UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
|
|
FORM N-CSR |
|
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT |
INVESTMENT COMPANIES |
|
Investment Company Act file number 811-7123 |
|
Advantage 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) |
|
Mark N. Jacobs, 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: | | 10/31 |
Date of reporting period: | | 4/30/07 |
| | | | FORM N-CSR |
Item 1. | | Reports to Stockholders. | | |
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
| | Contents |
|
| | THE FUND |
| |
|
2 | | A Letter from the CEO |
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 |
13 | | Statement of Financial Futures |
14 | | Statement of Assets and Liabilities |
15 | | Statement of Operations |
16 | | Statement of Changes in Net Assets |
18 | | Financial Highlights |
21 | | Notes to Financial Statements |
31 | | Information About the Review and Approval |
| | of the Fund’s Management Agreement |
| | FOR MORE INFORMATION |
| |
|
| | Back Cover |
The Fund
Dreyfus Premier |
Total Return |
Advantage Fund |
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A LETTER FROM THE CEO
Dear Shareholder:
We present to you this semiannual report for Dreyfus Premier Total Return Advantage Fund, covering the six-month period from November 1, 2006, through April 30, 2007.
The U.S. economy moderated throughout the reporting period as cooling housing markets took their toll on consumer and business spending. Yet, labor markets remained quite strong, and key measures of inflation stayed stubbornly above the Federal Reserve’s stated “comfort zone.” Dreyfus’ chief economist believes that these seemingly conflicting signals may be the result of a lag between the current downturn in housing activity and its likely dampening effect on housing-related employment. In his view, inflationary pressures may moderate over the coming months in an environment of modestly higher unemployment rates and sub-par economic growth.
The likely implications of this economic outlook include a long pause in Fed policy before an eventual easing of short-term interest rates, a modest drop in 10-year Treasury bond yields, decelerating corporate earnings, high levels of mergers-and-acquisitions activity and a probable continuation of the ongoing shift in investor sentiment toward higher-quality stocks. We expect these developments to produce both challenges and opportunities in fixed-income markets, and your financial advisor can help determine the appropriate asset allocation strategy for you.
For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Managers.
Thank you for your continued confidence and support.
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2
DISCUSSION OF FUND PERFORMANCE
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David Kwan and Lowell Bennett, Portfolio Managers
How did Dreyfus Premier Total Return Advantage Fund |
perform compared to its benchmark? |
For the six-month period ended April 30, 2007, the fund produced total returns of 1.72% for Class A shares, 1.33% for Class C shares and ¬1.83% for Class I shares.1 Please note that effective June 1, 2007, Class R shares were renamed Class I shares. In comparison, the fund’s benchmark, the Lehman Brothers U.S. Aggregate Index, produced a total return of 2.64% for the same period.2
During the reporting period, interest rates in the United States remained range bound, but not static, as concerns regarding inflation arising from volatile energy prices and low unemployment rates were balanced by weaker economic growth stemming from softening U.S. housing markets. In international markets, economic growth generally has been more consistent and bond yields have been higher, particularly in Europe.The fund’s returns were lower than the benchmark, primarily due to relatively heavy exposure to bonds in Europe and weakness in the U.S. dollar and the yen, in which the fund held relatively overweight positions.
What is the fund’s investment approach?
The fund seeks to maximize total return from capital appreciation and income. To pursue its goal, the fund normally invests in securities and other instruments that provide exposure to fixed income and currency markets.
To focus the fund’s investments on the U.S. fixed income market, we employ an active core bond strategy, in which four proprietary quantitative models are run and implemented independently of one another. We overlay the active core bond strategy with a separate global bond strategy, setting the fund’s exposures to the world’s major bond markets according to our view of their relative valuations. Finally, we employ an active currency strategy in which we evaluate and establish exposure to various currencies based on relative valuations as determined by real interest rates and purchasing power parity.
T h e F u n d 3
DISCUSSION OF FUND PERFORMANCE (continued)
The fund typically will invest in bonds rated investment grade or the unrated equivalent, but we may invest up to 30% of the fund’s assets in securities rated below investment grade at the time of purchase. The average effective maturity of the fund’s portfolio typically will range between three and 10 years.
What other factors influenced the fund’s performance?
The Federal Reserve Board (the “Fed”) held the overnight federal funds rate constant at 5.25% during the reporting period, and on balance, interest rates ended the period very close to where they began. However, interest rates fluctuated significantly during the reporting period as conflicting economic signals and stock market volatility affected the U.S. bond market. The forces driving U.S. interest rates were in a “tug of war” between slowing economic growth stemming from a softening housing market and persistent inflationary pressures driven by volatile energy prices and low unemployment. The fund modestly benefited from these developments as we tactically shifted its duration posture to take advantage of interest-rate volatility.
In global markets, robust economic growth has prompted many of the world’s central banks to move away from accommodative monetary policies by raising short-term interest rates. In fact, the United States and Canada represented the only major central banks that did not change their policy rates during the reporting period. The European Central Bank raised rates twice during the reporting period, as did Sweden and New Zealand, and Norway tightened three times.
These policy shifts, which were intended to forestall an acceleration of inflation, had a generally negative impact on our currency strategy. Relatively attractive short-term, inflation-adjusted interest rates in the United States led us to maintain an overweight position in the U.S. dollar, with correspondingly underweight exposure to other currency markets. As central banks outside of the United States raised interest rates, their currencies appreciated relative to the U.S. dollar, hurting the fund’s performance. Rising yields in Europe, which eroded bond prices, also detracted from the fund’s relative performance. However, these factors were offset, in part, by success in other currency markets, most notably the British pound and New Zealand dollar.
4
What is the fund’s current strategy?
At the end of the reporting period, global economic growth remained robust while the U.S. economy continued to show signs of a moderate slowdown. Outside of the United States, we have found relatively attractive values in the Australian and U.K. bond markets, where interest rates rose significantly during the reporting period. In contrast, yields on Japanese bonds fell, making them less attractive.
Our active currency strategy has continued to favor the U.S. dollar and the British pound, which we believe may still hold value in this relatively high short-term, inflation-adjusted interest rate environment.We also see better prospects for the Japanese yen, which has depreciated to more attractive levels. In our core strategy, we have maintained a modestly short duration position, and we generally have emphasized shorter duration, higher-quality bonds. Of course, we are prepared to adjust our strategies as economic and market conditions change.
June 1, 2007
| | Foreign bonds are subject to special risks including exposure to currency fluctuations, |
| | changing political and economic conditions, and potentially less liquidity. |
| | Investments in foreign currencies are subject to the risk that those currencies will decline in |
| | value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will |
| | decline relative to the currency being hedged. Currency rates in foreign countries may |
| | fluctuate significantly over short periods of time. A decline in the value of foreign currencies |
| | relative to the U.S. dollar will reduce the value of securities held by the fund and |
| | denominated in those currencies. |
1 | | Total return includes reinvestment of dividends and any capital gains paid and does not take into |
| | consideration the maximum initial sales charge in the case of Class A shares or the applicable |
| | contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these |
| | charges been reflected, returns would have been lower. Past performance is no guarantee of future |
| | results. Share price and investment return fluctuate such that upon redemption, fund shares may be |
| | worth more or less than their original cost. Return figures provided reflect the absorption of certain |
| | fund expenses by The Dreyfus Corporation pursuant to an agreement in effect through October |
| | 31, 2007, at which time it may be extended, modified or terminated. Had these expenses not |
| | been absorbed, the fund’s returns would have been lower. |
2 | | SOURCE: LIPPER INC. — Reflects reinvestment of dividends and, where applicable, capital |
| | gain distributions.The Lehman Brothers U.S. Aggregate Index is a widely accepted, unmanaged |
| | total return index of corporate, U.S. government and U.S. government agency debt instruments, |
| | mortgage-backed securities and asset-backed securities with an average maturity of 1-10 years. |
| | Index returns do not reflect fees and expenses associated with operating a mutual fund. |
T h e F u n d 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 Premier Total Return Advantage Fund from November 1, 2006 to April 30, 2007. 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 April 30, 2007 | | | | | | |
| | Class A | | | | Class C | | Class R |
| |
| |
| |
| |
|
Expenses paid per $1,000 † | | $ 4.45 | | | | $ 8.19 | | $ 3.20 |
Ending value (after expenses) | | $1,017.20 | | | | $1,013.30 | | $1,018.30 |
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 April 30, 2007 |
| | Class A | | Class C | | Class R |
| |
| |
| |
|
Expenses paid per $1,000 † | | $ 4.46 | | $ 8.20 | | $ 3.21 |
Ending value (after expenses) | | $1,020.38 | | $1,016.66 | | $1,021.62 |
|
† Expenses are equal to the fund’s annualized expense ratio of .89% for Class A, 1.64% for Class C and .64% for |
Class R, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half |
year period). | | | | | | |
6
STATEMENT OF INVESTMENTS |
April 30, 2007 (Unaudited) |
| | Coupon | | Maturity | | Principal | | |
Bonds and Notes—92.4% | | Rate (%) | | Date | | Amount ($) | | Value ($) |
| |
| |
| |
| |
|
Asset-Backed Ctfs./ | | | | | | | | |
Auto Receivables—6.7% | | | | | | | | |
Bank One Auto Securitization | | | | | | | | |
Trust, Ser. 2003-1, Cl. A4 | | 2.43 | | 3/22/10 | | 46,289 | | 46,150 |
Capital One Auto Finance Trust, | | | | | | | | |
Ser. 2005-C, Cl. A3 | | 4.61 | | 7/15/10 | | 75,700 | | 75,524 |
Carmax Auto Owner Trust, | | | | | | | | |
Ser. 2003-2, Cl. A4 | | 3.07 | | 10/15/10 | | 47,729 | | 47,564 |
Chase Manhattan Auto Owner Trust, | | | | | | |
Ser. 2003-B, Cl. A4 | | 2.57 | | 2/16/10 | | 45,108 | | 44,991 |
Chase Manhattan Auto Owner Trust, | | | | | | |
Ser. 2003-C, Cl. A4 | | 2.94 | | 6/15/10 | | 59,989 | | 59,495 |
Daimler Chrysler Auto Trust, | | | | | | | | |
Ser. 2004-A, Cl. A4 | | 2.58 | | 4/8/09 | | 58,768 | | 58,397 |
Harley-Davidson Motorcycle Trust, | | | | | | |
Ser. 2004-1, Cl. A2 | | 2.53 | | 11/15/11 | | 68,530 | | 66,737 |
Honda Auto Receivables Owner | | | | | | | | |
Trust, Ser. 2005-5, Cl. A4 | | 4.69 | | 2/15/11 | | 140,000 | | 139,295 |
Household Automotive Trust, | | | | | | | | |
Ser. 2003-2, Cl. A4 | | 3.02 | | 12/17/10 | | 59,997 | | 59,435 |
Nissan Auto Receivables Owner | | | | | | | | |
Trust, Ser. 2003-B, Cl. A4 | | 2.05 | | 3/16/09 | | 30,648 | | 30,594 |
USAA Auto Owner Trust, | | | | | | | | |
Ser. 2004-3, Cl. A4 | | 3.53 | | 6/15/11 | | 100,000 | | 98,548 |
WFS Financial Owner Trust, | | | | | | | | |
Ser. 2004-2, Cl. A4 | | 3.54 | | 11/21/11 | | 74,248 | | 73,495 |
| | | | | | | | 800,225 |
Asset-Backed Ctfs./Credit Cards—3.3% | | | | | | |
Capital One Multi-Asset Execution | | | | | | |
Trust, Ser. 2005-A2, Cl. A2 | | 4.05 | | 2/15/11 | | 100,000 | | 99,000 |
Chase Issuance Trust, | | | | | | | | |
Ser. 2005-A10, Cl. A10 | | 4.65 | | 12/17/12 | | 100,000 | | 99,255 |
Citibank Credit Card Issuance | | | | | | | | |
Trust, Ser. 2003-A8, Cl. A8 | | 3.50 | | 8/16/10 | | 100,000 | | 98,018 |
MBNA Master Credit Card Trust, | | | | | | | | |
Ser. 2000-L, Cl. A | | 6.50 | | 4/15/10 | | 100,000 | | 100,777 |
| | | | | | | | 397,050 |
Asset-Backed Ctfs./ | | | | | | | | |
Home Equity Loans—2.5% | | | | | | | | |
MASTR Asset-Backed Securities | | | | | | | | |
Trust, Ser. 2005-AB1, Cl. A2 | | 5.05 | | 11/25/35 | | 100,000 a | | 99,341 |
T h e F u n d 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | Coupon | | Maturity | | Principal | | |
Bonds and Notes (continued) | | Rate (%) | | Date | | Amount ($) | | Value ($) |
| |
| |
| |
| |
|
Asset-Backed Ctfs./ | | | | | | | | |
Home Equity Loans (continued) | | | | | | | | |
Renaissance Home Equity Loan | | | | | | | | |
Trust, Ser. 2005-2, Cl. AF3 | | 4.50 | | 8/25/35 | | 100,000 a | | 98,999 |
Residential Asset Mortgage | | | | | | | | |
Products, Ser. 2003-RZ4, Cl. A7 | | 4.79 | | 6/25/33 | | 95,699 a | | 93,109 |
Specialty Underwriting & | | | | | | | | |
Residential Finance, | | | | | | | | |
Ser. 2003-BC4, Cl. A3B | | 4.79 | | 11/25/34 | | 7,426 | | 6,898 |
| | | | | | | | 298,347 |
Asset-Backed Ctfs./Student Loans—.2% | | | | | | |
College Loan Corporation Trust, | | | | | | | | |
Stripped Security, Interest | | | | | | | | |
Only Class, Ser. 2006-1, Cl. AIO | | 10.00 | | 7/25/08 | | 200,000 b | | 23,563 |
Banks—2.1% | | | | | | | | |
ABN AMRO Bank, | | | | | | | | |
Sr. Notes | | 5.41 | | 4/18/08 | | 50,000 a,c | | 50,077 |
Royal Bank of Canada, | | | | | | | | |
Notes | | 3.88 | | 5/4/09 | | 100,000 | | 97,929 |
Wells Fargo, | | | | | | | | |
Notes | | 5.38 | | 3/10/08 | | 100,000 a | | 100,084 |
| | | | | | | | 248,090 |
Commercial Mortgage | | | | | | | | |
Pass-Through Ctfs.—4.9% | | | | | | | | |
GMAC Commercial Mortgage | | | | | | | | |
Securities, Ser. 2001-C2, Cl. A1 | | 6.25 | | 4/15/34 | | 60,492 | | 61,185 |
J.P. Morgan Chase Commercial | | | | | | | | |
Mortgage Securities, | | | | | | | | |
Ser. 2005-LDP3, Cl. A4A | | 4.94 | | 8/15/42 | | 102,000 a | | 99,286 |
J.P. Morgan Chase Commercial | | | | | | | | |
Mortgage Securities, | | | | | | | | |
Ser. 2005-LDP3, Cl. A3 | | 4.96 | | 8/15/42 | | 75,000 | | 73,995 |
J.P. Morgan Chase Commercial | | | | | | | | |
Mortgage Securities, | | | | | | | | |
Ser. 2005-LDP5, Cl. ASB | | 5.33 | | 12/15/44 | | 100,000 a | | 100,006 |
Morgan Stanley Capital I, | | | | | | | | |
Ser. 2006-HQ8, Cl. AJ | | 5.64 | | 3/12/44 | | 65,000 a | | 65,466 |
Morgan Stanley Dean Witter Capital | | | | | | |
I, Ser. 2003-HQ2, Cl. A1 | | 4.18 | | 3/12/35 | | 118,773 | | 114,737 |
Wachovia Bank Commercial Mortgage | | | | | | |
Trust, Ser. 2005-C16, Cl. A2 | | 4.38 | | 10/15/41 | | 75,000 | | 73,582 |
| | | | | | | | 588,257 |
8
| | Coupon | | Maturity | | Principal | | |
Bonds and Notes (continued) | | Rate (%) | | Date | | Amount ($) | | Value ($) |
| |
| |
| |
| |
|
Diversified Financial Services—11.8% | | | | | | |
Allstate Life Global Funding | | | | | | | | |
Trusts, Notes, Ser. 04-1 | | 4.50 | | 5/29/09 | | 200,000 | | 198,184 |
Bear Stearns Cos., | | | | | | | | |
Sr. Unscd. Notes | | 5.59 | | 1/31/11 | | 100,000 a | | 100,142 |
Boeing Capital, | | | | | | | | |
Unscd. Notes | | 6.50 | | 2/15/12 | | 50,000 | | 53,193 |
Citigroup, | | | | | | | | |
Notes | | 5.13 | | 5/5/14 | | 150,000 | | 149,043 |
Citigroup, | | | | | | | | |
Notes | | 5.48 | | 6/9/09 | | 50,000 a | | 50,138 |
Credit Suisse USA, | | | | | | | | |
Sr. Notes | | 5.47 | | 12/9/08 | | 50,000 a | | 50,138 |
Credit Suisse USA, | | | | | | | | |
Notes | | 5.56 | | 8/15/10 | | 100,000 a | | 100,496 |
General Electric Capital, | | | | | | | | |
Sr. Unscd. Notes, Ser. A | | 6.00 | | 6/15/12 | | 200,000 | | 207,979 |
Household Finance, | | | | | | | | |
Unscd. Notes | | 4.13 | | 11/16/09 | | 100,000 | | 97,737 |
JPMorgan Chase & Co., | | | | | | | | |
Sr. Unscd. Notes | | 5.53 | | 1/17/11 | | 100,000 a | | 100,344 |
Lehman Brothers Holdings, | | | | | | | | |
Notes | | 5.56 | | 12/23/10 | | 100,000 a | | 100,342 |
MBNA, | | | | | | | | |
Bonds | | 5.00 | | 6/15/15 | | 100,000 | | 97,201 |
Morgan Stanley, | | | | | | | | |
Unsub. Bonds | | 6.75 | | 4/15/11 | | 100,000 | | 105,818 |
| | | | | | | | 1,410,755 |
Diversified Metals & Mining—.7% | | | | | | | | |
Alcoa, | | | | | | | | |
Notes | | 7.38 | | 8/1/10 | | 75,000 | | 79,965 |
Electric Utilities—.9% | | | | | | | | |
SCANA, | | | | | | | | |
Notes | | 6.88 | | 5/15/11 | | 50,000 | | 53,121 |
Wisconsin Energy, | | | | | | | | |
Sr. Notes | | 5.50 | | 12/1/08 | | 50,000 | | 50,249 |
| | | | | | | | 103,370 |
Foreign/Governmental—.5% | | | | | | | | |
United Mexican States, | | | | | | | | |
Notes | | 6.63 | | 3/3/15 | | 50,000 | | 54,325 |
T h e F u n d 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | Coupon | | Maturity | | Principal | | |
Bonds and Notes (continued) | | Rate (%) | | Date | | Amount ($) | | Value ($) |
| |
| |
| |
| |
|
Health Care—1.2% | | | | | | | | |
Abbott Laboratories, | | | | | | | | |
Notes | | 5.60 | | 5/15/11 | | 50,000 | | 51,037 |
Merck & Co., | | | | | | | | |
Notes | | 4.38 | | 2/15/13 | | 100,000 | | 96,174 |
| | | | | | | | 147,211 |
Oil & Gas—1.3% | | | | | | | | |
Conoco Funding, | | | | | | | | |
Gtd. Notes | | 6.35 | | 10/15/11 | | 100,000 | | 105,222 |
KeySpan, | | | | | | | | |
Sr. Unsub. Notes | | 7.63 | | 11/15/10 | | 50,000 | | 53,885 |
| | | | | | | | 159,107 |
Property & Casualty | | | | | | | | |
Insurance—3.3% | | | | | | | | |
Berkshire Hathaway Finance, | | | | | | | | |
Gtd. Notes | | 4.63 | | 10/15/13 | | 100,000 | | 97,079 |
Hartford Life Global Funding | | | | | | | | |
Trusts, Notes | | 5.20 | | 2/15/11 | | 150,000 | | 150,149 |
Principal Life Income Funding | | | | | | | | |
Trusts, Notes | | 5.13 | | 3/1/11 | | 150,000 | | 150,812 |
| | | | | | | | 398,040 |
Residential Mortgage | | | | | | | | |
Pass-Through Ctfs.—1.7% | | | | | | | | |
Credit Suisse Mortgage Capital | | | | | | | | |
Ctfs., Ser. 2006-C3, Cl. A3 | | 6.02 | | 6/15/38 | | 100,000 a | | 103,687 |
Merrill Lynch/Countrywide | | | | | | | | |
Commercial Mortgage, | | | | | | | | |
Ser. 2006-2, Cl. A4 | | 5.91 | | 6/12/46 | | 100,000 a | | 104,205 |
| | | | | | | | 207,892 |
Retail—.9% | | | | | | | | |
Wal-Mart Stores, | | | | | | | | |
Sr. Unscd. Notes | | 6.88 | | 8/10/09 | | 100,000 | | 103,935 |
Technology—.8% | | | | | | | | |
International Business Machines, | | | | | | | | |
Unscd. Notes | | 4.25 | | 9/15/09 | | 50,000 | | 49,220 |
Oracle, | | | | | | | | |
Unscd. Notes | | 5.00 | | 1/15/11 | | 50,000 | | 49,900 |
| | | | | | | | 99,120 |
10
| | Coupon | | Maturity | | Principal | | |
Bonds and Notes (continued) | | Rate (%) | | Date | | Amount ($) | | Value ($) |
| |
| |
| |
| |
|
Telecommunications—2.2% | | | | | | | | |
BellSouth, | | | | | | | | |
Sr. Unscd. Notes | | 6.00 | | 10/15/11 | | 100,000 | | 103,375 |
Cisco Systems, | | | | | | | | |
Sr. Unscd. Notes | | 5.25 | | 2/22/11 | | 100,000 | | 100,800 |
Motorola, | | | | | | | | |
Unscd. Notes | | 7.63 | | 11/15/10 | | 50,000 | | 53,549 |
| | | | | | | | 257,724 |
U.S. Government Agencies/ | | | | | | | | |
Mortgage-Backed—44.1% | | | | | | | | |
Federal Home Loan Mortgage Corp.: | | | | | | |
4.50%, 12/1/19 | | | | | | 858,084 | | 832,744 |
5.00%, 11/1/33—7/1/35 | | | | | | 193,734 | | 188,740 |
5.50%, 12/1/18—10/1/21 | | | | | | 725,744 | | 727,813 |
6.00%, 10/1/19—9/1/34 | | | | | | 287,943 | | 292,373 |
6.50%, 8/1/12 | | | | | | 113,042 | | 115,832 |
7.00%, 1/1/36 | | | | | | 210,968 | | 218,931 |
Federal National Mortgage Association: | | | | | | |
4.00%, 3/1/21 | | | | | | 94,021 | | 88,839 |
5.00%, 7/1/19—11/1/34 | | | | | | 1,334,164 | | 1,302,045 |
5.50%, 8/1/19—8/1/35 | | | | | | 784,806 | | 782,238 |
6.00%, 8/1/17 | | | | | | 157,781 | | 160,586 |
Government National Mortgage Association I | | | | | | |
5.00%, 9/15/33—1/15/34 | | | | | | 196,343 | | 191,291 |
Federal Home Loan Mortgage Association: | | | | | | |
5.63%, 2/1/37 | | | | | | 49,966 a | | 50,073 |
5.78%, 2/1/37 | | | | | | 97,268 a | | 98,055 |
5.97%, 1/1/37 | | | | | | 96,352 a | | 97,626 |
Federal National Mortgage Association | | | | | | |
5.82%, 4/1/37 | | | | | | 99,578 a | | 100,275 |
| | | | | | | | 5,247,461 |
U.S. Government Securities—3.3% | | | | | | |
U.S. Treasury Bonds | | | | | | | | |
6.25%, 5/15/30 | | | | | | 295,000 | | 351,142 |
U.S. Treasury Notes | | | | | | | | |
4.88%, 7/31/11 | | | | | | 40,000 | | 40,563 |
| | | | | | | | 391,705 |
Total Bonds and Notes | | | | | | | | |
(cost $10,942,678) | | | | | | | | 11,016,142 |
T h e F u n d 11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | Principal | | |
Short-Term Investments—.4% | | Amount ($) | | Value ($) |
| |
| |
|
U.S. Treasury Bills; | | | | |
4.95%, 6/14/07 | | | | |
(cost $49,698) | | 50,000 d | | 49,713 |
| |
| |
|
|
Other Investment—2.3% | | Shares | | Value ($) |
| |
| |
|
Registered Investment Company; | | | | |
Dreyfus Institutional Preferred | | | | |
Plus Money Market Fund | | | | |
(cost $274,000) | | 274,000 e | | 274,000 |
| |
| |
|
|
Total Investments (cost $11,266,376) | | 95.1% | | 11,339,855 |
|
Cash and Receivables (Net) | | 4.9% | | 590,309 |
|
Net Assets | | 100.0% | | 11,930,164 |
|
a Variable rate security—interest rate subject to periodic change. | | |
b Notional face amount shown. | | | | |
c Security exempt from registration under Rule 144A of the Securities Act of 1933.This security may be resold in |
transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2007, this security |
amounted to $50,077 or .4% of net assets. | | | | |
d All or partially held by a broker as collateral for open financial futures positions. | | |
e Investment in affiliated money market mutual fund. | | |
Portfolio Summary (Unaudited) † | | | | |
|
| | Value (%) | | Value (%) |
| |
| |
|
U.S. Government & Agencies | | 47.4 | | Short-Term/Money Market Investments | | 2.7 |
Corporate Bonds | | 25.2 | | Foreign/Governmental | | .5 |
Asset/Mortgage-Backed | | 19.3 | | | | 95.1 |
|
† Based on net assets. | | | | | | |
See notes to financial statements. | | | | | | |
12
STATEMENT OF FINANCIAL | | FUTURES |
April 30, 2007 (Unaudited) | | |
| | | | | | | | Unrealized |
| | | | Market Value | | | | Appreciation |
| | | | Covered by | | | | (Depreciation) |
| | Contracts | | Contracts ($) | | Expiration | | at 4/30/2007 ($) |
| |
| |
| |
| |
|
Financial Futures Long | | | | | | | | |
Australian 10 Year Bonds | | 7 | | 588,094 | | June 2007 | | (6,644) |
British Long Gilt | | 2 | | 428,648 | | June 2007 | | (6,466) |
U.S. Treasury 2 year Notes | | 3 | | 614,156 | | June 2007 | | (228) |
U.S. Treasury 10 year Notes | | 1 | | 108,328 | | June 2007 | | 138 |
U.S. Treasury 30 year Bonds | | 9 | | 1,005,750 | | June 2007 | | (2,746) |
Financial Futures Short | | | | | | | | |
Japanese 10 Year Bond | | 5 | | (562,236) | | June 2007 | | (755) |
U.S. Treasury 5 year Notes | | 4 | | (423,313) | | June 2007 | | (246) |
| | | | | | | | (16,947) |
|
See notes to financial statements. | | | | | | | | |
STATEMENT OF ASSETS | | AND | | LIABILITIES |
April 30, 2007 (Unaudited) | | | | |
| | Cost | | Value |
| |
| |
|
Assets ($): | | | | |
Investments in securities—See Statement of Investments: | | |
Unaffiliated issuers | | 10,992,376 | | 11,065,855 |
Affiliated issuers | | 274,000 | | 274,000 |
Cash | | | | 62,424 |
Receivable for investment securities sold | | | | 484,023 |
Dividends and interest receivable | | | | 84,131 |
Unrealized appreciation on forward | | | | |
currency exchange contracts—Note 4 | | | | 21,496 |
Receivable for futures variation margin—Note 4 | | 10,914 |
Prepaid expenses | | | | 25,278 |
| | | | 12,028,121 |
| |
| |
|
Liabilities ($): | | | | |
Due to The Dreyfus Corporation and affiliates—Note 3(c) | | 1,469 |
Unrealized depreciation on forward | | | | |
currency exchange contracts—Note 4 | | | | 67,820 |
Payable for investment securities purchased | | 1,346 |
Accrued expenses | | | | 27,322 |
| | | | 97,957 |
| |
| |
|
Net Assets ($) | | | | 11,930,164 |
| |
| |
|
Composition of Net Assets ($): | | | | |
Paid-in capital | | | | 11,747,182 |
Accumulated undistributed investment income—net | | 173,111 |
Accumulated net realized gain (loss) on investments | | (337) |
Accumulated net unrealized appreciation (depreciation) on | | |
investments and foreign currency transactions [including | | |
($16,947) net unrealized (depreciation) on financial futures] | | 10,208 |
| |
|
Net Assets ($) | | | | 11,930,164 |
Net Asset Value Per Share | | | | | | |
| | Class A | | Class C | | Class R |
| |
| |
| |
|
Net Assets ($) | | 10,189,250 | | 1,153,299 | | 587,615 |
Shares Outstanding | | 801,511 | | 91,019 | | 46,186 |
| |
| |
| |
|
Net Asset Value Per Share ($) | | 12.71 | | 12.67 | | 12.72 |
|
See notes to financial statements. | | | | | | |
14
S TAT E M E N T | | O F | | OPERATIONS |
Six Months Ended | | April | | 30, 2007 (Unaudited) |
Investment Income ($): | | |
Income: | | |
Interest | | 296,280 |
Dividends; | | |
Affiliated issuers | | 13,345 |
Total Income | | 309,625 |
Expenses: | | |
Management fee—Note 3(a) | | 32,288 |
Registration fees | | 37,133 |
Auditing fees | | 21,332 |
Shareholder servicing costs—Note 3(c) | | 14,278 |
Prospectus and shareholders’ reports | | 4,655 |
Distribution fees—Note 3(b) | | 4,118 |
Custodian fees—Note 3(c) | | 2,595 |
Directors’ fees and expenses—Note 3(d) | | 267 |
Legal fees | | 65 |
Loan commitment fees—Note 2 | | 3 |
Miscellaneous | | 9,167 |
Total Expenses | | 125,901 |
Less—expense reimbursement from The Dreyfus | | |
Corporation due to undertaking—Note 3(a) | | (69,670) |
Less—reduction in custody fees due to earnings credits—Note 1(c) | | (549) |
Net Expenses | | 55,682 |
Investment Income—Net | | 253,943 |
| |
|
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
Net realized gain (loss) on investments and foreign currency transactions | | 7,618 |
Net realized gain (loss) on financial futures | | 12,766 |
Net realized gain (loss) on forward currency exchange contracts | | 7,496 |
Net Realized Gain (Loss) | | 27,880 |
Net unrealized appreciation (depreciation) on investments | | |
and foreign currency transactions [including ($35,403) | | |
net unrealized (depreciation) on financial futures] | | (83,032) |
Net Realized and Unrealized Gain (Loss) on Investments | | (55,152) |
Net Increase in Net Assets Resulting from Operations | | 198,791 |
|
See notes to financial statements. | | |
T h e F u n d 15
STATEMENT OF CHANGES IN NET ASSETS
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
| | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Operations ($): | | | | |
Investment income—net | | 253,943 | | 259,642 |
Net realized gain (loss) on investments | | 27,880 | | 50,972 |
Net unrealized appreciation | | | | |
(depreciation) on investments | | (83,032) | | 93,240 |
Net Increase (Decrease) in Net Assets | | | | |
Resulting from Operations | | 198,791 | | 403,854 |
| |
| |
|
Dividends to Shareholders from ($): | | | | |
Investment income—net: | | | | |
Class A shares | | (165,599) | | (135,349) |
Class C shares | | (14,909) | | (6,088) |
Class R shares | | (10,131) | | (8,012) |
Net realized gain on investments: | | | | |
Class A shares | | (68,019) | | — |
Class C shares | | (7,649) | | — |
Class R shares | | (3,907) | | — |
Total Dividends | | (270,214) | | (149,449) |
| |
| |
|
Capital Stock Transactions ($): | | | | |
Net proceeds from shares sold: | | | | |
Class A shares | | 222,762 | | 9,647,803 |
Class C shares | | 164,802 | | 963,446 |
Class R shares | | — | | 556,000 |
Dividends reinvested: | | | | |
Class A shares | | 231,190 | | 134,854 |
Class C shares | | 11,680 | | 6,088 |
Class R shares | | 14,037 | | 8,012 |
Cost of shares redeemed: | | | | |
Class A shares | | (210,821) | | (2,513) |
Class C shares | | (158) | | — |
Increase (Decrease) in Net Assets | | | | |
from Capital Stock Transactions | | 433,492 | | 11,313,690 |
Total Increase (Decrease) in Net Assets | | 362,069 | | 11,568,095 |
| |
| |
|
Net Assets ($): | | | | |
Beginning of Period | | 11,568,095 | | — |
End of Period | | 11,930,164 | | 11,568,095 |
Undistributed investment income—net | | 173,111 | | 109,807 |
16
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
| | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Capital Share Transactions: | | | | |
Class A | | | | |
Shares sold | | 17,575 | | 771,527 |
Shares issued for dividends reinvested | | 18,334 | | 10,881 |
Shares redeemed | | (16,604) | | (202) |
Net Increase (Decrease) in Shares Outstanding | | 19,305 | | 782,206 |
| |
| |
|
Class C | | | | |
Shares sold | | 12,949 | | 76,664 |
Shares issued for dividends reinvested | | 927 | | 492 |
Shares redeemed | | (13) | | — |
Net Increase (Decrease) in Shares Outstanding | | 13,863 | | 77,156 |
| |
| |
|
Class R | | | | |
Shares sold | | — | | 44,426 |
Shares issued for dividends reinvested | | 1,113 | | 647 |
Net Increase (Decrease) in Shares Outstanding | | 1,113 | | 45,073 |
|
a From March 15, 2006 (commencement of operations) to October 31, 2006. | | |
See notes to financial statements. | | | | |
The Fund 17
FINANCIAL HIGHLIGHTS
The following tables describes the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
| | | | Six Months Ended | | |
| | | | April 30, 2007 | | Year Ended |
Class A Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 12.79 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .28 | | .32 |
Net realized and unrealized | | | | |
gain (loss) on investments | | (.06) | | .16 |
Total from Investment Operations | | .22 | | .48 |
Distributions: | | | | |
Dividends from investment income—net | | (.21) | | (.19) |
Dividends from net realized gain on investments | | (.09) | | — |
Total Distributions | | (.30) | | (.19) |
Net asset value, end of period | | 12.71 | | 12.79 |
| |
| |
|
Total Return (%) c,d | | 1.72 | | 3.86 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets e | | 2.07 | | 3.32 |
Ratio of net expenses to average net assets e | | .89 | | .88 |
Ratio of net investment income | | | | |
to average net assets e | | 4.38 | | 3.99 |
Portfolio Turnover Rate d | | 56.08 | | 104.30f |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 10,189 | | 10,006 |
|
a | | From March 15, 2006 (commencement of operations) to October 31, 2006. | | |
b | | Based on average shares outstanding at each month end. | | |
c | | Exclusive of sales charge. | | | | |
d | | Not annualized. | | | | |
e | | Annualized. | | | | |
f | | The portfolio turnover rate excluding mortgage dollar roll transactions for the period ended October 31, 2006 was |
| | 101.24%. | | | | |
See notes to financial statements. | | | | |
18
| | | | Six Months Ended | | |
| | | | April 30, 2007 | | Year Ended |
Class C Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 12.77 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .23 | | .25 |
Net realized and unrealized | | | | |
gain (loss) on investments | | (.06) | | .17 |
Total from Investment Operations | | .17 | | .42 |
Distributions: | | | | |
Dividends from investment income—net | | (.18) | | (.15) |
Dividends from net realized gain on investments | | (.09) | | — |
Total Distributions | | (.27) | | (.15) |
Net asset value, end of period | | 12.67 | | 12.77 |
| |
| |
|
Total Return (%) c,d | | 1.33 | | 3.41 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets e | | 2.85 | | 4.12 |
Ratio of net expenses to average net assets e | | 1.64 | | 1.61 |
Ratio of net investment income | | | | |
to average net assets e | | 3.64 | | 3.28 |
Portfolio Turnover Rate d | | 56.08 | | 104.30f |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 1,153 | | 985 |
|
a | | From March 15, 2006 (commencement of operations) to October 31, 2006. | | |
b | | Based on average shares outstanding at each month end. | | |
c | | Exclusive of sales charge. | | | | |
d | | Not annualized. | | | | |
e | | Annualized. | | | | |
f | | The portfolio turnover rate excluding mortgage dollar roll transactions for the period ended October 31, 2006 was |
| | 101.24%. | | | | |
See notes to financial statements. | | | | |
The Fund 19
FINANCIAL HIGHLIGHTS (continued)
| | | | Six Months Ended | | |
| | | | April 30, 2007 | | Year Ended |
Class R Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 12.80 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .29 | | .33 |
Net realized and unrealized | | | | |
gain (loss) on investments | | (.06) | | .17 |
Total from Investment Operations | | .23 | | .50 |
Distributions: | | | | |
Dividends from investment income—net | | (.22) | | (.20) |
Dividends from net realized gain on investments | | (.09) | | — |
Total Distributions | | (.31) | | (.20) |
Net asset value, end of period | | 12.72 | | 12.80 |
| |
| |
|
Total Return (%) c | | 1.83 | | 4.04 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets d | | 1.83 | | 3.08 |
Ratio of net expenses to average net assets d | | .64 | | .63 |
Ratio of net investment income | | | | |
to average net assets d | | 4.63 | | 4.25 |
Portfolio Turnover Rate c | | 56.08 | | 104.30e |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 588 | | 577 |
|
a | | From March 15, 2006 (commencement of operations) to October 31, 2006. | | |
b | | Based on average shares outstanding at each month end. | | |
c | | Not annualized. | | | | |
d | | Annualized. | | | | |
e | | The portfolio turnover rate excluding mortgage dollar roll transactions for the period ended October 31, 2006 was |
| | 101.24%. | | | | |
See notes to financial statements. | | | | |
20
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus Premier Total Return Advantage Fund (the “fund”) is a separate diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering thirteen series, including the fund. The fund’s investment objective seeks to maximize total return through capital appreciation and income. The Dreyfus Corporation (the “Manager” or “Dreyfus”) serves as the fund’s investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation (“Mellon Financial”).
On May 24, 2007, the shareholders of Mellon Financial and The Bank of New York Company, Inc. approved the proposed merger of the two companies.The new company will be called The Bank of New York Mellon Corporation. As part of this transaction, Dreyfus would become a wholly-owned subsidiary of The Bank of New York Mellon Corporation.The transaction is subject to certain regulatory approvals, as well as other customary conditions to closing. Subject to such approvals and the satisfaction of the other conditions, Mellon Financial and The Bank of New York Company, Inc. expect the transaction to be completed in the third quarter of 2007.
Dreyfus Service Corporation (“the Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares. The fund is authorized to issue 300 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 R (100 million shares authorized). Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class R 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 and certain voting
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
As of April 30, 2007, MBC Investments Corp., an indirect subsidiary of Mellon Financial, held 748,110, 41,352 and 41,645 of the outstanding Class A, Class C and Class R shares of the fund, respectively.
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 fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: Investments in securities excluding short-term investments (other than U.S. Treasury Bills), financial futures and forward currency exchange contracts are valued each business day by an independent pricing service (the “Service”) approved by the Board of Directors. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are valued as determined by the Service, based on methods which include consideration of: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Restricted securities,
22
as well as securities or other assets for which recent market quotations are not readily available, that are not valued by a pricing service approved by the Board of Directors, or are determined by the fund not to reflect accurately fair value, are valued at fair value as determined in good faith under the direction of the Board of Directors. The factors that may be considered when fair valuing a security include 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. Short-term investments, excluding U.S. Treasury Bills, are carried at amortized cost, which approximates value. Registered open-end investment companies that are not traded on an exchange are valued at their net asset value. Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange. Forward currency exchange contracts are valued at the forward rate.
The Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.
(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.
T h e F u n d 23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized on securities transactions 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 in securities, resulting from changes in exchange rates. Such gains and losses are included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss 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 has an arrangement with the custodian bank whereby the fund receives earnings credits from the custodian when positive cash balances are maintained, which are used to offset custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
(d) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as “affiliated” in the Act.
(e) Dividends to shareholders: It is the policy of the fund to declare and pay dividends from investment income-net, quarterly. Dividends from net realized capital gain, 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 gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.
24
On April 30, 2007, the Board of Directors declared a cash dividend of $.179,$.148 and $.189 per share from undistributed investment income-net for Class A,Class C and Class R,respectively,payable on May 1,2007 (ex-dividend date), to shareholders of record as of the close of business on April 30, 2007.
(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
The FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year.Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.
The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2006 were as follows: ordinary income $149,449.The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $350 million redemption credit facility (the “Facility”) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees
The Fund 25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
on its pro rata portion of the Facility. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. During the period ended April 30, 2007, the fund did not borrow under the Facility.
NOTE 3—Management Fee and Other Transactions With |
Affiliates: |
(a) Pursuant to a Management Agreement (“Agreement”) with the Manager, the management fee is computed at the annual rate of .55% of the value of the fund’s average daily net assets and is payable monthly. The Manager has undertaken through October 31, 2007, that, if the fund’s aggregate expenses, exclusive of taxes, brokerage fees, Rule 12b-1 distribution plan fees, interest expense, commitment fees, shareholder services plan fees and extraordinary expenses, exceed an annual rate of .80% of the value of the fund’s average daily net assets, the fund may deduct from the payment to be made to the Manager under the Agreement, or the Manager will bear, such excess expense.The Manager had undertaken, from November 1, 2006 through April 30, 2007, that, if the fund’s aggregate expenses, exclusive of certain expenses as described above, exceed an annual rate of .65% of the value of the fund’s average daily assets, the fund may deduct from the payment to be made to the Manager under the Agreement, or the manager will bear, such excess expense. The expense reimbursement, pursuant to the undertaking, amounted to $69,670 during the period ended April 30, 2007.
(b) Under the Distribution Plan (the “Plan”) adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of the average daily net assets of Class C shares. During the period ended April 30, 2007, Class C shares were charged $4,118 pursuant to the 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
26
and other information, and services related to the maintenance of shareholder accounts.The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services.The Distributor determines the amounts to be paid to Service Agents. During the period ended April 30, 2007, Class A and Class C shares were charged $12,581 and $1,373, respectively, pursuant to the Shareholder Services Plan.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended April 30, 2007, the fund was charged $183 pursuant to the transfer agency agreement.
The fund compensates Mellon Bank, N.A., an affiliate of the Manager, under a custody agreement for providing custodial services for the fund. During the period ended April 30, 2007, the fund was charged $2,595 pursuant to the custody agreement.
During the period ended April 30, 2007, the fund was charged $2,044 for services performed by the Chief Compliance Officer.
The components of Due from The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $5,392,Rule 12b-1 distribution plan fees $709,shareholder services plan fees $2,331, custodian fees $1,647 chief compliance officer fees $3,407 and transfer agency per account fees $50, which are offset against an expense reimbursement currently in effect in the amount of $12,067.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
(e) Pursuant to an exemptive order from the SEC, the fund may invest its available cash balances in affiliated money market mutual funds. Management fees of the underlying money market mutual funds have been waived by the Manager.
T h e F u n d 27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities, financial futures and forward currency exchange contracts during the period ended April 30, 2007, amounted to $6,345,541 and $6,242,161, respectively.
A mortgage dollar roll transaction involves a sale by the fund of mortgage related securities that it holds with an agreement by the fund to repurchase similar securities at an agreed upon price and date. The securities purchased will bear the same interest rate as those sold, but generally will be collateralized by pools of mortgages with different prepayment histories than those securities sold.
The fund may invest in financial futures contracts in order to gain exposure to or protect against changes in the market.The fund is exposed to market risk as a result of changes in the value of the underlying financial instruments. Investments in financial futures require the fund to “mark to market” on a daily basis, which reflects the change in market value of the contracts at the close of each day’s trading. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses.When the contracts are closed, the fund recognizes a realized gain or loss.These investments require initial margin deposits with a broker, which consist of cash or cash equivalents.The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Contracts open April 30, 2007, are set forth in the Statement of Financial Futures.
The fund enters into forward currency exchange contracts to gain exposure to foreign currency, hedge its exposure against changes in exchange rates on its foreign portfolio holdings and to settle foreign currency transactions. When executing forward currency exchange 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 currency exchange contracts, the fund would incur a loss if the
28
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 currency exchange contracts, the fund would incur 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.The fund is also exposed to credit risk associated with counterparty nonperformance on these forward currency exchange contracts which is typically limited to the unrealized gain on each open contract.The following summarizes open forward currency exchange contracts at April 30, 2007:
| | Foreign | | | | | | Unrealized |
Forward Currency | | Currency | | | | | | Appreciation |
Exchange Contracts | | Amounts | | Cost ($) | | Value ($) (Depreciation) ($) |
| |
| |
| |
|
Purchases: | | | | | | | | |
British Pound, | | | | | | | | |
expiring 6/14/2007 | | 170,000 | | 329,883 | | 339,885 | | 10,002 |
Japanese Yen, | | | | | | | | |
expiring 6/14/2007 | | 57,577,000 | | 493,920 | | 484,431 | | (9,489) |
New Zealand Dollar, | | | | | | | | |
expiring 6/14/2007 | | 205,000 | | 140,443 | | 151,841 | | 11,398 |
Swedish Krona, | | | | | | | | |
expiring 6/14/2007 | | 64,000 | | 9,466 | | 9,562 | | 96 |
Sales: | | | | Proceeds ($) | | | | |
Australian Dollar, | | | | | | | | |
expiring 6/14/2007 | | 507,000 | | 397,977 | | 421,535 | | (23,558) |
Canadian Dollar, | | | | | | | | |
expiring 6/14/2007 | | 237,000 | | 202,488 | | 214,723 | | (12,235) |
Euro, expiring | | | | | | | | |
6/14/2007 | | 274,000 | | 363,261 | | 374,536 | | (11,275) |
Norwegian Krone, | | | | | | | | |
expiring 6/14/2007 | | 1,524,000 | | 247,949 | | 256,559 | | (8,610) |
Swiss Franc, | | | | | | | | |
expiring 6/14/2007 | | 471,000 | | 389,064 | | 391,717 | | (2,653) |
Total | | | | | | | | (46,324) |
T h e F u n d 29
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
At April 30, 2007, accumulated net unrealized appreciation on investments was $73,479, consisting of $76,051 gross unrealized appreciation and $2,572 gross unrealized depreciation.
At April 30, 2007, 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).
NOTE 5—Subsequent Event:
The fund’s Board of Directors approved the redesignation of the fund’s Class R shares as Class I shares, effective June 1, 2007. The description of the eligibility requirements for Class I shares remains the same as it was for Class R shares.
30
INFORMATION ABOUT THE REVIEW AND APPROVAL |
OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board held on March 7 and 8, 2007, the Board unanimously approved the continuation of the fund’s Management Agreement with Dreyfus for a one-year term ending March 30, 2008. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of Dreyfus. In approving the continuance of the Management Agreement, the Board considered all factors that they believed to be relevant, including, among other things, the factors discussed below.
Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members received a presentation from representatives of Dreyfus regarding services provided to the fund and other funds in the Dreyfus fund complex, and discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement. Dreyfus’s representatives reviewed the fund’s distribution of accounts and the relationships Dreyfus has with various intermediaries and the different needs of each. Dreyfus’s representatives noted the various distribution channels for the fund as well as the diverse methods of distribution among other funds in the Dreyfus fund complex, and Dreyfus’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund. Dreyfus also provided the number of accounts investing in the fund, as well as the fund’s asset size.
The Board members also considered Dreyfus’s research and portfolio management capabilities and Dreyfus’s oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements.The Board members also considered Dreyfus’s extensive administrative, accounting and compliance infrastructure.
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance, management fee and expense ratio, placing significant emphasis
The Fund 31
INFORMATION ABOUT THE | | REVIEW AND | | APPROVAL | | OF THE |
FUND’S MANAGEMENT | | AGREEMENT | | (Unaudited) | | (continued) |
on comparative data supplied by Lipper, Inc., an independent provider of mutual fund data, including contractual and actual (net of fee waivers and expense reimbursements) management fees, operating expense components and total return performance.The fund’s performance was compared to that of a Performance Universe, consisting of all funds with the same Lipper classification/objective, and a Performance Group, consisting of comparable funds chosen by Lipper based on guidelines previously approved by the Board. Similarly, the fund’s contractual and actual management fee and operating expenses were compared to those of an Expense Universe, consisting of funds with the same or similar Lipper classification/objective, and an Expense Group, consisting comparable funds chosen by Lipper based on guidelines previously approved by the Board.As part of its review of expenses, the Board also considered other fund expenses, such as transfer agent fees, custody fees, 12b-1 or non-12b-1 service fees (if any), and other non-management fees, as well as any waivers or reimbursements of fees and expenses.
In its review of performance, the Board noted that the fund’s average annual total return ranked in the second quintile of its Performance Group and its Performance Universe for the one-year period ended December 31, 2006.
In its review of the fund’s management fee and operating expenses, the Board examined the range of management fees and expense ratios of the funds in the Expense Group and Expense Universe, noting, among other things, that Dreyfus waived the fund’s management fee, and that the fund’s total expense ratio was in the second quintile of the Expense Group and Expense Universe (the first quintile represents the funds with the lowest fees).
Representatives of Dreyfus reviewed with the Board members the fees paid to Dreyfus or its affiliates by mutual funds and/or separate accounts managed by Dreyfus with similar investment objectives, policies and strategies as the fund (the “Similar Accounts”), and explained the nature of the Similar Accounts and the differences, from Dreyfus’s perspective, as applicable, in providing services to the Similar Accounts
32
as compared to the fund. Dreyfus’s representatives also reviewed the costs associated with distribution through intermediaries. The Board analyzed differences in fees paid to Dreyfus and discussed the relationship of the advisory fees paid in light of Dreyfus’s performance, and the services provided.The Board members considered the relevance of the fee information provided for the Similar Accounts managed by Dreyfus, to evaluate the appropriateness and reasonableness of the fund’s management fees.The Board acknowledged that differences in fees paid by the Similar Accounts seemed to be consistent with the services provided.
Analysis of Profitability and Economies of Scale. Dreyfus’s representatives reviewed the dollar amount of expenses allocated and profit received by Dreyfus and the method used to determine such expenses and profit. The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund investors. The Board members also considered potential benefits to Dreyfus from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s investments.
It was noted that the Board members should consider Dreyfus’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by Dreyfus, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that Dreyfus may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within ranges determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided. The Board also noted the fee waiver and expense reimbursement arrangements in place for the fund and its effect on Dreyfus’s profitability.
T h e F u n d 33
INFORMATION ABOUT THE | | REVIEW AND | | APPROVAL | | OF THE |
FUND’S MANAGEMENT | | AGREEMENT | | (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 continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.
- The Board concluded that the nature, extent and quality of the services provided by Dreyfus are adequate and appropriate.
- The Board generally was satisfied with the fund’s performance.
- The Board concluded that the fee paid by the fund to Dreyfus was reasonable in light of the services provided, comparative performance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by Dreyfus from its relationship with the fund.
- The Board determined that the economies of scale which may accrue to Dreyfus and its affiliates in connection with the management of the fund had been adequately considered by Dreyfus in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that continuation of the fund’s Management Agreement was in the best interests of the fund and its shareholders.
34
NOTES
For More Information
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Telephone Call your financial representative or 1-800-554-4611
Mail | | The Dreyfus Premier 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 1-202-551-8090.
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 12-month period ended June 30, 2006, 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 1-800-645-6561.
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© 2007 Dreyfus Service Corporation |
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Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
| | Contents |
|
| | THE FUND |
| |
|
2 | | A Letter from the CEO |
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 |
39 | | Statement of Financial Futures |
40 | | Statement of Assets and Liabilities |
41 | | Statement of Operations |
42 | | Statement of Changes in Net Assets |
44 | | Financial Highlights |
48 | | Notes to Financial Statements |
58 | | Information About the Review and Approval |
| | of the Fund’s Management Agreement |
| | FOR MORE INFORMATION |
| |
|
| | Back Cover |
The Fund
Global Alpha Fund
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A LETTER FROM THE CEO
Dear Shareholder:
We are pleased to present this semiannual report for Global Alpha Fund, covering the six-month period from November 1, 2006, through April 30, 2007.
Heightened volatility in global stock markets has suggested that investors’ appetite for risk is waning. Near the end of February 2007, a sudden and sharp decline in the Shanghai stock market shook equity markets worldwide, including the United States.The Shanghai market apparently reacted to fears that China would need to take steps to reduce the developing nation’s unsustainably high growth rate by raising their short-term rates. Although most international markets subsequently rebounded by the end of April, investors remained cautious with regard to risks posed by a potential interruption of the current global economic expansion.
At the same time, the U.S. dollar has continued to decline relative to many other currencies, including the euro and British pound, making investments denominated in foreign currencies more valuable for U.S. residents.A stubborn U.S. trade deficit and higher interest rates in overseas markets have resulted in a flow of global capital away from U.S. markets and toward those with higher potential returns. As always, your financial advisor can help determine the appropriate investments for you and position your investment portfolio for exposure to these markets.
For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.
Thank you for your continued confidence and support.
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2
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DISCUSSION OF FUND PERFORMANCE
Helen Potter, Portfolio Manager
How did Global Alpha Fund perform relative to its benchmark?
For the six-month period ended April 30, 2007, the fund produced total returns of 6.15% for Class A shares, 5.87% for Class C shares, 6.33% for Class R shares and 6.03% for Class T shares.1 In comparison, the fund’s benchmark, a hybrid index comprised of 60% Morgan Stanley Capital International World Index (half-hedged) and 40% Citigroup World Government Bond Index 1+ World Index (half-hedged), produced a total return of 7.53% for the reporting period.2 Separately, the Morgan Stanley Capital International World Index (half-hedged) produced a total return of 11.07%, and the Citigroup World Government Bond Index 1+ World Index (half-hedged) produced a 2.32% total return for the same period.
Despite the headwind a slowing U.S. economy placed on global securities markets, international equities generally advanced amid accelerated growth rates in a number of geographic regions, vigorous mergers-and-acquisition (“M&A”) activity and unexpectedly strong corporate profit growth. The fund’s returns lagged its blended benchmark, primarily due to its exposure to U.S. equities and the U.S. dollar.
Effective 6/1/07, Class R shares will be renamed Class I shares.
What is the fund’s investment approach?
The fund seeks total return through investments in securities and instruments that provide exposure to global stock, bond and currency markets.The strategy utilizes a proprietary, fundamentals-based quantitative model to construct and optimally integrate a diverse set of four alpha-generating signals: stock markets vs. bond markets within each country, country allocation among equity markets, country allocation among sovereign bond markets, and currency allocation. Our quantitative investment approach is designed to identify and exploit these relative misvaluations across and within major developed capital markets such as the United States, Canada, Japan,Australia and Western Europe.
T h e F u n d 3
DISCUSSION OF FUND PERFORMANCE (continued)
What other factors influenced the fund’s performance?
Accelerating economic growth across numerous geographic regions fueled gains in international equity markets. In Europe, falling unemployment rates, strong production levels, impressive corporate earnings growth and ongoing M&A activity helped support stock prices. However, U.S. equities did not keep pace as softening housing markets, lackluster consumer spending and persistent inflationary pressures limited gains for domestic stocks. While the movement of U.S. and Japanese interest rates remained a preoccupation of investors, this concern apparently did not dampen overall market sentiment.
In this environment,we believed global equities on the whole were more attractive investments than global bonds. Therefore, the fund generally maintained heavier exposure to global equities and an underweighted position in global bonds compared to its benchmark. Although global bond markets also produced positive results,the fund’s emphasis on global equity markets proved advantageous to its relative performance. Europe led international equity indices higher during the reporting period, with various Scandinavian and German companies delivering notably strong returns. Swiss equities also were attractive according to our quantitative analysis, spurring the fund to invest more heavily in this market. This created a substantially positive contribution to the fund’s relative performance as Swiss stocks, on average, outperformed global averages.
Nevertheless, some European countries faltered. For example, the United Kingdom’s stock market produced a positive return overall, but it lagged European averages. However, the fund held an underweighted position in the United Kingdom, an investment decision that proved beneficial to its relative return.
Languishing economic growth and concerns over sub-prime mortgage delinquencies in the United States caused U.S. stocks to underperform global stock market averages, and the fund’s exposure to U.S. equities detracted from its relative performance. Likewise, the fund’s heavy exposure to stocks in Spain, which posted subpar returns relative to Europe overall, also proved detrimental to the fund’s results.
Among currencies, the fund’s relatively heavy allocation to the New Zealand dollar, which appreciated against the U.S. dollar, helped boost the fund’s relative performance during the reporting period. However, our allocation strategy among the U.S.,Australian and Canadian dollars
4
produced a negative relative impact.When the investments were made early in the reporting period, our quantitative models indicated that the U.S. dollar was likely to outperform the Australian and Canadian dollars as both foreign currencies appeared to be overvalued. However, the U.S. dollar lost ground during the reporting period, allowing both the Australian and Canadian dollars to rise in comparative value.
What is the fund’s current strategy?
The alpha signals generated by our quantitative models have continued to suggest an overweighted allocation to U.S. stocks and underweighted exposure to U.K. equities. In addition, our analysis has shown that U.S. and Japanese bonds remained relatively unattractive as of the reporting period’s end. However, the Japanese yen, which may be undervalued, may warrant increased investment.
More generally, we have kept the fund’s strategy clearly focused on the long-term investment horizon, making adjustments based not on short-term market movements, but for the long-term value of the portfolio.We have employed our four alpha signals in building what we believe to be a well-positioned investment portfolio, allocating the fund’s assets among stock markets, bond markets, country-specific markets and sovereign bonds and currencies in keeping with our quantitative models’ signals.
May 15, 2007
| | Investing in foreign companies involves special risks, including changes in currency rates, |
| | political, economic and social instability, a lack of comprehensive company information, |
| | differing auditing and legal standards, and less market liquidity. An investment in this fund |
| | should be considered only as a supplement to an overall investment program. |
1 | | Total return includes reinvestment of dividends and any capital gains paid, and does not take into |
| | consideration the maximum initial sales charges in the case of Class A or Class T shares, or the |
| | applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. |
| | Had these charges been reflected, returns would have been lower. Past performance is no guarantee |
| | of future results. Share price, yield and investment return fluctuate such that upon redemption, |
| | fund shares may be worth more or less than their original cost. Return figures provided reflect the |
| | absorption of certain fund expenses by The Dreyfus Corporation in effect through October 31, |
| | 2007, 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 | | SOURCES: Morgan Stanley Capital International and Citigroup – Reflects reinvestment of net |
| | dividends and, where applicable, capital gain distributions.The Morgan Stanley Capital |
| | International (MSCI) World Index is an unmanaged index of global stock market performance, |
| | including the United States, Canada, Europe, Australia, New Zealand and the Far East.The |
| | Citigroup World Government Bond Index includes the 22 government bond markets. |
T h e F u n d 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 Alpha Fund from November 1, 2006 to April 30, 2007. 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 April 30, 2007 | | | | |
| | Class A | | Class C | | Class R | | Class T |
| |
| |
| |
| |
|
Expenses paid per $1,000 † | | $ 7.67 | | $ 11.49 | | $ 6.39 | | $ 8.94 |
Ending value (after expenses) | | $1,061.50 | | $1,058.70 | | $1,063.30 | | $1,060.30 |
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 April 30, 2007 |
| | Class A | | Class C | | Class R | | Class T |
| |
| |
| |
| |
|
Expenses paid per $1,000 † | | $ 7.50 | | $ 11.23 | | $ 6.26 | | $ 8.75 |
Ending value (after expenses) | | $1,017.36 | | $1,013.64 | | $1,018.60 | | $1,016.12 |
|
† Expenses are equal to the fund’s annualized expense ratio of 1.50% for Class A, 2.25% for Class C, 1.25% for |
Class R and 1.75% for Class T, multiplied by the average account value over the period, multiplied by 181/365 (to |
reflect the one-half year period). | | | | | | | | |
6
STATEMENT OF INVESTMENTS |
April 30, 2007 (Unaudited) |
Common Stocks—26.2% | | Shares | | Value ($) |
| |
| |
|
Austria—.1% | | | | |
Andritz | | 82 | | 21,286 |
Boehler-Uddeholm | | 176 | | 17,349 |
Erste Bank der Oesterreichischen Sparkassen | | 645 | | 51,953 |
IMMOEAST | | 850 a | | 12,064 |
IMMOFINANZ | | 873 a | | 14,249 |
Meinl European Land | | 661 a | | 19,161 |
OMV | | 687 | | 43,879 |
Raiffeisen International Bank-Holding | | 88 | | 12,350 |
Telekom Austria | | 1,425 | | 40,490 |
Verbund-Oesterreichische Elektrizitaetswirtschafts, Cl. A | | 220 | | 11,382 |
Voestalpine | | 227 | | 15,412 |
Wiener Staedtische Versicherung | | 168 | | 12,645 |
Wienerberger | | 217 | | 15,726 |
| | | | 287,946 |
Belgium—.2% | | | | |
AGFA-Gevaert | | 488 | | 11,848 |
Bekaert | | 140 | | 19,966 |
Belgacom | | 679 | | 29,987 |
Colruyt | | 60 | | 14,189 |
Delhaize Group | | 382 | | 36,822 |
Dexia | | 2,157 | | 70,739 |
Fortis | | 4,037 | | 182,695 |
Groupe Bruxelles Lambert | | 315 | | 38,252 |
InBev | | 660 | | 51,702 |
KBC Groep | | 609 | | 81,011 |
Mobistar | | 137 | | 11,910 |
Solvay | | 235 | | 37,360 |
UCB | | 446 | | 26,642 |
Umicore | | 75 | | 15,203 |
| | | | 628,326 |
Bermuda—.3% | | | | |
Accenture, Cl. A | | 2,670 | | 104,397 |
ACE | | 1,520 | | 90,379 |
Axis Capital Holdings | | 630 | | 23,373 |
Everest Re Group | | 300 | | 30,192 |
Ingersoll-Rand, Cl. A | | 1,400 | | 62,510 |
T h e F u n d 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Bermuda (continued) | | | | |
Marvell Technology Group | | 2,140 a | | 34,518 |
Nabors Industries | | 1,370 a | | 44,004 |
PartnerRe | | 260 | | 18,725 |
RenaissanceRe Holdings | | 310 | | 16,787 |
Tyco International | | 9,200 | | 300,196 |
Weatherford International | | 1,550 a | | 81,360 |
XL Capital, Cl. A | | 820 | | 63,944 |
| | | | 870,385 |
Canada—.0% | | | | |
Tim Hortons | | 880 | | 27,746 |
Cayman Islands—.0% | | | | |
Garmin | | 540 | | 31,423 |
Seagate Technology | | 2,360 | | 52,274 |
| | | | 83,697 |
Denmark—.1% | | | | |
AP Moller—Maersk | | 5 a | | 57,052 |
Carlsberg, Cl. B | | 121 | | 13,629 |
Coloplast, Cl. B | | 131 | | 11,373 |
Danisco | | 134 | | 10,872 |
Danske Bank | | 1,527 | | 71,877 |
DSV | | 63 | | 13,062 |
FLSmidth and Co. | | 195 | | 14,893 |
GN Store Nord | | 808 a | | 9,323 |
Jyske Bank | | 174 a | | 14,086 |
NKT Holding | | 197 | | 17,463 |
Novo Nordisk, Cl. B | | 795 | | 78,191 |
Novozymes, Cl. B | | 140 | | 14,770 |
Sydbank | | 270 | | 15,231 |
Topdanmark | | 97 a | | 19,187 |
TrygVesta | | 215 | | 18,370 |
Vestas Wind Systems | | 823 a | | 54,114 |
William Demant Holding | | 207 a | | 20,132 |
| | | | 453,625 |
Finland—.2% | | | | |
Amer Sports, Cl. A | | 532 | | 11,842 |
Elisa | | 442 | | 12,951 |
Fortum | | 1,473 | | 45,935 |
8
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Finland (continued) | | | | |
KCI Konecranes OYJ | | 541 | | 19,654 |
Kesko, Cl. B | | 232 | | 16,214 |
Kone, Cl. B | | 229 | | 13,929 |
Metso | | 595 | | 32,903 |
Neste Oil | | 363 | | 12,990 |
Nokia | | 14,422 | | 367,274 |
Nokian Renkaat | | 563 | | 17,403 |
OKO Bank, Cl. A | | 1,013 | | 19,355 |
Orion, Cl. B | | 731 | | 17,459 |
Outokumpu | | 334 | | 11,236 |
Rautaruukki | | 300 | | 16,410 |
Sampo, Cl. A | | 1,595 | | 49,979 |
Sanoma-WSOY | | 622 | | 18,505 |
Stora Enso, Cl. R | | 2,237 | | 41,154 |
Tietoenator | | 413 | | 13,178 |
UPM-Kymmene | | 1,771 | | 43,941 |
Uponor | | 460 | | 19,179 |
Wartsila, Cl. B | | 234 | | 15,798 |
YIT | | 458 | | 16,451 |
| | | | 833,740 |
Greece—.1% | | | | |
Alpha Bank | | 1,387 | | 42,590 |
Coca-Cola Hellenic Bottling | | 313 | | 13,567 |
Cosmote Mobile Communications | | 414 | | 13,074 |
EFG Eurobank Ergasias | | 970 | | 40,641 |
Hellenic Petroleum | | 1,214 | | 18,424 |
Hellenic Telecommunications Organization | | 1,229 a | | 35,558 |
National Bank of Greece | | 1,467 | | 82,646 |
OPAP | | 890 | | 33,888 |
Piraeus Bank | | 492 | | 17,955 |
Public Power | | 445 | | 11,733 |
Titan Cement | | 222 | | 12,725 |
| | | | 322,801 |
Ireland—.1% | | | | |
Allied Irish Banks | | 3,347 | | 101,817 |
Bank of Ireland | | 3,626 | | 77,940 |
C & C Group | | 1,849 | | 31,558 |
T h e F u n d 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Ireland (continued) | | | | |
CRH | | 2,042 | | 89,568 |
DCC | | 382 | | 12,825 |
Elan | | 980 a | | 13,682 |
Grafton Group (Units) | | 791 a | | 11,815 |
IAWS Group | | 694 | | 17,304 |
Independent News & Media | | 3,203 | | 15,081 |
Kerry Group, Cl. A | | 483 | | 14,674 |
Kingspan Group | | 514 | | 14,603 |
| | | | 400,867 |
Japan—6.3% | | | | |
77 Bank | | 3,000 | | 19,757 |
Acom | | 870 | | 31,523 |
Aderans | | 800 | | 17,941 |
Advantest | | 1,200 | | 53,722 |
Aeon | | 4,500 | | 82,842 |
Aiful | | 1,150 | | 28,773 |
Aisin Seiki | | 1,500 | | 49,705 |
Ajinomoto | | 5,000 | | 61,797 |
All Nippon Airways | | 8,000 | | 31,128 |
Alps Electric | | 2,900 | | 30,188 |
Amada | | 3,000 | | 33,689 |
Aoyama Trading | | 600 | | 18,426 |
Asahi Breweries | | 3,300 | | 53,985 |
Asahi Glass | | 6,000 | | 81,336 |
Asatsu-DK | | 600 | | 19,179 |
Ashai Kasei | | 8,000 | | 56,901 |
Astellas Pharma | | 3,900 | | 171,332 |
Autobacs Seven | | 500 | | 17,405 |
Bank of Kyoto | | 3,000 | | 34,894 |
Bank of Yokohama | | 8,000 | | 59,111 |
Benesse | | 800 | | 29,923 |
Bridgestone | | 4,300 | | 87,616 |
Canon | | 8,000 | | 451,864 |
Casio Computer | | 2,500 | | 50,730 |
Central Japan Railway | | 12 | | 132,547 |
Chiba Bank | | 6,000 | | 50,006 |
Chiyoda | | 2,000 | | 46,274 |
10
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
Chubu Electric Power | | 5,100 | | 164,303 |
Chugai Pharmaceutical | | 2,300 | | 58,893 |
Circle K Sunkus | | 1,100 | | 18,962 |
Citizen Holdings | | 3,800 | | 34,119 |
COMSYS Holdings | | 3,000 | | 33,689 |
Credit Saison | | 1,500 | | 42,927 |
CSK HOLDINGS | | 700 | | 27,179 |
Dai Nippon Printing | | 4,000 | | 63,964 |
Daicel Chemical Industries | | 3,000 | | 20,384 |
Daido Steel | | 5,000 | | 29,120 |
Daifuku | | 1,000 | | 12,719 |
Daiichi Sankyo | | 5,400 | | 161,767 |
Daikin Industries | | 1,600 | | 54,358 |
Daimaru | | 3,000 | | 35,873 |
Dainippon Ink and Chemicals | | 8,000 | | 30,191 |
Daito Trust Construction | | 400 | | 18,443 |
Daiwa House Industry | | 4,000 | | 63,194 |
Daiwa Securities Group | | 9,000 | | 101,443 |
Denki Kagaku Kogyo | | 8,000 | | 35,145 |
Denso | | 3,400 | | 120,915 |
Dentsu | | 18 | | 51,362 |
Dowa Holdings | | 3,000 | | 28,467 |
East Japan Railway | | 25 | | 203,548 |
Eisai | | 1,700 | | 81,084 |
Electric Power Development | | 1,100 | | 48,416 |
Elpida Memory | | 400 a | | 17,070 |
FamilyMart | | 1,200 | | 30,526 |
Fanuc | | 1,200 | | 118,288 |
Fast Retailing | | 200 | | 13,807 |
Fuji Electric Holdings | | 7,000 | | 32,802 |
FUJIFILM Holdings | | 3,600 | | 150,019 |
Fujikura | | 5,000 | | 32,342 |
Fujitsu | | 13,000 | | 82,239 |
Fukuoka Financial Group | | 6,000 | | 45,688 |
Furukawa Electric | | 3,000 | | 18,476 |
Glory | | 1,100 | | 22,045 |
Gunma Bank | | 5,000 | | 33,471 |
T h e F u n d 11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
Hankyu Hashin Holdings | | 9,000 | | 51,437 |
Haseko | | 8,500 a | | 28,380 |
Hirose Electric | | 300 | | 36,676 |
Hitachi | | 24,000 | | 183,557 |
Hitachi Construction Machinery | | 1,200 | | 37,856 |
Hokkaido Electric Power | | 1,200 | | 30,526 |
Hokuhoku Financial Group | | 5,000 | | 16,317 |
Honda Motor | | 11,400 | | 393,975 |
Hoya Pentax HD Corp. | | 3,100 | | 95,979 |
Ibiden | | 1,100 | | 63,052 |
INPEX Holdings | | 6 | | 50,709 |
Isetan | | 1,900 | | 31,289 |
Ishikawajima-Harima Heavy Industries | | 6,000 | | 23,597 |
Itochu | | 11,000 | | 109,167 |
Jafco | | 600 | | 26,108 |
Japan Real Estate Investment | | 5 | | 67,361 |
Japan Retail Fund Investment | | 2 | | 20,250 |
Japan Steel Works | | 4,000 | | 47,697 |
Japan Tobacco | | 33 | | 161,818 |
JFE Holdings | | 4,100 | | 227,120 |
JGC | | 2,000 | | 30,961 |
Joyo Bank | | 5,000 | | 30,836 |
JS Group | | 2,400 | | 54,525 |
JSR | | 800 | | 18,041 |
JTEKT | | 1,700 | | 31,936 |
Kajima | | 4,000 | | 19,882 |
Kaneka | | 2,000 | | 18,376 |
Kansai Electric Power | | 5,700 | | 160,261 |
Kao | | 3,000 | | 82,591 |
Kawasaki Heavy Industries | | 13,000 | | 52,324 |
Kawasaki Kisen Kaisha | | 3,000 | | 32,835 |
KDDI | | 18 | | 142,036 |
Keihin Electric Express Railway | | 3,000 | | 23,145 |
Keio | | 3,000 | | 21,162 |
Keyence | | 300 | | 67,077 |
Kintetsu | | 16,000 | | 47,931 |
Kirin Holdings Company | | 6,000 | | 90,875 |
12
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
Kobe Steel | | 19,000 | | 67,570 |
Kokuyo | | 1,200 | | 15,313 |
Komatsu | | 6,000 | | 143,843 |
Konami | | 1,200 | | 31,831 |
Konica Minolta Holdings | | 4,000 | | 55,094 |
Kubota | | 7,000 | | 66,775 |
Kuraray | | 3,000 | | 33,538 |
Kurita Water Industries | | 1,600 | | 40,166 |
Kyocera | | 1,200 | | 117,183 |
Kyowa Hakko Kogyo | | 4,000 | | 37,588 |
Kyushu Electric Power | | 2,600 | | 73,537 |
Leopalace21 | | 600 | | 19,782 |
Makita | | 900 | | 34,417 |
Marubeni | | 11,000 | | 66,642 |
Marui | | 2,700 | | 32,218 |
Matsumotokiyoshi | | 900 | | 21,200 |
Matsushita Electric Industrial | | 15,000 | | 291,829 |
Matsushita Electric Works | | 3,000 | | 34,141 |
Mediceo Paltac Holdings | | 1,800 | | 32,986 |
Meiji Dairies | | 4,000 | | 32,133 |
Meitec | | 600 | | 19,631 |
Millea Holdings | | 5,200 | | 193,632 |
Minebea | | 5,000 | | 29,455 |
Mitsubishi | | 9,800 | | 210,343 |
Mitsubishi Chemical Holdings | | 8,000 | | 64,667 |
Mitsubishi Electric | | 14,000 | | 136,714 |
Mitsubishi Estate | | 9,000 | | 281,662 |
Mitsubishi Gas Chemical | | 2,000 | | 17,455 |
Mitsubishi Heavy Industries | | 22,000 | | 136,597 |
Mitsubishi Materials | | 8,000 | | 39,429 |
Mitsubishi Rayon | | 5,000 | | 35,061 |
Mitsubishi Tanabe Pharma Corporation | | 3,000 | | 39,086 |
Mitsubishi UFJ Financial Group | | 62 | | 648,508 |
Mitsubishi UFJ Securities | | 3,000 | | 31,882 |
Mitsui & Co. | | 11,000 | | 198,360 |
Mitsui Chemicals | | 3,000 | | 25,053 |
Mitsui Engineering & Shipbuilding | | 9,000 | | 40,743 |
T h e F u n d 13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
Mitsui Fudosan | | 6,000 | | 176,729 |
Mitsui Mining & Smelting | | 6,000 | | 29,221 |
Mitsui OSK Lines | | 8,000 | | 101,686 |
Mitsui Sumitomo Insurance | | 9,000 | | 112,439 |
Mitsui Trust Holdings | | 5,000 | | 45,563 |
Mitsukoshi | | 7,000 | | 33,681 |
Mizuho Financial Group | | 69 | | 418,024 |
Murata Manufacturing | | 1,500 | | 111,585 |
Namco Bandai Holdings | | 2,300 | | 37,549 |
NEC | | 15,000 | | 80,080 |
NGK Insulators | | 3,000 | | 66,022 |
NGK Spark Plug | | 2,000 | | 35,563 |
Nidec | | 800 | | 50,877 |
Nikon | | 2,000 | | 46,358 |
Nintendo | | 800 | | 252,040 |
Nippon Building Fund | | 4 | | 64,935 |
Nippon Electric Glass | | 3,000 | | 51,839 |
Nippon Express | | 4,000 | | 24,936 |
Nippon Light Metal | | 8,000 | | 22,158 |
Nippon Meat Packers | | 3,000 | | 36,651 |
Nippon Mining Holdings | | 7,000 | | 56,701 |
Nippon Oil | | 8,000 | | 61,788 |
Nippon Paper Group | | 9 | | 30,576 |
Nippon Sheet Glass | | 4,000 | | 21,254 |
Nippon Steel | | 45,000 | | 292,205 |
Nippon Telegraph & Telephone | | 39 | | 194,502 |
Nippon Yusen | | 7,000 | | 60,508 |
Nishi-Nippon City Bank | | 7,000 | | 30,225 |
Nissan Chemical Industries | | 3,000 | | 34,216 |
Nissan Motor | | 16,100 | | 163,688 |
Nisshin Steel | | 8,000 | | 32,534 |
Nissin Food Products | | 1,000 | | 37,655 |
Nitto Denko | | 1,200 | | 53,420 |
Nomura Holdings | | 12,300 | | 238,270 |
Nomura Real Estate Office Fund | | 3 | | 37,404 |
Nomura Research Institute | | 1,000 | | 26,944 |
NSK | | 3,000 | | 29,246 |
14
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
NTN | | 2,000 | | 16,669 |
NTT Data | | 10 | | 49,287 |
NTT DoCoMo | | 139 | | 238,442 |
Obayashi | | 3,000 | | 19,028 |
Odakyu Electric Railway | | 7,000 | | 49,144 |
OJI Paper | | 6,000 | | 30,777 |
OKUMA | | 2,000 | | 24,166 |
Olympus | | 2,000 | | 70,290 |
Omron | | 1,900 | | 51,354 |
Oriental Land | | 400 | | 22,627 |
ORIX | | 660 | | 177,557 |
Osaka Gas | | 14,000 | | 52,717 |
Promise | | 950 | | 28,698 |
Rakuten | | 69 | | 28,003 |
Resona Holdings | | 33 | | 75,110 |
Ricoh | | 5,000 | | 110,456 |
Rohm | | 800 | | 72,767 |
Ryohin Keikaku | | 500 | | 27,990 |
Sankyo | | 700 | | 30,810 |
Sanwa Shutter | | 3,000 | | 18,552 |
Sanyo Electric | | 20,000 a | | 32,133 |
Sapporo Hokuyo Holdings | | 3 | | 29,120 |
SBI Holdings | | 86 | | 27,778 |
Secom | | 1,500 | | 68,031 |
Sega Sammy Holdings | | 700 | | 15,932 |
Seiko Epson | | 1,300 | | 39,597 |
Sekisui Chemical | | 2,000 | | 15,631 |
Sekisui House | | 4,000 | | 59,445 |
Seven & I Holdings | | 5,600 | | 162,135 |
Sharp | | 7,000 | | 129,451 |
Shimachu | | 700 | | 19,095 |
Shimamura | | 300 | | 32,886 |
Shimizu | | 6,000 | | 37,505 |
Shin-Etsu Chemical | | 2,700 | | 175,549 |
Shinsei Bank | | 10,000 | | 43,262 |
Shionogi & Co. | | 3,000 | | 58,742 |
Shiseido | | 3,000 | | 64,642 |
T h e F u n d 15
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
Shizuoka Bank | | 5,000 | | 52,927 |
Showa Denko | | 5,000 | | 16,485 |
Showa Shell Sekiyu | | 2,900 | | 34,944 |
SMC | | 300 | | 38,685 |
Softbank | | 5,500 | | 119,430 |
Sojitz | | 8,300 | | 31,671 |
Sompo Japan Insurance | | 6,000 | | 73,754 |
Sony | | 7,300 | | 392,168 |
Stanley Electric | | 1,600 | | 32,066 |
SUMCO | | 900 | | 39,463 |
Sumitomo | | 8,000 | | 138,237 |
Sumitomo Bakelite | | 5,000 | | 35,647 |
Sumitomo Chemical | | 10,000 | | 66,608 |
Sumitomo Electric Industries | | 4,500 | | 64,127 |
Sumitomo Heavy Industries | | 5,000 | | 52,048 |
Sumitomo Metal Industries | | 29,000 | | 148,513 |
Sumitomo Metal Mining | | 3,000 | | 56,232 |
Sumitomo Mitsui Financial Group | | 44 | | 386,595 |
Sumitomo Realty & Development | | 3,000 | | 111,711 |
Sumitomo Rubber Industries | | 2,900 | | 31,304 |
Sumitomo Trust & Banking | | 9,000 | | 88,716 |
Suruga Bank | | 2,000 | | 24,334 |
Suzuken | | 900 | | 31,706 |
T & D Holdings | | 1,750 | | 111,439 |
Taiheiyo Cement | | 5,000 | | 21,589 |
Taisei | | 6,000 | | 20,836 |
Taisho Pharmaceutical | | 2,000 | | 39,413 |
Taiyo Nippon Sanso | | 4,000 | | 35,011 |
Taiyo Yuden | | 2,000 | | 44,266 |
Takara Holdings | | 3,000 | | 22,342 |
Takashimaya | | 1,000 | | 11,807 |
Takeda Pharmaceutical | | 6,400 | | 416,652 |
Takefuji | | 840 | | 28,257 |
TDK | | 900 | | 78,097 |
Teijin | | 3,000 | | 15,539 |
Terumo | | 1,300 | | 52,759 |
16
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Japan (continued) | | | | |
THK | | 1,300 | | 31,928 |
Tobu Railway | | 7,000 | | 32,158 |
Tohoku Electric Power | | 3,200 | | 76,716 |
Tokai Rika | | 800 | | 18,510 |
Tokuyama | | 1,000 | | 15,188 |
Tokyo Electric Power | | 9,100 | | 303,067 |
Tokyo Electron | | 1,200 | | 83,946 |
Tokyo Gas | | 17,000 | | 85,921 |
Tokyo Tatemono | | 3,000 | | 42,375 |
Tokyu | | 7,000 | | 51,253 |
Tokyu Land | | 2,000 | | 22,878 |
TonenGeneral Sekiyu | | 3,000 | | 32,434 |
Toppan Printing | | 5,000 | | 51,044 |
Toray Industries | | 9,000 | | 62,207 |
Toshiba | | 21,000 | | 157,625 |
Tosoh | | 6,000 | | 27,714 |
TOTO | | 3,000 | | 28,493 |
Toyo Seikan Kaisha | | 1,800 | | 35,923 |
Toyota Industries | | 1,200 | | 56,935 |
Toyota Motor | | 21,000 | | 1,286,306 |
Toyota Tsusho | | 1,900 | | 46,425 |
Trend Micro | | 1,500 | | 47,069 |
Ube Industries | | 10,000 | | 32,049 |
Uni-Charm | | 600 | | 35,547 |
UNY | | 3,000 | | 36,174 |
West Japan Railway | | 12 | | 54,525 |
Yahoo! Japan | | 138 | | 48,096 |
Yakult Honsha | | 1,100 | | 29,547 |
Yamada Denki | | 600 | | 55,931 |
Yamaha | | 900 | | 20,899 |
Yamaha Motor | | 1,800 | | 47,898 |
Yamato Holdings | | 3,000 | | 43,630 |
Yaskawa Electric | | 3,000 | | 34,618 |
Yokogawa Electric | | 1,200 | | 17,813 |
Zeon | | 3,000 | | 31,078 |
| | | | 21,417,309 |
T h e F u n d 17
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Luxembourg—.0% | | | | |
Oriflame Cosmetics | | 426 a | | 22,512 |
New Zealand—.0% | | | | |
Auckland International Airport | | 7,957 | | 14,661 |
Fletcher Building | | 1,669 | | 14,136 |
Sky City Entertainment Group | | 3,365 | | 12,075 |
Telecom of New Zealand | | 9,351 | | 33,556 |
| | | | 74,428 |
Norway—.1% | | | | |
Acergy | | 601 a | | 13,137 |
Aker Kvaerner | | 490 | | 11,679 |
DNB NOR | | 2,714 | | 39,017 |
Frontline | | 536 | | 20,368 |
Marine Harvest | | 17,061 a | | 18,474 |
Norsk Hydro | | 2,371 | | 83,122 |
Norske Skogindustrier | | 704 | | 10,855 |
Orkla | | 3,455 | | 55,653 |
Petroleum Geo-Services | | 534 a | | 14,905 |
Prosafe Se | | 845 | | 13,171 |
Schibsted | | 420 | | 19,279 |
SeaDrill | | 706 a | | 11,728 |
Statoil | | 2,221 | | 63,019 |
Storebrand | | 926 | | 15,842 |
Telenor | | 2,586 | | 48,373 |
TGS-NOPEC Geophysical | | 935 a | | 21,695 |
Yara International | | 555 | | 16,354 |
| | | | 476,671 |
Portugal—.0% | | | | |
Banco BPI | | 2,091 | | 17,978 |
Banco Comercial Portugues, Cl. R | | 10,256 | | 43,250 |
Banco Espirito Santo | | 678 | | 13,620 |
Brisa-Auto Estradas de Portugal | | 995 | | 13,185 |
Energias de Portugal | | 4,457 | | 24,392 |
Portugal Telecom | | 2,072 | | 29,607 |
Sonae | | 7,653 | | 20,889 |
| | | | 162,921 |
18
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Singapore—.2% | | | | |
Ascendas Real Estate Investment Trust | | 7,000 | | 11,976 |
Capitacommercial Trust | | 10,000 | | 18,556 |
CapitaLand | | 7,000 | | 39,152 |
CapitaMall Trust | | 6,000 | | 15,714 |
City Developments | | 1,000 | | 10,594 |
ComfortDelgro | | 15,000 | | 22,603 |
DBS Group Holdings | | 4,000 | | 56,064 |
Flextronics International | | 2,770 a | | 30,886 |
Fraser & Neave | | 4,000 | | 14,213 |
Keppel | | 3,000 | | 42,245 |
Keppel Land | | 3,000 | | 17,471 |
Oversea-Chinese Banking | | 9,000 | | 53,300 |
SembCorp Industries | | 5,000 | | 16,056 |
Singapore Airlines | | 2,000 | | 23,952 |
Singapore Exchange | | 3,000 | | 14,608 |
Singapore Press Holdings | | 4,000 | | 11,476 |
Singapore Technologies Engineering | | 6,000 | | 14,213 |
Singapore Telecommunications | | 26,000 | | 56,801 |
United Overseas Bank | | 4,000 | | 56,327 |
Venture | | 1,000 | | 10,331 |
| | | | 536,538 |
Sweden—.4% | | | | |
Alfa Laval | | 291 | | 17,915 |
Assa Abloy, Cl. B | | 723 | | 16,328 |
Atlas Copco, Cl. A | | 787 | | 30,268 |
Atlas Copco, Cl. B | | 1,033 | | 37,573 |
Boliden | | 1,412 | | 35,677 |
Castellum | | 863 | | 13,186 |
Electrolux, Ser. B | | 614 | | 16,109 |
Elekta, Cl. B | | 794 | | 14,085 |
Eniro | | 908 | | 12,182 |
Fabege | | 450 | | 12,075 |
Getinge, Cl. B | | 614 | | 14,141 |
Hennes & Mauritz, Cl. B | | 1,529 | | 101,768 |
Holmen, Cl. B | | 391 | | 17,544 |
T h e F u n d 19
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
Sweden (continued) | | | | |
Husqvarna, Cl. B | | 838 | | 15,459 |
Kungsleden | | 1,026 | | 16,671 |
Lundin Petroleum | | 1,092 a | | 12,209 |
Modern Times Group, Cl. B | | 186 | | 10,938 |
Nobia | | 1,257 | | 17,239 |
Nordea Bank | | 6,976 | | 121,460 |
OMX | | 881 | | 21,210 |
Sandvik | | 3,215 | | 62,183 |
Securitas, Cl. B | | 838 | | 12,867 |
Skandinaviska Enskilda Banken, Cl. A | | 1,555 | | 57,487 |
Skanska, Cl. B | | 1,721 | | 40,278 |
SKF, Cl. B | | 1,788 | | 39,514 |
Ssab Svenskt Stal, Ser. A | | 534 | | 19,144 |
Svenska Cellulosa, Cl. B | | 711 | | 36,831 |
Svenska Handelsbanken, Cl. A | | 1,682 | | 51,651 |
Swedish Match | | 652 | | 12,100 |
Tele2, Cl. B | | 887 | | 15,305 |
Telefonaktiebolaget LM Ericsson, Cl. B | | 53,031 | | 205,536 |
TeliaSonera | | 6,450 | | 52,641 |
Trelleborg, Cl. B | | 531 | | 16,504 |
Volvo, Cl. A | | 2,280 | | 45,543 |
Volvo, Cl. B | | 3,635 | | 71,255 |
| | | | 1,292,876 |
United States—18.1% | | | | |
3M | | 3,200 | | 264,864 |
Abbott Laboratories | | 7,010 | | 396,906 |
Abercrombie & Fitch, Cl. A | | 400 | | 32,664 |
Activision | | 1,280 a | | 25,600 |
ADC Telecommunications | | 540 a | | 9,936 |
Adobe Systems | | 2,660 a | | 110,549 |
Advance Auto Parts | | 480 | | 19,776 |
Advanced Micro Devices | | 2,510 a | | 34,688 |
AES | | 3,030 a | | 66,629 |
Aetna | | 2,380 | | 111,574 |
Affiliated Computer Services, Cl. A | | 510 a | | 30,554 |
Aflac | | 2,260 | | 116,028 |
Agilent Technologies | | 1,950 a | | 67,021 |
20
Common Stocks (continued) | | Shares | | | | Value ($) |
| |
| |
| |
|
United States (continued) | | | | | | |
Air Products & Chemicals | | 1,010 | | | | 77,265 |
Akamai Technologies | | 610 a | | | | 26,888 |
Alcoa | | 3,960 | | | | 140,540 |
Allegheny Technologies | | 390 | | | | 42,736 |
Alliant Energy | | 530 | | | | 23,214 |
Allied Capital | | 690 | | | | 19,941 |
Allstate | | 2,710 | | | | 168,887 |
Alltel | | 1,710 | | | | 107,199 |
Altera | | 1,650 | | | | 37,191 |
Altria Group | | 9,570 | | | | 659,564 |
Amazon.com | | 1,410 a | | | | 86,475 |
AMB Property | | 450 | | | | 27,409 |
Ambac Financial Group | | 480 | | | | 44,064 |
Ameren | | 940 | | | | 49,415 |
American Capital Strategies | | 710 | | | | 34,562 |
American Eagle Outfitters | | 920 | | | | 27,112 |
American Electric Power | | 1,840 | | | | 92,404 |
American Express | | 5,060 | | | | 306,990 |
American International Group | | 10,090 | | | | 705,391 |
American Standard Cos. | | 820 | | | | 45,149 |
American Tower, Cl. A | | 1,940 a | | | | 73,720 |
Ameriprise Financial | | 1,100 | | | | 65,417 |
AmerisourceBergen | | 920 | | | | 45,990 |
Amgen | | 5,330 a | | | | 341,866 |
Amphenol, Cl. A | | 800 | | | | 28,088 |
Amylin Pharmaceuticals | | 590 a | | | | 24,384 |
Anadarko Petroleum | | 2,130 | | | | 99,385 |
Analog Devices | | 1,560 | | | | 60,247 |
Anheuser-Busch Cos. | | 3,510 | | | | 172,657 |
AON | | 1,270 | | | | 49,212 |
Apache | | 1,500 | | | | 108,750 |
Apartment Investment & Management, Cl. A | | 440 | | | | 24,332 |
Apollo Group, Cl. A | | 670 a | | | | 31,691 |
Apple Computer | | 3,900 a | | | | 389,220 |
Applera—Applied Biosystems Group | | 840 | | | | 26,241 |
Applied Materials | | 6,300 | | | | 121,086 |
Aqua America | | 600 | | | | 13,266 |
The Fund 21
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Arch Coal | | 650 | | 23,445 |
Archer-Daniels-Midland | | 2,700 | | 104,490 |
Archstone-Smith Trust | | 1,000 | | 52,110 |
Arrow Electronics | | 560 a | | 22,131 |
Associated Banc-Corp | | 560 | | 18,132 |
AT & T | | 28,590 | | 1,107,004 |
Autodesk | | 1,050 a | | 43,333 |
Automatic Data Processing | | 2,520 | | 112,795 |
AutoNation | | 660 a | | 13,490 |
AutoZone | | 240 a | | 31,929 |
AvalonBay Communities | | 360 | | 44,013 |
Avaya | | 1,880 a | | 24,290 |
Avery Dennison | | 430 | | 26,746 |
Avis Budget Group | | 460 a | | 12,939 |
Avnet | | 600 a | | 24,540 |
Avon Products | | 2,030 | | 80,794 |
Baker Hughes | | 1,470 | | 118,173 |
Ball | | 450 | | 22,810 |
Bank of America | | 20,510 | | 1,043,959 |
Bank of New York | | 3,430 | | 138,846 |
Bausch & Lomb | | 240 | | 14,119 |
Baxter International | | 2,990 | | 169,323 |
BB & T | | 2,470 | | 102,801 |
BEA Systems | | 1,700 a | | 20,043 |
Beckman Coulter | | 280 | | 17,587 |
Becton, Dickinson & Co. | | 1,140 | | 89,707 |
Bed Bath & Beyond | | 1,290 a | | 52,554 |
Best Buy | | 1,860 | | 86,769 |
Biogen Idec | | 1,540 a | | 72,703 |
Biomet | | 1,060 | | 45,792 |
BJ Services | | 1,370 | | 39,264 |
Black & Decker | | 310 | | 28,123 |
BMC Software | | 940 a | | 30,427 |
Boeing | | 3,430 | | 318,990 |
Boston Properties | | 510 | | 59,956 |
Boston Scientific | | 5,720 a | | 88,317 |
Brinker International | | 560 | | 17,416 |
22
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Bristol-Myers Squibb | | 8,980 | | 259,163 |
Broadcom, Cl. A | | 2,140 a | | 69,657 |
Broadridge Financial Solutions | | 630 a | | 12,625 |
Brown & Brown | | 540 | | 13,905 |
Brunswick | | 420 | | 13,759 |
Bunge | | 550 | | 41,668 |
Burlington Northern Santa Fe | | 1,640 | | 143,566 |
C.R. Bard | | 470 | | 39,071 |
CA | | 1,920 | | 52,339 |
Cablevision Systems (NY Group), Cl. A | | 990 | | 32,452 |
Cadence Design Systems | | 1,270 a | | 28,194 |
Camden Property Trust | | 260 | | 18,109 |
Cameron International | | 510 a | | 32,931 |
Campbell Soup | | 1,010 | | 39,491 |
Capital One Financial | | 1,870 | | 138,866 |
Cardinal Health | | 1,850 | | 129,408 |
Career Education | | 430 a | | 12,702 |
CarMax | | 980 a | | 24,422 |
Carnival | | 1,990 | | 97,291 |
Caterpillar | | 2,970 | | 215,681 |
CB Richard Ellis Group, Cl. A | | 870 a | | 29,450 |
CBS, Cl. B | | 3,120 | | 99,122 |
CDW | | 290 | | 20,883 |
Celgene | | 1,740 a | | 106,418 |
CenterPoint Energy | | 1,360 | | 25,609 |
Centex | | 540 | | 24,176 |
Cephalon | | 280 a | | 22,291 |
Ceridian | | 640 a | | 21,606 |
Charles River Laboratories International | | 310 a | | 14,682 |
Charles Schwab | | 4,900 | | 93,688 |
CheckFree | | 340 a | | 11,444 |
Chesapeake Energy | | 2,220 | | 74,925 |
Chevron | | 9,960 | | 774,788 |
Chicago Mercantile Exchange Holdings, Cl. A | | 170 | | 87,848 |
Chico’s FAS | | 800 a | | 21,088 |
ChoicePoint | | 360 a | | 13,669 |
Chubb | | 1,880 | | 101,200 |
T h e F u n d 23
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
CIGNA | | 470 | | 73,127 |
Cimarex Energy | | 380 | | 14,972 |
Cincinnati Financial | | 750 | | 33,930 |
Cintas | | 620 | | 23,231 |
Circuit City Stores | | 800 | | 13,960 |
Cisco Systems | | 27,740 a | | 741,768 |
CIT Group | | 910 | | 54,282 |
Citigroup | | 22,560 | | 1,209,667 |
Citrix Systems | | 820 a | | 26,732 |
Clear Channel Communications | | 2,140 | | 75,820 |
Clorox | | 690 | | 46,285 |
Coach | | 1,710 a | | 83,499 |
Coca-Cola | | 9,640 | | 503,112 |
Cognizant Technology Solutions, Cl. A | | 650 a | | 58,110 |
Colonial BancGroup | | 630 | | 15,158 |
Comcast, Cl. A | | 8,910 a | | 237,541 |
Comcast, Cl. A (Special) | | 4,820 a | | 127,248 |
Comerica | | 730 | | 45,194 |
Commerce Bancorp/NJ | | 810 | | 27,086 |
Community Health Systems | | 430 a | | 15,824 |
Compass Bancshares | | 560 | | 38,181 |
Computer Sciences | | 780 a | | 43,321 |
Compuware | | 1,610 a | | 15,891 |
ConAgra Foods | | 2,330 | | 57,271 |
Consol Energy | | 830 | | 34,752 |
Consolidated Edison | | 1,170 | | 59,974 |
Constellation Brands, Cl. A | | 960 a | | 21,514 |
Constellation Energy Group | | 820 | | 73,078 |
Convergys | | 630 a | | 15,914 |
Cooper Cos. | | 190 | | 9,709 |
Cooper Industries, Cl. A | | 830 | | 41,300 |
Corning | | 7,150 a | | 169,598 |
Corporate Executive Board | | 180 | | 11,455 |
Costco Wholesale | | 2,090 | | 111,961 |
Countrywide Financial | | 2,890 | | 107,161 |
Covance | | 290 a | | 17,545 |
Coventry Health Care | | 730 a | | 42,216 |
24
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Crescent Real Estate EQT | | 450 | | 9,230 |
Crown Castle International | | 1,020 a | | 35,027 |
CSX | | 2,030 | | 87,635 |
Cummins | | 480 | | 44,237 |
CVS | | 7,030 | | 254,767 |
Cytyc | | 510 a | | 17,967 |
D.R. Horton | | 1,290 | | 28,612 |
Danaher | | 1,120 | | 79,733 |
Darden Restaurants | | 640 | | 26,547 |
DaVita | | 480 a | | 26,213 |
Dean Foods | | 610 | | 22,222 |
Deere & Co. | | 1,060 | | 115,964 |
Dell | | 9,340 a | | 235,461 |
Denbury Resources | | 550 a | | 18,200 |
Dentsply International | | 660 | | 22,051 |
Developers Diversified Realty | | 500 | | 32,550 |
Devon Energy | | 1,920 | | 139,910 |
Diamond Offshore Drilling | | 370 | | 31,672 |
DIRECTV Group | | 3,070 a | | 73,189 |
Discovery Holding, Cl. A | | 1,160 a | | 25,230 |
Dollar General | | 1,350 | | 28,823 |
Dominion Resources/VA | | 1,620 | | 147,744 |
Domtar | | 2,370 a | | 23,108 |
Dover | | 930 | | 44,752 |
Dow Chemical | | 4,360 | | 194,500 |
Dow Jones & Co. | | 250 | | 9,083 |
DST Systems | | 240 a | | 18,732 |
DTE Energy | | 810 | | 40,978 |
Duke Energy | | 5,730 | | 117,580 |
Duke Realty | | 620 | | 26,728 |
Dun & Bradstreet | | 280 | | 25,284 |
E*TRADE FINANCIAL | | 1,950 a | | 43,056 |
E.I. du Pont de Nemours & Co. | | 4,200 | | 206,514 |
Eastman Kodak | | 1,310 | | 32,632 |
Eaton | | 650 | | 57,987 |
eBay | | 5,090 a | | 172,755 |
EchoStar Communications, Cl. A | | 940 a | | 43,738 |
T h e F u n d 25
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Ecolab | | 860 | | 36,971 |
Edison International | | 1,410 | | 73,814 |
El Paso | | 3,220 | | 48,300 |
Electronic Arts | | 1,410 a | | 71,078 |
Electronic Data Systems | | 2,360 | | 69,006 |
Eli Lilly & Co. | | 4,650 | | 274,955 |
Embarq | | 680 | | 40,827 |
EMC/Massachusetts | | 10,060 a | | 152,711 |
Emerson Electric | | 3,670 | | 172,453 |
Energizer Holdings | | 250 a | | 24,295 |
Energy East | | 720 | | 17,438 |
ENSCO International | | 690 | | 38,902 |
Entergy | | 940 | | 106,352 |
EOG Resources | | 1,200 | | 88,128 |
Equifax | | 570 | | 22,686 |
Equitable Resources | | 520 | | 27,045 |
Equity Residential | | 1,330 | | 61,752 |
Estee Lauder Cos., Cl. A | | 540 | | 27,767 |
Exelon | | 3,060 | | 230,755 |
Expedia | | 1,010 a | | 23,856 |
Expeditors International Washington | | 970 | | 40,546 |
Express Scripts | | 530 a | | 50,642 |
Exxon Mobil | | 26,640 | | 2,114,683 |
Family Dollar Stores | | 660 | | 21,014 |
Fannie Mae | | 4,430 | | 261,016 |
Fastenal | | 590 | | 24,261 |
Federal Realty Investment Trust | | 250 | | 22,543 |
Federated Department Stores | | 2,480 | | 108,922 |
FedEx | | 1,330 | | 140,235 |
Fidelity National Financial, Cl. A | | 950 | | 24,216 |
Fidelity National Information Services | | 870 | | 43,961 |
Fifth Third Bancorp | | 2,290 | | 92,951 |
First American | | 380 | | 19,570 |
First Data | | 3,570 | | 115,668 |
First Horizon National | | 540 | | 21,173 |
FirstEnergy | | 1,390 | | 95,132 |
Fiserv | | 790 a | | 42,004 |
26
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Fluor | | 400 | | 38,248 |
FMC Technologies | | 310 a | | 21,973 |
Foot Locker | | 710 | | 16,891 |
Ford Motor | | 8,300 | | 66,732 |
Fortune Brands | | 690 | | 55,269 |
FPL Group | | 1,760 | | 113,291 |
Franklin Resources | | 810 | | 106,361 |
Freddie Mac | | 3,160 | | 204,705 |
Freeport-McMoRan Copper & Gold | | 1,710 | | 114,844 |
Gannett | | 1,070 | | 61,054 |
Gap | | 2,630 | | 47,209 |
Genentech | | 2,170 a | | 173,578 |
General Dynamics | | 1,570 | | 123,245 |
General Electric | | 47,090 | | 1,735,737 |
General Growth Properties | | 990 | | 63,212 |
General Mills | | 1,520 | | 91,048 |
General Motors | | 2,120 | | 66,208 |
Genuine Parts | | 780 | | 38,540 |
Genworth Financial, Cl. A | | 2,070 | | 75,534 |
Genzyme | | 1,200 a | | 78,372 |
Getty Images | | 230 a | | 11,960 |
Gilead Sciences | | 2,100 a | | 171,612 |
GlobalSantaFe | | 1,160 | | 74,158 |
Goldman Sachs Group | | 1,780 | | 389,126 |
Google, Cl. A | | 1,020 a | | 480,808 |
Grant Prideco | | 580 a | | 29,893 |
H & R Block | | 1,400 | | 31,654 |
H.J. Heinz | | 1,510 | | 71,136 |
Halliburton | | 4,390 | | 139,470 |
Hanesbrands | | 440 a | | 11,700 |
Harley-Davidson | | 1,180 | | 74,718 |
Harman International Industries | | 280 | | 34,129 |
Harrah’s Entertainment | | 810 | | 69,093 |
Harsco | | 380 | | 19,380 |
Hartford Financial Services Group | | 1,450 | | 146,740 |
Hasbro | | 650 | | 20,547 |
Health Care Property Investors | | 920 | | 32,559 |
T h e F u n d 27
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Health Management Associates, Cl. A | | 1,100 | | 11,759 |
Health Net | | 530 a | | 28,652 |
Hershey | | 740 | | 40,670 |
Hewlett-Packard | | 12,510 | | 527,171 |
Hillenbrand Industries | | 250 | | 15,288 |
Hilton Hotels | | 1,680 | | 57,120 |
Home Depot | | 9,430 | | 357,114 |
Honeywell International | | 3,540 | | 191,797 |
Hospira | | 680 a | | 27,574 |
Host Hotels & Resorts | | 2,340 | | 59,998 |
Hudson City Bancorp | | 2,450 | | 32,634 |
Huntington Bancshares/OH | | 1,030 | | 22,845 |
IAC/InterActiveCorp | | 920 a | | 35,070 |
Idearc | | 670 | | 23,283 |
Illinois Tool Works | | 2,200 | | 112,882 |
IMS Health | | 910 | | 26,690 |
Intel | | 26,340 | | 566,310 |
International Business Machines | | 6,880 | | 703,205 |
International Flavors & Fragrances | | 350 | | 17,035 |
International Game Technology | | 1,550 | | 59,117 |
International Paper | | 1,970 | | 74,308 |
Interpublic Group of Cos. | | 2,020 a | | 25,614 |
Intersil, Cl. A | | 630 | | 18,768 |
Intuit | | 1,510 a | | 42,960 |
Investors Financial Services | | 300 | | 18,564 |
Invitrogen | | 220 a | | 14,403 |
Iron Mountain | | 730 a | | 20,513 |
iStar Financial | | 570 | | 27,314 |
ITT Industries | | 800 | | 51,048 |
J.C. Penney | | 1,000 | | 79,090 |
Jabil Circuit | | 820 | | 19,106 |
Jacobs Engineering Group | | 540 a | | 27,232 |
Janus Capital Group | | 910 | | 22,768 |
JDS Uniphase | | 930 a | | 15,326 |
Johnson & Johnson | | 13,240 | | 850,273 |
Johnson Controls | | 910 | | 93,120 |
Jones Apparel Group | | 500 | | 16,695 |
28
Common Stocks (continued) | | Shares | | | | Value ($) |
| |
| |
| |
|
United States (continued) | | | | | | |
Joy Global | | 540 | | | | 27,340 |
JPMorgan Chase & Co. | | 15,970 | | | | 832,037 |
Juniper Networks | | 2,330 a | | | | 52,099 |
KB Home | | 350 | | | | 15,439 |
Kellogg | | 1,220 | | | | 64,550 |
KeyCorp | | 1,830 | | | | 65,294 |
KeySpan | | 800 | | | | 33,128 |
Kimberly-Clark | | 2,090 | | | | 148,745 |
Kimco Realty | | 1,030 | | | | 49,512 |
KLA-Tencor | | 910 | | | | 50,551 |
Kohl’s | | 1,340 a | | | | 99,214 |
Kraft Foods, Cl. A | | 7,570 | | | | 253,368 |
Kroger | | 3,180 | | | | 93,842 |
L-3 Communications Holdings | | 540 | | | | 48,562 |
Laboratory Corp. of America Holdings | | 570 a | | | | 44,996 |
Lam Research | | 650 a | | | | 34,957 |
Lamar Advertising, Cl. A | | 370 | | | | 22,326 |
Las Vegas Sands | | 490 a | | | | 41,743 |
Lear | | 310 a | | | | 11,383 |
Legg Mason | | 630 | | | | 62,490 |
Leggett & Platt | | 820 | | | | 19,286 |
Lehman Brothers Holdings | | 2,060 | | | | 155,077 |
Lennar, Cl. A | | 580 | | | | 24,772 |
Leucadia National | | 740 | | | | 22,304 |
Level 3 Communications | | 5,030 a | | | | 27,967 |
Lexmark International, Cl. A | | 450 a | | | | 24,525 |
Liberty Global, Cl. A | | 800 a | | | | 28,712 |
Liberty Global, Ser. C | | 830 a | | | | 27,730 |
Liberty Media Holding, Cap. Ser. A | | 610 a | | | | 68,912 |
Liberty Media Holding, Int. Ser. A | | 3,060 a | | | | 76,592 |
Liberty Property Trust | | 410 | | | | 19,840 |
Limited Brands | | 1,620 | | | | 44,663 |
Lincare Holdings | | 420 a | | | | 16,565 |
Lincoln National | | 1,290 | | | | 91,784 |
Linear Technology | | 1,370 | | | | 51,265 |
Liz Claiborne | | 470 | | | | 21,018 |
Lockheed Martin | | 1,650 | | | | 158,631 |
The Fund 29
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Lowe’s Cos. | | 6,630 | | 202,613 |
LSI | | 3,500 a | | 29,750 |
Lyondell Chemical | | 1,020 | | 31,742 |
M & T Bank | | 300 | | 33,402 |
Macerich | | 330 | | 31,390 |
Manpower | | 390 | | 31,298 |
Marathon Oil | | 1,610 | | 163,496 |
Marriott International, Cl. A | | 1,570 | | 70,980 |
Marsh & McLennan Cos. | | 2,390 | | 75,906 |
Marshall & Ilsley | | 1,050 | | 50,421 |
Martin Marietta Materials | | 210 | | 30,622 |
Masco | | 1,800 | | 48,978 |
Massey Energy | | 370 | | 9,964 |
Mattel | | 1,740 | | 49,242 |
Maxim Integrated Products | | 1,460 | | 46,311 |
MBIA | | 620 | | 43,127 |
McClatchy, Cl. A | | 250 | | 7,225 |
McCormick & Co. | | 540 | | 20,045 |
McDonald’s | | 5,650 | | 272,782 |
McGraw-Hill Cos. | | 1,620 | | 106,159 |
McKesson | | 1,280 | | 75,302 |
MeadWestvaco | | 830 | | 27,689 |
Medco Health Solutions | | 1,370 a | | 106,887 |
MedImmune | | 1,090 a | | 61,781 |
Medtronic | | 5,260 | | 278,412 |
MEMC Electronic Materials | | 810 a | | 44,453 |
Merck & Co. | | 9,920 | | 510,285 |
Merrill Lynch & Co. | | 3,900 | | 351,897 |
MetLife | | 3,470 | | 227,979 |
MGIC Investment | | 380 | | 23,412 |
MGM MIRAGE | | 600 a | | 40,350 |
Microchip Technology | | 990 | | 39,937 |
Micron Technology | | 3,450 a | | 39,572 |
Microsoft | | 40,410 | | 1,209,875 |
Millennium Pharmaceuticals | | 1,440 a | | 15,955 |
Millipore | | 240 a | | 17,719 |
Mohawk Industries | | 250 a | | 22,540 |
30
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Monsanto | | 2,480 | | 146,295 |
Monster Worldwide | | 540 a | | 22,707 |
Moody’s | | 1,090 | | 72,071 |
Morgan Stanley | | 4,430 | | 372,164 |
Motorola | | 11,040 | | 191,323 |
National City | | 2,630 | | 96,127 |
National Oilwell Varco | | 880 a | | 74,668 |
National Semiconductor | | 1,480 | | 38,924 |
NAVTEQ | | 450 a | | 15,912 |
Network Appliance | | 1,700 a | | 63,257 |
New York Community Bancorp | | 1,280 | | 22,349 |
New York Times, Cl. A | | 620 | | 14,508 |
Newell Rubbermaid | | 1,270 | | 38,951 |
Newfield Exploration | | 590 a | | 25,813 |
Newmont Mining | | 2,100 | | 87,570 |
News, Cl. A | | 8,450 | | 189,196 |
News, Cl. B | | 2,480 | | 59,520 |
NII Holdings | | 640 a | | 49,120 |
NIKE, Cl. B | | 1,660 | | 89,408 |
NiSource | | 1,250 | | 30,738 |
Noble | | 620 | | 52,210 |
Noble Energy | | 790 | | 46,460 |
Norfolk Southern | | 1,850 | | 98,494 |
Northern Trust | | 950 | | 59,803 |
Northrop Grumman | | 1,500 | | 110,460 |
Novellus Systems | | 560 a | | 18,127 |
Nucor | | 1,410 | | 89,479 |
NVIDIA | | 1,540 a | | 50,651 |
NVR | | 20 a | | 16,480 |
NYSE Euronext | | 610 a | | 51,441 |
Occidental Petroleum | | 3,840 | | 194,688 |
Office Depot | | 1,270 a | | 42,697 |
Old Republic International | | 1,000 | | 21,270 |
Omnicare | | 550 | | 18,244 |
Omnicom Group | | 780 | | 81,674 |
Oracle | | 18,990 a | | 357,012 |
Oshkosh Truck | | 340 | | 19,020 |
T h e F u n d 31
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Owens-Illinois | | 700 a | | 21,063 |
Paccar | | 1,100 | | 92,378 |
Pactiv | | 610 a | | 21,094 |
Pall | | 560 | | 23,492 |
Parker Hannifin | | 550 | | 50,677 |
Patterson Cos. | | 510 a | | 18,391 |
Patterson-UTI Energy | | 730 | | 17,805 |
Paychex | | 1,560 | | 57,876 |
PDL BioPharma | | 500 a | | 12,630 |
Peabody Energy | | 1,210 | | 58,056 |
Pentair | | 430 | | 13,820 |
Pepco Holdings | | 870 | | 25,682 |
PepsiCo | | 7,500 | | 495,675 |
PetSmart | | 640 | | 21,242 |
Pfizer | | 32,940 | | 871,592 |
PG & E | | 1,620 | | 81,972 |
Pinnacle West Capital | | 460 | | 22,213 |
Pioneer Natural Resources | | 560 | | 28,112 |
Pitney Bowes | | 1,010 | | 48,480 |
Plum Creek Timber | | 810 | | 32,157 |
PMI Group | | 360 | | 17,449 |
PNC Financial Services Group | | 1,580 | | 117,078 |
Polo Ralph Lauren | | 280 | | 25,791 |
PPG Industries | | 750 | | 55,185 |
PPL | | 1,740 | | 75,881 |
Praxair | | 1,500 | | 96,825 |
Pride International | | 750 a | | 24,608 |
Principal Financial Group | | 1,230 | | 78,093 |
Procter & Gamble | | 14,470 | | 930,566 |
Progress Energy | | 1,100 | | 55,605 |
Progressive | | 3,290 | | 75,900 |
ProLogis | | 1,130 | | 73,224 |
Prudential Financial | | 2,180 | | 207,100 |
Public Service Enterprise Group | | 1,150 | | 99,418 |
Public Storage | | 580 | | 54,126 |
Pulte Homes | | 990 | | 26,631 |
QLogic | | 720 a | | 12,874 |
32
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
QUALCOMM | | 7,550 | | 330,690 |
Quest Diagnostics | | 760 | | 37,156 |
Questar | | 390 | | 37,881 |
Qwest Communications International | | 7,430 a | | 65,978 |
R.R. Donnelley & Sons | | 990 | | 39,798 |
Radian Group | | 370 | | 21,501 |
RadioShack | | 590 | | 17,151 |
Range Resources | | 600 | | 21,930 |
Raytheon | | 2,030 | | 108,686 |
Regency Centers | | 310 | | 25,544 |
Regions Financial | | 3,330 | | 116,850 |
Reliant Energy | | 1,410 a | | 31,401 |
Republic Services | | 890 | | 24,858 |
Robert Half International | | 730 | | 24,309 |
Rockwell Automation | | 740 | | 44,060 |
Rockwell Collins | | 760 | | 49,909 |
Rohm & Haas | | 650 | | 33,261 |
Roper Industries | | 400 | | 22,424 |
Ross Stores | | 640 | | 21,216 |
Rowan Cos. | | 500 | | 18,320 |
Royal Caribbean Cruises | | 580 | | 24,110 |
Safeco | | 530 | | 35,372 |
Safeway | | 2,020 | | 73,326 |
SanDisk | | 1,030 a | | 44,754 |
Sanmina-SCI | | 2,430 a | | 8,384 |
Sara Lee | | 3,410 | | 55,958 |
SCANA | | 510 | | 22,200 |
Schlumberger | | 5,380 | | 397,205 |
Sealed Air | | 740 | | 24,346 |
Sears Holdings | | 390 a | | 74,455 |
Sempra Energy | | 1,080 | | 68,558 |
ServiceMaster | | 1,310 | | 20,161 |
Sherwin-Williams | | 520 | | 33,160 |
Sigma-Aldrich | | 600 | | 25,248 |
Simon Property Group | | 1,010 | | 116,433 |
Sirius Satellite Radio | | 5,780 a | | 17,109 |
SL Green Realty | | 270 | | 38,043 |
T h e F u n d 33
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
SLM | | 1,870 | | 100,662 |
Smith International | | 910 | | 47,720 |
Smurfit-Stone Container | | 1,160 a | | 13,978 |
Solectron | | 4,120 a | | 13,802 |
Southern | | 3,390 | | 128,108 |
Southwest Airlines | | 900 | | 12,915 |
Southwestern Energy | | 770 a | | 32,340 |
Sovereign Bancorp | | 1,730 | | 41,987 |
Spectra Energy | | 2,860 | | 74,646 |
Sprint Nextel | | 12,690 | | 254,181 |
SPX | | 260 | | 18,429 |
St. Joe | | 320 | | 18,122 |
St. Jude Medical | | 1,610 a | | 68,892 |
Stanley Works | | 330 | | 19,232 |
Staples | | 3,370 | | 83,576 |
Starbucks | | 3,450 a | | 107,019 |
Starwood Hotels & Resorts Worldwide | | 970 | | 65,009 |
State Street | | 1,520 | | 104,682 |
Station Casinos | | 220 | | 19,140 |
Stryker | | 1,300 | | 84,422 |
Sun Microsystems | | 16,080 a | | 83,938 |
Sunoco | | 560 | | 42,297 |
SunTrust Banks | | 1,540 | | 130,007 |
SUPERVALU | | 940 | | 43,146 |
Synopsys | | 640 a | | 17,702 |
Synovus Financial | | 1,190 | | 37,556 |
SYSCO | | 2,820 | | 92,327 |
T. Rowe Price Group | | 1,270 | | 63,094 |
Target | | 3,730 | | 221,450 |
TCF Financial | | 540 | | 14,623 |
Telephone & Data Systems | | 240 | | 12,672 |
Telephone & Data Systems | | 230 | | 13,099 |
Tellabs | | 1,920 a | | 20,390 |
Temple-Inland | | 490 | | 29,028 |
Tenet Healthcare | | 2,150 a | | 15,953 |
Teradyne | | 870 a | | 15,182 |
Terex | | 460 a | | 35,811 |
34
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
Tesoro | | 310 | | 37,572 |
Texas Instruments | | 6,780 | | 233,029 |
Textron | | 520 | | 52,868 |
Thermo Fisher Scientific | | 1,900 a | | 98,914 |
Tiffany & Co. | | 630 | | 30,045 |
Time Warner | | 18,150 | | 374,435 |
TJX Cos. | | 2,050 | | 57,175 |
Toll Brothers | | 530 a | | 15,783 |
Torchmark | | 450 | | 30,735 |
Transocean | | 1,340 a | | 115,508 |
Travelers Cos. | | 3,150 | | 170,415 |
Triad Hospitals | | 400 a | | 21,256 |
Tribune | | 710 | | 23,288 |
TXU | | 1,990 | | 130,504 |
Tyson Foods, Cl. A | | 1,150 | | 24,104 |
U.S. Bancorp | | 8,130 | | 279,266 |
UDR | | 620 | | 18,625 |
Ultra Petroleum | | 690 a | | 39,137 |
Union Pacific | | 1,170 | | 133,673 |
UnionBanCal | | 260 | | 15,985 |
Unisys | | 1,570 a | | 12,309 |
United Parcel Service, Cl. B | | 3,040 | | 214,107 |
United States Steel | | 540 | | 54,832 |
United Technologies | | 4,360 | | 292,687 |
UnitedHealth Group | | 6,150 | | 326,319 |
Unum Group | | 1,560 | | 38,813 |
Valero Energy | | 2,760 | | 193,835 |
Varian Medical Systems | | 590 a | | 24,904 |
VeriSign | | 1,110 a | | 30,359 |
Verizon Communications | | 13,340 | | 509,321 |
Vertex Pharmaceuticals | | 570 a | | 17,522 |
VF | | 410 | | 36,002 |
Viacom, Cl. B | | 2,770 a | | 114,263 |
Virgin Media | | 1,270 | | 32,042 |
Vornado Realty Trust | | 640 | | 75,923 |
Vulcan Materials | | 430 | | 53,178 |
W.R. Berkley | | 740 | | 24,043 |
T h e F u n d 35
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Common Stocks (continued) | | Shares | | Value ($) |
| |
| |
|
United States (continued) | | | | |
W.W. Grainger | | 330 | | 27,265 |
Wachovia | | 8,740 | | 485,420 |
Wal-Mart Stores | | 11,420 | | 547,246 |
Walgreen | | 4,580 | | 201,062 |
Walt Disney | | 8,980 | | 314,120 |
Washington Mutual | | 4,290 | | 180,094 |
Washington Post, Cl. B | | 30 | | 22,320 |
Waste Management | | 2,500 | | 93,525 |
Waters | | 460 a | | 27,338 |
WellPoint | | 2,830 a | | 223,485 |
Wells Fargo & Co. | | 14,650 | | 525,789 |
Wendy’s International | | 440 | | 16,588 |
Western Digital | | 1,010 a | | 17,857 |
Western Union | | 3,500 | | 73,675 |
Weyerhaeuser | | 990 | | 78,428 |
Whirlpool | | 360 | | 38,171 |
Whole Foods Market | | 640 | | 29,946 |
Williams Cos. | | 2,720 | | 80,240 |
Williams-Sonoma | | 440 | | 15,497 |
Wisconsin Energy | | 530 | | 25,859 |
Wm. Wrigley Jr. | | 900 | | 52,992 |
Wyeth | | 6,150 | | 341,325 |
Wyndham Worldwide | | 910 a | | 31,486 |
Wynn Resorts | | 230 | | 23,508 |
Xcel Energy | | 1,860 | | 44,807 |
Xerox | | 4,410 a | | 81,585 |
Xilinx | | 1,540 | | 45,399 |
XM Satellite Radio Holdings, Cl. A | | 1,230 a | | 14,391 |
XTO Energy | | 1,700 | | 92,259 |
Yahoo! | | 5,590 a | | 156,744 |
Yum! Brands | | 1,210 | | 74,851 |
Zimmer Holdings | | 1,110 a | | 100,433 |
Zions Bancorporation | | 460 | | 37,628 |
| | | | 60,995,560 |
Total Common Stocks | | | | |
(cost $86,067,639) | | | | 88,887,948 |
36
| | Coupon | | Maturity | | Principal | | |
Bonds and Notes—.4% | | Rate (%) | | Date | | Amount ($) | | Value ($) |
| |
| |
| |
| |
|
Germany | | | | | | | | |
Bundesrepublik Deutschland, | | | | | | | | |
Bonds, Ser. 05, 3.50%, 1/4/16 | | | | | | | | |
(cost $1,308,034) | | 3.50 | | 1/4/16 | | 1,072,000 | | 1,396,471 |
| |
| |
| |
| |
|
|
Short-Term Investments—50.2% | | | | | | |
| |
| |
| |
|
U.S. Government Agencies—47.8% | | | | | | |
Federal Home Loan Bank System, | | | | | | | | |
5.15%, 5/9/07 | | | | | | 34,700,000 | | 34,660,249 |
Federal Home Loan Mortgage Corp. | | | | | | |
5.11%, 6/21/07 | | | | | | 16,700,000 | | 16,579,106 |
Federal Home Loan Mortgage Corp. | | | | | | |
5.13%, 6/11/07 | | | | | | 29,400,000 | | 29,228,231 |
Federal National Mortgage Association, | | | | | | |
5.11%, 7/13/07 | | | | | | 20,000,000 | | 19,792,599 |
Federal National Mortgage Association, | | | | | | |
5.15%, 5/23/07 | | | | | | 25,000,000 | | 24,921,319 |
Federal National Mortgage Association, | | | | | | |
5.16%, 5/9/07 | | | | | | 11,600,000 | | 11,586,699 |
Inter-American Development Bank, | | | | | | | | |
5.17%, 5/14/07 | | | | | | 25,000,000 | | 24,953,326 |
| | | | | | | | 161,721,529 |
U.S. Treasury Bills—2.4% | | | | | | | | |
4.99%, 6/14/07 | | | | | | 8,300,000 b | | 8,252,358 |
Total Short-Term Investments | | | | | | | | |
(cost $169,971,539) | | | | | | | | 169,973,887 |
| |
| |
| |
| |
|
|
| | | | | | Face Amount | | |
| | | | | | Covered by | | |
Options—10.0% | | | | | | Contracts ($) | | Value ($) |
| |
| |
| |
| |
|
Call Options—9.7% | | | | | | | | |
Euro Bond, | | | | | | | | |
May 2007 @ 106 | | | | | | 449,000 | | 5,514,795 |
S&P 500 Future Index, | | | | | | | | |
6/14/07 @ 900 | | | | | | 3,475,000 | | 20,446,900 |
Swiss Market OTC Index, | | | | | | | | |
6/15/07 @ 6000 | | | | | | 249,000 | | 7,039,311 |
| | | | | | | | 33,001,006 |
T h e F u n d 37
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | Face Amount | | |
| | Covered by | | |
Options (continued) | | Contracts ($) | | Value ($) |
| |
| |
|
Put Options—.3% | | | | |
U.S. Treasury 10 Year Note Futures, | | | | |
5/25/07 @ 115 | | 14,100,000 | | 940,735 |
Total Options | | | | |
(cost $30,118,319) | | | | 33,941,741 |
| |
| |
|
|
Other Investment—13.2% | | Shares | | Value ($) |
| |
| |
|
Registered Investment Company; | | | | |
Dreyfus Institutional Preferred Plus Money Market Fund | | |
(cost $44,565,001) | | 44,565,001 c | | 44,565,001 |
| |
| |
|
Total Investments (cost $332,030,532) | | 100.0% | | 338,765,048 |
Cash and Receivables (Net) | | .0% | | 64,735 |
Net Assets | | 100.0% | | 338,829,783 |
|
a Non-income producing security. | | | | |
b All or partially held by a broker as collateral for open financial futures positions. | | |
c Investment in affiliated money market mutual fund. | | |
Portfolio Summary | | (Unaudited) † | | | | |
|
| | Value (%) | | | | Value (%) |
| |
| |
| |
|
Short-Term/Money | | | | Consumer Staples | | 2.0 |
Market Investments | | 63.4 | | Energy | | 2.0 |
Options | | 10.0 | | Materials | | 1.3 |
Financial | | 5.6 | | Telecommunication Services | | 1.0 |
Information Technology | | 3.9 | | Utilities | | 1.0 |
Consumer Discretionary | | 3.4 | | Foreign/Governmental | | .4 |
Industrial | | 3.4 | | | | |
Health Care | | 2.6 | | | | 100.0 |
|
† Based on net assets. | | | | | | |
See notes to financial statements. | | | | |
38
STATEMENT OF FINANCIAL | | FUTURES |
April 30, 2007 (Unaudited) | | |
| | | | | | | | Unrealized |
| | | | Market Value | | | | Appreciation |
| | | | Covered by | | | | (Depreciation) |
| | Contracts | | Contracts ($) | | Expiration | | at 4/30/2007 ($) |
| |
| |
| |
| |
|
Financial Futures Long | | | | | | | | |
Amsterdam Index | | 8 | | 1,157,963 | | May-07 | | 26,552 |
Australian Government | | | | | | | | |
10 Year Bond | | 317 | | 26,632,263 | | June-07 | | 5,352 |
Long Gilt | | 198 | | 42,436,137 | | June-07 | | (293,935) |
DJ Euro Stoxx 50 | | 88 | | 5,213,454 | | June-07 | | 332,279 |
Hang Seng | | 38 | | 4,881,637 | | May-07 | | (78,843) |
IBEX 35 Index | | 96 | | 18,716,291 | | May-07 | | (736,798) |
Japanese Government | | | | | | | | |
10 Year Bonds | | 5 | | 562,236 | | June-07 | | 174 |
S & P 500 Emini | | 339 | | 25,230,075 | | June-07 | | 443,748 |
S & P/MIB Index | | 33 | | 9,708,347 | | June-07 | | 821,961 |
S&P ASX 200 Index | | 61 | | 7,836,867 | | June-07 | | 248,915 |
S & P/Toronto Stock | | | | | | | | |
Exchange 60 Index | | 22 | | 3,055,296 | | June-07 | | 145,475 |
TOPIX | | 168 | | 23,898,582 | | June-07 | | 35,650 |
Financial Futures Short | | | | | | | | |
Canadian Government | | | | | | | | |
10 Year Bond | | 237 | | (24,239,343) | | June-07 | | 65,332 |
Japanese Government | | | | | | | | |
10 Year Bond | | 4 | | (4,498,891) | | June-07 | | (19,135) |
CAC 40 10 Euro | | 66 | | (5,336,404) | | May-07 | | (58,820) |
Dax Index | | 49 | | (12,457,557) | | June-07 | | (1,221,482) |
FTSE 100 Index | | 168 | | (21,729,170) | | June-07 | | (965,618) |
U.S. Treasury 10 Year Note | | 224 | | (24,265,501) | | June-07 | | (75,865) |
| | | | | | | | (1,325,058) |
|
See notes to financial statements. | | | | | | | | |
The Fund 39
STATEMENT OF ASSETS | | AND | | LIABILITIES |
April 30, 2007 (Unaudited) | | | | |
| | Cost | | Value |
| |
| |
|
Assets ($): | | | | |
Investments in securities—See Statement of Investments: | | |
Unaffiliated issuers | | 287,465,531 | | 294,200,047 |
Affiliated issuers | | 44,565,001 | | 44,565,001 |
Cash | | | | 3,137,719 |
Cash denominated in foreign currencies | | 206,517 | | 209,900 |
Receivable for shares of Common Stock subscribed | | 5,371,603 |
Unrealized appreciation on forward | | | | |
currency exchange contracts—Note 4 | | | | 2,756,269 |
Receivable for investment securities sold | | | | 489,680 |
Dividends and interest receivable | | | | 374,289 |
Prepaid expenses | | | | 87,788 |
| | | | 351,192,296 |
| |
| |
|
Liabilities ($): | | | | |
Due to The Dreyfus Corporation and affiliates—Note 3(c) | | 399,575 |
Unrealized depreciation on forward | | | | |
currency exchange contracts—Note 4 | | | | 5,632,121 |
Payable for investment securities purchased | | 5,369,331 |
Payable for futures variation margin—Note 4 | | 551,639 |
Payable for shares of Common Stock redeemed | | 324,642 |
Accrued expenses | | | | 85,205 |
| | | | 12,362,513 |
| |
| |
|
Net Assets ($) | | | | 338,829,783 |
| |
| |
|
Composition of Net Assets ($): | | | | |
Paid-in capital | | | | 329,867,859 |
Accumulated undistributed investment income—net | | 1,961,445 |
Accumulated net realized gain (loss) on investments | | 4,464,626 |
Accumulated net unrealized appreciation (depreciation) | | |
on investments and foreign currency transactions [including | | |
($1,325,058) net unrealized (depreciation) on financial futures] | | 2,535,853 |
| |
|
Net Assets ($) | | | | 338,829,783 |
Net Asset Value Per Share | | | | | | |
| | Class A | | Class C | | Class R | | Class T |
| |
| |
| |
| |
|
Net Assets ($) | | 234,889,230 | | 53,533,518 | | 47,129,452 | | 3,277,583 |
Shares Outstanding | | 17,004,014 | | 3,901,365 | | 3,404,870 | | 237,739 |
| |
| |
| |
| |
|
Net Asset Value Per Share ($) | | 13.81 | | 13.72 | | 13.84 | | 13.79 |
|
See notes to financial statements. | | | | | | | | |
40
STATEMENT | | OF | | OPERATIONS |
Six Months Ended | | April | | 30, 2007 (Unaudited) |
Investment Income ($): | | |
Income: | | |
Interest | | 2,737,823 |
Cash dividends (net of $15,852 foreign taxes withheld at source): | | |
Unaffiliated issuers | | 277,209 |
Affiliated issuers | | 834,213 |
Total Income | | 3,849,245 |
Expenses: | | |
Management fee—Note 3(a) | | 1,047,467 |
Shareholder servicing costs—Note 3(c) | | 233,190 |
Custodian fees—Note 3(c) | | 111,432 |
Registration fees | | 103,391 |
Distribution fees—Note 3(b) | | 97,674 |
Prospectus and shareholders’ reports | | 11,949 |
Professional fees | | 11,052 |
Directors’ fees and expenses—Note 3(d) | | 318 |
Miscellaneous | | 7,468 |
Total Expenses | | 1,623,941 |
Less—reduction in management fee | | |
due to undertaking—Note 3(a) | | (126,404) |
Net Expenses | | 1,497,537 |
Investment Income—Net | | 2,351,708 |
| |
|
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
Net realized gain (loss) on investments and foreign currency transactions | | (125,005) |
Net realized gain (loss) on options transactions | | 977,547 |
Net realized gain (loss) on financial futures | | 3,324,942 |
Net realized gain (loss) on forward currency exchange contracts | | 1,009,596 |
Net Realized Gain (Loss) | | 5,187,080 |
Net unrealized appreciation (depreciation) on investments and | | |
foreign currency transactions [including ($1,571,889) | | |
net unrealized (depreciation) on financial futures] | | 1,268,090 |
Net Realized and Unrealized Gain (Loss) on Investments | | 6,455,170 |
Net Increase in Net Assets Resulting from Operations | | 8,806,878 |
|
See notes to financial statements. | | |
T h e F u n d 41
STATEMENT OF CHANGES IN NET ASSETS
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
| | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Operations ($): | | | | |
Investment income—net | | 2,351,708 | | 222,698 |
Net realized gain (loss) on investments | | 5,187,080 | | 802,876 |
Net unrealized appreciation | | | | |
(depreciation) on investments | | 1,268,090 | | 1,267,763 |
Net Increase (Decrease) in Net Assets | | | | |
Resulting from Operations | | 8,806,878 | | 2,293,337 |
| |
| |
|
Dividends to Shareholders from ($): | | | | |
Investment income—net: | | | | |
Class A shares | | (485,921) | | — |
Class C shares | | (53,687) | | — |
Class R shares | | (63,602) | | — |
Class T shares | | (11,569) | | — |
Net realized gain on investments: | | | | |
Class A shares | | (1,191,979) | | — |
Class C shares | | (153,298) | | — |
Class R shares | | (146,892) | | — |
Class T shares | | (31,343) | | — |
Total Dividends | | (2,138,291) | | — |
| |
| |
|
Capital Stock Transactions ($): | | | | |
Net proceeds from shares sold: | | | | |
Class A shares | | 192,444,161 | | 54,706,127 |
Class C shares | | 49,847,895 | | 3,849,007 |
Class R shares | | 39,179,623 | | 7,902,691 |
Class T shares | | 3,119,187 | | 779,205 |
Dividends reinvested: | | | | |
Class A shares | | 1,512,242 | | — |
Class C shares | | 122,768 | | — |
Class R shares | | 186,213 | | — |
Class T shares | | 42,912 | | — |
Cost of shares redeemed: | | | | |
Class A shares | | (11,164,906) | | (9,260,046) |
Class C shares | | (676,718) | | (519,039) |
Class R shares | | (863,244) | | (521,306) |
Class T shares | | (298,602) | | (520,311) |
Increase (Decrease) in Net Assets | | | | |
from Capital Stock Transactions | | 273,451,531 | | 56,416,328 |
Total Increase (Decrease) in Net Assets | | 280,120,118 | | 58,709,665 |
| |
| |
|
Net Assets ($): | | | | |
Beginning of Period | | 58,709,665 | | — |
End of Period | | 338,829,783 | | 58,709,665 |
Undistributed investment income—net | | 1,961,445 | | 224,516 |
42
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
| | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Capital Share Transactions: | | | | |
Class A | | | | |
Shares sold | | 14,140,978 | | 4,280,453 |
Shares issued for dividends reinvested | | 112,018 | | — |
Shares redeemed | | (817,986) | | (711,449) |
Net Increase (Decrease) in Shares Outstanding | | 13,435,010 | | 3,569,004 |
| |
| |
|
Class C | | | | |
Shares sold | | 3,676,346 | | 305,717 |
Shares issued for dividends reinvested | | 9,128 | | — |
Shares redeemed | | (49,824) | | (40,002) |
Net Increase (Decrease) in Shares Outstanding | | 3,635,650 | | 265,715 |
| |
| |
|
Class R | | | | |
Shares sold | | 2,871,537 | | 621,927 |
Shares issued for dividends reinvested | | 13,773 | | — |
Shares redeemed | | (62,365) | | (40,002) |
Net Increase (Decrease) in Shares Outstanding | | 2,822,945 | | 581,925 |
| |
| |
|
Class T | | | | |
Shares sold | | 234,750 | | 61,784 |
Shares issued for dividends reinvested | | 3,181 | | — |
Shares redeemed | | (21,966) | | (40,010) |
Net Increase (Decrease) in Shares Outstanding | | 215,965 | | 21,774 |
|
a From May 2, 2006 (commencement of operations) to October 31, 2006. | | |
See notes to financial statements. | | | | |
T h e F u n d 43
FINANCIAL HIGHLIGHTS
The following tables describes 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 | | |
| | April 30, 2007 | | Year Ended |
Class A Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 13.23 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .17 | | .12 |
Net realized and unrealized | | | | |
gain (loss) on investments | | .64 | | .61 |
Total from Investment Operations | | .81 | | .73 |
Distributions: | | | | |
Dividends from investment income—net | | (.07) | | — |
Dividends from net realized gain on investments | | (.16) | | — |
Total Distributions | | (.23) | | — |
Net asset value, end of period | | 13.81 | | 13.23 |
| |
| |
|
Total Return (%) c,d | | 6.15 | | 5.84 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets e | | 1.63 | | 2.67 |
Ratio of net expenses to average net assets e | | 1.50 | | 1.54 |
Ratio of net investment income | | | | |
to average net assets e | | 2.53 | | 2.09 |
Portfolio Turnover Rate | | .51d | | — |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 234,889 | | 47,215 |
|
a From May 2, 2006 (commencement of operations) to October 31, 2006. | | |
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. | | | | |
44
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
Class C Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 13.18 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .12 | | .08 |
Net realized and unrealized | | | | |
gain (loss) on investments | | .64 | | .60 |
Total from Investment Operations | | .76 | | .68 |
Distributions: | | | | |
Dividends from investment income—net | | (.06) | | — |
Dividends from net realized gain on investments | | (.16) | | — |
Total Distributions | | (.22) | | — |
Net asset value, end of period | | 13.72 | | 13.18 |
| |
| |
|
Total Return (%) c,d | | 5.87 | | 5.36 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets e | | 2.44 | | 3.49 |
Ratio of net expenses to average net assets e | | 2.25 | | 2.29 |
Ratio of net investment income | | | | |
to average net assets e | | 1.83 | | 1.33 |
Portfolio Turnover Rate | | .51d | | — |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 53,534 | | 3,501 |
|
a From May 2, 2006 (commencement of operations) to October 31, 2006. | | |
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. | | | | |
T h e F u n d 45
FINANCIAL HIGHLIGHTS (continued)
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
Class R Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 13.24 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .19 | | .13 |
Net realized and unrealized | | | | |
gain (loss) on investments | | .64 | | .61 |
Total from Investment Operations | | .83 | | .74 |
Distributions: | | | | |
Dividends from investment income—net | | (.07) | | — |
Dividends from net realized gain on investments | | (.16) | | — |
Total Distributions | | (.23) | | — |
Net asset value, end of period | | 13.84 | | 13.24 |
| |
| |
|
Total Return (%) c | | 6.33 | | 5.92 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets d | | 1.38 | | 2.51 |
Ratio of net expenses to average net assets d | | 1.25 | | 1.27 |
Ratio of net investment income | | | | |
to average net assets d | | 2.82 | | 2.31 |
Portfolio Turnover Rate | | .51c | | — |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 47,129 | | 7,705 |
|
a From May 2, 2006 (commencement of operations) to October 31, 2006. | | |
b Based on average shares outstanding at each month end. | | | | |
c Not annualized. | | | | |
d Annualized. | | | | |
See notes to financial statements. | | | | |
46
| | Six Months Ended | | |
| | April 30, 2007 | | Year Ended |
Class T Shares | | (Unaudited) | | October 31, 2006 a |
| |
| |
|
Per Share Data ($): | | | | |
Net asset value, beginning of period | | 13.22 | | 12.50 |
Investment Operations: | | | | |
Investment income—net b | | .16 | | .12 |
Net realized and unrealized | | | | |
gain (loss) on investments | | .63 | | .60 |
Total from Investment Operations | | .79 | | .72 |
Distributions: | | | | |
Dividends from investment income—net | | (.06) | | — |
Dividends from net realized gain on investments | | (.16) | | — |
Total Distributions | | (.22) | | — |
Net asset value, end of period | | 13.79 | | 13.22 |
| |
| |
|
Total Return (%) c,d | | 6.03 | | 5.68 |
| |
| |
|
Ratios/Supplemental Data (%): | | | | |
Ratio of total expenses to average net assets e | | 1.88 | | 3.10 |
Ratio of net expenses to average net assets e | | 1.75 | | 1.85 |
Ratio of net investment income | | | | |
to average net assets e | | 2.23 | | 1.89 |
Portfolio Turnover Rate | | .51d | | — |
| |
| |
|
Net Assets, end of period ($ x 1,000) | | 3,278 | | 288 |
|
a From May 2, 2006 (commencement of operations) to October 31, 2006. | | |
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. | | | | |
T h e F u n d 47
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Global Alpha Fund (the “fund”) is a separate diversified series of Advantage Funds, Inc. (the “Company”) which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company that offers thirteen series, including the fund. The fund’s investment objective seeks total return by investing in instruments that provide investment exposure to global equity, bond and currency markets, and in fixed-income securities.The Dreyfus Corporation (the “Manager” or “Dreyfus”) serves as the fund’s investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation (“Mellon Financial”). Mellon Capital Management Corporation (“Mellon Capital”) serves as the fund’s sub-investment adviser.
On May 24, 2007, the shareholders of Mellon Financial and The Bank of New York Company, Inc. approved the proposed merger of the two companies.The new company will be called The Bank of New York Mellon Corporation. As part of this transaction, Dreyfus would become a wholly-owned subsidiary of The Bank of New York Mellon Corporation.The transaction is subject to certain regulatory approvals, as well as other customary conditions to closing. Subject to such approvals and the satisfaction of the other conditions, Mellon Financial and The Bank of New York Company, Inc. expect the transaction to be completed in the third quarter of 2007.
Dreyfus Service Corporation (the “Distributor”) a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares. The fund is authorized to issue 400 million shares of $.001 par value Common Stock.The fund currently offers four classes of shares: Class A (100 million shares authorized), Class C (100 million shares authorized), Class R (100 million shares authorized) and Class T (100 million shares authorized). Class A and Class T shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class R shares are sold at net asset value per share only to institutional investors. Other differences
48
between the classes include the services offered to and the expenses borne by each class 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 fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale 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 open-end investment companies that are not traded on an exchange are valued at their net asset value. When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally
T h e F u n d 49
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair 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 ADR’s and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.
Investments in debt securities excluding short-term investments (other than U.S.Treasury Bills), financial futures, options and forward currency exchange contracts are valued each business day by an independent pricing service (the “Service”) approved by the Board of Directors. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Restricted securities, as well as securities or other assets for which recent market quotations are not readily available, that are not valued by a pricing service approved by the Board of Directors, or are determined by the fund not to reflect accurately fair value, are valued at fair value as determined in good faith under the direction of the Board of Directors.The factors that may be considered when fair valuing a security include fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the
50
market in which the securities are purchased and sold and public trading in similar securities of the issuer or comparable issuers. Short-term investments, excluding U.S.Treasury Bills, are carried at amortized cost, which approximates value. Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Options traded over-the-counter are priced at the mean between the bid and asked price. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange. Forward currency exchange contracts are valued at the forward rate.
The Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.
(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 and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized on securities transactions 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 in securities, resulting from changes in exchange
T h e F u n d 51
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
rates. Such gains and losses are included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss 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 has an arrangement with the custodian bank whereby the fund receives earnings credits from the custodian when positive cash balances are maintained, which are used to offset custody fees. For financial reporting purposes, the fund includes net earnings credits, if any, as an expense offset in the Statement of Operations.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act.
(e) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gain, 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 gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.
(f) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
The FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, pre-
52
sented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority.Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year.Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.
There were no distributions paid to shareholders during the fiscal year ended October 31, 2006. The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $350 million redemption credit facility (the “Facility”) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. During the period ended April 30, 2007, the fund did not borrow under the Facility.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to a Management Agreement (“Agreement”) with Dreyfus, the management fee is computed at the annual rate of 1.10% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has agreed, through October 31, 2007, 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 taxes, brokerage fees, Rule 12b-1 distribution plan fees, interest on borrowings, shareholder services plan fees, commitment fees and extraordinary expenses, exceed an annual rate of 1.25% of the value of the average daily net assets of their class. The
T h e F u n d 53
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
reduction in management fee,pursuant to the undertaking, amounted to $126,404 during the period ended April 30, 2007.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and Mellon Capital, Dreyfus pays Mellon Capital an annual fee of .65% of the value of the fund’s average daily net assets, payable monthly.
During the period ended April 30, 2007, the Distributor retained $129,228 from commissions earned on sales of the fund’s Class A shares and $2,760 from CDSC on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan (the “Plan”) adopted pursuant to Rule 12b-1 under the Act, Class C and Class T shares pay the Distributor for distributing their shares at an annual rate of .75% and .25% of the value of their respective average daily net assets. During the period ended April 30, 2007, Class C and Class T shares were charged $94,177 and $3,497, respectively, pursuant to the Plan.
(c) Under the Shareholder Services Plan, Class A, Class C and Class T 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 (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended April 30, 2007, Class A, Class C and Class T shares were charged $172,518, $31,392 and $3,497, respectively, pursuant to the Shareholder Services Plan.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended April 30, 2007, the fund was charged $16,566 pursuant to the transfer agency agreement.
54
The fund compensates Mellon Bank, N.A., an affiliate of Dreyfus, under a custody agreement for providing custodial services for the fund. During the period ended April 30, 2007, the fund was charged $111,432 pursuant to the custody agreement.
During the period ended April 30, 2007, the fund was charged $2,044 for services performed by the Chief Compliance Officer.
The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $286,091, Rule 12b-1 distribution plan fees $30,593, shareholder services plan fees $55,789, custodian fees $105,333, chief compliance officer fees $3,407 and transfer agency per account fees $6,310, which are offset against an expense reimbursement currently in effect in the amount of $87,948.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
(e) Pursuant to an exemptive order from the SEC, the fund may invest its available cash balances in affiliated money market mutual funds. Management fees of the underlying money market mutual funds have been waived by Dreyfus.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, financial futures, options transactions and forward currency exchange contracts during the period ended April 30, 2007, amounted to $86,175,652 and $126,959, respectively.
The fund may invest in financial futures contracts in order to gain exposure to or protect against changes in the market.The fund is exposed to market risk as a result of changes in the value of the underlying financial instruments. Investments in financial futures require the fund to “mark to market” on a daily basis, which reflects the change in market value of the contracts at the close of each day’s trading.Accordingly, vari-
T h e F u n d 55
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
ation margin payments are received or made to reflect daily unrealized gains or losses.When the contracts are closed, the fund recognizes a realized gain or loss.These investments require initial margin deposits with a broker, which consist of cash or cash equivalents.The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Contracts open at April 30, 2007, are set forth in the Statement of Financial Futures.
The fund enters into forward currency exchange contracts to gain exposure to foreign currency, hedge its exposure against changes in exchange rates on its foreign portfolio holdings and to settle foreign currency trans-actions.When executing forward currency exchange 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 currency exchange contracts, the fund would incur 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 currency exchange contracts, the fund would incur 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.The fund is also exposed to credit risk associated with counterparty nonperfor-mance on these forward currency exchange contracts which is typically limited to the unrealized gain on each open contract.The following summarizes open forward currency exchange contracts at April 30, 2007:
| | Foreign | | | | | | Unrealized |
Forward Currency | | Currency | | | | | | Appreciation |
Exchange Contracts | | Amounts | | Cost ($) | | Value ($) (Depreciation) ($) |
| |
| |
| |
|
Purchases: | | | | | | | | |
British Pound, | | | | | | | | |
expiring 6/14/2007 | | 20,607,500 | | 40,074,874 | | 41,200,987 | | 1,126,113 |
Euro, expiring | | | | | | | | |
6/14/2007 | | 6,893,000 | | 9,135,127 | | 9,422,180 | | 287,053 |
Japanese Yen, | | | | | | | | |
expiring | | | | | | | | |
6/14/2007 | | 5,827,103,000 | | 49,891,903 | | 49,026,991 | | (864,912) |
New Zealand Dollar, | | | | | | | | |
expiring 6/14/2007 | | 26,804,000 | | 18,527,701 | | 19,853,455 | | 1,325,754 |
56
| | Foreign | | | | | | Unrealized |
Forward Currency | | Currency | | | | | | Appreciation |
Exchange Contracts | | Amounts | | Proceeds ($) | | Value ($) (Depreciation) ($) |
| |
| |
| |
|
Sales: | | | | | | | | |
Australian Dollar, | | | | | | | | |
expiring 6/14/2007 | | 52,600,000 | | 41,542,086 | | 43,733,218 | | (2,191,132) |
Canadian Dollar, | | | | | | | | |
expiring 6/14/2007 | | 33,517,000 | | 28,788,410 | | 30,366,478 | | (1,578,068) |
Norwegian Krone, | | | | | | | | |
expiring 6/14/2007 | | 152,469,000 | | 24,914,511 | | 25,667,534 | | (753,023) |
Swedish Krona, expiring | | | | | | |
6/14/2007 | | 35,005,000 | | 4,984,754 | | 5,229,740 | | (244,986) |
Swiss Franc, expiring | | | | | | | | |
6/14/2007 | | 21,264,080 | | 17,702,046 | | 17,684,697 | | 17,349 |
Total | | | | | | | | (2,875,852) |
At April 30, 2007, accumulated net unrealized appreciation on investments was $6,734,516, consisting of $8,058,571 gross unrealized appreciation and $1,324,055 gross unrealized depreciation.
At April 30, 2007, 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).
NOTE 5—Subsequent Event:
The fund’s Board of Directors approved the redesignation of the fund’s Class R shares as Class I shares, effective June 1, 2007. The description of the eligibility requirements for Class I shares remains the same as it was for Class R shares.
T h e F u n d 57
INFORMATION ABOUT THE REVIEW AND APPROVAL |
OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) |
At a Board of Directors meeting held on April 24, 2006, the Board unanimously approved the fund’s Management Agreement and Sub-Investment Advisory Agreement (together, the “Agreements”) with Mellon Capital Management Corporation (the “Sub-Adviser”), for a one-year term ending March 30, 2008. The Board is comprised entirely of individuals who have no affiliation with the Manager or any affiliates of the Manager.
Prior to the meeting, the Manager provided the Board members with extensive materials related to the approval of the Agreements, including performance and expense information for other investment companies with a similar investment objective to the fund.
During their meeting, the Board discussed the proposed approval of the Agreements with senior management personnel of the Manager. In determining to approve the Agreements, the Board considered all factors which they believed to be relevant.
Analysis of Nature,Extent,and Quality of Services Provided to the Fund. The Board members received a presentation from representatives of the Manager regarding services provided to the funds in the Dreyfus fund complex, and discussed the nature, extent, and quality of the services provided to the fund pursuant to the proposed Agreements.The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Board members also referenced information provided regarding the relationships the Manager has with various intermediaries and the different needs of each, the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to the different distribution channels.
The Board members also considered the Manager’s and Sub-Adviser’s research and portfolio management capabilities and the Manager’s oversight of other day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager’s
58
extensive administrative, accounting and compliance infrastructure, as well as the Manager’s supervisory activities over the Sub-Adviser.
Comparative Analysis of the Fund’s Performance, Management Fee, and Expense Ratio. As the fund had not yet commenced operations, the Board members were not able to review the fund’s performance. The Board discussed with representatives of the Manager the investment strategies to be employed in the management of the fund’s assets. The Board members noted the Manager’s and Sub-Adviser’s reputation and experience with respect to similar funds.
The Board members reviewed the fund’s management fee and anticipated expense ratio and reviewed the range of management fees and expense ratios of funds in the Lipper Global Flexible Portfolio Funds category and the average and median management fees in the Lipper category, as well as management fees of a subset of funds in the Lipper category.
Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds and/or separate accounts managed by the Manager with similar investment objectives, policies and strategies as the fund (the “Similar Accounts”), and explained the nature of the Similar Accounts and the differences, from the Manager’s and Sub-Adviser’s perspective, as applicable, in providing services to the Similar Accounts as compared to the fund. The Manager’s representatives also reviewed the costs associated with distribution through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the advisory fees paid in light of the Manager’s or Sub-Adviser’s performance, as the case may be, and the services provided. The Board members considered the relevance of the fee information provided for the Similar Accounts managed by the Manager or Sub-Adviser, as applicable, to evaluate the appropriateness and reasonableness of the fund’s management fees.The Board acknowledged that differences in fees paid by the Similar Accounts seemed to be consistent with the services provided.
T h e F u n d 59
INFORMATION ABOUT THE | | REVIEW AND | | APPROVAL | | OF THE |
FUND’S MANAGEMENT | | AGREEMENT | | (Unaudited) | | (continued) |
Analysis of Profitability and Economies of Scale. As the fund had not yet commenced operations, the Manager’s representatives were not able to review the dollar amount of expenses allocated and profit received by the Manager.The Board members also considered potential benefits to the Manager and Sub-Adviser from acting as investment adviser and sub-investment adviser, respectively, and noted the possibility of soft dollar arrangements in the future with respect to trading the fund’s portfolio. The Board also considered whether the fund would be able to participate in any economies of scale that the Manager may experience in the event that the fund attracts a large amount of assets. The Board members noted the uncertainty of the estimated asset levels and discussed the renewal requirements for advisory agreements and their ability to review the management fee annually after an initial term of the Management Agreement.
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 approving the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.
- The Board concluded that the nature, extent and quality of the services to be provided by the Manager and Sub-Adviser are adequate and appropriate, especially considering the Manager’s and Sub- Adviser’s experience and reputation with respect to its investment approach and its experience and reputation with respect to investing in similar funds.
- The Board concluded that the fee to be paid by the fund to the Manager was reasonable, in light of the services to be provided, comparative expense and advisory fee information, and benefits anticipated to be derived by the Manager fom its relationship with the fund, and that, the fee to be paid by the Manager is reasonable and appropriate.
The Board members considered these conclusions and determinations, and, without any one factor being dispositive, the Board determined that approval of the fund’s Agreements was in the best interests of the fund and its shareholders.
60
For More Information
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Telephone Call your financial representative or 1-800-554-4611
Mail | | The Dreyfus Premier 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 1-202-551-8090.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-645-6561.
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© 2007 Dreyfus Service Corporation |
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. | | Schedule of Investments. |
| | 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. |
Item 10. | | Submission of Matters to a Vote of Security Holders. |
The Registrant has a Nominating Committee (the "Committee"), which is responsible for selecting and nominating persons for election or appointment by the Registrant's Board as Board members. The Committee has adopted a Nominating Committee Charter (the "Charter"). Pursuant to the Charter, the Committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Registrant, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8th Floor East, New York, New York 10166. A nomination submission must include information regarding the recommended nominee as specified in the Charter. This information includes all information relating to a recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Board members, as well as information sufficient to evaluate the factors to be considered by the Committee, including character and integrity, business and professional experience, and whether the person has the ability to apply sound and independent business judgment and would act in the interests of the Registrant and its shareholders.
Nomination submissions are required to be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.
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.
Advantage Funds, Inc.
By: | | /s/ J. David Officer |
| | J. David Officer |
| | President |
|
Date: | | June 19, 2007 |
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/ J. David Officer |
| | J. David Officer |
| | President |
|
Date: | | June 19, 2007 |
|
By: | | /s/ James Windels |
| | James Windels |
| | Treasurer |
|
Date: | | June 19, 2007 |
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) |