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 | |||||
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| Strategic Funds, Inc. (formerly, Dreyfus Premier New Leaders Fund, Inc.) |
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| (Exact name of Registrant as specified in charter) |
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c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 |
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| (Address of principal executive offices) (Zip code) |
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| Janette E. Farragher, Esq. 200 Park Avenue New York, New York 10166 |
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| (Name and address of agent for service) |
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Registrant's telephone number, including area code: | (212) 922-6000 | |||||
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Date of fiscal year end:
| 5/31 |
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Date of reporting period: | 11/30/2014 |
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The following N-CSR relates only to the Registrant’s series listed below and does not affect the other series of the Registrant, which 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 Growth Fund
Dreyfus |
Select Managers |
Small Cap Growth Fund |
SEMIANNUAL REPORT November 30, 2014
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
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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 |
30 | Notes to Financial Statements |
41 | Information About the Renewal of the Fund’s Management, Portfolio Allocation Management and Sub-Invesment Advisory Agreements |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus
Select Managers
Small Cap Growth Fund
The Fund
A LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Select Managers Small Cap Growth Fund, covering the six-month period from June 1, 2014, through November 30, 2014. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Despite bouts of heightened volatility stemming mainly from economic and geopolitical concerns in overseas markets, U.S. stocks gained ground over the reporting period when the domestic economy continued to rebound.As a result, several broad measures of equity market performance established new record highs. Stocks of larger, better established companies rallied more strongly than those of smaller businesses over the last six months, on average, while growth stocks outperformed their value-oriented counterparts.
We remain cautiously optimistic regarding the U.S. stock market’s prospects. We currently expect the economy to continue to accelerate as several longstanding drags—including tight fiscal policies and private sector deleveraging—fade from the scene. Of course, a number of risks remain, including the possibilities of higher interest rates and intensifying geopolitical turmoil. As always, we encourage you to discuss our observations with your financial adviser to assess their potential impact on your investments.
Thank you for your continued confidence and support.
![](https://capedge.com/proxy/N-CSRS/0000737520-15-000006/smscgncsrx4x1.jpg)
J. Charles Cardona
President
The Dreyfus Corporation
December 15, 2014
2
DISCUSSION OF FUND PERFORMANCE
For the period of June 1, 2014, through November 30, 2014, 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 November 30, 2014, Dreyfus Select Managers Small Cap Growth Fund’s Class A, Class C, Class I, and ClassY shares produced total returns of 6.46%, 6.04%, 6.63%, and 6.59%, respectively.1 In comparison, the Russell 2000® Growth Index (the “Index”), the fund’s benchmark, returned 6.56% for the same period.2
Small-cap stocks advanced during the reporting period when a domestic economic recovery gained momentum. The fund’s returns were roughly in line with its benchmark, as strength in the health care and financials sectors was balanced by shortfalls among information technology and consumer discretionary companies.
The Fund’s Investment Approach
The fund seeks long-term capital appreciation.To pursue its goal, the fund normally invests at least 80% of its 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. We seek sub-advisers that complement one another’s style of investing. We monitor and evaluate the performance of the sub-advisers and will make corresponding recommendations to Dreyfus and the fund’s Board.
The fund’s assets are currently under the day-to-day portfolio management of seven sub-advisers, each of whom acts independently and uses their own methodology to select investments. At the end of the reporting period, 12% of the fund’s assets are under the management of Riverbridge Partners, LLC, which employs a bottom-up approach to stock selection and focuses on companies that are building their earnings power and intrinsic value over long periods of time.Approximately 12% of the fund’s assets are under the management of Geneva Capital Management LLC, which employs bottom-up fundamental analysis supplemented by top-down considerations to identify companies that perform well over long periods of time. Approximately 13% of the fund’s assets are under the management of Cupps Capital Management, LLC, which employs a proprietary investment framework to evaluate the attractiveness
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
of stocks. Nicholas Investment Partners, L.P., which employs quantitative/qualitative analysis to identify companies experiencing positive change in seeking above-expected growth, manages 16% of the fund’s assets. EAM Investors, LLC, which manages 22% of the fund’s assets, chooses investments through bottom-up fundamental analysis using a blend of a quantitative discovery process and a qualitative analysis process. During the reporting period, the fund added two investment managers, with 12% of assets being managed by Granite Investment Partners, LLC, which seeks attractively valued small-cap companies with catalysts for growth, and another 13% of assets managed by Rice Hall James & Associates, which seeks growing companies whose value, in the view of the manager, has not yet been fully appreciated in the marketplace.These percentages are expected to increase over time, within ranges described in the prospectus.
Stocks Climbed Despite Bouts of Volatility
The reporting period began in the midst of a market rally as the U.S. economy bounced back in the wake of weather-related weakness and global geopolitical concerns. Investors responded favorably to a declining unemployment rate, rising household wealth, subdued inflationary pressures, and falling long-term interest rates. These developments fueled expectations that the Federal Reserve Board would keep short-term interest rates low even as the U.S. economy rebounded at a robust 4.6% annualized rate during the second quarter of 2014.
The market encountered volatility in July and September due to renewed concerns that a weak global economy might derail the U.S. expansion. However, strong corporate earnings and solid domestic economic data—including an estimated 3.9% annualized growth rate for the third quarter—subsequently drove some broad market indices to new record highs.
Health Care and Financials Stocks Bolstered Relative Results
The fund’s underlying managers achieved particularly strong results in the health care sector. Biopharmaceutical developer Receptos announced positive results in clinical trials for a new ulcerative colitis treatment, and biotechnology firm InterMune was acquired by Roche Holding at a premium to its stock price at the time. Among financial companies, investment manager Janus Capital Group gained value when a well known bond manager joined its ranks, while GAMCO Investors and Affiliated Managers Group benefited from rising financial markets.
4
Shortfalls during the reporting period were concentrated primarily in the information technology sector. E-commerce software developer Demandware reported disappointing quarterly results due to longer sales cycles and deferred client renewals, and user interface solutions provider Synaptics lost its position as a key supplier to a major manufacturer of mobile devices. In other areas, restaurant chain Chuy’s Holdings weighed on relative results in the consumer discretionary sector.
Finding Attractive Growth Opportunities
Small-cap stocks’ lagging performance compared to large-cap stocks has made their relative valuations more attractive. In addition, we expect robust mergers-and-acquisitions activity to support the asset class, as should small companies’ relatively light exposure to troubled international markets. In this environment, the fund’s underlying managers have found ample opportunities in the health care, industrials, and information technology sectors, but fewer among consumer staples, telecommunications services, and utilities stocks.
December 15, 2014
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 October 1, 2015, at which |
time it may be extended, terminated, or modified. Had these expenses not been absorbed, the fund’s Class A and C |
returns would have been lower. |
2 SOURCE: LIPPER INC. — The Russell 2000 Growth Index is an unmanaged index, which measures the |
performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. |
The total return figure cited for this index assumes change in security prices and reinvestment of dividends, but does |
not reflect the costs of managing a mutual fund. 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 Cap Growth Fund from June 1, 2014 to November 30, 2014. 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 November 30, 2014
Class A | Class C | Class I | Class Y | |||||
Expenses paid per $1,000† | $ | 6.73 | $ | 10.59 | $ | 5.02 | $ | 5.02 |
Ending value (after expenses) | $ | 1,064.60 | $ | 1,060.40 | $ | 1,066.30 | $ | 1,065.90 |
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 November 30, 2014
Class A | Class C | Class I | Class Y | |||||
Expenses paid per $1,000† | $ | 6.58 | $ | 10.35 | $ | 4.91 | $ | 4.91 |
Ending value (after expenses) | $ | 1,018.55 | $ | 1,014.79 | $ | 1,020.21 | $ | 1,020.21 |
† Expenses are equal to the fund’s annualized expense ratio of 1.30% for Class A, 2.05% for Class C, .97% for |
Class I and .97% for ClassY, multiplied by the average account value over the period, multiplied by 183/365 (to |
reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS
November 30, 2014 (Unaudited)
Common Stocks—97.9% | Shares | Value ($) | |
Automobiles & Components—1.1% | |||
Dorman Products | 17,504 | a,b | 828,464 |
Gentex | 47,350 | 1,683,766 | |
Gentherm | 42,737 | b | 1,610,758 |
Motorcar Parts of America | 41,212 | b | 1,390,905 |
Tesla Motors | 1,114 | a,b | 272,395 |
5,786,288 | |||
Banks—3.2% | |||
Ameris Bancorp | 28,410 | 714,512 | |
Bank of the Ozarks | 104,924 | 3,798,248 | |
Beneficial Mutual Bancorp | 29,240 | b | 397,664 |
BofI Holding | 41,088 | a,b | 3,242,665 |
Boston Private Financial Holdings | 80,056 | 1,021,515 | |
Capital Bank Financial, Cl. A | 29,636 | b | 751,273 |
Clifton Bancorp | 45,127 | 570,405 | |
First Horizon National | 56,750 | 724,130 | |
Opus Bank | 29,351 | 789,248 | |
PacWest Bancorp | 21,719 | 1,009,934 | |
Radian Group | 56,839 | a | 969,105 |
Texas Capital Bancshares | 40,671 | b | 2,242,193 |
Tree.com | 16,181 | b | 732,352 |
16,963,244 | |||
Capital Goods—7.6% | |||
Acuity Brands | 19,223 | 2,656,618 | |
Apogee Enterprises | 46,785 | 2,116,086 | |
Astronics | 28,160 | b | 1,380,404 |
Barnes Group | 36,015 | 1,322,831 | |
Beacon Roofing Supply | 71,348 | b | 1,932,104 |
CIRCOR International | 11,736 | 785,725 | |
Donaldson | 35,776 | 1,395,264 | |
Encore Wire | 22,449 | 823,205 | |
Enphase Energy | 31,465 | b | 330,697 |
Esterline Technologies | 16,119 | b | 1,915,421 |
FreightCar America | 23,866 | 690,443 | |
Graham | 26,875 | 816,194 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Capital Goods (continued) | |||
H&E Equipment Services | 70,876 | 2,480,660 | |
ITT | 17,226 | 713,156 | |
Manitex International | 46,790 | b | 515,158 |
Middleby | 22,469 | b | 2,148,935 |
NCI Building Systems | 128,281 | b | 2,393,724 |
Patrick Industries | 15,782 | b | 703,719 |
Power Solutions International | 13,129 | a,b | 861,919 |
Primoris Services | 21,559 | 563,768 | |
Proto Labs | 42,234 | a,b | 2,740,987 |
RBC Bearings | 22,364 | 1,421,903 | |
Rush Enterprises, Cl. A | 34,990 | b | 1,227,449 |
Sparton | 23,860 | b | 593,637 |
Standex International | 9,671 | 705,693 | |
TASER International | 61,157 | a,b | 1,313,653 |
The Greenbrier Companies | 27,150 | a | 1,506,282 |
Trex | 23,886 | b | 1,006,556 |
Tutor Perini | 50,869 | b | 1,284,442 |
Twin Disc | 27,665 | 632,975 | |
Woodward | 31,971 | 1,652,262 | |
40,631,870 | |||
Commercial & Professional Services—5.0% | |||
Acacia Research | 48,011 | a | 913,169 |
Advisory Board | 84,385 | b | 3,594,801 |
Corporate Executive Board | 30,032 | 2,198,643 | |
Franklin Covey | 15,132 | b | 285,692 |
G&K Services, Cl. A | 11,384 | 741,098 | |
Healthcare Services Group | 85,169 | 2,568,697 | |
Huron Consulting Group | 20,113 | b | 1,391,015 |
InnerWorkings | 59,480 | b | 444,910 |
Korn/Ferry International | 34,173 | b | 927,797 |
MiX Telematics, ADR | 31,677 | b | 273,373 |
Mobile Mini | 48,364 | 2,006,622 | |
Paylocity Holding | 20,821 | a | 605,683 |
Ritchie Brothers Auctioneers | 80,013 | a | 2,090,740 |
Rollins | 66,001 | 2,147,013 |
8
Common Stocks (continued) | Shares | Value ($) | |
Commercial & Professional Services (continued) | |||
Steelcase, Cl. A | 55,027 | 964,073 | |
Team | 23,007 | b | 934,314 |
Tetra Tech | 44,075 | 1,197,959 | |
TriNet Group | 25,740 | 814,928 | |
WageWorks | 42,554 | b | 2,486,005 |
26,586,532 | |||
Consumer Durables & Apparel—2.7% | |||
Boot Barn Holdings | 13,299 | 287,258 | |
Carter’s | 9,225 | 767,612 | |
Cavco Industries | 14,745 | b | 1,093,047 |
Columbia Sportswear | 17,036 | 767,472 | |
Deckers Outdoor | 8,780 | b | 849,202 |
G-III Apparel Group | 31,656 | b | 2,801,240 |
Iconix Brand Group | 15,098 | b | 610,110 |
La-Z-Boy | 28,906 | 751,267 | |
Nautilus | 65,223 | b | 836,811 |
Skechers USA, Cl. A | 58,358 | b | 3,583,764 |
Universal Electronics | 17,670 | b | 1,069,212 |
Vince Holding | 32,968 | 1,224,102 | |
14,641,097 | |||
Consumer Services—6.5% | |||
2U | 82,025 | 1,483,012 | |
Bob Evans Farms | 22,845 | a | 1,241,854 |
Bravo Brio Restaurant Group | 81,748 | b | 1,073,351 |
Bright Horizons Family Solutions | 23,334 | b | 1,043,030 |
Century Casinos | 78,888 | b | 409,429 |
Cheesecake Factory | 52,611 | a | 2,547,950 |
Chuy’s Holdings | 33,825 | b | 724,193 |
Del Frisco’s Restaurant Group | 23,448 | b | 521,015 |
Domino’s Pizza | 8,922 | 837,330 | |
Fiesta Restaurant Group | 59,635 | b | 3,343,138 |
Grand Canyon Education | 43,808 | b | 2,000,711 |
Jack in the Box | 18,524 | 1,380,039 | |
K12 | 23,946 | b | 275,379 |
Kona Grill | 19,942 | b | 505,330 |
The Fund 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Consumer Services (continued) | |||
La Quinta Holdings | 72,157 | 1,588,897 | |
Life Time Fitness | 28,835 | a,b | 1,596,882 |
LifeLock | 83,268 | a,b | 1,374,755 |
Panera Bread, Cl. A | 8,402 | a,b | 1,406,495 |
Popeyes Louisiana Kitchen | 53,675 | b | 2,965,007 |
Red Robin Gourmet Burgers | 11,131 | b | 749,673 |
Resources Connection | 67,600 | 1,025,492 | |
Scientific Games, Cl. A | 61,098 | a,b | 925,024 |
Sonic | 31,797 | 864,560 | |
Texas Roadhouse | 20,215 | 668,308 | |
Vail Resorts | 32,532 | 2,851,104 | |
Zoe’s Kitchen | 32,951 | a | 1,042,240 |
34,444,198 | |||
Diversified Financials—2.9% | |||
Affiliated Managers Group | 3,434 | b | 699,128 |
Financial Engines | 25,950 | a | 848,046 |
GAMCO Investors, Cl. A | 6,800 | 585,888 | |
Green Dot, Cl. A | 62,530 | b | 1,376,285 |
Hercules Technology Growth Capital | 54,874 | a | 863,717 |
HFF, Cl. A | 70,277 | 2,423,151 | |
Janus Capital Group | 48,145 | 756,839 | |
Marcus & Millichap | 47,137 | b | 1,462,661 |
MarketAxess Holdings | 27,670 | 1,814,322 | |
PRA Group | 52,148 | b | 3,051,701 |
SLM | 62,467 | 604,681 | |
Springleaf Holdings | 21,771 | a,b | 863,220 |
15,349,639 | |||
Energy—1.4% | |||
Bonanza Creek Energy | 33,687 | b | 916,960 |
C&J Energy Services | 24,435 | b | 370,190 |
Diamondback Energy | 11,159 | b | 629,368 |
Dril-Quip | 11,251 | b | 897,267 |
Geospace Technologies | 6,343 | b | 167,201 |
Gulfport Energy | 18,813 | b | 897,944 |
Matador Resources | 40,370 | b | 710,108 |
10
Common Stocks (continued) | Shares | Value ($) | |
Energy (continued) | |||
Natural Gas Services Group | 16,184 | b | 374,821 |
SemGroup, Cl. A | 9,653 | 714,225 | |
SM Energy | 16,023 | 696,199 | |
Synergy Resources | 36,445 | b | 357,525 |
Western Refining | 13,562 | 557,534 | |
7,289,342 | |||
Exchange-Traded Funds—.9% | |||
iShares Russell 2000 ETF | 40,727 | a | 4,752,433 |
Food & Staples Retailing—.9% | |||
Chefs’ Warehouse | 12,910 | a,b | 222,310 |
Fresh Market | 62,722 | a,b | 2,569,093 |
United Natural Foods | 26,838 | b | 2,017,949 |
4,809,352 | |||
Food, Beverage & Tobacco—1.5% | |||
Boulder Brands | 42,594 | b | 460,015 |
Cal-Maine Foods | 13,457 | a | 563,579 |
Diamond Foods | 31,982 | a,b | 952,744 |
Freshpet | 22,600 | a | 377,646 |
Hain Celestial Group | 13,382 | b | 1,515,110 |
Inventure Foods | 40,370 | b | 557,510 |
J&J Snack Foods | 14,661 | 1,540,138 | |
SunOpta | 98,506 | b | 1,175,177 |
TreeHouse Foods | 13,326 | b | 1,078,740 |
8,220,659 | |||
Health Care Equipment & Services—10.7% | |||
Abaxis | 23,583 | a | 1,353,664 |
ABIOMED | 89,525 | b | 3,179,928 |
Acadia Healthcare | 57,102 | b | 3,540,895 |
Adeptus Health, Cl. A | 24,503 | 745,871 | |
AmSurg | 14,879 | b | 767,310 |
AngioDynamics | 64,016 | b | 1,120,280 |
athenahealth | 12,324 | a,b | 1,445,605 |
Bio-Reference Laboratories | 78,786 | a,b | 2,229,644 |
Brookdale Senior Living | 20,608 | b | 729,935 |
Cantel Medical | 39,447 | 1,717,522 |
The Fund 11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Health Care Equipment & Services (continued) | |||
Chemed | 12,645 | a | 1,392,341 |
Community Health Systems | 16,971 | b | 798,995 |
Cynosure, Cl. A | 27,405 | b | 755,556 |
DexCom | 53,130 | b | 2,734,070 |
ExamWorks Group | 16,055 | b | 631,764 |
Globus Medical, Cl. A | 18,696 | b | 430,756 |
Health Net | 16,116 | b | 828,040 |
iCAD | 58,898 | b | 590,747 |
iKang Healthcare Group, ADR | 20,805 | a | 392,590 |
Insulet | 82,956 | b | 3,864,920 |
IPC The Hospitalist | 40,756 | b | 1,796,524 |
Kindred Healthcare | 40,797 | 811,452 | |
LDR Holding | 39,447 | b | 1,287,155 |
Masimo | 27,482 | b | 721,402 |
Medidata Solutions | 49,035 | b | 2,094,284 |
MEDNAX | 22,620 | b | 1,480,705 |
MWI Veterinary Supply | 11,075 | a,b | 1,809,876 |
Neogen | 67,286 | b | 2,981,443 |
Novadaq Technologies | 32,803 | b | 470,723 |
NuVasive | 49,377 | b | 2,169,131 |
Omnicell | 23,000 | b | 740,600 |
OraSure Technologies | 6,600 | b | 59,466 |
Quidel | 86,899 | a,b | 2,421,006 |
RadNet | 85,249 | b | 717,797 |
Roka Bioscience | 12,968 | a | 51,353 |
Spectranetics | 56,455 | b | 1,853,417 |
STERIS | 15,162 | 966,578 | |
Tandem Diabetes Care | 52,860 | a | 746,912 |
Team Health Holdings | 13,276 | b | 758,856 |
Teleflex | 8,752 | 1,042,801 | |
Trinity Biotech, ADR | 50,747 | 870,819 | |
Zeltiq Aesthetics | 64,026 | a,b | 1,752,391 |
56,855,124 |
12
Common Stocks (continued) | Shares | Value ($) | |
Household & Personal Products—.2% | |||
Medifast | 29,540 | b | 871,430 |
Insurance—.2% | |||
Stewart Information Services | 28,402 | 1,007,987 | |
Materials—3.7% | |||
AK Steel Holding | 63,375 | a,b | 375,180 |
Balchem | 41,840 | 2,719,600 | |
Berry Plastics Group | 64,238 | b | 1,859,048 |
Boise Cascade | 20,654 | b | 737,141 |
CaesarStone Sdot-Yam | 14,315 | 887,530 | |
Century Aluminum | 46,721 | b | 1,291,836 |
Eagle Materials | 10,449 | 860,893 | |
Ferro | 48,601 | b | 625,495 |
Flotek Industries | 15,445 | b | 300,869 |
Globe Specialty Metals | 57,191 | 991,120 | |
Graphic Packaging Holding | 48,107 | b | 598,932 |
Haynes International | 17,014 | 763,758 | |
Headwaters | 17,217 | b | 241,038 |
Horsehead Holding | 47,411 | b | 740,560 |
Kaiser Aluminum | 11,661 | 848,688 | |
LSB Industries | 22,094 | b | 730,649 |
Minerals Technologies | 10,379 | 770,433 | |
Senomyx | 145,433 | a,b | 846,420 |
Sensient Technologies | 24,470 | 1,442,506 | |
Steel Dynamics | 43,769 | 986,553 | |
US Concrete | 26,596 | b | 750,539 |
US Silica Holdings | 18,891 | a | 593,555 |
19,962,343 | |||
Media—2.0% | |||
AMC Entertainment Holdings, Cl. A | 28,488 | 746,955 | |
Cinemark Holdings | 23,311 | 846,422 | |
Cumulus Media, Cl. A | 101,168 | b | 403,660 |
Live Nation Entertainment | 31,379 | b | 840,957 |
MDC Partners, Cl. A | 157,796 | a | 3,482,558 |
The Fund 13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Media (continued) | |||
New Media Investment Group | 42,224 | 857,992 | |
Rentrak | 29,305 | a,b | 2,464,551 |
Scholastic | 30,664 | 1,088,572 | |
10,731,667 | |||
Pharmaceuticals, Biotech & | |||
Life Sciences—13.1% | |||
ACADIA Pharmaceuticals | 29,050 | a,b | 867,724 |
Achillion Pharmaceuticals | 65,854 | b | 847,541 |
Aegerion Pharmaceuticals | 30,609 | a,b | 644,932 |
Aerie Pharmaceuticals | 28,059 | b | 739,916 |
Agios Phamaceuticals | 7,894 | a,b | 795,794 |
Akorn | 21,269 | b | 852,249 |
Albany Molecular Research | 13,161 | b | 214,129 |
Alder Biopharmaceuticals | 10,440 | a | 170,381 |
Alkermes | 4,328 | b | 238,127 |
Alnylam Pharmaceuticals | 11,904 | b | 1,196,947 |
AMAG Pharmaceuticals | 26,748 | b | 995,026 |
Amicus Therapeutics | 125,235 | b | 993,114 |
ANI Pharmaceuticals | 13,105 | b | 709,112 |
Avanir Pharmaceuticals, Cl. A | 92,734 | b | 1,383,591 |
Bio-Techne | 30,285 | 2,774,409 | |
BioCryst Pharmaceuticals | 56,616 | b | 612,019 |
BioDelivery Sciences International | 96,760 | a,b | 1,485,266 |
Celldex Therapeutics | 34,412 | b | 697,875 |
Cepheid | 107,981 | b | 5,947,594 |
Chimerix | 26,835 | a,b | 945,665 |
Clovis Oncology | 13,464 | a,b | 640,617 |
DepoMed | 78,421 | b | 1,214,741 |
Dyax | 105,015 | b | 1,474,411 |
Enanta Pharmaceuticals | 16,912 | b | 793,849 |
Esperion Therapeutics | 35,667 | a,b | 1,128,147 |
Exact Sciences | 141,109 | a,b | 3,502,325 |
GW Pharmaceuticals, ADR | 6,415 | a,b | 496,713 |
Horizon Pharma | 82,517 | a,b | 1,054,567 |
ICON | 9,475 | b | 526,241 |
Impax Laboratories | 23,564 | b | 752,870 |
14
Common Stocks (continued) | Shares | Value ($) | |
Pharmaceuticals, Biotech & | |||
Life Sciences (continued) | |||
Insmed | 31,498 | b | 444,437 |
Keryx Biopharmaceuticals | 45,068 | a,b | 716,581 |
KYTHERA Biopharmaceuticals | 38,652 | a,b | 1,478,439 |
Loxo Oncology | 15,517 | a | 159,825 |
Merrimack Pharmaceuticals | 89,718 | a,b | 821,817 |
MiMedx Group | 22,099 | b | 244,415 |
NanoString Technologies | 31,663 | b | 472,095 |
Nektar Therapeutics | 141,711 | a,b | 2,362,322 |
NeoGenomics | 41,369 | b | 175,405 |
Neothetics | 25,421 | a | 272,005 |
Novavax | 157,996 | a,b | 843,699 |
NPS Pharmaceuticals | 97,515 | b | 3,235,548 |
Omeros | 47,079 | a,b | 1,051,274 |
Ophthotech | 25,004 | a,b | 1,078,923 |
Orexigen Therapeutics | 105,958 | a,b | 613,497 |
OvaScience | 21,877 | a,b | 552,613 |
Pacira Pharmaceuticals | 22,611 | b | 2,123,851 |
PAREXEL International | 31,319 | b | 1,832,475 |
Pernix Therapeutics | 67,710 | b | 702,153 |
Phibro Animal Health, Cl. A | 23,944 | 731,729 | |
Portola Pharmaceuticals | 11,770 | b | 330,972 |
Progenics Pharmaceuticals | 127,085 | b | 884,512 |
PTC Therapeutics | 27,455 | b | 1,228,611 |
Puma Biotechnology | 6,161 | b | 1,398,670 |
Radius Health | 9,367 | a,b | 231,365 |
Receptos | 24,785 | b | 3,353,410 |
Repligen | 103,742 | b | 2,372,580 |
SAGE Therapeutics | 13,795 | 545,454 | |
Salix Pharmaceuticals | 12,326 | b | 1,265,757 |
Tetraphase Pharmaceuticals | 48,536 | b | 1,281,350 |
TG Therapeutics | 68,186 | a,b | 1,017,335 |
Ultragenyx Pharmaceutical | 7,110 | 309,925 | |
ZS Pharma | 30,302 | a | 1,301,774 |
70,130,710 |
The Fund 15
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Real Estate—1.3% | |||
Capstead Mortgage | 67,668 | a,c | 880,361 |
Colony Financial | 29,780 | 731,099 | |
CyrusOne | 23,306 | 639,750 | |
Gramercy Property Trust | 97,415 | 574,749 | |
Howard Hughes | 12,368 | b | 1,806,223 |
Kennedy-Wilson Holdings | 27,787 | 722,184 | |
RE/MAX Holdings, Cl. A | 31,305 | 1,047,152 | |
Strategic Hotels & Resorts | 30,465 | b,c | 404,575 |
6,806,093 | |||
Retailing—4.9% | |||
Big Lots | 16,702 | 848,462 | |
Burlington Stores | 23,375 | b | 1,044,161 |
Christopher & Banks | 39,153 | b | 283,468 |
Core-Mark Holding Company | 41,354 | 2,485,789 | |
Finish Line, Cl. A | 30,681 | 875,636 | |
Five Below | 51,760 | a,b | 2,415,122 |
Genesco | 8,382 | b | 682,043 |
Hibbett Sports | 18,432 | a,b | 924,733 |
Lands’ End | 24,929 | b | 1,186,122 |
LKQ | 24,715 | b | 717,971 |
MarineMax | 64,456 | b | 1,193,081 |
Monro Muffler Brake | 43,476 | 2,382,050 | |
Office Depot | 119,763 | b | 794,029 |
Pier 1 Imports | 60,413 | 833,699 | |
Pool | 21,920 | 1,302,267 | |
Restoration Hardware Holdings | 31,109 | a,b | 2,627,777 |
Shutterfly | 64,459 | a,b | 2,756,267 |
Tile Shop Holdings | 61,859 | a,b | 617,353 |
TravelCenters of America | 42,873 | b | 400,863 |
Tuesday Morning | 39,587 | b | 843,203 |
Vitamin Shoppe | 17,569 | b | 840,852 |
26,054,948 |
16
Common Stocks (continued) | Shares | Value ($) | |
Semiconductors & Semiconductor Equipment—4.3% | |||
Ambarella | 19,872 | a,b | 1,092,960 |
Cabot Microelectronics | 27,595 | b | 1,305,244 |
Canadian Solar | 14,385 | b | 349,412 |
Cavium | 54,762 | b | 3,099,529 |
CEVA | 55,988 | b | 963,553 |
Entegris | 74,949 | b | 1,009,563 |
Fairchild Semiconductor International | 22,135 | b | 357,038 |
FormFactor | 209,907 | b | 1,687,653 |
Integrated Device Technology | 113,470 | b | 2,117,351 |
MA-COM Technology Solutions Holdings | 30,703 | b | 762,355 |
Mellanox Technologies | 23,725 | b | 1,011,871 |
Monolithic Power Systems | 21,453 | 1,032,533 | |
ON Semiconductor | 49,305 | b | 445,224 |
Power Integrations | 21,508 | 1,078,841 | |
RF Micro Devices | 63,827 | a,b | 932,512 |
Semtech | 47,512 | b | 1,209,656 |
Spansion, Cl. A | 96,136 | b | 2,246,698 |
SunEdison | 42,553 | b | 921,272 |
Synaptics | 8,752 | b | 551,288 |
Tessera Technologies | 23,081 | 788,909 | |
22,963,462 | |||
Software & Services—16.2% | |||
ACI Worldwide | 71,359 | b | 1,387,933 |
Actua | 117,226 | b | 1,976,430 |
Advent Software | 16,478 | 519,551 | |
Aspen Technology | 21,117 | b | 796,956 |
Attunity | 55,438 | b | 526,107 |
Barracuda Networks | 47,641 | 1,711,742 | |
Benefitfocus | 16,410 | a,b | 444,547 |
Blackbaud | 18,519 | 785,946 | |
Bottomline Technologies | 35,531 | b | 871,220 |
Cadence Design Systems | 39,722 | b | 749,554 |
The Fund 17
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Software & Services (continued) | |||
Callidus Software | 225,998 | b | 3,609,188 |
Cass Information Systems | 17,064 | 776,924 | |
ChannelAdvisor | 25,153 | a,b | 442,693 |
Cimpress | 34,972 | a,b | 2,346,271 |
comScore | 19,180 | b | 843,345 |
Constant Contact | 61,806 | b | 2,019,820 |
CoStar Group | 10,777 | b | 1,834,892 |
Criteo, ADR | 16,758 | b | 676,688 |
Cvent | 1,135 | b | 30,554 |
Cyber-Ark Software | 21,395 | a | 884,041 |
Dealertrack Technologies | 43,519 | b | 2,052,356 |
Demandware | 50,100 | b | 2,805,600 |
Descartes Systems Group | 72,388 | a,b | 1,089,439 |
Digital River | 31,164 | b | 791,254 |
Endurance International Group Holdings | 42,990 | a,b | 714,494 |
Envestnet | 70,857 | b | 3,624,336 |
FactSet Research Systems | 4,897 | a | 671,183 |
Guidewire Software | 23,208 | b | 1,171,308 |
Imperva | 47,111 | b | 2,004,102 |
Interactive Intelligence Group | 46,231 | b | 2,091,029 |
Intralinks Holdings | 180,205 | b | 1,960,630 |
j2 Global | 15,026 | 849,570 | |
LogMeIn | 16,723 | b | 845,682 |
Marketo | 65,470 | b | 2,092,421 |
Mavenir Systems | 32,067 | a | 405,968 |
MAXIMUS | 63,338 | 3,318,278 | |
MicroStrategy, Cl. A | 4,568 | b | 784,508 |
Monotype Imaging Holdings | 31,015 | 857,255 | |
NetSuite | 16,806 | a,b | 1,777,235 |
NeuStar, Cl. A | 30,719 | a,b | 837,093 |
Paycom Software | 36,726 | 1,055,873 | |
Pegasystems | 50,893 | 1,064,682 | |
Points International | 27,007 | b | 358,653 |
Proofpoint | 23,553 | b | 1,022,671 |
18
Common Stocks (continued) | Shares | Value ($) | |
Software & Services (continued) | |||
PROS Holdings | 24,143 | b | 690,490 |
QLIK Technologies | 24,060 | b | 741,770 |
Qualys | 29,889 | b | 1,060,761 |
Reis | 34,689 | 872,775 | |
SciQuest | 38,501 | b | 574,050 |
SeaChange International | 52,351 | b | 351,275 |
Shutterstock | 11,906 | a,b | 895,093 |
SPS Commerce | 24,889 | b | 1,450,531 |
Stamps.com | 49,336 | b | 2,331,126 |
Synchronoss Technologies | 16,673 | b | 714,105 |
Tableau Software, Cl. A | 8,864 | b | 743,512 |
TrueCar | 79,624 | a | 1,525,596 |
Trulia | 13,460 | a,b | 684,172 |
TubeMogul | 41,029 | a | 654,823 |
Tyler Technologies | 24,001 | b | 2,606,029 |
Ultimate Software Group | 37,520 | b | 5,524,445 |
Upland Software | 61,620 | a | 745,602 |
VASCO Data Security International | 28,121 | b | 838,006 |
VeriFone Systems | 43,046 | b | 1,535,020 |
Verint Systems | 35,046 | b | 2,109,419 |
WEX | 7,372 | b | 833,626 |
WNS Holdings, ADR | 47,935 | b | 979,312 |
Yelp | 5,902 | b | 336,945 |
86,278,505 | |||
Technology Hardware & Equipment—3.2% | |||
Agilysys | 35,981 | b | 441,847 |
ARRIS Group | 23,603 | b | 702,661 |
Aruba Networks | 48,596 | b | 909,231 |
CDW | 17,405 | 610,567 | |
Cognex | 29,586 | b | 1,204,446 |
Comtech Telecommunications | 19,326 | 767,049 | |
Cray | 23,903 | b | 802,663 |
Digi International | 60,390 | b | 431,185 |
Electronics For Imaging | 36,035 | b | 1,601,756 |
The Fund 19
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | Shares | Value ($) | |
Technology Hardware & Equipment (continued) | |||
Infinera | 70,029 | b | 954,495 |
Ituran Location and Control | 10,592 | 229,105 | |
National Instruments | 63,787 | 2,053,304 | |
Sanmina | 20,392 | b | 501,643 |
Sonus Networks | 321,882 | b | 1,190,963 |
Stratasys | 20,538 | a,b | 2,094,259 |
Super Micro Computer | 71,881 | b | 2,392,200 |
Universal Display | 11,551 | a,b | 320,425 |
17,207,799 | |||
Telecommunication Services—.6% | |||
Calix | 70,312 | b | 745,307 |
Cogent Communications Holdings | 29,787 | 1,055,056 | |
Iridium Communications | 119,448 | b | 1,140,728 |
RingCentral, Cl. A | 38,211 | b | 480,694 |
3,421,785 | |||
Transportation—3.6% | |||
Allegiant Travel | 14,159 | 1,985,941 | |
Covenant Transport, Cl. A | 29,735 | b | 781,436 |
Echo Global Logistics | 135,971 | b | 3,813,986 |
Forward Air | 14,995 | 734,155 | |
Genesee & Wyoming, Cl. A | 21,121 | b | 2,082,319 |
Heartland Express | 21,058 | 558,669 | |
Hub Group, Cl. A | 13,395 | b | 503,920 |
JetBlue Airways | 142,792 | a,b | 2,089,047 |
Marten Transport | 85,198 | 1,831,757 | |
Old Dominion Freight Line | 23,321 | b | 1,889,933 |
Roadrunner Transportation Systems | 15,166 | b | 341,387 |
Spirit Airlines | 13,007 | b | 1,075,549 |
XPO Logistics | 39,769 | a,b | 1,538,265 |
19,226,364 | |||
Utilities—.2% | |||
American States Water | 31,755 | 1,107,932 | |
Vivint Solar | 7,054 | a | 71,245 |
1,179,177 | |||
Total Common Stocks | |||
(cost $427,131,586) | 522,172,048 |
20
Investment of Cash Collateral | ||||
for Securities Loaned—13.4% | Shares | Value ($) | ||
Registered Investment Company; | ||||
Dreyfus Institutional Cash | ||||
Advantage Fund | ||||
(cost $71,412,952) | 71,412,952 | d | 71,412,952 | |
Total Investments (cost $498,544,538) | 111.3 | % | 593,585,000 | |
Liabilities, Less Cash and Receivables | (11.3 | %) | (60,260,535 | ) |
Net Assets | 100.0 | % | 533,324,465 |
ADR—American Depository Receipts
ETF—Exchange-Traded Fund
a Security, or portion thereof, on loan.At November 30, 2014, the value of the fund’s securities on loan was |
$69,416,575 and the value of the collateral held by the fund was $71,681,440, consisting of cash collateral of |
$71,412,952 and U.S. Government & Agency securities valued at $268,488. |
b Non-income producing security. |
c Investment in real estate investment trust. |
d Investment in affiliated money market mutual fund. |
Portfolio Summary (Unaudited)† | |||
Value (%) | Value (%) | ||
Software & Services | 16.2 | Diversified Financials | 2.9 |
Money Market Investment | 13.4 | Consumer Durables & Apparel | 2.7 |
Pharmaceuticals, | Media | 2.0 | |
Biotech & Life Sciences | 13.1 | Food, Beverage & Tobacco | 1.5 |
Health Care Equipment & Services | 10.7 | Energy | 1.4 |
Capital Goods | 7.6 | Real Estate | 1.3 |
Consumer Services | 6.5 | Automobiles & Components | 1.1 |
Commercial & Professional Services | 5.0 | Exchange-Traded Funds | .9 |
Retailing | 4.9 | Food & Staples Retailing | .9 |
Semiconductors & | Telecommunication Services | .6 | |
Semiconductor Equipment | 4.3 | Household & Personal Products | .2 |
Materials | 3.7 | Insurance | .2 |
Transportation | 3.6 | Utilities | .2 |
Banks | 3.2 | ||
Technology Hardware & Equipment | 3.2 | 111.3 | |
† Based on net assets. | |||
See notes to financial statements. |
The Fund 21
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2014 (Unaudited)
Cost | Value | ||
Assets ($): | |||
Investments in securities—See Statement of Investments (including | |||
securities on loan, valued at $69,416,575)—Note 1(b): | |||
Unaffiliated issuers | 427,131,586 | 522,172,048 | |
Affiliated issuers | 71,412,952 | 71,412,952 | |
Cash | 11,270,281 | ||
Receivable for investment securities sold | 4,552,603 | ||
Dividends and securities lending income receivable | 268,654 | ||
Receivable for shares of Common Stock subscribed | 49,876 | ||
Prepaid expenses | 27,824 | ||
609,754,238 | |||
Liabilities ($): | |||
Due to The Dreyfus Corporation and affiliates—Note 3(c) | 431,836 | ||
Liability for securities on loan—Note 1(b) | 71,412,952 | ||
Payable for investment securities purchased | 4,258,215 | ||
Payable for shares of Common Stock redeemed | 268,337 | ||
Accrued expenses | 58,433 | ||
76,429,773 | |||
Net Assets ($) | 533,324,465 | ||
Composition of Net Assets ($): | |||
Paid-in capital | 401,854,844 | ||
Accumulated Investment (loss)—net | (1,038,991 | ) | |
Accumulated net realized gain (loss) on investments | 37,468,150 | ||
Accumulated net unrealized appreciation | |||
(depreciation) on investments | 95,040,462 | ||
Net Assets ($) | 533,324,465 |
Net Asset Value Per Share | ||||
Class A | Class C | Class I | Class Y | |
Net Assets ($) | 3,400,025 | 320,260 | 23,131,129 | 506,473,051 |
Shares Outstanding | 135,638 | 13,216 | 910,243 | 19,946,945 |
Net Asset Value Per Share ($) | 25.07 | 24.23 | 25.41 | 25.39 |
See notes to financial statements. |
22
STATEMENT OF OPERATIONS
Six Months Ended November 30, 2014 (Unaudited)
Investment Income ($): | ||
Income: | ||
Cash dividends (net of $12,513 foreign taxes withheld at source) | 992,879 | |
Income from securities lending—Note 1(b) | 331,291 | |
Total Income | 1,324,170 | |
Expenses: | ||
Management fee—Note 3(a) | 2,184,494 | |
Custodian fees—Note 3(c) | 62,092 | |
Registration fees | 35,332 | |
Professional fees | 25,900 | |
Directors’ fees and expenses—Note 3(d) | 14,694 | |
Shareholder servicing costs—Note 3(c) | 11,453 | |
Prospectus and shareholders’ reports | 9,088 | |
Loan commitment fees—Note 2 | 3,094 | |
Distribution fees—Note 3(b) | 1,423 | |
Miscellaneous | 16,971 | |
Total Expenses | 2,364,541 | |
Less—reduction in expenses due to undertaking—Note 3(a) | (1,377 | ) |
Less—reduction in fees due to earnings credits—Note 3(c) | (3 | ) |
Net Expenses | 2,363,161 | |
Investment (Loss)—Net | (1,038,991 | ) |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
Net realized gain (loss) on investments | 20,969,315 | |
Net unrealized appreciation (depreciation) on investments | 12,903,944 | |
Net Realized and Unrealized Gain (Loss) on Investments | 33,873,259 | |
Net Increase in Net Assets Resulting from Operations | 32,834,268 | |
See notes to financial statements. |
The Fund 23
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
November 30, 2014 | Year Ended | |||
(Unaudited) | May 31, 2014a | |||
Operations ($): | ||||
Investment (loss)—net | (1,038,991 | ) | (2,048,531 | ) |
Net realized gain (loss) on investments | 20,969,315 | 40,328,441 | ||
Net unrealized appreciation | ||||
(depreciation) on investments | 12,903,944 | 4,034,369 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 32,834,268 | 42,314,279 | ||
Dividends to Shareholders from ($): | ||||
Net realized gain on investments: | ||||
Class A | — | (117,849 | ) | |
Class C | — | (11,167 | ) | |
Class I | — | (22,586,266 | ) | |
Class Y | — | (57 | ) | |
Total Dividends | — | (22,715,339 | ) | |
Capital Stock Transactions ($): | ||||
Net proceeds from shares sold: | ||||
Class A | 348,707 | 5,361,188 | ||
Class C | 13,211 | 457,590 | ||
Class I | 15,318,998 | 119,283,672 | ||
Class Y | 525,164,381 | 982,102 | ||
Dividends reinvested: | ||||
Class A | — | 115,639 | ||
Class C | — | 10,992 | ||
Class I | — | 11,988,560 | ||
Cost of shares redeemed: | ||||
Class A | (1,910,222 | ) | (1,074,701 | ) |
Class C | (146,090 | ) | (42,049 | ) |
Class I | (470,678,360 | ) | (60,071,260 | ) |
Class Y | (27,629,903 | ) | (4,825 | ) |
Increase (Decrease) in Net Assets | ||||
from Capital Stock Transactions | 40,480,722 | 77,006,908 | ||
Total Increase (Decrease) in Net Assets | 73,314,990 | 96,605,848 | ||
Net Assets ($): | ||||
Beginning of Period | 460,009,475 | 363,403,627 | ||
End of Period | 533,324,465 | 460,009,475 | ||
Accumulated investment (loss)—net | (1,038,991 | ) | — |
24
Six Months Ended | ||||
November 30, 2014 | Year Ended | |||
(Unaudited) | May 31, 2014a | |||
Capital Share Transactions: | ||||
Class A | ||||
Shares sold | 14,433 | 209,944 | ||
Shares issued for dividends reinvested | — | 4,614 | ||
Shares redeemed | (80,194 | ) | (43,311 | ) |
Net Increase (Decrease) in Shares Outstanding | (65,761 | ) | 171,247 | |
Class C | ||||
Shares sold | 584 | 18,615 | ||
Shares issued for dividends reinvested | — | 450 | ||
Shares redeemed | (6,170 | ) | (1,720 | ) |
Net Increase (Decrease) in Shares Outstanding | (5,586 | ) | 17,345 | |
Class Ib | ||||
Shares sold | 622,104 | 4,719,753 | ||
Shares issued for dividends reinvested | — | 473,295 | ||
Shares redeemed | (18,758,248 | ) | (2,372,287 | ) |
Net Increase (Decrease) in Shares Outstanding | (18,136,144 | ) | 2,820,761 | |
Class Yb | ||||
Shares sold | 21,052,134 | 41,048 | ||
Shares redeemed | (1,146,040 | ) | (197 | ) |
Net Increase (Decrease) in Shares Outstanding | 19,906,094 | 40,851 |
a Effective July1, 2013, the fund commenced offering ClassY shares. |
b During the period ended November 30, 2014, 17,848,095 Class I shares representing $448,344,147 were |
exchanged for 17,862,317 ClassY shares. |
See notes to financial statements.
The Fund 25
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||||||
November 30, 2014 | Year Ended May 31, | |||||||||
Class A Shares | (Unaudited) | 2014 | 2013 | 2012 | 2011 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 23.55 | 22.16 | 17.13 | 18.36 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment (loss)—netb | (.09 | ) | (.19 | ) | (.11 | ) | (.13 | ) | (.15 | ) |
Net realized and unrealized | ||||||||||
gain (loss) on investments | 1.61 | 2.90 | 5.14 | (1.10 | ) | 6.06 | ||||
Total from Investment Operations | 1.52 | 2.71 | 5.03 | (1.23 | ) | 5.91 | ||||
Distributions: | ||||||||||
Dividends from net realized | ||||||||||
gain on investments | — | (1.32 | ) | — | — | (.05 | ) | |||
Net asset value, end of period | 25.07 | 23.55 | 22.16 | 17.13 | 18.36 | |||||
Total Return (%)c | 6.46 | d | 11.87 | 29.36 | (6.70 | ) | 47.31 | d | ||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses to average net assets | 1.34 | e | 1.38 | 1.34 | 1.43 | 2.95 | e | |||
Ratio of net expenses to average net assets | 1.30 | e | 1.30 | 1.33 | 1.34 | 1.40 | e | |||
Ratio of net investment (loss) | ||||||||||
to average net assets | (.78 | )e | (.75 | ) | (.56 | ) | (.78 | ) | (1.03 | )e |
Portfolio Turnover Rate | 75.31 | d | 121.33 | 111.48 | 107.62 | 70.41 | d | |||
Net Assets, end of period ($ x 1,000) | 3,400 | 4,742 | 668 | 430 | 758 |
a | From July 1, 2010 (commencement of operations) to May 31, 2011. |
b | Based on average shares outstanding. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
26
Six Months Ended | ||||||||||
November 30, 2014 | Year Ended May 31, | |||||||||
Class C Shares | (Unaudited) | 2014 | 2013 | 2012 | 2011 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 22.85 | 21.70 | 16.89 | 18.22 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment (loss)—netb | (.18 | ) | (.36 | ) | (.23 | ) | (.26 | ) | (.26 | ) |
Net realized and unrealized | ||||||||||
gain (loss) on investments | 1.56 | 2.83 | 5.04 | (1.07 | ) | 6.03 | ||||
Total from Investment Operations | 1.38 | 2.47 | 4.81 | (1.33 | ) | 5.77 | ||||
Distributions: | ||||||||||
Dividends from net realized | ||||||||||
gain on investments | — | (1.32 | ) | — | — | (.05 | ) | |||
Net asset value, end of period | 24.23 | 22.85 | 21.70 | 16.89 | 18.22 | |||||
Total Return (%)c | 6.04 | d | 10.99 | 28.48 | (7.30 | ) | 46.19 | d | ||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses to average net assets | 2.30 | e | 2.34 | 2.25 | 2.16 | 3.73 | e | |||
Ratio of net expenses to average net assets | 2.05 | e | 2.03 | 2.02 | 2.07 | 2.15 | e | |||
Ratio of net investment (loss) | ||||||||||
to average net assets | (1.52 | )e | (1.48 | ) | (1.28 | ) | (1.56 | ) | (1.77 | )e |
Portfolio Turnover Rate | 75.31 | d | 121.33 | 111.48 | 107.62 | 70.41 | d | |||
Net Assets, end of period ($ x 1,000) | 320 | 430 | 32 | 47 | 214 |
a | From July 1, 2010 (commencement of operations) to May 31, 2011. |
b | Based on average shares outstanding. |
c | Exclusive of sales charge. |
d | Not annualized. |
e | Annualized. |
See notes to financial statements.
The Fund 27
FINANCIAL HIGHLIGHTS (continued)
Six Months Ended | ||||||||||
November 30, 2014 | Year Ended May 31, | |||||||||
Class I Shares | (Unaudited) | 2014 | 2013 | 2012 | 2011 | a | ||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 23.83 | 22.35 | 17.22 | 18.40 | 12.50 | |||||
Investment Operations: | ||||||||||
Investment (loss)—netb | (.05 | ) | (.12 | ) | (.05 | ) | (.06 | ) | (.13 | ) |
Net realized and unrealized | ||||||||||
gain (loss) on investments | 1.63 | 2.92 | 5.18 | (1.12 | ) | 6.08 | ||||
Total from Investment Operations | 1.58 | 2.80 | 5.13 | (1.18 | ) | 5.95 | ||||
Distributions: | ||||||||||
Dividends from net realized | ||||||||||
gain on investments | — | (1.32 | ) | — | — | (.05 | ) | |||
Net asset value, end of period | 25.41 | 23.83 | 22.35 | 17.22 | 18.40 | |||||
Total Return (%) | 6.63 | c | 12.18 | 29.79 | (6.41 | ) | 47.63 | c | ||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .97 | d | .98 | .99 | 1.03 | 1.77 | d | |||
Ratio of net expenses | ||||||||||
to average net assets | .97 | d | .98 | .99 | 1.02 | 1.15 | d | |||
Ratio of net investment (loss) | ||||||||||
to average net assets | (.55 | )d | (.45 | ) | (.25 | ) | (.34 | ) | (.84 | )d |
Portfolio Turnover Rate | 75.31 | c | 121.33 | 111.48 | 107.62 | 70.41 | c | |||
Net Assets, end of period ($ x 1,000) | 23,131 | 453,865 | 362,704 | 189,191 | 111,480 |
a | From July 1, 2010 (commencement of operations) to May 31, 2011. |
b | Based on average shares outstanding. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
28
Six Months Ended | ||||
November 30, 2014 | Year Ended | |||
Class Y Shares | (Unaudited) | May 31, 2014a | ||
Per Share Data ($): | ||||
Net asset value, beginning of period | 23.81 | 23.06 | ||
Investment Operations: | ||||
Investment (loss)—netb | (.05 | ) | (.02 | ) |
Net realized and unrealized | ||||
gain (loss) on investments | 1.63 | 2.09 | ||
Total from Investment Operations | 1.58 | 2.07 | ||
Distributions: | ||||
Dividends from net realized gain on investments | — | (1.32 | ) | |
Net asset value, end of period | 25.39 | 23.81 | ||
Total Return (%)c | 6.59 | 8.68 | ||
Ratios/Supplemental Data (%): | ||||
Ratio of total expenses to average net assetsd | .97 | 1.16 | ||
Ratio of net expenses to average net assetsd | .97 | 1.04 | ||
Ratio of net investment (loss) | ||||
to average net assetsd | (.39 | ) | (.08 | ) |
Portfolio Turnover Rate | 75.31 | c | 121.33 | |
Net Assets, end of period ($ x 1,000) | 506,473 | 973 |
a | From July 1, 2013 (commencement of initial offering) to May 31, 2014. |
b | Based on average shares outstanding. |
c | Not annualized. |
d | Annualized. |
See notes to financial statements.
The Fund 29
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus Select Managers Small Cap Growth 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 of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. EACM Advisors LLC (“EACM”), a wholly-owned subsidiary of BNY Mellon and an affiliate of Dreyfus, serves as the fund’s portfolio allocation manager. Riverbridge Partners, LLC (“Riverbridge”), Geneva Capital Management Ltd. (“Geneva”), Cupps Capital Management, LLC (“CCM”), Nicholas Investment Partners, L.P. (“Nicholas”), EAM Investors, LLC (“EAM”), Granite Investment Partners, LLC (“Granite”) and Rice Hall James & Associates (“Rice Hall”), 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 325 million shares of $.001 par value Common Stock.The fund currently offers four classes of shares: Class A (75 million shares authorized), Class C (75 million shares authorized), Class I (75 million shares authorized) and Class Y (100 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”) imposed on Class C shares redeemed within one year of purchase. Class I and ClassY shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by
30
each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are 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 (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The 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).
The Fund 31
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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:
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
32
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 generally 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 Company’s Board of Director’s (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.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
The Fund 33
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The following is a summary of the inputs used as of November 30, 2014 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† | 499,840,230 | — | — | 499,840,230 |
Equity Securities— | ||||
Foreign | ||||
Common Stocks† | 17,579,385 | — | — | 17,579,385 |
Exchange-Traded | ||||
Funds | 4,752,433 | — | — | 4,752,433 |
Mutual Funds | 71,412,952 | — | — | 71,412,952 |
† | See Statement of Investments for additional detailed categorizations. |
At November 30, 2014, 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 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 or U.S. Government and Agency securities.The fund is entitled to receive all dividends, interest
34
and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. During the period ended November 30, 2014,The Bank of NewYork Mellon earned $185,485 from lending portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended November 30, 2014 were as follows:
Affiliated | |||||
Investment | Value | Value | Net | ||
Company | 5/31/2014 ($) | Purchases ($) | Sales ($) | 11/30/2014 ($) | Assets (%) |
Dreyfus | |||||
Institutional | |||||
Cash | |||||
Advantage | |||||
Fund | 27,274,600 | 162,236,154 | 118,097,802 | 71,412,952 | 13.4 |
(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 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 pro-
The Fund 35
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
visions 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 November 30, 2014, 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 ended November 30, 2014, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended May 31, 2014 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 May 31, 2014 was as follows: ordinary income $8,801,203 and long-term capital gains $13,914,136.The tax character of current year distributions, if any, 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 $430 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. Prior to October 8, 2014, the unsecured credit facility with Citibank, N.A. was $265 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended November 30, 2014, 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 aver-
36
age daily net assets and is payable monthly.The Manager had contractually agreed, from June 1, 2014 through November 30, 2014, to waive receipt of its fees and/or assume the direct expenses of Class Y shares, so that the expenses of ClassY shares (excluding taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) did not exceed 1.05% of the value of the fund’s average daily net assets.The Manager has also contractually agreed, from June 1, 2014 through October 1, 2015, to waive receipt of its fees and/or assume the direct expenses of Class A, Class C and Class I shares and from December 1, 2014 through October 1, 2015, to waive receipt of its fees and/or assume the direct expenses of ClassY shares, so that the expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees and certain expenses as described above) exceed 1.05%, 1.05%, 1.05% and .98% of the value of the respective class’ average daily net assets.The reduction in expenses, pursuant to the undertaking, amounted to $1,377 during the period ended November 30, 2014.
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 a sub-investment advisory agreement between Dreyfus and Riverbridge, Geneva, CCM, Nicholas, EAM, Granite and Rice Hall, each serves as the fund’s sub-investment adviser responsible for the day-to-day management of a portion of the fund’s portfolio. Dreyfus pays the sub-investment adviser a monthly fee at an annual percentage of the value of the fund’s average daily net assets. Dreyfus has obtained an exemptive order from the SEC, upon which the fund may rely, to use a manager of managers approach that permits Dreyfus, subject to certain conditions and approval by the Board, to enter into and materially amend sub-investment advisory agreements with one or more sub-investment advisers who are either unaffiliated with Dreyfus or are wholly-owned subsidiaries (as defined under the Act) of Dreyfus’ ultimate parent company, BNY Mellon, without obtaining
The Fund 37
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
shareholder approval. The order also relieves the fund from disclosing the sub-investment advisory fee paid by Dreyfus to an unaffiliated sub-investment adviser in documents filed with the SEC and provided to shareholders. In addition, pursuant to the order, it is not necessary to disclose the sub-investment advisory fee payable by Dreyfus separately to a sub-investment adviser that is a wholly-owned subsidiary of BNY Mellon in documents filed with the SEC and provided to shareholders; such fees are to be aggregated with fees payable to Dreyfus. Dreyfus has ultimate responsibility (subject to oversight by the Board) to supervise any sub-investment adviser and recommend the hiring, termination, and replacement of any sub-investment adviser to the Board.
During the period ended November 30, 2014, the Distributor retained $261 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 November 30, 2014, Class C shares were charged $1,423 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 November 30, 2014, Class A and Class C shares were charged $5,039 and $474, respectively, pursuant to the Shareholder Services Plan.
38
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 and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended November 30, 2014, the fund was charged $2,207 for transfer agency services and $92 for cash management services. These fees are included in Shareholder servicing costs in the Statement of Operations. Cash management fees were partially offset by earnings credits of $3.
The fund compensates The Bank of NewYork Mellon under a custody agreement for providing custodial services for the fund.These fees are determined based on net assets, geographic region and transaction activity. During the period ended November 30, 2014, the fund was charged $62,092 pursuant to the custody agreement.
During the period ended November 30, 2014, the fund was charged $7,955 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 $389,336, Distribution Plan fees $199, Shareholder Services Plan fees $779, custodian fees $38,000, Chief Compliance Officer fees $2,714 and transfer agency fees $984, which are offset against an expense reimbursement currently in effect in the amount of $176.
The Fund 39
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended November 30, 2014, amounted to $397,708,070 and $361,408,469, respectively.
At November 30, 2014, accumulated net unrealized appreciation on investments was $95,040,462, consisting of $108,389,551 gross unrealized appreciation and $13,349,089 gross unrealized depreciation.
At November 30, 2014, 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).
40
INFORMATION ABOUT THE RENEWAL OF THE FUND’S
MANAGEMENT, PORTFOLIO ALLOCATION MANAGEMENT
AND SUB-INVESTMENT ADVISORY AGREEMENTS (Unaudited)
At a meeting of the fund’s Board of Directors held on November 3-4, 2014, the Board considered the renewal of (a) the fund’s Management Agreement, pursuant to which Dreyfus provides the fund with investment advisory and administrative services (the “Management Agreement”); (b) Dreyfus’ Portfolio Allocation Management Agreement (the “Allocation Agreement”) with EACM Advisors, LLC (“EACM”), pursuant to which EACM is responsible for evaluating and recommending sub-advisers to provide the fund with day-to-day portfolio management services, recommending the percentage of fund assets to be allocated to each sub-adviser, monitoring and evaluating the performance of the sub-advisers, and recommending whether a sub-adviser should be terminated; and (c) Dreyfus’ separate Sub-Investment Advisory Agreements (collectively with the Management Agreement and the Allocation Agreement, the “Agreements”) with each of EAM Investors, LLC, Geneva Capital Management, LCC, Riverbridge Partners, LLC, Nicholas Investment Partners, L.P., Cupps Capital Management, LLC, Granite Investment Partners, LLC and Rice Hall James & Associates (collectively, the “Sub-Advisers”), pursuant to which each Sub-Adviser serves as a sub-investment adviser and provides day-to-day management of the fund’s investments. The Board members, a majority of whom are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of Dreyfus, EACM and the Sub-Advisers. In considering the renewal of the Agreements, the Board considered all factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
Analysis of Nature, Extent, and Quality of Services Provided to the Fund. The Board considered information provided to them at the meeting and in previous presentations from Dreyfus representatives regarding the nature, extent, and quality of the services provided to funds in the Dreyfus fund complex. Dreyfus provided the number of
The Fund 41
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT,
PORTFOLIO ALLOCATION MANAGEMENT AND SUB-INVESTMENT
ADVISORY AGREEMENTS (Unaudited) (continued)
open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. Dreyfus also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the Dreyfus fund complex (such as retail direct or intermediary, in which intermediaries typically are paid by the fund and/or Dreyfus) and Dreyfus’ corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each intermediary or distribution channel, as applicable to the fund.
The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that Dreyfus also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board also considered Dreyfus’ extensive administrative, accounting, and compliance infrastructures, as well as Dreyfus’ supervisory activities over EACM and the Sub-Advisers, and EACM’s evaluations and recommendations to Dreyfus regarding the Sub-Advisers and EACM’s supervisory activities over the Sub-Advisers. The Board also considered the Sub-Advisers’ brokerage policies and practices (including policies and practices regarding soft dollars) and the standards applied in seeking best execution.
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed reports prepared by Lipper, Inc. (“Lipper”), an independent provider of investment company data, which included information comparing (1) the fund’s performance with the performance of a group of comparable funds (the “Performance Group”) and with a broader group of funds (the “Performance Universe”), all for various periods ended September 30, 2014, and (2) the fund’s actual and contractual management fees and total expenses with those of a group of comparable funds (the “Expense Group”) and with a broader group of funds (the “Expense
42
Universe”), the information for which was derived in part from fund financial statements available to Lipper as of the date of its analysis. Dreyfus previously had furnished the Board with a description of the methodology Lipper used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
Dreyfus representatives stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations that may be applicable to the fund and comparison funds.They also noted that performance generally should be considered over longer periods of time, although it is possible that long-term performance can be adversely affected by even one period of significant underperformance so that a single investment decision or theme has the ability to affect disproportionately long-term performance. The Board discussed the results of the comparisons and noted that the fund’s total return performance was below the Performance Group and Performance Universe medians for the various periods, except for the four-year period when the fund’s performance was above the Performance Group and Performance Universe medians. Dreyfus also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark index and noted that the fund’s total returns were above the benchmark index for two of the three calendar years provided.
The Board also reviewed the range of actual and contractual management fees and total expenses of the Expense Group and Expense Universe funds and discussed the results of the comparisons. The Board noted that the fund’s contractual management fee was above the Expense Group median, the fund’s actual management fee was below the Expense Group median and above the Expense Universe median and the fund’s total expenses were below the Expense Group and Expense Universe medians.
The Fund 43
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT,
PORTFOLIO ALLOCATION MANAGEMENT AND SUB-INVESTMENT
ADVISORY AGREEMENTS (Unaudited) (continued)
Dreyfus representatives noted that Dreyfus has contractually agreed, until October 1, 2015, 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 fees, shareholder services fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) 1.05%.
Dreyfus representatives reviewed with the Board the management or investment advisory fees (1) paid by funds advised or administered by Dreyfus that are in the same Lipper category as the fund and (2) paid to Dreyfus or its affiliates for advising any separate accounts and/or other types of client portfolios that are considered to have similar investment strategies and policies as the fund (the “Similar Clients”), and explained the nature of the Similar Clients.They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors. The Board considered the relevance of the fee information provided for the Similar Clients to evaluate the appropriateness and reasonableness of the fund’s management fee.
The Board considered the fee to EACM and to each Sub-Adviser in relation to the fee paid to Dreyfus by the fund and the respective services provided by EACM, each Sub-Adviser and Dreyfus. The Board also reviewed and considered the individual performance of the respective Sub-Advisers as to the portion of the fund’s assets under their manage-ment.The Board also noted that EACM’s and each Sub-Adviser’s fee is paid by Dreyfus (out of its fee from the fund) and not the fund.
Analysis of Profitability and Economies of Scale. Dreyfus representatives reviewed the expenses allocated and profit received by Dreyfus and its affiliates and the resulting profitability percentage for managing the fund and the aggregate profitability percentage to Dreyfus and its affiliates for managing the funds in the Dreyfus fund complex, and the method used to determine the expenses and profit. The Board con-
44
cluded that the profitability results were not unreasonable, given the services rendered and service levels provided by Dreyfus. The Board also had been provided with information prepared by an independent consulting firm regarding Dreyfus’ approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
The Board considered on the advice of its counsel the profitability analysis (1) as part of its evaluation of whether the fees under the Agreements bear a reasonable relationship to the mix of services provided by Dreyfus, EACM and the Sub-Advisers, including the nature, extent and quality of such services, and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Since Dreyfus, and not the fund, pays EACM and the Sub-Advisers pursuant to the respective Agreements, the Board did not consider EACM’s or any Sub-Adviser’s profitability to be relevant to its deliberations. Dreyfus representatives also noted that, as a result of shared and allocated costs among funds in the Dreyfus fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level.The Board also considered potential benefits to Dreyfus and each Sub-Adviser from acting as investment adviser and sub-investment adviser, respectively, and EACM from acting as portfolio allocation manager, and noted the soft dollar arrangements in effect for trading the fund’s investments.
The Fund 45
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT,
PORTFOLIO ALLOCATION MANAGEMENT AND SUB-INVESTMENT
ADVISORY AGREEMENTS (Unaudited) (continued)
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreements. Based on the discussions and considerations as described above, the Board concluded and determined as follows.
The Board concluded that the nature, extent and quality of the services provided by Dreyfus, EACM and the Sub-Advisers are adequate and appropriate.
The Board expressed some concern with the fund’s relative under- performance and agreed to closely monitor performance.
The Board concluded that the fees paid to Dreyfus, EACM and the Sub-Advisers were reasonable in light of the considerations described above.
The Board determined that the economies of scale which may accrue to Dreyfus and its affiliates in connection with the management of the fund had been adequately considered by Dreyfus in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
In evaluating the Agreements, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with Dreyfus and its affiliates, EACM and the Sub-Advisers, of the fund and the services provided to the fund by Dreyfus, EACM and the Sub-Advisers. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreements,
46
including information on the investment performance of the fund in comparison to similar mutual funds and benchmark performance indices; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for this fund had the benefit of a number of years of reviews of prior or similar agreements during which lengthy discussions took place between the Board and Dreyfus representatives. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the same or similar arrangements in prior years.The Board determined to renew the Agreements.
The Fund 47
NOTES
For More Information
![](https://capedge.com/proxy/N-CSRS/0000737520-15-000006/smscgncsrx52x1.jpg)
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
© 2015 MBSC Securities Corporation | 6289SA1114 |
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: January 22, 2015
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: January 22, 2015
By: /s/ James Windels
James Windels
Treasurer
Date: January 22, 2015
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)