Securities Act File No. 333-47011
Investment Company Act File No. 811-08673
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. __ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. __ / /
(Check appropriate box or boxes)
DREYFUS INVESTMENT PORTFOLIOS
(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)
Registrant's Telephone Number, including Area Code: (212) 922-6130
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
copy to:
Stuart H. Coleman, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement is declared effective.
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Title of Securities Being Registered: Shares of Beneficial Interest, $.001
par value per share.
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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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<PAGE>
DREYFUS INVESTMENT PORTFOLIOS
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
FORM N-1A CAPTION PAGE
1 Cover Cover Page
2 Synopsis 2
3 Condensed Financial Information *
4 General Description of Registrant 3
5 Management of the Fund 7
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 14
7 Purchase of Securities Being Offered 10
8 Redemption or Repurchase 11
9 Pending Legal Proceedings *
Items in
Part B of
FORM N-1A
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-12
15 Control Persons and Principal Holders
of Securities B-15
16 Investment Advisory and Other Services B-15
17 Brokerage Allocation B-21
18 Capital Stock and Other Securities B-23
19 Purchase, Redemption and Pricing of
Securities Being Offered B-16
20 Tax Status B-18
21 Underwriters *
22 Calculations of Performance Data B-22
23 Financial Statements B-33
Items in
Part C of
FORM N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-1
26 Number of Holders of Securities C-1
27 Indemnification C-1
28 Business and Other Connections of
Investment Adviser C-2
29 Principal Underwriters C-5
30 Location of Accounts and Records C-7
31 Management Services C-7
32 Undertakings C-7
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*Omitted since answer is negative or inapplicable.
<PAGE>
PROSPECTUS May __, 1998
DREYFUS INVESTMENT PORTFOLIOS
Dreyfus Investment Portfolios (the "Fund") is an open-end, management
investment company, known as a mutual fund. SHARES ARE OFFERED ONLY TO VARIABLE
ANNUITY AND VARIABLE LIFE INSURANCE SEPARATE ACCOUNTS ESTABLISHED BY INSURANCE
COMPANIES TO FUND VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE
POLICIES AND TO QUALIFIED PENSION AND RETIREMENT PLANS. Individuals may not
purchase shares directly from the Fund. For offers to separate accounts, this
Prospectus should be read in conjunction with the prospectus of the separate
accounts of the specific insurance product. The Fund permits investors to invest
in two separate portfolios (each, a "Portfolio"), each with a different
investment objective:
o The CORE VALUE PORTFOLIO'S primary investment objective is to
provide long-term growth of capital; current income is a secondary investment
objective. This Portfolio invests primarily in equity securities, such as common
stocks and securities convertible into common stocks.
o The MIDCAP STOCK PORTFOLIO'S investment objective is to provide
investment results that are greater than the total return performance of
publicly-traded common stocks of medium-size domestic companies in the
aggregate, as represented by the Standard & Poor's MidCap 400 Index. This
Portfolio invests primarily in a portfolio of equity securities of medium-size
domestic issuers, while attempting to maintain volatility and diversification
similar to that of the Standard & Poor's MidCap 400 Index.
The Dreyfus Corporation serves as each Portfolio's investment adviser.
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This Prospectus sets forth concisely information about the Fund that
an investor should know before investing in a Portfolio. It should be read and
retained for future reference.
The Statement of Additional Information, dated May __, 1998, which may
be revised from time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to some investors. It
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.
For a free copy of the Statement of Additional Information, write to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-554-4611. When telephoning, ask for Operator 144.
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MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. MUTUAL
FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses...........................................
Description of the Fund..................................................
Management of the Fund...................................................
How to Buy Shares........................................................
How to Redeem Shares.....................................................
Dividends, Distributions and Taxes.......................................
Performance Information..................................................
General Information......................................................
Appendix.................................................................
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
CORE VALUE MIDCAP STOCK
PORTFOLIO PORTFOLIO
Management Fees................................. .75% .75%
Other Expenses.................................. .25% .25%
Total Operating Expenses........................ 1.00% 1.00%
EXAMPLE
AN INVESTOR WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING A
5% ANNUAL RETURN (CUMULATIVELY THROUGH THE END OF EACH TIME PERIOD):
CORE VALUE MIDCAP STOCK
PORTFOLIO PORTFOLIO
1 Year.......................................... $10 $10
3 Years......................................... $32 $32
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED REPRESENTATIVE OF
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED.
MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH PORTFOLIO'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN
5%.
The purpose of the foregoing table is to assist investors in
understanding the costs and expenses borne by each Portfolio, the payment of
which will reduce investors' annual return. Other Expenses noted above are based
on estimated amounts for the current fiscal year. The information in the
foregoing table does not reflect deduction of account fees and charges to
separate accounts or related insurance policies that may be imposed by insurance
companies. For a further description of the various costs and expenses incurred
in the operation of the Fund, as well as expense reimbursement or waiver
arrangements, see "Management of the Fund."
DESCRIPTION OF THE FUND
GENERAL
Shares of the Portfolios are offered only to variable annuity and
variable life insurance separate accounts established by affiliated and
unaffiliated life insurance companies ("Participating Insurance Companies") to
fund variable annuity contracts ("VA contracts") and variable life insurance
policies ("VLI policies" and, together with VA contracts, "Policies"). The
Policies are described in the separate prospectuses and statements of additional
information issued by the Participating Insurance Companies over which the Fund
assumes no responsibility. Shares of the Portfolios also are offered to
qualified pension and retirement plans and accounts permitting accumulation of
assets on a tax-deferred basis ("Eligible Plans" or "Plans").
Differences in tax treatment or other considerations may cause the
interests of VA contract owners, VLI policy owners or Eligible Plan participants
to conflict, although the Fund currently does not foresee any disadvantages to
VA contract owners, VLI policy owners or Eligible Plan participants arising
therefrom. Nevertheless, the Fund's Board intends to monitor events in order to
identify any material conflicts which may arise and to determine what action, if
any, should be taken in response thereto. Resolution of an irreconcilable
conflict might result in the withdrawal of a substantial amount of a Portfolio's
assets which could adversely affect the Portfolio's net asset value per share.
Individual Policy owners and Plan participants are not the
"shareholders" of the Fund. Rather, the Participating Insurance Companies and
their separate accounts and the Eligible Plans, respectively, are the
shareholders (the "shareholders"), although the Participating Insurance
Companies and Eligible Plans anticipate passing voting rights through to their
Policy owners and Plan participants, respectively.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
Each Portfolio has a different investment objective which it pursues
through separate investment policies, as described herein. The differences in
objectives and policies between the Portfolios determine the types of portfolio
securities in which each Portfolio invests, and can be expected to affect the
degree of risk to which each Portfolio is subject and each Portfolio's yield or
return. Each Portfolio's investment objective cannot be changed without approval
by the holders of a majority (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act")) of such Portfolio's outstanding voting shares.
There can be no assurance that a Portfolio's investment objective will be
achieved. The types of portfolio securities in which each Portfolio may invest
are described in greater detail below and under "Appendix--Certain Portfolio
Securities."
CORE VALUE PORTFOLIO
The Core Value Portfolio is a diversified portfolio, the primary
investment objective of which is to provide long-term growth of capital; current
income is a secondary investment objective.
The Portfolio anticipates that at least 65% of the value of its total
assets (except when maintaining a temporary defensive position) will be invested
in equity securities, such as common stocks, preferred stocks and securities
convertible into common stocks, including Depositary Receipts, which would be
characterized as "value" companies according to criteria established by The
Dreyfus Corporation. In general, the Portfolio's investments are broadly
diversified over a number of industries and, as a matter of operating policy,
the Portfolio will not invest more than 25% of its total assets in any one
industry.
The Portfolio's investment approach is value-oriented, research-driven
and risk adverse. To manage the Portfolio, The Dreyfus Corporation classifies
issuers as "value" or "growth" companies. In general, The Dreyfus Corporation
believes that companies with relatively low price to book ratios, low price to
earnings ratios or higher than average dividend payments in relation to price
should be classified as value companies. Alternatively, companies which have
above average earnings or sales growth and retention of earnings and command
higher price to earnings ratios fit the classic growth description. In addition,
The Dreyfus Corporation intends to consider broader measures of value, including
operating return characteristics, overall financial health and positive changes
in business momentum. This value-oriented investment style is both quantitative
and fundamentally based, focusing first on stock selection then enhanced by
industry allocation guidelines.
Up to 20% of the Portfolio's total assets may be invested in foreign
securities, principally in foreign equity securities. The Portfolio may invest
up to 5% of its total net assets in fixed-income securities, including those of
companies that are close to entering, or already in, reorganization proceedings
which are rated below investment grade by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P"), Fitch IBCA, Inc. ("Fitch")
or Duff & Phelps Credit Rating Co. ("Duff"). See "Investment Considerations and
Risks--Fixed-Income Securities" below.
While seeking desirable investments, the Portfolio may invest in money
market instruments (collectively, "Money Market Instruments") consisting of U.S.
Government securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other short-term
debt instruments, and repurchase agreements, as set forth under
"Appendix--Certain Portfolio Securities--Money Market Instruments." Under normal
market conditions, the Portfolio does not expect to have a substantial portion
of its assets invested in Money Market Instruments. However, when The Dreyfus
Corporation determines that adverse market conditions exist, the Portfolio may
adopt a temporary defensive posture and invest all of its assets in Money Market
Instruments.
The Portfolio's annual portfolio turnover rate is not expected to
exceed 150%. A portfolio turnover rate of 100% is equivalent to the Portfolio
buying and selling all of the securities in its portfolio once in the course of
a year. Higher portfolio turnover rates usually generate additional brokerage
commissions and transaction costs and the short-term gains realized from these
transactions are taxable to shareholders as ordinary income. The Portfolio may
engage in various investment techniques, such as options, futures and foreign
currency transactions, lending portfolio securities and leveraging. For a
discussion of the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix--Investment Techniques" below and
"Investment Objectives and Management Policies--Management Policies" in the
Statement of Additional Information.
MIDCAP STOCK PORTFOLIO
The MidCap Stock Portfolio is a diversified portfolio, the investment
objective of which is to provide investment results that are greater than the
total return performance of publicly-traded common stocks in the aggregate, as
represented by the Standard & Poor's MidCap 400 Index* (the "S&P 400 Index").
The Portfolio invests primarily in a portfolio of equity securities of
medium-size domestic issuers, while attempting to maintain volatility and
diversification similar to that of the S&P 400 Index. The Portfolio will invest
in the securities of issuers that are considered by The Dreyfus Corporation to
offer above-average growth potential. Medium-size issuers will include those
U.S. companies with market capitalizations (market price per share times the
number of shares outstanding) generally ranging in value from $200 million to $5
billion. The Portfolio also may invest in large and small capitalization
companies, including emerging and cyclical growth companies. Emerging and
cyclical growth companies are firms which, while they may not have a history of
stable long-term growth, are nonetheless expected to represent attractive
investments. The equity securities in which the Portfolio invests consist of
common stocks, preferred stocks and securities convertible into common stocks,
including those in the form of Depositary Receipts. The Portfolio is not an
index fund and its investments are not limited to securities of issuers included
in the S&P 400 Index.
* "Standard & Poor's Mid-Cap 400 Index" is a trademark of The McGraw-Hill
Companies, Inc. The Portfolio is not sponsored, endorsed, sold or promoted
by S&P or The McGraw-Hill Companies, Inc.
<PAGE>
The S&P 400 Index is composed of 400 selected common stocks of
medium-size domestic companies, which may include some Canadian issuers, with
market capitalizations ranging generally between $50 million and $10 billion.
The median market capitalization of the stocks in the S&P 400 Index is
approximately $2.7 billion. Standard & Poor's chooses the stocks to be included
in the S&P 400 Index on the basis of market size, liquidity and industry group
representation. The weightings of stocks in the S&P 400 Index are based on each
stock's relative total market capitalization. Because of this weighting, as of
October 31, 1997, approximately 32% of the S&P 400 Index was composed of the 50
largest companies. Of the companies, most are listed on the New York Stock
Exchange, others are quoted on The Nasdaq Stock Market and a few are listed on
the American Stock Exchange.
The Dreyfus Corporation utilizes computer techniques to track, and, if
possible, outperform the S&P 400 Index. To construct the Portfolio's investment
portfolio, The Dreyfus Corporation employs valuation models designed to identify
common stocks of companies that are undervalued and should be purchased and
retained by the Portfolio. Undervalued securities ordinarily are characterized
by a relatively low price to earnings ratio (using normalized earnings), a low
ratio of market price to book value, or underlying asset values that The Dreyfus
Corporation determines are not fully reflected in the current market price. Once
undervalued common stocks are identified, The Dreyfus Corporation's experienced
investment analysts construct an investment portfolio, using the valuation
models, that in the aggregate resembles the S&P 400 Index, but is weighted
toward the most attractive stocks.
The Portfolio also may invest in corporate obligations rated at least
Baa by Moody's or BBB by S&P, Fitch or Duff, or, if unrated, of comparable
quality as determined by The Dreyfus Corporation. Securities rated Baa by
Moody's or BBB by S&P, Fitch or Duff are considered by those rating agencies to
be investment grade obligations which lack outstanding investment
characteristics and may have speculative characteristics as well. See
"Investment Considerations and Risks--Fixed-Income Securities" below.
While seeking desirable investments, the Portfolio may invest in Money
Market Instruments. Under normal market conditions, the Portfolio does not
expect to have a substantial portion of its assets invested in Money Market
Instruments. However, when The Dreyfus Corporation determines that adverse
market conditions exist, the Portfolio may adopt a temporary defensive posture
and invest all of its assets in Money Market Instruments.
The Portfolio's annual portfolio turnover rate is not expected to
exceed 100%. A portfolio turnover rate of 100% is equivalent to the Portfolio
buying and selling all the securities in its portfolio once in the course of the
year. In an effort to increase returns, the Portfolio may engage in various
investment techniques, such as options and futures transactions, lending
portfolio securities and leveraging. For a discussion of the investment
techniques and their related risks, see "Investment Considerations and Risks"
and "Appendix--Investment Techniques" below and "Investment Objectives and
Management Policies--Management Policies" in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL--Since each Portfolio will pursue different types of investments, the
risks of investing will vary depending on the Portfolio selected for investment.
Before selecting a Portfolio in which to invest, the investor should assess the
risks associated with the types of investments made by the Portfolio. The net
asset value per share of each Portfolio should be expected to fluctuate.
Investors should consider each Portfolio as a supplement to an overall
investment program and should invest only if they are willing to undertake the
risks involved. See "Investment Objectives and Management Policies " in the
Statement of Additional Information for a further discussion of certain risks.
EQUITY SECURITIES--Equity securities fluctuate in value, often based on factors
unrelated to the value of the issuer of the securities, and such fluctuations
can be pronounced. Changes in the value of a Portfolio's investments will result
in changes in the value of its shares and thus the Portfolio's total return to
investors.
Each Portfolio may purchase securities of smaller capitalization
companies, the prices of which may be subject to more abrupt or erratic market
movements than larger, more established companies, because these securities
typically are traded in lower volume and the issuers typically are more subject
to changes in earnings and prospects.
FIXED-INCOME SECURITIES--Each Portfolio may invest in fixed-income securities to
the extent described under "Investment Objectives and Management Policies"
above. Even though interest-bearing securities are investments which promise a
stable stream of income, the prices of such securities generally are inversely
affected by changes in interest rates and, therefore, are subject to the risk of
market price fluctuations. Certain securities that may be purchased by each
Portfolio, such as those with interest rates that fluctuate directly or
indirectly based on multiples of a stated index, are designed to be highly
sensitive to changes in interest rates and can subject the holders thereof to
extreme reductions of yield and possibly loss of principal.
The values of fixed-income securities also may be affected by changes
in the credit rating or financial condition of the issuer. Certain debt
securities that may be purchased by each Portfolio, such as those rated Baa by
Moody's and BBB by S&P, Fitch and Duff, may be subject to such risk with respect
to the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. The Core Value Portfolio may
invest up to 5% of its net assets in higher yielding (and, therefore, higher
risk) debt securities such as those rated Ba by Moody's or BB by S&P, Fitch or
Duff or as low as the lowest rating assigned by Moody's, S&P, Fitch or Duff. The
retail secondary market for these securities may be less liquid than that of
higher rated securities; adverse conditions could make it difficult at times for
the Portfolio to sell certain securities or could result in lower prices than
those used in calculating the Portfolio's net asset value. Once the rating of a
portfolio security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to continue to hold the security. See
"Investment Objectives and Management Policies--Investment Considerations and
Risks--Lower Rated Securities" and "Appendix" in the Statement of Additional
Information.
FOREIGN SECURITIES--The Core Value Portfolio may invest up to 20% of its total
assets in foreign securities. Foreign securities markets generally are not as
developed or efficient as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable U.S.
issuers. Similarly, volume and liquidity in most foreign securities markets are
less than in the United States and, at times, volatility of price can be greater
than in the United States.
Because evidences of ownership of such securities usually are held
outside the United States, the Portfolio will be subject to additional risks
which include possible adverse political and economic developments, seizure or
nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect or restrict the payment of principal and interest
on the foreign securities to investors located outside the country of the
issuer, whether from currency blockage or otherwise. Moreover, foreign
securities held by the Portfolio may trade on days when the Portfolio does not
calculate its net asset value and thus affect the Portfolio's net asset value on
days when investors have no access to the Portfolio.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency rates
and exchange control regulations.
The percentage of the Core Value Portfolio's assets which may be
invested in foreign securities as noted above is not a fundamental policy and
may be changed at any time without shareholder approval.
USE OF DERIVATIVES--Each Portfolio may invest in derivatives ("Derivatives").
These are financial instruments which derive their performance, at least in
part, from the performance of an underlying asset, index or interest rate. The
Derivatives the Portfolios may use include options and futures. While
Derivatives can be used effectively in furtherance of the Portfolio's investment
objective, under certain market conditions, they can increase the volatility of
the Portfolio's net asset value, decrease the liquidity of the Portfolio's
investments and make more difficult the accurate pricing of the Portfolio's
investments. See "Appendix--Investment Techniques--Use of Derivatives" below,
and "Investment Objectives and Management Policies--Management
Policies--Derivatives" in the Statement of Additional Information.
STATE INSURANCE REGULATION--The Fund is intended to be a funding vehicle for VA
contracts and VLI policies to be offered by Participating Insurance Companies
and will seek to be offered in as many jurisdictions as possible. Certain states
have regulations concerning concentration of investments, purchase and sale of
futures contracts and short sales of securities, among other techniques. If
applied to the Fund, each Portfolio may be limited in its ability to engage in
such techniques and to manage its portfolio with the flexibility provided
herein. It is the Fund's intention that each Portfolio operate in material
compliance with current insurance laws and regulations, as applied, in each
jurisdiction in which the Portfolio is offered.
SIMULTANEOUS INVESTMENT--Investment decisions for each Portfolio are made
independently from those of the other Portfolio and investment companies managed
by The Dreyfus Corporation. However, if such other Portfolio or investment
companies desire to invest in, or dispose of, the same securities as the
Portfolio, available investments or opportunities for sales will be allocated
equitably to each. In some cases, this procedure may adversely affect the size
of the position obtained for or disposed of by a Portfolio or the price paid or
received by a Portfolio.
YEAR 2000 RISKS--Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by The Dreyfus Corporation and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Dreyfus Corporation is taking steps to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES--The business affairs of the Fund are managed under the
general supervision of its Board of Trustees. The Statement of Additional
Information contains the name and general business experience of each Trustee.
INVESTMENT ADVISER--The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947 and serves as the Fund's investment
adviser. The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon").
As of March 31, 1998, The Dreyfus Corporation managed or administered
approximately $100 billion in assets for approximately 1.7 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the authority of the Fund's Board in accordance with Massachusetts
law. The primary portfolio managers of the Portfolios are as follows:
CORE VALUE PORTFOLIO--Investment decisions for the Core Value Portfolio are made
by a committee of portfolio managers of The Dreyfus Corporation, and no person
is primarily responsible for making recommendations to the committee. Members of
the committee also comprise the Equity Policy Group of The Boston Company Asset
Management, Inc., which is an indirect wholly-owned subsidiary of Mellon and,
thus, an affiliate of The Dreyfus Corporation.
MIDCAP STOCK PORTFOLIO--John O'Toole. He has been the MidCap Stock Portfolio's
primary portfolio manager since the Portfolio's inception and has been employed
by The Dreyfus Corporation since October 1994. He also is a Senior Vice
President and a Portfolio Manager for Mellon Equity Associates, a wholly-owned
subsidiary of Mellon and, thus, an affiliate of The Dreyfus Corporation, and has
been employed by Mellon Bank, N.A. since 1979.
The Dreyfus Corporation also provides research services for the Fund
and for other funds advised by The Dreyfus Corporation through a professional
staff of portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, N.A., Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries, including The
Dreyfus Corporation, Mellon managed more than $305 billion in assets as of
December 31, 1997, including approximately $104 billion in proprietary mutual
fund assets. As of December 31, 1997, Mellon, through various subsidiaries,
provided non-investment services, such as custodial or administration services,
for more than $1.532 trillion in assets including approximately $60 billion in
mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .75 of 1% of
each Portfolio's average daily net assets.
In allocating brokerage transactions, The Dreyfus Corporation seeks to
obtain the best execution of orders at the most favorable net price. Subject to
this determination, The Dreyfus Corporation may consider, among other things,
the receipt of research services and/or the sale of shares of the Fund or other
funds managed, advised or administered by The Dreyfus Corporation as factors in
the selection of broker-dealers to execute portfolio transactions for the Fund.
Brokerage transactions for the Fund may be conducted through Dreyfus Investment
Services Corporation, an affiliate of The Dreyfus Corporation, in accordance
with procedures adopted by the Fund's Board. See "Portfolio Transactions" in the
Statement of Additional Information.
The Dreyfus Corporation, from time to time, may make payments from its
own assets to Participating Insurance Companies and Eligible Plans in connection
with the provision of certain administrative services to one or more Portfolios
and/or to purchasers of VA contracts or VLI policies or Plan participants.
EXPENSES--All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by The Dreyfus Corporation. The
expenses borne by the Fund include: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who are not
officers, directors, employees or holders of 5% or more of the outstanding
voting securities of The Dreyfus Corporation or its affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of maintaining the Fund's
existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders, costs of shareholders' reports
and meetings, and any extraordinary expenses. Expenses attributable to a
particular Portfolio are charged against the assets of that Portfolio; other
expenses of the Fund are allocated between the Portfolios on the basis
determined by the Board, including, but not limited to, proportionately in
relation to the net assets of each Portfolio.
From time to time, The Dreyfus Corporation may waive receipt of its
fees and/or voluntarily assume certain expenses of a Portfolio, which would have
the effect of lowering the expense ratio of that Portfolio and increasing yield
to investors. The Fund will not pay The Dreyfus Corporation at a later time for
any amounts it may waive nor will the Fund reimburse The Dreyfus Corporation for
any amounts it may assume.
DISTRIBUTOR--The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109. The
Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN--Dreyfus Transfer, Inc., a
wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671, Providence,
Rhode Island 02940-9671, is the Fund's Transfer and Dividend Disbursing Agent
(the "Transfer Agent"). Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, is the Fund's Custodian.
HOW TO BUY SHARES
INDIVIDUALS MAY NOT PLACE PURCHASE ORDERS DIRECTLY WITH THE FUND.
INDIVIDUALS SHOULD CONSULT A PARTICIPATING INSURANCE COMPANY, THE ADMINISTRATOR
OF AN ELIGIBLE PLAN OR A FINANCIAL INTERMEDIARY FOR INFORMATION ON THE PURCHASE
OF PORTFOLIO SHARES. THE FUND DOES NOT ISSUE SHARE CERTIFICATES. Purchase orders
received by the Participating Insurance Company or Eligible Plan on a given
business day will be effected at the net asset value of the applicable Portfolio
determined on such business day if the orders and Fed Funds (monies of member
banks within the Federal Reserve System which are held on deposit at a Federal
Reserve Bank) are received by the Fund on the next business day in accordance
with applicable requirements. It is each Participating Insurance Company's or
Eligible Plan administrator's or trustee's responsibility to transmit purchase
orders in accordance with applicable requirements.
Fund shares are sold on a continuous basis. Net asset value per share
is determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day that the New York
Stock Exchange is open for business. For purposes of determining net asset
value, options and futures will be valued 15 minutes after the close of trading
on the floor of the New York Stock Exchange. Net asset value per share is
computed by dividing the value of the net assets of each Portfolio (i.e., the
value of its assets less liabilities) by the total number of Portfolio shares
outstanding. Each Portfolio's investments are valued based on market value, or
where market quotations are not readily available, based on fair value as
determined in good faith by the Fund's Board. For further information regarding
the methods employed in valuing each Portfolio's investments, see "Determination
of Net Asset Value" in the Statement of Additional Information.
HOW TO REDEEM SHARES
Portfolio shares may be redeemed at any time by the separate accounts
of the Participating Insurance Companies or by Eligible Plans. INDIVIDUALS MAY
NOT PLACE REDEMPTION ORDERS DIRECTLY WITH THE FUND. Redemption requests received
by the Participating Insurance Company or Eligible Plan on a given business day
will be effected at the net asset value of the applicable Portfolio determined
on such business day if the requests are received by the Fund in proper form and
in accordance with applicable requirements on the next business day. It is each
Participating Insurance Company's or Eligible Plan administrator's or trustee's
responsibility to properly transmit redemption requests in accordance with
applicable requirements. The value of the shares redeemed may be more or less
than their original cost, depending on the Portfolio's then-current net asset
value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent or other entity authorized to
accept orders on behalf of the Fund of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Internal Revenue Code of 1986, as amended (the "Code"), each
Portfolio of the Fund is treated as a separate entity for purposes of
qualification and taxation as a regulated investment company. Each Portfolio
declares and pays dividends from net investment income quarterly. Each Portfolio
will make distributions from net realized securities gains, if any, once a year,
but may make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner consistent with
the provisions of the 1940 Act. No Portfolio will make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. Dividends are automatically reinvested in additional
shares at net asset value unless payment in cash is elected by the Participating
Insurance Company or Eligible Plan. Shares begin earning dividends on the day
the purchase order is effective. If all shares in an account are redeemed at any
time, all dividends to which the shareholder is entitled will be paid along with
the proceeds of the redemption. An omnibus accountholder may indicate in a
partial redemption request that a portion of any accrued dividends to which such
account is entitled belongs to an underlying accountholder who has redeemed all
shares in his or her account, and such portion of the accrued dividends will be
paid to the accountholder along with the proceeds of the redemption. All
expenses are accrued daily and deducted before declaration of dividends to
investors.
Section 817(h) of the Code and regulations thereunder set standards
for diversification of the investments underlying Policies in order for the
Policies to be treated as life insurance. These requirements, which are in
addition to diversification requirements applicable to the Portfolios under
Subchapter M of the Code, may affect the composition of a Portfolio's
investments. Since the shares of the Portfolios currently are sold to segregated
asset accounts underlying such Policies, each Portfolio intends to comply with
the diversification requirements as set forth in the regulations.
By meeting these and other requirements, the Participating Insurance
Companies, rather than the Policy owners, should be subject to tax on
distributions received with respect to Portfolio shares. The tax treatment on
distributions made to a Participating Insurance Company will depend on the
Participating Insurance Company's tax status.
Dividends and distributions made by the Portfolios to Eligible Plans
are not taxable to the Plans or to the participants thereunder. The Portfolios
will be managed without regard to tax ramifications.
Since the Fund's shareholders are the Participating Insurance
Companies, their separate accounts and Eligible Plans, no discussion is included
herein as to the Federal income tax consequences to Policy owners and Eligible
Plan participants. For information concerning the Federal income tax
consequences, Policy owners should consult the applicable prospectus of the
separate account of the Participating Insurance Company and Eligible Plan
participants should consult the Plan's administrator or trustee.
Management of the Fund expects that each Portfolio will qualify as a
"regulated investment company" under the Code so long as such qualification is
in the best interests of its shareholders. Qualification as a regulated
investment company relieves the Portfolio of any liability for Federal income
taxes to the extent its earnings are distributed in accordance with applicable
provisions of the Code. The Portfolio may be subject to a non-deductible 4%
excise tax, measured with respect to certain undistributed amounts of investment
income and capital gains. Participating Insurance Companies and Eligible Plans
should consult their tax advisers regarding specific questions as to Federal,
state or local taxes.
PERFORMANCE INFORMATION
Each Portfolio may calculate performance on an average annual total
return or total return basis. Average annual total return is calculated pursuant
to a standardized formula which assumes that an investment in the Portfolio was
purchased with an initial payment of $1,000 and that the investment was redeemed
at the end of a stated period of time, after giving effect to the reinvestment
of dividends and distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result in
the redeemable value of the investment at the end of the period. Advertisements
of the Portfolios' performance will include the Portfolios' average annual total
return for one, five and ten year periods, or for shorter time periods depending
upon the length of time the Portfolio has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is expressed
as a percentage rate which is calculated by combining the income and principal
changes for a specified period and dividing by the net asset value per share at
the beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end of
the period, which assumes the application of the percentage rate of total
return.
In addition, from time to time, each Portfolio may advertise "yield"
and "actual distribution rate" quotations. A Portfolio's "yield" for any 30-day
period is computed by dividing the net investment income per share earned during
such period by the maximum public offering price per share on the last day of
the period, and then annualizing such 30-day yield in accordance with a formula
prescribed by the Securities and Exchange Commission which provides for
compounding on a semi-annual basis. A Portfolio's "actual distribution rate" is
computed in the same manner as yield except that actual income dividends
declared per share during the period in question is substituted for net
investment income per share.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance. Performance information for either
Portfolio should not be compared with other funds that offer their shares
directly to the public since the figures provided do not reflect charges imposed
by Participating Insurance Companies under their VA contracts or VLI policies.
The effective yield and total return for a Portfolio should be distinguished
from the rate of return of a corresponding sub-account or investment division of
a separate account of a Participating Insurance Company, which rate will reflect
the deduction of additional charges, including mortality and expense risk
charges, and will therefore be lower. Policy owners should consult the
prospectus for their contract or policy.
Calculations of the Portfolios' performance information may reflect
absorbed expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund." Comparative performance information may be used from
time to time in advertising a Portfolio's shares, including data from Lipper
Analytical Services, Inc., IBC's Money Fund Report(TM), Money Magazine, Bank
Rate Monitor(TM), Standard & Poor's 500 Composite Stock Price Index, S&P 400
Index, Russell 2500(R) Index, Morgan Stanley Capital International World Index,
the Dow Jones Industrial Average, Morningstar, Inc., Value Line Mutual Fund
Survey and other industry publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated May 14, 1993, and has not
commenced operations as of the date hereof. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
Each share has one vote. The Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to call a
meeting of shareholders for the purpose of voting to remove Trustees.
In accordance with current law, the Fund anticipates that a
Participating Insurance Company issuing a VA contract or VLI policy or an
Eligible Plan that participates in the Fund will request voting instructions
from Policy holders or Plan participants and will vote shares in proportion to
the voting instructions received. For further information on voting rights,
Policy holders should refer to the prospectus for their policies and Plan
participants should consult the Plan's administrator or trustee.
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for certain
matters under the 1940 Act and for other purposes. A shareholder of one
portfolio is not deemed to be a shareholder of any other portfolio. For certain
matters shareholders vote together as a group; as to others they vote separately
by portfolio.
To date, the Board has authorized the creation of two portfolios of
shares. All consideration received by the Fund for shares of one of the
Portfolios, and all assets in which such consideration is invested, will belong
to that Portfolio (subject only to the rights of creditors of the Fund) and will
be subject to the liabilities related thereto. The income attributable to, and
the expenses of, one Portfolio would be treated separately from those of the
other Portfolio. The Fund has the ability to create, from time to time, new
portfolios without shareholder approval.
The Transfer Agent maintains a record of each shareholder's ownership
and will send confirmations and statements of account. Shareholder inquiries may
be made by writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144, or by calling 516-338-3300.
Owners of VLI policies and VA contracts issued by Participating
Insurance Companies for which Portfolio shares are an investment vehicle will
receive from the Participating Insurance Companies unaudited semi-annual
financial statements and audited year-end financial statements certified by the
Fund's independent public accountants. Each report will show the investments
owned by the Portfolio and the market values thereof as determined by the Fund's
Board and will provide other information about the Portfolio and its operations.
<PAGE>
APPENDIX
INVESTMENT TECHNIQUES
LEVERAGE--(Both Portfolios) Leveraging will exaggerate the effect on net asset
value of any increase or decrease in the market value of the portfolio. Money
borrowed for leveraging will be limited to 33-1/3% of the value of each
Portfolio's total assets. These borrowings will be subject to interest costs
which may or may not be recovered by appreciation of the securities purchased;
in certain cases, interest costs may exceed the return received on the
securities purchased.
Each Portfolio may enter into reverse repurchase agreements with
banks, brokers or dealers. This form of borrowing involves the transfer by the
Portfolio of an underlying debt instrument in return for cash proceeds based on
a percentage of the value of the security. The Portfolio retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Portfolio repurchases the security at principal plus accrued
interest. Except for these transactions, each Portfolio's borrowings generally
will be unsecured.
USE OF DERIVATIVES--(Both Portfolios) Each Portfolio may invest in the types of
Derivatives enumerated under "Description of the Fund--Investment Considerations
and Risks--Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objectives and Management
Policies--Management Policies--Derivatives" in the Statement of Additional
Information.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives could
have a large potential impact on the Portfolio's performance.
If a Portfolio invests in Derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Portfolio's return
or result in a loss. The Portfolio also could experience losses if its
Derivatives were poorly correlated with its other investments, or if the
Portfolio were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable changes
in the prices for Derivatives.
Although neither the Fund nor either Portfolio will be a commodity
pool, certain Derivatives subject the Portfolios to the rules of the Commodity
Futures Trading Commission which limit the extent to which a Portfolio can
invest in such Derivatives. Each Portfolio may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However,
neither Portfolio may invest in such contracts and options for other purposes if
the sum of the amount of initial margin deposits and premiums paid for unexpired
options with respect to such contracts, other than for bona fide hedging
purposes, exceeds 5% of the liquidation value of the Portfolio's assets, after
taking into account unrealized profits and unrealized losses on such contracts
and options; provided, however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
calculating the 5% limitation.
Each Portfolio may purchase call and put options and write (i.e.,
sell) covered call and put option contracts. When required by the Securities and
Exchange Commission, the Portfolio will set aside permissible liquid assets in a
segregated account to cover its obligations relating to its purchase of
Derivatives. To maintain this required cover, the Portfolio may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES--(Both Portfolios) Each Portfolio may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. In
connection with such loans, the Portfolio continues to be entitled to payments
in amounts equal to the dividends, interest or other distributions payable on
the loaned securities which affords the Portfolio an opportunity to earn
interest on the amount of the loan and at the same time to earn income on the
loaned securities' collateral. Loans of portfolio securities may not exceed
33-1/3% of the value of the Portfolio's total assets, and the Portfolio will
receive collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. Such loans are
terminable by the Portfolio at any time upon specified notice. The Portfolio
might experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio.
FOREIGN CURRENCY TRANSACTIONS--(Core Value Portfolio) Foreign currency
transactions may be entered into for a variety of purposes, including: to fix in
U.S. dollars, between trade and settlement date, the value of a security the
Portfolio has agreed to buy or sell; to hedge the U.S. dollar value of
securities the Portfolio already owns, particularly if it expects a decrease in
the value of the currency in which the foreign security is denominated; or to
gain exposure to the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the
Portfolio's purchase of foreign currencies for U.S. dollars or the maintenance
of short positions in foreign currencies, which would involve the Portfolio
agreeing to exchange an amount of a currency it did not currently own for
another currency at a future date in anticipation of a decline in the value of
the currency sold relative to the currency the Fund contracted to receive in the
exchange. The Portfolio's success in these transactions will depend principally
on The Dreyfus Corporation's ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar.
Currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by the forces of supply and demand in the
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates also
can be affected unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
FORWARD COMMITMENTS--(Both Portfolios) Each Portfolio may purchase securities on
a forward commitment or when-issued basis, which means that delivery and payment
take place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivable on a forward commitment or
when-issued security are fixed when the Portfolio enters into the commitment,
but the Portfolio does not make a payment until it receives delivery from the
counter party. The Portfolio will commit to purchase such securities only with
the intention of actually acquiring the securities, but the Portfolio may sell
these securities before the settlement date if it is deemed advisable. The
Portfolio will set aside in a segregated account permissible liquid assets at
least equal at all times to the amount of the commitments.
CERTAIN PORTFOLIO SECURITIES
CONVERTIBLE SECURITIES--(Both Portfolios) Convertible securities are
fixed-income securities that may be converted at either a stated price or stated
rate into underlying shares of common stock. Convertible securities have
characteristics similar to both fixed-income and equity securities. Convertible
securities generally are subordinated to other similar but non-convertible
securities of the same issuer, although convertible bonds, as corporate debt
obligations, enjoy seniority in right of payment to all equity securities, and
convertible preferred stock is senior to common stock, of the same issuer.
Because of the subordination feature, however, convertible securities typically
have lower ratings than similar non-convertible securities.
WARRANTS--(Both Portfolios) A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time. Each
Portfolio may invest up to 5% of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Portfolio that are sold
in units with, or attached to, other securities.
DEPOSITARY RECEIPTS--(Both Portfolios) Each Portfolio may invest in the
securities of foreign issuers in the form of American Depositary Receipts
("ADRs") and Global Depositary Receipts ("GDRs"). These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. GDRs are receipts issued outside the United States
typically by non-United States banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in the United States securities markets and GDRs in bearer form
are designed for use outside the United States.
MONEY MARKET INSTRUMENTS--(Both Portfolios) Each Portfolio may invest in the
following types of Money Market Instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio buys,
and the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the seller's
obligation to repurchase is secured by the value of the underlying security.
Repurchase agreements could involve risks in the event of a default or
insolvency of the other party to the agreement, including possible delays or
restrictions upon the Portfolio's ability to dispose of the underlying
securities. The Portfolio may enter into repurchase agreements with certain
banks or non-bank dealers.
BANK OBLIGATIONS. Each Portfolio may purchase certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Series may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Fund--Investment Considerations and
Risks--Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven days)
at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Portfolios will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's, A-1
by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated at least A3 by Moody's or A- by
S&P, Fitch or Duff, or (c) if unrated, determined by The Dreyfus Corporation to
be of comparable quality to those rated obligations which may be purchased by
the Portfolio.
INVESTMENT COMPANIES--(Both Portfolios) Each Portfolio may invest in securities
issued by investment companies. Under the 1940 Act, the Portfolio's investment
in such securities, subject to certain exceptions, currently is limited to (i)
3% of the total voting stock of any one investment company, (ii) 5% of the
Portfolio's total assets with respect to any one investment company and (iii)
10% of the Portfolio's total assets in the aggregate. Investments in the
securities of other investment companies may involve duplication of advisory
fees and certain other expenses.
ILLIQUID SECURITIES--(Both Portfolios) Each Portfolio may invest up to 15% of
the value of its net assets in securities as to which a liquid trading market
does not exist, provided such investments are consistent with the Portfolio's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Portfolio is subject to a risk that should
the Portfolio desire to sell them when a ready buyer is not available at a price
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
DREYFUS INVESTMENT PORTFOLIOS
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY __, 1998
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Core Value Portfolio and Dreyfus MidCap Stock Portfolio (collectively,
the "Portfolios"), each a separate series of Dreyfus Investment Portfolios (the
"Fund"), dated May __, 1998, as it may be revised from time to time. To obtain a
copy of the Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call (516) 338-3300.
Shares of the Portfolios are offered only to variable annuity and
variable life insurance separate accounts established by insurance companies
("Participating Insurance Companies") to fund variable annuity contracts and
variable life insurance policies (collectively, "Policies") and qualified
pension and retirement plans and accounts permitting accumulation of assets on a
tax-deferred basis (collectively, "Eligible Plans") outside the separate account
context.
The Dreyfus Corporation (the "Manager") serves as each Portfolio's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Portfolios' shares.
TABLE OF CONTENTS
PAGE
Investment Objectives and Management Policies............................B-2
Management of the Fund...................................................B-12
Management Agreement.....................................................B-15
Purchase of Shares.......................................................B-16
Redemption of Shares.....................................................B-16
Determination of Net Asset Value.........................................B-17
Dividends, Distributions and Taxes.......................................B-18
Portfolio Transactions...................................................B-21
Performance Information..................................................B-22
Information About the Fund...............................................B-23
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors......................................B-24
Appendix.................................................................B-25
Financial Statement and Report of Independent Auditors...................B-33
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTIONS IN THE FUND'S PROSPECTUS ENTITLED "DESCRIPTION OF
THE FUND" AND "APPENDIX."
PORTFOLIO SECURITIES
DEPOSITARY RECEIPTS. (Both Portfolios) These securities may be
purchased through "sponsored" or "unsponsored" facilities. A sponsored facility
is established jointly by the issuer of the underlying security and a
depositary, whereas a depositary may establish an unsponsored facility without
participation by the issuer of the deposited security. Holders of unsponsored
depositary receipts generally bear all the costs of such facilities and the
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts in
respect of the deposited securities.
REPURCHASE AGREEMENTS. (Both Portfolios) The Fund's custodian or
sub-custodian will have custody of, and will hold in a segregated account,
securities acquired by a Portfolio under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange Commission
to be loans by the Portfolio. In an attempt to reduce the risk of incurring a
loss on a repurchase agreement, each Portfolio will enter into repurchase
agreements only with domestic banks with total assets in excess of $1 billion,
or primary government securities dealers reporting to the Federal Reserve Bank
of New York, with respect to securities of the type in which the Portfolio may
invest, and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below the resale price.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE Obligations. (Both
Portfolios) These instruments include variable amount master demand notes, which
are obligations that permit a Portfolio to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Portfolio, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus accrued interest,
at any time. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Portfolio's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies, and
a Portfolio may invest in them only if at the time of an investment the borrower
meets the criteria set forth in the Fund's Prospectus for other commercial paper
issuers.
CONVERTIBLE SECURITIES. (Both Portfolios) Although to a lesser extent
than with fixed-income securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion
feature, the market value of convertible securities tends to vary with
fluctuations in the market value of the underlying common stock. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable
stream of income with generally higher yields than common stocks. There can be
no assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.
ILLIQUID SECURITIES. (Both Portfolios) When purchasing securities that
have not been registered under the Securities Act of 1933, as amended, and are
not readily marketable, a Portfolio will endeavor, to the extent practicable, to
obtain the right to registration at the expense of the issuer. Generally, there
will be a lapse of time between the Portfolio's decision to sell any such
security and the registration of the security permitting sale. During any such
period, the price of the securities will be subject to market fluctuations.
However, where a substantial market of qualified institutional buyers has
developed for certain unregistered securities purchased by the Portfolio
pursuant to Rule 144A under the Securities Act of 1933, as amended, the
Portfolio intends to treat such securities as liquid securities in accordance
with procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for specific restricted securities sold
pursuant to Rule 144A will develop, the Fund's Board has directed the Manager to
monitor carefully the relevant Portfolio's investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a period of
time, qualified institutional buyers cease purchasing restricted securities
pursuant to Rule 144A, a Portfolio's investing in such securities may have the
effect of increasing the level of illiquidity in its investment portfolio during
such period.
MANAGEMENT POLICIES
LEVERAGE. (Both Portfolios) For borrowings for investment purposes,
the Investment Company Act of 1940, as amended (the "1940 Act"), requires the
Portfolio to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the required coverage should decline as a result of market
fluctuations or other reasons, the Portfolio may be required to sell some of its
portfolio securities within three days to reduce the amount of its borrowings
and restore the 300% asset coverage, even though it may be disadvantageous from
an investment standpoint to sell securities at that time. The Portfolio also may
be required to maintain minimum average balances in connection with such
borrowing or pay a commitment or other fee to maintain a line of credit; either
of these requirements would increase the cost of borrowing over the stated
interest rate. To the extent a Portfolio enters into a reverse repurchase
agreement, the Portfolio will maintain in a segregated account permissible
liquid assets at least equal to the aggregate amount of its reverse repurchase
obligations, plus accrued interest, in certain cases, in accordance with
releases promulgated by the Securities and Exchange Commission. The Securities
and Exchange Commission views reverse repurchase transactions as collateralized
borrowings by a Portfolio.
LENDING PORTFOLIO SECURITIES. (Both Portfolios) In connection with its
securities lending transactions, a Portfolio may return to the borrower or a
third party which is unaffiliated with the Portfolio, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Portfolio must receive at least 100% cash collateral from the borrower; (2)
the borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Portfolio must be
able to terminate the loan at any time; (4) the Portfolio must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Portfolio may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned securities may pass to
the borrower, the Fund's Board must terminate the loan and regain the right to
vote the securities if a material event adversely affecting the investment
occurs.
DERIVATIVES. (Both Portfolios) A Portfolio may invest in Derivatives
(as defined in the Fund's Prospectus) for a variety of reasons, including to
hedge certain market risks, to provide a substitute for purchasing or selling
particular securities or to increase potential income gain. Derivatives may
provide a cheaper, quicker or more specifically focused way for the Portfolio to
invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit a Portfolio to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Portfolio can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter Derivatives.
Therefore, each party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, the Manager will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by a
Portfolio. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS--IN GENERAL. A Portfolio may enter into futures contracts
in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or, if
permitted in the Fund's Prospectus, on exchanges located outside the United
States, such as the London International Financial Futures Exchange and the
Sydney Futures Exchange Limited. Foreign markets may offer advantages such as
trading opportunities or arbitrage possibilities not available in the United
States. Foreign markets, however, may have greater risk potential than domestic
markets. For example, some foreign exchanges are principal markets so that no
common clearing facility exists and an investor may look only to the broker for
performance of the contract. In addition, any profits that a Portfolio might
realize in trading could be eliminated by adverse changes in the exchange rate,
or the Portfolio could incur losses as a result of those changes. Transactions
on foreign exchanges may include both commodities which are traded on domestic
exchanges and those which are not. Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to a Portfolio
which could adversely affect the value of the Portfolio's net assets. Although
each Portfolio intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid market
will exist for any particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during the
trading day. Futures contract prices could move to the limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Portfolio to
substantial losses.
Successful use of futures by a Portfolio also is subject to the
ability of the Manager to predict correctly movements in the direction of the
relevant market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction being
hedged and the price movements of the futures contract. For example, if a
Portfolio uses futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices of such
securities instead increase, the Portfolio will lose part or all of the benefit
of the increased value of securities which it has hedged because it will have
offsetting losses in its futures positions. Furthermore, if in such
circumstances the Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. A Portfolio may have to
sell such securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Portfolio may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation of
such assets will have the effect of limiting the Portfolio's ability otherwise
to invest those assets.
SPECIFIC FUTURES TRANSACTIONS. Each Portfolio may purchase and sell stock index
futures contracts. A stock index future obligates the Portfolio to pay or
receive an amount of cash equal to a fixed dollar amount specified in the
futures contract multiplied by the difference between the settlement price of
the contract on the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the opening of trading
in such securities on the next business day.
The Core Value Portfolio may purchase and sell currency futures. A
foreign currency future obligates the Portfolio to purchase or sell an amount of
a specific currency at a future date at a specific price.
Each Portfolio may purchase and sell interest rate futures contracts.
An interest rate future obligates the Portfolio to purchase or sell an amount of
a specific debt security at a future date at a specific price.
OPTIONS--IN GENERAL. Each Portfolio may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date.
A covered call option written by a Portfolio is a call option with
respect to which the Portfolio owns the underlying security or otherwise covers
the transaction by segregating cash or other securities. A put option written by
a Portfolio is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize, through
the receipt of premiums, a greater return than would be realized on the
underlying securities alone. A Portfolio receives a premium from writing covered
call or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow, or other unforeseen events, at times have rendered
certain of the clearing facilities inadequate and resulted in the institution of
special procedures, such as trading rotations, restrictions on certain types of
orders or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Portfolio is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. Each Portfolio may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of specific
securities) or stock indices listed on national securities exchanges or traded
in the over-the-counter market. An option on a stock index is similar to an
option in respect of specific securities, except that settlement does not occur
by delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. Thus, the effectiveness of
purchasing or writing stock index options will depend upon price movements in
the level of the index rather than the price of a particular stock.
Each Portfolio may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying currency
at a price which is expected to be lower or higher than the spot price of the
currency at the time the option is exercised or expires.
Each Portfolio may purchase cash-settled options on equity index swaps
in pursuit of its investment objective. Equity index swaps involve the exchange
by the Portfolio with another party of cash flows based upon the performance of
an index or a portion of an index of securities which usually includes
dividends. A cash-settled option on a swap gives the purchaser the right, but
not the obligation, in return for the premium paid, to receive an amount of cash
equal to the value of the underlying swap as of the exercise date. These options
typically are purchased in privately negotiated transactions from financial
institutions, including securities brokerage firms.
Successful use by a Portfolio of options will be subject to the
ability of the Manager to predict correctly movements in the prices of
individual stocks, the stock market generally, foreign currencies or interest
rates. To the extent such predictions are incorrect, a Portfolio may incur
losses.
FUTURE DEVELOPMENTS. (Both Portfolios) A Portfolio may take advantage
of opportunities in the area of options and futures contracts and options on
futures contracts and any other Derivatives which are not presently contemplated
for use by the Portfolio or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Portfolio's investment objective and legally permissible for the Portfolio.
Before entering into such transactions or making any such investment on behalf
of a Portfolio, the Fund will provide appropriate disclosure in its Prospectus
or Statement of Additional Information.
FORWARD COMMITMENTS. (Both Portfolios) Securities purchased on a
forward commitment or when-issued basis are subject to changes in value
(generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Securities purchased on a forward
commitment or when-issued basis may expose a Portfolio to risks because they may
experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued basis can involve the additional risk that the yield
available in the market when the delivery takes place actually may be higher
than that obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Portfolio is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Portfolio's net assets and its net asset value per share.
INVESTMENT CONSIDERATIONS AND RISKS
LOWER RATED SECURITIES. (Core Value Portfolio) The Core Value
Portfolio is permitted to invest up to 5% of the value of its net assets in
securities rated Ba or lower by Moody's Investors Service, Inc. ("Moody's") or
BB or lower by Standard & Poor's Ratings Group ("S&P"), Fitch IBCA, Inc.
("Fitch") and Duff & Phelps Credit Rating Co. ("Duff") and as low as the lowest
rating assigned by Moody's, S&P, Fitch and Duff. Such securities, though higher
yielding, are characterized by risk. See "Appendix" for a general description of
Moody's, S&P, Fitch and Duff ratings. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not evaluate
the market value risk of these securities. The Core Value Portfolio will rely on
the Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by S&P, Moody's,
Fitch and Duff to be, on balance, predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in the
higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with higher rated securities and
will fluctuate over time. For example, during an economic downturn or a
sustained period of rising interest rates, highly leveraged issuers of these
securities may experience financial stress. During such periods, such issuers
may not have sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations also may be affected adversely
by specific corporate developments, or the issuer's inability to meet specific
projected business forecasts, or the unavailability of additional financing. The
risk of loss because of default by the issuer is significantly greater for the
holders of these securities because such securities generally are unsecured and
often are subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold only
to a limited number of dealers or institutional investors. To the extent a
secondary trading market for these securities does exist, it generally is not as
liquid as the secondary market for higher rated securities. The lack of a liquid
secondary market may have an adverse impact on market price and yield and the
Portfolio's ability to dispose of particular issues when necessary to meet such
Portfolio's liquidity needs or in response to a specific economic event such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
security market for certain securities also may make it more difficult for the
Portfolio to obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic
downturns. It is likely that any economic recession could disrupt severely the
market for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Core Value Portfolio may acquire these securities during an
initial offering. Such securities may involve special risks because they are new
issues. The Fund has no arrangement with any persons concerning the acquisition
of such securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
INVESTMENT RESTRICTIONS
Each Portfolio has adopted investment restrictions numbered 1 through
10 as fundamental policies. These restrictions cannot be changed, as to a
Portfolio, without approval by the holders of a majority (as defined in the 1940
Act) of such Portfolio's outstanding voting shares. Investment restrictions
numbered 11 and 15 are not fundamental policies and may be changed, as to a
Portfolio, by vote of a majority of the Fund's Board members at any time.
Neither Portfolio may:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Portfolio's total assets may
be invested, and securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities may be purchased, without regard to any such
limitations.
3. Purchase the securities of any issuer if such purchase would cause
the Portfolio to hold more than 10% of the voting securities of such issuer.
This restriction applies only with respect to 75% of the Portfolio's total
assets.
4. Invest in commodities, except that a Portfolio may purchase and
sell options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but a Portfolio may purchase and
sell securities that are secured by real estate or issued by companies that
invest or deal in real estate or real estate investment trusts.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
Portfolio's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Portfolio may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value of
its total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the Fund's
Board.
8. Act as an underwriter of securities of other issuers, except to the
extent a Portfolio may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
9. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 4, 6, 12 and 13 may be deemed to give rise to a senior
security.
10. Purchase securities on margin, but a Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
11. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the securities it
owns as a shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
13. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Prospectus and Statement of Additional Information.
14. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of its net assets would be so
invested.
15. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
* * *
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
In addition, each Portfolio has adopted the following policies as
non-fundamental policies. Each Portfolio intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) to comply
in all material respects with insurance laws and regulations that the Fund has
been advised are applicable to investments of separate accounts of Participating
Insurance Companies. As non-fundamental policies, these policies may be changed
by vote of a majority of the Board members at any time.
MANAGEMENT OF THE FUND
Board members and officers of the Fund, together with information as
to their principal business occupations during at least the last five years, are
shown below.
BOARD MEMBERS OF THE FUND
JOSEPH S. DiMARTINO, CHAIRMAN OF THE BOARD. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is a
director of The Muscular Dystrophy Association, The Noel Group, Inc., a
venture capital company (for which, from February 1995 until November
1997, he was Chairman of the Board), Staffing Resources, Inc., a
temporary placement agency, HealthPlan Services Corporation, a provider
of marketing, administrative and risk management services to health and
other benefit programs, Carlyle Industries, Inc. (formerly, Belding
Heminway Company, Inc.), a button packager and distributor, and Century
Business Services, Inc. (formerly, International Alliance Services,
Inc.), a provider of various outsourcing functions for small and medium
sized companies. For more than five years prior to January 1995, he was
President, a director and, until August 1994, Chief Operating Officer
of the Manager and Executive Vice President and a director of Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager. From
August 1994 until December 31, 1994, he was a director of Mellon Bank
Corporation. He is 54 years old and his address is 200 Park Avenue, New
York, New York 10166.
CLIFFORD L. ALEXANDER, JR., BOARD MEMBER. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander
served as Secretary of the Army and Chairman of the Board of the
Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation,
Cognizant Corporation, a service provider of marketing information and
information technology, The Dun & Bradstreet Corporation, MCI
Communications Corporation, Mutual of America Life Insurance Company
and TLC Beatrice International Holdings, Inc. He is 64 years old and
his address is 400 C Street, N.E., Washington, D.C. 20002.
LUCY WILSON BENSON, BOARD MEMBER. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
COMSAT Corporation, General ReCorporation and Logistics Management
Institute. She is also a Trustee of the Alfred P. Sloan Foundation,
Vice Chairman of the Board of Trustees of Lafayette College, Vice
Chairman of the Citizens Network for Foreign Affairs, and a member of
the Council on Foreign Relations. Mrs. Benson served as a consultant
to the U.S. Department of State and to SRI International from 1980 and
1981. From 1977 to 1980, she was Under Secretary of State for Security
Assistance, Science and Technology. She is 69 years old and her
address is 46 Sunset Avenue, Amherst, Massachusetts 01002.
There ordinarily will be no meetings of shareholders for the purpose
of electing Board members unless and until such time as less than a majority of
the Board members holding office have been elected by shareholders, at which
time the Board members then in office will call a shareholders' meeting for the
election of Board members. Under the 1940 Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Fund may remove a Board
member through a declaration in writing or by vote cast in person or by proxy at
a meeting called for that purpose. The Board members are required to call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Board member when requested in writing to do so by the shareholders of
record of not less than 10% of the Fund's outstanding shares.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. Emeritus Board members are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The aggregate amount of compensation
estimated to be paid to each Board member by the Fund, and by all other funds in
the Dreyfus Family of Funds for which such person is a Board member (the number
of which is set forth in parenthesis next to each Board member's total
compensation) for the year ending December 31, 1998, is as follows:
Total Compensation
Aggregate Estimated From Fund and
Name of Board Member Compebsation From Fund Complex Paid
Fund To Board Member
Joseph S. DiMartino $3,750 $600,878(95)
Clifford L. Alexander, Jr. $3,000 $ 91,350(18)
Lucy Wilson Benson $3,000 $ 77,055(16)
OFFICERS OF THE FUND
MARIE E. CONNOLLY, PRESIDENT AND TREASURER. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She is 40 years old.
MICHAEL S. PETRUCELLI, VICE PRESIDENT, ASSISTANT TREASURER AND ASSISTANT
SECRETARY. Senior Vice President of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From December 1989 through November 1996, he was employed by
GE Investments where he held various financial, business development
and compliance positions. He also served as Treasurer of the GE Funds
and as a Director of GE Investment Services. He is 36 years old.
MARY A. NELSON, VICE PRESIDENT AND ASSISTANT TREASURER. Vice President of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 33 years old.
JOSEPH F. TOWER, III, VICE PRESIDENT AND ASSISTANT TREASURER. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 35 years old.
DOUGLAS C. CONROY, VICE PRESIDENT AND ASSISTANT SECRETARY. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From April
1993 to January 1995, he was a Senior Fund Accountant for Investors
Bank & Trust Company. From December 1991 to March 1993, he was employed
as a Fund Accountant at The Boston Company, Inc. He is 28 years old.
CHRISTOPHER J. KELLEY, VICE PRESIDENT AND ASSISTANT SECRETARY. Vice President
and Senior Associate General Counsel of the Distributor and Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, he was employed by Putnam Investments in legal and compliance
capacities. He is 33 years old.
KATHLEEN K. MORRISEY, VICE PRESIDENT AND ASSISTANT SECRETARY. Vice President and
Assistant Secretary of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
July 1994 to November 1995, she was a Fund Accountant for Investors
Bank & Trust Company. She is 25 years old.
ELBA VASQUEZ, VICE PRESIDENT AND ASSISTANT SECRETARY. Assistant Vice President
of Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From March 1990 to
May 1996, she was employed by U.S. Trust Company of New York, where she
held various sales and marketing positions. She is 36 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
As of April 22, 1998, none of the Fund's Board members or officers
owned any shares of either Portfolio.
MANAGEMENT AGREEMENT
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "MANAGEMENT OF
THE FUND."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated April 16, 1998. As to each
Portfolio, the Agreement is subject to annual approval by (i) the Fund's Board
or (ii) vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of such Portfolio, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Manager, by
vote cast in person at a meeting called for the purpose of voting on such
approval. As to each Portfolio, the Agreement is terminable without penalty, on
60 days' notice, by the Fund's Board or by vote of the holders of a majority of
the shares of such Portfolio, or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically, as to the relevant
Portfolio, in the event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E. Canter,
Vice Chairman, Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman-Distribution and a director; Ronald P. O'Hanley III, Vice Chairman; J.
David Officer, Vice Chairman; William T. Sandalls, Jr., Senior Vice President
and Chief Financial Officer; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Patrice M. Kozlowski, Vice President-Corporate Communications; Mary
Beth Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Andrew S. Wasser, Vice President-Information
Services; William V. Healey, Assistant Secretary; and Mandell L. Berman, Burton
C. Borgelt, Frank V. Cahouet and Richard F. Syron, directors.
The Manager manages the investments of each Portfolio in accordance
with the stated policies of the Portfolio, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides the
Fund with portfolio managers who are authorized by the Fund's Board to execute
purchases and sales of securities. The portfolio managers who comprise the
committee responsible for making investment decisions for Dreyfus Core Value
Portfolio are Francis DeAngelis, William Goldenberg and Valerie Sill. The
portfolio managers of Dreyfus MidCap Stock Portfolio are John O'Toole, Ronald
Gala, Steven Falci, Robert Wilke, Mark Sickorski, Harry Grosse and Jocelyn Reed.
The Manager also maintains a research department with professional
portfolio managers and securities analysts who provide research services for the
Fund and for other funds advised by the Manager.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The expenses
borne by the Fund include: organizational costs, taxes, interest, loan
commitment fees, dividends and interest on securities sold short, brokerage fees
and commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Manager or any of its affiliates, Securities and Exchange Commission fees, state
Blue Sky qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining the
Fund's existence, costs of independent pricing services, costs attributable to
investor services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders, and any extraordinary
expenses. Expenses attributable to a particular Portfolio are charged against
the assets of that Portfolio; other expenses of the Fund are allocated between
the Portfolios on the basis determined by the Fund's Board, including, but not
limited to, proportionately in relation to the net assets of each Portfolio.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and promotional
expenditures, using its own resources, as it from time to time deems
appropriate.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's assets increases.
PURCHASE OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY
SHARES."
THE DISTRIBUTOR. The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus Family
of Funds and for certain other investment companies.
REDEMPTION OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO REDEEM
SHARES."
REDEMPTION COMMITMENT. The Fund has committed to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of a Portfolio's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount, the Fund's Board reserves the
right to make payments in whole or part in securities or other assets of the
Portfolio in case of an emergency or any time a cash distribution would impair
the liquidity of the Portfolio to the detriment of the existing shareholders. In
such event, the securities would be valued in the same manner as the Portfolio's
investments are valued. If the recipient sold such securities, brokerage charges
might be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b) when
trading in the markets the Fund ordinarily utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange Commission so that
disposal of the Fund's investments or determination of its net asset value is
not reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY
SHARES."
Each Portfolio's investment securities are valued at the last sale
price on the securities exchange or national securities market on which such
securities are primarily traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
are valued at the average of the most recent bid and asked prices, except in the
case of open short positions where the asked price is used for valuation
purposes. Bid price is used when no asked price is available. Market quotations
for foreign securities denominated in foreign currencies are translated into
U.S. dollars at the prevailing rates of exchange. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place contemporaneously with the
determination of prices of the Core Value Portfolio's foreign investment
securities. If events materially affecting the value of such securities occur
between the time when their price is determined and the time when the
Portfolio's net asset value is calculated, such securities will be valued at
fair value as determined in good faith by the Board. Short-term investments are
carried at amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in good faith by the Fund's Board. Expenses and
fees, including the management fee (reduced by the expense limitation, if any),
are accrued daily and taken into account for the purpose of determining the net
asset value of shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Fund's Board, are valued at fair value as determined in
good faith by the Fund's Board. The Fund's Board will review the method of
valuation on a current basis. In making their good faith valuation of restricted
securities, the Board members generally will take the following factors into
consideration: restricted securities which are, or are convertible into,
securities of the same class of securities for which a public market exists
usually will be valued at market value less the same percentage discount at
which purchased. This discount will be revised periodically by the Fund's Board
if the Board members believe that it no longer reflects the value of the
restricted securities. Restricted securities not of the same class as securities
for which a public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Fund's Board.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DIVIDENDS,
DISTRIBUTIONS AND TAXES."
It is expected that each Portfolio will qualify as a regulated
investment company under the Code. Each Portfolio intends to continue to so
qualify as long as such qualification is in the best interests of its
shareholders. As a regulated investment company, each Portfolio will pay no
Federal income tax on net investment income and net realized securities gains to
the extent that such income and gains are distributed to shareholders in
accordance with applicable provisions of the Code. To qualify as a regulated
investment company, the Portfolio must distribute at least 90% of its net income
(consisting of net investment income and net short-term capital gain) to its
shareholders, and meet certain asset diversification and other requirements. The
term "regulated investment company" does not imply the supervision of management
or investment practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of the shares
below the cost of the investment. Such a dividend or distribution would be a
return of investment in an economic sense, although taxable as stated in the
Prospectus. In addition, the Code provides that if a shareholder holds shares of
the Portfolio for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of such
shares will be treated as long-term capital loss to the extent of the capital
gain distribution received.
A Portfolio may qualify for and may make an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a credit
or deduction on their Federal income tax returns for, and will be required to
treat as part of the amounts distributed to them, their pro rata portion of
qualified taxes paid or incurred by the Portfolio to foreign countries (which
taxes relate primarily to investment income). The Portfolio may make an election
under Section 853 of the Code, provided that more than 50% of the value of the
Portfolio's total assets at the close of the taxable year consists of securities
in foreign corporations, and the Portfolio satisfies the applicable distribution
provisions of the Code. The foreign tax credit available to shareholders is
subject to certain limitations imposed by the Code.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gain or loss
realized from the disposition of foreign currencies (including foreign currency
denominated bank deposits) and non-U.S. dollar denominated securities (including
debt instruments, certain financial futures or forward contracts and options)
may be treated as ordinary income or loss under Section 988 of the Code. In
addition, all or a portion of any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary income
under Section 1276 of the Code. Finally, all or a portion of the gain realized
from engaging in "conversion transactions" may be treated as ordinary income
under Section 1258 of the Code. "Conversion transactions" are defined to include
certain forward, futures, option and straddle transactions, transactions
marketed or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by a
Portfolio from certain financial futures or forward contracts and options
transactions (other than those taxed under Section 988 of the Code) will be
treated as 60% long-term capital gain or loss and 40% short-term capital gain
or loss. Gain or loss will arise upon the exercise or lapse of such futures and
options as well as from closing transactions. In addition, any such contract or
option remaining unexercised at the end of the Fund's taxable year will be
treated as sold for their then fair market value, resulting in additional gain
or loss to the Fund characterized in the manner described above.
Offsetting positions held by a Portfolio involving certain futures or
forward contracts or options transactions may be considered, for tax purposes,
to constitute "straddles." Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of straddles
is governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, override or modify the provisions of Sections 988 and 1256 of the
Code. As such, all or a portion of any short- or long-term capital gain from
certain straddle transactions may be recharacterized as ordinary income.
If a Portfolio were treated as entering into straddles by reason of
its engaging in certain futures or forward contracts or options transactions,
such straddles could be characterized as "mixed straddles" if the futures or
forward contracts or options transactions comprising such straddles were
governed by Section 1256 of the Code. The Portfolio may make one or more
elections with respect to "mixed straddles." Depending upon which election is
made, if any, the results to the Portfolio may differ. If no election is made,
to the extent the straddle rules apply to positions established by the
Portfolio, losses realized by the Fund will be deferred to the extent of
unrealized gain in any offsetting positions. Moreover, as a result of the
straddle and conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and long-term
capital gain on straddle positions may be treated as short-term capital gain or
ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally will apply if a Fund either (1) holds an appreciated financial
position with respect to stock, certain debt obligations, or partnership
interests ("appreciated financial position") and then enters into a short sale,
futures or forward contract or offsetting notional principal contract
(collectively, a "Contract") with respect to the same or substantially identical
property or (2) holds an appreciated financial position that is a Contract and
then acquires property that is the same as, or substantially identical to, the
underlying property. In each instance, with certain exceptions, the Fund
generally will be taxed as if the appreciated financial position were sold at
its fair market value on the date the Fund enters into the financial position or
acquires the property, respectively. Transactions that are identified hedging or
straddle transactions under other provisions of the Code can be subject to the
constructive sale provisions.
Investment by a Portfolio in securities issued or acquired at a
discount, or providing for deferred interest or for payment of interest in the
form of additional obligations could under special tax rules affect the amount,
timing and character of distributions to shareholders by causing the Portfolio
to recognize income prior to the receipt of cash payments. For example, the
Portfolio could be required to accrue a portion of the discount (or deemed
discount) at which the securities were issued each year and to distribute such
income in order to maintain its qualification as a regulated investment
company. In such case, the Portfolio may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.
Shareholders of the Fund will be variable annuity and variable life
insurance separate accounts established by insurance companies to fund Policies
and Eligible Plans. The Secretary of the Treasury may in the future issue
additional regulations or revenue rulings that will prescribe the circumstances
in which a Policy owner's control of the investments of a separate account may
cause the Policy owner, rather than the insurance company, to be treated as the
owner of assets of the separate account. Failure to comply with Section 817(h)
of the Code or any regulation thereunder, or with any regulations or revenue
rulings on Policy owner control, if promulgated, would cause earnings regarding
a Policy owner's interest in the separate account to be includable in the Policy
owner's gross income in the year earned.
The Fund will not report dividends paid to Eligible Plans to the
Internal Revenue Service ("IRS"). Generally, distributions from Eligible Plans,
except those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the participant
reaches age 59-1/2, generally will be subject to an additional tax equal to 10%
of the taxable portion of the distribution. If the distribution from an Eligible
Plan (other than certain governmental or church plans) for any taxable year
following the year in which the participant reaches age 70-1/2 is less than the
"minimum required distribution" for that taxable year, an excise tax equal to
50% of the deficiency may be imposed by the IRS. (In some cases, minimum
required distributions need not commence until the participant retires, if
later.) The administrator, trustee or custodian of such a Plan will be
responsible for reporting distributions from the Plan to the IRS. Participants
in Eligible Plans will receive a disclosure statement describing the
consequences of a distribution from the Plan from the administrator, trustee or
custodian of the Plan prior to receiving the distribution. Moreover, certain
contributions to an Eligible Plan in excess of the amounts permitted by law may
be subject to an excise tax. For more information concerning the Federal income
tax consequences, Policy owners should refer to the prospectus for their
contracts or policies and Eligible Plan participants should consult the Plan's
administrator or trustee.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities on a securities exchange
are effected by the Manager through brokers who charge a negotiated commission
for their services based on the quality and quantity of execution services
provided by the broker in the light of generally prevailing rates. In the
over-the-counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. Transactions are allocated to various
dealers by the Fund's portfolio managers in their best judgment. The primary
consideration is prompt and effective execution of orders at the most favorable
price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to supplement its
own research and analysis with the views and information of other securities
firms. Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and the
availability of securities or the purchasers or sellers of securities. In
addition, such broker-dealers may furnish analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and performance of accounts; and effect securities transactions, and
perform functions incidental thereto (such as clearance and settlement).
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds or
accounts and, conversely, research services furnished to the Manager by brokers
in connection with other funds or accounts may be used in advising a Portfolio.
Although it is not possible to place a dollar value on these services, it is the
opinion of the Manager that the receipt and study of such services should not
reduce the overall research department expenses.
Brokers also will be selected because of their ability to handle
special executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block trades
may, in certain cases, result from two or more funds in the Dreyfus Family of
Funds being engaged simultaneously in the purchase or sale of the same security.
Certain of the Portfolios' transactions in securities of foreign issuers may not
benefit from the negotiated commission rates available for transactions in
securities of domestic issuers. Higher portfolio turnover rates are likely to
result in comparatively greater brokerage expenses. The overall reasonableness
of brokerage commissions paid is evaluated based upon knowledge of available
information as to the general level of commissions paid by other institutional
investors for comparable services.
The Fund contemplates that, consistent with the policy of obtaining
the most favorable net price, brokerage transactions may be conducted through
the Manager or its affiliates, including Dreyfus Investment Services
Corporation. The Fund's Board has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to the
Manager or its affiliates are reasonable and fair.
PERFORMANCE INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "PERFORMANCE
INFORMATION."
Performance figures for the Portfolios will not reflect the separate
charges applicable to the variable annuity contracts and variable life policies
offered by Participating Insurance Companies.
Current yield is computed pursuant to a formula which operates as
follows: The amount of the relevant Portfolio's expenses accrued for the 30-day
period (net of reimbursements) is subtracted from the amount of the dividends
and interest earned (computed in accordance with regulatory requirements) by
such Portfolio during the period. That result is then divided by the product of:
(a) the average daily number of such Portfolio's shares outstanding during the
period that were entitled to receive dividends, and (b) the net asset value per
share on the last day of the period less any undistributed earned income per
share reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying the
result by 2.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return is calculated by subtracting the amount of the relevant
Portfolio's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect to
the reinvestment of dividends and distributions during the period), and dividing
the result by the net asset value per share at the beginning of the period.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events. From time to time advertising materials for the Fund also may
refer to Morningstar ratings and related analyses supporting the rating. From
time to time, advertising materials from the Fund may refer to, or include,
commentary by the Fund's portfolio managers relating to their investment
strategy, asset growth of the Portfolio, current or past business, political,
economic or financial conditions and other matters of general interest to
shareholders.
INFORMATION ABOUT THE FUND
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "GENERAL
INFORMATION."
Each Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Shares have no preemptive, subscription or conversion rights and are freely
transferable.
Under Massachusetts law, shareholders, under certain circumstances,
could be held personally liable for the obligations of the Fund. However, the
Fund's Trust Agreement disclaims shareholder liability for acts or obligations
of the Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund or a
Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations, a possibility
which management believes is remote. Upon payment of any liability incurred by
the Fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Fund intends to conduct
its operations in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Fund.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of any investment
company, such as the Fund, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each portfolio affected by such matter. Rule 18f-2 further provides that a
portfolio shall be deemed to be affected by a matter unless it is clear that the
interests of each portfolio in the matter are identical or that the matter does
not affect any interest of such portfolio. However, the Rule exempts the
selection of independent accountants and the election of Board members from the
separate voting requirements of the rule.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund, the
Transfer Agent arranges for the maintenance of shareholder account records for
the Fund, the handling of certain communications between shareholders and the
Fund and the payment of dividends and distributions payable by the Fund. For
these services, the Transfer Agent receives a monthly fee computed on the basis
of the number of shareholder accounts it maintains for the Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian. Under a custody
agreement with the Fund, Mellon Bank, N.A. holds each Portfolio's securities and
keeps all necessary accounts and records. For its custody services, Mellon Bank,
N.A. receives a monthly fee based on the market value of each Portfolio's assets
held in custody and receives certain securities transaction charges.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund. The auditors
examine the Fund's financial statements and provide other audit, tax and related
services.
<PAGE>
APPENDIX
Description of certain ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade bonds. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payment.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to bonds subordinated to senior
debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC- rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major ratings
categories, except in the AAA (Prime Grade) category.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a rating for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be evidenced
by leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings take
into consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or reorganization of
the obligor. DDD represents the highest potential for recovery on these bonds
and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection
factors but still considered sufficient for prudent investment. Considerable
variability in risk exists during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds
may be in default or have considerable uncertainty as to timely payment of
interest, preferred dividends and/or principal. Protection factors are narrow
and risk can be substantial with unfavorable economic or industry conditions
and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled
principal and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except
AAA) to indicate the relative position of a credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by ample asset
protection. Risk factors are minor.
FINANCIAL STATEMENT AND REPORT OF INDEPENDENT AUDITORS
Statement of Assets and Liabilities
April 20, 1998
CORE VALUE MIDCAP
PORTFOLIO STOCK PORTFOLIO
ASSETS
Cash................................... $50,000 $50,000
Deferred organization expenses......... 30,250 30,250
------ ------
Total Assets........................... 80,250 30,250
LIABILITIES
Accrued organization expenses..........
NET ASSETS applicable to the shares of
beneficial interest ($.001 par value)
issued and outstanding
(unlimited number of shares authorized).. $50,000 $50,000
======= =======
SHARES OUTSTANDING......................... 4,000 4,000
NET ASSET VALUE PER SHARE.................. $12.50 $12.50
====== ======
NOTE - Dreyfus Investment Portfolios (the "Fund") is organized as a
Massachusetts business trust and has had no operations as of the date hereof
other than matters relating to its organization and registration as an open-end
investment company under the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended, and the sale and issuance of 4,000 shares of
beneficial interest each of the Core Value Portfolio and MidCap Stock Portfolio,
respectively, to Premier Mutual Fund Services, Inc. ("Initial Shares").
Organization expenses payable by the Fund have been deferred and will be
amortized to operations from the date operations commence over a period which it
is expected that a benefit will be realized, not to exceed five years. If any of
the Initial Shares are redeemed during the amortization period by any holder
thereof, the redemption proceeds will be reduced by any unamortized organization
expenses in the same proportion as the number of Initial Shares being redeemed
bears to the number of Initial Shares outstanding at the time of the redemption.
Pursuant to a management agreement with The Dreyfus Corporation, the
management fee for each Portfolio is computed at the annual rate of .75 of 1% of
the value of the average daily net assets of each Portfolio and is payable
monthly.
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Trustees
Dreyfus Investment Portfolios
We have audited the accompanying statement of assets and liabilities
of Dreyfus Investment Portfolios (comprised of Core Value Portfolio and MidCap
Stock Portfolio) as of April 20, 1998. This statement of assets and liabilities
is the responsibility of the Fund's management. Our responsibility is to express
an opinion on this statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to
above presents fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios at April 20, 1998, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 22, 1998
<PAGE>
DREYFUS INVESTMENT PORTFOLIOS
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in the Statement of Additional
Information:
(1) Statements of Assets and Liabilities as of April 20, 1998.
(2) Reports of Ernst & Young LLP, Independent Auditors, dated
April 22, 1998.
(b) Exhibits:
(1) Agreement and Declaration of Trust*
(2) By-Laws*
(5) Management Agreement
(6) Distribution Agreement
(8) Custody Agreement
(10) Opinion, including consent, of Stroock & Stroock & Lavan LLP
(11) Consent of Independent Auditors
Other Exhibit: (a) Secretary's Certificate
(b) Rule 18f-1 Election Assistant
- ---------
* Previously filed.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of Record
Title of Class Holders
Beneficial Interests, par value
$.001 per share
Dreyfus Core Value Portfolio -1-
Dreyfus Midcap Stock Portfolio -1-
ITEM 27. INDEMNIFICATION
Reference is made to Article EIGHTH of the Registrant's Agreement and
Declaration of Trust filed as Exhibit 1 hereto. The application of these
provisions is limited by Article 10 of the Registrant's By-Laws filed as Exhibit
2 hereto and by the following undertaking set forth in the rules promulgated by
the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Board members, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a Board member, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such Board member, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference also is made to the form of Distribution Agreement filed as
Exhibit 6 hereto.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The Dreyfus Corporation ("Dreyfus") and its subsidiary companies
comprise a financial service organization whose business consists primarily of
providing investment management services as the investment adviser and manager
for investment companies registered under the Investment Company Act of 1940 and
as an investment adviser to institutional and individual accounts. Dreyfus also
serves as sub investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
serves primarily as a registered broker-dealer of shares of investment companies
sponsored by Dreyfus and of other investment companies for which Dreyfus acts as
investment adviser, sub-investment adviser or administrator. Dreyfus Management,
Inc., another wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
OFFICERS AND DIRECTORS OF DREYFUS
Name and Position
WITH DREYFUS OTHER BUSINESSES
MANDELL L. BERMAN Real estate consultant and
Director private investor
29100 Northwestern Highway
Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of
Trustees:
Skillman Foundation;
Member of the Board of Vintners
International
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive
Officer and Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
W. KEITH SMITH Chairman and Chief Executive
Chairman of the Board Officer:
The Boston Company****;
Vice Chairman of the Board:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Executive Mellon Bank Corporation***;
Officer, Chief Operating Officer The Boston Company****;
and a Director Deputy Director:
Mellon Trust***;
Chief Executive Officer:
The Boston Company Asset
Management, Inc.****;
President:
Boston Safe Deposit and Trust
Company****
STEPHEN E. CANTER Director:
Vice Chairman, Chief Investment The Dreyfus Trust Company++;
Officer and Former Chairman and Chief Executive
a Director Officer:
Kleinwort Benson Investment
Management Americas Inc.*
LAWRENCE S. KASH
Vice Chairman - Distribution and
a Director Chairman, President and Chief
Executive Officer:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and
Director:
Dreyfus Service Organization,
Inc.**;
Director:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****
RICHARD F. SYRON Chairman of the Board and
Director Chief Executive Officer:
American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance
Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, NW, Suite 120
Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Avenue
Chestnut Hill, Massachusetts
02167-3934
J. DAVID OFFICER Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
Director:
Dreyfus Financial Services
Corporation*****;
Dreyfus Investment Services
Corporation*****;
Mellon Trust of Florida
2875 Northeast 191st Street
North Miami Beach, Florida 33180;
Mellon Preferred Capital
Corporation****;
Boston Group Holdings, Inc.****;
Mellon Trust of New York
1301 Avenue of the Americas -
41st Floor
New York, New York 10019;
Mellon Trust of California
400 South Hope Street
Los Angeles, California 90071-2806;
Executive Vice President:
Mellon Bank, N.A.***;
Vice Chairman and Director:
The Boston Company; Inc.****;
President and Director:
RECO, Inc.****;
The Boston Company Financial
Services, Inc.****;
Boston Safe Deposit and
Trust Company****;
RONALD P. O'HANLEY Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
Director:
The Boston Company Asset
Management, LLC****;
TBCAM Holding, Inc.****;
Franklin Portfolio Holdings, Inc.
Two International Place - 22nd Fl.
Boston, Massachusetts 02110;
Mellon Capital Management
Corporation
595 Market Street, Suite #3000
San Francisco, California 94105;
Certus Asset Advisors Corporation
One Bush Street, Suite 450
San Francisco, California 94104;
Mellon-France Corporation***;
Chairman and Director:
Boston Safe Advisors, Inc.****;
Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP***;
Mellon Equity Associates, LLP***;
Trustee:
Laurel Capital Advisors, LLP***;
Chairman, President and Chief
Executive Officer:
Mellon Global Investing Corp.***;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Chief Dreyfus Partnership Management,
Financial Officer Inc.*;
Seven Six Seven Agency, Inc.*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Lion Management, Inc.*;
Executive Vice President and
Director:
Dreyfus Service Organization,
Inc.*;
Vice President, Chief Financial
Officer and Director:
Dreyfus America Fund+++;
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and
Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and
Vice President, Director:
General Counsel Lion Management, Inc.*;
and Secretary Secretary:
The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization,
Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation***
Services
WILLIAM V. HEALEY President:
Assistant Secretary The Truepenny Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
Secretary and Director:
Dreyfus Partnership Management
Inc.*;
Director:
The Dreyfus Trust Company++;
Assistant Secretary:
Dreyfus Service Corporation*;
Dreyfus Investment Advisors, Inc.*;
Assistant Clerk;
Dreyfus Insurance Agency of
Massachusetts, Inc.+++++
- ------------------------
* The address of the business so indicated is 200 Park Avenue, New York,
New York 10166.
** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
*** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
**** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
***** The address of the business so indicated is Union Trust Building,
501 Grant Street, Room 179, Pittsburgh, Pennsylvania 15259.
+ The address of the business so indicated is Atrium Building, 80 Route 4
East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
+++ The address of the business so indicated is 69, Route 'd' Esch, L-1470,
Luxembourg.
++++ The address of the business so indicated is 69, Route 'd' Esch, L-2953,
Luxembourg.
+++++ The address of the business so indicated is 53 State Street,
Boston, Massachusetts 02103.
ITEM 28(B). BUSINESS AND OTHER CONNECTIONS OF SUB-INVESTMENT ADVISER
Registrant is fulfilling the requirement of this Item 28(b) to provide
a list of the officers and directors of Hamon U.S. Investment Advisers Limited,
the sub-investment adviser of a series of the Registrant (the "Sub-Adviser"),
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by the Sub-Adviser or those of its
officers and directors during the past two years, by incorporating by reference
the information contained in the Form ADV filed with the SEC pursuant to the
Investment Advisers Act of 1940 by the Sub-Adviser (SEC File No. 801-55066).
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal
underwriter or exclusive distributor:
1. Comstock Partners Funds, Inc.
2. Dreyfus A Bonds Plus, Inc.
3. Dreyfus Appreciation Fund, Inc.
4. Dreyfus Asset Allocation Fund, Inc.
5. Dreyfus Balanced Fund, Inc.
6. Dreyfus BASIC GNMA Fund
7. Dreyfus BASIC Money Market Fund, Inc.
8. Dreyfus BASIC Municipal Fund, Inc.
9. Dreyfus BASIC U.S. Government Money Market Fund
10. Dreyfus California Intermediate Municipal Bond Fund
11. Dreyfus California Tax Exempt Bond Fund, Inc.
12. Dreyfus California Tax Exempt Money Market Fund
13. Dreyfus Cash Management
14. Dreyfus Cash Management Plus, Inc.
15. Dreyfus Connecticut Intermediate Municipal Bond Fund
16. Dreyfus Connecticut Municipal Money Market Fund, Inc.
17. Dreyfus Florida Intermediate Municipal Bond Fund
18. Dreyfus Florida Municipal Money Market Fund
19. The Dreyfus Fund Incorporated
20. Dreyfus Global Bond Fund, Inc.
21. Dreyfus Global Growth Fund
22. Dreyfus GNMA Fund, Inc.
23. Dreyfus Government Cash Management Funds
24. Dreyfus Growth and Income Fund, Inc.
25. Dreyfus Growth and Value Funds, Inc.
26. Dreyfus Growth Opportunity Fund, Inc.
27. Dreyfus Income Funds
28. Dreyfus Index Funds, Inc.
29. Dreyfus Institutional Money Market Fund
30. Dreyfus Institutional Preferred Money Market Fund
31. Dreyfus Institutional Short Term Treasury Fund
32. Dreyfus Insured Municipal Bond Fund, Inc.
33. Dreyfus Intermediate Municipal Bond Fund, Inc.
34. Dreyfus International Funds, Inc.
35. Dreyfus Investment Grade Bond Funds, Inc.
36. The Dreyfus/Laurel Funds, Inc.
37. The Dreyfus/Laurel Funds Trust
38. The Dreyfus/Laurel Tax-Free Municipal Funds
39. Dreyfus Lifetime Portfolios, Inc.
40. Dreyfus Liquid Assets, Inc.
41. Dreyfus Massachusetts Intermediate Municipal Bond Fund
42. Dreyfus Massachusetts Municipal Money Market Fund
43. Dreyfus Massachusetts Tax Exempt Bond Fund
44. Dreyfus MidCap Index Fund
45. Dreyfus Money Market Instruments, Inc.
46. Dreyfus Municipal Bond Fund, Inc.
47. Dreyfus Municipal Cash Management Plus
48. Dreyfus Municipal Money Market Fund, Inc.
49. Dreyfus New Jersey Intermediate Municipal Bond Fund
50. Dreyfus New Jersey Municipal Bond Fund, Inc.
51. Dreyfus New Jersey Municipal Money Market Fund, Inc.
52. Dreyfus New Leaders Fund, Inc.
53. Dreyfus New York Insured Tax Exempt Bond Fund
54. Dreyfus New York Municipal Cash Management
55. Dreyfus New York Tax Exempt Bond Fund, Inc.
56. Dreyfus New York Tax Exempt Intermediate Bond Fund
57. Dreyfus New York Tax Exempt Money Market Fund
58. Dreyfus 100% U.S. Treasury Intermediate Term Fund
59. Dreyfus 100% U.S. Treasury Long Term Fund
60. Dreyfus 100% U.S. Treasury Money Market Fund
61. Dreyfus 100% U.S. Treasury Short Term Fund
62. Dreyfus Pennsylvania Intermediate Municipal Bond Fund
63. Dreyfus Pennsylvania Municipal Money Market Fund
64. Dreyfus Premier California Municipal Bond Fund
65. Dreyfus Premier Equity Funds, Inc.
66. Dreyfus Premier International Funds, Inc.
67. Dreyfus Premier GNMA Fund
68. Dreyfus Premier Worldwide Growth Fund, Inc.
69. Dreyfus Premier Insured Municipal Bond Fund
70. Dreyfus Premier Municipal Bond Fund
71. Dreyfus Premier New York Municipal Bond Fund
72. Dreyfus Premier State Municipal Bond Fund
73. Dreyfus Premier Value Fund
74. Dreyfus Short-Intermediate Government Fund
75. Dreyfus Short-Intermediate Municipal Bond Fund
76. The Dreyfus Socially Responsible Growth Fund, Inc.
77. Dreyfus Stock Index Fund, Inc.
78. Dreyfus Tax Exempt Cash Management
79. The Dreyfus Third Century Fund, Inc.
80. Dreyfus Treasury Cash Management
81. Dreyfus Treasury Prime Cash Management
82. Dreyfus Variable Investment Fund
83. Dreyfus Worldwide Dollar Money Market Fund, Inc.
84. General California Municipal Bond Fund, Inc.
85. General California Municipal Money Market Fund
86. General Government Securities Money Market Fund, Inc.
87. General Money Market Fund, Inc.
88. General Municipal Bond Fund, Inc.
89. General Municipal Money Market Fund, Inc.
90. General New York Municipal Bond Fund, Inc.
91. General New York Municipal Money Market Fund
(b)
Positions and offices Positions and
Name and principal with Premier Mutual offices with
BUSINESS ADDRESS FUND SERVICES, INC. REGISTRANT
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Treasurer
Compliance Officer
Joseph F. Tower, III+ Senior Vice President, Vice President
Treasurer and Chief and Assistant
Financial Officer Treasurer
Richard W. Ingram Senior Vice President Vice President
and Assistant
Treasurer
Roy M. Moura + First Vice President None
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
- ----------------
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. Dreyfus Transfer Inc.
P.O. Box 9671
Providence, Rhode Island 02903-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes
(1) to file a post-effective amendment, using financial statements
which need not be certified, within four to six months from the
effective date of Registrant's 1933 Act Registration Statement.
(2) to call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(3) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 24th day of
April, 1998.
DREYFUS INVESTMENT PORTFOLIOS
(Registrant)
By:/S/MARIE E. CONNOLLY
Marie E. Connolly, President
POWER OF ATTORNEY
Each person whose signature appears below on this Amendment to
Registration Statement hereby constitutes and appoints Marie E. Connolly and
Michael S. Petrucelli, and each of them, with full power to act without the
other, his/her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him/her and in his/her name, place and
stead, in any and all capacities (until revoked in writing) to sign any and all
amendments to this Registration Statement (including post-effective amendments
and amendments thereto), and to file the same, with all exhibits thereto), and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his/her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/S/MARIE E. CONNOLLY President (Principal April 24, 1998
Marie E. Connolly Executive Officer), Treasurer
and Board Member
/S/JOHN F. TOWER, III Assistant Treasurer April 24, 1998
John F. Tower, III (Principal Financial
and Accounting Officer)
/S/ JOSEPH S. DIMARTINO Chairman of the Board April 24, 1998
Joseph S. DiMartino
/S/ CLIFFORD L. ALEXANDER, JR. Board Member April 24, 1998
Clifford L. Alexander, Jr.
/S/ LUCY WILSON BENSON Board Member April 24, 1998
Lucy Wilson Benson
<PAGE>
DREYFUS VARIABLE INSURANCE PORTFOLIOS
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
--------------------------------------
EXHIBITS
--------------------------------------
<PAGE>
INDEX TO EXHIBITS
PAGE
(5) Management Agreement...........................................
(6) Distribution Agreement.........................................
(8) Custody Agreement..............................................
(10) Opinion, including consent, of Stroock & Stroock & Lavan LLP...
(11) Consent of Independent Auditors................................
Other Exhibits:
(a) Assistant Secretary's Certificate
(b) Rule 18f-1 Election
EXHIBIT (5)
MANAGEMENT AGREEMENT
DREYFUS INVESTMENT PORTFOLIOS
200 Park Avenue
New York, New York 10166
April 16, 1998
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Ladies and Gentlemen:
The above-named investment company (the "Fund") consisting of the
series named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting
the same in investments of the type and in accordance with the limitations
specified in its charter documents and in its Prospectus and Statement of
Additional Information as from time to time in effect, copies of which have been
or will be submitted to you, and in such manner and to such extent as from time
to time may be approved by the Fund's Board. The Fund desires to employ you to
act as the Fund's investment adviser.
In this connection it is understood that from time to time you will
employ or associate with yourself such person or persons as you may believe to
be particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of each Series' portfolio in accordance with such
Series' investment objectives and policies as stated in the Fund's Prospectus
and Statement of Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment research and will
supervise each Series' investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and reinvestment of such
Series' assets. You will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or contemplate purchasing, as
the Fund may reasonably request. The Fund wishes to be informed of important
developments materially affecting any Series' portfolio and shall expect you, on
your own initiative, to furnish to the Fund from time to time such information
as you may believe appropriate for this purpose.
In addition, you will supply office facilities (which may be in your
own offices), data processing services, clerical, accounting and bookkeeping
services, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; prepare reports to
each Series' stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities; calculate the
net asset value of each Series' shares; and generally assist in all aspects of
the Fund's operations. You shall have the right, at your expense, to engage
other entities to assist you in performing some or all of the obligations set
forth in this paragraph, provided each such entity enters into an agreement with
you in form and substance reasonably satisfactory to the Fund. You agree to be
liable for the acts or omissions of each such entity to the same extent as if
you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder and the Fund agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or purport to protect
you against any liability to the Fund or a Series or to its security holders to
which you would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of your duties hereunder, or by reason of
your reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement, the
Fund will pay you on the first business day of each month a fee at the rate set
forth opposite each Series' name on Schedule 1 hereto. Net asset value shall be
computed on such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information. The fee for the
period from the date of the commencement of the public sale of a Series' shares
to the end of the month during which such sale shall have been commenced shall
be pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by you. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who are not your
officers, directors or employees or holders of 5% or more of your outstanding
voting securities, Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
The Fund understands that you now act, and that from time to time
hereafter you may act, as investment adviser to one or more other investment
companies and fiduciary or other managed accounts, and the Fund has no objection
to your so acting, provided that when the purchase or sale of securities of the
same issuer is suitable for the investment objectives of two or more companies
or accounts managed by you which have available funds for investment, the
available securities will be allocated in a manner believed by you to be
equitable to each company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one or more Series
or the size of the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to
assist in the performance of your duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict your right or the right of any of your affiliates to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except for a loss resulting from willful misfeasance, bad
faith or gross negligence on your part in the performance of your duties or from
reckless disregard by you of your obligations and duties under this Agreement.
Any person, even though also your officer, director, partner, employee or agent,
who may be or become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting on any business
of the Fund, to be rendering such services to or acting solely for the Fund and
not as your officer, director, partner, employee or agent or one under your
control or direction even though paid by you.
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 hereto (the "Reapproval Date")
and thereafter shall continue automatically for successive annual periods ending
on the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940) of such Series' outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Fund's Board members who are not "interested persons" (as
defined in said Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. As to each Series,
this Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of holders of a majority of such Series' shares or, upon not
less than 90 days' notice, by you. This Agreement also will terminate
automatically, as to the relevant Series, in the event of its assignment (as
defined in said Act).
The Fund recognizes that from time to time your directors, officers
and employees may serve as directors, trustees, partners, officers and employees
of other corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other entities may include
the name "Dreyfus" as part of their name, and that your corporation or its
affiliates may enter into investment advisory or other agreements with such
other entities. If you cease to act as the Fund's investment adviser, the Fund
agrees that, at your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Dreyfus" in any form or
combination of words.
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the Fund or the affected Series, as the case may be, and shall not be binding
upon any Board member, officer or shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS INVESTMENT
PORTFOLIOS
By:___________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
<PAGE>
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
NAME OF SERIES ASSETS REAPPROVAL DATE REAPPROVAL DAY
Dreyfus Core Value .75% April 16, 2000 April 16th
Portfolio
Dreyfus MidCap Stock .75% April 16, 2000 April 16th
Portfolio
EXHIBIT (6)
DISTRIBUTION AGREEMENT
DREYFUS INVESTMENT PORTFOLIOS
200 Park Avenue
New York, New York 10166
April 16, 1998
Premier Mutual Fund Services, Inc.
60 State Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the "Fund") has
agreed that you shall be, for the period of this agreement, the distributor of
(a) shares of each Series of the Fund set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes of this
agreement the term "Shares" shall mean the authorized shares of the relevant
Series, if any, and otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by,
and in accordance with, the registration statement and prospectus then in effect
under the Securities Act of 1933, as amended, and will transmit promptly any
orders received by you for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing.
1.2 You agree to use your best efforts to solicit orders for the sale
of Shares. It is contemplated that you will enter into sales or servicing
agreements with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended, by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by abnormal circumstances of any kind, the
Fund's officers may decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such orders and to
make such sales and the Fund shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in connection with
the registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided, however,
that nothing contained herein shall be deemed to require the Fund to pay any of
the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Fund's officers in connection with
the qualification of Shares for sale in such states as you may designate to the
Fund and the Fund may approve, and the Fund agrees to pay all expenses which may
be incurred in connection with such qualification. You shall pay all expenses
connected with your own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this agreement, all other
expenses incurred by you in connection with the sale of Shares as contemplated
in this agreement.
1.7 The Fund shall furnish you from time to time, for use in
connection with the sale of Shares, such information with respect to the Fund or
any relevant Series and the Shares as you may reasonably request, all of which
shall be signed by one or more of the Fund's duly authorized officers; and the
Fund warrants that the statements contained in any such information, when so
signed by the Fund's officers, shall be true and correct. The Fund also shall
furnish you upon request with: (a) semi-annual reports and annual audited
reports of the Fund's books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings statements prepared by
the Fund, (c) a monthly itemized list of the securities in the Fund's or, if
applicable, each Series' portfolio, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition as you may
reasonably request.
1.8 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully prepared in
conformity with the requirements of said Acts and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Fund represents and warrants to you
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Fund may
but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not file any amendment
to any registration statement or supplement to any prospectus without giving you
reasonable notice thereof in advance; provided, however, that nothing contained
in this agreement shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the form
furnished to you from time to time, in connection with the sale of Shares. The
Fund agrees to indemnify, defend and hold you, your several officers and
directors, and any person who controls you within the meaning of Section 15 of
the Securities Act of 1933, as amended, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you, your officers and directors,
or any such controlling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Fund's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's agreement to
indemnify you, your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Fund at
its address set forth above within ten days after the summons or other first
legal process shall have been served. The failure so to notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this paragraph
1.9. The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case, such defense
shall be conducted by counsel of good standing chosen by the Fund and approved
by you. In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained by
any of them; but in case the Fund does not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by you or them. The Fund's indemnification agreement
contained in this paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of you, your officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your several officers and directors, and their respective estates, and to the
benefit of any controlling persons and their successors. The Fund agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Fund or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its officers or Board members, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or otherwise,
but only to the extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting from such claims
or demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
you to the Fund specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your address set forth above within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on your part, and in any other event the Fund,
its officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 1.10. This agreement of
indemnity will inure exclusively to the Fund's benefit, to the benefit of the
Fund's officers and Board members, and their respective estates, and to the
benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any litigation or
proceedings against you or any of your officers or directors in connection with
the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund under any of
the provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect
or for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation
of any proceeding for that purpose;
(c) of the happening of any event which makes untrue any
statement of a material fact made in the registration statement or
prospectus then in effect or which requires the making of a change in
such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus
which may from time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be
offered for sale at a price per share (the "offering price") approximately equal
to (a) their net asset value (determined in the manner set forth in the Fund's
charter documents) plus (b) a sales charge, if any and except to those persons
set forth in the then-current prospectus, which shall be the percentage of the
offering price of such Shares as set forth in the Fund's then-current
prospectus. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred sales charge as
set forth in the Fund's then-current prospectus. You shall be entitled to
receive any sales charge or contingent deferred sales charge in respect of the
Shares. Any payments to dealers shall be governed by a separate agreement
between you and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval Date")
set forth on Exhibit A hereto (and, if the Fund has Series, a separate
Reapproval Date shall be specified on Exhibit A for each Series), and thereafter
shall continue automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A hereto, provided such
continuance is specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may be, provided that
in either event its continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in said Act) of any party
to this agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable without penalty, on 60
days' notice, by vote of holders of a majority of the Fund's or, as to any
relevant Series, such Series' outstanding voting securities or by the Fund's
Board as to the Fund or the relevant Series, as the case may be. This agreement
is terminable by you, upon 270 days' notice, effective on or after the fifth
anniversary of the date hereof. This agreement also will terminate
automatically, as to the Fund or relevant Series, as the case may be, in the
event of its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you shall not perform
any services for any entity other than investment companies advised or
administered by The Dreyfus Corporation. The Fund acknowledges that the persons
employed by you to assist in the performance of your duties under this agreement
may not devote their full time to such service and nothing contained in this
agreement shall be deemed to limit or restrict your or any of your affiliates
right to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this agreement shall only be binding upon the assets and property
of the Fund and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below, whereupon it
shall become a binding agreement between us.
Very truly yours,
DREYFUS INVESTMENT
PORTFOLIOS
By:________________________
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:_______________________________
<PAGE>
EXHIBIT A
NAME OF SERIES REAPPROVAL DATE REAPPROVAL DAY
Dreyfus Core Value Portfolio April 16, 2000 April 16th
Dreyfus MidCap April 16, 2000 April 16th
Stock Portfolio
EXHIBIT (8)
CUSTODY AGREEMENT
AGREEMENT dated as of April 16, 1998 between DREYFUS INVESTMENT
PORTFOLIOS (the "Fund"), an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts, having its principal office and place
of business at 200 Park Avenue, New York, New York 10166, and MELLON BANK, N.A.
(the "Custodian"), a national banking association, having its principal place of
business at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, with respect
to the Fund's series named on Schedule 1 hereto, as such Schedule may be revised
from time to time (each, a "Series").
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and the Custodian agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement or in any Schedules to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within Section
2(a)(3) of the 1940 Act.
(b) "Authorized Person" shall mean those persons duly authorized by the
Fund's Board to give Oral Instructions and Written Instructions on behalf
of the Fund and listed in the certification annexed hereto as Appendix A or
such other certification as may be received by the Custodian from time to
time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its successor or
successors and its nominee or nominees, in which the Custodian is hereby
specifically authorized and instructed on a continuous and on-going basis
to deposit all Securities eligible for deposit therein, and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder.
(d) "Business Day" shall mean each day on which the Fund is required to
determine its net asset value, and any other day on which the Securities
and Exchange Commission may require the Fund to be open for business.
(e) "Certificate" shall mean any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf
of the Fund by any two Authorized Persons or any two officers of the Fund.
(f) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in which the Custodian
is hereby specifically authorized and instructed on a continuous and
on-going basis to deposit all Securities eligible for deposit therein, and
to utilize the Depository to the extent possible in connection with its
performance hereunder. The term "Depository" shall further mean and include
any other person to be named in a Certificate authorized to act as a
depository under the 1940 Act, its successor or successors and its nominee
or nominees.
(g) "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to interest and principal by the
government of the United States or agencies or instrumentalities thereof
("U.S. government securities"), commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations, where
the purchase or sale of such securities normally requires settlement in
federal funds on the same day as such purchase or sale, and repurchase and
reverse repurchase agreements with respect to any of the foregoing types of
securities and bank time deposits.
(h) "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from a person reasonably believed by the Custodian to be an
Authorized Person.
(i) "Prospectus" shall mean the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's Shares
under the Securities Act of 1933, as amended.
(j) "Shares" shall mean all or any part of each class of shares of
beneficial interest of the Fund, allocated to a particular Series, listed
in the Certificate annexed hereto as Appendix B, as it may be amended from
time to time, which from time to time are authorized and/or issued by the
Fund.
(k) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time owned
by the Fund.
(l) "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions
for the Fund.
(m) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex, whereby the
receiver of such communication is able to verify by codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication.
(n) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
2. APPOINTMENT OF CUSTODIAN.
(a) The Fund hereby constitutes and appoints the Custodian as custodian of
all the Securities and monies at the time owned by or in the possession of
the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
3. COMPENSATION.
(a) The Fund will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule A and incorporated herein. Such Fee Schedule
does not include out-of-pocket disbursements of the Custodian for which the
Custodian shall be entitled to bill separately. Out-of-pocket disbursements
shall consist of the items specified in the Schedule of Out-of-pocket
charges annexed hereto as Schedule B and incorporated herein, which
schedule may be modified by the Custodian upon not less than thirty days
prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A of this Agreement a revised Fee Schedule, dated
and signed by an Authorized Officer or authorized representative of each
party hereto.
(c) The Custodian will bill the Fund as soon as practicable after the end
of each calendar month, and said billings will be detailed in accordance
with Schedule A, as amended from time to time. The Fund will promptly pay
to the Custodian the amount of such billing. The Custodian may charge
against any monies held on behalf of the Fund pursuant to this Agreement
such compensation and disbursements incurred by the Custodian in the
performance of its duties pursuant to this Agreement. The Custodian shall
also be entitled to charge against any money held on behalf of the Fund
pursuant to this Agreement the amount of any loss, damage, liability or
expense incurred with respect to the Fund, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement.
4. CUSTODY OF CASH AND SECURITIES.
(a) RECEIPT AND HOLDING OF ASSETS. The Fund will deliver or cause to be
delivered to the Custodian or its permitted Sub-Custodians all Securities
and monies owned by the Series at any time during the period of this
Agreement and shall specify the Series to which the same are to be
specifically allocated. The Custodian will not be responsible for such
Securities and monies until actually received by it. The Fund shall
instruct the Custodian from time to time in its sole discretion, by means
of Written Instructions, or, in connection with the purchase or sale of
Money Market Securities, by means of Oral Instructions confirmed in writing
in accordance with Section 11(h) hereof or Written Instructions, as to the
manner in which and in what amounts Securities and monies are to be
deposited on behalf of the Series in the Book-Entry System or the
Depository. Securities and monies of such Series deposited in the
Book-Entry System or the Depository will be represented in accounts which
include only assets held by the Custodian for customers, including but not
limited to accounts for which the Custodian acts in a fiduciary or
representative capacity.
(b) ACCOUNTS AND DISBURSEMENTS. The Custodian shall establish and maintain
a separate account for the Fund with respect to each Series and shall
credit to the separate account all monies received by it for the account of
the Fund with respect to such Series and shall disburse the same only:
1. In payment for Securities purchased for the Series, as provided in
Section 5 hereof;
2. In payment of dividends or distributions with respect to the
Shares, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to the
Shares, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund, as
provided in Section 8 hereof;
5. Pursuant to a Certificate setting forth the name and address of the
person to whom the payment is to be made, the Series account from
which payment is to be made, the amount to be paid and the purpose for
which payment is to be made, provided that in the event of
disbursements pursuant to this paragraph 5 of Section 4(b), the Fund
shall indemnify and hold the Custodian harmless from any claims or
losses arising out of such disbursements in reliance on such
Certificate; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as provided in
Sections 3 and 11(i).
(c) CONFIRMATION AND STATEMENTS. Promptly after the close of business on
each day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of each Series during said
day. Where securities purchased by a Series are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the Depository or the
Book-Entry System, the Custodian shall by book-entry or otherwise identify
the quantity of those securities belonging to such Series. At least
monthly, the Custodian shall furnish the Fund with a detailed statement of
the Securities and monies held for each Series under this Agreement.
(d) REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION. All Securities held
for a Series which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the
Custodian in that form; all other Securities held for a Series may be
registered in the name of such Series, in the name of the Custodian, in the
name of any duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor or successors, or their nominee
or nominees. The Fund reserves the right to instruct the Custodian as to
the method of registration and safekeeping of the Securities. The Fund
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of the Book-Entry System
or the Depository, any Securities which it may hold for the account of a
Series and which may from time to time be registered in the name of such
Series. The Custodian shall hold all such Securities specifically allocated
to a Series which are not held in the Book-Entry System or the Depository
in a separate account for the Fund in the name of such Series physically
segregated at all times from those of any other person or persons.
(e) SEGREGATED ACCOUNTS. Upon receipt of a Certificate, the Custodian will
establish segregated accounts on behalf of each Series to hold liquid or
other assets as it shall be directed by a Certificate and shall increase or
decrease the assets in such segregated accounts only as it shall be
directed by subsequent Certificate.
(f) COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES. Unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with respect to all
Securities held for each Series in accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired or
otherwise become payable. Notwithstanding the foregoing, the Custodian
only shall have such responsibility to the Fund for Securities which
are called if either (i) the Custodian received a written notice of
such call; or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian upon five (5) Business Days prior
notification to the Fund;
3. Surrender Securities in temporary form for definitive Securities;
4. Execute any necessary declarations or certificates of ownership
under the Federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
5. Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of each
Series all rights and similar Securities issued with respect to any
Securities held by the Custodian hereunder for the Series.
(g) DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon receipt of a
Certificate, the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Certificate, proxies, consents,
authorizations, and any other instruments whereby the authority of the
Fund as owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for the Series
in exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise
of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the Series
to any protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement in
the separate account for the Series such certificates of deposit,
interim receipts or other instruments or documents as may be issued to
it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of the Series and take
such other steps as shall be stated in a Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund;
5. Deliver Securities upon the receipt of payment in connection with
any repurchase agreement related to such Securities entered into by
the Fund;
6. Deliver Securities owned by the Series to the issuer thereof or its
agent when such Securities are called or otherwise become payable.
Notwithstanding the foregoing, the Custodian shall have no
responsibility for monitoring or ascertaining any call, redemption or
retirement dates with respect to put bonds which are owned by the
Series and held by the Custodian or its nominees. Nor shall the
Custodian have any responsibility or liability to the Fund for any
loss by the Series for any missed payments or other defaults resulting
therefrom; unless the Custodian received timely notification from the
Fund specifying the time, place and manner for the presentment of any
such put bond owned by the Series and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes no
liability to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with respect to put
bonds;
7. Deliver Securities for delivery in connection with any loans of
Securities made by the Series but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and the
Fund which may be in the form of cash or U.S. government securities or
a letter of credit;
8. Deliver Securities for delivery as security in connection with any
borrowings by the Series requiring a pledge of Fund assets, but only
against receipt of amounts borrowed;
9. Deliver Securities upon receipt of a Certificate from the Fund for
delivery to the Transfer Agent or to the holders of Shares in
connection with distributions in kind, as may be described from time
to time in the Fund's Prospectus, in satisfaction of requests by
holders of Shares for repurchase or redemption;
10. Deliver Securities as collateral in connection with short sales by
the Series of common stock for which the Series owns the stock or owns
preferred stocks or debt securities convertible or exchangeable,
without payment or further consideration, into shares of the common
stock sold short;
11. Deliver Securities for any purpose expressly permitted by and in
accordance with procedures described in the Fund's Prospectus; and
12. Deliver Securities for any other proper business purpose, but only
upon receipt of, in addition to Written Instructions, a certified copy
of a resolution of the Fund's Board signed by an Authorized Person and
certified by the Secretary of the Fund, specifying the Securities to
be delivered, setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper business purpose, and
naming the person or persons to whom delivery of such Securities shall
be made.
(h) ENDORSEMENT AND COLLECTION OF CHECKS, ETC. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the account of the
Series.
5. PURCHASE AND SALE OF INVESTMENTS.
(a) Promptly after each purchase of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Certificate; and (ii) with respect
to each purchase of Money Market Securities, either a Written Instruction
or Oral Instruction, in either case specifying with respect to each
purchase: (1) the Series to which the Securities purchased are to be
specifically allocated; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or the principal amount purchased and
accrued interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such purchase;
(7) the name of the person from whom or the broker through whom the
purchase was made, if any; and (8) whether or not such purchase is to be
settled through the Book-Entry System or the Depository. The Custodian
shall receive the Securities purchased by or for such Series and upon
receipt of Securities shall pay out of the monies held for the account of
such Series the total amount payable upon such purchase, provided that the
same conforms to the total amount payable as set forth in such Certificate,
Written or Oral Instruction.
(b) Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which
are not Money Market Securities, a Certificate, and (ii) with respect to
each sale of Money Market Securities, either Written Instruction or Oral
Instructions, in either case specifying with respect to such sale: (1) the
Series to which such Securities sold were specifically allocated; (2) the
name of the issuer and the title of the Securities; (3) the number of
shares or principal amount sold, and accrued interest, if any; (4) the date
of sale; (5) the sale price per unit; (6) the total amount payable to such
Series upon such sale; (7) the name of the broker through whom or the
person to whom the sale was made; and (8) whether or not such sale is to be
settled through the Book-Entry System or the Depository. The Custodian
shall deliver or cause to be delivered the Securities to the broker or
other person designated by the Fund upon receipt of the total amount
payable to such Series upon such sale, provided that the same conforms to
the total amount payable to the Series as set forth in such Certificate,
Written or Oral Instruction. Subject to the foregoing, the Custodian may
accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
6. LENDING OF SECURITIES.
If the Fund is permitted by the terms of its organization documents
and as disclosed in its Prospectus to lend securities, within 24 hours
after each loan of Securities, the Fund shall deliver to the Custodian a
Certificate specifying with respect to each such loan: (a) the Series to
which the Securities to be loaned are specifically allocated; (b) the name
of the issuer and the title of the Securities; (c) the number of shares or
the principal amount loaned; (d) the date of loan and delivery; (e) the
total amount to be delivered to the Custodian, and specifically allocated
against the loan of the Securities, including the amount of cash collateral
and the premium, if any, separately identified; and (f) the name of the
broker, dealer or financial institution to which the loan was made.
Promptly after each termination of a loan of Securities, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such loan termination and return of Securities: (a) the Series to
which the Securities to be returned are specifically allocated; (b) the
name of the issuer and the title of the Securities to be returned; (c) the
number of shares or the principal amount to be returned; (d) the date of
termination; (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Certificate); and (f) the name of the broker,
dealer or financial institution from which the Securities will be returned.
The Custodian shall receive all Securities returned from the broker, dealer
or financial institution to which such Securities were loaned and upon
receipt thereof shall pay the total amount payable upon such return of
Securities as set forth in the Certificate. Securities returned to the
Custodian shall be held as they were prior to such loan.
7. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
(a) For each Series, the Fund shall furnish to the Custodian a Certificate
specifying the date of payment of any dividend or distribution, and the
total amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such Certificate, the Custodian
shall pay out of the monies held for the account of the Series the total
amount payable to the Transfer Agent of the Fund.
8. SALE AND REDEMPTION OF SHARES.
(a) Whenever the Fund shall sell any Shares, or whenever any Shares are
redeemed, the Fund shall deliver or cause to be delivered to the Custodian
a Written Instruction from the Transfer Agent duly specifying:
1. The net amount of money to be received by the Custodian, where the
sale of such Shares exceeds redemption; and
2. The net amount of money to be paid for such Shares, where
redemptions exceed purchases.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares and that the information
contained therein will be derived from the sales of Shares as reported to
the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Series.
(c) Upon issuance of any Shares in accordance with the foregoing provisions
of this Section 8, the Custodian shall pay all original issue or other
taxes required to be paid for the account of the Series in connection with
such issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Upon receipt from the Transfer Agent of Written Instructions setting
forth the net amount of money to be paid for Shares received by the
Transfer Agent for redemption, the Custodian shall make payment to the
Transfer Agent of such net amount out of the monies held for the account of
the Series.
9. INDEBTEDNESS.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for investment
or for temporary administrative or emergency purposes using Securities as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a Certificate
stating with respect to each such borrowing: (1) the Series to which the
borrowing relates; (2) the name of the bank; (3) the amount and terms of
the borrowing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other loan
agreement; (4) the time and date, if known, on which the loan is to be
entered into (the "borrowing date"); (5) the date on which the loan becomes
due and payable; (6) the total amount payable to the Fund for the account
of such Series on the borrowing date; (7) the market value of Securities to
be delivered as collateral for such loan, including the name of the issuer,
the title and the number of shares or the principal amount of any
particular Securities; and (8) a statement that such loan is in conformance
with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Certificate referred to in subparagraph (a) above,
the Custodian shall deliver on the borrowing date the specified collateral
and the executed promissory note, if any, against delivery by the lending
bank of the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all rights therein
given the lending bank by virtue of any promissory note or loan agreement.
The Custodian shall deliver as additional collateral in the manner directed
by the Fund from time to time such Securities as may be specified in the
Certificate to collateralize further any transaction described in this
Section 9. The Fund shall cause all Securities released from collateral
status to be returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in the Certificate all of
the information required by this Section 9, the Custodian shall not be
under any obligation to deliver any Securities. Collateral returned to the
Custodian shall be held hereunder as it was prior to being used as
collateral.
10. PERSONS HAVING ACCESS TO ASSETS OF THE FUND.
(a) No Board member or agent of the Fund, and no officer, director,
employee or agent of the Fund's investment adviser, of any sub-investment
adviser of the Fund, or of the Fund's administrator, shall have physical
access to the assets of the Fund held by the Custodian or be authorized or
permitted to withdraw any investments of the Fund, nor shall the Custodian
deliver any assets of the Fund to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with the
Fund's investment adviser, with any sub-investment adviser of the Fund or
with the Fund's administrator shall have access to the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized officer,
employee or agent of the Fund, or any duly authorized officer, director,
employee or agent of the investment adviser, of any sub-investment adviser
of the Fund or of the Fund's administrator, from giving Oral Instructions
or Written Instructions to the Custodian or executing a Certificate so long
as it does not result in delivery of or access to assets of the Fund
prohibited by Section 10(a).
11. CONCERNING THE CUSTODIAN.
(a) STANDARD OF CONDUCT. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for any
loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising
out of the negligence, misfeasance or willful misconduct of the Custodian
or any of its employees, Sub-Custodians or agents. The Custodian may, with
respect to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of the Fund, and
shall be fully protected with respect to anything done or omitted by it in
good faith in conformity with such advice or opinion. The Custodian shall
not be liable to the Fund for any loss or damage resulting from the use of
the Book-Entry System or the Depository, except to the extent such loss or
damage arises by reason of any negligence, misfeasance or willful
misconduct on the part of the Custodian or any of its employees or agents.
(b) LIMIT OF DUTIES. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by the Fund,
the legality of the purchase thereof, or the propriety of the amount
paid therefor;
2. The legality of the sale of any Securities by the Fund or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the sufficiency
of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor;
5. The legality of the declaration or payment of any distribution of
the Fund; or
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) NO LIABILITY UNTIL RECEIPT. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by
any check, draft, or other instrument for the payment of money, received by
it on behalf of the Fund until the Custodian actually receives and collects
such money directly or by the final crediting of the account representing
the Fund's interest in the Book-Entry System or the Depository.
(d) AMOUNTS DUE FROM TRANSFER AGENT. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount due to
the Fund from the Transfer Agent nor to take any action to effect payment
or distribution by the Transfer Agent of any amount paid by the Custodian
to the Transfer Agent in accordance with this Agreement.
(e) COLLECTION WHERE PAYMENT REFUSED. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (a)
it shall be directed to take such action by a Certificate and (b) it shall
be assured to its satisfaction of reimbursement of its costs and expenses
in connection with any such action.
(f) APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Custodian may appoint one
or more banking institutions, including but not limited to banking
institutions located in foreign countries, to act as Depository or
Depositories or as Sub-Custodian or as Sub-Custodians of Securities and
monies at any time owned by the Fund. The Custodian shall use reasonable
care in selecting a Depository and/or Sub-Custodian located in a country
other than the United States ("Foreign Sub-Custodian"), which selection
shall be in accordance with the requirements of Rule 17f-5 under the 1940
Act, and shall oversee the maintenance of any Securities or monies of the
Fund by any Foreign Sub-Custodian. In addition, the Custodian shall hold
the Fund harmless from, and indemnify the Fund against, any loss, action,
claim, demand, expense and proceeding, including counsel fees, that occurs
as a result of the failure of any Foreign Sub-Custodian or Depository to
exercise reasonable care with respect to the safekeeping of Securities and
monies of the Fund. Notwithstanding the generality of the foregoing,
however, the Custodian shall not be liable for any losses resulting from
the general risk of investing or holding Securities and monies in a
particular country, including, but not limited to, losses resulting from
nationalization, expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, taxes, levies or other charges affecting the Fund's
property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
(g) NO DUTY TO ASCERTAIN AUTHORITY. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held by
the Fund under the provisions of its organization documents and the
Prospectus.
(h) RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the Custodian
to be genuine and to be signed by an officer or Authorized Person of the
Fund. The Custodian shall be entitled to rely upon any Written Instructions
or Oral Instructions actually received by the Custodian pursuant to the
applicable Sections of this Agreement and reasonably believed by the
Custodian to be genuine and to be given by an Authorized Person. The Fund
agrees to forward to the Custodian Written Instructions from an Authorized
Person confirming such Oral Instructions in such manner so that such
Written Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business on the same day that
such Oral Instructions are given to the Custodian. The Fund agrees that the
fact that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or enforceability
of the transactions hereby authorized by the Fund. The Fund agrees that the
Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from a
duly Authorized Person.
(i) OVERDRAFT FACILITY AND SECURITY FOR PAYMENT. In the event that the
Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(h) hereof) to make any
payment or transfer of monies on behalf of a Series for which there would
be, at the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of such Series, the
Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion of
such payment or transfer. Any Overdraft provided hereunder: (a) shall be
payable on the next Business Day, unless otherwise agreed by the Fund and
the Custodian; and (b) shall accrue interest from the date of the Overdraft
to the date of payment in full by the Fund at a rate agreed upon in
writing, from time to time, by the Custodian and the Fund. The Custodian
and the Fund acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt delivery in
accordance with the terms hereof, to meet unanticipated or unusual
redemption, to allow the settlement of foreign exchange contracts or to
meet other emergency expenses not reasonably foreseeable by the Fund. The
Custodian shall promptly notify the Fund in writing (an "Overdraft Notice")
of any Overdraft by facsimile transmission or in such other manner as the
Fund and the Custodian may agree in writing. To secure payment of any
Overdraft, the Fund hereby grants to the Custodian a continuing security
interest in and right of setoff against the Securities and cash in the
Series' account from time to time in the full amount of such Overdraft.
Should the Fund fail to pay promptly any amounts owed hereunder, the
Custodian shall be entitled to use available cash in the Series' account
and to liquidate Securities in the account as is necessary to meet the
Fund's obligations under the Overdraft. In any such case, and without
limiting the foregoing, the Custodian shall be entitled to take such other
actions(s) or exercise such other options, powers and rights as the
Custodian now or hereafter has as a secured creditor under the Pennsylvania
Uniform Commercial Code or any other applicable law.
(j) INSPECTION OF BOOKS AND RECORDS. The books and records of the Custodian
shall be open to inspection and audit at reasonable times by officers and
auditors employed by the Fund and by the appropriate employees of the
Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
12. TERM AND TERMINATION.
(a) This Agreement shall become effective on the date first set forth above
(the "Effective Date") and shall continue in effect thereafter until such
time as this Agreement may be terminated in accordance with the provisions
hereof.
(b) Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of receipt
of such notice. In the event such notice is given by the Fund, it shall be
accompanied by a certified vote of the Fund's Board, electing to terminate
this Agreement and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund shall, on
or before the termination date, deliver to the Custodian a certified vote
of the Fund's Board, designating a successor custodian or custodians. In
the absence of such designation by the Fund, the Custodian may designate a
successor custodian, which shall be a person qualified to so act under the
1940 Act. If the Fund fails to designate a successor custodian, the Fund
shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other
than Securities held in the Book-Entry System which cannot be delivered to
the Fund) and monies then owned by the Fund, be deemed to be its own
custodian and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System which cannot be
delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by
the successor custodian on that date deliver directly to the successor
custodian all Securities and monies then held by the Custodian on behalf of
the Fund, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
13. LIMITATION OF LIABILITY.
The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Board members,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon the
assets and property of the Fund. The execution and delivery of this
Agreement have been authorized by the Fund's Board members, and signed by
an authorized officer of the Fund, acting as such, and neither such
authorization by such Board members nor such execution and delivery by such
officer shall be deemed to have been made by any of them or any shareholder
of the Fund individually or to impose any liability on any of them or any
shareholder of the Fund personally, but shall bind only the assets and
property of the Fund.
14. MISCELLANEOUS.
(a) Annexed hereto as Appendix A is a certification signed by the Secretary
of the Fund setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the Custodian a new
certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last
delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the Secretary
of the Fund setting forth the names and the signatures of the present
officers of the Fund. The Fund agrees to furnish to the Custodian a new
certification in similar form in the event any such present officer ceases
to be an officer of the Fund or in the event that other or additional
officers are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signature of an officer as set forth
in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 or at such other
place as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at 200
Park Avenue, New York, New York 10166 or at such other place as the Fund
may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the same formality as this
Agreement, (i) authorized, or ratified and approved by a vote of the Fund's
Board, including a majority of the Board members who are not "interested
persons" of the Fund (as defined in the 1940 Act), or (ii) authorized, or
ratified and approved by such other procedures as may be permitted or
required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent
of the Fund authorized or approved by a vote of the Fund's Board. Nothing
in this Agreement shall give or be construed to give or confer upon any
third party any rights hereunder.
(g) The Fund represents that copies of its organization documents are on
file with the Secretary of the Commonwealth of Massachusetts.
(h) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
(i) The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective representatives duly authorized as of the day
and year first above written.
DREYFUS INVESTMENT PORTFOLIOS
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
<PAGE>
SCHEDULE 1
NAME OF SERIES
Dreyfus Core Value Portfolio
Dreyfus MidCap Stock Portfolio
<PAGE>
CUSTODIAN ACCOUNT FOR PORTFOLIO SECURITIES TRANSACTIONS
APPENDIX A
Michael S. Petrucelli, Vice President and Assistant, Secretary of the
Fund, does hereby certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the Fund
and Series indicated and the specimen signatures set forth opposite their
respective names are their true and correct signatures:
NAME SIGNATURE SERIES
Dreyfus Core Value Portfolio
Dreyfus MidCap Stock Portfolio
Michael S. Petrucelli,
Vice President and Assistant Secretary
Dated: April 16, 1998
<PAGE>
APPENDIX A
AUTHORIZED SIGNATORIES: CASH ACCOUNT
<TABLE>
<CAPTION>
GROUP I Group II
<S> <C>
Paul R. Casti, Jr., Thomas Durante, Jean Paul R. Casti, Jr., Christopher Condron,
Farley, Gregory Gruber, Paul Molloy, Jeffrey N. Nachman, Joseph Connolly,
Jeffrey N. Nachman, James Windels, Brian Gregory Gruber, Thomas Durante, James
Ward, Phyllis Meiner, Robert Robol, Laura Windels, Paul Molloy, William T. Sandalls, Jr.
Sanderson and Mike Stalzer and Jean Farley
</TABLE>
1. Fees payable to Mellon Bank, N.A. or Boston Safe Deposit and Trust Company
pursuant to written agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to Dreyfus Transfer, Inc. in
its capacity as Transfer Agent or agent of the Fund:
Two (2) signatures required, one of which must be from Group II,
except that no individual shall be authorized to sign more than
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either Group I or
Group II, or both such Groups, except that no individual shall be
authorized to sign more than once.
3. Other expenses of the Fund, over $5,000 but not over $25,000:
Two (2) signatures required, one of which must be from Group II,
except that no individual shall be authorized to sign more than
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or Group II,
including any one of the following: Paul R. Casti, Jr.,
Christopher Condron, James Windels, Jeffrey N. Nachman, Joseph
Connolly or William T. Sandalls, Jr., except that no individual
shall be authorized to sign more than once.
CUSTODIAN ACCOUNT FOR PORTFOLIO SECURITIES TRANSACTIONS
Two (2) signatures required from any of the following:
Joseph Connolly, Paul R. Casti, Jr., Thomas Durante, Jean Farley,
Gregory Gruber, Paul Molloy, Jeffrey N. Nachman, James Windels,
Mary Kate Macchia, Robert Salviolo, Kathy Jimenez, and Mike
Stalzer.
<PAGE>
APPENDIX B
DREYFUS INVESTMENT PORTFOLIOS
I, Michael S. Petrucelli, Vice President and Assistant Secretary of the Fund, do
hereby certify that the only series of shares of the Fund issued and/or
authorized by the Fund as of the date of this Custody Agreement are shares of
beneficial interest, $.001 par value, as follows: Dreyfus Core Value Portfolio
Dreyfus MidCap Stock Portfolio
Michael S. Petrucelli, Vice President
and Assistant Secretary
Dated: April 16, 1998
<PAGE>
APPENDIX C
The following are designated publications for purposes of paragraph 2
of Section 4 (f):
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
SCHEDULE A
I. ASSET BASED CHARGES
A. U.S. SECURITIES (NET ASSET VALUE)
First $1 Billion 0.70 Basis Points
Next $1 Billion 0.50 Basis Points
Excess 0.25 Basis Points
B. INTERNATIONAL SECURITIES (MARKET VALUE)
Foreign Assets in all funds will be totaled by country and charged a
basis point fee by category.
Euroclear 5.00 Basis Points
Category I 8.00 Basis Points
Category II 14.00 Basis Points
Category III 16.00 Basis Points
Category IV 45.00 Basis Points
(A complete listing of countries is on page 2 of this fee schedule)
II. TRANSACTION CHARGES
A. DOMESTIC
U.S. Buy/Sell transaction (DTC, PTC, Fed) $_____
Physical U.S. Buy/Sell transaction $20
B. INTERNATIONAL
Euroclear $ 25
Category I $ 35
Category II $ 60
Category III $ 80
Category IV $100
C. OTHER TRANSACTIONS
Futures Transaction $ 8
Paydown Transaction $ 5
Margin Variation Wire $ 10
F/X not executed at BSDT $ 20
Options Round Trip $ 20
Wire Transfer $ 5
III. OUT-OF-POCKET EXPENSES
The Custodian will pass through to the client any out-of-pocket expenses
including, but not limited to, postage, courier expense, registration
fees, stamp duties telex charges, custom reporting or custom
programming, internal/external tax, legal or consulting costs, proxy
voting expenses, etc.
The Custodian reserves the right to amend its fees if the service
requirements change in a way that materially affects our
responsibilities or costs. Support of other derivative investment
strategies or special processing requirements (e.g., external cash
sweep, third party securities lending etc.) may result in additional fees.
<PAGE>
IV. COUNTRY BY COUNTRY CATEGORIES:
CATEGORY I CATEGORY II CATEGORY III CATEGORY IV
Australia Argentina Austria Bangladesh
Belgium Denmark Indonesia Brazil
Canada Finland Israel Colombia
France Hong Kong South Korea China
Germany Malaysia Philippines Czech Republic
Ireland Mexico Singapore Greece
Italy Norway Thailand India
Japan Spain Jordan
Netherlands Luxembourg
New Zealand Pakistan
South Africa Peru
Sweden Poland
Switzerland Portugal
United Kingdom Sri Lanka
Cedel Taiwan
Turkey
Uruguay
Venezuela
<PAGE>
SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end
of each month all out-of-pocket expenses reasonably incurred in connection with
the assets of the Fund.
EXHIBIT (10)
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NY 10038-4982
PHONE 212-806-5400
FAX 212-806-6006
April 24, 1998
Dreyfus Investment Portfolios
200 Park Avenue
New York, New York 10166
Ladies and Gentlemen:
We have acted as counsel to Dreyfus Investment Portfolios (the "Fund") in
connection with the preparation of a Registration Statement on Form N-1A,
Registration No. 333-47011 (the "Registration Statement"), covering shares of
beneficial interest (the "Shares") of the Fund.
We have examined copies of the Agreement and Declaration of Trust and By-Laws of
the Fund, the Registration Statement and such other documents, records, papers,
statutes and authorities as we deemed necessary to form a basis for the opinion
hereinafter expressed. In our examination of such material, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to such
opinion, we have relied upon statements and certificates of officers and
representatives of the Fund and others.
Based upon the foregoing, we are of the opinion that the Fund is authorized to
issue an unlimited number of Shares, and that, when the Shares are issued and
sold and the authorized consideration therefor is received by the Fund, they
will be validly issued, fully paid and nonassessable by the Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included in
the Registration Statement, and to the filing of this opinion as an exhibit to
any application made by or on behalf of the Fund or any distributor or dealer in
connection with the registration and qualification of the Fund or its Shares
under the securities laws of any state or jurisdiction. In giving such
permission, we do not admit hereby that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN LLP
EXHIBIT (11)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Transfer and Dividend
Disbursing Agent, Custodian, Counsel and Independent Auditors" and to the use of
our report dated April 22, 1998, in this Registration Statement (Form N-1A No.
333-47011) of Dreyfus Investment Portfolios.
ERNST & YOUNG
New York, New York
April 24, 1998
OTHER EXHIBIT (a)
DREYFUS INVESTMENT PORTFOLIOS
Certificate of Assistant Secretary
The undersigned, Michael S. Petrucelli, Assistant Secretary of Dreyfus
Investment Portfolios (the "Fund"), hereby certifies that set forth below is a
copy of the resolution adopted by the Fund's Board authorizing the signing of
the Fund's Registration Statement and all amendments and supplements thereto on
behalf of the proper officers of the Fund pursuant to a power of attorney.
RESOLVED, that the Registration Statement and any
and all amendments and supplements thereto, may be
signed by any one of Marie E. Connolly, Michael S.
Petrucelli, and Douglas C. Conroy as the attorney-in-
fact for the proper officers of the Fund, with full
power of substitution and resubstitution; and that the
appointment of each of such persons as such attorney-in-fact
hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in connection with such
Registration Statement and any and all amendments and
supplements thereto, as fully to all intents and purposes as
the officer, for whom he or she is acting as attorney-in-fact,
might or could do in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
Seal of the Fund on April 24, 1998.
/S/ MICHAEL S. PETRUCELLI
Michael S. Petrucelli
Assistant Secretary
(SEAL)
<PAGE>
OTHER EXHIBIT (b)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
NOTIFICATION OF ELECTION PURSUANT TO RULE 18f-1
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
____________________________
DREYFUS INVESTMENT PORTFOLIOS
Exact Name of Registrant
<PAGE>
NOTIFICATION OF ELECTION
Dreyfus Investment Portfolios (the "Fund"), an open-end investment
company registered with the Securities and Exchange Commission (the
"Commission") under the Investment Company Act of 1940, as amended (the "1940
Act"), hereby notifies the Commission that it elects to commit itself to pay in
cash all redemptions by a shareholder of record as provided by Rule 18f-1 under
the 1940 Act (the "Rule"). The Fund understands that this election is
irrevocable while the Rule is in effect unless the Commission by order upon
application permits the withdrawal of this Notification of Election.
SIGNATURE
Pursuant to the requirements of Rule 18f-1 under the 1940 Act, the
Fund has caused this Notification of Election to be duly executed on its behalf
in the City of New York and the State of New York on April 16, 1998.
DREYFUS INVESTMENT
PORTFOLIOS
By:/s/ Marie E. Connolly
Marie E. Connolly
President
Attest: /s/ Michael S. Petrucelli
Michael S. Petrucelli
Vice President, Assistant Treasuer
and Assistant Secretary
