Average Market Value ($) | |
Forward contracts | 16,630,225 |
At May 31, 2013, accumulated net unrealized appreciation on investments was $332,860,895, consisting of $408,989,517 gross unrealized appreciation and $76,128,622 gross unrealized depreciation.
At May 31, 2013, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
The Fund 29
![](https://capedge.com/proxy/N-CSRS/0000737520-13-000087/isncsrx32x1.jpg)
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
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) Not applicable.
(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.
Strategic Funds, Inc.
By: /s/ Bradley J. Skapyak | |
Bradley J. Skapyak, President
| |
Date: | July 24, 2013 |
| |
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: | July 24, 2013 |
| |
By: /s/ James Windels | |
James Windels, Treasurer
| |
Date: | July 24, 2013 |
|
EXHIBIT INDEX
(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)