Form N-CSR Advantage Funds, Inc. For: Oct 31
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 |
811-07123 | |||||
|
| |||||
|
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) |
| ||||
|
|
| ||||
|
Bennett A. MacDougall, Esq. 200 Park Avenue New York, New York 10166 |
| ||||
|
(Name and address of agent for service) |
| ||||
| ||||||
Registrant's telephone number, including area code: |
(212) 922-6400 | |||||
|
| |||||
Date of fiscal year end:
|
10/31 |
| ||||
Date of reporting period: |
10/31/16
|
| ||||
The following N-CSR relates only to the Registrant's series listed below and does not relate to any series of the Registrant with a different fiscal year end and, therefore, different N-CSR reporting requirements. A separate N-CSR will be filed for any series with a different fiscal year end, as appropriate.
Dreyfus Global Dynamic Bond Fund
Dreyfus Global Real Return Fund
Dreyfus Total Emerging Markets Fund
Dynamic Total Return Fund
FORM N-CSR
Item 1. Reports to Stockholders.
Dreyfus Global Dynamic Bond Fund
|
ANNUAL REPORT October 31, 2016 |
|
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(s) 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
T H E F U N D
Chief Executive Officer |
|
With Those of Other Funds |
|
Public Accounting Firm |
|
F O R M O R E I N F O R M AT I O N
Back Cover
|
The Fund |
A LETTER FROM THE CHIEF EXECUTIVE OFFICER
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Global Dynamic Bond Fund, covering the 12-month period from November 1, 2015 through October 31, 2016. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Stocks and bonds generally advanced over the reporting period in the midst of heightened market volatility stemming from various global economic developments. Toward the end of 2015, investor sentiment deteriorated amid sluggish global economic growth, falling commodity prices, and the first increase in short-term U.S. interest rates in nearly a decade. These worries sparked sharp stock market declines in January 2016, but equities began to rally in February when U.S. monetary policymakers refrained from additional rate hikes, other central banks eased their monetary policies further, and commodity prices began to rebound. Stocks generally continued to climb through the summer, driving several broad measures of U.S. stock market performance to record highs in July and August before moderating as a result of uncertainty regarding U.S. elections and potential rate hikes. In the bond market, yields of high-quality sovereign bonds generally moved lower and their prices increased in response to robust investor demand for current income in a low interest rate environment.
The outcome of the U.S. presidential election and ongoing global economic headwinds suggest that uncertainty will persist in the financial markets over the foreseeable future. Some asset classes and industry groups may benefit from a changing economic and political landscape, while others probably will face challenges. Consequently, selectivity could become a more important determinant of investment success. As always, we encourage you to discuss the implications of our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
Mark D. Santero
Chief Executive Officer
The Dreyfus Corporation
November 15, 2016
2
DISCUSSION OF FUND PERFORMANCE
For the period from November 1, 2015 through October 31, 2016, as provided by Paul Brain, Howard Cunningham, and Jonathan Day, Portfolio Managers of Newton Investment Management (North America) Limited, Sub-Investment Adviser
Fund and Market Performance Overview
For the 12-month period ended October 31, 2016, Dreyfus Global Dynamic Bond Fund’s Class A shares produced a total return of 3.20%, Class C shares returned 2.47%, Class I shares returned 3.52%, and Class Y shares returned 3.54%.1 In comparison, the fund’s benchmark, the Citi 1-Month Treasury Bill Index (the “Index”), produced a total return of 0.18% for the same period.2
Higher-quality bonds generally benefited during the reporting period from falling long-term interest rates, and lower-quality securities erased previous losses during a rally over the spring and summer of 2016. The fund outperformed its benchmark, mainly due to our sector allocation and currency strategies.
The Fund’s Investment Approach
The fund seeks total return (consisting of income and capital appreciation). To pursue its goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in bonds and other instruments that provide investment exposure to global bond markets, including developed and emerging capital markets. We employ a dynamic, benchmark unconstrained approach in allocating the fund’s assets globally, among government bonds, emerging market sovereign debt, investment grade and high yield corporate instruments, and currencies. We combine a top-down approach, emphasizing global economic trends and current investment themes, with bottom-up security selection based on fundamental research to allocate the fund’s investments. In choosing investments, we consider key trends in global economic variables, investment themes, relative valuations of debt securities and cash, long-term trends in currency movements, and company fundamentals.
Robust Investor Demand Supported Global Bond Prices
Global economic concerns sparked heightened bond market turbulence over the final months of 2015. Sluggish growth in Europe and Japan and falling commodity prices caused investors to flock to traditional safe havens, hurting riskier emerging market and corporate bonds while sending prices of high-quality sovereign bonds higher. Investors also anticipated that U.S. monetary policymakers would raise short-term interest rates, as indeed they did in December 2015, a move that many worried could weigh on the U.S. and global economies.
Investor sentiment changed dramatically in mid-February 2016 when U.S. policymakers indicated that they would delay additional rate hikes, commodity prices began to rebound, several central banks announced new stimulus measures, and foreign currencies gained value against the U.S. dollar. The Bank of Japan and European Central Bank adopted negative short-term interest rates, a move that drove international fixed-income investors to higher-yielding market sectors such as corporate-backed securities, emerging market bonds, and U.S. government securities.
In June and early July, concerns surrounding a referendum in the United Kingdom to leave the European Union produced renewed market volatility. Yet, higher-yielding bond market sectors quickly rebounded amid robust demand from international investors seeking more competitive yields than were available from sovereign bonds in overseas markets. Bonds gave back some of the previous gains in October as uncertainty intensified in advance of U.S. elections.
3
DISCUSSION OF FUND PERFORMANCE (continued)
Currencies and Riskier Market Sectors Buoyed Fund Results
A bias towards high-quality government and corporate bonds helped cushion the impact of declining markets early in the reporting period. However, higher short-term U.S. interest rates initially hurt long-dated U.S. Treasuries and other government bonds. The resulting weakness was partly offset at the time by selective exposure to short-dated emerging market sovereign bonds and investment-grade credits.
When investor sentiment began to improve in February, the fund benefited from a more favorable backdrop by modestly increasing its exposure to riskier assets, including emerging-market bonds. Meanwhile, a more constructive duration posture helped the fund benefit from falling long-term interest rates. In addition, a modest increase in exposure to high yield bonds helped the fund participate more fully in their rally.
The fund’s net currency strategies also added value over the reporting period. Short Australian dollar/Asian currency positions against a long Japanese yen position enabled the fund to profit from related volatility in the Chinese renminbi. Short and long positions in various emerging-markets currencies and a bias to the U.S. dollar over European currencies also fared relatively well.
Finally, short positions in ten-year U.S. Treasury futures contracts increased exposure to Treasury Inflation Protected Securities, and the sale of longer-term sovereign bonds helped mitigate rising inflation expectations towards the end of the reporting period.
A More Cautious Investment Posture
With economic growth weak and inflation subdued, we expect most of the world’s major central banks to maintain accommodative monetary policies. Expectations of renewed U.S. infrastructure spending and the fading effects of previous energy price declines could make high-quality sovereign bonds vulnerable to higher inflation expectations. Therefore, we currently intend to limit the fund’s duration exposure while maintaining positions in inflation-linked securities. In currency markets, expectations of U.S. economic growth may favor the U.S. dollar, while European and emerging market currencies seem vulnerable to economic and political uncertainty.
November 15, 2016
Bonds are subject generally to interest-rate, credit, liquidity, and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.
High yield bonds are subject to increased credit risk and are considered speculative in terms of the issuer’s perceived ability to continue making interest payments on a timely basis and to repay principal upon maturity.
Foreign bonds are subject to special risks including exposure to currency fluctuations, changing political and economic conditions, and potentially less liquidity.
Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by the fund and denominated in those currencies. The use of leverage may magnify the fund’s gains or losses. For derivatives with a leveraging component, adverse changes in the value or level of the underlying asset can result in a loss that is much greater than the original investment in the derivative.
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Class I and Class Y shares are not subject to any initial or deferred sales charge. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Return figures reflect the absorption of certain fund expenses by The Dreyfus Corporation pursuant to an agreement in effect through March 1, 2017, at which time it may be extended, terminated, or modified. Had these expenses not been absorbed, the returns would have been lower.
2 Source: Lipper Inc. — Reflects reinvestment of dividends and, where applicable, capital gain distributions. The Citi 1-Month Treasury Bill Index is a market value-weighted index of public obligations of the U.S. Treasury with maturities of 30 days. Investors cannot invest directly in any index.
4
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Global Dynamic Bond Fund Class A shares, Class C shares, Class I shares and Class Y shares and the Citi 1-Month Treasury Bill Index
† Source: Lipper Inc.
†† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C, Class I and Class Y shares of Dreyfus Global Dynamic Bond Fund on 3/25/11 (inception date) to a $10,000 investment made in the Citi 1-Month Treasury Bill Index (the “Index”) on that date. All dividends and capital gain distributions are reinvested.
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes. The Index is a market value-weighted index of public obligations of the U.S. Treasury with maturities of 30 days. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
5
FUND PERFORMANCE (continued)
Average Annual Total Returns as of 10/31/16 | |||||
|
Inception |
1 Year |
5 Years |
From |
|
Class A shares |
|||||
with maximum sales charge (4.5%) |
3/25/11 |
-1.43% |
2.21% |
2.13% |
|
without sales charge |
3/25/11 |
3.20% |
3.15% |
2.97% |
|
Class C shares |
|||||
with applicable redemption charge † |
3/25/11 |
1.47% |
2.39% |
2.20% |
|
without redemption |
3/25/11 |
2.47% |
2.39% |
2.20% |
|
Class I shares |
3/25/11 |
3.52% |
3.40% |
3.22% |
|
Class Y shares |
7/1/13 |
3.54% |
3.35%†† |
3.15%†† |
|
Citi 1- Month Treasury Bill Index |
3/31/11 |
0.18% |
0.06% |
0.06%††† |
Past performance is not predictive of future performance. The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.
† The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.
†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
††† For comparative purposes, the value of the Index as of 3/31/11 is used as the beginning value on 3/25/11.
6
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Global Dynamic Bond Fund from May 1, 2016 to October 31, 2016. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
|||||||||||
assuming actual returns for the six months ended October 31, 2016 | |||||||||||
|
|
|
|
Class A |
Class C |
Class I |
Class Y | ||||
Expenses paid per $1,000† |
$4.83 |
$8.63 |
$3.56 |
$3.56 | |||||||
Ending value (after expenses) |
$1,022.00 |
$1,018.50 |
$1,024.50 |
$1,024.50 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
|||||||||||
assuming a hypothetical 5% annualized return for the six months ended October 31, 2016 | |||||||||||
|
|
|
|
Class A |
Class C |
Class I |
Class Y | ||||
Expenses paid per $1,000† |
$4.82 |
$8.62 |
$3.56 |
$3.56 | |||||||
Ending value (after expenses) |
$1,020.36 |
$1,016.59 |
$1,021.62 |
$1,021.62 |
† Expenses are equal to the fund’s annualized expense ratio of .95% for Class A, 1.70% for Class C, .70% for Class I and .70% for Class Y, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
7
STATEMENT OF INVESTMENTS
October 31, 2016
Bonds and Notes - 91.2% |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Consumer Discretionary - 7.4% |
||||||||||
Bertelsmann SE & Co., |
EUR |
3.50 |
4/23/75 |
200,000 |
b |
214,922 |
||||
CPUK Finance, |
GBP |
7.00 |
2/28/42 |
100,000 |
129,952 |
|||||
CPUK Finance, |
GBP |
2.67 |
2/28/42 |
200,000 |
252,673 |
|||||
Daimler Finance North America, |
1.88 |
1/11/18 |
300,000 |
301,538 |
||||||
DISH DBS, |
4.63 |
7/15/17 |
140,000 |
142,975 |
||||||
Enterprise Inns, |
GBP |
6.50 |
12/6/18 |
98,000 |
131,660 |
|||||
Fiat Chrysler Finance Europe, |
EUR |
7.00 |
3/23/17 |
100,000 |
112,625 |
|||||
InterContinental Hotels Group, |
GBP |
6.00 |
12/9/16 |
200,000 |
245,991 |
|||||
John Lewis, |
GBP |
8.38 |
4/8/19 |
175,000 |
248,494 |
|||||
Mitchells & Butlers Finance, |
GBP |
6.01 |
12/15/30 |
181,059 |
257,693 |
|||||
Motability Operations Group, |
EUR |
1.63 |
6/9/23 |
100,000 |
117,209 |
|||||
New Look Secured Issuer, |
GBP |
6.50 |
7/1/22 |
100,000 |
110,261 |
|||||
Norcell Sweden Holding 3, |
SEK |
5.25 |
11/4/19 |
1,000,000 |
114,037 |
|||||
Unitymedia Hessen, |
EUR |
4.00 |
1/15/25 |
115,000 |
130,818 |
|||||
Unitymedia Hessen, |
EUR |
6.25 |
1/15/29 |
100,000 |
122,291 |
|||||
Virgin Media Finance, |
EUR |
4.50 |
1/15/25 |
100,000 |
109,309 |
|||||
Virgin Media Secured Finance, |
GBP |
6.25 |
3/28/29 |
100,000 |
128,726 |
|||||
2,871,174 |
||||||||||
Consumer Staples - 4.2% |
||||||||||
Agrokor dd, |
EUR |
9.13 |
2/1/20 |
100,000 |
114,441 |
|||||
Anheuser-Busch InBev, |
GBP |
6.50 |
6/23/17 |
110,000 |
139,419 |
|||||
Anheuser-Busch InBev, |
EUR |
0.88 |
3/17/22 |
110,000 |
124,325 |
|||||
Anheuser-Busch InBev Finance, |
1.90 |
2/1/19 |
130,000 |
130,930 |
||||||
Barry Callebaut Services, |
EUR |
2.38 |
5/24/24 |
100,000 |
115,131 |
|||||
Coca-Cola European Partners, |
EUR |
0.75 |
2/24/22 |
210,000 |
233,817 |
|||||
Constellation Brands, |
7.25 |
5/15/17 |
130,000 |
134,387 |
||||||
DS Services of America, |
10.00 |
9/1/21 |
78,000 |
c |
86,970 |
8
Bonds and Notes - 91.2% (continued) |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Consumer Staples - 4.2% (continued) |
||||||||||
Fomento Economico Mexicano, |
EUR |
1.75 |
3/20/23 |
207,000 |
240,790 |
|||||
PepsiCo, |
1.13 |
7/17/17 |
218,000 |
b |
218,309 |
|||||
Smithfield Foods, |
7.75 |
7/1/17 |
70,000 |
72,712 |
||||||
1,611,231 |
||||||||||
Energy - 2.2% |
||||||||||
BG Energy Capital, |
GBP |
6.50 |
11/30/72 |
155,000 |
b |
199,743 |
||||
BP Capital Markets, |
GBP |
4.33 |
12/10/18 |
100,000 |
131,070 |
|||||
Petrobras Global Finance, |
7.88 |
3/15/19 |
95,000 |
102,362 |
||||||
Petrobras Global Finance, |
6.75 |
1/27/41 |
130,000 |
115,823 |
||||||
Shell International Finance, |
1.27 |
5/11/20 |
287,000 |
b |
287,465 |
|||||
Statoil, |
1.80 |
11/23/16 |
35,000 |
35,017 |
||||||
871,480 |
||||||||||
Financials - 20.2% |
||||||||||
Abbey National Treasury Services, |
GBP |
0.70 |
1/20/17 |
100,000 |
b |
122,452 |
||||
Allied Irish Banks, |
EUR |
2.75 |
4/16/19 |
100,000 |
115,919 |
|||||
Aquarius & Investments, |
8.25 |
9/29/49 |
200,000 |
b |
215,354 |
|||||
Arsenal Securities, |
GBP |
5.14 |
9/1/29 |
33,511 |
46,475 |
|||||
Banca Carige, |
EUR |
6.75 |
3/20/17 |
200,000 |
225,428 |
|||||
Banca Monte dei Paschi di Siena, |
EUR |
3.50 |
3/20/17 |
200,000 |
222,352 |
|||||
Bank of England Euro Note, |
1.25 |
3/14/19 |
260,000 |
260,565 |
||||||
Barclays Bank, |
EUR |
6.00 |
1/23/18 |
90,000 |
105,748 |
|||||
BNG Bank, |
1.10 |
5/15/18 |
200,000 |
b |
200,656 |
|||||
Citigroup, |
5.50 |
9/13/25 |
160,000 |
180,600 |
||||||
Close Brothers Finance, |
GBP |
3.88 |
6/27/21 |
200,000 |
265,825 |
|||||
Close Brothers Finance, |
GBP |
2.75 |
10/19/26 |
141,000 |
169,675 |
|||||
Commonwealth Bank of Australia, |
2.13 |
7/22/20 |
250,000 |
253,479 |
||||||
Cooperatieve Rabobank, |
AUD |
7.25 |
4/20/18 |
250,000 |
203,153 |
|||||
Coventry Building Society, |
GBP |
0.68 |
3/17/20 |
100,000 |
b |
122,279 |
||||
Coventry Building Society, |
EUR |
2.50 |
11/18/20 |
200,000 |
236,173 |
|||||
Danske Bank, |
GBP |
5.38 |
9/29/21 |
90,000 |
b |
116,987 |
9
STATEMENT OF INVESTMENTS (continued)
Bonds and Notes - 91.2% (continued) |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Financials - 20.2% (continued) |
||||||||||
Dexia Credit Local, |
2.25 |
1/30/19 |
250,000 |
253,405 |
||||||
DNB Bank, |
EUR |
4.75 |
3/8/22 |
200,000 |
b |
223,243 |
||||
HSBC Bank, |
GBP |
5.38 |
11/4/30 |
45,000 |
b |
60,935 |
||||
HSBC Holdings, |
GBP |
6.38 |
10/18/22 |
150,000 |
b |
191,081 |
||||
JPMorgan Chase & Co, |
2.09 |
10/29/20 |
163,000 |
b |
165,302 |
|||||
Landwirtschaftliche Rentenbank, |
NZD |
4.00 |
1/30/20 |
250,000 |
185,651 |
|||||
Lloyds Bank, |
EUR |
13.00 |
1/29/49 |
66,000 |
105,055 |
|||||
Lloyds Bank, |
9.88 |
12/16/21 |
185,000 |
b |
187,412 |
|||||
Lloyds Bank, |
AUD |
13.00 |
12/19/21 |
65,000 |
b |
50,027 |
||||
Nationwide Building Society, |
GBP |
0.60 |
7/17/17 |
100,000 |
b |
122,473 |
||||
Nationwide Building Society, |
GBP |
6.88 |
12/29/49 |
100,000 |
b |
120,871 |
||||
New Red Finance, |
6.00 |
4/1/22 |
180,000 |
c |
188,730 |
|||||
New York Life Global Funding, |
1.70 |
9/14/21 |
280,000 |
277,421 |
||||||
Royal Bank of Canada, |
2.00 |
10/1/18 |
125,000 |
126,461 |
||||||
Royal Bank of Canada, |
1.88 |
2/5/20 |
280,000 |
282,175 |
||||||
Royal Bank of Scotland, |
9.50 |
3/16/22 |
250,000 |
b |
256,684 |
|||||
Royal Bank of Scotland, |
EUR |
10.50 |
3/16/22 |
100,000 |
b |
113,806 |
||||
RSA Insurance Group, |
GBP |
9.38 |
5/20/39 |
140,000 |
b |
199,313 |
||||
Santander UK, |
GBP |
9.63 |
10/30/23 |
50,000 |
b |
69,656 |
||||
Silverback Finance, |
EUR |
3.13 |
2/25/37 |
210,381 |
230,189 |
|||||
SLM Student Loan Trust, Ser. 2003-10, |
GBP |
0.93 |
12/15/39 |
100,000 |
b |
104,499 |
||||
Societe Generale, |
EUR |
6.75 |
4/7/49 |
200,000 |
b |
223,630 |
||||
UBS, |
EUR |
4.75 |
2/12/26 |
135,000 |
b |
158,745 |
||||
UNITE USAF II, |
GBP |
3.37 |
6/30/28 |
100,000 |
132,146 |
|||||
US Bancorp, |
1.31 |
11/15/18 |
100,000 |
b |
100,241 |
|||||
US Bank, |
1.29 |
4/26/19 |
280,000 |
b |
280,839 |
|||||
Westpac Banking, |
1.38 |
5/30/18 |
330,000 |
329,755 |
||||||
7,802,865 |
10
Bonds and Notes - 91.2% (continued) |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Foreign/Governmental - 27.4% |
||||||||||
Abu Dhabi Government, |
2.13 |
5/3/21 |
400,000 |
402,000 |
||||||
Asian Development Bank, |
0.89 |
7/10/19 |
165,000 |
b |
164,773 |
|||||
Belarusian Government, |
8.95 |
1/26/18 |
130,000 |
137,421 |
||||||
Caisse des Depots et Consignations, |
1.25 |
5/17/19 |
200,000 |
199,546 |
||||||
Costa Rican Government, |
4.25 |
1/26/23 |
200,000 |
194,500 |
||||||
Council of Europe Development Bank, |
1.13 |
5/31/18 |
280,000 |
280,178 |
||||||
Dominican Republic Government, |
7.50 |
5/6/21 |
150,000 |
165,388 |
||||||
Export-Import Bank of Korea, |
1.34 |
10/21/19 |
401,000 |
b |
401,027 |
|||||
FADE, |
EUR |
0.85 |
9/17/19 |
300,000 |
336,735 |
|||||
FMS Wertmanagement, |
0.63 |
1/30/17 |
210,000 |
209,889 |
||||||
FMS Wertmanagement AoeR, |
0.75 |
11/27/19 |
600,000 |
b |
599,590 |
|||||
Hungarian Government, |
HUF |
2.50 |
10/27/21 |
149,520,000 |
549,440 |
|||||
Icelandic Government, |
5.88 |
5/11/22 |
280,000 |
328,591 |
||||||
Instituto de Credito Oficial, |
1.63 |
9/14/18 |
390,000 |
391,174 |
||||||
International Bank for Reconstruction & Development, |
1.10 |
2/11/21 |
250,000 |
b |
251,406 |
|||||
International Bank for Reconstruction & Development, |
0.88 |
4/17/17 |
280,000 |
280,240 |
||||||
International Bank for Reconstruction & Development, |
NZD |
4.63 |
2/26/19 |
350,000 |
261,967 |
|||||
KFW, |
NZD |
3.75 |
6/14/18 |
100,000 |
72,720 |
|||||
Kommunalbanken, |
1.01 |
5/2/19 |
190,000 |
b |
189,936 |
|||||
Kommunekredit, |
1.63 |
6/1/21 |
250,000 |
250,173 |
||||||
Mexican Government, |
MXN |
6.50 |
6/10/21 |
13,160,000 |
712,308 |
|||||
Moroccan Government, |
EUR |
3.50 |
6/19/24 |
300,000 |
356,425 |
|||||
Netherlands Development Finance Company, |
1.02 |
10/21/19 |
192,000 |
b |
191,048 |
|||||
New Zealand Government, |
NZD |
5.00 |
3/15/19 |
1,290,000 |
974,941 |
|||||
Nordic Investment Bank, |
NZD |
4.13 |
3/16/17 |
150,000 |
107,956 |
|||||
Peruvian Government, |
PEN |
8.20 |
8/12/26 |
550,000 |
194,290 |
11
STATEMENT OF INVESTMENTS (continued)
Bonds and Notes - 91.2% (continued) |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Foreign/Governmental - 27.4% (continued) |
||||||||||
Peruvian Government, |
PEN |
6.95 |
8/12/31 |
500,000 |
161,955 |
|||||
Portuguese Government, |
EUR |
5.65 |
2/15/24 |
167,860 |
c |
214,801 |
||||
Province of British Columbia Canada, |
EUR |
0.88 |
10/8/25 |
328,000 |
375,506 |
|||||
Queensland Treasury Corp, |
AUD |
3.50 |
9/21/17 |
640,000 |
c |
494,411 |
||||
Romanian Government, |
EUR |
2.75 |
10/29/25 |
230,000 |
270,764 |
|||||
Saudi Arabian Government, |
2.38 |
10/26/21 |
200,000 |
199,565 |
||||||
Swedish Export Credit, |
2.88 |
11/14/23 |
200,000 |
b,c |
200,942 |
|||||
United Kingdom Government, |
CNY |
2.70 |
10/21/17 |
1,000,000 |
147,139 |
|||||
Vietnamese Government, |
6.75 |
1/29/20 |
300,000 |
334,885 |
||||||
10,603,630 |
||||||||||
Health Care - 1.3% |
||||||||||
BUPA Finance, |
GBP |
6.13 |
12/29/49 |
130,000 |
b |
173,839 |
||||
Roche Holdings, |
0.94 |
9/29/17 |
200,000 |
b |
199,975 |
|||||
Teva Pharmaceutical Finance Netherlands II, |
EUR |
1.88 |
3/31/27 |
100,000 |
112,942 |
|||||
486,756 |
||||||||||
Industrials - 2.4% |
||||||||||
AA Bond, |
GBP |
5.50 |
7/31/43 |
100,000 |
122,312 |
|||||
AA Bond, |
GBP |
4.25 |
7/31/43 |
100,000 |
130,697 |
|||||
Firstgroup, |
GBP |
8.13 |
9/19/18 |
160,000 |
219,335 |
|||||
General Electric Capital, |
5.63 |
9/15/17 |
250,000 |
259,746 |
||||||
General Electric Capital, |
GBP |
6.44 |
11/15/22 |
39,140 |
53,878 |
|||||
RAC, |
GBP |
4.57 |
5/6/23 |
110,000 |
146,546 |
|||||
932,514 |
||||||||||
Information Technology - 1.1% |
||||||||||
Diamond 1 Finance, |
6.02 |
6/15/26 |
100,000 |
c |
109,159 |
|||||
Microsoft, |
2.00 |
8/8/23 |
250,000 |
247,272 |
||||||
Western Digital, |
10.50 |
4/1/24 |
60,000 |
c |
69,525 |
|||||
425,956 |
||||||||||
Materials - .8% |
||||||||||
Cemex, |
7.25 |
1/15/21 |
200,000 |
215,440 |
12
Bonds and Notes - 91.2% (continued) |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Materials - .8% (continued) |
||||||||||
SIG Combibloc Holdings, |
EUR |
7.75 |
2/15/23 |
100,000 |
116,431 |
|||||
331,871 |
||||||||||
Real Estate - .7% |
||||||||||
Tesco Property Finance 3, |
GBP |
5.74 |
4/13/40 |
97,945 |
119,038 |
|||||
Vonovia Finance, |
EUR |
1.50 |
3/31/25 |
134,000 |
153,544 |
|||||
272,582 |
||||||||||
Telecommunication Services - 4.0% |
||||||||||
British Telecommunications, |
GBP |
5.75 |
12/7/28 |
120,000 |
197,610 |
|||||
British Telecommunications, |
GBP |
8.50 |
12/7/16 |
130,000 |
160,397 |
|||||
Matterhorn Telecom, |
CHF |
3.63 |
5/1/22 |
150,000 |
151,751 |
|||||
Orange, |
EUR |
4.00 |
10/29/49 |
100,000 |
b |
117,297 |
||||
Sprint Communications, |
9.25 |
4/15/22 |
80,000 |
89,200 |
||||||
Sprint Communications, |
6.00 |
12/1/16 |
63,000 |
63,158 |
||||||
Telefonica Europe, |
EUR |
4.20 |
12/29/49 |
100,000 |
b |
112,522 |
||||
Verizon Communications, |
2.63 |
8/15/26 |
250,000 |
240,363 |
||||||
Vodafone Group, |
1.63 |
3/20/17 |
225,000 |
225,332 |
||||||
Wind Acquisition Finance, |
EUR |
7.00 |
4/23/21 |
160,000 |
183,365 |
|||||
1,540,995 |
||||||||||
U.S. Government Securities - 16.7% |
||||||||||
U.S. Treasury Inflation Protected Securities, |
2.38 |
1/15/25 |
2,108,238 |
d |
2,498,032 |
|||||
U.S. Treasury Inflation Protected Securities, |
2.13 |
2/15/41 |
318,942 |
d |
420,782 |
|||||
U.S. Treasury Inflation Protected Securities, |
0.13 |
4/15/20 |
781,630 |
d |
796,778 |
|||||
U.S. Treasury Notes |
0.88 |
2/28/17 |
880,000 |
881,617 |
||||||
U.S. Treasury Notes |
3.50 |
5/15/20 |
1,350,000 |
1,460,927 |
||||||
U.S. Treasury Notes |
2.00 |
2/15/25 |
380,000 |
387,533 |
||||||
6,445,669 |
||||||||||
Utilities - 2.8% |
||||||||||
E.ON International Finance, |
GBP |
6.00 |
10/30/19 |
50,000 |
69,904 |
|||||
Electricite de France, |
EUR |
2.75 |
3/10/23 |
100,000 |
124,528 |
|||||
National Grid Gas Finance, |
GBP |
1.13 |
9/22/21 |
264,000 |
319,072 |
|||||
NET4GAS, |
EUR |
2.50 |
7/28/21 |
100,000 |
118,054 |
13
STATEMENT OF INVESTMENTS (continued)
Bonds and Notes - 91.2% (continued) |
Coupon |
Maturity |
Principal |
a |
Value ($) |
|||||
Utilities - 2.8% (continued) |
||||||||||
Severn Trent Utilities Finance, |
GBP |
6.00 |
1/22/18 |
150,000 |
195,036 |
|||||
Southern Gas Networks, |
GBP |
5.13 |
11/2/18 |
100,000 |
132,613 |
|||||
SPP Infrastructure Financing, |
EUR |
2.63 |
2/12/25 |
100,000 |
120,057 |
|||||
1,079,264 |
||||||||||
Total Bonds and Notes |
35,275,987 |
|||||||||
Common Stocks - 3.9% |
Shares |
Value ($) |
||||||||
Exchange-Traded Funds - 3.9% |
||||||||||
iShares JP Morgan USD Emerging Markets Bond Fund |
5,975 |
685,273 |
||||||||
SPDR Bloomberg Barclays Emerging Markets Local Bond ETF |
29,548 |
e |
825,867 |
|||||||
Total Common Stocks |
1,511,140 |
|||||||||
Options Purchased - .1% |
Face Amount Covered by Contracts |
Value ($) |
||||||||
Put Options - .1% |
||||||||||
U.S. Treasury 10 Year Note Futures, |
62,000 |
51,344 |
14
Other Investment - 2.4% |
Shares |
Value ($) |
||||||||
Registered Investment Company; |
||||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund |
926,577 |
f |
926,577 |
|||||||
Total Investments (cost $38,617,850) |
97.6% |
37,765,048 |
||||||||
Cash and Receivables (Net) |
2.4% |
920,140 |
||||||||
Net Assets |
100.0% |
38,685,188 |
ETF—Exchange-Traded Fund
SPDR—Standard & Poor's Depository Receipt
a Principal amount stated in U.S. Dollars unless otherwise noted.
AUD—Australian Dollar
CHF—Swiss Franc
CNY—Chinese Yuan Renminbi
EUR—Euro
GBP—British Pound
HUF—Hungarian Forint
MXN—Mexican Peso
NZD—New Zealand Dollar
PEN—Peruvian Nuevo Sol
SEK—Swedish Krona
b Variable rate security—rate shown is the interest rate in effect at period end.
c Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2016, these securities were valued at $1,364,538 or 3.53% of net assets.
d Principal amount for accrual purposes is periodically adjusted based on changes in the Consumer Price Index.
e Non-income producing security.
f Investment in affiliated money market mutual fund.
Portfolio Summary (Unaudited) † |
Value (%) |
Corporate Bonds |
47.1 |
Foreign/Governmental |
27.4 |
U.S. Government Securities |
16.7 |
Exchange-Traded Funds |
3.9 |
Money Market Investment |
2.4 |
Options Purchased |
.1 |
97.6 |
† Based on net assets.
See notes to financial statements.
15
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2016
|
|
|
|
|
|
|
|
|
|
Cost |
|
Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See Statement of Investments: |
|
|
|
| ||
Unaffiliated issuers |
|
37,691,273 |
|
36,838,471 |
| |
Affiliated issuers |
|
926,577 |
|
926,577 |
| |
Cash |
|
|
|
|
21,815 |
|
Cash denominated in foreign currency |
|
|
29,109 |
|
29,238 |
|
Unrealized appreciation on forward foreign |
|
|
|
|
633,691 |
|
Interest receivable |
|
|
|
|
405,836 |
|
Receivable for investment securities sold |
|
|
|
|
285,192 |
|
Prepaid expenses |
|
|
|
|
19,455 |
|
|
|
|
|
|
39,160,275 |
|
Liabilities ($): |
|
|
|
| ||
Due to The Dreyfus Corporation and affiliates—Note 3(c) |
|
|
|
|
15,173 |
|
Payable for investment securities purchased |
|
|
|
|
284,353 |
|
Unrealized depreciation on forward foreign |
|
|
|
|
97,893 |
|
Payable for shares of Common Stock redeemed |
|
|
|
|
20,131 |
|
Accrued expenses |
|
|
|
|
57,537 |
|
|
|
|
|
|
475,087 |
|
Net Assets ($) |
|
|
38,685,188 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
|
38,796,527 |
|
Accumulated undistributed investment income—net |
|
|
|
|
521,046 |
|
Accumulated net realized gain (loss) on investments |
|
|
|
|
(302,695) |
|
Accumulated net unrealized appreciation (depreciation) |
|
|
|
(329,690) |
| |
Net Assets ($) |
|
|
38,685,188 |
|
Net Asset Value Per Share |
Class A |
Class C |
Class I |
Class Y |
|
Net Assets ($) |
1,818,480 |
670,906 |
1,244,252 |
34,951,550 |
|
Shares Outstanding |
147,797 |
55,084 |
100,942 |
2,835,017 |
|
Net Asset Value Per Share ($) |
12.30 |
12.18 |
12.33 |
12.33 |
|
See notes to financial statements. |
16
STATEMENT OF OPERATIONS
Year Ended October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Interest (net of $1,833 foreign taxes withheld at source) |
|
|
508,458 |
| ||
Dividends: |
|
|
|
| ||
Unaffiliated issuers |
|
|
11,565 |
| ||
Affiliated issuers |
|
|
3,884 |
| ||
Total Income |
|
|
523,907 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
|
115,196 |
| ||
Professional fees |
|
|
58,606 |
| ||
Registration fees |
|
|
54,482 |
| ||
Custodian fees—Note 3(c) |
|
|
17,037 |
| ||
Prospectus and shareholders’ reports |
|
|
11,616 |
| ||
Shareholder servicing costs—Note 3(c) |
|
|
10,215 |
| ||
Distribution fees—Note 3(b) |
|
|
5,647 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
|
2,175 |
| ||
Loan commitment fees—Note 2 |
|
|
477 |
| ||
Miscellaneous |
|
|
57,136 |
| ||
Total Expenses |
|
|
332,587 |
| ||
Less—reduction in expenses due to undertaking—Note 3(a) |
|
|
(141,956) |
| ||
Less—reduction in fees due to earnings credits—Note 3(c) |
|
|
(22) |
| ||
Net Expenses |
|
|
190,609 |
| ||
Investment Income—Net |
|
|
333,298 |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments and foreign currency transactions |
(440,669) |
| ||||
Net realized gain (loss) on options transactions |
(7,339) |
| ||||
Net realized gain (loss) on financial futures |
(43,243) |
| ||||
Net realized gain (loss) on forward foreign currency exchange contracts |
851,518 |
| ||||
Net Realized Gain (Loss) |
|
|
360,267 |
| ||
Net unrealized appreciation (depreciation) on investments |
|
|
(309,718) |
| ||
Net unrealized appreciation (depreciation) on options transactions |
|
|
1,569 |
| ||
Net unrealized appreciation (depreciation) on |
|
|
429,396 |
| ||
Net Unrealized Appreciation (Depreciation) |
|
|
121,247 |
| ||
Net Realized and Unrealized Gain (Loss) on Investments |
|
|
481,514 |
| ||
Net Increase in Net Assets Resulting from Operations |
|
814,812 |
| |||
See notes to financial statements. |
17
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Operations ($): |
|
|
|
|
|
|
|
| |
Investment income—net |
|
|
333,298 |
|
|
|
233,640 |
| |
Net realized gain (loss) on investments |
|
360,267 |
|
|
|
448,976 |
| ||
Net unrealized appreciation (depreciation) |
|
121,247 |
|
|
|
(712,171) |
| ||
Net Increase (Decrease) in Net Assets |
814,812 |
|
|
|
(29,555) |
| |||
Dividends to Shareholders from ($): |
|
|
|
|
|
|
|
| |
Investment income—net: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(23,340) |
|
|
|
(57,838) |
| |
Class C |
|
|
(9,412) |
|
|
|
(33,290) |
| |
Class I |
|
|
(42,083) |
|
|
|
(404,897) |
| |
Class Y |
|
|
(328,169) |
|
|
|
(59,526) |
| |
Net realized gain on investments: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(2,110) |
|
|
|
(7,353) |
| |
Class C |
|
|
(1,205) |
|
|
|
(5,245) |
| |
Class I |
|
|
(2,610) |
|
|
|
(51,344) |
| |
Class Y |
|
|
(22,568) |
|
|
|
(5) |
| |
Total Dividends |
|
|
(431,497) |
|
|
|
(619,498) |
| |
Capital Stock Transactions ($): |
|
|
|
|
|
|
|
| |
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
|
866,305 |
|
|
|
680,797 |
| |
Class C |
|
|
79,202 |
|
|
|
198,369 |
| |
Class I |
|
|
825,349 |
|
|
|
858,080 |
| |
Class Y |
|
|
20,507,649 |
|
|
|
15,890,580 |
| |
Dividends reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
|
23,867 |
|
|
|
44,528 |
| |
Class C |
|
|
9,430 |
|
|
|
20,845 |
| |
Class I |
|
|
44,693 |
|
|
|
245,543 |
| |
Class Y |
|
|
307,758 |
|
|
|
52,705 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(502,446) |
|
|
|
(716,498) |
| |
Class C |
|
|
(213,406) |
|
|
|
(436,299) |
| |
Class I |
|
|
(5,065,739) |
|
|
|
(5,521,093) |
| |
Class Y |
|
|
(859,355) |
|
|
|
(1,200,173) |
| |
Increase (Decrease) in Net Assets |
16,023,307 |
|
|
|
10,117,384 |
| |||
Total Increase (Decrease) in Net Assets |
16,406,622 |
|
|
|
9,468,331 |
| |||
Net Assets ($): |
|
|
|
|
|
|
|
| |
Beginning of Period |
|
|
22,278,566 |
|
|
|
12,810,235 |
| |
End of Period |
|
|
38,685,188 |
|
|
|
22,278,566 |
| |
Undistributed investment income—net |
521,046 |
|
|
|
119,039 |
|
18
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Capital Share Transactions (Shares): |
|
|
|
|
|
|
|
| |
Class A |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
71,290 |
|
|
|
55,214 |
| |
Shares issued for dividends reinvested |
|
|
1,982 |
|
|
|
3,601 |
| |
Shares redeemed |
|
|
(41,496) |
|
|
|
(58,237) |
| |
Net Increase (Decrease) in Shares Outstanding |
31,776 |
|
|
|
578 |
| |||
Class C |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
6,591 |
|
|
|
16,068 |
| |
Shares issued for dividends reinvested |
|
|
791 |
|
|
|
1,694 |
| |
Shares redeemed |
|
|
(17,686) |
|
|
|
(35,692) |
| |
Net Increase (Decrease) in Shares Outstanding |
(10,304) |
|
|
|
(17,930) |
| |||
Class I |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
67,292 |
|
|
|
69,171 |
| |
Shares issued for dividends reinvested |
|
|
3,711 |
|
|
|
19,841 |
| |
Shares redeemed |
|
|
(420,719) |
|
|
|
(447,883) |
| |
Net Increase (Decrease) in Shares Outstanding |
(349,716) |
|
|
|
(358,871) |
| |||
Class Y |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
1,676,600 |
|
|
|
1,297,727 |
| |
Shares issued for dividends reinvested |
|
|
25,465 |
|
|
|
4,327 |
| |
Shares redeemed |
|
|
(70,464) |
|
|
|
(98,718) |
| |
Net Increase (Decrease) in Shares Outstanding |
1,631,601 |
|
|
|
1,203,336 |
| |||
See notes to financial statements. |
19
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
Class A Shares |
Year Ended October 31, | ||||||||
2016 |
2015 |
2014 |
2013 |
2012 |
|||||
Per Share Data ($): |
|||||||||
Net asset value, beginning of period |
12.13 |
12.70 |
12.59 |
13.03 |
12.58 |
||||
Investment Operations: |
|||||||||
Investment income—neta |
.13 |
.16 |
.26 |
.32 |
.41 |
||||
Net realized and unrealized |
.25 |
(.18) |
(.00) |
b |
(.04) |
.64 |
|||
Total from Investment Operations |
.38 |
(.02) |
.26 |
.28 |
1.05 |
||||
Distributions: |
|||||||||
Dividends from |
(.19) |
(.49) |
(.15) |
(.51) |
(.59) |
||||
Dividends from net realized |
(.02) |
(.06) |
— |
(.21) |
(.01) |
||||
Total Distributions |
(.21) |
(.55) |
(.15) |
(.72) |
(.60) |
||||
Net asset value, end of period |
12.30 |
12.13 |
12.70 |
12.59 |
13.03 |
||||
Total Return (%)c |
3.20 |
(.15) |
2.08 |
2.12 |
8.74 |
||||
Ratios/Supplemental Data (%): |
|||||||||
Ratio of total expenses |
1.64 |
1.99 |
2.22 |
2.31 |
2.67 |
||||
Ratio of net expenses |
.95 |
.95 |
1.02 |
1.10 |
1.10 |
||||
Ratio of net investment income |
1.10 |
1.29 |
2.04 |
2.49 |
3.21 |
||||
Portfolio Turnover Rate |
141.08 |
134.49 |
157.23 |
138.46 |
132.40 |
||||
Net Assets, end of period ($ x 1,000) |
1,818 |
1,407 |
1,466 |
1,912 |
1,132 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
See notes to financial statements.
20
Class C Shares |
Year Ended October 31, | ||||||||||
2016 |
2015 |
2014 |
2013 |
2012 |
|||||||
Per Share Data ($): |
|||||||||||
Net asset value, beginning of period |
12.05 |
12.62 |
12.54 |
12.98 |
12.54 |
||||||
Investment Operations: |
|||||||||||
Investment income—neta |
.04 |
.07 |
.17 |
.23 |
.31 |
||||||
Net realized and unrealized |
.25 |
(.19) |
(.00) |
b |
(.06) |
.65 |
|||||
Total from Investment Operations |
.29 |
(.12) |
.17 |
.17 |
.96 |
||||||
Distributions: |
|||||||||||
Dividends from |
(.14) |
(.39) |
(.09) |
(.40) |
(.51) |
||||||
Dividends from net realized |
(.02) |
(.06) |
— |
(.21) |
(.01) |
||||||
Total Distributions |
(.16) |
(.45) |
(.09) |
(.61) |
(.52) |
||||||
Net asset value, end of period |
12.18 |
12.05 |
12.62 |
12.54 |
12.98 |
||||||
Total Return (%)c |
2.47 |
(.94) |
1.30 |
1.41 |
7.94 |
||||||
Ratios/Supplemental Data (%): |
|||||||||||
Ratio of total expenses |
2.39 |
2.74 |
2.95 |
3.03 |
3.32 |
||||||
Ratio of net expenses |
1.70 |
1.70 |
1.76 |
1.85 |
1.85 |
||||||
Ratio of net investment income |
.35 |
.54 |
1.31 |
1.83 |
2.46 |
||||||
Portfolio Turnover Rate |
141.08 |
134.49 |
157.23 |
138.46 |
132.40 |
||||||
Net Assets, end of period ($ x 1,000) |
671 |
788 |
1,051 |
819 |
587 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
See notes to financial statements.
21
FINANCIAL HIGHLIGHTS (continued)
Class I Shares |
Year Ended October 31, | ||||||||||
2016 |
2015 |
2014 |
2013 |
2012 |
|||||||
Per Share Data ($): |
|||||||||||
Net asset value, beginning of period |
12.14 |
12.71 |
12.60 |
13.04 |
12.59 |
||||||
Investment Operations: |
|||||||||||
Investment income—neta |
.15 |
.19 |
.29 |
.36 |
.44 |
||||||
Net realized and unrealized |
.27 |
(.18) |
(.00) |
b |
(.06) |
.64 |
|||||
Total from Investment Operations |
.42 |
.01 |
.29 |
.30 |
1.08 |
||||||
Distributions: |
|||||||||||
Dividends from |
(.21) |
(.52) |
(.18) |
(.53) |
(.62) |
||||||
Dividends from net realized |
(.02) |
(.06) |
— |
(.21) |
(.01) |
||||||
Total Distributions |
(.23) |
(.58) |
(.18) |
(.74) |
(.63) |
||||||
Net asset value, end of period |
12.33 |
12.14 |
12.71 |
12.60 |
13.04 |
||||||
Total Return (%) |
3.52 |
.07 |
2.30 |
2.33 |
8.98 |
||||||
Ratios/Supplemental Data (%): |
|||||||||||
Ratio of total expenses |
1.39 |
1.70 |
1.88 |
1.96 |
2.31 |
||||||
Ratio of net expenses |
.70 |
.70 |
.77 |
.85 |
.85 |
||||||
Ratio of net investment income |
1.35 |
1.54 |
2.29 |
2.86 |
3.45 |
||||||
Portfolio Turnover Rate |
141.08 |
134.49 |
157.23 |
138.46 |
132.40 |
||||||
Net Assets, end of period ($ x 1,000) |
1,244 |
5,472 |
10,292 |
9,391 |
9,476 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
See notes to financial statements.
22
Class Y Shares |
Year Ended October 31, | ||||||||
2016 |
2015 |
2014 |
2013 |
a | |||||
Per Share Data ($): |
|||||||||
Net asset value, beginning of period |
12.14 |
12.71 |
12.60 |
12.50 |
|||||
Investment Operations: |
|||||||||
Investment income—netb |
.16 |
.19 |
.29 |
.10 |
|||||
Net realized and unrealized |
.27 |
(.18) |
(.00) |
c |
.11 |
||||
Total from Investment Operations |
.43 |
.01 |
.29 |
.21 |
|||||
Distributions: |
|||||||||
Dividends from |
(.22) |
(.52) |
(.18) |
(.11) |
|||||
Dividends from net realized |
(.02) |
(.06) |
— |
— |
|||||
Total Distributions |
(.24) |
(.58) |
(.18) |
(.11) |
|||||
Net asset value, end of period |
12.33 |
12.14 |
12.71 |
12.60 |
|||||
Total Return (%) |
3.54 |
.09 |
2.34 |
1.29 |
d | ||||
Ratios/Supplemental Data (%): |
|||||||||
Ratio of total expenses |
1.23 |
1.31 |
1.88 |
2.09 |
e | ||||
Ratio of net expenses |
.70 |
.70 |
.75 |
.85 |
e | ||||
Ratio of net investment income |
1.35 |
1.54 |
2.30 |
2.36 |
e | ||||
Portfolio Turnover Rate |
141.08 |
134.49 |
157.23 |
138.46 |
|||||
Net Assets, end of period ($ x 1,000) |
34,952 |
14,611 |
1 |
1 |
a From July 1, 2013 (commencement of initial offering) to October 31, 2013.
b Based on average shares outstanding.
c Amount represents less than $.01 per share.
d Not annualized.
e Annualized.
See notes to financial statements.
23
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Global Dynamic Bond Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering ten series, including the fund. The fund’s investment objective is to seek total return (consisting of income and capital appreciation). The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Newton Investment Management (North America) Limited (“Newton”), formerly, Newton Capital Management Limited, a wholly-owned subsidiary of BNY Mellon and an affiliate of Dreyfus, serves as the fund’s sub-investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares. The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C, Class I and Class Y. Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
As of October 31, 2016, MBC Investments Corp., an indirect subsidiary of BNY Mellon, held 7,453 Class A and 7,267 Class C shares of the fund.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive
24
releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
25
NOTES TO FINANCIAL STATEMENTS (continued)
Investments in debt securities, excluding short-term investments (other than U.S. Treasury Bills), financial futures, options and forward foreign currency exchange contracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. These securities are generally categorized within Level 2 of the fair value hierarchy.
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
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. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service is engaged under the general supervision of the Board.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its
26
net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day and are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter (“OTC”) are valued at the mean between the bid and asked price and are generally categorized within Level 2 of the fair value hierarchy. Forward foreign currency exchange contracts (“forward contracts”) are valued at the forward rate and are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2016 in valuing the fund’s investments:
|
Level 1 - Unadjusted Quoted Prices |
Level 2 - Other Significant Observable Inputs |
Level 3 -Significant Unobservable Inputs |
Total |
Assets ($) |
|
|
|
|
Investments in Securities: |
|
|
|
|
Corporate Bonds† |
- |
18,226,688 |
- |
18,226,688 |
Exchange-Traded Funds |
1,511,140 |
- |
- |
1,511,140 |
Foreign Government |
- |
10,603,630 |
- |
10,603,630 |
Mutual Funds |
926,577 |
- |
- |
926,577 |
U.S. Treasury |
- |
6,445,669 |
- |
6,445,669 |
Other Financial Instruments: |
|
|
|
|
Forward Foreign Currency Exchange Contracts†† |
- |
633,691 |
- |
633,691 |
Options Purchased |
51,344 |
- |
- |
51,344 |
27
NOTES TO FINANCIAL STATEMENTS (continued)
|
Level 1 - Unadjusted Quoted Prices |
Level 2 - Other Significant Observable Inputs |
Level 3 -Significant Unobservable Inputs |
Total |
Liabilities ($) |
|
|
|
|
Other Financial Instruments: |
|
|
|
|
Forward Foreign Currency Exchange Contracts†† |
- |
(97,893) |
- |
(97,893) |
† See Statement of Investments for additional detailed categorizations.
†† Amount shown represents unrealized appreciation (depreciation) at period end.
At October 31, 2016, there were no transfers between levels of the fair value hierarchy.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when issued or delayed delivery basis may be settled a month or more after the trade date.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended October 31, 2016 were as follows:
28
Affiliated Investment Company |
Value 10/31/2015 ($) |
Purchases ($) |
Sales ($) |
Value 10/31/2016 ($) |
Net Assets (%) |
Dreyfus Institutional Preferred Government Plus Money Market Fund† |
766,142 |
34,266,813 |
34,106,378 |
926,577 |
2.4 |
† Formerly Dreyfus Institutional Preferred Plus Money Market Fund.
Certain affiliated investment companies may also invest in the fund. At October 31, 2016, Dreyfus Yield Enhancement Strategy Fund, an affiliate of the fund, held 1,974,098 Class Y shares representing approximately 63% of the fund’s net assets.
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net are normally declared and paid quarterly. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
On October 31, 2016, the Board declared a cash dividend of $.054, $.031, $.062 and $.062 per share from undistributed investment income-net for Class A, Class C, Class I and Class Y shares, respectively, payable on November 1, 2016 (ex-dividend date), to shareholders of record as of the close of business on October 31, 2016.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
29
NOTES TO FINANCIAL STATEMENTS (continued)
As of and during the period ended October 31, 2016, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended October 31, 2016, the fund did not incur any interest or penalties.
Each tax year in the four-year period ended October 31, 2016 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2016, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $1,003,580, accumulated other losses $3,061 and unrealized depreciation $1,111,858.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2016 and October 31, 2015 were as follows: ordinary income $404,465 and $575,242, and long-term capital gains $27,032 and $44,256, respectively.
During the period ended October 31, 2016, as a result of permanent book to tax differences, primarily due to the tax treatment for amortization of premiums, foreign currency gains and losses and consent fees, the fund increased accumulated undistributed investment income-net by $471,713 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $810 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Prior to October 5, 2016, the unsecured credit facility with Citibank, N.A. was $555 million and prior to January 11, 2016, the unsecured credit facility with Citibank, N.A. was $480 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended October 31, 2016, the fund did not borrow under the Facilities.
30
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of .45% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has contractually agreed, from November 1, 2015 through March 1, 2017, to waive receipt of its fees and/or assume the direct expenses of the fund so that the expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .70% of the value of the fund’s average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $141,956 during the period ended October 31, 2016.
Pursuant to a sub-investment advisory agreement between Dreyfus and Newton, Dreyfus pays Newton a monthly fee at an annual rate of .22% of the value of the fund’s average daily net assets.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended October 31, 2016, Class C shares were charged $5,647 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2016, Class A and Class C shares were charged $3,856 and $1,882, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer
31
NOTES TO FINANCIAL STATEMENTS (continued)
agency and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended October 31, 2016, the fund was charged $1,567 for transfer agency services and $54 for cash management services. These fees are included in Shareholder servicing costs in the Statement of Operations. Cash management fees were partially offset by earnings credits of $22.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended October 31, 2016, the fund was charged $17,037 pursuant to the custody agreement.
During the period ended October 31, 2016, the fund was charged $9,804 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $14,562, Distribution Plan fees $431, Shareholder Services Plan fees $528, custodian fees $6,000, Chief Compliance Officer fees $5,688 and transfer agency fees $225, which are offset against an expense reimbursement currently in effect in the amount of $12,261.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, forward contracts, financial futures and options transactions, during the period ended October 31, 2016, amounted to $51,505,402 and $34,015,961, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its over–the–counter (“OTC”) derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or
32
posted and create one single net payment in the event of default or termination.
Each type of derivative instrument that was held by the fund during the period ended October 31, 2016 is discussed below.
Financial Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including interest rate risk, as a result of changes in value of underlying financial instruments. The fund invests in financial futures in order to manage its exposure to or protect against changes in the market. A financial futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents. The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations. When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Statement of Operations. There is minimal counterparty credit risk to the fund with financial futures since they are exchange traded, and the exchange guarantees the financial futures against default. At October 31, 2016, there were no financial futures outstanding.
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in interest rates, or as a substitute for an investment. The fund is subject to market risk and interest risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying financial instrument at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying financial instrument at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
33
NOTES TO FINANCIAL STATEMENTS (continued)
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates. The maximum payout for these contracts is limited to the number of put option contracts written and the related strike prices, respectively.
As a writer of an option, the fund has no control over whether the underlying financial instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the financial instrument underlying the written option. There is a risk of loss from a change in value of such options which may exceed the related premiums received. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The Statement of Operations reflects any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction. At October 31, 2016, there were no options written outstanding.
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements,
34
if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The following summarizes open forward contracts at October 31, 2016:
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: |
||||
Barclays Bank |
||||
Danish Krone, |
||||
Expiring |
||||
11/18/2016 |
1,732,296 |
259,957 |
255,856 |
(4,101) |
Indian Rupee, |
||||
Expiring |
||||
11/18/2016 |
30,517,000 |
450,336 |
455,688 |
5,352 |
Polish Zloty, |
||||
Expiring |
||||
11/18/2016 |
376,996 |
97,660 |
96,049 |
(1,611) |
JP Morgan Chase Bank |
||||
Danish Krone, |
||||
Expiring |
||||
11/18/2016 |
336,000 |
50,489 |
49,627 |
(862) |
Royal Bank of Scotland |
||||
New Zealand Dollar, |
||||
Expiring |
||||
11/18/2016 |
139,866 |
99,590 |
99,944 |
354 |
Swedish Krona, |
||||
Expiring |
||||
11/18/2016 |
3,732,773 |
439,106 |
413,609 |
(25,497) |
State Street Bank & Trust Co. |
||||
Canadian Dollar, |
||||
Expiring |
||||
11/18/2016 |
205,000 |
154,465 |
152,854 |
(1,611) |
Danish Krone, |
||||
Expiring |
||||
11/18/2016 |
347,271 |
51,994 |
51,291 |
(703) |
UBS |
||||
Indian Rupee, |
||||
Expiring |
||||
11/18/2016 |
5,632,000 |
83,142 |
84,099 |
957 |
Japanese Yen, |
||||
Expiring |
||||
11/18/2016 |
56,840,363 |
560,992 |
542,326 |
(18,666) |
35
NOTES TO FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: |
||||
Barclays Bank |
||||
Chinese Yuan Renminbi, |
||||
Expiring |
||||
11/18/2016 |
1,078,000 |
160,895 |
159,083 |
1,812 |
Euro, |
||||
Expiring |
||||
11/18/2016 |
320,524 |
357,618 |
352,106 |
5,512 |
Hungarian Forint, |
||||
Expiring |
||||
11/18/2016 |
34,204,069 |
123,209 |
121,615 |
1,594 |
Mexican New Peso, |
||||
Expiring |
||||
11/18/2016 |
2,240,000 |
120,310 |
118,261 |
2,049 |
JP Morgan Chase Bank |
||||
Australian Dollar, |
||||
Expiring |
||||
11/18/2016 |
299,000 |
228,285 |
227,341 |
944 |
British Pound, |
||||
Expiring |
||||
11/18/2016 |
89,742 |
117,697 |
109,881 |
7,816 |
Euro, |
||||
Expiring |
||||
11/18/2016 |
312,706 |
350,312 |
343,519 |
6,793 |
New Zealand Dollar, |
||||
Expiring |
||||
11/18/2016 |
229,012 |
163,911 |
163,645 |
266 |
South African Rand, |
||||
Expiring |
||||
11/18/2016 |
3,913,000 |
265,485 |
289,168 |
(23,683) |
Turkish Lira, |
||||
Expiring |
||||
11/18/2016 |
219,000 |
72,915 |
70,507 |
2,408 |
Royal Bank of Scotland |
||||
Australian Dollar, |
||||
Expiring |
||||
11/18/2016 |
380,342 |
284,268 |
289,189 |
(4,921) |
British Pound, |
||||
Expiring |
||||
11/18/2016 |
993,660 |
1,318,376 |
1,216,658 |
101,718 |
36
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
Royal Bank of Scotland (continued) | ||||
Canadian Dollar, |
||||
Expiring |
||||
11/18/2016 |
431,000 |
327,660 |
321,366 |
6,294 |
Euro, |
||||
Expiring |
||||
11/18/2016 |
6,002,139 |
6,686,232 |
6,593,560 |
92,672 |
Hungarian Forint, |
||||
Expiring |
||||
11/18/2016 |
92,456,968 |
330,054 |
328,736 |
1,318 |
Indian Rupee, |
||||
Expiring |
||||
11/18/2016 |
10,834,000 |
161,316 |
161,776 |
(460) |
New Zealand Dollar, |
||||
Expiring |
||||
11/18/2016 |
424,017 |
306,468 |
302,989 |
3,479 |
Norwegian Krone, |
||||
Expiring |
||||
11/18/2016 |
24,123 |
2,845 |
2,920 |
(75) |
Polish Zloty, |
||||
Expiring |
||||
11/18/2016 |
386,692 |
100,555 |
98,520 |
2,035 |
South African Rand, |
||||
Expiring |
||||
11/18/2016 |
2,834,000 |
198,844 |
209,431 |
(10,587) |
South Korean Won, |
||||
Expiring |
||||
11/18/2016 |
645,127,000 |
570,283 |
563,761 |
6,522 |
Turkish Lira, |
||||
Expiring |
||||
11/18/2016 |
961,000 |
314,950 |
309,394 |
5,556 |
State Street Bank & Trust Co. |
||||
Australian Dollar, |
||||
Expiring |
||||
11/18/2016 |
317,499 |
241,672 |
241,407 |
265 |
British Pound, |
||||
Expiring |
||||
11/2/2016 |
7,813 |
9,504 |
9,563 |
(59) |
11/18/2016 |
700,565 |
912,922 |
857,786 |
55,136 |
Canadian Dollar, |
||||
Expiring |
||||
11/18/2016 |
523,000 |
401,131 |
389,964 |
11,167 |
37
NOTES TO FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
State Street Bank & Trust Co. (continued) | ||||
Euro, |
||||
Expiring |
||||
11/2/2016 |
6,325 |
6,920 |
6,943 |
(23) |
11/18/2016 |
430,105 |
479,932 |
472,485 |
7,447 |
Hungarian Forint, |
||||
Expiring |
||||
11/18/2016 |
15,627,953 |
56,861 |
55,566 |
1,295 |
Mexican New Peso, |
||||
Expiring |
||||
11/18/2016 |
2,552,327 |
129,716 |
134,750 |
(5,034) |
New Zealand Dollar, |
||||
Expiring |
||||
11/18/2016 |
1,740,077 |
1,253,725 |
1,243,404 |
10,321 |
UBS |
||||
British Pound, |
||||
Expiring |
||||
11/18/2016 |
3,601,148 |
4,694,474 |
4,409,318 |
285,156 |
Euro, |
||||
Expiring |
||||
11/18/2016 |
108,072 |
122,239 |
118,721 |
3,518 |
Hungarian Forint, |
||||
Expiring |
||||
11/18/2016 |
12,140,706 |
43,929 |
43,167 |
762 |
Swiss Franc, |
||||
Expiring |
||||
11/18/2016 |
149,547 |
154,438 |
151,265 |
3,173 |
Gross Unrealized Appreciation |
633,691 | |||
Gross Unrealized Depreciation |
(97,893) |
The following tables show the fund’s exposure to different types of market risk as it relates to the Statement of Assets and Liabilities and the Statement of Operations, respectively.
38
Fair value of derivative instruments as of October 31, 2016 is shown below:
|
|
Derivative |
|
|
|
Derivative |
|
Interest rate risk |
51,344 |
1 |
Interest rate risk |
- |
|||
Foreign exchange risk |
633,691 |
2 |
Foreign exchange risk |
(97,893) |
2 | ||
Gross fair value of |
685,035 |
(97,893) |
|||||
Statement of Assets and Liabilities location: |
|||||||
1 |
Options purchased are included in Investments in securities—Unaffiliated issuers, at value. | ||||||
2 |
Unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
The effect of derivative instruments in the Statement of Operations during the period ended October 31, 2016 is shown below:
Amount of realized gain (loss) on derivatives recognized in income ($) |
||||||||||
Underlying |
Financial |
1 |
Options |
2 |
Forward |
3 |
Total |
|
||
Interest |
(43,243) |
(7,339) |
- |
(50,582) |
||||||
Foreign |
- |
- |
851,518 |
851,518 |
||||||
Total |
(43,243) |
(7,339) |
851,518 |
800,936 |
||||||
Change in unrealized appreciation (depreciation) on derivatives recognized in income ($) |
||||||||||
Underlying |
Options |
4 |
Forward |
5 |
Total |
|
||||
Interest |
1,569 |
- |
1,569 |
|||||||
Foreign |
- |
429,396 |
429,396 |
|||||||
Total |
1,569 |
429,396 |
430,965 |
|||||||
Statement of Operations location: |
||||||||||
1 |
Net realized gain (loss) on financial futures. |
|||||||||
2 |
Net realized gain (loss) on options transactions. | |||||||||
3 |
Net realized gain (loss) on forward foreign currency exchange contracts. |
|||||||||
4 |
Net unrealized appreciation (depreciation) on options transactions. |
|||||||||
5 |
Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
The provisions of ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities” require disclosure on the offsetting of financial assets and liabilities. These disclosures are required for certain investments, including derivative financial instruments subject to Master Agreements which are eligible for offsetting in the Statement of Assets and Liabilities and require the fund to disclose both gross and net information with respect to such investments. For financial reporting purposes, the fund does not offset
39
NOTES TO FINANCIAL STATEMENTS (continued)
derivative assets and derivative liabilities that are subject to Master Agreements in the Statement of Assets and Liabilities.
At October 31, 2016, derivative assets and liabilities (by type) on a gross basis are as follows:
Derivative Financial Instruments: |
|
Assets ($) |
|
Liabilities ($) |
|
Options |
51,344 |
- |
|||
Forward contracts |
633,691 |
(97,893) |
|||
Total gross amount of derivative |
|||||
assets and liabilities in the |
|||||
Statement of Assets and Liabilities |
685,035 |
(97,893) |
|||
Derivatives not subject to |
|||||
Master Agreements |
(51,344) |
- |
|||
Total gross amount of assets |
|||||
and liabilities subject to |
|||||
Master Agreements |
633,691 |
(97,893) |
The following tables present derivative assets and liabilities net of amounts available for offsetting under Master Agreements and net of related collateral received or pledged, if any, as of October 31, 2016:
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Assets ($) |
1 |
for Offset ($) |
Received ($) |
|
Assets ($) |
Barclays Bank |
16,319 |
(5,712) |
- |
10,607 | ||
JP Morgan |
18,227 |
(18,227) |
- |
- | ||
Royal Bank |
219,948 |
(41,540) |
- |
178,408 | ||
State Street |
85,631 |
(7,430) |
- |
78,201 | ||
UBS |
293,566 |
(18,666) |
- |
274,900 | ||
Total |
633,691 |
(91,575) |
- |
542,116 | ||
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Liabilities ($) |
1 |
for Offset ($) |
Pledged ($) |
|
Liabilities ($) |
Barclays Bank |
(5,712) |
5,712 |
- |
- | ||
JP Morgan |
(24,545) |
18,227 |
- |
(6,318) | ||
Royal Bank |
(41,540) |
41,540 |
- |
- | ||
State Street |
(7,430) |
7,430 |
- |
- | ||
UBS |
(18,666) |
18,666 |
- |
- | ||
Total |
(97,893) |
91,575 |
- |
(6,318) | ||
1 Absent a default event or early termination, OTC derivative assets and liabilities are presented at gross amounts and are |
40
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2016:
|
|
Average Market Value ($) |
Interest rate financial futures |
734,090 | |
Interest rate options contracts |
9,173 | |
Forward contracts |
15,559,227 | |
At October 31, 2016, the cost of investments for federal income tax purposes was $38,858,531; accordingly, accumulated net unrealized depreciation on investments was $1,093,483, consisting of $218,169 gross unrealized appreciation and $1,311,652 gross unrealized depreciation.
41
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dreyfus Global Dynamic Bond Fund
We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Global Dynamic Bond Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2016, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for the each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2016 by correspondence with the custodian and others. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Global Dynamic Bond Fund at October 31, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 29, 2016
42
IMPORTANT TAX INFORMATION (Unaudited)
For federal tax purposes, the fund hereby reports $.0184 per share as a long-term capital gain distribution paid on December 30, 2015.
43
BOARD MEMBERS INFORMATION (Unaudited)
INDEPENDENT BOARD MEMBERS
Chairman of the Board (1995)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1995-present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small and medium size companies, Director (1997-present)
No. of Portfolios for which Board Member Serves: 135
———————
Peggy C. Davis (73)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Shad Professor of Law, New York University School of Law (1983-present)
No. of Portfolios for which Board Member Serves: 49
———————
David P. Feldman (76)
Board Member (1996)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1985-present)
Other Public Company Board Memberships During Past 5 Years:
· BBH Mutual Funds Group (5 registered mutual funds), Director (1992-2014)
No. of Portfolios for which Board Member Serves: 35
———————
Ehud Houminer (76)
Board Member (1993)
Principal Occupation During Past 5 Years:
· Executive-in-Residence at the Columbia Business School, Columbia
University (1992-present)
Other Public Company Board Memberships During Past 5 Years:
· Avnet, Inc., an electronics distributor, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 59
———————
44
Lynn Martin (76)
Board Member (2012)
Principal Occupation During Past 5 Years:
· President of The Martin Hall Group LLC, a human resources consulting firm (2005-2012)
Other Public Company Board Memberships During Past 5 Years:
· AT&T, Inc., a telecommunications company, Director (1999-2012)
· Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Robin A. Melvin (53)
Board Member (2012)
Principal Occupation During Past 5 Years:
· Co-chairman, Illinois Mentoring Partnership, non-profit organization dedicated to increasing the quantity and quality of mentoring services in Illinois; (2014-present; served as a board member since 2013)
· Director, Boisi Family Foundation, a private family foundation that supports youth-serving organizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012)
No. of Portfolios for which Board Member Serves: 107
———————
Dr. Martin Peretz (77)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Editor-in-Chief Emeritus of The New Republic Magazine (2011-2012) (previously,
Editor-in-Chief, 1974-2011)
· Director of TheStreet.com, a financial information service on the web (1996-2010)
· Lecturer at Harvard University (1969-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80. The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Philip L. Toia, Emeritus Board Member
45
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009, Chairman of Dreyfus Transfer, Inc., an affiliate of the Manager and the transfer agent of the funds, since May 2011 and Executive Vice President of the Distributor since June 2007. From April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 64 investment companies (comprised of 135 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since February 1988.
BENNETT A. MACDOUGALL, Chief Legal Officer since October 2015.
Chief Legal Officer of the Manager since June 2015; from June 2005 to June 2015, he served in various capacities with Deutsche Bank – Asset & Wealth Management Division, including as Director and Associate General Counsel, and Chief Legal Officer of Deutsche Investment Management Americas Inc. from June 2012 to May 2015. He is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 2015.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 53 years old and has been an employee of the Manager since February 1984.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon and Secretary of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 60 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since June 2000.
MAUREEN E. KANE, Vice President and Assistant Secretary since April 2015.
Managing Counsel of BNY Mellon since July 2014; from October 2004 until July 2014, General Counsel, and from May 2009 until July 2014, Chief Compliance Officer of Century Capital Management. She is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 54 years old and has been an employee of the Manager since July 2014.
SARAH S. KELLEHER, Vice President and Assistant Secretary since April 2014.
Senior Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager; from August 2005 to March 2013, Associate General Counsel of Third Avenue Management. She is 41 years old and has been an employee of the Manager since March 2013.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1985.
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market, Municipal Bond and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since September 1982.
46
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since December 2002.
Senior Accounting Manager of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 52 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Fixed Income and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (65 investment companies, comprised of 160 portfolios). He is 59 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
CARIDAD M. CAROSELLA, Anti-Money Laundering Compliance Officer since January 2016
Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust since January 2016; from May 2015 to December 2015, Interim Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust and the Distributor; from January 2012 to May 2015, AML Surveillance Officer of the Distributor and from 2007 to December 2011, Financial Processing Manager of the Distributor. She is an officer of 60 investment companies (comprised of 155 portfolios) managed by the Manager. She is 48 years old and has been an employee of the Distributor since 1997.
47
NOTES
48
NOTES
49
Dreyfus Global Dynamic Bond Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Newton Investment Management
(North America) Limited
160 Queen Victoria Street
London, EC4V, 4LA, UK
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
Distributor
MBSC Securities Corporation
200 Park Avenue
New York, NY 10166
Ticker Symbols: |
Class A: DGDAX Class C: DGDCX Class I: DGDIX Class Y: DGDYX |
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to [email protected]
Internet Information can be viewed online or downloaded at www.dreyfus.com
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 www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (phone 1-800-SEC-0330 for information).
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.dreyfus.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
© 2016 MBSC Securities Corporation |
|
Dreyfus Global Real Return Fund
|
ANNUAL REPORT October 31, 2016 |
|
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(s) 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
T H E F U N D
Chief Executive Officer |
|
With Those of Other Funds |
|
Public Accounting Firm |
|
F O R M O R E I N F O R M AT I O N
Back Cover
|
The Fund |
A LETTER FROM THE CHIEF EXECUTIVE OFFICER
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Global Real Return Fund, covering the 12-month period from November 1, 2015 through October 31, 2016. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Stocks and bonds generally advanced over the reporting period in the midst of heightened market volatility stemming from various global economic developments. Toward the end of 2015, investor sentiment deteriorated amid sluggish global economic growth, falling commodity prices, and the first increase in short-term U.S. interest rates in nearly a decade. These worries sparked sharp stock market declines in January 2016, but equities began to rally in February when U.S. monetary policymakers refrained from additional rate hikes, other central banks eased their monetary policies further, and commodity prices began to rebound. Stocks generally continued to climb through the summer, driving several broad measures of U.S. stock market performance to record highs in July and August before moderating as a result of uncertainty regarding U.S. elections and potential rate hikes. In the bond market, yields of high-quality sovereign bonds generally moved lower and their prices increased in response to robust investor demand for current income in a low interest rate environment.
The outcome of the U.S. presidential election and ongoing global economic headwinds suggest that uncertainty will persist in the financial markets over the foreseeable future. Some asset classes and industry groups may benefit from a changing economic and political landscape, while others probably will face challenges. Consequently, selectivity could become a more important determinant of investment success. As always, we encourage you to discuss the implications of our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
Mark D. Santero
Chief Executive Officer
The Dreyfus Corporation
November 15, 2016
2
DISCUSSION OF FUND PERFORMANCE
For the period from November 1, 2015 through October 31, 2016, as provided by Suzanne Hutchins (Lead) and Aron Pataki, Portfolio Managers of Newton Investment Management (North America) Limited, Sub-Investment Adviser
Market and Fund Performance Overview
For the 12-month period ended October 31, 2016, Dreyfus Global Real Return Fund’s Class A shares produced a total return of 4.87%, Class C shares returned 4.12%, Class I shares returned 5.16%, and Class Y shares returned 5.18%.1 In comparison, the fund’s benchmark, the Citi 1-Month Treasury Bill Index, and the fund’s performance baseline benchmark, the U.S.$ 1-Month London Interbank Offered Rate (LIBOR) Index, produced total returns of 0.18% and 0.43%, respectively, for the same period.2,3
Bonds gained value as interest rates declined, and stocks generally advanced when investor sentiment improved during the spring and summer of 2016. The fund delivered higher returns than its benchmark during the period.
The Fund’s Investment Approach
The fund seeks total return (consisting of capital appreciation and income). To pursue its goal, the fund uses an actively managed multi-asset strategy to produce positive absolute or real returns exhibiting less volatility than major equity markets over a complete market cycle, typically a period of five years. The fund is not managed relative to an index, but rather seeks to provide returns that are largely independent of market moves.
The fund invests in a core of return-seeking assets, including global equities, convertible bonds, and global high yield corporate bonds to meet its total return objective. To complement this core and to provide capital protection as well as to reduce volatility, the fund is invested in other asset types where we find value, including commodity-related investments, currencies, select government bonds, and index-linked securities and derivatives. The fund must invest at least 10% of the value of its total assets in equity securities and at least 10% of the value of its total assets in fixed income securities.
To allocate the fund’s assets, we combine a top-down approach emphasizing economic trends and current investment themes on a global basis, with bottom-up security selection based on fundamental research. In choosing investments, we consider economic trends as emphasized by our global investment themes, security valuation, and company fundamentals. Within markets and sectors, we seek attractively priced companies possessing sustainable competitive advantages, and we may invest in such companies anywhere across their capital structure and where we find the best risk/reward tradeoff. Identifying the right security characteristics for the prevailing investment environment is key to our approach, which currently emphasizes income generation.
Financial Markets Advanced Despite Headwinds
Global equity investors grew increasingly averse to risks over the final months of 2015 amid sluggish growth in Europe, Japan, and China, and stocks and corporate bonds suffered particularly severe declines in January 2016 due to plunging commodity prices and worries about higher short-term U.S. interest rates. The markets reversed course in mid-February after reports of better-than-expected economic data and corporate earnings. The rally continued through the spring when U.S. monetary policymakers refrained from additional rate hikes, other major central banks eased their monetary policies further, commodity prices rebounded, and foreign currencies strengthened against the U.S. dollar. Although a referendum in the United Kingdom to leave the European Union introduced renewed market turmoil in late June, riskier assets bounced back quickly over the summer.
Among traditional safe havens, robust investor demand sent yields of high-quality sovereign bonds lower and gold prices higher. Indeed, international investors seeking higher levels of current income than were available in international markets drove yields of U.S. Treasury securities to historical lows in July.
3
DISCUSSION OF FUND PERFORMANCE (continued)
Bonds, Gold, and Currencies Supported Results
In the fund’s return-seeking core, equities weighed on relative results over the reporting period due to our emphasis on more defensive market sectors. The equity portfolio was also hurt by a strengthening U.S. dollar. In contrast, a modest exposure to corporate bonds, where the fund maintains a handful of opportunistic holdings, provided a positive contribution to relative performance.
In the offsetting layer, government bonds and gold contributed positively. Returns from cash and currency positions also proved constructive, as our currency hedges gained value when the U.S. dollar appreciated. On the other hand, direct equity index protection detracted from relative performance over the reporting period.
A More Cautious Investment Posture
In light of ongoing global economic headwinds and recently elevated political uncertainties, we believe that market volatility is likely to increase. Therefore, we have maintained the fund’s relatively cautious positioning, with an emphasis on capital preservation over the pursuit of short-term gains. We have attempted to reduce risks in the fund’s return-seeking core through additional equity index protection and by eliminating exposure to convertible bonds. We also increased indirect protection by reallocating assets from cash to U.S. Treasury bonds, and we raised the fund’s exposure to gold. In our view, these strategies position the fund to provide a positive absolute return with an acceptable level of volatility.
November 15, 2016
Equities are subject generally to market, market sector, market liquidity, issuer, and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Bonds are subject generally to interest-rate, credit, liquidity, and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.
The fund’s performance will be influenced by political, social, and economic factors affecting investments in foreign companies. Special risks associated with such companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability, and differing auditing and legal standards.
Because the fund seeks to provide exposure to alternative or non-traditional (i.e., satellite) asset categories or investment strategies, the fund’s performance will be linked to the performance of these highly volatile asset categories and strategies. Accordingly, investors should consider purchasing shares of the fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of fund shares.
The fund may, but is not required to, use derivative instruments, such as options, futures, options on futures, forward contracts, and other credit derivatives. A small investment in derivatives could have a potentially large impact on the fund’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets.
1 Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Return figures provided reflect the absorption of certain fund expenses by The Dreyfus Corporation pursuant to an agreement in effect through March 1, 2017, at which time it may be extended, modified, or terminated. Had these expenses not been absorbed, the fund’s returns would have been lower. Past performance is no guarantee of future results.
2 Source: Bloomberg — The London Interbank Offered Rate (LIBOR). The rate of interest at which banks borrow funds, in marketable size, from other banks in the London interbank market. LIBOR is the most widely used benchmark or reference rate for short-term interest rates, and is an international rate. The London Interbank Offered Rate is fixed each morning at 11 a.m. London time by the British Bankers’ Association (BBA). The rate is an average derived from 16 quotations provided by banks determined by the BBA; the four highest and lowest are then eliminated, and an average of the remaining eight is calculated to arrive at the fix. Eurodollar Libor is calculated on an ACT/360-day count basis, and settlement is for two days hence.
3 Source: Lipper, Inc. — Reflects reinvestment of dividends and, where applicable, capital gain distributions. The Citi 1-Month Treasury Bill Index is a market value-weighted index of public obligations of the U.S. Treasury with maturities of 30 days. Investors cannot invest directly in any index.
4
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Global Real Return Fund Class A shares, Class C shares, Class I shares, and Class Y shares with the U.S. $1-Month London Interbank Offered Rate (LIBOR) Index and the Citi 1-Month Treasury Bill Index
† Source: Bloomberg L.P.
†† Source: Lipper Inc.
††† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C, Class I and Class Y shares of Dreyfus Global Real Return Fund on 5/12/10 (inception date) to a $10,000 investment made in the Citi 1-Month Treasury Bill Index and the U.S.$ 1-Month London Interbank Offered Rate (LIBOR) Index on that date. All dividends and capital gain distributions are reinvested.
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes. The Citi 1-Month Treasury Bill Index is a market value-weighted index of public obligations of the U.S. Treasury with maturities of 30 days. LIBOR is the rate of interest at which banks borrow funds, in marketable size, from other banks in the London interbank market. LIBOR is the most widely used benchmark or reference rate for short term interest rates, and is an international rate. LIBOR is fixed each morning at 11 a.m. London time by the British Bankers’ Association (BBA). The rate is an average derived from 16 quotations provided by banks determined by the British Bankers’ Association; the four highest and lowest are then eliminated and an average of the remaining eight is calculated to arrive at the fix. Eurodollar LIBOR is calculated on an ACT/360 day count basis and settlement is for two days hence. Unlike a mutual fund, the indices are not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
5
FUND PERFORMANCE (continued)
Average Annual Total Returns as of 10/31/16 | ||||
|
Inception |
1 Year |
5 Years |
From |
Class A shares |
||||
with maximum sales charge (5.75%) |
5/12/10 |
-1.15% |
2.83% |
3.41% |
without sales charge |
5/12/10 |
4.87% |
4.05% |
4.36% |
Class C shares |
||||
with applicable redemption charge† |
5/12/10 |
3.12% |
3.28% |
3.60% |
without redemption |
5/12/10 |
4.12% |
3.28% |
3.60% |
Class I shares |
5/12/10 |
5.16% |
4.34% |
4.65% |
Class Y shares |
7/1/13 |
5.18% |
4.32%†† |
4.57%†† |
U.S.$ 1-Month London Interbank |
4/30/10 |
0.43% |
0.25% |
0.25%††† |
Citi 1-Month Treasury Bill Index |
4/30/10 |
0.18% |
0.06% |
0.07%††† |
Past performance is not predictive of future performance. The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.
† The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.
†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
††† For comparative purposes, the value of each Index as of 4/30/10 is used as the beginning value on 5/12/10.
6
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Global Real Return Fund from May 1, 2016 to October 31, 2016. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment | ||||||||
assuming actual returns for the six months ended October 31, 2016 | ||||||||
Class A |
Class C |
Class I |
Class Y | |||||
Expenses paid per $1,000† |
$5.84 |
$9.63 |
$4.52 |
$4.11 | ||||
Ending value (after expenses) |
$1,018.70 |
$1,015.60 |
$1,020.00 |
$1,020.70 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment | ||||||||
assuming a hypothetical 5% annualized return for the six months ended October 31, 2016 | ||||||||
Class A |
Class C |
Class I |
Class Y | |||||
Expenses paid per $1,000† |
$5.84 |
$9.63 |
$4.52 |
$4.12 | ||||
Ending value (after expenses) |
$1,019.36 |
$1,015.58 |
$1,020.66 |
$1,021.06 |
† Expenses are equal to the fund’s annualized expense ratio of 1.15% for Class A, 1.90% for Class C, .89% for Class I and .81% for Class Y, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
7
STATEMENT OF INVESTMENTS
October 31, 2016
Bonds and Notes - 34.0% |
Principal |
a |
Value ($) |
|||||||
Australia - 5.5% |
||||||||||
Australian Government, Sr. Unscd. Bonds, Ser. 144, 3.75%, 4/21/37 |
AUD |
6,404,000 |
5,484,204 |
|||||||
Australian Government, Sr. Unscd. Bonds, Ser. 147, 3.25%, 6/21/39 |
AUD |
33,131,000 |
26,131,623 |
|||||||
Australian Government, Sr. Unscd. Bonds, Ser. 150, 3.00%, 3/21/47 |
AUD |
22,738,000 |
16,415,387 |
|||||||
New South Wales Treasury, Govt. Gtd. Notes, Ser. CIB1, 2.75%, 11/20/25 |
AUD |
6,226,300 |
b |
6,955,673 |
||||||
Treasury Corp. of Victoria, Govt. Gtd. Notes, 5.50%, 11/17/26 |
AUD |
24,250,000 |
23,335,123 |
|||||||
78,322,010 |
||||||||||
France - .3% |
||||||||||
SFR Group, Sr. Scd. Bonds, 5.63%, 5/15/24 |
EUR |
3,218,000 |
3,715,828 |
|||||||
Germany - .2% |
||||||||||
SIG Combibloc Holdings, Sr. Scd. Notes, 7.75%, 2/15/23 |
EUR |
2,584,000 |
3,008,568 |
|||||||
New Zealand - 2.5% |
||||||||||
New Zealand Government, Sr. Unscd. Bonds, Ser. 0427, 4.50%, 4/15/27 |
NZD |
15,491,000 |
12,877,045 |
|||||||
New Zealand Government, Sr. Unscd. Bonds, Ser. 0437, 2.75%, 4/15/37 |
NZD |
11,722,000 |
7,706,464 |
|||||||
New Zealand Government, Sr. Unscd. Bonds, Ser. 0521, 6.00%, 5/15/21 |
NZD |
14,366,000 |
11,956,774 |
|||||||
New Zealand Government, Sr. Unscd. Bonds, Ser. 0925, 2.00%, 9/20/25 |
NZD |
4,185,000 |
c |
3,220,308 |
||||||
35,760,591 |
||||||||||
United Kingdom - 1.4% |
||||||||||
Anglian Water Services Financing, Sr. Scd. Notes, Ser. A8, 3.67%, 7/30/24 |
GBP |
151,000 |
d |
373,194 |
||||||
Arqiva Broadcast Finance, Sr. Scd. Notes, 9.50%, 3/31/20 |
GBP |
3,545,000 |
4,698,159 |
|||||||
British Telecommunications, Sr. Unscd. Notes, 3.50%, 4/25/25 |
GBP |
287,000 |
d |
748,112 |
||||||
Centrica, Jr. Sub. Bonds, 5.25%, 4/10/75 |
GBP |
982,000 |
e |
1,244,302 |
||||||
Centrica, Jr. Sub. Bonds, 3.00%, 4/10/76 |
EUR |
1,353,000 |
e |
1,459,271 |
||||||
CPUK Finance, Scd. Notes, 7.00%, 2/28/42 |
GBP |
212,000 |
275,498 |
|||||||
Dwr Cymru Financing, Asset Backed Notes, 1.86%, 3/31/48 |
GBP |
150,000 |
d |
389,686 |
||||||
High Speed Rail Finance 1, Sr. Scd. Notes, 1.57%, 11/1/38 |
GBP |
268,000 |
d |
516,926 |
||||||
National Grid Electricity Transmission, Insured Bonds, 2.98%, 7/8/18 |
GBP |
667,000 |
d |
1,318,349 |
||||||
Network Rail Infrastructure Finance, Govt. Gtd. Notes, Ser. RPI, 1.75%, 11/22/27 |
GBP |
865,000 |
d |
1,924,622 |
||||||
Scotland Gas Networks, Insured Notes, Ser. A2S, 2.13%, 10/21/22 |
GBP |
300,000 |
d |
603,367 |
||||||
TESCO, Sr. Unscd. Notes, 6.13%, 2/24/22 |
GBP |
672,000 |
929,913 |
|||||||
TESCO, Sr. Unscd. Notes, 3.32%, 11/5/25 |
GBP |
245,000 |
d |
527,628 |
||||||
Tesco Property Finance 3, Mortgage Backed Bonds, 5.74%, 4/13/40 |
GBP |
3,393,788 |
4,124,657 |
|||||||
19,133,684 |
8
Bonds and Notes - 34.0% (continued) |
Principal |
a |
Value ($) |
|||||||
United States - 24.1% |
||||||||||
Sprint, Gtd. Notes, 7.88%, 9/15/23 |
5,758,000 |
5,700,420 |
||||||||
Sprint, Gtd. Notes, 7.13%, 6/15/24 |
3,548,000 |
3,388,340 |
||||||||
Sprint Capital, Gtd. Notes, 8.75%, 3/15/32 |
6,347,000 |
6,519,562 |
||||||||
Sprint Communications, Sr. Unscd. Debs., 9.25%, 4/15/22 |
404,000 |
450,460 |
||||||||
Sprint Communications, Sr. Unscd. Notes, 6.00%, 12/1/16 |
4,066,000 |
4,076,165 |
||||||||
Sprint Spectrum, Sr. Scd. Notes, 3.36%, 3/20/23 |
472,000 |
f |
475,540 |
|||||||
U.S. Treasury Bonds, 3.00%, 5/15/45 |
64,040,000 |
69,626,017 |
||||||||
U.S. Treasury Bonds, 3.00%, 11/15/45 |
45,929,400 |
49,937,475 |
||||||||
U.S. Treasury Notes, 1.00%, 12/31/17 |
17,219,100 |
17,272,910 |
||||||||
U.S. Treasury Notes, 1.50%, 8/31/18 |
50,549,700 |
51,146,035 |
||||||||
U.S. Treasury Notes, 0.88%, 4/15/19 |
16,784,000 |
16,759,411 |
||||||||
U.S. Treasury Notes, 1.75%, 12/31/20 |
66,993,300 |
68,385,488 |
||||||||
U.S. Treasury Notes, 2.00%, 2/15/25 |
41,398,400 |
42,219,082 |
||||||||
Western Digital, Gtd. Notes, 10.50%, 4/1/24 |
3,339,000 |
f |
3,869,066 |
|||||||
339,825,971 |
||||||||||
Total Bonds and Notes |
479,766,652 |
|||||||||
Common Stocks - 53.5% |
Shares |
Value ($) |
||||||||
Australia - 1.6% |
||||||||||
Dexus Property Group |
1,456,156 |
9,902,809 |
||||||||
Newcrest Mining |
729,322 |
12,516,168 |
||||||||
22,418,977 |
||||||||||
Canada - 5.1% |
||||||||||
Agnico Eagle Mines |
79,174 |
4,020,974 |
||||||||
Alacer Gold |
1,444,980 |
g |
2,919,478 |
|||||||
Alamos Gold |
425,250 |
3,335,294 |
||||||||
Barrick Gold |
642,479 |
11,301,206 |
||||||||
Centerra Gold |
606,097 |
3,063,698 |
||||||||
Detour Gold |
244,297 |
g |
4,657,179 |
|||||||
Eldorado Gold |
1,085,218 |
g |
3,422,405 |
|||||||
IAMGOLD |
1,556,672 |
g |
6,232,259 |
|||||||
Kinross Gold |
1,075,501 |
g |
4,177,559 |
|||||||
New Gold |
1,485,682 |
g |
5,859,433 |
|||||||
OceanaGold |
1,190,142 |
3,637,950 |
||||||||
Primero Mining |
1,340,835 |
g |
1,809,373 |
|||||||
Silver Wheaton |
738,466 |
17,794,096 |
||||||||
72,230,904 |
||||||||||
Denmark - .1% |
||||||||||
DONG Energy |
41,087 |
f |
1,629,339 |
|||||||
France - 1.8% |
||||||||||
Vivendi |
1,272,344 |
25,727,621 |
||||||||
Germany - 3.1% |
||||||||||
Bayer |
135,025 |
13,383,179 |
||||||||
Brenntag |
73,302 |
3,918,372 |
||||||||
Infineon Technologies |
317,294 |
5,696,628 |
||||||||
LEG Immobilien |
36,093 |
g |
3,044,499 |
|||||||
SAP |
75,233 |
6,626,814 |
||||||||
Telefonica Deutschland Holding |
2,807,407 |
10,881,996 |
||||||||
43,551,488 |
9
STATEMENT OF INVESTMENTS (continued)
Common Stocks - 53.5% (continued) |
Shares |
Value ($) |
||||||||
Ireland - .6% |
||||||||||
CRH |
273,105 |
8,838,414 |
||||||||
Israel - 1.2% |
||||||||||
Teva Pharmaceutical Industries, ADR |
405,529 |
17,332,309 |
||||||||
Japan - 3.2% |
||||||||||
Japan Tobacco |
779,100 |
29,672,217 |
||||||||
Skylark |
520,600 |
7,332,185 |
||||||||
Suntory Beverage & Food |
83,800 |
3,671,794 |
||||||||
Topcon |
271,700 |
4,070,189 |
||||||||
44,746,385 |
||||||||||
Mexico - .3% |
||||||||||
Fresnillo |
210,020 |
4,215,875 |
||||||||
Netherlands - 3.4% |
||||||||||
RELX |
1,029,898 |
17,382,603 |
||||||||
Wolters Kluwer |
781,983 |
30,263,802 |
||||||||
47,646,405 |
||||||||||
New Zealand - .5% |
||||||||||
Spark New Zealand |
2,990,959 |
7,828,112 |
||||||||
South Africa - .3% |
||||||||||
Gold Fields |
896,998 |
3,646,201 |
||||||||
South Korea - .5% |
||||||||||
Samsung SDI |
78,960 |
6,507,256 |
||||||||
Switzerland - 3.8% |
||||||||||
Adecco Group |
41,270 |
2,454,388 |
||||||||
Novartis |
422,101 |
30,029,721 |
||||||||
Roche Holding |
90,503 |
20,806,864 |
||||||||
53,290,973 |
||||||||||
United Kingdom - 10.0% |
||||||||||
BAE Systems |
941,594 |
6,252,399 |
||||||||
British American Tobacco |
112,583 |
6,464,989 |
||||||||
Centrica |
7,831,864 |
20,533,731 |
||||||||
Cobham |
4,693,300 |
8,209,067 |
||||||||
Diageo |
261,563 |
6,977,767 |
||||||||
Dixons Carphone |
1,519,949 |
5,854,759 |
||||||||
GlaxoSmithKline |
1,001,276 |
19,835,802 |
||||||||
National Grid |
1,476,886 |
19,252,177 |
||||||||
Randgold Resources |
37,803 |
3,350,025 |
||||||||
United Utilities Group |
1,683,459 |
19,369,288 |
||||||||
Vodafone Group |
5,109,528 |
14,059,192 |
||||||||
Wolseley |
216,637 |
11,272,156 |
||||||||
141,431,352 |
||||||||||
United States - 18.0% |
||||||||||
Abbott Laboratories |
370,573 |
14,541,285 |
||||||||
Accenture, Cl. A |
217,283 |
25,256,976 |
||||||||
CA |
480,892 |
14,782,620 |
||||||||
CMS Energy |
798,842 |
33,671,190 |
||||||||
Cognizant Technology Solutions, Cl. A |
83,747 |
g |
4,300,408 |
|||||||
Dollar General |
86,227 |
5,957,424 |
||||||||
Dun & Bradstreet |
40,909 |
5,107,489 |
||||||||
Eversource Energy |
676,843 |
37,266,976 |
||||||||
Maxim Integrated Products |
84,756 |
3,358,880 |
||||||||
Merck & Co. |
148,806 |
8,737,888 |
||||||||
Microsoft |
576,286 |
34,531,057 |
10
Common Stocks - 53.5% (continued) |
Shares |
Value ($) |
||||||||
United States - 18.0% (continued) |
||||||||||
PowerShares DB Gold Fund |
543,408 |
g,h |
22,442,750 |
|||||||
Procter & Gamble |
124,028 |
10,765,630 |
||||||||
Reynolds American |
291,358 |
16,047,999 |
||||||||
Sysco |
145,661 |
7,009,207 |
||||||||
Trimble Navigation |
106,791 |
g |
2,951,703 |
|||||||
Walgreens Boots Alliance |
85,827 |
7,100,468 |
||||||||
253,829,950 |
||||||||||
Total Common Stocks |
754,871,561 |
|||||||||
Short-Term Investments - 4.4% |
Principal Amount ($) |
Value ($) |
||||||||
U.S. Government Securities |
||||||||||
U.S. Treasury Bills, 0.33%, 12/8/16 |
62,636,600 |
62,626,077 |
||||||||
Other Investment - 5.5% |
Shares |
Value ($) |
||||||||
Registered Investment Company; |
||||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund |
77,404,811 |
i |
77,404,811 |
|||||||
Total Investments (cost $1,361,169,684) |
97.4% |
1,374,669,101 |
||||||||
Cash and Receivables (Net) |
2.6% |
36,254,584 |
||||||||
Net Assets |
100.0% |
1,410,923,685 |
ADR—American Depository Receipt
a Principal amount stated in U.S. Dollars unless otherwise noted.
AUD—Australian Dollar
EUR—Euro
GBP—British Pound
NZD—New Zealand Dollar
b Interest accruals are adjusted based on changes in the Australian Consumer Price Index.
c Interest accruals are adjusted based on changes in the New Zealand Consumer Price Index.
d Interest accruals are adjusted based on changes in the British Consumer Price Index.
e Variable rate security—rate shown is the interest rate in effect at period end.
f Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2016, these securities were valued at $5,973,945 or .42% of net assets.
g Non-income producing security.
h Investment in non-controlled affiliate (cost $23,555,235).
i Investment in affiliated money market mutual fund.
11
STATEMENT OF INVESTMENTS (continued)
Portfolio Summary (Unaudited) † |
Value (%) |
U.S. Government Securities |
22.3 |
Short-Term/Money Market Investments |
9.9 |
Utilities |
9.4 |
Health Care |
8.2 |
Foreign/Governmental |
8.1 |
Basic Materials |
8.0 |
Consumer Services |
7.9 |
Consumer Goods |
5.2 |
Industrials |
5.1 |
Technology |
4.9 |
Corporate Bonds |
3.6 |
Telecommunication |
2.3 |
Exchange-Traded Funds |
1.6 |
Financials |
.9 |
97.4 |
† Based on net assets.
See notes to financial statements.
12
STATEMENT OF FINANCIAL FUTURES
October 31, 2016
Contracts |
Market Value Covered by Contracts ($) |
Expiration |
Unrealized Appreciation (Depreciation) ($) |
||
Financial Futures Short |
|||||
FTSE 100 |
393 |
(33,330,848) |
December 2016 |
(593,176) |
|
Standard & Poor's 500 |
677 |
(358,826,925) |
December 2016 |
8,203,034 |
|
Gross Unrealized Appreciation |
8,203,034 |
||||
Gross Unrealized Depreciation |
(593,176) |
See notes to financial statements.
13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2016
|
|
|
|
|
|
|
|
|
|
Cost |
|
Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See Statement of Investments: |
|
|
|
| ||
Unaffiliated issuers |
|
1,260,209,638 |
|
1,274,821,540 |
| |
Affiliated issuers |
|
100,960,046 |
|
99,847,561 |
| |
Cash |
|
|
|
|
2,114,307 |
|
Cash denominated in foreign currency |
|
|
337,463 |
|
338,354 |
|
Cash collateral held by broker—Note 4 |
|
|
|
|
17,155,000 |
|
Unrealized appreciation on forward foreign |
|
|
|
|
14,547,920 |
|
Dividends and interest receivable |
|
|
|
|
5,929,932 |
|
Receivable for shares of Common Stock subscribed |
|
|
|
|
4,906,236 |
|
Receivable for investment securities sold |
|
|
|
|
1,090,858 |
|
Receivable for futures variation margin—Note 4 |
|
|
|
|
758,509 |
|
Prepaid expenses |
|
|
|
|
61,170 |
|
|
|
|
|
|
1,421,571,387 |
|
Liabilities ($): |
|
|
|
| ||
Due to The Dreyfus Corporation and affiliates—Note 3(c) |
|
|
|
|
1,034,390 |
|
Payable for investment securities purchased |
|
|
|
|
5,738,340 |
|
Unrealized depreciation on forward foreign |
|
|
|
|
2,977,580 |
|
Payable for shares of Common Stock redeemed |
|
|
|
|
676,325 |
|
Accrued expenses |
|
|
|
|
221,067 |
|
|
|
|
|
|
10,647,702 |
|
Net Assets ($) |
|
|
1,410,923,685 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
|
1,409,316,889 |
|
Accumulated undistributed investment income—net |
|
|
|
|
24,651,403 |
|
Accumulated net realized gain (loss) on investments |
|
|
|
|
(55,698,491) |
|
Accumulated net unrealized appreciation (depreciation) |
|
|
|
32,653,884 |
| |
Net Assets ($) |
|
|
1,410,923,685 |
|
Net Asset Value Per Share |
Class A |
Class C |
Class I |
Class Y |
|
Net Assets ($) |
157,624,145 |
35,860,863 |
509,711,864 |
707,726,813 |
|
Shares Outstanding |
10,706,050 |
2,501,381 |
34,476,317 |
47,837,264 |
|
Net Asset Value Per Share ($) |
14.72 |
14.34 |
14.78 |
14.79 |
|
See notes to financial statements. |
14
STATEMENT OF OPERATIONS
Year Ended October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Dividends (net of $663,715 foreign taxes withheld at source): |
|
|
|
| ||
Unaffiliated issuers |
|
|
12,274,821 |
| ||
Affiliated issuers |
|
|
141,199 |
| ||
Interest |
|
|
7,247,524 |
| ||
Total Income |
|
|
19,663,544 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
|
6,391,147 |
| ||
Shareholder servicing costs—Note 3(c) |
|
|
526,328 |
| ||
Registration fees |
|
|
183,753 |
| ||
Distribution fees—Note 3(b) |
|
|
177,921 |
| ||
Custodian fees—Note 3(c) |
|
|
133,404 |
| ||
Professional fees |
|
|
83,372 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
|
64,906 |
| ||
Prospectus and shareholders’ reports |
|
|
36,386 |
| ||
Loan commitment fees—Note 2 |
|
|
14,958 |
| ||
Interest expense—Note 2 |
|
|
1,107 |
| ||
Miscellaneous |
|
|
47,289 |
| ||
Total Expenses |
|
|
7,660,571 |
| ||
Less—reduction in expenses due to undertaking—Note 3(a) |
|
|
(9,641) |
| ||
Less—reduction in fees due to earnings credits—Note 3(c) |
|
|
(182) |
| ||
Net Expenses |
|
|
7,650,748 |
| ||
Investment Income—Net |
|
|
12,012,796 |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments and foreign currency transactions |
(8,047,061) |
| ||||
Net realized gain (loss) on options transactions |
(1,087,566) |
| ||||
Net realized gain (loss) on financial futures |
(25,122,089) |
| ||||
Net realized gain (loss) on forward foreign currency exchange contracts |
13,320,467 |
| ||||
Capital gain distributions on unaffiliated issuers |
148,033 |
| ||||
Net Realized Gain (Loss) |
|
|
(20,788,216) |
| ||
Net unrealized appreciation (depreciation) on investments |
|
|
|
| ||
Unaffiliated issuers |
|
|
|
7,721,244 |
| |
Affiliated issuers |
|
|
|
1,256,788 |
| |
Net unrealized appreciation (depreciation) on options transactions |
|
|
122,393 |
| ||
Net unrealized appreciation (depreciation) on financial futures |
|
|
13,406,904 |
| ||
Net unrealized appreciation (depreciation) on |
|
|
12,875,018 |
| ||
Net Unrealized Appreciation (Depreciation) |
|
|
35,382,347 |
| ||
Net Realized and Unrealized Gain (Loss) on Investments |
|
|
14,594,131 |
| ||
Net Increase in Net Assets Resulting from Operations |
|
26,606,927 |
| |||
See notes to financial statements. |
15
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Operations ($): |
|
|
|
|
|
|
|
| |
Investment income—net |
|
|
12,012,796 |
|
|
|
6,715,992 |
| |
Net realized gain (loss) on investments |
|
(20,788,216) |
|
|
|
7,957,599 |
| ||
Net unrealized appreciation (depreciation) |
|
35,382,347 |
|
|
|
(10,791,176) |
| ||
Net Increase (Decrease) in Net Assets |
26,606,927 |
|
|
|
3,882,415 |
| |||
Dividends to Shareholders from ($): |
|
|
|
|
|
|
|
| |
Investment income—net: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(1,985,751) |
|
|
|
(2,671,161) |
| |
Class C |
|
|
(565,274) |
|
|
|
(519,065) |
| |
Class I |
|
|
(4,536,404) |
|
|
|
(3,560,081) |
| |
Class Y |
|
|
(17,423,097) |
|
|
|
(12,071,963) |
| |
Total Dividends |
|
|
(24,510,526) |
|
|
|
(18,822,270) |
| |
Capital Stock Transactions ($): |
|
|
|
|
|
|
|
| |
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
|
135,924,150 |
|
|
|
22,416,838 |
| |
Class C |
|
|
22,230,757 |
|
|
|
6,252,076 |
| |
Class I |
|
|
468,457,613 |
|
|
|
52,781,238 |
| |
Class Y |
|
|
393,078,796 |
|
|
|
210,309,244 |
| |
Dividends reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
|
1,985,751 |
|
|
|
2,671,161 |
| |
Class C |
|
|
565,274 |
|
|
|
519,065 |
| |
Class I |
|
|
4,412,721 |
|
|
|
3,424,219 |
| |
Class Y |
|
|
10,077,228 |
|
|
|
8,084,258 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(30,295,189) |
|
|
|
(29,553,397) |
| |
Class C |
|
|
(3,502,241) |
|
|
|
(1,749,030) |
| |
Class I |
|
|
(67,046,742) |
|
|
|
(24,372,003) |
| |
Class Y |
|
|
(104,900,705) |
|
|
|
(44,162,813) |
| |
Increase (Decrease) in Net Assets |
830,987,413 |
|
|
|
206,620,856 |
| |||
Total Increase (Decrease) in Net Assets |
833,083,814 |
|
|
|
191,681,001 |
| |||
Net Assets ($): |
|
|
|
|
|
|
|
| |
Beginning of Period |
|
|
577,839,871 |
|
|
|
386,158,870 |
| |
End of Period |
|
|
1,410,923,685 |
|
|
|
577,839,871 |
| |
Undistributed investment income—net |
24,651,403 |
|
|
|
24,541,256 |
|
16
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Capital Share Transactions (Shares): |
|
|
|
|
|
|
|
| |
Class Aa |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
9,236,847 |
|
|
|
1,516,866 |
| |
Shares issued for dividends reinvested |
|
|
142,245 |
|
|
|
183,207 |
| |
Shares redeemed |
|
|
(2,072,271) |
|
|
|
(2,039,778) |
| |
Net Increase (Decrease) in Shares Outstanding |
7,306,821 |
|
|
|
(339,705) |
| |||
Class C |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
1,550,131 |
|
|
|
430,720 |
| |
Shares issued for dividends reinvested |
|
|
41,321 |
|
|
|
36,247 |
| |
Shares redeemed |
|
|
(244,973) |
|
|
|
(121,038) |
| |
Net Increase (Decrease) in Shares Outstanding |
1,346,479 |
|
|
|
345,929 |
| |||
Class Ia |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
31,624,601 |
|
|
|
3,595,479 |
| |
Shares issued for dividends reinvested |
|
|
315,645 |
|
|
|
234,215 |
| |
Shares redeemed |
|
|
(4,550,565) |
|
|
|
(1,646,567) |
| |
Net Increase (Decrease) in Shares Outstanding |
27,389,681 |
|
|
|
2,183,127 |
| |||
Class Ya |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
26,614,889 |
|
|
|
14,191,557 |
| |
Shares issued for dividends reinvested |
|
|
720,317 |
|
|
|
552,959 |
| |
Shares redeemed |
|
|
(7,250,679) |
|
|
|
(3,013,167) |
| |
Net Increase (Decrease) in Shares Outstanding |
20,084,527 |
|
|
|
11,731,349 |
| |||
aDuring the period ending October 31, 2016, 498 Class A shares representing $7,336 were exchanged for 496 Class I shares and 167,112 Class Y shares representing $2,457,452 were exchanged for 167,167 Class I shares. |
|||||||||
See notes to financial statements. |
17
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||
Class A Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
14.61 |
15.11 |
14.75 |
14.07 |
13.51 | |
Investment Operations: |
||||||
Investment income—neta |
.17 |
.17 |
.36 |
.21 |
.17 | |
Net realized and unrealized |
.51 |
.01b |
.17 |
.54 |
.53 | |
Total from Investment Operations |
.68 |
.18 |
.53 |
.75 |
.70 | |
Distributions: |
||||||
Dividends from |
(.57) |
(.68) |
(.04) |
(.07) |
(.07) | |
Dividends from net realized |
- |
- |
(.13) |
- |
(.07) | |
Total Distributions |
(.57) |
(.68) |
(.17) |
(.07) |
(.14) | |
Net asset value, end of period |
14.72 |
14.61 |
15.11 |
14.75 |
14.07 | |
Total Return (%)c |
4.87 |
1.22 |
3.63 |
5.42 |
5.16 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.16 |
1.15 |
1.20 |
1.49 |
1.72 | |
Ratio of net expenses to |
1.15 |
1.15 |
1.15 |
1.47 |
1.50 | |
Ratio of net investment income |
1.15 |
1.16 |
2.38 |
1.48 |
1.26 | |
Portfolio Turnover Rate |
57.17 |
68.92 |
47.01 |
44.96 |
53.24 | |
Net Assets, end of period ($ x 1,000) |
157,624 |
49,672 |
56,501 |
35,478 |
17,088 |
a Based on average shares outstanding.
b In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
c Exclusive of sales charge.
See notes to financial statements.
18
Year Ended October 31, | ||||||
Class C Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
14.26 |
14.79 |
14.51 |
13.89 |
13.37 | |
Investment Operations: |
||||||
Investment income—neta |
.06 |
.06 |
.21 |
.08 |
.06 | |
Net realized and unrealized |
.50 |
.02b |
.20 |
.55 |
.53 | |
Total from Investment Operations |
.56 |
.08 |
.41 |
.63 |
.59 | |
Distributions: |
||||||
Dividends from |
(.48) |
(.61) |
- |
(.01) |
- | |
Dividends from net realized |
- |
- |
(.13) |
- |
(.07) | |
Total Distributions |
(.48) |
(.61) |
(.13) |
(.01) |
(.07) | |
Net asset value, end of period |
14.34 |
14.26 |
14.79 |
14.51 |
13.89 | |
Total Return (%)c |
4.12 |
.49 |
2.87 |
4.58 |
4.39 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.90 |
1.91 |
1.96 |
2.21 |
2.56 | |
Ratio of net expenses |
1.90 |
1.90 |
1.90 |
2.18 |
2.25 | |
Ratio of net investment income |
.44 |
.39 |
1.41 |
.58 |
.51 | |
Portfolio Turnover Rate |
57.17 |
68.92 |
47.01 |
44.96 |
53.24 | |
Net Assets, end of period ($ x 1,000) |
35,861 |
16,470 |
11,969 |
5,671 |
944 |
a Based on average shares outstanding.
b In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
c Exclusive of sales charge.
See notes to financial statements.
19
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||
Class I Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
14.68 |
15.18 |
14.81 |
14.10 |
13.56 | |
Investment Operations: |
||||||
Investment income—neta |
.20 |
.21 |
.38 |
.26 |
.21 | |
Net realized and unrealized |
.52 |
.01b |
.19 |
.54 |
.53 | |
Total from Investment Operations |
.72 |
.22 |
.57 |
.80 |
.74 | |
Distributions: |
||||||
Dividends from |
(.62) |
(.72) |
(.07) |
(.09) |
(.13) | |
Dividends from net realized |
- |
- |
(.13) |
- |
(.07) | |
Total Distributions |
(.62) |
(.72) |
(.20) |
(.09) |
(.20) | |
Net asset value, end of period |
14.78 |
14.68 |
15.18 |
14.81 |
14.10 | |
Total Return (%) |
5.16 |
1.49 |
3.89 |
5.79 |
5.45 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
.88 |
.86 |
.90 |
1.11 |
1.35 | |
Ratio of net expenses |
.88 |
.86 |
.90 |
1.11 |
1.25 | |
Ratio of net investment income |
1.36 |
1.40 |
2.51 |
1.84 |
1.55 | |
Portfolio Turnover Rate |
57.17 |
68.92 |
47.01 |
44.96 |
53.24 | |
Net Assets, end of period ($ x 1,000) |
509,712 |
104,057 |
74,438 |
60,482 |
52,410 |
a Based on average shares outstanding.
b In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
See notes to financial statements.
20
Year Ended October 31, | |||||
Class Y Shares |
2016 |
2015 |
2014 |
2013a | |
Per Share Data ($): |
|||||
Net asset value, beginning of period |
14.69 |
15.18 |
14.81 |
14.16 | |
Investment Operations: |
|||||
Investment income—netb |
.22 |
.22 |
.26 |
.05 | |
Net realized and unrealized |
.51 |
.02c |
.31 |
.60 | |
Total from Investment Operations |
.73 |
.24 |
.57 |
.65 | |
Distributions: |
|||||
Dividends from |
(.63) |
(.73) |
(.07) |
- | |
Dividends from net realized |
- |
- |
(.13) |
- | |
Total Distributions |
(.63) |
(.73) |
(.20) |
- | |
Net asset value, end of period |
14.79 |
14.69 |
15.18 |
14.81 | |
Total Return (%) |
5.18 |
1.57 |
3.89 |
4.59d | |
Ratios/Supplemental Data (%): |
|||||
Ratio of total expenses |
.81 |
.83 |
.88 |
1.09e | |
Ratio of net expenses |
.81 |
.83 |
.88 |
1.09e | |
Ratio of net investment income |
1.53 |
1.45 |
1.77 |
1.10e | |
Portfolio Turnover Rate |
57.17 |
68.92 |
47.01 |
44.96 | |
Net Assets, end of period ($ x 1,000) |
707,727 |
407,642 |
243,251 |
41,381 |
a From July 1, 2013 (commencement of initial offering) to October 31, 2013.
b Based on average shares outstanding.
c In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
d Not annualized.
e Annualized.
See notes to financial statements.
21
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Global Real Return 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 ten series, including the fund. The fund’s investment objective is to seek total return (consisting of capital appreciation and income). The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Newton Investment Management (North America) Limited (“Newton”), formerly, Newton Capital Management Limited, a wholly-owned subsidiary of BNY Mellon and an affiliate of Dreyfus, serves as the fund’s sub-investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares. The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C, Class I and Class Y. Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with
22
GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in debt securities, excluding short-term investments (other than U.S. Treasury Bills), financial futures, options and forward foreign currency exchange contracts (“forward contracts”), are valued each business day by an independent pricing service (the “Service”) approved by
23
NOTES TO FINANCIAL STATEMENTS (continued)
the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. These securities are generally categorized within Level 2 of the fair value hierarchy.
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
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. U.S. Treasury Bills are valued at the mean price between quoted bid prices and asked prices by an independent pricing service (the“Service”) approved by the Board. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service is engaged under the general supervision of the Board.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board.
24
Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Financial futures and options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day and are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter (“OTC”) are valued at the mean between the bid and asked price and are generally categorized within Level 2 of the fair value hierarchy. Forward contracts are valued at the forward rate and are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2016 in valuing the fund’s investments:
Level 1 - Unadjusted Quoted Prices |
Level 2 - Other Significant Observable Inputs |
Level 3 -Significant Unobservable Inputs |
Total | |
Assets ($) |
||||
Investments in Securities: |
||||
Corporate Bonds† |
- |
50,337,633 |
- |
50,337,633 |
Equity Securities –Domestic |
231,387,200 |
- |
- |
231,387,200 |
Equity Securities –Foreign |
501,041,611 |
- |
- |
501,041,611 |
Exchange –Traded Funds |
22,442,750 |
- |
- |
22,442,750 |
Foreign Government |
- |
114,082,601 |
- |
114,082,601 |
Mutual Funds |
77,404,811 |
- |
- |
77,404,811 |
U.S. Treasury |
- |
377,972,495 |
- |
377,972,495 |
Other Financial Instruments: |
||||
Financial Futures†† |
8,203,034 |
- |
- |
8,203,034 |
Forward Foreign Currency |
- |
14,547,920 |
- |
14,547,920 |
25
NOTES TO FINANCIAL STATEMENTS (continued)
Level 1 - Unadjusted Quoted Prices |
Level 2 - Other Significant Observable Inputs |
Level 3 -Significant Unobservable Inputs |
Total | |
Liabilities ($) |
||||
Other Financial Instruments: |
||||
Financial Futures†† |
(593,176) |
- |
- |
(593,176) |
Forward Foreign Currency |
- |
(2,977,580) |
- |
(2,977,580) |
† See Statement of Investments for additional detailed categorizations.
†† Amount shown represents unrealized appreciation (depreciation) at period end.
At October 31, 2016, there were no transfers between levels of the fair value hierarchy.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended October 31, 2016 were as follows:
26
Affiliated Investment Company |
Value |
Purchases ($) |
Sales ($) |
Value |
Net |
Dreyfus Institutional Preferred Government Plus Money Market Fund† |
15,598,919 |
724,894,435 |
663,088,543 |
77,404,811 |
5.5 |
† Formerly Dreyfus Institutional Preferred Plus Money Market Fund.
In addition, an affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Investments in affiliated companies during the period ended October 31, 2016 were as follows:
Affiliated |
Value |
Purchases ($) |
Sales ($) |
Net Realized |
PowerShares DB |
13,555,443 |
7,630,519 |
- |
- |
Affiliated |
Change in Net Unrealized Appreciation |
Value |
Net |
Dividends/ |
PowerShares DB |
1,256,788 |
22,442,750 |
1.6 |
- |
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable
27
NOTES TO FINANCIAL STATEMENTS (continued)
provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2016, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended October 31, 2016, the fund did not incur any interest or penalties.
Each tax year in the four-year period ended October 31, 2016 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2016, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $38,217,454, accumulated capital and other losses $43,167,163 and unrealized appreciation $6,556,505.
Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses for an unlimited period. Furthermore, capital loss carryovers retain their character as either short-term or long-term capital losses.
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to October 31, 2016. If not applied, the fund has $13,001,271 of short-term capital losses and $29,376,366 of long-term capital losses which can be carried forward for an unlimited period.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2016 and October 31, 2015 were as follows: ordinary income $24,510,526 and $18,822,270, respectively.
During the period ended October 31, 2016, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency gains and losses, limited partnerships and passive foreign investment companies, the fund increased accumulated undistributed investment income-net by $12,607,877 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $810 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus (each, a “Facility”),
28
each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Prior to October 5, 2016, the unsecured credit facility with Citibank, N.A. was $555 million and prior to January 11, 2016, the unsecured credit facility with Citibank, N.A. was $480 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing.
The average amount of borrowings outstanding under the Facilities during the period ended October 31, 2016, was approximately $80,900 with a related weighted average annualized interest rate of 1.37%.
NOTE 3—Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of .75% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has contractually agreed, from November 1, 2015 through March 1, 2017, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .90% of the value of the fund’s average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $9,641 during the period ended October 31, 2016.
Pursuant to a sub-investment advisory agreement between Dreyfus and Newton, Dreyfus pays Newton an annual fee of .36% of the value of the fund’s average daily net assets.
During the period ended October 31, 2016, the Distributor retained $76,186 from commissions earned on sales of the fund’s Class A shares and $1,854 from CDSCs on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended October 31, 2016, Class C shares were charged $177,921 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as
29
NOTES TO FINANCIAL STATEMENTS (continued)
answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2016, Class A and Class C shares were charged $223,360 and $59,307, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended October 31, 2016, the fund was charged $7,214 for transfer agency services and $418 for cash management services. These fees are included in Shareholder servicing costs in the Statement of Operations. Cash management fees were partially offset by earnings credits of $182.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended October 31, 2016, the fund was charged $133,404 pursuant to the custody agreement.
During the period ended October 31, 2016, the fund was charged $9,804 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $868,454, Distribution Plan fees $22,127, Shareholder Services Plan fees $39,781, custodian fees $92,708, Chief Compliance Officer fees $5,688 and transfer agency fees $7,293, which are offset against an expense reimbursement currently in effect in the amount of $1,661.
(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.
30
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, financial futures, options transactions and forward contracts, during the period ended October 31, 2016, amounted to $1,234,343,172 and $426,608,022, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default or termination.
Each type of derivative instrument that was held by the fund during the period ended October 31, 2016 is discussed below.
Financial Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including equity risk and interest risk, as a result of changes in value of underlying financial instruments. The fund invests in financial futures in order to manage its exposure to or protect against changes in the market. A financial futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents. The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations. When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Statement of Operations. There is minimal counterparty credit risk to the fund with financial futures since they are exchange traded, and the exchange guarantees the financial futures against default. Financial futures open at October 31, 2016 are set forth in the Statement of Financial Futures.
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in the values of equities, interest rates, foreign currencies or as a substitute for an investment. The fund is subject
31
NOTES TO FINANCIAL STATEMENTS (continued)
to market risk, interest rate risk and currency risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying financial instrument at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying financial instrument at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates.
As a writer of an option, the fund has no control over whether the underlying financial instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the financial instrument underlying the written option. There is a risk of loss from a change in value of such options which may exceed the related premiums received. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The Statement of Operations reflects any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction.
The following summarizes the fund’s call/put options written during the period ended October 31, 2016:
32
Options Terminated | ||||
Number of |
Premiums |
Net Realized | ||
Options Written: |
Contracts |
Received ($) |
Cost ($) |
Gain ($) |
Contracts outstanding |
- |
- |
||
Contracts written |
1,099 |
630,563 |
||
Contracts terminated: |
||||
Contracts closed |
1,099 |
630,563 |
242,876 |
387,687 |
Contracts outstanding |
- |
- |
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The following summarizes open forward contracts at October 31, 2016:
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: |
||||
JP Morgan Chase Bank |
||||
Japanese Yen, |
||||
Expiring |
||||
12/15/2016 |
267,737,700 |
2,558,691 |
2,557,808 |
(883) |
33
NOTES TO FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: (continued) | ||||
Royal Bank of Scotland |
||||
British Pound, |
||||
Expiring |
||||
11/1/2016 |
45,195 |
54,982 |
55,319 |
337 |
State Street Bank and Trust Co. |
||||
Japanese Yen, |
||||
Expiring |
||||
12/15/2016 |
39,596,497 |
389,089 |
378,282 |
(10,807) |
UBS |
||||
Australian Dollar, |
||||
Expiring |
||||
12/15/2016 |
11,067,510 |
8,412,458 |
8,409,324 |
(3,134) |
Japanese Yen, |
||||
Expiring |
||||
12/15/2016 |
115,446,549 |
1,139,798 |
1,102,908 |
(36,890) |
Sales: |
||||
Barclays Bank |
||||
Canadian Dollar, |
||||
Expiring |
||||
11/16/2016 |
3,539,771 |
2,766,038 |
2,639,324 |
126,714 |
New Zealand Dollar, |
||||
Expiring |
||||
11/16/2016 |
2,336,192 |
1,690,869 |
1,669,505 |
21,364 |
JP Morgan Chase Bank |
||||
Australian Dollar, |
||||
Expiring |
||||
12/15/2016 |
13,081,129 |
9,982,909 |
9,939,314 |
43,595 |
British Pound, |
||||
Expiring |
||||
1/17/2017 |
2,319,295 |
2,831,616 |
2,844,281 |
(12,665) |
Canadian Dollar, |
||||
Expiring |
||||
11/16/2016 |
16,050,180 |
12,137,623 |
11,967,336 |
170,287 |
Euro, |
||||
Expiring |
||||
1/17/2017 |
3,092,811 |
3,424,183 |
3,407,900 |
16,283 |
Japanese Yen, |
||||
Expiring |
||||
12/15/2016 |
359,154,595 |
3,521,715 |
3,431,152 |
90,563 |
New Zealand Dollar, |
||||
Expiring |
||||
11/16/2016 |
24,593,083 |
17,868,481 |
17,574,870 |
293,611 |
34
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
JP Morgan Chase Bank (continued) | ||||
South African Rand, |
||||
Expiring |
||||
1/17/2017 |
51,174,603 |
3,634,573 |
3,734,754 |
(100,181) |
Royal Bank of Scotland |
||||
Australian Dollar, |
||||
Expiring |
||||
12/15/2016 |
181,792,074 |
136,053,188 |
138,129,399 |
(2,076,211) |
British Pound, |
||||
Expiring |
||||
1/17/2017 |
184,222,674 |
234,174,919 |
225,922,573 |
8,252,346 |
Canadian Dollar, |
||||
Expiring |
||||
11/16/2016 |
79,557,592 |
60,486,685 |
59,319,736 |
1,166,949 |
Euro, |
||||
Expiring |
||||
1/17/2017 |
7,180,501 |
7,834,215 |
7,912,035 |
(77,820) |
Japanese Yen, |
||||
Expiring |
||||
11/1/2016 |
8,942,411 |
85,467 |
85,271 |
196 |
11/4/2016 |
26,287,403 |
250,447 |
250,667 |
(220) |
New Zealand Dollar, |
||||
Expiring |
||||
11/16/2016 |
946,229 |
679,853 |
676,200 |
3,653 |
South Korean Won, |
||||
Expiring |
||||
11/16/2016 |
5,006,678,057 |
4,499,416 |
4,375,263 |
124,153 |
State Street Bank and Trust Co. |
||||
Australian Dollar, |
||||
Expiring |
||||
12/15/2016 |
15,856,237 |
12,059,577 |
12,047,899 |
11,678 |
British Pound, |
||||
Expiring |
||||
1/17/2017 |
8,162,131 |
9,975,864 |
10,009,677 |
(33,813) |
Canadian Dollar, |
||||
Expiring |
||||
11/16/2016 |
19,253,902 |
14,690,905 |
14,356,095 |
334,810 |
Euro, |
||||
Expiring |
||||
1/17/2017 |
1,873,657 |
2,070,049 |
2,064,541 |
5,508 |
35
NOTES TO FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
State Street Bank and Trust Co. (continued) | ||||
Japanese Yen, |
||||
Expiring |
||||
11/2/2016 |
9,036,351 |
85,829 |
86,167 |
(338) |
12/15/2016 |
2,501,589,527 |
24,568,158 |
23,898,714 |
669,444 |
New Zealand Dollar, |
||||
Expiring |
||||
11/16/2016 |
19,303,837 |
13,931,416 |
13,795,034 |
136,382 |
UBS |
||||
British Pound, |
||||
Expiring |
||||
1/17/2017 |
4,781,481 |
5,853,985 |
5,863,798 |
(9,813) |
Euro, |
||||
Expiring |
||||
1/17/2017 |
148,051,486 |
166,200,170 |
163,134,654 |
3,065,516 |
New Zealand Dollar, |
||||
Expiring |
||||
11/16/2016 |
131,550,259 |
93,394,502 |
94,009,307 |
(614,805) |
South Korean Won, |
||||
Expiring |
||||
11/16/2016 |
680,028,693 |
608,798 |
594,267 |
14,531 |
Gross Unrealized Appreciation |
14,547,920 | |||
Gross Unrealized Depreciation |
(2,977,580) |
The following tables show the fund’s exposure to different types of market risk as it relates to the Statement of Assets and Liabilities and the Statement of Operations, respectively.
Fair value of derivative instruments as of October 31, 2016 is shown below:
|
|
Derivative |
|
|
|
Derivative |
|
Equity risk |
8,203,034 |
1 |
Equity risk |
(593,176) |
1 | ||
Foreign exchange risk |
14,547,920 |
2 |
Foreign exchange risk |
(2,977,580) |
2 | ||
Gross fair value of |
22,750,954 |
(3,570,756) |
|||||
Statement of Assets and Liabilities location: |
|||||||
1 |
Includes cumulative appreciation (depreciation) on financial futures as reported in the Statement of Financial | ||||||
2 |
Unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
36
The effect of derivative instruments in the Statement of Operations during the period ended October 31, 2016 is shown below:
Amount of realized gain (loss) on derivatives recognized in income ($) |
||||||||||
Underlying |
Financial |
1 |
Options |
2 |
Forward |
3 |
Total |
|
||
Interest |
(529,805) |
(805,234) |
- |
(1,335,039) |
||||||
Equity |
(24,765,808) |
(389,638) |
- |
(25,155,446) |
||||||
Foreign |
173,524 |
107,306 |
13,320,467 |
13,601,297 |
||||||
Total |
(25,122,089) |
(1,087,566) |
13,320,467 |
(12,889,188) |
||||||
Change in unrealized appreciation (depreciation) on derivatives recognized in income ($) |
||||||||||
Underlying |
Financial |
4 |
Options |
5 |
Forward |
6 |
Total |
|
||
Equity |
13,406,904 |
- |
- |
13,406,904 |
||||||
Foreign |
- |
122,393 |
12,875,018 |
12,997,411 |
||||||
Total |
13,406,904 |
122,393 |
12,875,018 |
26,404,315 |
||||||
Statement of Operations location: |
||||||||||
1 |
Net realized gain (loss) on financial futures. |
|||||||||
2 |
Net realized gain (loss) on options transactions. | |||||||||
3 |
Net realized gain (loss) on forward foreign currency exchange contracts. |
|||||||||
4 |
Net unrealized appreciation (depreciation) on financial futures. |
|||||||||
5 |
Net unrealized appreciation (depreciation) on options transactions. |
|||||||||
6 |
Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
The provisions of ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities” require disclosure on the offsetting of financial assets and liabilities. These disclosures are required for certain investments, including derivative financial instruments subject to Master Agreements which are eligible for offsetting in the Statement of Assets and Liabilities and require the fund to disclose both gross and net information with respect to such investments. For financial reporting purposes, the fund does not offset derivative assets and derivative liabilities that are subject to Master Agreements in the Statement of Assets and Liabilities.
37
NOTES TO FINANCIAL STATEMENTS (continued)
At October 31, 2016, derivative assets and liabilities (by type) on a gross basis are as follows:
Derivative Financial Instruments: |
|
Assets ($) |
|
Liabilities ($) |
|
Financial futures |
8,203,034 |
(593,176) |
|||
Forward contracts |
14,547,920 |
(2,977,580) |
|||
Total gross amount of derivative |
|||||
assets and liabilities in the |
|||||
Statement of Assets and Liabilities |
22,750,954 |
(3,570,756) |
|||
Derivatives not subject to |
|||||
Master Agreements |
(8,203,034) |
593,176 |
|||
Total gross amount of assets |
|||||
and liabilities subject to |
|||||
Master Agreements |
14,547,920 |
(2,977,580) |
The following tables present derivative assets and liabilities net of amounts available for offsetting under Master Agreements and net of related collateral received or pledged, if any, as of October 31, 2016:
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Assets ($) |
1 |
for Offset ($) |
Received ($) |
|
Assets ($) |
Barclays Bank |
148,078 |
- |
- |
148,078 | ||
JP Morgan |
614,339 |
(113,729) |
- |
500,610 | ||
Royal Bank |
9,547,634 |
(2,154,251) |
- |
7,393,383 | ||
State Street |
1,157,822 |
(44,958) |
- |
1,112,864 | ||
UBS |
3,080,047 |
(664,642) |
- |
2,415,405 | ||
Total |
14,547,920 |
(2,977,580) |
- |
11,570,340 | ||
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Liabilities ($) |
1 |
for Offset ($) |
Pledged ($) |
|
Liabilities ($) |
JP Morgan |
(113,729) |
113,729 |
- |
- | ||
Royal Bank |
(2,154,251) |
2,154,251 |
- |
- | ||
State Street |
(44,958) |
44,958 |
- |
- | ||
UBS |
(664,642) |
664,642 |
- |
- | ||
Total |
(2,977,580) |
2,977,580 |
- |
- | ||
1 Absent a default event or early termination, OTC derivative assets and liabilities are presented at gross amounts | ||||||
38
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2016:
|
|
Average Market Value ($) |
Equity financial futures |
205,453,914 | |
Equity options contracts |
32,800 | |
Interest rate financial futures |
5,808 | |
Interest rate options contracts |
93,647 | |
Foreign currency options contracts |
16,391 | |
Forward contracts |
438,304,873 | |
At October 31, 2016, the cost of investments for federal income tax purposes was $1,368,086,619; accordingly, accumulated net unrealized appreciation on investments was $6,582,482, consisting of $53,343,536 gross unrealized appreciation and $46,761,054 gross unrealized depreciation.
39
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dreyfus Global Real Return Fund
We have audited the accompanying statement of assets and liabilities, including the statements of investments and financial futures, of Dreyfus Global Real Return Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2016, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2016 by correspondence with the custodian and others. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Global Real Return Fund at October 31, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 29, 2016
40
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund elects to provide each shareholder with their portion of the fund’s foreign taxes paid and the income sourced from foreign countries. Accordingly, the fund hereby reports the following information regarding its fiscal year ended October 31, 2016:
- the total amount of taxes paid to foreign countries was $589,274.
- the total amount of income sourced from foreign countries was $12,952,161.
Where required by federal tax law rules, shareholders will receive notification of their proportionate share of foreign taxes paid and foreign sourced income for the 2016 calendar year with Form 1099-DIV which will be mailed in early 2017. For the fiscal year ended October 31, 2016, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $8,846,858 represents the maximum amount that may be considered qualified dividend income.
41
BOARD MEMBERS INFORMATION (Unaudited)
INDEPENDENT BOARD MEMBERS
Chairman of the Board (1995)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1995-present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small and medium size companies, Director (1997-present)
No. of Portfolios for which Board Member Serves: 135
———————
Peggy C. Davis (73)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Shad Professor of Law, New York University School of Law (1983-present)
No. of Portfolios for which Board Member Serves: 49
———————
David P. Feldman (76)
Board Member (1996)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1985-present)
Other Public Company Board Memberships During Past 5 Years:
· BBH Mutual Funds Group (5 registered mutual funds), Director (1992-2014)
No. of Portfolios for which Board Member Serves: 35
———————
Ehud Houminer (76)
Board Member (1993)
Principal Occupation During Past 5 Years:
· Executive-in-Residence at the Columbia Business School, Columbia
University (1992-present)
Other Public Company Board Memberships During Past 5 Years:
· Avnet, Inc., an electronics distributor, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 59
———————
42
Lynn Martin (76)
Board Member (2012)
Principal Occupation During Past 5 Years:
· President of The Martin Hall Group LLC, a human resources consulting firm (2005-2012)
Other Public Company Board Memberships During Past 5 Years:
· AT&T, Inc., a telecommunications company, Director (1999-2012)
· Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Robin A. Melvin (53)
Board Member (2012)
Principal Occupation During Past 5 Years:
· Co-chairman, Illinois Mentoring Partnership, non-profit organization dedicated to increasing the quantity and quality of mentoring services in Illinois; (2014-present; served as a board member since 2013)
· Director, Boisi Family Foundation, a private family foundation that supports youth-serving organizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012)
No. of Portfolios for which Board Member Serves: 107
———————
Dr. Martin Peretz (77)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Editor-in-Chief Emeritus of The New Republic Magazine (2011-2012) (previously,
Editor-in-Chief, 1974-2011)
· Director of TheStreet.com, a financial information service on the web (1996-2010)
· Lecturer at Harvard University (1969-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80. The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Philip L. Toia, Emeritus Board Member
43
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009, Chairman of Dreyfus Transfer, Inc., an affiliate of the Manager and the transfer agent of the funds, since May 2011 and Executive Vice President of the Distributor since June 2007. From April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 64 investment companies (comprised of 135 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since February 1988.
BENNETT A. MACDOUGALL, Chief Legal Officer since October 2015.
Chief Legal Officer of the Manager since June 2015; from June 2005 to June 2015, he served in various capacities with Deutsche Bank – Asset & Wealth Management Division, including as Director and Associate General Counsel, and Chief Legal Officer of Deutsche Investment Management Americas Inc. from June 2012 to May 2015. He is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 2015.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 53 years old and has been an employee of the Manager since February 1984.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon and Secretary of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 60 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since June 2000.
MAUREEN E. KANE, Vice President and Assistant Secretary since April 2015.
Managing Counsel of BNY Mellon since July 2014; from October 2004 until July 2014, General Counsel, and from May 2009 until July 2014, Chief Compliance Officer of Century Capital Management. She is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 54 years old and has been an employee of the Manager since July 2014.
SARAH S. KELLEHER, Vice President and Assistant Secretary since April 2014.
Senior Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager; from August 2005 to March 2013, Associate General Counsel of Third Avenue Management. She is 41 years old and has been an employee of the Manager since March 2013.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1985.
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market, Municipal Bond and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since September 1982.
44
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since December 2005.
Senior Accounting Manager of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 52 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Fixed Income and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (65 investment companies, comprised of 160 portfolios). He is 59 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
CARIDAD M. CAROSELLA, Anti-Money Laundering Compliance Officer since January 2016
Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust since January 2016; from May 2015 to December 2015, Interim Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust and the Distributor; from January 2012 to May 2015, AML Surveillance Officer of the Distributor and from 2007 to December 2011, Financial Processing Manager of the Distributor. She is an officer of 60 investment companies (comprised of 155 portfolios) managed by the Manager. She is 48 years old and has been an employee of the Distributor since 1997.
45
Dreyfus Global Real Return Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Newton Investment Management
(North America) Limited
160 Queen Victoria Street
London, EC4V, 4LA, UK
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
Distributor
MBSC Securities Corporation
200 Park Avenue
New York, NY 10166
Ticker Symbols: |
Class A: DRRAX Class C: DRRCX Class I: DRRIX Class Y: DRRYX |
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to [email protected]
Internet Information can be viewed online or downloaded at www.dreyfus.com
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 www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (phone 1-800-SEC-0330 for information).
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.dreyfus.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
© 2016 MBSC Securities Corporation |
|
Dreyfus Total Emerging Markets Fund
|
ANNUAL REPORT October 31, 2016 |
|
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(s) 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
T H E F U N D
Chief Executive Officer |
|
With Those of Other Funds |
|
Public Accounting Firm |
|
F O R M O R E I N F O R M AT I O N
Back Cover
|
The Fund |
A LETTER FROM THE CHIEF EXECUTIVE OFFICER
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Total Emerging Markets Fund, covering the 12-month period from November 1, 2015 through October 31, 2016. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Stocks and bonds generally advanced over the reporting period in the midst of heightened market volatility stemming from various global economic developments. Toward the end of 2015, investor sentiment deteriorated amid sluggish global economic growth, falling commodity prices, and the first increase in short-term U.S. interest rates in nearly a decade. These worries sparked sharp stock market declines in January 2016, but equities began to rally in February when U.S. monetary policymakers refrained from additional rate hikes, other central banks eased their monetary policies further, and commodity prices began to rebound. Stocks generally continued to climb through the summer, driving several broad measures of U.S. stock market performance to record highs in July and August before moderating as a result of uncertainty regarding U.S. elections and potential rate hikes. In the bond market, yields of high-quality sovereign bonds generally moved lower and their prices increased in response to robust investor demand for current income in a low interest rate environment.
The outcome of the U.S. presidential election and ongoing global economic headwinds suggest that uncertainty will persist in the financial markets over the foreseeable future. Some asset classes and industry groups may benefit from a changing economic and political landscape, while others probably will face challenges. Consequently, selectivity could become a more important determinant of investment success. As always, we encourage you to discuss the implications of our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
Mark D. Santero
Chief Executive Officer
The Dreyfus Corporation
November 15, 2016
2
DISCUSSION OF FUND PERFORMANCE
For the period from November 1, 2015 through October 31, 2016, as provided by Sean P. Fitzgibbon, Federico Garcia Zamora, and Josephine Shea, Portfolio Managers
Fund and Market Performance Overview
For the 12-month period ended October 31, 2016, Dreyfus Total Emerging Markets Fund’s Class A shares produced a total return of 11.10%, Class C shares returned 10.17%, Class I shares returned 11.37%, and Class Y shares returned 11.47%.1 In comparison, the Morgan Stanley Capital International Emerging Markets Index (the “MSCI EM Index”), the fund’s benchmark, returned 9.27% for the same period.2 The fund’s secondary benchmark index, the hybrid “Total EM Index,” returned 9.91%. The Total EM Index is a blend of 70% MSCI EM Index, 15% JP Morgan (JPM) Government Bond Index-Emerging Markets Global Diversified, 7.5% JPM Emerging Markets Bond Index-Global, and 7.5% JPM Corporate Emerging Markets Bond Index-Diversified. 3
Improving global economic conditions drove emerging market securities higher, with equities and bonds both producing robust gains. Strong individual stock and bond selections enabled the fund to outperform its benchmarks.
The Fund’s Investment Approach
The fund seeks to maximize total return. To pursue its goal, the fund normally invests at least 70% of its assets in equities, bonds, and currencies issued by, or economically tied to, emerging markets. We base asset and country allocation decisions on our global macroeconomic view and top-down country-specific outlooks, along with our bottom-up valuation assessments of individual securities. Equity, bond, and currency investments all rely on in-depth fundamental analysis, supported by proprietary quantitative models. By constructing a portfolio that is liquid and diversified from an asset class and country perspective, we seek to reduce volatility and country concentration risk.
Markets Advanced as Conditions Improved
Emerging market stocks and bonds lost value in choppy trading during the last two months of 2015 under pressure from global economic concerns, weakening commodity prices, and declining foreign currency values against the U.S. dollar. Investor sentiment turned more sharply negative in January 2016 in response to further deterioration in commodity prices and economic slowdowns in China, Brazil, and other key regional markets. These developments sparked a flight to quality away from the emerging markets and toward developed markets, particularly the United States.
Emerging market equities staged a strong recovery starting in early February as investors responded positively to a rebound in commodity prices, an easing of market liquidity concerns, and a decline in the relative strength of the U.S. dollar. The stock market rally continued through the spring until June, when renewed volatility was triggered by a referendum in the United Kingdom to leave the European Union. However, emerging market equities bounced back quickly and continued to gain value over the summer.
Meanwhile, emerging market bonds generally rallied as interest rates declined and credit conditions improved in many developing nations. Business-friendly political developments in Brazil and signs of stabilizing growth in China further encouraged investors as the reporting period progressed.
Security Selections Bolstered Returns
The fund’s stock selections enhanced returns, led by strong individual investments in the relatively weak Mexican stock market, such as airport operator Grupo Aeroportuario del Centro Norte. In Thailand, food and beverage conglomerate Thai Beverage advanced sharply as sales volumes and pricing improved. Other leading equity holdings included mobile communications company Telekomunikasi Indonesia, which benefited from improving business trends, and Taiwanese pneumatic equipment manufacturer Airtac International Group, which reported revenue increases as the company expanded into new industrial areas.
3
DISCUSSION OF FUND PERFORMANCE (continued)
On a more negative note, lack of exposure to rebounding Brazilian commodities producers and financial institutions undermined the fund’s relative performance, while investments in other areas of the Brazilian stock market, such as beverage distributor Ambev and machinery supplier JBS, underperformed. A few other equity holdings further detracted from returns, including brokerage firm Korea Investment Holdings, Korean consumer products maker LG Household & Health Care, and Chinese pharmaceutical maker Sihuan Pharmaceutical Holdings Group.
Among bonds, the fund benefited from gains posted by a number of individual credits, including U.S. dollar-denominated sovereign and corporate bonds from issuers in Brazil, Kazakhstan, Russia, and the Ivory Coast. The fund’s currency positions also added value.
Emerging Markets Remain Well Positioned
As global economic conditions improve, we believe that emerging equity markets are likely to continue offering attractively valued, growth-oriented investment opportunities. As of the end of the reporting period, we are finding an increasing number of such opportunities in Taiwan and Indonesia, but relatively few in India and Mexico. We have increasingly emphasized stocks from the information technology sector, particularly in China, where we see potential for strong corporate earnings growth. In contrast, we have trimmed the fund’s exposure to the consumer staples and financials sectors, where opportunities currently appear less compelling.
In the bond portfolio, we have continued to focus on individual securities in which we have high levels of confidence, an approach that has led to moderately reduced fixed-income positions in Turkey and greater exposure to the Middle East.
November 15, 2016
Please note, the position in any security highlighted with italicized typeface was sold during the reporting period.
Equities are subject generally to market, market sector, market liquidity, issuer, and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Bonds are subject generally to interest-rate, credit, liquidity, and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.
Emerging markets tend to be more volatile than the markets of more mature economies and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. The securities of companies located in emerging markets are often subject to rapid and large changes in price. An investment in this fund should be considered only as a supplement to a complete investment program for those investors willing to accept the greater risks associated with investing in emerging market countries.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic, and social instability, a lack of comprehensive company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries than with more economically and politically established foreign countries.
¹ Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charges imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price, yield, and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Return figures provided reflect the absorption of certain fund expenses by The Dreyfus Corporation pursuant to an agreement in effect until March 1, 2017, at which time it may be extended, terminated, or modified. Had these expenses not been absorbed, the fund’s returns would have been lower for all classes.
2 Source: Lipper Inc. — Reflects reinvestment of net dividends and, where applicable, capital gain distributions. The Morgan Stanley Capital International Emerging Markets (MSCI EM) Index is a market capitalization-weighted index composed of companies representative of the market structure of select designated emerging market countries in Europe, Latin America, and the Pacific Basin. Investors cannot invest directly in any index.
3 Source: FactSet — Reflects reinvestment of net dividends and, where applicable, capital gain distributions. The Total EM Index is an unmanaged hybrid index composed of 70% Morgan Stanley Capital International Emerging Markets Index/15% JP Morgan (JPM) Government Bond Index-Emerging Markets Global Diversified/7.5% JPM Emerging Markets Bond Index-Global/7.5% JPM Corporate Emerging Markets Bond Index-Diversified. Investors cannot invest directly in any index.
4
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Total Emerging Markets Fund Class A shares, Class C shares, Class I shares and Class Y shares with the Morgan Stanley Capital International Emerging Markets Index and, a secondary benchmark, the hybrid Total EM Index.
† Source: Lipper Inc.
†† Source : FactSet
††† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C, Class I and Class Y shares of Dreyfus Total Emerging Markets Fund on 3/25/11 (inception date) to a $10,000 investment made in the Morgan Stanley Capital International Emerging Markets Index (the “MSCI EM Index”) and a secondary benchmark, the hybrid Total EM Index. All dividends and capital gain distributions are reinvested.
The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes. The MSCI EM Index is a market capitalization-weighted index composed of companies representative of the market structure of 21 emerging market countries in Europe, Latin America and the Pacific Basin. The Index excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Total EM Index is an unmanaged hybrid index composed of 70% MSCI EM Index /15% JP Morgan (JPM) Government Bond Index-Emerging Markets Global Diversified/7.5% JPM Emerging Markets Bond Index-Global/7.5% JPM Corporate Emerging Markets Bond Index-Diversified. Unlike a mutual fund, the indices are not subject to charges, fees and other expenses. Investors cannot invest directly in any index. These factors can contribute to the indices potentially outperforming the fund. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
5
FUND PERFORMANCE (continued)
Average Annual Total Returns as of 10/31/16 | ||||
Inception |
From | |||
|
Date |
1 Year |
5 Year |
Inception |
Class A shares |
||||
with maximum sales charge (5.75%) |
3/25/11 |
4.68% |
-0.05% |
-1.71% |
without sales charge |
3/25/11 |
11.10% |
1.13% |
-0.67% |
Class C shares |
||||
with applicable redemption charge† |
3/25/11 |
9.17% |
0.36% |
-1.43% |
without redemption |
3/25/11 |
10.17% |
0.36% |
-1.43% |
Class I shares |
3/25/11 |
11.37% |
1.38% |
-0.43% |
Class Y shares |
7/1/13 |
11.47% |
1.37%†† |
-0.46%†† |
Morgan Stanley Capital International Emerging Markets Index |
3/31/11 |
9.27% |
0.55% |
-2.05%††† |
Hybrid Index |
3/31/11 |
9.91% |
1.25% |
-0.50%††† |
Past performance is not predictive of future performance. The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.
† The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.
†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (the inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
††† For comparative purposes, the value of the Index as of 3/31/11 is used as the beginning value on 3/25/11.
6
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Total Emerging Markets Fund from May 1, 2016 to October 31, 2016. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
||||||||||
assuming actual returns for the six months ended October 31, 2016 | ||||||||||
Class A |
Class C |
Class I |
Class Y | |||||||
Expenses paid per $1,000† |
$8.48 |
$12.43 |
$6.57 |
$6.90 | ||||||
Ending value (after expenses) |
$1,108.90 |
$1,103.90 |
$1,109.40 |
$1,110.40 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment | ||||||||
assuming a hypothetical 5% annualized return for the six months ended October 31, 2016 | ||||||||
Class A |
Class C |
Class I |
Class Y | |||||
Expenses paid per $1,000† |
$8.11 |
$11.89 |
$6.29 |
$6.60 | ||||
Ending value (after expenses) |
$1,017.09 |
$1,013.32 |
$1,018.90 |
$1,018.60 |
† Expenses are equal to the fund’s annualized expense ratio of 1.60% for Class A, 2.35% for Class C, 1.24% for Class I and 1.30% for Class Y, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
7
STATEMENT OF INVESTMENTS
October 31, 2016
Bonds and Notes - 29.2% |
Principal |
a |
Value ($) |
|||||||
Argentina - 1.8% |
||||||||||
Argentine Government, Sr. Unscd. Bonds, 27.67%, 3/28/17 |
ARS |
800,000 |
b |
53,057 |
||||||
Argentine Government, Sr. Unscd. Bonds, 15.50%, 10/17/26 |
ARS |
3,500,000 |
233,635 |
|||||||
Argentine Government, Sr. Unscd. Bonds, 16.00%, 10/17/23 |
ARS |
5,200,000 |
347,048 |
|||||||
Argentine Government, Sr. Unscd. Notes, 5.83%, 12/31/33 |
ARS |
775,000 |
b,c |
353,626 |
||||||
Argentine Government, Unscd. Bonds, 18.20%, 10/3/21 |
ARS |
2,135,000 |
148,910 |
|||||||
Boncer, Bonds, 2.50%, 7/22/21 |
ARS |
3,237,000 |
c |
230,040 |
||||||
YPF, Sr. Unscd. Notes, 8.50%, 7/28/25 |
470,000 |
513,475 |
||||||||
1,879,791 |
||||||||||
Austria - .5% |
||||||||||
Suzano Austria GmbH, Gtd. Notes, 5.75%, 7/14/26 |
520,000 |
515,476 |
||||||||
Bahrain - .9% |
||||||||||
Bahraini Government, Sr. Unscd. Notes, 7.00%, 1/26/26 |
915,000 |
975,599 |
||||||||
Brazil - 1.7% |
||||||||||
Brazilian Government, Govt. Gtd. Notes, 5.33%, 2/15/28 |
650,000 |
640,250 |
||||||||
Odebrecht Finance, Gtd. Notes, 4.38%, 4/25/25 |
1,055,000 |
515,631 |
||||||||
Vale Overseas, Gtd. Notes, 6.88%, 11/21/36 |
600,000 |
608,070 |
||||||||
1,763,951 |
||||||||||
Chile - .2% |
||||||||||
AES Gener, Sr. Unscd. Notes, 5.00%, 7/14/25 |
200,000 |
d |
205,781 |
|||||||
Colombia - 1.2% |
||||||||||
Ecopetrol, Sr. Unscd. Notes, 5.38%, 6/26/26 |
300,000 |
303,450 |
||||||||
Ecopetrol, Sr. Unscd. Notes, 5.88%, 5/28/45 |
520,000 |
461,500 |
||||||||
Emgesa, Sr. Unscd. Notes, 8.75%, 1/25/21 |
COP |
237,000,000 |
79,164 |
|||||||
Empresas Publicas de Medellin, Sr. Unscd. Notes, 8.38%, 2/1/21 |
COP |
684,000,000 |
225,732 |
|||||||
Empresas Publicas de Medellin, Sr. Unscd. Notes, 7.63%, 9/10/24 |
COP |
230,000,000 |
d |
71,505 |
||||||
Findeter, Sr. Unscd. Notes, 7.88%, 8/12/24 |
COP |
450,000,000 |
d |
141,576 |
||||||
1,282,927 |
||||||||||
Georgia - .7% |
||||||||||
Georgian Railway JSC, Sr. Unscd. Notes, 7.75%, 7/11/22 |
630,000 |
705,600 |
||||||||
Hungary - .8% |
||||||||||
Hungarian Government, Sr. Unscd. Notes, 5.38%, 3/25/24 |
700,000 |
805,561 |
8
Bonds and Notes - 29.2% (continued) |
Principal |
a |
Value ($) |
|||||||
India - 1.0% |
||||||||||
Vedanta Resources, Sr. Unscd. Bonds, 8.25%, 6/7/21 |
950,000 |
977,360 |
||||||||
Indonesia - .7% |
||||||||||
Pertamina, Sr. Unscd. Notes, 4.30%, 5/20/23 |
650,000 |
674,864 |
||||||||
Iraq - 1.2% |
||||||||||
Iraqi Government, Unscd. Bonds, 5.80%, 1/15/28 |
1,530,000 |
1,237,055 |
||||||||
Ireland - .7% |
||||||||||
MMC Norilsk Nickel, Sr. Unscd. Notes, 6.63%, 10/14/22 |
480,000 |
d |
536,738 |
|||||||
Novolipetsk Steel via Steel Funding, Sr. Unscd. Notes, 4.50%, 6/15/23 |
200,000 |
d |
200,185 |
|||||||
736,923 |
||||||||||
Ivory Coast - 1.0% |
||||||||||
Ivory Coast Government, Sr. Unscd. Notes, 5.38%, 7/23/24 |
995,000 |
1,007,622 |
||||||||
Jamaica - .4% |
||||||||||
Digicel Group, Sr. Unscd. Notes, 7.13%, 4/1/22 |
495,000 |
397,238 |
||||||||
Kazakhstan - .7% |
||||||||||
KazMunayGas National, Sr. Unscd. Notes, 4.40%, 4/30/23 |
700,000 |
710,283 |
||||||||
Lebanon - .9% |
||||||||||
Lebanese Government, Sr. Unscd. Notes, 6.20%, 2/26/25 |
830,000 |
800,950 |
||||||||
Lebanese Government, Sr. Unscd. Notes, 6.60%, 11/27/26 |
150,000 |
146,249 |
||||||||
947,199 |
||||||||||
Luxembourg - .6% |
||||||||||
Cosan Luxembourg, Gtd. Notes, 7.00%, 1/20/27 |
550,000 |
d |
573,375 |
|||||||
Mexico - 2.3% |
||||||||||
Cemex, Sr. Scd Notes, 5.70%, 1/11/25 |
950,000 |
969,000 |
||||||||
Mexican Government, Bonds, Ser. M, 7.75%, 12/14/17 |
MXN |
7,980,000 |
434,418 |
|||||||
Mexican Government, Bonds, Ser. M 20, 10.00%, 12/5/24 |
MXN |
7,080,000 |
466,517 |
|||||||
Mexican Government, Bonds, Ser. S, 4.50%, 12/4/25 |
MXN |
1,000,000 |
e |
326,198 |
||||||
Sixsigma Networks Mexico, Gtd. Notes, 8.25%, 11/7/21 |
200,000 |
197,000 |
||||||||
2,393,133 |
||||||||||
Morocco - 1.1% |
||||||||||
Office Cherifien des Phosphates, Sr. Unscd. Notes, 6.88%, 4/25/44 |
1,040,000 |
1,145,706 |
||||||||
Netherlands - 3.5% |
||||||||||
Equate Petrochemical, Gtd. Notes, 4.25%, 11/3/26 |
690,000 |
d |
680,513 |
|||||||
GTH Finance, Gtd. Notes, 7.25%, 4/26/23 |
520,000 |
d |
554,970 |
9
STATEMENT OF INVESTMENTS (continued)
Bonds and Notes - 29.2% (continued) |
Principal |
a |
Value ($) |
|||||||
Netherlands - 3.5% (continued) |
||||||||||
Lukoil International Finance, Gtd. Notes, 4.75%, 11/2/26 |
575,000 |
d |
576,202 |
|||||||
Petrobras Global Finance, Gtd. Notes, 8.38%, 5/23/21 |
810,000 |
897,318 |
||||||||
VTR Finance, Sr. Scd. Notes, 6.88%, 1/15/24 |
880,000 |
921,800 |
||||||||
3,630,803 |
||||||||||
Panama - .3% |
||||||||||
AES Panama, Sr. Unscd. Notes, 6.00%, 6/25/22 |
280,000 |
d |
292,983 |
|||||||
Peru - .5% |
||||||||||
Union Andina De Cementos, Sr. Unscd. Notes, 5.88%, 10/30/21 |
500,000 |
520,750 |
||||||||
Poland - .8% |
||||||||||
Polish Government, Bonds, Ser. 0420, 1.50%, 4/25/20 |
PLN |
1,700,000 |
423,911 |
|||||||
Polish Government, Bonds, Ser. 1017, 5.25%, 10/25/17 |
PLN |
1,570,000 |
414,205 |
|||||||
838,116 |
||||||||||
Russia - .9% |
||||||||||
Russian Government, Bonds, Ser. 6215, 7.00%, 8/16/23 |
RUB |
17,140,000 |
251,023 |
|||||||
Russian Government, Sr. Unscd. Bonds, 4.75%, 5/27/26 |
200,000 |
212,088 |
||||||||
Vnesheconombank, Sr. Unscd. Notes, 6.80%, 11/22/25 |
400,000 |
429,406 |
||||||||
892,517 |
||||||||||
Senegal - .9% |
||||||||||
Senegalese Government, Bonds, 6.25%, 7/30/24 |
900,000 |
928,724 |
||||||||
Sri Lanka - .7% |
||||||||||
Sri Lankan Government, Sr. Unscd. Bonds, 6.85%, 11/3/25 |
480,000 |
507,044 |
||||||||
Sri Lankan Government, Sr. Unscd. Bonds, 6.83%, 7/18/26 |
200,000 |
211,770 |
||||||||
718,814 |
||||||||||
Turkey - 1.4% |
||||||||||
Turk Telekomunikasyon, Sr. Unscd. Notes, 4.88%, 6/19/24 |
800,000 |
791,160 |
||||||||
Turkiye Vakiflar Bankasi, Sr. Unscd. Notes, 5.50%, 10/27/21 |
600,000 |
d |
597,276 |
|||||||
1,388,436 |
||||||||||
Ukraine - 1.0% |
||||||||||
Ukrainian Government, Sr. Scd. Notes, 7.75%, 9/1/19 |
990,000 |
989,876 |
||||||||
United Arab Emirates - .8% |
||||||||||
DP World, Sr. Unscd. Notes, 6.85%, 7/2/37 |
700,000 |
800,908 |
||||||||
Total Bonds and Notes |
29,937,371 |
10
Common Stocks - 69.2% |
Shares |
Value ($) |
||||||||
Brazil - 3.1% |
||||||||||
Ambev, ADR |
346,400 |
2,043,760 |
||||||||
JBS |
370,700 |
1,127,662 |
||||||||
3,171,422 |
||||||||||
China - 23.9% |
||||||||||
AAC Technologies Holdings |
83,000 |
791,949 |
||||||||
Alibaba Group Holding, ADR |
23,800 |
f |
2,420,222 |
|||||||
Anhui Conch Cement, Cl. H |
544,000 |
1,508,081 |
||||||||
ANTA Sports Products |
417,000 |
1,204,402 |
||||||||
Beijing Capital International Airport, Cl. H |
934,000 |
979,095 |
||||||||
China Construction Bank, Cl. H |
2,121,000 |
1,553,375 |
||||||||
China Lodging Group |
37,700 |
1,621,477 |
||||||||
CNOOC |
1,849,000 |
2,353,106 |
||||||||
Ctrip.com International, ADR |
25,900 |
f |
1,143,485 |
|||||||
PICC Property & Casualty, Cl. H |
912,000 |
1,476,971 |
||||||||
Ping An Insurance Group Company of China, Cl. H |
292,500 |
1,544,426 |
||||||||
Shanghai Pharmaceuticals Holding, Cl. H |
735,300 |
1,896,190 |
||||||||
Tencent Holdings |
198,100 |
5,256,749 |
||||||||
ZTO Express, ADR |
42,200 |
714,446 |
||||||||
24,463,974 |
||||||||||
Hungary - 1.5% |
||||||||||
Richter Gedeon |
70,871 |
1,523,265 |
||||||||
India - 3.4% |
||||||||||
ICICI Bank, ADR |
196,420 |
1,628,322 |
||||||||
Reliance Industries, GDR |
58,221 |
d |
1,845,606 |
|||||||
3,473,928 |
||||||||||
Indonesia - 5.1% |
||||||||||
Bank Rakyat Indonesia |
1,822,800 |
1,704,335 |
||||||||
Matahari Department Store |
1,051,300 |
1,452,306 |
||||||||
Telekomunikasi Indonesia |
6,392,700 |
2,067,535 |
||||||||
5,224,176 |
||||||||||
Mexico - 2.1% |
||||||||||
Arca Continental |
140,600 |
873,757 |
||||||||
Grupo Aeroportuario del Centro Norte |
225,100 |
1,313,609 |
||||||||
2,187,366 |
||||||||||
Peru - .9% |
||||||||||
Credicorp |
6,090 |
905,461 |
||||||||
Philippines - 1.9% |
||||||||||
Metropolitan Bank & Trust |
741,634 |
1,245,182 |
||||||||
Puregold Price Club |
789,300 |
664,236 |
||||||||
1,909,418 |
||||||||||
Russia - 3.2% |
||||||||||
Sberbank of Russia, ADR |
186,405 |
1,770,848 |
||||||||
Yandex, Cl. A |
76,650 |
f |
1,509,239 |
|||||||
3,280,087 |
||||||||||
South Africa - 3.6% |
||||||||||
Barclays Africa Group |
161,134 |
1,868,539 |
||||||||
Clicks Group |
195,920 |
1,823,525 |
||||||||
3,692,064 |
||||||||||
South Korea - 10.2% |
||||||||||
BGF Retail |
6,391 |
971,845 |
||||||||
Coway |
24,291 |
1,902,096 |
11
STATEMENT OF INVESTMENTS (continued)
Common Stocks - 69.2% (continued) |
Shares |
Value ($) |
||||||||
South Korea - 10.2% (continued) |
||||||||||
Hugel |
1,906 |
571,342 |
||||||||
KB Financial Group |
56,230 |
2,078,679 |
||||||||
Korea Investment Holdings |
21,441 |
770,133 |
||||||||
LG Household & Health Care |
1,737 |
1,244,780 |
||||||||
NAVER |
1,066 |
798,394 |
||||||||
Samsung Biologics |
2,453 |
f,g |
291,552 |
|||||||
Samsung Electronics |
1,261 |
1,806,230 |
||||||||
10,435,051 |
||||||||||
Taiwan - 6.9% |
||||||||||
Advanced Semiconductor Engineering |
735,158 |
864,275 |
||||||||
Airtac International Group |
157,000 |
1,251,224 |
||||||||
Largan Precision |
16,000 |
1,893,686 |
||||||||
Taiwan Semiconductor Manufacturing |
521,000 |
3,112,049 |
||||||||
7,121,234 |
||||||||||
Thailand - 1.4% |
||||||||||
Thai Beverage |
2,026,700 |
1,405,761 |
||||||||
Turkey - .8% |
||||||||||
Turkiye Vakiflar Bankasi, Cl. D |
545,875 |
807,985 |
||||||||
United Arab Emirates - 1.2% |
||||||||||
Abu Dhabi Commercial Bank |
293,706 |
490,983 |
||||||||
Emaar Properties |
383,828 |
728,374 |
||||||||
1,219,357 |
||||||||||
Total Common Stocks |
70,820,549 |
12
Other Investment - 2.7% |
Shares |
Value ($) |
||||||||
Registered Investment Company; |
||||||||||
Dreyfus Institutional Preferred Government Plus Money Market Fund |
2,732,534 |
h |
2,732,534 |
|||||||
Total Investments (cost $95,132,357) |
101.1% |
103,490,454 |
||||||||
Liabilities, Less Cash and Receivables |
(1.1%) |
(1,075,898) |
||||||||
Net Assets |
100.0% |
102,414,556 |
ADR—American Depository Receipt
GDR—Global Depository Receipt
a Principal amount stated in U.S. Dollars unless otherwise noted.
ARS—Argentine Peso
COP—Colombian Peso
MXN—Mexican Peso
PLN—Polish Zloty
RUB—Russian Ruble
b Variable rate security—rate shown is the interest rate in effect at period end.
c Interest accruals are adjusted based on changes in the Argentine Consumer Price Index.
d Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2016, these securities were valued at $6,276,710 or 6.13% of net assets.
e Principal amount for accrual purposes is periodically adjusted based on changes in the Mexican Consumer Price Index.
f Non-income producing security.
g The valuation of this security has been determined in good faith by management under the direction of the Board of Directors. At October 31, 2016, the value of this security amounted to $291,552 or .28% of net assets.
h Investment in affiliated money market mutual fund.
Portfolio Summary (Unaudited) † |
Value (%) |
Financial |
18.1 |
Information Technology |
16.3 |
Foreign/Governmental |
15.6 |
Corporate Bonds |
13.6 |
Consumer Discretionary |
9.4 |
Consumer Staples |
7.7 |
Industrials |
5.9 |
Health Care |
4.2 |
Energy |
4.1 |
Money Market Investment |
2.7 |
Telecommunication Services |
2.0 |
Materials |
1.5 |
101.1 |
† Based on net assets.
See notes to financial statements.
13
STATEMENT OF OPTIONS WRITTEN
October 31, 2016
Face Amount Covered by Contracts ($) |
Value ($) |
|||||
Call Options: |
||||||
Mexican Peso, |
||||||
December 2016 @ MXN 20 |
1,100,000 |
(12,497) |
||||
Mexican Peso, |
||||||
December 2016 @ MXN 22 |
1,000,000 |
(3,232) |
||||
South African Rand, |
||||||
December 2016 @ ZAR 16 |
1,100,000 |
(667) |
||||
South Korean Won, |
||||||
January 2017 @ KRW 1,175 |
1,000,000 |
(12,045) |
||||
Turkish Lira, |
||||||
January 2017 @ TRY 3.25 |
1,000,000 |
(10,513) |
||||
Total Options Written |
(38,954) |
See notes to financial statements.
14
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2016
|
|
|
|
|
|
|
|
|
|
Cost |
|
Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See Statement of Investments: |
|
|
|
| ||
Unaffiliated issuers |
|
92,399,823 |
|
100,757,920 |
| |
Affiliated issuers |
|
2,732,534 |
|
2,732,534 |
| |
Cash |
|
|
|
|
320,945 |
|
Cash denominated in foreign currency |
|
|
294,318 |
|
296,422 |
|
Receivable for investment securities sold |
|
|
|
|
2,564,302 |
|
Dividends and interest receivable |
|
|
|
|
486,476 |
|
Unrealized appreciation on forward foreign |
|
|
|
|
239,334 |
|
Prepaid expenses |
|
|
|
|
13,848 |
|
|
|
|
|
|
107,411,781 |
|
Liabilities ($): |
|
|
|
| ||
Due to The Dreyfus Corporation and affiliates—Note 3(c) |
|
|
|
|
147,368 |
|
Payable for investment securities purchased |
|
|
|
|
4,498,405 |
|
Unrealized depreciation on forward foreign |
|
|
|
|
252,208 |
|
Outstanding options written, at value (premiums received |
|
|
|
|
38,954 |
|
Payable for shares of Common Stock redeemed |
|
|
|
|
1 |
|
Accrued expenses |
|
|
|
|
60,289 |
|
|
|
|
|
|
4,997,225 |
|
Net Assets ($) |
|
|
102,414,556 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
|
101,874,958 |
|
Accumulated undistributed investment income—net |
|
|
|
|
1,624,029 |
|
Accumulated net realized gain (loss) on investments |
|
|
|
|
(9,455,224) |
|
Accumulated net unrealized appreciation (depreciation) |
|
|
|
8,370,793 |
| |
Net Assets ($) |
|
|
102,414,556 |
|
Net Asset Value Per Share |
Class A |
Class C |
Class I |
Class Y |
|
Net Assets ($) |
1,016,285 |
644,224 |
99,314,906 |
1,439,141 |
|
Shares Outstanding |
89,072 |
57,708 |
8,662,743 |
125,463 |
|
Net Asset Value Per Share ($) |
11.41 |
11.16 |
11.46 |
11.47 |
|
See notes to financial statements. |
15
STATEMENT OF OPERATIONS
Year Ended October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Interest (net of $3,048 foreign taxes withheld at source) |
|
|
1,412,735 |
| ||
Dividends (net of $148,039 foreign taxes withheld at source): |
|
|
|
| ||
Unaffiliated issuers |
|
|
1,324,212 |
| ||
Affiliated issuers |
|
|
7,345 |
| ||
Total Income |
|
|
2,744,292 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
|
856,310 |
| ||
Custodian fees—Note 3(c) |
|
|
81,974 |
| ||
Professional fees |
|
|
69,284 |
| ||
Registration fees |
|
|
53,861 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
|
23,360 |
| ||
Prospectus and shareholders’ reports |
|
|
9,268 |
| ||
Shareholder servicing costs—Note 3(c) |
|
|
6,584 |
| ||
Distribution fees—Note 3(b) |
|
|
4,591 |
| ||
Loan commitment fees—Note 2 |
|
|
1,689 |
| ||
Interest expense—Note 2 |
|
|
388 |
| ||
Miscellaneous |
|
|
35,481 |
| ||
Total Expenses |
|
|
1,142,790 |
| ||
Less—reduction in expenses due to undertaking—Note 3(a) |
|
|
(28,644) |
| ||
Less—reduction in fees due to earnings credits—Note 3(c) |
|
|
(30) |
| ||
Net Expenses |
|
|
1,114,116 |
| ||
Investment Income—Net |
|
|
1,630,176 |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments and foreign currency transactions |
330,439 |
| ||||
Net realized gain (loss) on options transactions |
272,442 |
| ||||
Net realized gain (loss) on forward foreign currency exchange contracts |
1,005,697 |
| ||||
Net Realized Gain (Loss) |
|
|
1,608,578 |
| ||
Net unrealized appreciation (depreciation) on investments |
|
|
9,479,219 |
| ||
Net unrealized appreciation (depreciation) on options transactions |
|
|
(10,683) |
| ||
Net unrealized appreciation (depreciation) on |
|
|
(165,814) |
| ||
Net Unrealized Appreciation (Depreciation) |
|
|
9,302,722 |
| ||
Net Realized and Unrealized Gain (Loss) on Investments |
|
|
10,911,300 |
| ||
Net Increase in Net Assets Resulting from Operations |
|
12,541,476 |
| |||
See notes to financial statements. |
16
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Operations ($): |
|
|
|
|
|
|
|
| |
Investment income—net |
|
|
1,630,176 |
|
|
|
1,472,527 |
| |
Net realized gain (loss) on investments |
|
1,608,578 |
|
|
|
(8,763,538) |
| ||
Net unrealized appreciation (depreciation) |
|
9,302,722 |
|
|
|
(3,971,985) |
| ||
Net Increase (Decrease) in Net Assets |
12,541,476 |
|
|
|
(11,262,996) |
| |||
Dividends to Shareholders from ($): |
|
|
|
|
|
|
|
| |
Investment income—net: |
|
|
|
|
|
|
|
| |
Class A |
|
|
- |
|
|
|
(19,328) |
| |
Class C |
|
|
- |
|
|
|
(6,578) |
| |
Class I |
|
|
- |
|
|
|
(1,439,219) |
| |
Class Y |
|
|
- |
|
|
|
(15,627) |
| |
Tax return of capital: |
|
|
|
|
|
|
|
| |
Class A |
|
|
- |
|
|
|
(2,184) |
| |
Class C |
|
|
- |
|
|
|
(1,782) |
| |
Class I |
|
|
- |
|
|
|
(174,189) |
| |
Class Y |
|
|
- |
|
|
|
(1,881) |
| |
Total Dividends |
|
|
- |
|
|
|
(1,660,788) |
| |
Capital Stock Transactions ($): |
|
|
|
|
|
|
|
| |
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
|
139,418 |
|
|
|
37,137 |
| |
Class C |
|
|
9,158 |
|
|
|
- |
| |
Class I |
|
|
31,578,081 |
|
|
|
5,140,978 |
| |
Class Y |
|
|
1,139,039 |
|
|
|
1,292,262 |
| |
Dividends reinvested: |
|
|
|
|
|
|
|
| |
Class A |
|
|
- |
|
|
|
13,272 |
| |
Class C |
|
|
- |
|
|
|
3,480 |
| |
Class I |
|
|
- |
|
|
|
32,469 |
| |
Class Y |
|
|
- |
|
|
|
11,336 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(133,670) |
|
|
|
(239,920) |
| |
Class C |
|
|
(90,470) |
|
|
|
(33,805) |
| |
Class I |
|
|
(12,634,217) |
|
|
|
(6,222,559) |
| |
Class Y |
|
|
(919,109) |
|
|
|
(731,868) |
| |
Increase (Decrease) in Net Assets |
19,088,230 |
|
|
|
(697,218) |
| |||
Total Increase (Decrease) in Net Assets |
31,629,706 |
|
|
|
(13,621,002) |
| |||
Net Assets ($): |
|
|
|
|
|
|
|
| |
Beginning of Period |
|
|
70,784,850 |
|
|
|
84,405,852 |
| |
End of Period |
|
|
102,414,556 |
|
|
|
70,784,850 |
| |
Undistributed investment income—net |
1,624,029 |
|
|
|
1,988 |
|
17
STATEMENT OF CHANGES IN NET ASSETS (continued)
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Capital Share Transactions (Shares): |
|
|
|
|
|
|
|
| |
Class A |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
12,437 |
|
|
|
3,302 |
| |
Shares issued for dividends reinvested |
|
|
- |
|
|
|
1,201 |
| |
Shares redeemed |
|
|
(12,581) |
|
|
|
(21,943) |
| |
Net Increase (Decrease) in Shares Outstanding |
(144) |
|
|
|
(17,440) |
| |||
Class C |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
798 |
|
|
|
- |
| |
Shares issued for dividends reinvested |
|
|
- |
|
|
|
318 |
| |
Shares redeemed |
|
|
(9,120) |
|
|
|
(3,094) |
| |
Net Increase (Decrease) in Shares Outstanding |
(8,322) |
|
|
|
(2,776) |
| |||
Class I |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
3,307,471 |
|
|
|
442,315 |
| |
Shares issued for dividends reinvested |
|
|
- |
|
|
|
2,938 |
| |
Shares redeemed |
|
|
(1,266,125) |
|
|
|
(538,385) |
| |
Net Increase (Decrease) in Shares Outstanding |
2,041,346 |
|
|
|
(93,132) |
| |||
Class Y |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
119,562 |
|
|
|
116,210 |
| |
Shares issued for dividends reinvested |
|
|
- |
|
|
|
1,026 |
| |
Shares redeemed |
|
|
(96,316) |
|
|
|
(68,748) |
| |
Net Increase (Decrease) in Shares Outstanding |
23,246 |
|
|
|
48,488 |
| |||
See notes to financial statements. |
18
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||
Class A Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
10.27 |
12.13 |
12.22 |
11.52 |
11.38 | |
Investment Operations: |
||||||
Investment income—neta |
.17 |
.19 |
.21 |
.21 |
.21 | |
Net realized and unrealized |
.97 |
(1.84) |
(.13) |
.51 |
.14 | |
Total from Investment Operations |
1.14 |
(1.65) |
.08 |
.72 |
.35 | |
Distributions: |
||||||
Dividends from |
- |
(.19) |
(.17) |
(.02) |
(.21) | |
Tax return of capital |
- |
(.02) |
- |
- |
- | |
Total Distributions |
- |
(.21) |
(.17) |
(.02) |
(.21) | |
Net asset value, end of period |
11.41 |
10.27 |
12.13 |
12.22 |
11.52 | |
Total Return (%)b |
11.10 |
(13.76) |
.71 |
6.25 |
3.18 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.69 |
1.72 |
1.71 |
1.71 |
1.81 | |
Ratio of net expenses |
1.60 |
1.60 |
1.60 |
1.61 |
1.65 | |
Ratio of net investment income |
1.60 |
1.71 |
1.80 |
1.78 |
1.86 | |
Portfolio Turnover Rate |
79.54 |
125.89 |
97.47 |
99.13 |
100.76 | |
Net Assets, end of period ($ x 1,000) |
1,016 |
916 |
1,294 |
1,380 |
738 |
a Based on average shares outstanding.
b Exclusive of sales charge.
See notes to financial statements.
19
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||
Class C Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
10.13 |
11.96 |
12.07 |
11.44 |
11.33 | |
Investment Operations: |
||||||
Investment income—neta |
.09 |
.10 |
.12 |
.11 |
.13 | |
Net realized and unrealized |
.94 |
(1.81) |
(.14) |
.52 |
.13 | |
Total from |
1.03 |
(1.71) |
(.02) |
.63 |
.26 | |
Distributions: |
||||||
Dividends from |
- |
(.10) |
(.09) |
- |
(.15) | |
Tax return of capital |
- |
(.02) |
- |
- |
- | |
Total Distributions |
- |
(.12) |
(.09) |
- |
(.15) | |
Net asset value, end of period |
11.16 |
10.13 |
11.96 |
12.07 |
11.44 | |
Total Return (%)b |
10.17 |
(14.36) |
(.03) |
5.42 |
2.38 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
2.41 |
2.46 |
2.44 |
2.42 |
2.51 | |
Ratio of net expenses |
2.35 |
2.35 |
2.35 |
2.36 |
2.40 | |
Ratio of net investment income |
.85 |
.96 |
1.04 |
.92 |
1.15 | |
Portfolio Turnover Rate |
79.54 |
125.89 |
97.47 |
99.13 |
100.76 | |
Net Assets, end of period ($ x 1,000) |
644 |
669 |
823 |
720 |
589 |
a Based on average shares outstanding.
b Exclusive of sales charge.
See notes to financial statements.
20
Year Ended October 31, | ||||||
Class I Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
10.29 |
12.16 |
12.25 |
11.54 |
11.40 | |
Investment Operations: |
||||||
Investment income—neta |
.20 |
.21 |
.24 |
.24 |
.25 | |
Net realized and unrealized |
.97 |
(1.84) |
(.13) |
.51 |
.12 | |
Total from Investment Operations |
1.17 |
(1.63) |
.11 |
.75 |
.37 | |
Distributions: |
||||||
Dividends from |
- |
(.21) |
(.20) |
(.04) |
(.23) | |
Tax return of capital |
- |
(.03) |
- |
- |
- | |
Total Distributions |
- |
(.24) |
(.20) |
(.04) |
(.23) | |
Net asset value, end of period |
11.46 |
10.29 |
12.16 |
12.25 |
11.54 | |
Total Return (%) |
11.37 |
(13.54) |
.97 |
6.52 |
3.38 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.32 |
1.36 |
1.35 |
1.34 |
1.45 | |
Ratio of net expenses |
1.29 |
1.35 |
1.35 |
1.34 |
1.40 | |
Ratio of net investment income |
1.91 |
1.96 |
2.04 |
1.97 |
2.15 | |
Portfolio Turnover Rate |
79.54 |
125.89 |
97.47 |
99.13 |
100.76 | |
Net Assets, end of period ($ x 1,000) |
99,315 |
68,147 |
81,636 |
83,306 |
69,209 |
a Based on average shares outstanding.
See notes to financial statements.
21
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||
Class Y Shares |
2016 |
2015 |
2014 |
2013a |
Per Share Data ($): |
||||
Net asset value, beginning of period |
10.29 |
12.16 |
12.25 |
11.41 |
Investment Operations: |
||||
Investment income—netb |
.20 |
.24 |
.28 |
.06 |
Net realized and unrealized |
.98 |
(1.87) |
(.16) |
.78 |
Total from Investment Operations |
1.18 |
(1.63) |
.12 |
.84 |
Distributions: |
||||
Dividends from |
- |
(.22) |
(.21) |
- |
Tax return of capital |
- |
(.02) |
- |
- |
Total Distributions |
- |
(.24) |
(.21) |
- |
Net asset value, end of period |
11.47 |
10.29 |
12.16 |
12.25 |
Total Return (%) |
11.47 |
(13.53) |
.95 |
7.45c |
Ratios/Supplemental Data (%): |
||||
Ratio of total expenses |
1.32 |
1.38 |
1.35 |
1.42d |
Ratio of net expenses |
1.30 |
1.30 |
1.33 |
1.35d |
Ratio of net investment income |
1.90 |
2.10 |
2.26 |
1.46d |
Portfolio Turnover Rate |
79.54 |
125.89 |
97.47 |
99.13 |
Net Assets, end of period($ x 1,000) |
1,439 |
1,052 |
653 |
1 |
a From July 1, 2013 (commencement of initial offering) to October 31, 2013.
b Based on average shares outstanding.
c Not annualized.
d Annualized.
See notes to financial statements.
22
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Total Emerging Markets Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering ten series, including the fund. The fund’s investment objective is to seek to maximize total return. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares. The fund is authorized to issue 100 million shares of $.001 par value Common Stock in each of the following classes of shares: Class A, Class C, Class I and Class Y. Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
As of October 31, 2016, MBC Investments Corp., an indirect subsidiary of BNY Mellon, held 40,000 Class A shares, 40,000 Class C shares and 463,798 Class I shares of the fund.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
23
NOTES TO FINANCIAL STATEMENTS (continued)
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in debt securities, excluding short-term investments (other than U.S. Treasury Bills), options and forward foreign currency exchange contracts (“forward contracts”) are valued each business day by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in
24
the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments are valued as determined by the Service, based on methods which include consideration of the following: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. These securities are generally categorized within Level 2 of the fair value hierarchy.
Investments in equity securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
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. These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service is engaged under the general supervision of the Board.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar
25
NOTES TO FINANCIAL STATEMENTS (continued)
securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Options, which are traded on an exchange, are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day and are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter (“OTC”) are valued at the mean between the bid and asked price and are generally categorized within Level 2 of the fair value hierarchy. Forward contracts are valued at the forward rate and are generally categorized within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of October 31, 2016 in valuing the fund’s investments:
Level 1 – |
Level 2 – Other |
Level 3 – |
Total | |
Assets ($) |
||||
Investments in Securities: |
||||
Corporate Bonds† |
- |
13,982,519 |
- |
13,982,519 |
Equity Securities – |
70,528,997 |
291,552†† |
- |
70,820,549 |
Foreign Government |
- |
15,954,852 |
- |
15,954,852 |
Mutual Funds |
2,732,534 |
- |
- |
2,732,534 |
Other Financial Instruments: |
||||
Forward Foreign Currency Exchange Contracts††† |
- |
239,334 |
- |
239,334 |
26
Level 1 – |
Level 2 – Other |
Level 3 – |
Total | |
Liabilities ($) |
||||
Other Financial Instruments: |
||||
Forward Foreign Currency Exchange Contracts††† |
- |
(252,208) |
- |
(252,208) |
Options Written |
- |
(38,954) |
- |
(38,954) |
† See Statement of Investments for additional detailed categorizations.
†† Securities classified within Level 2 at period end as the values were determined pursuant to the fund’s fair valuation procedures. See note above for additional information.
††† Amount shown represents unrealized appreciation (depreciation) at period end.
At October 31, 2015, no exchange traded foreign equity securities were classified within Level 2 of the fair value hierarchy pursuant to the fund’s fair valuation procedures.
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
|
Equity Securities-Foreign ($) |
Balance as of 10/31/2015 |
400,270 |
Realized gain (loss) |
– |
Change in unrealized appreciation (depreciation) |
(173,285) |
Purchases/ issuances |
– |
Sales/ dispositions |
– |
Transfers into Level 3 |
– |
Transfers out of Level 3† |
(226,985) |
Balance as of 10/31/2016 |
– |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to investments still held at 10/31/2016 |
– |
† Transfers out of Level 3 represent the value at the date of transfer. The transfer out of Level 3 for the current period was due to the resumption of trading of a security.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on
27
NOTES TO FINANCIAL STATEMENTS (continued)
the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended October 31, 2016 were as follows:
Affiliated Investment Company |
Value |
Purchases ($) |
Sales ($) |
Value |
Net |
Dreyfus Institutional Preferred Government Plus Money Market Fund† |
1,494,487 |
65,118,821 |
63,880,774 |
2,732,534 |
2.7 |
† Formerly Dreyfus Institutional Preferred Plus Money Market Fund.
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to
28
distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended October 31, 2016, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended October 31, 2016, the fund did not incur any interest or penalties.
Each tax year in the four-year period ended October 31, 2016 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2016, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $1,676,724, accumulated capital and other losses $9,316,997 and unrealized appreciation $8,179,871.
Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses for an unlimited period. Furthermore, capital loss carryovers retain their character as either short-term or long-term capital losses.
The accumulated capital loss carryover is available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to October 31, 2016. The fund has $5,538,457 of short-term capital losses and $3,758,320 of long-term capital losses which can be carried forward for an unlimited period.
The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2016 and October 31, 2015 were as follows: ordinary income $0 and $1,480,752, and tax return of capital $0 and $180,036, respectively.
During the period ended October 31, 2016, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency gains and losses, passive foreign investment companies and consent fees, the fund decreased accumulated undistributed investment income-net by $8,135 and increased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.
29
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $810 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Prior to October 5, 2016, the unsecured credit facility with Citibank, N.A. was $555 million and prior to January 11, 2016, the unsecured credit facility with Citibank, N.A. was $480 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing.
The average amount of borrowings outstanding under the Facilities during the period ended October 31, 2016, was approximately $44,500 with a related weighted average annualized interest rate of .87%.
NOTE 3—Management Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of 1% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has contractually agreed, from November 1, 2015 through March 1, 2017, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the expenses of Class A, Class C, Class I and Class Y shares (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) do not exceed 1.35%, 1.35%, 1.35% and 1.30% of the value of the respective class’ average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $28,644 during the period ended October 31, 2016.
During the period ended October 31, 2016, the Distributor retained $4 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended October 31, 2016, Class C shares were charged $4,591 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily
30
net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2016, Class A and Class C shares were charged $2,280 and $1,530, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended October 31, 2016, the fund was charged $1,462 for transfer agency services and $72 for cash management services. These fees are included in Shareholder servicing costs in the Statement of Operations. Cash management fees were partially offset by earnings credits of $30.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended October 31, 2016, the fund was charged $81,974 pursuant to the custody agreement.
During the period ended October 31, 2016, the fund was charged $11,765 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $87,539, Distribution Plan fees $416, Shareholder Services Plan fees $349, custodian fees $52,000, Chief Compliance Officer fees $6,826 and transfer agency fees $254, which are offset against an expense reimbursement currently in effect in the amount of $16.
31
NOTES TO FINANCIAL STATEMENTS (continued)
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
(e) A 2% redemption fee is charged and retained by the fund on certain shares redeemed within sixty days following the date of issuance subject to certain exceptions, including redemptions made through use of the fund’s exchange privilege. At October 31, 2016, there were no redemption fees retained by the fund.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, options transactions and forward contracts, during the period ended October 31, 2016, amounted to $87,678,304 and $65,848,646, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default or termination.
Each type of derivative instrument that was held by the fund during the period ended October 31, 2016 is discussed below.
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in foreign currencies or as a substitute for an investment. The fund is subject to market risk and currency risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying financial instrument at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying financial instrument at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the
32
financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates. The maximum payout for these contracts is limited to the number of put option contracts written and the related strike prices, respectively.
As a writer of an option, the fund has no control over whether the underlying financial instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the financial instrument underlying the written option. There is a risk of loss from a change in value of such options which may exceed the related premiums received. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The Statement of Operations reflects any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction.
The following summarizes the fund’s call/put options written during the period ended October 31, 2016:
Face Amount |
Options Terminated | |||
Covered by |
Premiums |
Net Realized | ||
Options Written: |
Contracts ($) |
Received ($) |
Cost ($) |
Gain ($) |
Contracts outstanding |
10,700,000 |
127,807 |
||
Contracts written |
16,600,000 |
218,334 |
||
Contracts terminated: |
||||
Contracts expired |
22,100,000 |
283,757 |
- |
283,757 |
Contracts outstanding |
5,200,000 |
62,384 |
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign
33
NOTES TO FINANCIAL STATEMENTS (continued)
currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The following summarizes open forward contracts at October 31, 2016:
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: |
||||
Bank of America |
||||
Euro, |
||||
Expiring |
||||
11/30/2016 |
1,670,000 |
1,828,449 |
1,835,447 |
6,998 |
South African Rand, |
||||
Expiring |
||||
1/13/2017 |
2,045,000 |
144,804 |
149,361 |
4,557 |
Barclays Bank |
||||
Mexican New Peso, |
||||
Expiring |
||||
1/13/2017 |
35,030,000 |
1,878,200 |
1,838,105 |
(40,095) |
Citigroup |
||||
South Korean Won, |
||||
Expiring |
||||
1/13/2017 |
2,402,270,000 |
2,110,531 |
2,098,926 |
(11,605) |
34
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: (continued) | ||||
Goldman Sachs International |
||||
Colombian Peso, |
||||
Expiring |
||||
1/13/2017 |
10,181,865,000 |
3,424,681 |
3,349,357 |
(75,324) |
Russian Ruble, |
||||
Expiring |
||||
1/13/2017 |
167,585,000 |
2,646,344 |
2,591,957 |
(54,387) |
JP Morgan Chase Bank |
||||
Brazilian Real, |
||||
Expiring |
||||
12/2/2016 |
21,205,000 |
6,475,730 |
6,577,274 |
101,544 |
Chilean Peso, |
||||
Expiring |
||||
1/13/2017 |
509,600,000 |
764,212 |
775,843 |
11,631 |
Indian Rupee, |
||||
Expiring |
||||
1/13/2017 |
460,760,000 |
6,810,936 |
6,823,092 |
12,156 |
Malaysian Ringgit, |
||||
Expiring |
||||
1/13/2017 |
12,080,000 |
2,888,624 |
2,869,284 |
(19,340) |
Polish Zloty, |
||||
Expiring |
||||
1/13/2017 |
13,420,000 |
3,380,663 |
3,415,914 |
35,251 |
Turkish Lira, |
||||
Expiring |
||||
1/13/2017 |
2,515,000 |
803,463 |
799,840 |
(3,623) |
Morgan Stanley Capital Services |
||||
South African Rand, |
||||
Expiring |
||||
1/13/2017 |
21,900,000 |
1,560,632 |
1,599,516 |
38,884 |
Sales: |
||||
Bank of America |
||||
Indonesian Rupiah, |
||||
Expiring |
||||
1/13/2017 |
9,812,580,000 |
741,804 |
743,490 |
(1,686) |
Singapore Dollar, |
||||
Expiring |
||||
11/30/2016 |
2,170,000 |
1,558,549 |
1,560,107 |
(1,558) |
Barclays Bank |
||||
Philippine Peso, |
||||
Expiring |
||||
1/13/2017 |
160,060,000 |
3,301,257 |
3,302,487 |
(1,230) |
35
NOTES TO FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
Barclays Bank (continued) | ||||
South Korean Won, |
||||
Expiring |
||||
1/13/2017 |
1,400,000,000 |
1,234,459 |
1,223,217 |
11,242 |
Citigroup |
||||
Argentine Peso, |
||||
Expiring |
||||
12/7/2016 |
9,350,000 |
594,216 |
602,712 |
(8,496) |
7/13/2017 |
4,390,000 |
251,576 |
253,770 |
(2,194) |
Peruvian New Sol, |
||||
Expiring |
||||
1/9/2017 |
2,498,000 |
736,612 |
736,692 |
(80) |
Goldman Sachs International |
||||
Hungarian Forint, |
||||
Expiring |
||||
1/13/2017 |
279,320,000 |
985,867 |
994,437 |
(8,570) |
Mexican New Peso, |
||||
Expiring |
||||
1/13/2017 |
17,830,000 |
951,948 |
935,581 |
16,367 |
South African Rand, |
||||
Expiring |
||||
11/1/2016 |
629,998 |
45,375 |
46,723 |
(1,348) |
HSBC |
||||
Hong Kong Dollars |
||||
Expiring |
||||
11/2/2016 |
2,558,658 |
329,916 |
329,913 |
3 |
JP Morgan Chase Bank |
||||
Argentine Peso, |
||||
Expiring |
||||
12/21/2016 |
2,200,000 |
138,713 |
140,714 |
(2,001) |
Hungarian Forint, |
||||
Expiring |
||||
1/13/2017 |
647,890,000 |
2,286,173 |
2,306,621 |
(20,448) |
Polish Zloty, |
||||
Expiring |
||||
11/2/2016 |
82,425 |
20,787 |
21,009 |
(222) |
Taiwan Dollar, |
||||
Expiring |
||||
1/13/2017 |
5,000 |
158 |
159 |
(1) |
Thai Baht, |
||||
Expiring |
||||
1/13/2017 |
100,440,000 |
2,867,502 |
2,866,868 |
634 |
36
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
Standard Chartered Bank |
||||
Hong Kong Dollars |
||||
Expiring |
||||
11/1/2016 |
5,595,011 |
721,487 |
721,420 |
67 |
Gross Unrealized Appreciation |
239,334 | |||
Gross Unrealized Depreciation |
(252,208) |
The provisions of ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities” require disclosure on the offsetting of financial assets and liabilities. These disclosures are required for certain investments, including derivative financial instruments subject to Master Agreements which are eligible for offsetting in the Statement of Assets and Liabilities and require the fund to disclose both gross and net information with respect to such investments. For financial reporting purposes, the fund does not offset derivative assets and derivative liabilities that are subject to Master Agreements in the Statement of Assets and Liabilities.
At October 31, 2016, derivative assets and liabilities (by type) on a gross basis are as follows:
Derivative Financial Instruments: |
|
Assets ($) |
|
Liabilities ($) |
|
Options |
- |
(38,954) |
|||
Forward contracts |
239,334 |
(252,208) |
|||
Total gross amount of derivative |
|||||
assets and liabilities in the |
|||||
Statement of Assets and Liabilities |
239,334 |
(291,162) |
|||
Derivatives not subject to |
|||||
Master Agreements |
- |
- |
|||
Total gross amount of assets |
|||||
and liabilities subject to |
|||||
Master Agreements |
239,334 |
(291,162) |
37
NOTES TO FINANCIAL STATEMENTS (continued)
The following tables present derivative assets and liabilities net of amounts available for offsetting under Master Agreements and net of related collateral received or pledged, if any, as of October 31, 2016:
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Assets ($) |
1 |
for Offset ($) |
Received ($) |
2 |
Assets ($) |
Bank of America |
11,555 |
(3,244) |
- |
8,311 | ||
Barclays Bank |
11,242 |
(11,242) |
- |
- | ||
Goldman Sachs |
16,367 |
(16,367) |
- |
- | ||
HSBC |
3 |
- |
- |
3 | ||
JP Morgan |
161,216 |
(72,544) |
(88,672) |
- | ||
Morgan Stanley |
38,884 |
- |
- |
38,884 | ||
Standard |
67 |
- |
- |
67 | ||
Total |
239,334 |
(103,397) |
(88,672) |
47,265 | ||
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Liabilities ($) |
1 |
for Offset ($) |
Pledged ($) |
2 |
Liabilities ($) |
Bank of America |
(3,244) |
3,244 |
- |
- | ||
Barclays Bank |
(41,325) |
11,242 |
- |
(30,083) | ||
Citigroup |
(34,420) |
- |
- |
(34,420) | ||
Goldman Sachs |
(139,629) |
16,367 |
- |
(123,262) | ||
JP Morgan |
(72,544) |
72,544 |
- |
- | ||
Total |
(291,162) |
103,397 |
- |
(187,765) | ||
1 Absent a default event or early termination, OTC derivative assets and liabilities are presented at gross amounts and are | ||||||
2 In some instances, the actual collateral received and/or pledged may be more than the amount shown due to |
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2016:
|
|
Average Market Value ($) |
Foreign currency options contracts |
33,646 | |
Forward contracts |
35,319,009 | |
At October 31, 2016, the cost of investments for federal income tax purposes was $95,298,703; accordingly, accumulated net unrealized appreciation on investments was $8,191,751, consisting of $10,775,574 gross unrealized appreciation and $2,583,823 gross unrealized depreciation.
38
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dreyfus Total Emerging Markets Fund
We have audited the accompanying statement of assets and liabilities, including the statements of investments and options written, of Dreyfus Total Emerging Markets Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2016, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2016 by correspondence with the custodian and others. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Total Emerging Markets Fund at October 31, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 29, 2016
39
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund elects to provide each shareholder with their portion of the fund’s foreign taxes paid and the income sourced from foreign countries. Accordingly, the fund hereby reports the following information regarding its fiscal year ended October 31, 2016:
-the total amount of taxes paid to foreign countries was $148,501
-the total amount of income sourced from foreign countries was $2,265,513
Where required by federal tax law rules, shareholders will receive notification of their proportionate share of foreign taxes paid and foreign sourced income for the 2016 calendar year with Form 1099-DIV which will be mailed in early 2017.
40
BOARD MEMBERS INFORMATION (Unaudited)
INDEPENDENT BOARD MEMBERS
Chairman of the Board (1995)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1995-present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small and medium size companies, Director (1997-present)
No. of Portfolios for which Board Member Serves: 135
———————
Peggy C. Davis (73)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Shad Professor of Law, New York University School of Law (1983-present)
No. of Portfolios for which Board Member Serves: 49
———————
David P. Feldman (76)
Board Member (1996)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1985-present)
Other Public Company Board Memberships During Past 5 Years:
· BBH Mutual Funds Group (5 registered mutual funds), Director (1992-2014)
No. of Portfolios for which Board Member Serves: 35
———————
Ehud Houminer (76)
Board Member (1993)
Principal Occupation During Past 5 Years:
· Executive-in-Residence at the Columbia Business School, Columbia
University (1992-present)
Other Public Company Board Memberships During Past 5 Years:
· Avnet, Inc., an electronics distributor, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 59
———————
41
BOARD MEMBERS INFORMATION (Unaudited) (continued)
INDEPENDENT BOARD MEMBERS (continued)
Lynn Martin (76)
Board Member (2012)
Principal Occupation During Past 5 Years:
· President of The Martin Hall Group LLC, a human resources consulting firm (2005-2012)
Other Public Company Board Memberships During Past 5 Years:
· AT&T, Inc., a telecommunications company, Director (1999-2012)
· Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Robin A. Melvin (53)
Board Member (2012)
Principal Occupation During Past 5 Years:
· Co-chairman, Illinois Mentoring Partnership, non-profit organization dedicated to increasing the quantity and quality of mentoring services in Illinois; (2014-present; served as a board member since 2013)
· Director, Boisi Family Foundation, a private family foundation that supports youth-serving organizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012)
No. of Portfolios for which Board Member Serves: 107
———————
Dr. Martin Peretz (77)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Editor-in-Chief Emeritus of The New Republic Magazine (2011-2012) (previously,
Editor-in-Chief, 1974-2011)
· Director of TheStreet.com, a financial information service on the web (1996-2010)
· Lecturer at Harvard University (1969-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80. The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Philip L. Toia, Emeritus Board Member
42
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009, Chairman of Dreyfus Transfer, Inc., an affiliate of the Manager and the transfer agent of the funds, since May 2011 and Executive Vice President of the Distributor since June 2007. From April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 64 investment companies (comprised of 135 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since February 1988.
BENNETT A. MACDOUGALL, Chief Legal Officer since October 2015.
Chief Legal Officer of the Manager since June 2015; from June 2005 to June 2015, he served in various capacities with Deutsche Bank – Asset & Wealth Management Division, including as Director and Associate General Counsel, and Chief Legal Officer of Deutsche Investment Management Americas Inc. from June 2012 to May 2015. He is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 2015.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 53 years old and has been an employee of the Manager since February 1984.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon and Secretary of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 60 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since June 2000.
MAUREEN E. KANE, Vice President and Assistant Secretary since April 2015.
Managing Counsel of BNY Mellon since July 2014; from October 2004 until July 2014, General Counsel, and from May 2009 until July 2014, Chief Compliance Officer of Century Capital Management. She is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 54 years old and has been an employee of the Manager since July 2014.
SARAH S. KELLEHER, Vice President and Assistant Secretary since April 2014.
Senior Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager; from August 2005 to March 2013, Associate General Counsel of Third Avenue Management. She is 41 years old and has been an employee of the Manager since March 2013.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1985.
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market, Municipal Bond and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since September 1982.
43
OFFICERS OF THE FUND (Unaudited) (continued)
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since August 2005.
Senior Accounting Manager of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 52 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Fixed Income and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (65 investment companies, comprised of 160 portfolios). He is 59 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
CARIDAD M. CAROSELLA, Anti-Money Laundering Compliance Officer since January 2016
Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust since January 2016; from May 2015 to December 2015, Interim Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust and the Distributor; from January 2012 to May 2015, AML Surveillance Officer of the Distributor and from 2007 to December 2011, Financial Processing Manager of the Distributor. She is an officer of 60 investment companies (comprised of 155 portfolios) managed by the Manager. She is 48 years old and has been an employee of the Distributor since 1997.
44
NOTES
45
Dreyfus Total Emerging Markets Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
Distributor
MBSC Securities Corporation
200 Park Avenue
New York, NY 10166
Ticker Symbols: |
Class A: DTMAX Class C: DTMCX Class I: DTEIX Class Y: DTMYX |
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to [email protected]
Internet Information can be viewed online or downloaded at www.dreyfus.com
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 www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (phone 1-800-SEC-0330 for information).
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.dreyfus.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
© 2016 MBSC Securities Corporation |
|
Dynamic Total Return Fund
|
ANNUAL REPORT October 31, 2016 |
|
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(s) 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
T H E F U N D
Chief Executive Officer |
|
With Those of Other Funds |
|
and Commodity Futures |
|
Options Written |
|
Assets and Liabilities |
|
Changes in Net Assets |
|
Financial Statements |
|
Public Accounting Firm |
|
F O R M O R E I N F O R M AT I O N
Back Cover
|
The Fund |
A LETTER FROM THE CHIEF EXECUTIVE OFFICER
Dear Shareholder:
We are pleased to present this annual report for Dynamic Total Return Fund, covering the 12-month period from November 1, 2015 through October 31, 2016. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Stocks and bonds generally advanced over the reporting period in the midst of heightened market volatility stemming from various global economic developments. Toward the end of 2015, investor sentiment deteriorated amid sluggish global economic growth, falling commodity prices, and the first increase in short-term U.S. interest rates in nearly a decade. These worries sparked sharp stock market declines in January 2016, but equities began to rally in February when U.S. monetary policymakers refrained from additional rate hikes, other central banks eased their monetary policies further, and commodity prices began to rebound. Stocks generally continued to climb through the summer, driving several broad measures of U.S. stock market performance to record highs in July and August before moderating as a result of uncertainty regarding U.S. elections and potential rate hikes. In the bond market, yields of high-quality sovereign bonds generally moved lower and their prices increased in response to robust investor demand for current income in a low interest rate environment.
The outcome of the U.S. presidential election and ongoing global economic headwinds suggest that uncertainty will persist in the financial markets over the foreseeable future. Some asset classes and industry groups may benefit from a changing economic and political landscape, while others probably will face challenges. Consequently, selectivity could become a more important determinant of investment success. As always, we encourage you to discuss the implications of our observations with your financial advisor.
Thank you for your continued confidence and support.
Sincerely,
Mark D. Santero
Chief Executive Officer
The Dreyfus Corporation
November 15, 2016
2
DISCUSSION OF FUND PERFORMANCE
For the period from November 1, 2015 through October 31, 2016, as provided by Vassilis Dagioglu, James Stavena, Torrey Zaches, Joseph Miletich, and Sinead Colton, Portfolio Managers of Mellon Capital Management Corporation, Sub-Investment Adviser
Fund and Market Performance Overview
For the 12-month period ended October 31, 2016, Dynamic Total Return Fund’s Class A shares produced a total return of 0.70%, Class C shares returned -0.07%, Class I shares returned 1.01%, and Class Y shares returned 1.01%.1 In comparison, the fund’s benchmarks as of March 1, 2016, the Morgan Stanley Capital International World Index (the “MSCI World Index”), the Citi 3-Month Treasury Bill Index and a hybrid index comprised of 60% MSCI World Index and 40% Citigroup World Government Bond Index (the “CWGB Index”) returned 1.18%, 0.22% and 3.25%, respectively, for the same period. The fund’s benchmarks prior to March 1, 2016, the MSCI World Index (half-hedged), the CWGB Index (half-hedged) and a hybrid index comprised of 60% MSCI World Index (half-hedged) and 40% CWGB (half-hedged) returned 1.64%, 5.58% and 3.36%, respectively, for the 12-month period ended October 31, 2016. 2
Global bonds gained value amid falling interest rates, and equities posted more modestly positive returns in a volatile market environment. The fund performed roughly in line with the MSCI World Index, but lagged the MSCI World Index (half-hedged) and both hybrid indices due to a reduced exposure to German and Japanese equities. The fund’s Class A, Class I, and Class Y shares outperformed the Citi 3-Month Treasury Bill Index.
The Fund’s Investment Approach
The fund seeks total return through investments in instruments that provide investment exposure to global equity, bond, currency, and commodities markets, and in fixed-income securities. The fund targets a consistent volatility exposure across various economic regimes. The overall asset allocation of the fund is determined through a combination of bottom-up fundamental-based valuation and a top-down macroeconomic assessment. Among equity markets, the portfolio managers employ a bottom-up valuation approach using proprietary models to derive market-level expected returns. For bond markets, the portfolio managers use proprietary models to identify temporary mispricing among the long-term government bond markets. Our quantitative, long/short, relative value investment approach is designed to identify and exploit relative misvaluations across and within major developed capital markets such as the United States, Canada, Japan, Australia, and many Western European countries as well as emerging markets.
Volatility Buffeted Financial Markets
Global equities drifted lower during the final months of 2015 under pressure from weakening commodity prices and disappointment over recent central bank strategies in Europe. Investors also nervously anticipated a short-term interest rate hike in the United States, which occurred in mid-December. Investor sentiment turned more sharply negative in January 2016 amid further deterioration in commodity prices, disappointing economic data in China, and worries that higher short-term U.S. rates might weigh on economic activity.
Stocks began to rebound in mid-February when investors responded positively to encouraging economic data, recovering commodity prices, new rounds of monetary easing, and indications that monetary policymakers would delay additional U.S. rate hikes. Markets endured another bout of volatility in June when the United Kingdom voted to leave the European Union, but equities quickly rebounded. In October, uncertainty surrounding upcoming U.S. elections weighed on global stocks, and the MSCI World Index ended the reporting period with only a modestly positive return.
3
DISCUSSION OF FUND PERFORMANCE (continued)
Bonds fared better than equities in this environment when interest rates declined in response to sluggish global economic growth, low inflation, and aggressively accommodative monetary policies from most central banks.
Foreign Developed Equity Markets Weighed on Results
The fund’s relative performance was dampened by our decision to reduce its allocation to long positions in Japanese and German equity markets. This change reduced the fund’s participation in the rally that followed. In fixed-income markets, short positions in U.K. 10-year gilts proved counterproductive when the Bank of England increased its quantitative easing program after the Brexit referendum. A short position in German 10-year government bonds also undermined relative performance. Late in the reporting period, short positions in certain commodities markets, especially wheat and corn, were hurt by rallies stemming from weaker-than-expected inventories.
Positions that aided relative performance during the reporting period included a short position in the British pound, which depreciated after the Brexit vote. A short euro position and a long U.S. dollar position also supported gains from active currency trading. Among bonds, a long position in the U.S. 10-year Treasury bond benefited from falling growth expectations early in the reporting period. A long position in high yield bonds added value after we temporarily doubled the fund’s allocation during a significant rally. Finally, a long position in Treasury Inflation Protected Securities fared well when monetary policymakers delayed additional rate hikes.
We employed futures contracts to establish exposures to global stocks and bonds, and we used currency forward contracts to set our currency strategies during the reporting period.
Finding Ample Long-Short Opportunities
As of the reporting period’s end, we have maintained a modestly reduced allocation to global equities, focusing on U.S., German, and Japanese markets. In contrast, we increased the fund’s long exposure to U.S. Treasury and Australian government bonds with 10-year maturities while maintaining short positions in German and U.K. government bonds. We also have attempted to limit exposure to foreign currency risk by hedging back to the U.S. dollar through short positions in the euro, British pound, Australian dollar, and Canadian dollar.
November 15, 2016
Equities are subject generally to market, market sector, market liquidity, issuer, and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Bonds are subject generally to interest rate, credit, liquidity, call, sector, and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic, and social instability, a lack of comprehensive company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries than with more economically and politically established foreign countries.
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.
Exposure to the commodities markets may subject the fund to greater volatility than investments in traditional securities. The values of commodities and commodity-linked investments are affected by events that might have less impact on the values of stocks and bonds. Investments linked to the prices of commodities are considered speculative. Prices of commodities and related contracts may fluctuate significantly over short periods for a variety of factors.
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. Share price, yield, and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Past performance is no guarantee of future results.
2 Source: FactSet — Reflects reinvestment of net dividends and, where applicable, capital gain distributions. The Citi 3-Month Treasury Bill Index is a market value-weighted index of public obligations of the U.S. Treasury with maturities of 90 days. The Morgan Stanley Capital International (MSCI) World Index and MSCI World Index (half-hedged) are unmanaged indices of global stock market performance, including the United States, Canada, Europe, Australia, New Zealand, and the Far East. The Citigroup World Government Bond (CWGB) Index and the CWGB (half-hedged) are market capitalization-weighted indices which include select designated government bond markets of developed countries. The hybrid index as of March 1, 2016, is an unmanaged hybrid index composed of 60% MSCI World Index and 40% CWGB Index. The hybrid index prior to March 1, 2016, is an unmanaged hybrid index composed of 60% MSCI World Index (half-hedged) and 40% CWGB Index (half-hedged). Investors cannot invest directly in any index.
4
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dynamic Total Return Fund Class A shares, Class C shares, Class I shares and Class Y shares with: (1) the fund’s benchmarks as of March 1, 2016, the Morgan Stanley Capital International World Index, the Citi 3-Month Treasury Bill Index, and a Hybrid Index A comprised of 60% Morgan Stanley Capital International World Index and 40% Citigroup World Government Bond Index; and (2) the fund’s benchmarks prior to March 1, 2016, the Morgan Stanley Capital International World Index (half-hedged), Citigroup World Government Bond Index (half-hedged), and a Hybrid Index B comprised of 60% Morgan Stanley Capital International World Index (half-hedged) and 40% Citigroup World Government Bond Index (half-hedged).
† Source: FactSet
†† The total return figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class C, Class I and Class Y shares of Dynamic Total Return Fund on 10/31/06 to a $10,000 investment made on that date in each of the following: the Morgan Stanley Capital International World Index (the “MSCI World Index”); the Citi 3-Month Treasury Bill Index; Hybrid Index A comprised of 60% MSCI World Index and 40% Citigroup World Government Bond (“CWGB”) Index ; the MSCI World Index (half-hedged); CWGB Index (half-hedged) and Hybrid Index B comprised of 60% MSCI World Index (half-hedged) and 40% CWGB Index (half-hedged). Returns assume all dividends and capital gain distributions are reinvested.
The fund invests primarily in instruments that provide exposure to global equity, bond and currency markets. The fund’s performance shown in the line graph above takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses on all classes. The Morgan Stanley Capital International (MSCI) World Index and MSCI World Index (half-hedged) are unmanaged indices of global stock market performance, including the United States, Canada, Europe, Australia, New Zealand, and the Far East. The Citi 3-Month Treasury Bill Index is a market value-weighted index of public obligations of the U.S. Treasury with maturities of 90 days. The Citigroup World Government Bond (CWGB) Index and the CWGB (half-hedged) are market capitalization-weighted indices which include select designated government bond markets of developed countries. The hybrid index as of March 1, 2016, Hybrid Index A, is an unmanaged hybrid index comprised of 60% MSCI World Index and 40% CWGB Index. The hybrid index prior to March 1, 2016, Hybrid Index B, is an unmanaged hybrid index comprised of 60% MSCI World Index (half-hedged) and 40% CWGB Index (half-hedged). Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
5
FUND PERFORMANCE (continued)
Average Annual Total Returns as of 10/31/16 | ||||
Inception |
||||
Date |
1 Year |
5 Years |
10 Years | |
Class A shares |
||||
with maximum sales charge (5.75%) |
5/2/06 |
-5.07% |
4.79% |
2.09% |
without sales charge |
5/2/06 |
0.70% |
6.05% |
2.70% |
Class C shares |
||||
with applicable redemption charge † |
5/2/06 |
-1.07% |
5.25% |
1.94% |
without redemption |
5/2/06 |
-0.07% |
5.25% |
1.94% |
Class I shares |
5/2/06 |
1.01% |
6.37% |
3.04% |
Class Y shares |
7/1/13 |
1.01% |
6.52%†† |
2.93%†† |
Morgan Stanley Capital International World Index |
1.18% |
9.03% |
3.89% | |
Citi 3-Month Treasury Bill Index |
0.22% |
0.08% |
0.80% | |
Hybrid Index A |
3.25% |
5.47% |
4.13% | |
Morgan Stanley Capital International World Index ( half-hedged ) |
1.64% |
10.22% |
4.17% | |
Citigroup World Government |
5.58% |
2.07% |
4.07% | |
Hybrid Index B |
3.36% |
7.05% |
4.46% |
Past performance is not predictive of future performance. The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. In addition to the performance of Class A shares shown with and without a maximum sales charge, the fund’s performance shown in the table takes into account all other applicable fees and expenses on all classes.
† The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.
†† The total return performance figures presented for Class Y shares of the fund reflect the performance of the fund’s Class A shares for the period prior to 7/1/13 (inception date for Class Y shares), not reflecting the applicable sales charges for Class A shares.
6
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dynamic Total Return Fund from May 1, 2016 to October 31, 2016. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
||||||||||
assuming actual returns for the six months ended October 31, 2016 | ||||||||||
Class A |
Class C |
Class I |
Class Y | |||||||
Expenses paid per $1,000† |
$7.70 |
$11.50 |
$6.38 |
$5.97 | ||||||
Ending value (after expenses) |
$1,028.80 |
$1,024.90 |
$1,030.80 |
$1,030.80 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment | ||||||||
assuming a hypothetical 5% annualized return for the six months ended October 31, 2016 | ||||||||
Class A |
Class C |
Class I |
Class Y | |||||
Expenses paid per $1,000† |
$7.66 |
$11.44 |
$6.34 |
$5.94 | ||||
Ending value (after expenses) |
$1,017.55 |
$1,013.77 |
$1,018.85 |
$1,019.25 |
† Expenses are equal to the fund’s annualized expense ratio of 1.51% for Class A, 2.26% for Class C, 1.25% for Class I and 1.17% for Class Y, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
7
CONSOLIDATED STATEMENT OF INVESTMENTS
October 31, 2016
Common Stocks - 9.5% |
Shares |
Value ($) |
|||
Exchange-Traded Funds - 9.5% |
|||||
iShares TIPS Bond ETF |
589,965 |
68,353,345 |
|||
SPDR Barclays High Yield Bond ETF |
1,874,877 |
67,983,040 |
|||
(cost $130,180,132) |
136,336,385 |
||||
Options Purchased - 3.8% |
Face Amount |
Value ($) |
|||
Call Options - 3.6% |
|||||
Swiss Market Index Futures, December 2016 @ CHF 8,172 |
2,840 |
102,221 |
|||
Swiss Market Index Futures, December 2016 @ CHF 8,174 |
370 |
13,811 |
|||
U.S. Treasury 10 Year Note Futures, December 2016 @ $117 |
408,800,000 |
51,611,000 |
|||
51,727,032 |
|||||
Put Options - .2% |
|||||
EURO STOXX 50 Index Futures, December 2016 @ 2,750 |
59,020 |
1,183,942 |
|||
NIKKEI 225 Index Futures, December 2016 @ 1,500 |
1,470,500 |
336,531 |
|||
S & P 500 Index Futures, September 2016 @ 2,000 |
443 |
1,849,525 |
|||
3,369,998 |
|||||
Total Options Purchased (cost $69,076,428) |
55,097,030 |
||||
Short-Term Investments - 67.5% |
Principal Amount ($) |
Value ($) |
|||
U.S. Treasury Bills |
|||||
0.27%, 12/29/16 |
672,190,000 |
671,919,108 |
|||
0.34%, 12/15/16 |
56,315,000 |
a |
56,303,061 |
||
0.28%, 11/10/16 |
242,750,000 |
242,742,960 |
|||
(cost $970,916,165) |
970,965,129 |
||||
Other Investment - 12.2% |
Shares |
Value ($) |
|||
Registered Investment Company; |
|||||
Dreyfus Institutional Preferred Government Plus Money Market Fund |
175,712,091 |
b |
175,712,091 |
||
Total Investments (cost $1,345,884,816) |
93.0% |
1,338,110,635 |
|||
Cash and Receivables (Net) |
7.0% |
101,367,590 |
|||
Net Assets |
100.0% |
1,439,478,225 |
CHF—Swiss Franc
ETF—Exchange-Traded Fund
SPDR—Standard & Poor's Depository Receipt
a Held by or on behalf of a counterparty for open financial futures contracts.
b Investment in affiliated money market mutual fund.
8
Portfolio Summary (Unaudited) † |
Value (%) |
Short-Term/Money Market Investments |
79.7 |
Exchange-Traded Funds |
9.5 |
Options Purchased |
3.8 |
93.0 |
† Based on net assets.
See notes to consolidated financial statements.
9
CONSOLIDATED STATEMENT OF FINANCIAL AND COMMODITY FUTURES
October 31, 2016
Contracts |
Market Value Covered by Contracts ($) |
Expiration |
Unrealized Appreciation (Depreciation) ($) |
||||
Financial and Commodity Futures Long |
|||||||
ASX SPI 200 |
260 |
26,156,643 |
December 2016 |
252,775 |
|||
Australian 10 Year Bond |
3,364 |
339,379,714 |
December 2016 |
(4,809,228) |
|||
CAC 40 10 Euro |
586 |
28,989,615 |
November 2016 |
163,344 |
|||
Cocoa |
526 |
a |
13,902,180 |
March 2017 |
(350,891) |
||
Coffee "C" |
36 |
a |
2,261,925 |
March 2017 |
(3,445) |
||
Cotton No. 2 |
2 |
a |
68,860 |
December 2016 |
(132) |
||
Crude Soybean Oil |
890 |
a |
18,973,020 |
March 2017 |
924,496 |
||
DAX |
283 |
82,924,173 |
December 2016 |
1,593,307 |
|||
DJ Euro Stoxx 50 |
520 |
17,427,521 |
December 2016 |
555,183 |
|||
Euro-Bund Option Put 177 |
2,281 |
37,134,014 |
December 2016 |
6,384,146 |
|||
FTSE 100 |
1,156 |
98,041,885 |
December 2016 |
1,135,192 |
|||
FTSE/MIB Index |
210 |
19,719,414 |
December 2016 |
426,942 |
|||
Gasoline |
27 |
a |
1,607,105 |
January 2017 |
(62,833) |
||
Gold 100 oz |
31 |
a |
3,946,610 |
December 2016 |
(58,021) |
||
IBEX 35 Index |
92 |
9,217,573 |
November 2016 |
209,474 |
|||
Live Cattle |
11 |
a |
454,630 |
December 2016 |
(3,603) |
||
LME Primary Aluminum |
416 |
a |
18,046,600 |
January 2017 |
565,644 |
||
LME Primary Aluminum |
290 |
a |
12,571,500 |
November 2016 |
626,255 |
||
LME Primary Nickel |
87 |
a |
5,448,636 |
November 2016 |
(44,132) |
||
LME Primary Nickel |
86 |
a |
5,402,778 |
January 2017 |
136,224 |
||
LME Refined Pig Lead |
83 |
a |
4,264,125 |
November 2016 |
210,959 |
||
LME Zinc |
51 |
a |
3,127,575 |
November 2016 |
109,842 |
||
Low Sulfur Gas Oil |
72 |
a |
3,200,400 |
January 2017 |
(197,338) |
||
Nikkei 225 Index |
187 |
15,540,240 |
December 2016 |
429,563 |
|||
NY Harbor ULSD |
23 |
a |
1,469,866 |
January 2017 |
(86,441) |
||
S&P/Toronto Stock Exchange 60 Index |
56 |
7,235,369 |
December 2016 |
822,512 |
|||
Silver |
62 |
a |
5,516,760 |
December 2016 |
(663,027) |
||
Soybean |
179 |
a |
9,115,575 |
March 2017 |
429,006 |
||
Standard & Poor's 500 |
64 |
33,921,600 |
December 2016 |
6,839 |
|||
Standard & Poor's 500 E-mini |
3,205 |
339,746,025 |
December 2016 |
344,228 |
|||
Sugar No. 11 |
118 |
a |
2,850,691 |
March 2017 |
(137,921) |
||
Topix |
1,263 |
168,006,580 |
December 2016 |
6,491,822 |
|||
U.S. Treasury 10 Year Notes |
5,143 |
666,661,375 |
December 2016 |
(5,027,666) |
10
Contracts |
Market Value Covered by Contracts ($) |
Expiration |
Unrealized Appreciation (Depreciation) ($) |
|||
Financial and Commodity Futures Short |
||||||
Amsterdam Exchange Index |
4 |
(396,246) |
November 2016 |
(6,955) |
||
Brent Crude |
17 |
a |
(848,640) |
March 2017 |
59,944 |
|
Canadian 10 Year Bond |
1,250 |
(134,775,964) |
December 2016 |
511,409 |
||
Chicago SRW Wheat |
531 |
a |
(11,516,063) |
March 2017 |
(491,281) |
|
Copper |
1 |
a |
(55,125) |
December 2016 |
(3,177) |
|
Corn No. 2 Yellow |
401 |
a |
(7,273,138) |
March 2017 |
(262,356) |
|
Crude Oil |
119 |
a |
(5,785,780) |
March 2017 |
139,780 |
|
Euro-Bond |
864 |
(153,811,823) |
December 2016 |
1,630,060 |
||
Hang Seng |
81 |
(11,961,144) |
November 2016 |
283,840 |
||
Hard Red Winter Wheat |
387 |
a |
(8,368,875) |
March 2017 |
(247,072) |
|
Lean Hog |
27 |
a |
(517,860) |
December 2016 |
83,955 |
|
LME Primary Aluminum |
290 |
a |
(12,571,500) |
November 2016 |
(581,764) |
|
LME Primary Nickel |
87 |
a |
(5,448,636) |
November 2016 |
(141,848) |
|
LME Refined Pig Lead |
6 |
a |
(309,450) |
January 2017 |
2,120 |
|
LME Refined Pig Lead |
83 |
a |
(4,264,125) |
November 2016 |
(557,905) |
|
LME Zinc |
38 |
a |
(2,338,425) |
January 2017 |
(334,179) |
|
LME Zinc |
51 |
a |
(3,127,575) |
November 2016 |
(179,216) |
|
Long Gilt |
1,380 |
(211,715,197) |
December 2016 |
9,760,145 |
||
Natural Gas |
234 |
a |
(7,476,300) |
January 2017 |
330,411 |
|
NYMEX Palladium |
81 |
a |
(5,005,800) |
December 2016 |
84,406 |
|
Platinum |
162 |
a |
(7,926,660) |
January 2017 |
367,811 |
|
Soybean Meal |
94 |
a |
(3,004,240) |
March 2017 |
(167,527) |
|
Gross Unrealized Appreciation |
35,071,634 |
|||||
Gross Unrealized Depreciation |
(14,417,958) |
a These investments are held directly by the Subsidiary (see Note 1).
See notes to consolidated financial statements.
11
CONSOLIDATED STATEMENT OF OPTIONS WRITTEN
October 31, 2016
Number of Contracts |
Value ($) |
|||||
Put Options: |
||||||
Swiss Market Index Futures |
||||||
December 2016 @ CHF 8,172 |
2,840 |
(1,122,478) |
||||
Swiss Market Index Futures |
||||||
December 2016 @ CHF 8,174 |
370 |
(147,221) |
||||
Total Options Written |
(1,269,699) |
CHF—Swiss Franc
See notes to consolidated financial statements.
12
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
October 31, 2016
|
|
|
|
|
|
|
|
|
|
Cost |
|
Value |
|
Assets ($): |
|
|
|
| ||
Investments in securities—See Consolidated |
|
|
|
| ||
Unaffiliated issuers |
|
1,170,172,725 |
|
1,162,398,544 |
| |
Affiliated issuers |
|
175,712,091 |
|
175,712,091 |
| |
Cash |
|
|
|
|
76,823,174 |
|
Cash denominated in foreign currency |
|
|
457,932 |
|
450,523 |
|
Unrealized appreciation on forward foreign |
|
|
|
|
34,028,032 |
|
Cash collateral held by broker—Note 4 |
|
|
|
|
10,083,701 |
|
Receivable for shares of Common Stock subscribed |
|
|
|
|
1,285,816 |
|
Dividends receivable |
|
|
|
|
40,684 |
|
Prepaid expenses |
|
|
|
|
57,440 |
|
|
|
|
|
|
1,460,880,005 |
|
Liabilities ($): |
|
|
|
| ||
Due to The Dreyfus Corporation and affiliates—Note 3(c) |
|
|
|
|
1,561,401 |
|
Unrealized depreciation on forward foreign |
|
|
|
|
14,316,465 |
|
Payable for futures variation margin—Note 4 |
|
|
|
|
2,109,051 |
|
Payable for shares of Common Stock redeemed |
|
|
|
|
1,766,682 |
|
Outstanding options written, at value (premiums received |
|
|
|
|
1,269,699 |
|
Accrued expenses and other liabilities |
|
|
|
|
378,482 |
|
|
|
|
|
|
21,401,780 |
|
Net Assets ($) |
|
|
1,439,478,225 |
| ||
Composition of Net Assets ($): |
|
|
|
| ||
Paid-in capital |
|
|
|
|
1,433,555,046 |
|
Accumulated investment (loss)—net |
|
|
|
|
(2,748,744) |
|
Accumulated net realized gain (loss) on investments |
|
|
|
|
(24,700,600) |
|
Accumulated net unrealized appreciation (depreciation) |
|
|
|
33,372,523 |
| |
Net Assets ($) |
|
|
1,439,478,225 |
|
Net Asset Value Per Share |
Class A |
Class C |
Class I |
Class Y |
|
Net Assets ($) |
205,832,471 |
131,341,300 |
446,642,669 |
655,661,785 |
|
Shares Outstanding |
13,084,540 |
8,854,943 |
27,784,140 |
40,796,251 |
|
Net Asset Value Per Share ($) |
15.73 |
14.83 |
16.08 |
16.07 |
|
See notes to consolidated financial statements. |
13
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income ($): |
|
|
|
| ||
Income: |
|
|
|
| ||
Cash dividends (net of $67 foreign taxes withheld at source): |
|
|
|
| ||
Unaffiliated issuers |
|
|
3,671,885 |
| ||
Affiliated issuers |
|
|
488,663 |
| ||
Interest |
|
|
1,823,878 |
| ||
Total Income |
|
|
5,984,426 |
| ||
Expenses: |
|
|
|
| ||
Management fee—Note 3(a) |
|
|
15,608,170 |
| ||
Shareholder servicing costs—Note 3(c) |
|
|
1,757,259 |
| ||
Distribution fees—Note 3(b) |
|
|
1,104,098 |
| ||
Professional fees |
|
|
264,203 |
| ||
Subsidiary management fee—Note 3(a) |
|
|
212,425 |
| ||
Registration fees |
|
|
149,307 |
| ||
Directors’ fees and expenses—Note 3(d) |
|
|
117,730 |
| ||
Prospectus and shareholders’ reports |
|
|
107,837 |
| ||
Custodian fees—Note 3(c) |
|
|
95,275 |
| ||
Loan commitment fees—Note 2 |
|
|
22,395 |
| ||
Miscellaneous |
|
|
32,809 |
| ||
Total Expenses |
|
|
19,471,508 |
| ||
Less—reduction in expenses due to undertaking—Note 3(a) |
|
|
(212,425) |
| ||
Less—reduction in fees due to earnings credits—Note 3(c) |
|
|
(380) |
| ||
Net Expenses |
|
|
19,258,703 |
| ||
Investment (Loss)—Net |
|
|
(13,274,277) |
| ||
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): |
|
| ||||
Net realized gain (loss) on investments and foreign currency transactions |
(837,541) |
| ||||
Net realized gain (loss) on options transactions |
10,810,063 |
| ||||
Net realized gain (loss) on financial and commodity futures |
(23,559,125) |
| ||||
Net realized gain (loss) on swap transactions |
3,613,280 |
| ||||
Net realized gain (loss) on forward foreign currency exchange contracts |
35,727,868 |
| ||||
Net Realized Gain (Loss) |
|
|
25,754,545 |
| ||
Net unrealized appreciation (depreciation) on investments |
|
|
9,142,786 |
| ||
Net unrealized appreciation (depreciation) on options transactions |
|
|
(13,038,348) |
| ||
Net unrealized appreciation (depreciation) on financial |
|
|
(13,954,441) |
| ||
Net unrealized appreciation (depreciation) on swap transactions |
|
|
(311,178) |
| ||
Net unrealized appreciation (depreciation) on |
|
|
15,499,761 |
| ||
Net Unrealized Appreciation (Depreciation) |
|
|
(2,661,420) |
| ||
Net Realized and Unrealized Gain (Loss) on Investments |
|
|
23,093,125 |
| ||
Net Increase in Net Assets Resulting from Operations |
|
9,818,848 |
| |||
See notes to consolidated financial statements. |
14
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
Year Ended October 31, | |||||
|
|
|
|
2016 |
|
|
|
2015 |
|
Operations ($): |
|
|
|
|
|
|
|
| |
Investment (loss)—net |
|
|
(13,274,277) |
|
|
|
(11,567,681) |
| |
Net realized gain (loss) on investments |
|
25,754,545 |
|
|
|
(36,702,175) |
| ||
Net unrealized appreciation (depreciation) |
|
(2,661,420) |
|
|
|
32,779,962 |
| ||
Net Increase (Decrease) in Net Assets |
9,818,848 |
|
|
|
(15,489,894) |
| |||
Capital Stock Transactions ($): |
|
|
|
|
|
|
|
| |
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Class A |
|
|
85,425,288 |
|
|
|
266,485,465 |
| |
Class C |
|
|
46,807,391 |
|
|
|
132,899,289 |
| |
Class I |
|
|
299,261,521 |
|
|
|
555,886,892 |
| |
Class Y |
|
|
230,391,741 |
|
|
|
151,343,233 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Class A |
|
|
(148,416,191) |
|
|
|
(47,238,345) |
| |
Class C |
|
|
(57,090,576) |
|
|
|
(11,200,243) |
| |
Class I |
|
|
(343,046,982) |
|
|
|
(126,279,767) |
| |
Class Y |
|
|
(66,580,605) |
|
|
|
(61,328,324) |
| |
Increase (Decrease) in Net Assets |
46,751,587 |
|
|
|
860,568,200 |
| |||
Total Increase (Decrease) in Net Assets |
56,570,435 |
|
|
|
845,078,306 |
| |||
Net Assets ($): |
|
|
|
|
|
|
|
| |
Beginning of Period |
|
|
1,382,907,790 |
|
|
|
537,829,484 |
| |
End of Period |
|
|
1,439,478,225 |
|
|
|
1,382,907,790 |
| |
Accumulated investment (loss)—net |
(2,748,744) |
|
|
|
(12,080,090) |
| |||
Capital Share Transactions (Shares): |
|
|
|
|
|
|
|
| |
Class A |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
5,592,205 |
|
|
|
16,605,743 |
| |
Shares redeemed |
|
|
(9,694,240) |
|
|
|
(2,986,569) |
| |
Net Increase (Decrease) in Shares Outstanding |
(4,102,035) |
|
|
|
13,619,174 |
| |||
Class C |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
3,221,954 |
|
|
|
8,694,888 |
| |
Shares redeemed |
|
|
(3,925,165) |
|
|
|
(746,954) |
| |
Net Increase (Decrease) in Shares Outstanding |
(703,211) |
|
|
|
7,947,934 |
| |||
Class I a |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
19,107,885 |
|
|
|
34,065,593 |
| |
Shares redeemed |
|
|
(22,047,720) |
|
|
|
(7,935,554) |
| |
Net Increase (Decrease) in Shares Outstanding |
(2,939,835) |
|
|
|
26,130,039 |
| |||
Class Y a |
|
|
|
|
|
|
|
| |
Shares sold |
|
|
14,699,682 |
|
|
|
9,358,270 |
| |
Shares redeemed |
|
|
(4,261,697) |
|
|
|
(3,869,466) |
| |
Net Increase (Decrease) in Shares Outstanding |
10,437,985 |
|
|
|
5,488,804 |
| |||
aDuring the period ended October 31, 2016, 369,275 Class Y shares representing $5,809,635 were exchanged for 369,082 Class I shares. |
|||||||||
See notes to consolidated financial statements. |
15
CONSOLIDATED FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
Year Ended October 31, | ||||||
Class A Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
15.63 |
15.36 |
14.18 |
12.49 |
11.74 | |
Investment Operations: |
||||||
Investment (loss)—neta |
(.17) |
(.22) |
(.19) |
(.01) |
(.03) | |
Net realized and unrealized |
.27 |
.49b |
1.38 |
1.65 |
.78 | |
Payment by affiliate |
– |
– |
– |
.05 |
– | |
Total from |
.10 |
.27 |
1.19 |
1.69 |
.75 | |
Distributions: |
||||||
Dividends from |
– |
– |
(.01) |
– |
– | |
Net asset value, |
15.73 |
15.63 |
15.36 |
14.18 |
12.49 | |
Total Return (%)c |
.70 |
1.69 |
8.42 |
13.53d |
6.39 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.51 |
1.49 |
1.54 |
1.65 |
1.85 | |
Ratio of net expenses |
1.50 |
1.49 |
1.50 |
1.50 |
1.85 | |
Ratio of net investment (loss) |
(1.13) |
(1.41) |
(1.30) |
(.04) |
(.21) | |
Portfolio Turnover Rate |
10.66 |
165.55 |
124.10 |
1.74 |
1.65 | |
Net Assets, end of period ($ x 1,000) |
205,832 |
268,600 |
54,798 |
23,462 |
14,913 |
a Based on average shares outstanding.
b In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
c Exclusive of sales charge.
d The total return would have been 13.13% had a reimbursement for a trade error not been made by Mellon Capital.
See notes to consolidated financial statements.
16
Year Ended October 31, | ||||||
Class C Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
14.85 |
14.70 |
13.66 |
12.12 |
11.48 | |
Investment Operations: |
||||||
Investment (loss)—neta |
(.27) |
(.33) |
(.29) |
(.10) |
(.12) | |
Net realized and unrealized |
.25 |
.48b |
1.33 |
1.59 |
.76 | |
Payment by affiliate |
– |
– |
– |
.05 |
– | |
Total from |
(.02) |
.15 |
1.04 |
1.54 |
.64 | |
Net asset value, |
14.83 |
14.85 |
14.70 |
13.66 |
12.12 | |
Total Return (%)c |
(.07) |
.95 |
7.61 |
12.71d |
5.58 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
2.26 |
2.24 |
2.30 |
2.44 |
2.62 | |
Ratio of net expenses |
2.25 |
2.24 |
2.25 |
2.25 |
2.62 | |
Ratio of net investment (loss) |
(1.82) |
(2.16) |
(2.08) |
(.78) |
(.98) | |
Portfolio Turnover Rate |
10.66 |
165.55 |
124.10 |
1.74 |
1.65 | |
Net Assets, end of period ($ x 1,000) |
131,341 |
141,904 |
23,672 |
9,409 |
7,704 |
a Based on average shares outstanding.
b In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
c Exclusive of sales charge.
d The total return would have been 12.29% had a reimbursement for a trade error not been made by Mellon Capital.
See notes to consolidated financial statements.
17
CONSOLIDATED FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31, | ||||||
Class I Shares |
2016 |
2015 |
2014 |
2013 |
2012 | |
Per Share Data ($): |
||||||
Net asset value, beginning of period |
15.93 |
15.61 |
14.39 |
12.65 |
11.84 | |
Investment Operations: |
||||||
Investment income (loss)—neta |
(.13) |
(.19) |
(.14) |
.03 |
.02 | |
Net realized and unrealized |
.28 |
.51b |
1.39 |
1.67 |
.79 | |
Payment by affiliate |
– |
– |
– |
.05 |
– | |
Total from |
.15 |
.32 |
1.25 |
1.75 |
.81 | |
Distributions: |
||||||
Dividends from |
– |
– |
(.03) |
(.01) |
– | |
Net asset value, |
16.08 |
15.93 |
15.61 |
14.39 |
12.65 | |
Total Return (%) |
1.01 |
1.92 |
8.77 |
13.82c |
6.84 | |
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.25 |
1.22 |
1.21 |
1.29 |
1.47 | |
Ratio of net expenses |
1.24 |
1.22 |
1.21 |
1.25 |
1.47 | |
Ratio of net investment income |
(.86) |
(1.15) |
(.94) |
.20 |
.13 | |
Portfolio Turnover Rate |
10.66 |
165.55 |
124.10 |
1.74 |
1.65 | |
Net Assets, end of period ($ x 1,000) |
446,643 |
489,361 |
71,731 |
253,971 |
123,269 |
a Based on average shares outstanding.
b In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
c The total return would have been 13.42% had a reimbursement for a trade error not been made by Mellon Capital.
See notes to consolidated financial statements.
18
Year Ended October 31, | ||||||
Class Y Shares |
2016 |
2015 |
2014 |
2013a | ||
Per Share Data ($): |
||||||
Net asset value, beginning of period |
15.91 |
15.59 |
14.39 |
13.45 | ||
Investment Operations: |
||||||
Investment (loss)—netb |
(.11) |
(.15) |
(.17) |
(.01) | ||
Net realized and unrealized |
.27 |
.47c |
1.40 |
.90 | ||
Payment by affiliate |
– |
– |
– |
.05 | ||
Total from |
.16 |
.32 |
1.23 |
.94 | ||
Distributions: |
||||||
Dividends from |
– |
– |
(.03) |
– | ||
Net asset value, |
16.07 |
15.91 |
15.59 |
14.39 | ||
Total Return (%) |
1.01 |
2.05 |
8.56 |
6.99d,e | ||
Ratios/Supplemental Data (%): |
||||||
Ratio of total expenses |
1.18 |
1.14 |
1.16 |
1.31f | ||
Ratio of net expenses |
1.16 |
1.14 |
1.16 |
1.25f | ||
Ratio of net investment (loss) |
(.68) |
(.96) |
(1.14) |
(.18)f | ||
Portfolio Turnover Rate |
10.66 |
165.55 |
124.10 |
1.74 | ||
Net Assets, end of period ($ x 1,000) |
655,662 |
483,043 |
387,629 |
1 |
a From July 1, 2013 (commencement of initial offering) to October 31, 2013.
b Based on average shares outstanding.
c In addition to net realized and unrealized losses on investments, this amount includes an increase in net asset value per share resulting from the timing of issuances and redemptions of shares in relation to fluctuating market values for the portfolio investments.
d Not annualized.
e The total return would have been 6.62% had a reimbursement for a trade error not been made by Mellon Capital.
f Annualized.
See notes to consolidated financial statements.
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dynamic Total Return Fund (the “fund”) is a separate non-diversified series of Advantage Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering ten series, including the fund. The fund’s investment objective is to seek total return. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. Mellon Capital Management Corporation (“Mellon Capital”), a wholly-owned subsidiary of BNY Mellon and an affiliate of Dreyfus, serves as the fund’s sub-investment adviser.
Effective August 5, 2016, the fund may invest in certain commodities through its investment in DTR Commodity Fund Ltd., (the “Subsidiary”), a wholly-owned and controlled subsidiary of the fund organized under the laws of the Cayman Islands. The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the fund. Dreyfus serves as investment adviser for the Subsidiary, Mellon Capital serves as the Subsidiary’s sub-investment advisor and Citibank N.A. serves as the Subsidiary’s custodian. The financial statements have been consolidated and include the accounts of the fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the fund and the Subsidiary, comprising the entire issued share capital of the Subsidiary, with the intent that the fund will remain the sole shareholder and retain all rights. Under the Amended and Restated Memorandum and Articles of Association, shares issued by the Subsidiary confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Subsidiary and shall confer upon the shareholder rights in a winding-up or repayment of capital and the right to participate in the profits or assets of the Subsidiary. The following summarizes the structure and relationship of the Subsidiary at October 31, 2016:
Subsidiary Activity | |||
Consolidated fund Net Assets ($) |
1,439,478,225 |
||
Subsidiary Percentage of fund Net Assets |
5.76% |
||
Subsidiary Financial Statement Information ($) |
|||
Total assets |
83,165,107 |
||
Total liabilities |
207,723 |
||
Net assets |
82,957,384 |
||
Total income |
2,733 |
||
Investment income (loss)—net |
(347,192) |
||
Net realized gain (loss) |
(2,092,169) |
||
Net unrealized appreciation (depreciation) |
(503,255) |
||
Net increase (decrease) in net assets resulting from operations |
(2,942,616) |
20
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares. The fund is authorized to issue 500 million shares of $.001 par value Common Stock. The fund currently offers four classes of shares: Class A (200 million shares authorized), Class C (100 million shares authorized), Class I (100 million shares authorized) and Class Y (100 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
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. U.S. Treasury Bills are valued at the mean price between quoted bid prices and asked prices by an independent pricing service (the “Service”) approved by the Company’s Board of Directors (the “Board”). These securities are generally categorized within Level 2 of the fair value hierarchy.
The Service is engaged under the general supervision of the Board.
22
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and financial futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
Financial and commodity 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 and are generally categorized within Level 1 of the fair value hierarchy. Options traded over-the-counter (“OTC”) are valued at the mean between the bid and asked price and are generally categorized within Level 2 of the fair value hierarchy. Investments in swap transactions are valued each business day by the Service. Swaps are valued by the Service by using a swap pricing model which incorporates among other factors, default probabilities, recovery rates, credit curves of the underlying issuer and swap spreads on interest rates and are generally categorized within Level 2 of the fair value hierarchy. Forward foreign currency exchange contracts (“forward contracts”) are valued at the forward rate and are generally categorized within Level 2 of the fair value hierarchy.
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is a summary of the inputs used as of October 31, 2016 in valuing the fund’s investments:
Level 1 - Unadjusted Quoted Prices |
Level 2 - Other Significant Observable Inputs |
Level 3 -Significant Unobservable Inputs |
Total | |
Assets ($) |
||||
Investments in Securities: |
||||
Exchange-Traded Funds |
136,336,385 |
– |
– |
136,336,385 |
Mutual Funds |
175,712,091 |
– |
– |
175,712,091 |
U.S. Treasury |
– |
970,965,129 |
– |
970,965,129 |
Other Financial Instruments: |
||||
Financial Futures† |
31,000,781 |
– |
– |
31,000,781 |
Commodity Futures† |
4,070,853 |
– |
– |
4,070,853 |
Forward Foreign Currency Exchange Contracts† |
– |
34,028,032 |
– |
34,028,032 |
Options Purchased |
54,980,998 |
116,032 |
– |
55,097,030 |
Liabilities ($) |
||||
Other Financial Instruments: |
||||
Financial Futures† |
(9,843,849) |
– |
– |
(9,843,849) |
Commodity Futures† |
(4,574,109) |
– |
– |
(4,574,109) |
Forward Foreign Currency Exchange Contracts† |
– |
(14,316,465) |
– |
(14,316,465) |
Options Written |
– |
(1,269,699) |
– |
(1,269,699) |
† Amount shown represents unrealized appreciation (depreciation) at period end.
(b) Foreign currency transactions: The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized on securities transactions between trade and settlement date, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments resulting from changes in exchange rates. Foreign currency gains and losses
24
on foreign currency transactions are also included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
(d) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in affiliated investment companies during the period ended October 31, 2016 were as follows:
Affiliated Investment Company |
Value |
Purchases ($) |
Sales ($) |
Value |
Net |
Dreyfus Institutional Preferred Government Plus Money Market Fund† |
251,700,815 |
853,881,455 |
929,870,179 |
175,712,091 |
12.2 |
† Formerly Dreyfus Institutional Preferred Plus Money Market Fund.
(e) Risk: Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
The fund’s investments in commodity-linked financial derivatives instruments may subject the fund to greater market price volatility than investments in traditional securities. The value of commodity-linked financial derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments.
(f) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually,
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Code. Therefore, the fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the fund in the current period nor carried forward to offset taxable income in future periods.
As of and during the period ended October 31, 2016, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Consolidated Statement of Operations. During the period ended October 31, 2016, the fund did not incur any interest or penalties.
Each tax year in the four-year period ended October 31, 2016 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At October 31, 2016, the components of accumulated earnings on a tax basis were as follows: undistributed capital gains $2,620,552 and unrealized appreciation $6,051,371. In addition, the fund deferred for tax purposes late year ordinary losses of $2,748,744 to the first day of the following fiscal year.
During the period ended October 31, 2016, as a result of permanent book to tax differences, primarily due to the tax treatment for foreign currency transactions, net operating losses and swap periodic payments, the fund increased accumulated undistributed investment income-net by $22,605,623, decreased accumulated net realized gain (loss) on investments by $2,389,448 and decreased paid-in capital by $20,216,175. Net assets and net asset value per share were not affected by this reclassification.
26
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $810 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Prior to October 5, 2016, the unsecured credit facility with Citibank, N.A. was $555 million and prior to January 11, 2016, the unsecured credit facility with Citibank, N.A. was $480 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended October 31, 2016, the fund did not borrow under the Facilities.
NOTE 3— Management Fee, Sub-Investment Advisory Fee and Other Transactions with Affiliates:
(a) Dreyfus has entered into separate management agreements with the fund and the Subsidiary pursuant to which Dreyfus receives a management fee computed at the annual rate of 1.10% of the value of the average daily net assets of each of the fund and the Subsidiary which is payable monthly. In addition, Dreyfus has contractually agreed for as long as the fund invests in the Subsidiary, to waive the management fee it receives from the fund in an amount equal to the management fee paid to Dreyfus by the Subsidiary. The reduction in expenses, pursuant to the undertaking amounted to $212,425 during the period ended October 31, 2016.
Pursuant to separate sub-investment advisory agreements between Dreyfus and Mellon Capital with respect to the fund and the Subsidiary, Dreyfus pays Mellon Capital an annual fee of .65% of the value of the average daily net assets of each of the fund and the Subsidiary which is payable monthly.
During the period ended October 31, 2016, the Distributor retained $70,400 from commissions earned on sales of the fund’s Class A shares and $80,105 from CDSCs on redemptions of the fund’s Class C shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended October 31, 2016, Class C shares were charged $1,104,098 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 2016, Class A and Class C shares were charged $606,219 and $368,033, respectively, pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Consolidated Statement of Operations.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended October 31, 2016, the fund was charged $13,592 for transfer agency services and $917 for cash management services. These fees are included in Shareholder servicing costs in the Consolidated Statement of Operations. Cash management fees were partially offset by earnings credits of $380.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended October 31, 2016, the fund was charged $90,275 pursuant to the custody agreement.
During the period ended October 31, 2016, the fund was charged $9,804 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Consolidated Statement of Assets and Liabilities consist of: management fees $1,341,551, Distribution Plan fees $84,618, Shareholder Services Plan fees $72,532, custodian fees $52,342, Chief Compliance Officer fees $5,688 and transfer agency fees $4,670.
(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.
28
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, financial and commodity futures, options transactions, forward contracts and swap transactions, during the period ended October 31, 2016, amounted to $125,205,882 and $10,411,824, respectively.
Derivatives: A derivative is a financial instrument whose performance is derived from the performance of another asset. The fund enters into International Swaps and Derivatives Association, Inc. Master Agreements or similar agreements (collectively, “Master Agreements”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under a Master Agreement, the fund may offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default or termination.
Each type of derivative instrument that was held by the fund during the period ended October 31, 2016 is discussed below.
Financial and Commodity Futures: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including equity price risk, interest rate risk and commodity risk, as a result of changes in value of underlying financial instruments. The fund invests in financial and commodity futures in order to manage its exposure to or protect against changes in the market. A futures contract represents a commitment for the future purchase or a sale of an asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a counterparty, which consist of cash or cash equivalents. The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Consolidated Statement of Operations. When the contracts are closed, the fund recognizes a realized gain or loss which is reflected in the Consolidated Statement of Operations. There is minimal counterparty credit risk to the fund with financial and commodity futures since they are exchange traded, and the exchange guarantees the financial and commodity futures against default. Financial and commodity futures open at October 31, 2016 are set forth in the Consolidated Statement of Financial and Commodity Futures.
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Options Transactions: The fund purchases and writes (sells) put and call options to hedge against changes in values of equities, interest rates or as a substitute for an investment. The fund is subject to market risk and interest rate risk in the course of pursuing its investment objectives through its investments in options contracts. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the writer to sell, the underlying financial instrument at the exercise price at any time during the option period, or at a specified date. Conversely, a put option gives the purchaser of the option the right (but not the obligation) to sell, and obligates the writer to buy the underlying financial instrument at the exercise price at any time during the option period, or at a specified date.
As a writer of call options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument increases between those dates.
As a writer of put options, the fund receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the fund realizes a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the fund incurs a loss if the price of the financial instrument decreases between those dates. The maximum payout for these contracts is limited to the number of put option contracts written and the related strike prices, respectively.
As a writer of an option, the fund has no control over whether the underlying financial instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the financial instrument underlying the written option. There is a risk of loss from a change in value of such options which may exceed the related premiums received. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The Consolidated Statement of Operations reflects any unrealized gains or losses which occurred during the period as well as any realized gains or losses which occurred upon the expiration or closing of the option transaction.
The following summarizes the fund’s call/put options written during the period ended October 31, 2016:
30
Options Terminated | ||||
Number of |
Premiums |
Net Realized | ||
Options Written: |
Contracts |
Received ($) |
Cost ($) |
(Loss) ($) |
Contracts outstanding |
||||
October 31, 2015 |
4,800 |
1,356,261 |
||
Contracts written |
24,690 |
6,744,431 |
||
Contracts terminated: |
||||
Contracts closed |
26,280 |
7,231,821 |
5,735,949 |
1,495,872 |
Contracts outstanding |
||||
October 31, 2016 |
3,210 |
868,871 |
Forward Foreign Currency Exchange Contracts: The fund enters into forward contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to settle foreign currency transactions or as a part of its investment strategy. When executing forward contracts, the fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward contracts, the fund incurs a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward contracts, the fund incurs a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The fund realizes a gain if the value of the contract increases between those dates. Any realized or unrealized gains or losses which occurred during the period are reflected in the Consolidated Statement of Operations. The fund is exposed to foreign currency risk as a result of changes in value of underlying financial instruments. The fund is also exposed to credit risk associated with counterparty nonperformance on these forward contracts, which is generally limited to the unrealized gain on each open contract. This risk may be mitigated by Master Agreements, if any, between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. The following summarizes open forward contracts at October 31, 2016:
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: |
||||
Bank of America |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
3,023,520 |
2,313,413 |
2,296,984 |
(16,429) |
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: (continued) | ||||
Bank of America (continued) | ||||
British Pound, |
||||
Expiring |
||||
12/21/2016 |
2,219,360 |
2,854,460 |
2,719,984 |
(134,476) |
Euro, |
||||
Expiring |
||||
12/21/2016 |
3,188,475 |
3,479,366 |
3,508,625 |
29,259 |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
3,219,181,110 |
31,901,124 |
30,765,078 |
(1,136,046) |
New Zealand Dollar, |
||||
Expiring |
||||
12/21/2016 |
71,317,122 |
52,020,848 |
50,900,201 |
(1,120,647) |
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
55,180,705 |
6,303,597 |
6,125,793 |
(177,804) |
BNP Paribas |
||||
Euro, |
||||
Expiring |
||||
12/21/2016 |
14,046,525 |
15,323,031 |
15,456,915 |
133,884 |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
1,585,994,890 |
15,241,246 |
15,157,040 |
(84,206) |
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
154,870,375 |
17,410,947 |
17,192,673 |
(218,274) |
Citigroup |
||||
British Pound, |
||||
Expiring |
||||
12/21/2016 |
31,300,000 |
39,019,707 |
38,360,390 |
(659,317) |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
25,014,296 |
19,022,929 |
18,656,762 |
(366,167) |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
1,764,183,600 |
17,527,354 |
16,859,954 |
(667,400) |
New Zealand Dollar, |
||||
Expiring |
||||
12/21/2016 |
8,793,000 |
6,384,069 |
6,275,708 |
(108,361) |
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
42,225,376 |
43,603,688 |
42,803,653 |
(800,035) |
32
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: (continued) | ||||
Goldman Sachs International |
||||
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
36,270,729 |
27,564,487 |
27,052,305 |
(512,182) |
New Zealand Dollar, |
||||
Expiring |
||||
12/21/2016 |
41,445,398 |
30,135,778 |
29,580,261 |
(555,517) |
Norwegian Krone, |
||||
Expiring |
||||
12/21/2016 |
235,193,958 |
28,548,846 |
28,468,837 |
(80,009) |
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
28,968 |
29,737 |
29,365 |
(372) |
HSBC |
||||
British Pound, |
||||
Expiring |
||||
12/21/2016 |
8,760,000 |
11,598,591 |
10,736,007 |
(862,584) |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
22,095,962 |
16,791,776 |
16,480,140 |
(311,636) |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
4,535,000,000 |
44,479,841 |
43,340,099 |
(1,139,742) |
New Zealand Dollar, |
||||
Expiring |
||||
12/21/2016 |
11,611,000 |
8,454,782 |
8,286,961 |
(167,821) |
Norwegian Krone, |
||||
Expiring |
||||
12/21/2016 |
279,992,783 |
34,018,721 |
33,891,470 |
(127,251) |
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
9,176,000 |
9,490,025 |
9,301,666 |
(188,359) |
Nomura Securities |
||||
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
12,407,000 |
12,759,389 |
12,576,914 |
(182,475) |
Royal Bank of Canada |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
15,873,480 |
12,143,196 |
12,059,167 |
(84,029) |
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Purchases: (continued) | ||||
Royal Bank of Canada (continued) | ||||
British Pound, |
||||
Expiring |
||||
12/21/2016 |
15,793,640 |
20,058,812 |
19,356,236 |
(702,576) |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
3,594,311,400 |
35,053,112 |
34,350,124 |
(702,988) |
New Zealand Dollar, |
||||
Expiring |
||||
12/21/2016 |
24,387,000 |
17,300,138 |
17,405,402 |
105,264 |
Norwegian Krone, |
||||
Expiring |
||||
12/21/2016 |
682,590,435 |
82,970,669 |
82,623,533 |
(347,136) |
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
342,253,920 |
39,391,512 |
37,994,740 |
(1,396,772) |
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
21,032,000 |
21,400,953 |
21,320,034 |
(80,919) |
Standard Chartered Bank |
||||
New Zealand Dollar, |
||||
Expiring |
||||
12/21/2016 |
16,552,297 |
12,080,363 |
11,813,646 |
(266,717) |
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
22,736,741 |
23,487,762 |
23,048,121 |
(439,641) |
UBS |
||||
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
12,407,000 |
12,754,509 |
12,576,914 |
(177,595) |
Sales: |
||||
Bank of America |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
22,176,700 |
16,759,043 |
16,847,757 |
(88,714) |
British Pound, |
||||
Expiring |
||||
12/21/2016 |
4,965,585 |
6,065,338 |
6,085,680 |
(20,342) |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
14,740,525 |
11,135,091 |
10,994,132 |
140,959 |
34
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
Bank of America (continued) | ||||
Euro, |
||||
Expiring |
||||
12/21/2016 |
11,280,520 |
12,653,020 |
12,413,180 |
239,840 |
Bank of Montreal |
||||
Euro, |
||||
Expiring |
||||
12/21/2016 |
101,528,280 |
114,579,232 |
111,722,582 |
2,856,650 |
BNP Paribas |
||||
British Pound, |
||||
Expiring |
||||
12/21/2016 |
21,875,415 |
26,727,819 |
26,809,886 |
(82,067) |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
28,287,835 |
21,170,994 |
21,098,311 |
72,683 |
Citigroup |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
74,146,254 |
56,289,256 |
56,329,304 |
(40,048) |
British Pound, |
||||
Expiring |
||||
12/21/2016 |
69,896,663 |
92,376,198 |
85,663,362 |
6,712,836 |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
13,189,000 |
9,949,757 |
9,836,936 |
112,821 |
Euro, |
||||
Expiring |
||||
12/21/2016 |
124,070,616 |
139,991,725 |
136,528,360 |
3,463,365 |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
842,331,289 |
8,296,712 |
8,049,994 |
246,718 |
Norwegian Krone, |
||||
Expiring |
||||
12/21/2016 |
71,396,000 |
8,825,281 |
8,642,063 |
183,218 |
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
150,640,945 |
17,760,074 |
16,723,150 |
1,036,924 |
Swiss Franc, |
||||
Expiring |
||||
12/21/2016 |
10,243,000 |
10,491,878 |
10,383,278 |
108,600 |
Credit Suisse International |
||||
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
360,548,396 |
3,554,740 |
3,445,690 |
109,050 |
35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
Goldman Sachs International |
||||
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
125,193,637 |
14,806,966 |
13,898,160 |
908,806 |
HSBC |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
17,965,000 |
13,444,467 |
13,648,106 |
(203,639) |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
23,778,000 |
18,081,786 |
17,734,678 |
347,108 |
Norwegian Krone, |
||||
Expiring |
||||
12/21/2016 |
101,978,000 |
12,376,406 |
12,343,833 |
32,573 |
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
121,009,000 |
14,326,017 |
13,433,609 |
892,408 |
Nomura Securities |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
5,382,500 |
4,093,257 |
4,089,114 |
4,143 |
British Pound, |
||||
Expiring |
||||
12/21/2016 |
57,718,595 |
76,185,566 |
70,738,268 |
5,447,298 |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
17,088,000 |
12,964,204 |
12,744,982 |
219,222 |
Euro, |
||||
Expiring |
||||
12/21/2016 |
78,932,969 |
89,095,589 |
86,858,510 |
2,237,079 |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
1,471,873,500 |
14,256,869 |
14,066,404 |
190,465 |
Royal Bank of Canada |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
21,658,000 |
16,387,526 |
16,453,698 |
(66,172) |
British Pound, |
||||
Expiring |
||||
12/21/2016 |
35,206,898 |
46,559,081 |
43,148,573 |
3,410,508 |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
80,879,640 |
61,465,110 |
60,323,592 |
1,141,518 |
36
Forward Foreign Currency Exchange Contracts |
Foreign Currency |
Cost/ |
Value ($) |
Unrealized Appreciation (Depreciation)($) |
Sales: (continued) | ||||
Royal Bank of Canada (continued) | ||||
Euro, |
||||
Expiring |
||||
12/21/2016 |
43,852,480 |
48,900,362 |
48,255,642 |
644,720 |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
149,176,961 |
1,469,188 |
1,425,655 |
43,533 |
Swedish Krona, |
||||
Expiring |
||||
12/21/2016 |
192,179,030 |
22,645,130 |
21,334,430 |
1,310,700 |
Societe Generale |
||||
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
3,154,798,839 |
31,103,673 |
30,149,789 |
953,884 |
UBS |
||||
Australian Dollar, |
||||
Expiring |
||||
12/21/2016 |
5,382,500 |
4,091,830 |
4,089,114 |
2,716 |
British Pound, |
||||
Expiring |
||||
12/21/2016 |
5,751,000 |
7,338,679 |
7,048,262 |
290,417 |
Canadian Dollar, |
||||
Expiring |
||||
12/21/2016 |
17,088,000 |
12,955,741 |
12,744,982 |
210,759 |
Japanese Yen, |
||||
Expiring |
||||
12/21/2016 |
1,471,873,500 |
14,254,508 |
14,066,404 |
188,104 |
Gross Unrealized Appreciation |
34,028,032 | |||
Gross Unrealized Depreciation |
(14,316,465) |
Swap Transactions: The fund enters into swap agreements to exchange the interest rate on, or return generated by, one nominal instrument for the return generated by another nominal instrument. Swap agreements are privately negotiated in the OTC market or centrally cleared. The fund enters into these agreements to hedge certain market or interest rate risks, to manage the interest rate sensitivity (sometimes called duration) of fixed income securities, to provide a substitute for purchasing or selling particular securities or to increase potential returns.
For OTC swaps, the fund accrues for interim payments on a daily basis, with the net amount recorded within unrealized appreciation (depreciation) on swap agreements in the Consolidated Statement of Assets and
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Liabilities. Once the interim payments are settled in cash, the net amount is recorded as a realized gain (loss) on swaps, in addition to realized gain (loss) recorded upon the termination of swap transactions in the Consolidated Statement of Operations. Upfront payments made and/or received by the fund, are recorded as an asset and/or liability in the Consolidated Statement of Assets and Liabilities and are recorded as a realized gain or loss ratably over the agreement’s term/event with the exception of forward starting interest rate swaps which are recorded as realized gains or losses on the termination date.
Fluctuations in the value of swap agreements are recorded for financial statement purposes as unrealized appreciation or depreciation on swap transactions.
Total Return Swaps: Total return swaps involve commitments to pay interest in exchange for a market-linked return based on a notional principal amount. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the specific reference entity, the fund either receives a payment from or makes a payment to the counterparty, respectively. Total return swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. This risk is mitigated by Master Agreements between the fund and the counterparty and the posting of collateral, if any, by the counterparty to the fund to cover the fund’s exposure to the counterparty. At October 31, 2016, there were no open total return swaps entered into by the fund.
The following tables show the fund’s exposure to different types of market risk as it relates to the Consolidated Statement of Assets and Liabilities and the Consolidated Statement of Operations, respectively.
38
Fair value of derivative instruments as of October 31, 2016 is shown below:
|
|
Derivative |
|
|
|
Derivative |
|
Interest rate risk |
69,896,760 |
1,2 |
Interest rate risk |
(9,836,894) |
1 | ||
Equity risk |
16,201,051 |
1,2 |
Equity risk |
(1,276,654) |
1,3 | ||
Foreign exchange risk |
34,028,032 |
4 |
Foreign exchange risk |
(14,316,465) |
4 | ||
Commodity risk |
4,070,853 |
1 |
Commodity risk |
(4,574,109) |
1 | ||
Gross fair value of |
124,196,696 |
(30,004,122) |
|||||
Consolidated Statement of Assets and Liabilities location: |
|||||||
1 |
Includes cumulative appreciation (depreciation) on financial and commodity futures as reported in the | ||||||
2 |
Options purchased are included in Investments in securities—Unaffiliated issuers, at value. | ||||||
3 |
Outstanding options written, at value. |
||||||
4 |
Unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
The effect of derivative instruments in the Consolidated Statement of Operations during the period ended October 31, 2016 is shown below:
Amount of realized gain (loss) on derivatives recognized in income ($) |
||||||||||
Underlying |
Futures |
1 |
Options |
2 |
Forward |
3 |
Swap |
4 |
Total |
|
Interest |
(25,955,174) |
38,957,118 |
- |
- |
13,001,944 |
|||||
Equity |
4,488,218 |
(28,147,055) |
- |
3,613,280 |
(20,045,557) |
|||||
Foreign |
- |
- |
35,727,868 |
- |
35,727,868 |
|||||
Commodity |
(2,092,169) |
- |
- |
- |
(2,092,169) |
|||||
Total |
(23,559,125) |
10,810,063 |
35,727,868 |
3,613,280 |
26,592,086 |
|||||
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Change in unrealized appreciation (depreciation) on derivatives recognized in income ($) |
|||||||||||
Underlying |
Futures |
5 |
Options |
6 |
Forward |
7 |
Swap |
8 |
Total |
||
Interest |
18,067,609 |
(11,425,110) |
- |
- |
6,642,499 |
||||||
Equity |
(31,518,794) |
(1,613,238) |
- |
(311,178) |
(33,443,210) |
||||||
Foreign |
- |
- |
15,499,761 |
- |
15,499,761 |
||||||
Commodity |
(503,256) |
- |
- |
- |
(503,256) |
||||||
Total |
(13,954,441) |
(13,038,348) |
15,499,761 |
(311,178) |
(11,804,206) |
||||||
Consolidated Statement of Operations location: |
|||||||||||
1 |
Net realized gain (loss) on financial and commodity futures. |
||||||||||
2 |
Net realized gain (loss) on options transactions. | ||||||||||
3 |
Net realized gain (loss) on forward foreign currency exchange contracts. |
||||||||||
4 |
Net realized gain (loss) on swap transactions. |
||||||||||
5 |
Net unrealized appreciation (depreciation) on financial and commodity futures. |
||||||||||
6 |
Net unrealized appreciation (depreciation) on options transactions. |
||||||||||
7 |
Net unrealized appreciation (depreciation) on forward foreign currency exchange contracts. |
||||||||||
8 |
Net unrealized appreciation (depreciation) on swap transactions. |
The provisions of ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities” require disclosure on the offsetting of financial assets and liabilities. These disclosures are required for certain investments, including derivative financial instruments subject to Master Agreements which are eligible for offsetting in the Consolidated Statement of Assets and Liabilities and require the fund to disclose both gross and net information with respect to such investments. For financial reporting purposes, the fund does not offset derivative assets and derivative liabilities that are subject to Master Agreements in the Consolidated Statement of Assets and Liabilities.
At October 31, 2016, derivative assets and liabilities (by type) on a gross basis are as follows:
Derivative Financial Instruments: |
|
Assets ($) |
|
Liabilities ($) |
|
Financial and Commodity futures |
35,071,634 |
(14,417,958) |
|||
Options |
55,097,030 |
(1,269,699) |
|||
Forward contracts |
34,028,032 |
(14,316,465) |
|||
Total gross amount of derivative |
|||||
assets and liabilities in the |
|||||
Consolidated Statement of Assets and Liabilities |
124,196,696 |
(30,004,122) |
|||
Derivatives not subject to |
|||||
Master Agreements |
(90,161,682) |
14,417,958 |
|||
Total gross amount of assets |
|||||
and liabilities subject to |
|||||
Master Agreements |
34,035,014 |
(15,586,164) |
40
The following tables present derivative assets and liabilities net of amounts available for offsetting under Master Agreements and net of related collateral received or pledged, if any, as of October 31, 2016:†
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Assets ($) |
1 |
for Offset ($) |
Received ($) |
2 |
Assets ($) |
Bank of America |
410,058 |
(410,058) |
- |
- | ||
Bank of Montreal |
2,856,650 |
- |
- |
2,856,650 | ||
BNP Paribas |
206,567 |
(206,567) |
- |
- | ||
Citigroup |
11,864,482 |
(2,641,328) |
- |
9,223,154 | ||
Goldman Sachs |
922,617 |
(922,617) |
- |
- | ||
HSBC |
1,272,089 |
(1,272,089) |
- |
- | ||
Morgan Stanley |
102,221 |
(102,221) |
- |
- | ||
Nomura |
8,098,207 |
(182,475) |
- |
7,915,732 | ||
Royal Bank |
6,656,243 |
(3,380,592) |
- |
3,275,651 | ||
Societe Generale |
953,884 |
- |
- |
953,884 | ||
UBS |
691,996 |
(177,595) |
- |
514,401 | ||
Total |
34,035,014 |
(9,295,542) |
- |
24,739,472 | ||
Financial |
||||||
Instruments |
||||||
and Derivatives |
||||||
Gross Amount of |
Available |
Collateral |
Net Amount of | |||
Counterparty |
Liabilities ($) |
1 |
for Offset ($) |
Pledged ($) |
2 |
Liabilities ($) |
Bank of America |
(2,694,458) |
410,058 |
- |
(2,284,400) | ||
BNP Paribas |
(384,547) |
206,567 |
- |
(177,980) | ||
Citigroup |
(2,641,328) |
2,641,328 |
- |
- | ||
Goldman Sachs |
(1,295,301) |
922,617 |
190,000 |
(182,684) | ||
HSBC |
(3,001,032) |
1,272,089 |
- |
(1,728,943) | ||
Morgan Stanley |
(1,122,478) |
102,221 |
- |
(1,020,257) | ||
Nomura |
(182,475) |
182,475 |
- |
- | ||
Royal Bank |
(3,380,592) |
3,380,592 |
- |
- | ||
Standard |
(706,358) |
- |
- |
(706,358) | ||
UBS |
(177,595) |
177,595 |
- |
- | ||
Total |
(15,586,164) |
9,295,542 |
190,000 |
(6,100,622) | ||
1 Absent a default event or early termination, OTC derivative assets and liabilities are presented at gross amounts | ||||||
2 In some instances, the actual collateral received and/or pledged may be more than the amount shown due to | ||||||
† See Consolidated Statement of Investments for detailed information regarding collateral held for open financial |
41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following summarizes the average market value of derivatives outstanding during the period ended October 31, 2016:
|
|
Average Market Value ($) |
Equity financial futures |
980,882,822 | |
Equity options contracts |
7,909,517 | |
Interest rate financial futures |
1,229,445,583 | |
Interest rate options contracts |
69,436,819 | |
Forward contracts |
1,850,059,567 | |
Commodity futures |
33,090,975 | |
The following summarizes the average notional value of swap agreements outstanding during the period ended October 31, 2016:
|
|
Average Notional Value ($) |
Equity total return swap agreements |
49,683,276 | |
At October 31, 2016, the cost of investments for federal income tax purposes was $1,335,962,283; accordingly, accumulated net unrealized appreciation on investments was $2,148,352, consisting of $6,205,217 gross unrealized appreciation and $4,056,865 gross unrealized depreciation.
NOTE 5—Pending Legal Matters:
The fund and dozens of other entities and individuals have been named as defendants in an adversary proceeding pending in the United States Bankruptcy Court for the Southern District of New York (Weisfelner, as Trustee of the LB Creditor Trust v. Fund 1, et al., Adv. Pro. No. 10-04609 the “Creditor Trust Action”). In addition, a separate adversary proceeding has been brought in the same Bankruptcy Court against a putative defendant class ( Weisfeiner, as Trustee of the LB Litigation Trust v. Hofman, at al., Adv. Pro No. 10-05525, the “Litigation Trust Action” and collectively with the Creditor Trust Action, the “Actions”). In both Actions, plaintiffs allege that payments made to shareholders of Lyondell Chemical Company (“Lyondell”) in connection with the acquisition of Lyondell by Basell AF S.C.A. in a cash-out merger on December 20, 2007 constitute “fraudulent transfers” under applicable state law, and seek to recover from the former Lyondell shareholders the merger consideration received for their shares. The Creditor Trust Action asserts claims for both intentional and constructive fraudulent transfer, while the Litigation Trust Action asserts a single claim for intentional fraudulent transfer.
On November 18, 2015, the Bankruptcy Court granted defendants’ motion to dismiss the intentional fraudulent transfer claim in both Actions, and on July 20, 2016, the Court granted defendants motion to dismiss the
42
constructive fraudulent transfer claim. In 2016, the United States District Court for the Southern District of New York reversed the Bankruptcy Court’s order dismissing the intentional fraudulent transfer claim in the Litigation Trust Action.
At this stage in the proceedings, it is not possible to assess with any reasonable certainty the probable outcome of the pending litigation. Consequently, at this time, management is unable to estimate the possible loss, if any, that may result.
43
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Dynamic Total Return Fund
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated statements of investments, financial and commodity futures and options written, of Dynamic Total Return Fund (one of the series comprising Advantage Funds, Inc.) as of October 31, 2016, and the related consolidated statement of operations for the year then ended, the consolidated statement of changes in net assets for each of the two years in the period then ended, and the consolidated financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2016 by correspondence with the custodian and others. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the consolidated financial position of Dynamic Total Return Fund at October 31, 2016, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, and the consolidated financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
New York, New York
December 29, 2016
44
BOARD MEMBERS INFORMATION (Unaudited)
INDEPENDENT BOARD MEMBERS
Chairman of the Board (1995)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1995-present)
Other Public Company Board Memberships During Past 5 Years:
· CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small and medium size companies, Director (1997-present)
No. of Portfolios for which Board Member Serves: 135
———————
Peggy C. Davis (73)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Shad Professor of Law, New York University School of Law (1983-present)
No. of Portfolios for which Board Member Serves: 49
———————
David P. Feldman (76)
Board Member (1996)
Principal Occupation During Past 5 Years:
· Corporate Director and Trustee (1985-present)
Other Public Company Board Memberships During Past 5 Years:
· BBH Mutual Funds Group (5 registered mutual funds), Director (1992-2014)
No. of Portfolios for which Board Member Serves: 35
———————
Ehud Houminer (76)
Board Member (1993)
Principal Occupation During Past 5 Years:
· Executive-in-Residence at the Columbia Business School, Columbia
University (1992-present)
Other Public Company Board Memberships During Past 5 Years:
· Avnet, Inc., an electronics distributor, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 59
———————
45
BOARD MEMBERS INFORMATION (Unaudited) (continued)
INDEPENDENT BOARD MEMBERS (continued)
Lynn Martin (76)
Board Member (2012)
Principal Occupation During Past 5 Years:
· President of The Martin Hall Group LLC, a human resources consulting firm (2005-2012)
Other Public Company Board Memberships During Past 5 Years:
· AT&T, Inc., a telecommunications company, Director (1999-2012)
· Ryder System, Inc., a supply chain and transportation management company, Director (1993-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Robin A. Melvin (53)
Board Member (2012)
Principal Occupation During Past 5 Years:
· Co-chairman, Illinois Mentoring Partnership, non-profit organization dedicated to increasing the quantity and quality of mentoring services in Illinois; (2014-present; served as a board member since 2013)
· Director, Boisi Family Foundation, a private family foundation that supports youth-serving organizations that promote the self sufficiency of youth from disadvantaged circumstances (1995-2012)
No. of Portfolios for which Board Member Serves: 107
———————
Dr. Martin Peretz (77)
Board Member (2006)
Principal Occupation During Past 5 Years:
· Editor-in-Chief Emeritus of The New Republic Magazine (2011-2012) (previously,
Editor-in-Chief, 1974-2011)
· Director of TheStreet.com, a financial information service on the web (1996-2010)
· Lecturer at Harvard University (1969-2012)
No. of Portfolios for which Board Member Serves: 35
———————
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80. The address of the Board Members and Officers is c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-DREYFUS.
James F. Henry, Emeritus Board Member
Dr. Paul A. Marks, Emeritus Board Member
Philip L. Toia, Emeritus Board Member
46
OFFICERS OF THE FUND (Unaudited)
BRADLEY J. SKAPYAK, President since January 2010.
Chief Operating Officer and a director of the Manager since June 2009, Chairman of Dreyfus Transfer, Inc., an affiliate of the Manager and the transfer agent of the funds, since May 2011 and Executive Vice President of the Distributor since June 2007. From April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of the Manager. He is an officer of 64 investment companies (comprised of 135 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since February 1988.
BENNETT A. MACDOUGALL, Chief Legal Officer since October 2015.
Chief Legal Officer of the Manager since June 2015; from June 2005 to June 2015, he served in various capacities with Deutsche Bank – Asset & Wealth Management Division, including as Director and Associate General Counsel, and Chief Legal Officer of Deutsche Investment Management Americas Inc. from June 2012 to May 2015. He is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 2015.
JANETTE E. FARRAGHER, Vice President and Secretary since December 2011.
Assistant General Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 53 years old and has been an employee of the Manager since February 1984.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon and Secretary of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 60 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since June 2000.
MAUREEN E. KANE, Vice President and Assistant Secretary since April 2015.
Managing Counsel of BNY Mellon since July 2014; from October 2004 until July 2014, General Counsel, and from May 2009 until July 2014, Chief Compliance Officer of Century Capital Management. She is an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. She is 54 years old and has been an employee of the Manager since July 2014.
SARAH S. KELLEHER, Vice President and Assistant Secretary since April 2014.
Senior Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager; from August 2005 to March 2013, Associate General Counsel of Third Avenue Management. She is 41 years old and has been an employee of the Manager since March 2013.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.
Senior Managing Counsel of BNY Mellon, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001.
Director – Mutual Fund Accounting of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1985.
RICHARD CASSARO, Assistant Treasurer since January 2008.
Senior Accounting Manager – Money Market, Municipal Bond and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 57 years old and has been an employee of the Manager since September 1982.
47
OFFICERS OF THE FUND (Unaudited) (continued)
GAVIN C. REILLY, Assistant Treasurer since December 2005.
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1991.
ROBERT S. ROBOL, Assistant Treasurer since December 2005.
Senior Accounting Manager of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 52 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer since December 2002.
Senior Accounting Manager – Fixed Income and Equity Funds of the Manager, and an officer of 65 investment companies (comprised of 160 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since November 1990.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (65 investment companies, comprised of 160 portfolios). He is 59 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
CARIDAD M. CAROSELLA, Anti-Money Laundering Compliance Officer since January 2016
Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust since January 2016; from May 2015 to December 2015, Interim Anti-Money Laundering Compliance Officer of the Dreyfus Family of Funds and BNY Mellon Funds Trust and the Distributor; from January 2012 to May 2015, AML Surveillance Officer of the Distributor and from 2007 to December 2011, Financial Processing Manager of the Distributor. She is an officer of 60 investment companies (comprised of 155 portfolios) managed by the Manager. She is 48 years old and has been an employee of the Distributor since 1997.
48
NOTES
49
Dynamic Total Return Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Mellon Capital Management
Corporation
50 Fremont Street, Suite 3900
San Francisco, CA 94105
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
Distributor
MBSC Securities Corporation
200 Park Avenue
New York, NY 10166
Ticker Symbols: |
Class A: AVGAX Class C: AVGCX Class I: AVGRX Class Y: AVGYX |
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to [email protected]
Internet Information can be viewed online or downloaded at www.dreyfus.com
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 www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (phone 1-800-SEC-0330 for information).
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.dreyfus.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
© 2016 MBSC Securities Corporation |
|
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.
Item 3. Audit Committee Financial Expert.
The Registrant's Board has determined that David P. Feldman, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). Mr. Feldman is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $163,578 in 2015 and $167,665 in 2016.
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $25,092 in 2015 and $25,720 in 2016. These services consisted of one or more of the following: (i) agreed upon procedures related to compliance with Internal Revenue Code section 817(h), (ii) security counts required by Rule 17f-2 under the Investment Company Act of 1940, as amended, (iii) advisory services as to the accounting or disclosure treatment of Registrant transactions or events and (iv) advisory services to the accounting or disclosure treatment of the actual or potential impact to the Registrant of final or proposed rules, standards or interpretations by the Securities and Exchange Commission, the Financial Accounting Standards Boards or other regulatory or standard-setting bodies.
The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 2015 and $0 in 2016.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice, and tax planning ("Tax Services") were $18,170 in 2015 and $21,060 in 2016. These services consisted of: (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments; (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held, and (iv) determination of Passive Foreign Investment Companies. The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates, which required pre-approval by the Audit Committee were $0 in 2015 and $0 in 2016.
(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $121 in 2015 and $212 in 2016. These services consisted of a review of the Registrant's anti-money laundering program.
The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee, were $0 in 2015 and $0 in 2016.
(e)(1) Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. The pre-approved services in the Policy can include pre-approved audit services, pre-approved audit-related services, pre-approved tax services and pre-approved all other services. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.
(e)(2) Note. None of the services described in paragraphs (b) through (d) of this Item 4 were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) None of the hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal account's full-time, permanent employees.
Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $19,591,507 in 2015 and $20,423,084 in 2016.
Auditor Independence. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Auditor's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Advantage Funds, Inc.
By: /s/ Bradley J. Skapyak
Bradley J. Skapyak
President
Date: December 21, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ Bradley J. Skapyak
Bradley J. Skapyak
President
Date: December 21, 2016
By: /s/ James Windels
James Windels
Treasurer
Date: December 21, 2016
EXHIBIT INDEX
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)
THE DREYFUS FAMILY OF FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE
AND SENIOR FINANCIAL OFFICERS
1. Covered Officers/Purpose of the Code
This code of ethics (the "Code") for the investment companies within the complex (each, a "Fund") applies to each Fund's Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or other persons performing similar functions, each of whom is listed on Exhibit A (the "Covered Officers"), for the purpose of promoting:
· honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
· full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (the "SEC") and in other public communications made by the Fund;
· compliance with applicable laws and governmental rules and regulations;
· the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and
· accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
2. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest
Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund.
Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. The compliance programs and procedures of the Fund and the Fund's investment adviser (the "Adviser") are designed to prevent, or identify and correct, violations of these provisions. The Code does not, and is not intended to, repeat or replace these programs and procedures, and the circumstances they cover fall outside of the parameters of the Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the Adviser of which the Covered Officers are also officers or employees. As a result, the Code recognizes that the Covered Officers, in the ordinary course of their duties (whether formally for the Fund or for the Adviser, or for both), will be involved in establishing policies and implementing decisions that will have different effects on the Adviser and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund and, if addressed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, will be deemed to have been handled ethically. In addition, it is recognized by the Fund's Board that the Covered Officers also may be officers or employees of one or more other investment companies covered by this or other codes of ethics.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. Covered Officers should keep in mind that the Code cannot enumerate every possible scenario. The overarching principle of the Code is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund.
Each Covered Officer must:
· not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;
· not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; and
· not retaliate against any employee or Covered Officer for reports of potential violations that are made in good faith.
3. Disclosure and Compliance
· Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the Fund within his area of responsibility;
· each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Board members and auditors, and to governmental regulators and self-regulatory organizations;
· each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Fund and the Adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and
· it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.
4. Reporting and Accountability
Each Covered Officer must:
· upon adoption of the Code (or thereafter, as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he has received, read, and understands the Code;
· annually thereafter affirm to the Board that he has complied with the requirements of the Code; and
· notify the Adviser's General Counsel (the "General Counsel") promptly if he knows of any violation of the Code. Failure to do so is itself a violation of the Code.
The General Counsel is responsible for applying the Code to specific situations in which questions are presented under it and has the authority to interpret the Code in any particular situation. However, waivers sought by any Covered Officer will be considered by the Fund's Board.
The Fund will follow these procedures in investigating and enforcing the Code:
· the General Counsel will take all appropriate action to investigate any potential violations reported to him;
· if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action;
· any matter that the General Counsel believes is a violation will be reported to the Board;
· if the Board concurs that a violation has occurred, it will consider appropriate action, which may include: review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Adviser or its board; or dismissal of the Covered Officer;
· the Board will be responsible for granting waivers, as appropriate; and
· any waivers of or amendments to the Code, to the extent required, will be disclosed as provided by SEC rules.
5. Other Policies and Procedures
The Code shall be the sole code of ethics adopted by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. The Fund's, its principal underwriter's and the Adviser's codes of ethics under Rule 17j-1 under the Investment Company Act and the Adviser's additional policies and procedures, including its Code of Conduct, are separate requirements applying to the Covered Officers and others, and are not part of the Code.
6. Amendments
The Code may not be amended except in written form, which is specifically approved or ratified by a majority vote of the Fund's Board, including a majority of independent Board members.
7. Confidentiality
All reports and records prepared or maintained pursuant to the Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or the Code, such matters shall not be disclosed to anyone other than the appropriate Funds and their counsel, the appropriate Boards (or Committees) and their counsel and the Adviser.
8. Internal Use
The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact, circumstance, or legal conclusion.
Dated as of: July 1, 2003
Exhibit A
Persons Covered by the Code of Ethics
Bradley J. Skapyak |
President |
(Principal Executive Officer) |
|
|
|
James Windels |
Treasurer |
(Principal Financial and Accounting Officer) |
Revised as of: January 1, 2010
[EX-99.CERT]—Exhibit (a)(2)
SECTION 302 CERTIFICATION
I, Bradley J. Skapyak, certify that:
1. I have reviewed this report on Form N-CSR of Advantage Funds, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
By: /s/ Bradley J. Skapyak
Bradley J. Skapyak
President
Date: December 21, 2016
SECTION 302 CERTIFICATION
I, James Windels, certify that:
1. I have reviewed this report on Form N-CSR of Advantage Funds, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
By: /s/ James Windels
James Windels
Treasurer
Date: December 21, 2016
[EX-99.906CERT]
Exhibit (b)
SECTION 906 CERTIFICATIONS
In connection with this report on Form N-CSR for the Registrant as furnished to the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
By: /s/ Bradley J. Skapyak
Bradley J. Skapyak
President
Date: December 21, 2016
By: /s/ James Windels
James Windels
Treasurer
Date: December 21, 2016
This certificate is furnished pursuant to the requirements of Form N-CSR and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Bank of New York Mellon (BK) PT Raised to $64 at Wells Fargo
- Peabody Announcement Regarding Reducing Slate of Directors Standing for Re-Election
- DWS Municipal Income Trust Announces Termination and Liquidating Distribution to Shareholders and Distribution Rate Increase
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!