DISCUSSION OF FUND PERFORMANCE
For the period of January 1, 2012, through December 31, 2012, as provided by B. Randall Watts, Jr., CFA, and Robert C. Zeuthen, CFA, Primary Portfolio Managers
Fund and Market Performance Overview
For the 12-month period ended December 31, 2012, Dreyfus Mid-Cap Growth Fund’s Class A shares produced a total return of 12.85%, Class C shares returned 11.98%, Class F shares returned 13.00% and Class I shares returned 13.24%.
1
In comparison, the fund’s benchmark, the Russell Midcap Growth Index, produced a total return of 15.81% for the same period.
2
Despite periodic bouts of heightened volatility, midcap stocks generally advanced during 2012 as global and domestic economic conditions improved. The fund produced lower returns than its benchmark, mainly due to shortfalls in the financials, health care and consumer staples sectors.
The Fund’s Investment Approach
The fund seeks capital appreciation.The fund will normally invest at least 80% of its net assets in equity securities of companies within the market capitalization range of companies comprising the Russell Midcap Growth Index.The fund also may invest in larger or smaller companies if they represent better prospects for capital appreciation. We look for companies whose fundamental strengths suggest the potential for superior earnings growth over time.We go beyond Wall Street analysis and perform intensive qualitative and quantitative in-house research to determine whether companies meet our investment criteria.
Improving Economic Conditions Fueled Market Gains
Several positive macroeconomic developments drove stocks of all capitalization ranges higher during 2012. In the first quarter of the year, corporate earnings reports strengthened, domestic employment increased, a quantitative easing program in Europe forestalled a more severe regional banking crisis, and inflation-fighting efforts in China appeared to be effective. However, investor sentiment turned cautious during the spring, when the U.S. labor market’s rebound slowed and measures designed to relieve fiscal pressures in Europe encountered political resistance.
The Fund
3
DISCUSSION OF FUND PERFORMANCE
(continued)
Stocks rebounded over the summer amid more encouraging economic news, including a resumption of declines in the U.S. unemployment rate.The market lost ground again in November when a contentious political debate intensified regarding automatic tax hikes and spending cuts scheduled for the start of 2013. Nevertheless, continued corporate earnings strength and signs of an improving U.S. housing market enabled stocks to resume their rally, and the Russell Midcap Growth Index ended the year with double-digit gains. However, midcap stocks trailed their large- and small-cap counterparts, on average, during the year.
Security Selections Bolstered Fund Results
Although the fund participated to a significant degree in the benchmark’s gains in 2012, its relative performance was hindered by our security selection strategy in the financials sector. Among commercial banks, Wisconsin-based
Associated Banc-Corp
and Texas-based Prosperity Bancshares encountered net interest margin pressures in a low interest rate environment.The fund’s underweighted exposure to real estate investment trusts (REITs) prevented it from benefiting more fully from their above-average gains. In the health care sector, diagnostic imaging specialist Hologic reported disappointing revenue growth in its mammography business. The fund’s results in the consumer staples sector were undermined by energy drinks producer
Monster Beverage
, which missed earnings estimates due to weaker demand from consumers in international end markets. Finally, the fund’s lack of holdings in the telecommunications services sector weighed on its relative performance.
The fund achieved better relative results in other areas. Returns from the consumer discretionary sector were buoyed by apparel seller Urban Outfitters, which benefited from the success of new merchandising and e-commerce programs. Entertainment media distributor
Netflix
rallied when it reported better-than-expected results stemming from lower operating costs and strength in its U.S. streaming video subscription service. Accessories retailer
Michael Kors Holdings
gained value when consumers responded positively to its product lines, especially watches. Among industrial companies, electrical components manufacturer
Thomas & Betts
was acquired by a former rival at a substantial premium to its stock price at the time, and electromechanical devices maker AMETEK posted record operating margins due to a strong product mix, favorable pricing and cost reductions.
4
Equity Markets May Encounter Volatility
As we enter 2013, the fiscal cliff deal reached just after year-end delays the decision on the sequestration (regarding the debt ceiling), instead of removing it completely, as was proposed by the Obama administration in the cliff negotiations. Ultimately, the decision on the fate of spending austerity in 2013 is now tied closely to the debt ceiling deadline. Spending concerns could persist in the first half of the year as the risk of above-expected austerity in 2013 increases. However, as the fiscal situation is addressed, it is likely that pent-up demand will be released, driving up capital investment and job creation.We should also see improved valuations, and on a longer-term basis (2-3+ years), we believe multiples could expand once the market believes U.S. corporate earnings can grow steadily due to a truly sustainable fiscal path. This would likely be accompanied by money leaving the Treasury market.
As always, we continue to utilize a long-term view and remain focused on the strategy’s disciplined research-driven investment approach.
January 15, 2013
Please note, the position in any security highlighted with italicized typeface was sold during the reporting period. Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Midsize companies carry additional risks because their earnings and revenues tend to be less predictable and their share prices more volatile than those of larger, more established companies.The shares of midsize companies tend to trade less frequently than those of larger, more established companies.
|
1 Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the
|
maximum initial sales charges in the case of Class A 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 and investment return fluctuate such that upon redemption,
|
fund shares may be worth more or less than their original cost.
|
2 SOURCE: LIPPER INC. — The Russell Midcap Growth Index measures the performance of the 800 smallest
|
companies in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values.The total
|
return figure cited for this index assumes change in security prices and reinvestment of dividends, but does not reflect
|
the costs of managing a mutual fund.The Russell 1000 Index measures the performance of the largest 1,000
|
publicly traded U.S. companies. Investors cannot invest directly in any index.
|
The Fund
5
FUND PERFORMANCE
†
Source: Lipper Inc.
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 F and Class I shares of Dreyfus Mid-Cap Growth Fund on 12/31/02 to a $10,000 investment made in the Russell Midcap Growth 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 (after any expense reimbursements).The Index measures the performance of those companies among the 800 smallest companies in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values.The Russell 1000 Index measures the performance of the largest 1,000 publicly traded U.S. companies. Unlike a mutual fund, the Index is not subject to charges, fees and other expenses. Investors cannot invest directly in any index. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
6
|
|
|
|
|
|
|
Average Annual Total Returns
as of 12/31/12
|
|
|
|
|
|
|
|
|
1
|
Year
|
5 Years
|
|
10 Years
|
|
Class A shares
|
|
|
|
|
|
|
with maximum sales charge (5.75%)
|
6.42
|
%
|
–2.16
|
%
|
8.54
|
%
|
without sales charge
|
12.85
|
%
|
–1.01
|
%
|
9.20
|
%
|
Class C shares
|
|
|
|
|
|
|
with applicable redemption charge
†
|
10.98
|
%
|
–1.78
|
%
|
8.34
|
%
|
without redemption
|
11.98
|
%
|
–1.78
|
%
|
8.34
|
%
|
Class F shares
|
13.00
|
%
|
–0.82
|
%
|
9.38
|
%
|
Class I shares
|
13.24
|
%
|
–0.73
|
%
|
9.40
|
%
|
Russell Midcap Growth Index
|
15.81
|
%
|
3.23
|
%
|
10.32
|
%
|
Past performance is not predictive of future performance.The fund’s performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
|
† The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the
|
date of purchase.
|
The Fund
7
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 Mid-Cap Growth Fund from July 1, 2012 to December 31, 2012. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
Class C
|
|
Class F
|
|
Class I
|
Expenses paid per $1,000
†
|
$
|
7.65
|
$
|
11.53
|
$
|
6.38
|
$
|
6.02
|
Ending value (after expenses)
|
$
|
1,043.70
|
$
|
1,039.00
|
$
|
1,045.80
|
$
|
1,045.80
|
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 December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
Class C
|
|
Class F
|
|
Class I
|
Expenses paid per $1,000
†
|
$
|
7.56
|
$
|
11.39
|
$
|
6.29
|
$
|
5.94
|
Ending value (after expenses)
|
$
|
1,017.65
|
$
|
1,013.83
|
$
|
1,018.90
|
$
|
1,019.25
|
|
† Expenses are equal to the fund’s annualized expense ratio of 1.49% for Class A, 2.25% for Class C, 1.24% for
|
Class F and 1.17% for Class I, multiplied by the average account value over the period, multiplied by 184/366 (to
|
reflect the one-half year period).
|
8
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2012
|
|
|
|
|
Cost
|
Value
|
|
Assets ($):
|
|
|
|
Investments in securities—See Statement of Investments (including
|
|
|
|
securities on loan, valued at $3,028,749)—Note 1(b):
|
|
|
|
Unaffiliated issuers
|
107,071,629
|
117,148,051
|
|
Affiliated issuers
|
6,597,080
|
6,597,080
|
|
Receivable for investment securities sold
|
|
643,549
|
|
Dividends and securities lending income receivable
|
|
33,545
|
|
Receivable for shares of Common Stock subscribed
|
|
376
|
|
Prepaid expenses
|
|
27,581
|
|
|
|
124,450,182
|
|
Liabilities ($):
|
|
|
|
Due to The Dreyfus Corporation and affiliates—Note 3(c)
|
|
162,335
|
|
Cash overdraft due to Custodian
|
|
1,768
|
|
Liability for securities on loan—Note 1(b)
|
|
3,052,087
|
|
Payable for shares of Common Stock redeemed
|
|
386,237
|
|
Interest payable—Note 2
|
|
72
|
|
Accrued expenses
|
|
84,659
|
|
|
|
3,687,158
|
|
Net Assets ($)
|
|
120,763,024
|
|
Composition of Net Assets ($):
|
|
|
|
Paid-in capital
|
|
148,353,121
|
|
Accumulated undistributed Investment income—net
|
|
11,268
|
|
Accumulated net realized gain (loss) on investments
|
|
(37,677,787
|
)
|
Accumulated net unrealized appreciation
|
|
|
|
(depreciation) on investments
|
|
10,076,422
|
|
Net Assets ($)
|
|
120,763,024
|
|
|
|
|
|
|
Net Asset Value Per Share
|
|
|
|
|
|
Class A
|
Class C
|
Class F
|
Class I
|
Net Assets ($)
|
21,511,163
|
9,762,346
|
81,291,336
|
8,198,179
|
Shares Outstanding
|
3,604,971
|
1,831,539
|
13,169,724
|
1,331,405
|
Net Asset Value Per Share ($)
|
5.97
|
5.33
|
6.17
|
6.16
|
|
See notes to financial statements.
|
|
|
|
|
The Fund
13
STATEMENT OF OPERATIONS
Year Ended December 31, 2012
|
|
|
Investment Income ($):
|
|
|
Income:
|
|
|
Cash dividends (net of $1,376 foreign taxes withheld at source):
|
|
|
Unaffiliated issuers
|
1,383,532
|
|
Affiliated issuers
|
3,483
|
|
Income from securities lending—Note 1(b)
|
15,223
|
|
Total Income
|
1,402,238
|
|
Expenses:
|
|
|
Investment advisory fee—Note 3(a)
|
1,034,104
|
|
Shareholder servicing costs—Note 3(c)
|
300,714
|
|
Distribution fees—Note 3(b)
|
174,109
|
|
Accounting and administration fees—Note 3(c)
|
76,734
|
|
Professional fees
|
67,583
|
|
Registration fees
|
67,576
|
|
Prospectus and shareholders’ reports
|
44,519
|
|
Custodian fees—Note 3(c)
|
16,979
|
|
Directors’ fees and expenses—Note 3(d)
|
7,864
|
|
Interest expense—Note 2
|
72
|
|
Miscellaneous
|
24,167
|
|
Total Expenses
|
1,814,421
|
|
Less—reduction in expenses due to undertaking—Note 3(a)
|
(12,923
|
)
|
Less—reduction in fees due to earnings credits—Note 3(c)
|
(527
|
)
|
Net Expenses
|
1,800,971
|
|
Investment (Loss)—Net
|
(398,733
|
)
|
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($):
|
|
|
Net realized gain (loss) on investments
|
16,532,945
|
|
Net unrealized appreciation (depreciation) on investments
|
(375,081
|
)
|
Net Realized and Unrealized Gain (Loss) on Investments
|
16,157,864
|
|
Net Increase in Net Assets Resulting from Operations
|
15,759,131
|
|
|
See notes to financial statements.
|
|
|
14
STATEMENT OF CHANGES IN NET ASSETS
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2012
|
a
|
2011
|
|
Operations ($):
|
|
|
|
|
Investment (loss)–net
|
(398,733
|
)
|
(956,983
|
)
|
Net realized gain (loss) on investments
|
16,532,945
|
|
13,536,164
|
|
Net unrealized appreciation
|
|
|
|
|
(depreciation) on investments
|
(375,081
|
)
|
(12,390,087
|
)
|
Net Increase (Decrease) in Net Assets
|
|
|
|
|
Resulting from Operations
|
15,759,131
|
|
189,094
|
|
Capital Stock Transactions ($):
|
|
|
|
|
Net proceeds from shares sold:
|
|
|
|
|
Class A Shares
|
6,543,822
|
|
10,131,645
|
|
Class B Shares
|
389
|
|
58,449
|
|
Class C Shares
|
920,058
|
|
1,201,370
|
|
Class F Shares
|
956,428
|
|
3,038,977
|
|
Class I Shares
|
6,591,823
|
|
3,068,456
|
|
Cost of shares redeemed:
|
|
|
|
|
Class A Shares
|
(15,711,699
|
)
|
(20,995,579
|
)
|
Class B Shares
|
(226,579
|
)
|
(335,578
|
)
|
Class C Shares
|
(2,837,887
|
)
|
(3,327,201
|
)
|
Class F Shares
|
(12,057,719
|
)
|
(11,216,710
|
)
|
Class I Shares
|
(3,584,634
|
)
|
(6,042,331
|
)
|
Increase (Decrease) in Net Assets
|
|
|
|
|
from Capital Stock Transactions
|
(19,405,998
|
)
|
(24,418,502
|
)
|
Total Increase (Decrease) in Net Assets
|
(3,646,867
|
)
|
(24,229,408
|
)
|
Net Assets ($):
|
|
|
|
|
Beginning of Period
|
124,409,891
|
|
148,639,299
|
|
End of Period
|
120,763,024
|
|
124,409,891
|
|
Undistributed investment income–net
|
11,268
|
|
10,266
|
|
The Fund
15
STATEMENT OF CHANGES IN NET ASSETS
(continued)
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2012
|
a
|
2011
|
|
Capital Share Transactions:
|
|
|
|
|
Class A
b
|
|
|
|
|
Shares sold
|
1,123,342
|
|
1,880,560
|
|
Shares redeemed
|
(2,687,550
|
)
|
(3,919,408
|
)
|
Net Increase (Decrease) in Shares Outstanding
|
(1,564,208
|
)
|
(2,038,848
|
)
|
Class B
b
|
|
|
|
|
Shares sold
|
73
|
|
11,593
|
|
Shares redeemed
|
(42,249
|
)
|
(67,775
|
)
|
Net Increase (Decrease) in Shares Outstanding
|
(42,176
|
)
|
(56,182
|
)
|
Class C
|
|
|
|
|
Shares sold
|
175,031
|
|
244,835
|
|
Shares redeemed
|
(546,064
|
)
|
(684,847
|
)
|
Net Increase (Decrease) in Shares Outstanding
|
(371,033
|
)
|
(440,012
|
)
|
Class F
|
|
|
|
|
Shares sold
|
158,808
|
|
542,424
|
|
Shares redeemed
|
(1,994,780
|
)
|
(2,028,761
|
)
|
Net Increase (Decrease) in Shares Outstanding
|
(1,835,972
|
)
|
(1,486,337
|
)
|
Class I
|
|
|
|
|
Shares sold
|
1,094,318
|
|
555,073
|
|
Shares redeemed
|
(594,243
|
)
|
(1,120,660
|
)
|
Net Increase (Decrease) in Shares Outstanding
|
500,075
|
|
(565,587
|
)
|
|
a Effective as of the close of business on March 13, 2012, the fund no longer offers Class B shares.
|
b During the period ended December 31, 2012, 11,580 Class B shares representing $61,979 were automatically
|
converted to10,519 Class A shares and during the period ended December 31, 2011, 8,784 Class B shares
|
representing $43,255 were automatically converted to 8,016 Class A shares.
|
See notes to financial statements.
16
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated.All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
Class A Shares
|
2012
|
|
2011
|
|
2010
|
|
2009
|
†
|
2008
|
|
Per Share Data ($):
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
5.29
|
|
5.29
|
|
4.00
|
|
3.17
|
|
6.28
|
|
Investment Operations:
|
|
|
|
|
|
|
|
|
|
|
Investment (loss)—net
a
|
(.02
|
)
|
(.04
|
)
|
(.02
|
)
|
(.03
|
)
|
(.05
|
)
|
Net realized and unrealized
|
|
|
|
|
|
|
|
|
|
|
gain (loss) on investments
|
.70
|
|
.04
|
|
1.31
|
|
.86
|
|
(3.06
|
)
|
Total from Investment Operations
|
.68
|
|
—
|
|
1.29
|
|
.83
|
|
(3.11
|
)
|
Net asset value, end of period
|
5.97
|
|
5.29
|
|
5.29
|
|
4.00
|
|
3.17
|
|
Total Return (%)
b
|
12.85
|
|
.00
|
c
|
32.25
|
|
26.18
|
|
(49.52
|
)
|
Ratios/Supplemental Data (%):
|
|
|
|
|
|
|
|
|
|
|
Ratio of total expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
1.53
|
|
1.51
|
|
1.56
|
|
1.77
|
|
1.45
|
|
Ratio of net expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
1.50
|
|
1.37
|
|
1.36
|
|
1.75
|
|
1.45
|
|
Ratio of net investment (loss)
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
(.42
|
)
|
(.74
|
)
|
(.55
|
)
|
(.86
|
)
|
(.89
|
)
|
Portfolio Turnover Rate
|
164.34
|
|
232.19
|
|
204.97
|
|
59.66
|
|
119
|
|
Net Assets, end of period ($ x 1,000)
|
21,511
|
|
27,324
|
|
38,099
|
|
23,448
|
|
29,525
|
|
|
† Effective September 1, 2009,The Dreyfus Corporation replaced Founders Asset Management LLC as the fund’s
|
investment adviser.
|
a Based on average shares outstanding at each month end.
|
b Exclusive of sales charge.
|
c Amount represents less than .01 %.
|
See notes to financial statements.
The Fund
17
FINANCIAL HIGHLIGHTS
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
Class C Shares
|
2012
|
|
2011
|
|
2010
|
|
2009
|
†
|
2008
|
|
Per Share Data ($):
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
4.76
|
|
4.79
|
|
3.66
|
|
2.92
|
|
5.83
|
|
Investment Operations:
|
|
|
|
|
|
|
|
|
|
|
Investment (loss)—net
a
|
(.06
|
)
|
(.07
|
)
|
(.05
|
)
|
(.05
|
)
|
(.08
|
)
|
Net realized and unrealized
|
|
|
|
|
|
|
|
|
|
|
gain (loss) on investments
|
.63
|
|
.04
|
|
1.18
|
|
.79
|
|
(2.83
|
)
|
Total from Investment Operations
|
.57
|
|
(.03
|
)
|
1.13
|
|
.74
|
|
(2.91
|
)
|
Net asset value, end of period
|
5.33
|
|
4.76
|
|
4.79
|
|
3.66
|
|
2.92
|
|
Total Return (%)
b
|
11.98
|
|
(.63
|
)
|
30.87
|
|
25.34
|
|
(49.91
|
)
|
Ratios/Supplemental Data (%):
|
|
|
|
|
|
|
|
|
|
|
Ratio of total expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
2.27
|
|
2.25
|
|
2.36
|
|
2.61
|
|
2.20
|
|
Ratio of net expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
2.24
|
|
2.12
|
|
2.14
|
|
2.60
|
|
2.19
|
|
Ratio of net investment (loss)
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
(1.16
|
)
|
(1.49
|
)
|
(1.34
|
)
|
(1.70
|
)
|
(1.66
|
)
|
Portfolio Turnover Rate
|
164.34
|
|
232.19
|
|
204.97
|
|
59.66
|
|
119
|
|
Net Assets, end of period ($ x 1,000)
|
9,762
|
|
10,477
|
|
12,661
|
|
11,678
|
|
14,033
|
|
|
† Effective September 1, 2009,The Dreyfus Corporation replaced Founders Asset Management LLC as the fund’s
|
investment adviser.
|
a Based on average shares outstanding at each month end.
|
b Exclusive of sales charge.
|
See notes to financial statements.
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
Class F Shares
|
2012
|
|
2011
|
|
2010
|
|
2009
|
†
|
2008
|
|
Per Share Data ($):
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
5.46
|
|
5.45
|
|
4.12
|
|
3.26
|
|
6.43
|
|
Investment Operations:
|
|
|
|
|
|
|
|
|
|
|
Investment (loss)—net
a
|
(.01
|
)
|
(.03
|
)
|
(.02
|
)
|
(.02
|
)
|
(.04
|
)
|
Net realized and unrealized
|
|
|
|
|
|
|
|
|
|
|
gain (loss) on investments
|
.72
|
|
.04
|
|
1.35
|
|
.88
|
|
(3.13
|
)
|
Total from Investment Operations
|
.71
|
|
.01
|
|
1.33
|
|
.86
|
|
(3.17
|
)
|
Distributions:
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
6.17
|
|
5.46
|
|
5.45
|
|
4.12
|
|
3.26
|
|
Total Return (%)
|
13.00
|
|
.18
|
|
32.28
|
|
26.38
|
|
(49.30
|
)
|
Ratios/Supplemental Data (%):
|
|
|
|
|
|
|
|
|
|
|
Ratio of total expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
1.30
|
|
1.25
|
|
1.32
|
|
1.38
|
|
1.23
|
|
Ratio of net expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
1.30
|
|
1.20
|
|
1.30
|
|
1.36
|
|
1.22
|
|
Ratio of net investment (loss)
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
(.20
|
)
|
(.57
|
)
|
(.50
|
)
|
(.47
|
)
|
(.68
|
)
|
Portfolio Turnover Rate
|
164.34
|
|
232.19
|
|
204.97
|
|
59.66
|
|
119
|
|
Net Assets, end of period ($ x 1,000)
|
81,291
|
|
81,886
|
|
89,828
|
|
78,218
|
|
75,224
|
|
|
|
†
|
Effective September 1, 2009,The Dreyfus Corporation replaced Founders Asset Management LLC as the fund’s
|
|
investment adviser.
|
a
|
Based on average shares outstanding at each month end.
|
See notes to financial statements.
The Fund
19
FINANCIAL HIGHLIGHTS
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
Class I Shares
|
2012
|
|
2011
|
|
2010
|
|
2009
|
†
|
2008
|
|
Per Share Data ($):
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
5.44
|
|
5.42
|
|
4.10
|
|
3.24
|
|
6.39
|
|
Investment Operations:
|
|
|
|
|
|
|
|
|
|
|
Investment income (loss)—net
a
|
.00
|
b
|
(.03
|
)
|
(.02
|
)
|
(.02
|
)
|
(.03
|
)
|
Net realized and unrealized
|
|
|
|
|
|
|
|
|
|
|
gain (loss) on investments
|
.72
|
|
.05
|
|
1.34
|
|
.88
|
|
(3.12
|
)
|
Total from Investment Operations
|
.72
|
|
.02
|
|
1.32
|
|
.86
|
|
(3.15
|
)
|
Net asset value, end of period
|
6.16
|
|
5.44
|
|
5.42
|
|
4.10
|
|
3.24
|
|
Total Return (%)
|
13.24
|
|
.37
|
|
32.20
|
|
26.54
|
|
(49.30
|
)
|
Ratios/Supplemental Data (%):
|
|
|
|
|
|
|
|
|
|
|
Ratio of total expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
1.20
|
|
1.23
|
|
1.34
|
|
1.49
|
|
1.20
|
|
Ratio of net expenses
|
|
|
|
|
|
|
|
|
|
|
to average net assets
|
1.18
|
|
1.10
|
|
1.14
|
|
1.47
|
|
1.19
|
|
Ratio of net investment income
|
|
|
|
|
|
|
|
|
|
|
(loss) to average net assets
|
.00
|
c
|
(.46
|
)
|
(.33
|
)
|
(.58
|
)
|
(.65
|
)
|
Portfolio Turnover Rate
|
164.34
|
|
232.19
|
|
204.97
|
|
59.66
|
|
119
|
|
Net Assets, end of period ($ x 1,000)
|
8,198
|
|
4,521
|
|
7,575
|
|
4,098
|
|
3,849
|
|
|
† Effective September 1, 2009,The Dreyfus Corporation replaced Founders Asset Management LLC as the fund’s
|
investment adviser.
|
a Based on average shares outstanding at each month end.
|
b Amount represents less than $.01 per share.
|
c Amount represents less than .01%.
|
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Mid-Cap Growth Fund (the “fund”) is the sole series of Dreyfus Funds, Inc. (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as diversified open-end management investment company.The fund’s investment objective is to seek capital appreciation. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary ofThe Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares.The fund is authorized to issue 1.05 billion shares of $.001 par value Common Stock. The fund currently offers four classes of shares: ClassA (350 million shares authorized), Class C (100 million shares authorized), Class F (500 million shares authorized) and Class I (100 million shares authorized). Class A shares are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class F and Class I shares are sold at net asset value per share. Class F shares are sold only to Class F grandfathered investors, and Class I shares are sold only to institutional investors. The Company’s Board of Directors (the “Board”) approved, effective as of the close of business on March 13, 2012, the transfer of shares authorized from Class B to Class A. Class B shares were subject to a CDSC imposed on Class B share redemptions made within six years of purchase and automatically converted to Class A shares after six years.The fund no longer offers Class B shares. Effective March 13, 2012, all outstanding Class B shares were automatically converted to Class A shares. 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
The Fund
21
NOTES TO FINANCIAL STATEMENTS
(continued)
charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
(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 pri-oritizes 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).
22
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are categorized within Level 1 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant 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
The Fund
23
NOTES TO FINANCIAL STATEMENTS
(continued)
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 depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are categorized within Level 3 of the fair value hierarchy.
The following is a summary of the inputs used as of December 31, 2012 in valuing the fund’s investments:
|
|
|
|
|
|
|
Level 2—Other
|
Level 3—
|
|
|
Level 1—
|
Significant
|
Significant
|
|
|
Unadjusted
|
Observable
|
Unobservable
|
|
|
Quoted Prices
|
Inputs
|
Inputs
|
Total
|
Assets ($)
|
|
|
|
|
Investments in Securities:
|
|
|
|
Equity Securities—
|
|
|
|
|
Domestic
|
|
|
|
|
Common Stocks
†
|
115,514,623
|
—
|
—
|
115,514,623
|
Exchange-Traded
|
|
|
|
|
Funds
|
1,633,428
|
—
|
—
|
1,633,428
|
Mutual Funds
|
6,597,080
|
—
|
—
|
6,597,080
|
|
† See Statement of Investments for additional detailed categorizations.
|
|
At December 31, 2012, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(b) Securities transactions and investment income:
Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least
24
102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Manager, U.S. Government and Agency securities or letters of credit.The fund is entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund bears the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner. During the period ended December 31, 2012, The Bank of New York Mellon earned $6,524 from lending portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers:
Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act. Investments in affiliated investment companies for the period ended December 31, 2012 were as follows:
|
|
|
|
|
|
|
|
Affiliated
|
|
|
|
|
|
|
|
Investment
|
Value
|
|
|
|
Value
|
|
Net
|
Company
|
12/31/2011
|
($)
|
Purchases ($)
|
Sales ($)
|
12/31/2012
|
($)
|
Assets (%)
|
Dreyfus
|
|
|
|
|
|
|
|
Institutional
|
|
|
|
|
|
|
|
Preferred
|
|
|
|
|
|
|
|
Plus Money
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
Fund
|
3,286,006
|
|
80,246,391
|
79,987,404
|
3,544,993
|
|
3.0
|
Dreyfus
|
|
|
|
|
|
|
|
Institutional
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
Advantage
|
|
|
|
|
|
|
|
Fund
|
4,940,106
|
|
65,116,812
|
67,004,831
|
3,052,087
|
|
2.5
|
Total
|
8,226,112
|
|
145,363,203
|
146,992,235
|
6,597,080
|
|
5.5
|
(d) Dividends to shareholders:
Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code
The Fund
25
NOTES TO FINANCIAL STATEMENTS
(continued)
of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(e) Federal income taxes:
It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended December 31, 2012, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the four-year period ended December 31, 2012 remains subject to examination by the Internal Revenue Service and state taxing authorities.
At December 31, 2012, the components of accumulated earnings on a tax basis were as follows: accumulated capital losses $37,494,666 and unrealized appreciation $9,904,569.
Under the Regulated Investment Company Modernization Act of 2010 (the “2010 Act”), the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) for an unlimited period. Furthermore, post-enactment capital loss carryovers retain their character as either short-term or long-term capital losses rather than short-term as they were under previous statute.The 2010 Act requires post-enactment losses to be utilized before the utilization of losses incurred in taxable years prior to the effective date of the 2010 Act (“pre-enactment losses”).As a result of this ordering rule, pre-enactment losses may be more likely to expire unused.
26
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 December 31, 2012. If not applied, the carryover expires in fiscal year 2017.
During the period ended December 31, 2012, as a result of permanent book to tax differences, primarily due to the tax treatment for net operating losses, real estate investment trusts and limited partnerships, the fund increased accumulated undistributed investment income-net by $399,735, increased accumulated net realized gain (loss) on investments by $101,922 and decreased paid-in capital by $501,657. 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 $210 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Prior to October 10, 2012, the unsecured credit facility with Citibank, N.A. was $225 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 December 31, 2012 was approximately $6,300 with a related weighted average annualized interest rate of 1.15%.
NOTE 3—Investment Advisory Fee and Other Transactions With Affiliates:
(a)
Pursuant to an investment advisory agreement with the Manager, the investment advisory fee is based on the fund’s average daily net assets and is computed at the following annual rates: 1% of the first $30
The Fund
27
NOTES TO FINANCIAL STATEMENTS
(continued)
million, .75% of the next $270 million, .70% of the next $200 million, and .65% in excess of $500 million.The fee is payable monthly.
The Manager had agreed to waive receipt of its fees and/or assume the expenses of the fund, from January 1, 2012 through February 29, 2012, so that the annual direct expenses of the fund (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) did not exceed an annual rate of 1.15% of the value of the fund’s average daily net assets.The reduction in expenses, pursuant to the undertaking, amounted to $12,923 during the period ended December 31, 2012.
During the period ended December 31, 2012, the Distributor retained $2,165 from commissions earned on sales of the fund’s Class A shares and $592 from CDSCs on redemptions of Class C shares.
(b)
Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class B shares paid and Class C shares pay the Distributor for distributing their shares at an annual rate of .75% of the value of the average daily net assets of Class B and Class C shares. During the period ended December 31, 2012, Class B and Class C shares were charged $244 and $76,617, respectively, pursuant to the Class B and Class C Distribution Plan.
The fund also adopted a Distribution Plan pursuant to Rule 12b-1 under the Act applicable to its Class F shares (the “Class F Plan”). Under the Class F Plan, the fund is authorized to reimburse the Distributor for expenses paid for distributing or servicing its Class F shares at an annual rate of up to .25% of the value of the average daily net assets of the fund’s Class F shares.The Distributor has agreed not to seek reimbursement of any expenses under the Class F Plan other than reimbursements for payments made to brokers and other intermediaries whose customers hold Class F shares (“Third Party Payments”). This commitment applies to any such expenses (other than Third Party Payments). This commitment will continue indefinitely and will not
28
terminate without the prior approval of the Board. During the period ended December 31, 2012, Class F shares were charged $97,248 pursuant to the Class F Plan.
(c)
Under the Shareholder Services Plan, Class A and Class C shares pay and Class B shares paid 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 Class A, Class B and Class C shares 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 December 31, 2012, Class A, Class B and Class C shares were charged $66,170, $81 and $25,539, respectively, pursuant to the Shareholder Services Plan.
The Company has a shareholder services agreement with the Distributor, whereby the fund agrees to compensate the Distributor for providing certain shareholder servicing functions to holders of Class F shares. On an annual basis, the fund pays the Distributor a monthly fee of $24.00 per Class F shareholder account considered to be an open account at any time during a given month. During the period ended December 31, 2012, Class F shares were charged $77,309 pursuant to the shareholder services agreement.
Under its terms, the Distribution Plan, Class F Plan and Shareholder Services Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of a majority of those Directors who are “interested persons” of the Company and who have no direct or indirect financial interest in the operation of or in any agreement related to the Distribution Plan, Class F Plan or Shareholder Services Plan.
The Fund
29
NOTES TO FINANCIAL STATEMENTS
(continued)
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 the Manager, under a transfer agency agreement for providing transfer agency services for the fund and, since May 29, 2012, cash management services related to fund subscriptions and redemptions. During the period ended December 31, 2012, the fund was charged $52,019 for transfer agency services and $2,501 for cash management services. Cash management fees were partially offset by earnings credits of $290.These fees are included in Shareholder servicing costs in the Statement of Operations.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended December 31, 2012, the fund was charged $16,979 pursuant to the custody agreement.
Prior to May 29, 2012, the fund compensated The Bank of New York Mellon under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended December 31, 2012, the fund was charged $5,996 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations.These fees were partially offset by earnings credits of $237.
The fund has agreed to compensate the Manager for providing accounting services, administration, compliance monitoring, regulatory and shareholder reporting, as well as related facilities, equipment and clerical help.The fee is based on the fund’s average daily net assets and computed at the following annual rates: .06% of the first $500 million, .04% of the next $500 million and .02% in excess of $1 billion, plus reasonable out-of-pocket expenses.
30
During the period ended December 31, 2012, the fund was charged $8,783 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: investment advisory fees $83,537, Distribution Plan fees $25,489, Shareholder Services Plan fees $25,532, custodian fees $6,600, Chief Compliance Officer fees $3,981, accounting fees $5,165 and transfer agency fees $12,031.
(d)
Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended December 31, 2012, amounted to $204,954,483 and $224,907,761, respectively.
At December 31, 2012, the cost of investments for federal income tax purposes was $113,840,562; accordingly, accumulated net unrealized appreciation on investments was $9,904,569, consisting of $12,948,013 gross unrealized appreciation and $3,043,444 gross unrealized depreciation.
The Fund
31
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
Dreyfus Funds Inc.
We have audited the accompanying statement of assets and liabilities of Dreyfus Mid-Cap Growth Fund (the “Fund”), a series of Dreyfus Funds Inc., including the statements of investments as of December 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended. 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 audit.The financial highlights for each of the years in the two-year period ended December 31, 2009 were audited by other independent registered public accountants whose report thereon, dated February 25, 2010, expressed an unqualified opinion on that statement of changes in net assets and those financial highlights.
We conducted our audit 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides 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 Mid-Cap Growth Fund as of December 31, 2012, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York
February 28, 2013
32
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 2011 and $0 in 2012.
(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 $12,255,249 in 2011 and $12,372,510
in 2012.
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.