File Nos.333-47011
811-08673
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 8 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 8 [X]
(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) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
X immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Dreyfus Investment Portfolios
Technology Growth Portfolio
Investing in technology companies for capital appreciation
PROSPECTUS August 31, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Investment Portfolios
Technology Growth Portfolio
Contents
The Portfolio
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
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Account Policies 5
Distributions and Taxes 5
For More Information
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SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks capital appreciation. To pursue this goal, the portfolio
invests primarily in the stocks of growth companies of any size that Dreyfus
believes to be leading producers or beneficiaries of technological innovation.
Up to 25% of the portfolio's assets may be invested in foreign securities. The
portfolio's stock investments may include common stocks, preferred stocks and
convertible securities.
In choosing stocks, the portfolio looks for sectors in technology that are
expected to outperform on a relative scale. The more attractive sectors are
overweighted; those sectors with less appealing prospects are underweighted.
Among the sectors evaluated are those that develop, produce or distribute
products or services in the computer, semi-conductor, electronics,
communications, healthcare, biotechnology, computer software and hardware,
electronic components and systems, network and cable broadcasting,
telecommunications, defense and aerospace, and environmental sectors.
Although the portfolio looks for companies with the potential for strong
earnings growth rates, some of the portfolio's investments may currently be
experiencing losses. Moreover, the portfolio may invest in small-, mid- and
large-cap securities in all available trading markets, including initial public
offerings and the aftermarket.
Concepts to understand
SMALL AND MIDSIZE COMPANIES: new and often entrepreneurial companies. These
companies tend to grow faster than large-cap companies and typically use any
profits for expansion rather than for paying dividends. They are also more
volatile than larger companies and fail more often.
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth companies pay little or no dividends and have
relatively high price-to-earnings and price-to-book ratios. For these reasons
they tend to be more volatile than value companies.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. In fact, the technology sector has been among the
most volatile sectors of the stock market. The value of a shareholder's
investment in the portfolio will go up and down, sometimes dramatically, which
means that shareholders could lose money.
Technology companies, especially small-cap technology companies, involve greater
risk because their earnings tend to be less predictable, their share prices more
volatile and their securities less liquid than larger, more established
companies. Some of the portfolio's investments in technology companies will rise
and fall based on investor perception rather than economics. Other portfolio
investments are made in anticipation of future products and services which, if
delayed or cancelled, could cause the stock price to drop dramatically.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. The portfolio may also sell short, which
involves selling a security it does not own in anticipation of a decline in the
market price of the security. These practices, when employed, are used primarily
to hedge its portfolio but also may be used to increase returns; however, such
practices sometimes may reduce returns or increase volatility. In addition,
derivatives can be illiquid and highly sensitive to changes in their underlying
instrument. A small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
Growth companies typically lack the dividend yield that can cushion stock prices
in market downturns. These companies are expected to increase their earnings at
a certain rate. If these expectations are not met, investors can punish the
stocks inordinately, even if earnings show an absolute increase.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
period, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
As a new portfolio, past performance information is not available for the
portfolio as of the date of this prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
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Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.25%
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TOTAL 1.00%
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Expense example
1 Year 3 Years
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$102 $318
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the portfolio and assisting
in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$120 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 0.75% of the portfolio's average daily net
assets. Dreyfus is the primary mutual fund business of Mellon Bank Corporation,
a broad-based financial services company with a bank at its core. With more than
$389 billion of assets under management and $1.9 trillion of assets under
administration and custody, Mellon provides a full range of banking, investment
and trust products and services to individuals, businesses and institutions.
Mellon is headquartered in Pittsburgh, Pennsylvania.
The portfolio's primary portfolio manager is Mark Herskovitz. Mr. Herskovitz has
been the primary portfolio manager of the portfolio since its inception and has
been employed by Dreyfus since 1996. From 1992 to 1996, he served as a senior
technology analyst at National City Bank.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: the portfolio could be adversely affected if the computer
systems used by Dreyfus and the portfolio's other service providers do not
properly process and calculate date-related information from and after January
1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the portfolio invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the portfolio's investments and its share price.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
As a new portfolio, financial highlights information is not available for the
portfolio as of the date of this prospectus.
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio
shares.
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Technology Growth Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio generally pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE 5>
For More Information
Dreyfus Investment Portfolios
Technology Growth Portfolio
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SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of portfolio documents can be viewed online
or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation
175P0899
<PAGE>
DREYFUS INVESTMENT PORTFOLIOS
BOND MARKET INDEX PORTFOLIO
CORE VALUE PORTFOLIO
EUROPEAN EQUITY PORTFOLIO
MIDCAP STOCK PORTFOLIO
TECHNOLOGY GROWTH PORTFOLIO
FOUNDERS GROWTH PORTFOLIO
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
FOUNDERS PASSPORT PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 31, 1999
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the relevant current
Prospectus of the Bond Market Index, Core Value, European Equity, MidCap
Stock, Founders Growth, Founders International Equity and Founders Passport
Portfolios, each dated May 1, 1999, or the Technology Growth Portfolio,
dated August 31, 1999 (collectively, the "Portfolios"), each a separate
series of Dreyfus Investment Portfolios (the "Fund"), as each Prospectus may
be revised from time to time. To obtain a copy of the relevant Portfolio's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611 or (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").
The most recent Annual Report and Semi-Annual Report to Shareholders
for each Portfolio are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing in the Annual Report are
incorporated by reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund and Portfolios B-3
Management of the Fund B-27
Management Arrangements B-31
How to Buy Shares B-37
How to Redeem Shares B-38
Determination of Net Asset Value B-39
Dividends, Distributions and Taxes B-40
Portfolio Transactions B-43
Performance Information B-45
Information About the Fund and Portfolios B-46
Counsel and Independent Auditors B-48
Appendix B-49
DESCRIPTION OF THE FUND AND PORTFOLIOS
The Fund is a Massachusetts business trust that commenced operations on
May 1, 1998. Each Portfolio is a separate series of the Fund, an open-end
management investment company, known as a mutual fund. Each Portfolio is a
diversified fund, which means that, with respect to 75% of the Portfolio's
total assets, the Portfolio will not invest more than 5% of its assets in
the securities of any single issuer.
The Dreyfus Corporation (the "Manager") serves as each Portfolio's
investment adviser. The Manager has engaged Founders Asset Management LLC
("Founders") to serve as sub-investment adviser to each of the Founders
Growth, Founders International Equity and Founders Passport Portfolios
(collectively, the "Founders Portfolios") and to provide day-to-day
management of the Founders Portfolios' investments, subject to the
supervision of the Manager. The Manager has engaged Newton Capital
Management Limited ("Newton") to serve as the European Equity Portfolio's
sub-investment adviser. Newton provides day-to-day management of the
European Equity Portfolio's investments, subject to the supervision of the
Manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Portfolios' shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the relevant Portfolio's Prospectus.
Depositary Receipts. (All Portfolios, except the Bond Market Index
Portfolio) Each Portfolio may invest in the securities of foreign issuers
in the form of American Depositary Receipts and American Depositary Shares
(collectively, "ADRs") and Global Depositary Receipts and Global Depositary
Shares (collectively, "GDRs") and other forms of depositary receipts. 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.
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.
Foreign Government Obligations; Securities of Supranational Entities.
(Founders Portfolios and European Equity Portfolio only) Each of these
Portfolios may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by Founders (in the case of the
Founders Portfolios) or Newton (in the case of the European Equity
Portfolio) to be of comparable quality to the other obligations in which the
Portfolio may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Mortgage-Related Securities. (Bond Market Index Portfolio only)
Mortgage-related securities are a form of derivative collateralized by pools
of commercial or residential mortgages. Pools of mortgage loans are
assembled as securities for sale to investors by various governmental,
government-related and private organizations. These securities may include
complex instruments such as collateralized mortgage obligations and stripped
mortgage-backed securities, mortgage pass-through securities or other kinds
of mortgage-backed securities, including those with fixed, floating and
variable interest rates, those with interest rates based on multiples of
changes in a specified index of interest rates and those with interest rates
that change inversely to changes in interest rates, as well as those that do
not bear interest. See "Investment Considerations and Risks" below.
Residential Mortgage-Related Securities--The Bond Market Index Portfolio may
invest in mortgage-related securities representing participation interests
in pools of one- to four-family residential mortgage loans issued or
guaranteed by governmental agencies or instrumentalities, such as the
Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"), or issued by private entities. Similar to commercial
mortgage-related securities, residential mortgage-related securities have
been issued using a variety of structures, including multi-class structures
featuring senior and subordinated classes.
Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-
Through Certificates (also know as "Ginnie Maes") which are guaranteed as to
the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA certificates
also are supported by the authority of GNMA to borrow funds from the U.S.
Treasury to make payments under its guarantee. Mortgage-related securities
issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates
(also known as "Fannie Maes") which are solely the obligations of FNMA and
are not backed by or entitled to the full faith and credit of the United
States. Fannie Maes are guaranteed as to timely payment of principal and
interest by FNMA. Mortgage-related securities issued by FHLMC include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
Freddie Macs are not guaranteed by the United States or by any Federal Home
Loan Bank and do not constitute a debt or obligation of the United States or
of any Federal Home Loan Bank. Freddie Macs entitle the holder to timely
payment of interest, which is guaranteed by FHLMC. FHLMC guarantees either
ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
Commercial Mortgage-Related Securities--Commercial mortgage-related
securities generally are multi-class debt or pass-through certificates
secured by mortgage loans on commercial properties. These mortgage-related
securities generally are constructed to provide protection to the senior
classes investors against potential losses on the underlying mortgage loans.
This protection generally is provided by having the holders of subordinated
classes of securities ("Subordinated Securities") take the first loss if
there are defaults on the underlying commercial mortgage loans. Other
protection, which may benefit all of the classes or particular classes, may
include issuer guarantees, reserve funds, additional Subordinated
Securities, cross-collateralization and over-collateralization.
Subordinated Securities--The Bond Market Index Portfolio may invest in
Subordinated Securities issued or sponsored by commercial banks, savings and
loan institutions, mortgage bankers, private mortgage insurance companies
and other non-governmental issuers. Subordinated Securities have no
governmental guarantee, and are subordinated in some manner as to the
payment of principal and/or interest to the holders of more senior
mortgage-related securities arising out of the same pool of mortgages. The
holders of Subordinated Securities typically are compensated with a higher
stated yield than are the holders of more senior mortgage-related
securities. On the other hand, Subordinated Securities typically subject
the holder to greater risk than senior mortgage-related securities and tend
to be rated in a lower rating category, and frequently a substantially lower
rating category, than the senior mortgage-related securities issued in
respect of the same pool of mortgage. Subordinated Securities generally are
likely to be more sensitive to changes in prepayment and interest rates and
the market for such securities may be less liquid than is the case for
traditional fixed-income securities and senior mortgage-related securities.
Collateralized Mortgage Obligations ("CMOs") and Multi-Class Pass-Through-
Securities--A CMO is a multiclass bond backed by a pool of mortgage
pass-through certificates or mortgage loans. CMOs may be collateralized by
(a) Ginnie Mae, Fannie Mae, or Freddie Mac pass-through certificates, (b)
unsecuritized mortgage loans insured by the Federal Housing Administration
or guaranteed by the Department of Veterans' Affairs, (c) unsecuritized
conventional mortgages, (d) other mortgage-related securities, or (e) any
combination thereof.
Each class of CMOs, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be
retired substantially earlier than the stated maturities or final
distribution dates. The principal and interest on the underlying mortgages
may be allocated among the several classes of a series of a CMO in many
ways. One or more tranches of a CMO may have coupon rates which reset
periodically at a specified increment over an index, such as the London
Interbank Offered Rate ("LIBOR") (or sometimes more than one index). These
floating rate CMOs typically are issued with lifetime caps on the coupon
rate thereon. The Portfolio also may invest in inverse floating rate CMOs.
Inverse floating rate CMOs constitute a tranche of a CMO with a coupon rate
that moves in the reverse direction to an applicable index such a LIBOR.
Accordingly, the coupon rate thereon will increase as interest rates
decrease. Inverse floating rate CMOs are typically more volatile than fixed
or floating rate tranches of CMOs.
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying
inversely to a multiple of an applicable index creates a leverage factor.
Inverse floaters 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 loss of principal. The markets
for inverse floating rate CMOs with highly leveraged characteristics at
times may be very thin. The Portfolio's ability to dispose of its positions
in such securities will depend on the degree of liquidity in the markets for
such securities. It is impossible to predict the amount of trading interest
that may exist in such securities, and therefore the future degree of
liquidity.
Stripped Mortgage-Backed Securities--The Portfolio also may invest in
stripped mortgage-backed securities which are created by segregating the
cash flows from underlying mortgage loans or mortgage securities to create
two or more new securities, each with a specified percentage of the
underlying security's principal or interest payments. Mortgage securities
may be partially stripped so that each investor class receives some interest
and some principal. When securities are completely stripped, however, all
of the interest is distributed to holders of one type of security, known as
an interest-only security, or IO, and all of the principal is distributed to
holders of another type of security known as a principal-only security, or
PO. Strips can be created in a pass-through structure or as tranches of a
CMO. The yields to maturity on IOs and POs are very sensitive to the rate
of principal payments (including prepayments) on the related underlying
mortgage assets. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Portfolio may not fully recoup its
initial investment in IOs. Conversely, if the underlying mortgage assets
experience less than anticipated prepayments of principal, the yield on POs
could be materially and adversely affected.
Private Entity Securities--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other nongovernmental issuers. Timely
payment of principal and interest on mortgage-related securities backed by
pools created by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance. The insurance and guarantees are issued by
government entities, private insurers and the mortgage poolers. There can
be no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies, so that if the issuers default on their
obligations the holders of the security could sustain a loss. No insurance
or guarantee covers the Portfolio or the price of the Portfolio's shares.
Mortgage-related securities issued by non-governmental issuers generally
offer a higher rate of interest than government-agency and
government-related securities because there are no direct or indirect
government guarantees of payment.
Other Mortgage-Related Securities--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage
loans on real property, including CMO residuals. Other mortgage-related
securities may be equity or debt securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing.
Asset-Backed Securities. (Bond Market Index Portfolio only)
Asset-backed securities are a form of derivative. The securitization
techniques used for asset-backed securities are similar to those used for
mortgage-related securities. These securities include debt securities and
securities with debt-like characteristics. The collateral for these
securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home
loans, recreational vehicle loans and hospital account receivables. The
Portfolio may invest in these and other types of asset-backed securities
that may be developed in the future.
Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may provide the
Portfolio with a less effective security interest in the related collateral
than do mortgage-backed securities. Therefore, there is the possibility
that recoveries on the underlying collateral may not, in some cases, be
available to support payments on these securities.
Variable and Floating Rate Securities. (Bond Market Index Portfolio
only) Variable and floating rate securities provide for a periodic
adjustment in the interest rate paid on the obligations. The terms of such
obligations must provide that interest rates are adjusted periodically based
upon an interest rate adjustment index as provided in the respective
obligations. The adjustment intervals may be regular, and range from daily
up to annually, or may be event based, such as based on a change in the
prime rate.
The Portfolio may invest in floating rate debt instruments
("floaters"). The interest rate on a floater is a variable rate which is
tied to another interest rate, such as a money-market index or Treasury bill
rate. The interest rate on a floater resets periodically, typically every
six months. Because of the interest rate reset feature, floaters provide
the Portfolio with a certain degree of protection against rises in interest
rates, although the Portfolio will participate in any declines in interest
rates as well.
The Portfolio also may invest in inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction from the market rate of interest to which the inverse
floater is indexed or inversely to a multiple of the applicable index. An
inverse floating rate security may exhibit greater price volatility than a
fixed rate obligation of similar credit quality.
Investment Companies. (All Portfolios) Each Portfolio may invest in
securities issued by investment companies. Under the Investment Company Act
of 1940, as amended (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.
Convertible Securities. (All Portfolios, except the Bond Market Index
Portfolio) Convertible securities 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.
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.
Warrants. (All Portfolios, except the Bond Market Index Portfolio) 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.
Illiquid Securities. (All 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. These securities may include
securities that are not readily marketable, such as 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.
Money Market Instruments. (All Portfolios) When the Manager (or, if
applicable, the Portfolio's sub-investment adviser) determines that adverse
market conditions exist, the Portfolio may adopt a temporary defensive
position and invest some or all of its assets in money market instruments,
including the securities described below ("Money Market Instruments"). Each
Portfolio also may purchase Money Market Instruments when it has cash
reserves or in anticipation of taking a market position.
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 from 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 for such U.S. Government-sponsored agencies and
instrumentalities, no assurance can be given that it will always do so since
it is not obligated by law. A security backed by the U.S. Treasury or the
full faith and credit of the United States is guaranteed only as to timely
payment of interest and principal when held to maturity. Neither the market
value of such securities nor the Portfolio's share price is guaranteed.
Repurchase Agreements--Each Portfolio may enter into 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. The
Portfolio's custodian or sub-custodian will have custody of, and will hold
in a segregated account, securities acquired by the Portfolio under a
repurchase agreement. Repurchase agreements are considered by the staff of
the Securities and Exchange Commission to be loans by the Portfolio that
enters into them. 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 resale price.
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.
Bank Obligations--Each Portfolio may purchase certificates of deposit
("CDs"), time deposits ("TDs"), 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 Portfolio 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.
CDs are negotiable certificates evidencing the obligation of a bank to
repay funds deposited with it for a specified period of time.
TDs 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 a bank and the drawer to pay the face amount
of the instruments upon maturity. The other short-term obligations may
include uninsured, direct obligations bearing fixed, floating or variable
interest rates.
Commercial Paper and Other Short-Term Corporate Obligations--Each Portfolio
may purchase commercial paper consisting of short-term, unsecured promissory
notes issued to finance short-term credit needs. The commercial paper
purchased by the Portfolio will consist only of direct obligations which, at
the time of their purchase, are rated at least Prime-1 by Moody's Investors
Service, Inc. ("Moody's"), A-1 by Standard & Poor's Ratings Group ("S&P"), F-
1 by Fitch IBCA, Inc. ("Fitch") or Duff-1 by Duff & Phelps Credit Rating Co.
("Duff" and, together with Moody's, S&P and Fitch, the "Rating Agencies"),
or issued by companies having an outstanding unsecured debt issue currently
rated at least A by Moody's S&P, Fitch or Duff, or, if unrated, determined
by the Manager (or Founders with respect to the Founders Portfolios or
Newton with respect to the European Equity Portfolio) to be of comparable
quality to those rated obligations which may be purchased by the Portfolio.
These instruments also include variable amount master demand notes,
which are obligations that permit the 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 the
Portfolio may invest in them only if at the time of an investment the
borrower meets the criteria set forth above for other commercial paper
issuers.
Investment Techniques
The following information supplements and should be read in conjunction
with the relevant Portfolio's Prospectus.
General. (Bond Market Index Portfolio only) The Bond Market Index
Portfolio seeks to match the total return of the Lehman Brothers Aggregate
Bond Index (the "Aggregate Bond Index"). The Aggregate Bond Index covers
the U.S. investment grade fixed-rate bond market, including government and
corporate securities, agency mortgage pass-through securities, and asset-
backed securities. The Aggregate Bond Index covers those securities in the
Lehman Brothers Government/Corporate Bond Index, ("Government/Corporate Bond
Index") plus those covered by the Lehman Mortgage-Backed Securities Index
("MBS Index") and the Lehman Asset-Backed Securities Index ("ABS Index").
The Government/Corporate Bond Index is composed of (i) all public
obligations of the U.S. Government, its agencies and instrumentalities
(excluding "flower" bonds and pass-through issues such as GNMA Certificates)
and (ii) all publicly issued, fixed-rate, non-convertible, investment grade,
dollar-denominated, Securities and Exchange Commission-registered
obligations of domestic corporations, foreign governments and supranational
organizations. The MBS Index covers all fixed-rate securities backed by
mortgage pools of GNMA, FHLMC and FNMA. The ABS Index covers three
subsectors--credit and charge cards, auto, and home equity loans, and
includes pass-through, bullet, and controlled amortization structures. As
of December 31, 1998, over 7,257 issues were included in the Aggregate Bond
Index, representing $5.5 trillion in market value, distributed as follows:
46% governments; 22% corporates; and 31% mortgage-backed securities.
Foreign Currency Transactions. (All Portfolios, except the Bond Market
Index and MidCap Stock Portfolios) Each of these Portfolios may enter into
foreign currency transactions 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 Portfolio contracted to receive
in the exchange. The Portfolio's success in these transactions will depend
principally on the ability of the Manager (or, if applicable, the
Portfolio's sub-investment adviser) 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.
Borrowing Money. (All Portfolios) Each Portfolio is permitted to
borrow to the extent permitted under the 1940 Act, which permits an
investment company to borrow in an amount up to 33-1/3% of the value of its
total assets. Each Founders Portfolio and the Bond Market Index Portfolio
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes. Money borrowed will be subject to interest costs.
While borrowings exceed 5% of the Portfolio's total assets, the Portfolio
will not make any additional investments. The Core Value, European Equity,
MidCap Stock and Technology Growth Portfolios may borrow money for
investment purposes as described below.
Leverage. (Core Value, European Equity, MidCap Stock and Technology
Growth Portfolios only) Leveraging (that is, buying securities using
borrowed money) exaggerates the effect on net asset value of any increase or
decrease in the market value of a Portfolio's investments. 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. For borrowings
for investment purposes, 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.
Reverse Repurchase Agreements. (All Portfolios, except the Founders
Portfolios) Each of these Portfolios 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. To the extent a Portfolio
enters into a reverse repurchase agreement, the Portfolio will segregate
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. Except for these
transactions, borrowings by the Core Value, European Equity, MidCap Stock
and Technology Growth Portfolios generally will be unsecured. Reverse
repurchase agreements may be preferable to a regular sale and later
repurchase of the securities because it avoids certain market risks and
transaction costs. Such transactions, however, may increase the risk of
potential fluctuations in the market value of the Portfolio's assets. In
addition, interest costs on the cash received may exceed the return on the
securities purchased.
Lending Portfolio Securities. (All Portfolios) Each Portfolio may
lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
The Portfolio continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned securities,
which affords the Portfolio an opportunity to earn interest on the amount of
the loan and 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. 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.
Short-Selling. (European Equity and Technology Growth Portfolios only)
In these transactions, a Portfolio sells a security it does not own in
anticipation of a decline in the market value of the security. To complete
the transaction, the Portfolio must borrow the security to make delivery to
the buyer. The Portfolio is obligated to replace the security borrowed by
purchasing it subsequently at the market price at the time of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Portfolio, which would result in a loss or gain,
respectively.
Securities will not be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed
25% of the value of the Portfolio's net assets.
The Portfolio also may make short sales "against the box," in which the
Portfolio enters into a short sale of a security it owns. At no time will
more than 15% of the value of the Portfolio's net assets be in deposits on
short sales against the box.
Until the Portfolio closes its short position or replaces the borrowed
security, the Portfolio will: (a) segregate permissible liquid assets in an
amount that, together with the amount deposited with the broker as
collateral, always equals the current value of the security sold short; or
(b) otherwise cover its short position.
Derivatives. (All Portfolios) Each Portfolio may invest in, or enter
into, derivatives, such as options and futures, 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. However,
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 a 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. A 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 any 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. A Portfolio may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However,
no 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.
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 variation margin system
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. In 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 (or,
if applicable, the Portfolio's sub-investment adviser) 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. (All Portfolios, except the Bond Market
Index Portfolio) Each of these Portfolios 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, except
for the MidCap Stock Portfolio, on exchanges located outside the United
States, such as the London International Financial Futures Exchange, the
Deutsche Termine Borse 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 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 (or, if applicable, the Portfolio's sub-investment adviser)
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 to cover its obligations relating to its
transactions in 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. In addition, the segregation of such assets will have the
effect of limiting a Portfolio's ability otherwise to invest those assets.
Specific Futures Transactions. (All Portfolios, except the Bond Market
Index Portfolio) Each of these Portfolios 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, European Equity Portfolio, Technology Growth
Portfolio and Founders Portfolios 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 of these Portfolios 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.
Successful use by the Portfolio of futures contracts will be subject to
the ability of the Manager (or Founders with respect to the Founders
Portfolios or Newton with respect to the European Equity Portfolio) 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, the Portfolio may incur losses.
Options--In General. (All Portfolios, except the Bond Market Index
Portfolio) Each Portfolio may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call and put options. A Portfolio may
write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. 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,
permissible liquid assets having a value equal to or greater than the
exercise price of the option are segregated 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. (All Portfolios, except the Bond Market
Index Portfolio) Each of these Portfolios 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.
The Core Value Portfolio, European Equity Portfolio, Technology Growth
Portfolio and Founders Portfolios 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 of these Portfolios 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. The European Equity Portfolio also may
purchase cash-settled options on interest rate swaps and interest rate swaps
denominated in foreign currency. Interest rate swaps involve the exchange
by the European Equity Portfolio with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating-
rate payments for fixed-rate payments) denominated in U.S. dollars or
foreign currency. 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 (or Founders with respect to the Founders Portfolios or
Newton with respect to the European Equity Portfolio) 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. (All 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. (All 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 segregate
permissible liquid assets at least equal at all times to the amount of the
Portfolio's purchase commitments.
The Bond Market Index Portfolio intends to engage in forward
commitments to increase its portfolio's financial exposure to changes in
interest rates and will increase the volatility of its returns. If the
Portfolio is fully or almost fully invested when forward commitment
purchases are outstanding, such purchases may result in a form of leverage.
At no time will the Portfolio have more than 33-1/3% of its assets committed
to purchase securities on a forward commitment basis.
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
Equity Securities. (All Portfolios, except the Bond Market Index
Portfolio) Equity securities, including common stock, preferred stock,
convertible securities and warrants, 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 the Portfolio's
investments will result in changes in the value of its shares and thus the
Portfolio's total return to investors.
Fixed Income Securities. (All Portfolios, except the Technology Growth
Portfolio) The Core Value 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 the Rating Agencies. The MidCap Stock 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 Manager. Each Founders Portfolio may invest in debt
securities of foreign issuers that management believes, based on market
conditions, the financial condition of the issuer, general economic
conditions and other relevant factors, offer opportunities for capital
growth. The bonds, debentures and corporate obligations (other than
convertible securities and preferred stock) in which each Founders Portfolio
may invest must be rated not lower than Baa by Moody's or BBB by S&P, Fitch
and Duff, or, if unrated, deemed to be of comparable quality by Founders.
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 a 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
securities that may be purchased by each Portfolio, such as those rated Baa
or lower by Moody's and BBB or lower 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. 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.
Technology Sector. (Technology Growth Portfolio only) The technology
sector has been among the most volatile sectors of the stock market. You
should recognize that returns are likely to be highly volatile and that,
depending upon when you purchase and sell your Portfolio shares, you may
make or lose money.
The Portfolio may purchase securities of companies in initial public
offerings or shortly thereafter. The prices of these companies' securities
may be very volatile, rising and falling rapidly based, among other reasons,
solely on investor perceptions rather than economic reasons. The Portfolio
may purchase securities of companies which have no earnings or have
experienced losses. The Portfolio generally will make these investments
based on a belief that actual anticipated products or services will produce
future earnings. If the anticipated event is delayed or does not occur, or
if investor perception about the company change, the company's stock price
may decline sharply and its securities may become less liquid. The
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. The Portfolio is not limited in the
amount it may invest in these securities or companies. The Portfolio,
together with other investment companies advised by the Manager and its
affiliates, may own significant positions in portfolio companies which,
depending on market conditions, may affect adversely the Portfolio's ability
to dispose of some or all of its position should it desire to do so.
Lower Rated Securities. (Core Value Portfolio and Founders Portfolios
only) Each of these Portfolios may invest a portion of its assets in higher
yielding (and, therefore, higher risk) debt securities (convertible
securities and preferred stocks with respect to the Founders Portfolios)
such as those rated Ba by Moody's or BB by S&P, Fitch or Duff, or as low as
those rated B by a Rating Agency in the case of the Founders Portfolios, or
as low as the lowest rating assigned by a Rating Agency in the case of the
Core Value Portfolio. They may be subject to certain risks with respect to
the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. 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.
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 and the Founders Portfolios 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 (or
Founders with respect to the Founders Portfolios) will review carefully the
credit and other characteristics pertinent to such new issues.
The ratings of the Ratings Agencies represent their opinions as to the
quality of the obligations which they undertake to rate. Ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, the Manager (or
Founders with respect to the Founders Portfolios) also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal.
Foreign Securities. (All Portfolios, except the Bond Market Index
Portfolio) Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some foreign
issuers, including depositary receipts, foreign government obligations and
securities of supranational entities, 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 a 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 Portfolios.
With respect to certain securities that may be purchased by the
Founders Portfolios and the European Equity Portfolio only, developing
countries have economic structures that are generally less diverse and
mature, and political systems that are less stable, than those of developed
countries. The markets of developing countries may be more volatile than
the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Portfolio have experienced substantial, and
in some periods extremely high, rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may
continue to have adverse effects on the economies and securities markets of
certain of these countries.
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.
Mortgage-Related Securities. (Bond Market Index Portfolio only)
Mortgage-related securities are complex derivative instruments, subject to
both credit and prepayment risk, and may be more volatile and less liquid
than more traditional debt securities. Although certain mortgage-related
securities are guaranteed by a third party (such as a U.S. Government agency
or instrumentality with respect to government-related mortgage-backed
securities) or otherwise similarly secured, the market value of the
security, which may fluctuate, is not secured. If a mortgage-related
security is purchased at a premium, all or part of the premium may be lost
if there is a decline in the market value of the security, whether
resulting from changes in interest rates or prepayments on the underlying
mortgage collateral. Mortgage-related securities are subject to credit
risks associated with the performance of the underlying mortgage properties.
Adverse changes in economic conditions and circumstances are more likely to
have an adverse impact on mortgage-related securities secured by loans on
certain types of commercial properties than on those secured by loans on
residential properties. In addition, these securities are subject to
prepayment risk, although commercial mortgages typically have shorter
maturities than residential mortgages and prepayment protection features.
Some mortgage-related securities have structures that make their reactions
to interest rate changes and other factors difficult to predict, making
their value highly volatile.
State Insurance Regulation. (All Portfolios) 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 future contracts and
short sales of securities, among other techniques. If applied to a
Portfolio, the 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 Investments. (All Portfolios) Investment decisions for
each Portfolio are made independently from those of the other Portfolios and
investment companies managed by the Manager (and, where applicable, Founders
and Newton). If, however, such other Portfolios 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.
Investment Restrictions
Each Portfolio's investment objective is a fundamental policy, which
cannot be changed without approval by the holders of a majority (as defined
in the 1940 Act) of the Portfolio's outstanding voting shares. In addition,
each Portfolio, except the Bond Market Index and European Equity Portfolios,
has adopted investment restrictions numbered 1 through 10 as fundamental
policies. Investment restrictions numbered 11 through 15 are not
fundamental policies and may be changed, as to a Portfolio, by a vote of a
majority of the Fund's Board members at any time. None of these Portfolios
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. For purposes of this
Investment Restriction with respect to the Technology Growth Portfolio, the
technology sector in general is not considered an industry.
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.
* * *
Each of the Bond Market Index and European Equity Portfolios has
adopted investment restrictions numbered 1 through 10 as fundamental
policies. Investment restrictions numbered 11 through 13 are not
fundamental policies and may be changed, as to a Portfolio, by a 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 the 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 the 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. Lend any securities or make any other loans if, as a result,
more than 33-1/3% of its total assets would be lent to others, except that
this limitation does not apply to the purchase of debt obligations and the
entry into repurchase agreements. 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 the 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 and 12 may be deemed to give rise to a
senior security.
10. Purchase securities on margin, but the 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. 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.
* * *
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
The Fund's Board is responsible for the management and supervision of
each Portfolio. The Board approves all significant agreements with those
companies that furnish services to the Fund. These companies are as
follows:
The Dreyfus Corporation Investment Adviser
Founders Asset Management Sub-Investment Adviser for
LLC. the Founders Portfolios
Newton Capital Management Sub-Investment Adviser to the
Limited European Equity Portfolio
Premier Mutual Fund Distributor
Services, Inc.
Dreyfus Transfer, Inc. Transfer Agent
The Bank of New York Custodian for the European
Equity, Founders
International Equity and
Founders Passport Portfolios
Mellon Bank, N.A. Custodian for the Bond Market
Index, Core Value, Founders
Growth, MidCap Stock and
Technology Growth Portfolios
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 Noel Group, Inc., a venture capital company (for
which, from February 1995 until November 1997, he was Chairman of the
Board), The Muscular Dystrophy Association, 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, Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency, 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 55 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, The Dun & Bradstreet Corporation, MCI
Communications Corporation, Mutual of America Life Insurance Company
and TLC Beatrice International Holdings, Inc. He is 65 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 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 was a director of The Grumman Corporation from 1980 to
1994, and of the General RE Corporation from 1990 to 1998. 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 71 years old and her address is 46 Sunset Avenue, Amherst,
Massachusetts 01002.
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 paid to each Board member by the Fund, and by all 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 ended December 31, 1998, is as follows:
Total Compensation
Aggregate From Fund and Fund
Name of Board Compensation From Complex Paid
Member Fund** to Board Member
Joseph S. $2,500 $619,660 (187)
DiMartino
Clifford L. $2,000 $80,918 (38)
Alexander, Jr.
Lucy Wilson Benson $2,000 $77,168 (24)
___________________
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
**Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $211 for all Board members as a group.
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 has been employed by Funds
Distributor, Inc. for more than the past five years. She is 42 years
old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. She is
39 years old.
FREDERICK C. DEY, Vice President, Assistant Secretary, and Assistant
Treasurer. Vice President, New Business Development of the Distributor
and Funds Distributor, Inc. since September 1994, and an officer of
other investment companies advised or administered by the Manager. He
is 37 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was Second
Vice President with Chase Manhattan Bank. She is 30 years old.
*JOHN P. COVINO, Vice President and Assistant Treasurer. Vice President and
Treasury Group Manager of Treasury Servicing and Administration of
Funds Distributor, Inc. since December 1998, and an officer of other
investment companies advised or administered by the Manager. From
December 1995 to November 1998, he was employed by Fidelity Investments
where he held several positions in its Institutional Brokerage Group.
Prior to joining Fidelity, he was employed by SunGard Brokerage Systems
where he was responsible for the technology and development of the
accounting product group. He is 35 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. She has
been employed by Funds Distributor Inc. for more than the past five
years. She is 35 years old.
*GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. He is 44 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. He is 37
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. He is 30 years old.
*KAREN JACOPPO-WOOD, Vice President and Assistant Secretary. Vice President
and Senior Counsel of Funds Distributor, Inc. since February 1997, and
an officer of other investment companies advised or administered by the
Manager. From June 1994 to January 1996, she was Manager of SEC
Registration at Scudder, Stevens & Clark, Inc. She is 32 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of 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. He is 34 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration 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 27 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 37
years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166 except those officers indicated by an (*), whose address is
60 State Street, Boston, MA 02109.
The Fund's Board members and officers, as a group, owned less than 1%
of each Portfolio's shares outstanding on August 26, 1999.
The following shareholders are known by the Fund to own of record 5% or
more of the indicated Portfolio's shares outstanding on August 26, 1999:
Shareholder Portfolio Percentage of Shares
MBCIC Core Value 38.05%
c/o Mellon Bank, N.A. MidCap Stock 28.33%
919 North Market Street Founders Growth 63.65%
Wilmington, DE 19801-3023 Founders International
Equity 100.00%
Founders Passport 92.08%
European Equity 100.00%
TransAmerica Occidental Core Value 44.94%
Life Insurance Company MidCap Stock 49.83%
Separate Account VA-2L Founders Growth 30.33%
Accounting Department Founders Passport 7.50%
P.O. Box 33849
Charlotte, NC 28233-3849
First TransAmerica Life Core Value 16.63%
Insurance Company MidCap Stock 21.45%
Separate Account VA-2LNY Founders Growth 6.02%
Accounting Department
P.O. Box 33849
Charlotte, NC 28233-3849
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). 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.
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated April 16, 1998, as amended
July 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. The Agreement was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Agreement, at a meeting
held on July 15, 1999. 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:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo, and Richard F. Syron, directors.
The Manager has a personal securities trading policy (the "Policy")
which restricts the personal securities transactions of its employees. Its
primary purpose is to ensure that personal trading by the Manager's
employees does not disadvantage any fund managed by the Manager. Under the
Policy, the Manager's employees must preclear personal transactions in
securities not exempt under the Policy. In addition, the Manager's
employees must report their personal securities transactions and holdings,
which are reviewed for compliance with Policy. In that regard, the
Manager's portfolio managers and other investment personnel also are subject
to the oversight of Mellon's Investment Ethics Committee. Portfolio
managers and other investment personnel of the Manager who comply with the
Policy's preclearance and disclosure procedures, and the requirements of the
Committee, may be permitted to purchase, sell or hold securities which also
may be or are held in fund(s) they manage or for which they otherwise
provide investment advice.
Sub-Investment Advisory Agreements. With respect to the Founders
Portfolios, the Manager has entered into a Sub-Investment Advisory
Agreement with Founders dated July 16, 1998 (the "Founders Sub-Advisory
Agreement"). As to each Founders Portfolio, the Founders Sub-Advisory
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 Portfolio's
outstanding voting securities, 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 Founders,
by vote cast in person at a meeting called for the purpose of voting on
such approval. The Founders Sub-Advisory Agreement was last approved by
the Fund's Board, including a majority of the Board members who are not
"interested persons" of any party to the Founders Sub-Advisory Agreement,
at a meeting held on July 16, 1998. As to each Founders Portfolio, the
Founders Sub-Advisory Agreement is terminable without penalty, (i) by the
Manager on 60 days' notice, (ii) by the Fund's Board or by vote of the
holders of a majority of the Portfolio's outstanding voting securities on
60 days' notice, or (iii) upon not less than 90 days' notice, by Founders.
The Founders Sub-Advisory Agreement will terminate automatically, as to the
relevant Founders Portfolio, in the event of its assignment (as defined in
the 1940 Act).
The following persons are officers of Founders: Richard W. Sabo,
President and Chief Executive Officer; Robert T. Ammann, Vice President;
Thomas M. Arrington, Vice President; Angelo Barr, Vice President and
National Sales Manager; Scott A. Chapman, Vice President; Kenneth R.
Christoffersen, Vice President, General Counsel and Secretary; Gregory P.
Contillo, Senior Vice President and Chief Marketing Officer; Francis P.
Gaffney, Vice President; Roberto Galindo, Jr., Vice President; Laurine
Garrity, Vice President; Michael W. Gerding, Senior Vice President, Brian
F. Kelly, Vice President; Paul A. LaRocco, Vice President; Douglas A.
Loeffler, Vice President; David L. Ray, Senior Vice President and
Treasurer; and Linda M. Ripley, Vice President.
With respect to the European Equity Portfolio, the Manager has entered
into a Sub-Investment Advisory Agreement (the "Newton Sub-Advisory
Agreement") with Newton dated April 16, 1999. As to such Portfolio, the
Newton Sub-Advisory 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
Portfolio's outstanding voting securities, 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 Newton, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Newton Sub-Advisory Agreement is terminable without penalty,
(i) by the Manager on 60 days' notice, (ii) by the Fund's Board or by vote
of the holders of a majority of the Portfolio's outstanding voting
securities on 60 days' notice, or (iii) upon not less than 90 days' notice,
by Newton. The Newton Sub-Advisory Agreement will terminate automatically
in the event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of Newton: Colin
Harris, Director; Jonathan Powell, Director; Guy Hudson, Director; Shreekant
Panday, Director; Joanna Bowen, Officer; Keiran Gallagher, Officer; Philip
Collins, Officer; Guy Christie, Officer; Helena Morrisey, Officer; April
Larusse, Officer; Alexander Stanic, Officer; Richard Harris, Officer; Susan
Duffy, Officer; Julian Campbell, Compliance Officer; and Mary-Ann O'Hara,
Chief Financial Officer.
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. Founders, with respect to each Founders Portfolio, and
Newton, with respect to the European Equity Portfolio, provides day-to-day
management of the Portfolio's investments, subject to the supervision of the
Manager and the Fund's Board. Each Portfolio's adviser 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
for the relevant Portfolio. The portfolio managers of Core Value Portfolio
are Francis DeAngelis, William Goldenberg and Valerie Sill. The portfolio
managers for the European Equity Portfolio are Joanna Bowen and Keiran
Gallagher. The primary portfolio managers of Founders Growth Portfolio are
Scott A. Chapman and Thomas M. Arrington. The primary portfolio manager of
Founders International Equity Portfolio is Douglas A. Loeffler. The primary
portfolio manager of Founders Passport Portfolio is Tracy P. Stouffer. The
portfolio managers of MidCap Stock Portfolio are John O'Toole, Ronald Gala,
Steven Falci, Robert Wilke, Mark Sickorski, Harry Grosse and Jocelin Reed.
The portfolio managers of Technology Growth Portfolio are Mark Herskovitz
and Barry Mills. The Bond Market Index Portfolio is not managed according
to traditional methods of "active" investment management, which involve the
buying and selling of securities based upon economic, financial and market
analysis and investment judgment. Instead, the Bond Market Index Portfolio
utilizes a "passive" investment approach, attempting to duplicate the
investment performance of the Aggregate Bond Index through the use of
statistical procedures.
The Manager, Founders and Newton maintain research departments with
professional portfolio managers and securities analysts who provide research
services for the Portfolios and for other funds advised by the Manager,
Founders or Newton.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager (or, if
applicable, the Portfolio's sub-investment adviser). 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 Founders or any of their 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 among 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, from time to time, may make payments
from its own assets to Participating Insurance Companies in connection with
the provision of certain administrative services to one or more Portfolios
and/or to purchasers of VA contracts or VLI policies. The Manager also may
make such advertising and promotional expenditures, using its own resources,
as it from time to time deems appropriate.
As compensation for its services, the Fund has agreed to pay the
Manager a monthly fee at the annual rate set forth below as a percentage of
the relevant Portfolio's average daily net assets.
Name of Portfolio Management Fee
Bond Market Index Portfolio .30%
Core Value Portfolio .75%
European Equity Portfolio 1.00%
MidCap Stock Portfolio .75%
Technology Growth Portfolio .75%
Founders Growth Portfolio .75%
Founders International Equity Portfolio 1.00%
Founders Passport Portfolio 1.00%
The fees payable by the Fund to the Manager with respect to each
Portfolio indicated below for the period from its commencement of operations
through December 31, 1998, were as follows:
Name of Portfolio Management Fee Payable*
Core Value Portfolio(1) $26,068
MidCap Stock Portfolio(1) $40,453
Founders Growth Portfolio(2) $ 4,286
Founders International Equity $ 5,388
Portfolio(2)
Founders Passport Portfolio(2) $13,578
_________________
* The management fees payable by each Portfolio to the Manager for the
fiscal year ended December 31, 1998 were waived pursuant to
undertakings by the Manager, resulting in no management fees being paid
by the Portfolios for the fiscal year ended December 31, 1998.
(1) From May 1, 1998 (commencement of operations) through December 31,
1998.
(2) From September 30, 1998 (commencement of operations) through
December 31, 1998.
The Bond Market Index, European Equity and Technology Growth Portfolios
have not completed their first fiscal year.
As compensation for Founders' services, the Manager has agreed to pay
Founders a monthly sub-advisory fee at the annual rate set forth below as a
percentage of the relevant Founders Portfolio's average daily net assets:
Name of Portfolio Sub-Investment
Advisory Fee
Founders Growth Portfolio
0 to $100 million of average daily net assets .25%
$100 million to $1 billion of average daily net assets .20%
$1 billion to $1.5 billion of average daily net assets .16%
$1.5 billion or more of average daily net assets .10%
Founders International Equity Portfolio and
Founders Passport Portfolio
0 to $100 million of average daily net assets .35%
$100 million to $1 billion of average daily net assets .30%
$1 billion to $1.5 billion of average daily net assets .26%
$1.5 billion or more of average daily net assets .20%
The fees payable by the Manager to Founders with respect to the
Founders Growth, Founders International Equity and Founders Passport
Portfolios for the period from September 30, 1998 (commencement of
operations) through December 31, 1998 were waived in their entirety by
Founders pursuant to an undertaking.
As compensation for Newton's services, the Manager has agreed to pay
Newton a monthly sub-advisory fee at the annual rate set forth below as a
percentage of the European Equity Portfolio's average daily net assets:
Annual Fee as a Percentage
Average Daily Net Assets of the Portfolio's Average
Daily Net Assets
0 to $100 million .35%
$100 million to $1 billion .30%
$1 billion to $1.5 billion .26%
$1.5 billion or more .20%
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's assets increases.
Distributor. The Distributor, located at 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's distributor on a best efforts
basis pursuant to an agreement which is renewable annually.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus
Transfer, Inc. (the "Transfer Agent"), 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 with respect
to the Bond Market Index, Core Value, Founders Growth, MidCap Stock and
Technology Growth Portfolios. Under a custody agreement with the Fund,
Mellon Bank, N.A. holds each such 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 such Portfolio's
assets held in custody and receives certain securities transaction charges.
The Bank of New York, 90 Washington Street, New York, New York 10286,
serves as the Fund's custodian with respect to the European Equity, Founders
International Equity and Founders Passport Portfolios. The Bank of New York
has no part in determining the investment policies of the Portfolios or
which securities are to be purchased or sold by the Portfolios.
HOW TO BUY SHARES
Portfolio shares currently are offered only to separate accounts of
Participating Insurance Companies. Individuals may not place purchase
orders directly with the Fund.
Separate accounts of the Participating Insurance Companies place orders
based on, among other things, the amount of premium payments to be invested
pursuant to VA contracts and VLI policies. See the prospectus of the
separate account of the applicable Participating Insurance Company for more
information on the purchase of Portfolio shares and with respect to the
availability for investment in specific portfolios of the Fund. The Fund
does not issue share certificates.
Purchase orders from separate accounts based on premiums and
transaction requests received by the Participating Insurance Company on a
given business day in accordance with procedures established by the
Participating Insurance Company will be effected at the net asset value of
the applicable Portfolio determined on such business day if the orders are
received by the Fund in proper form and in accordance with applicable
requirements on the next business day and Federal Funds (monies of member
banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) in the net amount of such orders are received by the
Fund on the next business day in accordance with applicable requirements.
It is each Participating Insurance Company's responsibility to properly
transmit purchase orders and Federal Funds in accordance with applicable
requirements. VA contract holders and VLI policy holders should refer to
the prospectus for their contracts or policies in this regard.
Portfolio 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. For information regarding methods
employed in valuing each Portfolio's investments, see "Determination of Net
Asset Value."
HOW TO REDEEM SHARES
Portfolio shares may be redeemed at any time by the separate accounts
of the Participating Insurance Companies. Individuals may not place
redemption orders directly with the Fund. Redemption requests received by
the Participating Insurance Company from separate accounts on a given
business day in accordance with procedures established by the Participating
Insurance Company 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
responsibility to properly transmit redemption requests in accordance with
applicable requirements. VA contract holders and VLI policy holders should
consult their Participating Insurance Company in this regard. 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. No charges are imposed by
the Fund when shares are redeemed.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission.
Should any conflict between VA contract holders and VLI policy holders
arise which would require that a substantial amount of net assets be
withdrawn, orderly portfolio management could be disrupted to the potential
detriment of such contract holders and policy holders.
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 and is a fundamental policy, as to a Portfolio, which may not be
changed without shareholder approval of such Portfolio. 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 sells
such securities, brokerage charges would 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
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 certain of the Core Value Portfolio's, European Equity Portfolio's or any
Founders 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 may 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.
Substantially all of the Bond Market Index Portfolio's investments
(excluding short-term investments) are valued each business day by an
independent pricing service (the "Service") approved by the Fund's Board.
Securities valued by the Service for which quoted bid prices in the judgment
of the Service are readily available and are representative of the bid side
of the market are valued at the mean between the quoted bid prices (as
obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other debt securities valued by the Service are carried
at fair value as determined by the Service, based on methods which include
consideration of: yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers; and
general market conditions. Debt securities that are not valued by the
Service are valued at the average of the most recent bid and asked prices in
the market in which such investments are primarily traded, or at the last
sales price for securities traded primarily on an exchange. In the absence
of reported sales of investments traded primarily on an exchange, the
average of the most recent bid and asked prices is used. Bid price is used
when no asked price is available.
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
Management believes that each Portfolio (except the Bond Market Index,
European Equity and Technology Growth Portfolios) has qualified as a
regulated investment company under the Code for the period ended December
31, 1998. It is expected that each of the Bond Market Index, European
Equity and Technology Growth Portfolios 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 meet several
requirements. These requirements include the following: (1) at least 90% of
the Portfolio's gross income must be derived from dividends, interest,
payments with respect to securities loans, gains from the sale or
disposition of stock, securities or foreign currencies or other income
(including gain from options, futures or forward contracts) derived in
connection with the Portfolio's investment business, (2) at the close of
each quarter of the Portfolio's taxable year, (a) at least 50% of the value
of the Portfolio's assets must consist of cash, United States Government
securities, securities of other regulated investment companies and other
securities (limited generally with respect to any one issuer to not more
than 5% of the total assets of the Portfolio and not more than 10% of the
outstanding voting securities of such issuer) and (b) not more than 25% of
the value of the Portfolio's assets may be invested in the securities of any
one issuer (other than United States Government securities or securities of
other regulated investment companies) or of two or more issuers which the
Portfolio controls and which are determined to be engaged in similar or
related trades or businesses and (3) at least 90% of the Portfolio's net
income (consisting of net investment income and net short-term capital gain)
must be distributed to its shareholders. The Portfolios may be subject to a
non-deductible 4% excise tax, measured with respect to certain undistributed
amount of investment income and capital gains. The term "regulated
investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
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. In
addition, if a Portfolio invests in an entity that is classified as a
"passive foreign investment company" ("PFIC") for Federal income tax
purposes, the operation of certain provisions of the Code applying to PFICs
could result in the imposition of certain Federal income taxes on the
Portfolio.
Shareholders of the Portfolios will be variable annuity and variable
life insurance separate accounts established by insurance companies to fund
Policies. Section 817(h) of the Code and the 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.
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.
If a Portfolio fails to qualify as a regulated investment company, the
Portfolio will be subject to federal, and possibly state, corporate taxes on
its taxable income and gains, distributions to its shareholders will be
taxed as ordinary dividend income to the extent of such Portfolio's
available earnings and profits, and Policy owners could be subject to
current tax on distributions received with respect to Portfolio shares.
For more information concerning the Federal income tax consequences,
Policy owners should refer to the prospectus for their contracts or
policies.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities on a securities exchange
are effected by the Manager (or, if applicable, the Portfolio's sub-
investment adviser) 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 (and, if
applicable, the Portfolio's sub-investment adviser) to supplement its own
research and analysis with the views and information of other securities
firms and may be selected based upon their sales of shares of funds advised
by the Manager or its affiliates. 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, (and, if applicable, the
Portfolio's sub-investment adviser) in advising other funds or accounts and,
conversely, research services furnished to the Manager (and, if applicable,
the Portfolio's sub-investment adviser) 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 based on their sales of shares of other
funds advised by the Manager or its affiliates, as well as 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, Founders or Newton or their affiliates. 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, Founders or
Newton or their affiliates are reasonable and fair.
In connection with its portfolio securities transactions for the period
ended December 31, 1998, each Portfolio indicated below paid brokerage
commissions and, where determinable, concessions on principal transactions,
none of which was paid to the Distributor, in the following amounts:
Name of Portfolio Brokerage Concessions on Principal
Commissions Paid Transactions
Core Value(1) $ 9,350 $0
MidCap Stock(1) $20,261 $0
Founders Growth(2) $ 4,258 $0
Founders International Equity(2) $ 7,518 $0
Founders Passport(2) $11,415 $0
__________________
(1) From May 1, 1998 (commencement of operations) through December 31,
1998.
(2) From September 30, 1998 (commencement of operations) through
December 31, 1998.
The aggregate amount of transactions during the period ended December
31, 1998 in securities effected on an agency basis through a broker for,
among other things, research services, and the commissions and concessions
related to such transactions were as follows:
Name of Portfolio Transaction Amount Commissions and
Concessions
Core Value(1) $631,983 $480
MidCap Stock(1) $134,821 $406
Founders Growth(2) $768,658 $811
Founders International Equity(2) $273,807 $265
Founders Passport(2) $ 0 $ 0
__________________
(1) From May 1, 1998 (commencement of operations) through December 31,
1998.
(2) From September 30, 1998 (commencement of operations) through
December 31, 1998.
The Bond Market Index, European Equity and Technology Growth Portfolios
have not completed their first fiscal year.
PERFORMANCE INFORMATION
Performance figures for the Portfolios will not reflect the separate
charges applicable to the 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 (not annualized) for each of the following Portfolios for
the period indicated was:
Period Ended December 31, 1998
Portfolio
Core Value(1) -5.59%
MidCap Stock(1) -2.53%
Founders Growth(2) 27.20%
Founders International 14.88%
Equity(2)
Founders Passport(2) 15.79%
__________________
(1) From May 1, 1998 (commencement of operations) through December 31,
1998.
(2) From September 30, 1998 (commencement of operations) through
December 31, 1998.
The Bond Market Index, European Equity and Technology Growth Portfolios
have not completed their first fiscal year and, therefore, no performance
data have been provided for such Portfolios.
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.
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. 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 Policy.
Calculations of the Portfolios' performance information may reflect
absorbed expenses pursuant to any undertaking that may be in effect.
Comparative performance information may be used from time to time in
advertising a Portfolio's shares, including data from Lipper Analytical
Services, Inc., the Aggregate Bond Index, Government/Corporate Bond Index,
CDA Technologies Indexes, Consumer Price Index, IBC's Money Fund ReportT,
Money Magazine, Bank Rate MonitorT, Standard & Poor's 500 Composite Stock
Price Index ("S&P 500 Index"), Standard & Poor's MidCap 400 Index, Russell
2500r Index, Morgan Stanley Capital International (MSCI) Europe Index, MSCI
World (ex US) Index, the Dow Jones Industrial Average, Morningstar, Inc.,
Value Line Mutual Fund Survey and other industry publications.
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,
and 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 AND PORTFOLIOS
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.
Portfolio shares are of one class and have equal rights as to dividends and
in liquidation. 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 Agreement and Declaration of Trust (the "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.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a
result, shareholders may not consider each year the election of Board
members or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Fund to
hold a special meeting of shareholders for purposes of removing a Board
member from office. Shareholders may remove a Board member by the
affirmative vote of two-thirds of the Fund's outstanding voting shares. In
addition, the Board will call a meeting of shareholders for the purpose of
electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
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 eight 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 Portfolios. The Fund has the ability to
create, from time to time, new series without shareholder approval.
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.
COUNSEL AND INDEPENDENT AUDITORS
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 Prospectuses.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the
Fund. The auditors examine the Fund's financial statements and provide
other audit, tax and related services.
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 payments.
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.
DREYFUS INVESTMENT PORTFOLIOS
PART C. OTHER INFORMATION
_________________________
Item 23. Exhibits
_______ ________
(a) Registrant's Agreement and Declaration of Trust is incorporated by
reference to the Registration Statement on Form N-1A, filed on
February 28, 1998.
(b) Registrant's By-Laws are incorporated by reference to the
Registration Statement on Form N-1A, filed on February 28, 1998.
(d)(1) Management Agreement, as revised.
(d)(2) Sub-Investment Advisory Agreement with Founders Asset
Management LLC is incorporated by reference to Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on July 17, 1998.
(d)(3) Sub-Investment Advisory Agreement with Newton Capital Management
Limited is incorporated by reference to Exhibit (d)(3) of Post-
Effective Amendment No. 5 to the Registration Statement on
Form N-1A filed on April 29, 1999.
(e) Distribution Agreement, as revised.
(g) Custody Agreement is incorporated by reference to Exhibit (8)
of Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on April 24, 1998.
(i) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, filed on April 24, 1998.
(j) Consent of Independent Auditors.
Other Exhibits
______________
(a) Certificate of Assistant Secretary.
(b) Rule 18f-1 Election Assistant is incorporated by
reference to Other Exhibits (b) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-
1A, filed on April 24, 1998.
(c) Power of Attorney.
Item 24. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 25. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 27 of Part C of Pre-
Effective Amendment No. 2 to the Registration Statement on Form
N-1A, filed on September 15, 1998.
Reference is also made to the Distribution Agreement filed as
Exhibit (6) of Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, filed on September 15, 1998.
Item 26. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
(a) Manager - The Dreyfus Corporation
________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary
companies comprise a financial service organization whose
business consists primarily of providing investment management
services as the investment adviser, manager and distributor for
sponsored 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.
<TABLE>
<CAPTION>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
Officers and Directors of Investment Adviser
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
Christopher M. Condron Franklin Portfolio Associates, LLC* Director 1/97 - Present
Chairman of the Board and
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Pareto Partners Partner Representative 11/95 - 5/97
271 Regent Street
London, England W1R 8PP
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 -Present
Mellon Capital Management Director 5/95 -Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 -1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Christopher M. Condron The Boston Company, Inc.* Vice Chairman 1/94 - Present
Chairman and Chief Director 5/93 - Present
Executive Officer
(Continued) Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 -Present
Company*
The Boston Company Financial President 6/89 - Present
Strategies, Inc. * Director 6/89 - Present
Mandell L. Berman Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
Burton C. Borgelt DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Bank Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
Stephen E. Canter Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, LLC* Director 2/99 - Present
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Stephen E. Canter Founders Asset Management, LLC Member, Board of 12/97 - Present
President, Chief Operating 2930 East Third Ave. Managers
Officer, Chief Investment Denver, CO 80206 Acting Chief Executive 7/98 - 12/98
Officer, and Director Officer
(Continued)
The Dreyfus Trust Company+++ Director 6/ 95 - Present
Thomas F. Eggers Dreyfus Service Corporation++ Executive Vice President 4/96 - Present
Vice Chairman - Institutional Director 9/96 - Present
and Director
Founders Asset Management, LLC Member, Board of 2/99 - Present
2930 East Third Avenue Managers
Denver, CO 80206
Steven G. Elliott Mellon Bank Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Financial Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+ Chairman 7/89 - 11/97
President 4/88 - 11/97
Chief Executive Officer 4/88 - 11/97
Mellon International Investment Director 9/89 - 8/97
Corporation+
Steven G. Elliott Mellon Financial Services Treasurer 12/87 - Present
Director (Continued) Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
Lawrence S. Kash Dreyfus Investment Director 4/97 - Present
Vice Chairman Advisors, Inc.++
And Director
Dreyfus Brokerage Services, Inc. Chairman 11/97 - Present
401 North Maple Ave. Chief Executive Officer 11/97 - Present
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.++ + Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - Present
Organization, Inc.++ President 1/97 - Present
Seven Six Seven Agency, Inc. ++ Director 1/97 - Present
Dreyfus Insurance Agency of Chairman 5/97 - Present
Massachusetts, Inc.++++ President 5/97 - Present
Director 5/97 - Present
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - Present
Corporation++ President 5/97 - Present
Director 12/94 - Present
Founders Asset Management, LLC Member, Board of 12/97 - Present
2930 East Third Avenue Managers
Denver, CO. 80206
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Lawrence S. Kash Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Vice Chairman Chairman 9/93 - 1/98
And Director (Continued) President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Martin G. McGuinn Mellon Bank Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
Mellon Financial Vice President 9/86 - 10/97
Corporation (MD)
Rockville, Maryland
J. David Officer Dreyfus Service Corporation++ Executive Vice President 5/98 - Present
Vice Chairman Director 3/99 - Present
And Director
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - Present
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - Present
Services, Inc.* Director 8/96 - Present
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
J. David Officer Mellon Trust of New York Director 6/96 - Present
Vice Chairman and 1301 Avenue of the Americas
Director (Continued) New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon Bank, N.A.+ Executive Vice President 2/94 - Present
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
Richard W. Sabo Founders Asset Management LLC President 12/98 - Present
Director 2930 East Third Avenue Chief Executive Officer 12/98 - Present
Denver, CO. 80206
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
Richard F. Syron American Stock Exchange Chairman 4/94 - Present
Director 86 Trinity Place Chief Executive Officer 4/94 - Present
New York, NY 10006
Ronald P. O'Hanley Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
TBCAM Holdings, Inc.* Chairman 6/98 - Present
Director 10/97 - Present
The Boston Company Asset Chairman 6/98 - Present
Management, LLC* Director 1/98 - 6/98
The Boston Company Asset Director 2/97 - 12/97
Management, Inc. *
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 5/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon Equity Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon-France Corporation+ Director 3/97 - Present
Ronald P. O'Hanley Laurel Capital Advisors+ Trustee 3/97 - Present
Vice Chairman (Continued)
Mark N. Jacobs Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - Present
Organization, Inc.++
William H. Maresca The Dreyfus Trust Company+++ Director 3/97 - Present
Controller
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 -Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Assistant Treasurer 3/93 - Present
Organization, Inc.++
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
William T. Sandalls, Jr. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97-12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
William T. Sandalls, Jr. Dreyfus-Lincoln, Inc. Director 12/96 - Present
Executive Vice President 4500 New Linden Hill Road President 1/97 - Present
(Continued) Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
Dreyfus Partnership President 1/97 - 6/97
Management, Inc.++ Director 1/96 - 6/97
Dreyfus Service Organization, Director 1/96 - 6/97
Inc.++ Executive Vice President 1/96 - 6/97
Treasurer 10/96- Present
Dreyfus Insurance Agency of Director 5/97 - Present
Massachusetts, Inc.++++ Treasurer 5/97- Present
Executive Vice President 5/97 - Present
Diane P. Durnin Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
Patrice M. Kozlowski None
Vice President - Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Theodore A. Schachar Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
Dreyfus Investment Advisors, Inc.++ Vice President - Tax 10/96 - Present
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Inc.++ Vice President - Tax 10/96 - Present
Wendy Strutt None
Vice President
Richard Terres None
Vice President
Andrew S. Wasser Mellon Bank Corporation+ Vice President 1/95 - Present
Vice-President -
Information Systems
James Bitetto The TruePenny Corporation++ Secretary 9/98 - Present
Assistant Secretary
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
Steven F. Newman Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
_______________________________
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ 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 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. 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 Debt and Equity 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) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus U.S. Treasury Intermediate Term Fund
60) Dreyfus U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
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 Equity Funds
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) Founders Funds, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Funds, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Chief Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Jean M. O'Leary+ Assistant Vice President, None
Assistant Secretary and
Assistant Clerk
William J. Nutt+ Chairman of the Board None
Stephanie D. Pierce++ Vice President Vice President,
Assistant
Secretary and
Assistant
Treasurer
Patrick W. McKeon+ Vice President None
Joseph A. Vignone+ Vice President None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York
10166.
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. The Bank of New York
90 Washington Street
New York, New York 10286
4. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
5. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
6. Founders Asset Management LLC
Founders Financial Center
2930 East Third Center
Denver, Colorado 80206
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
NONE
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the 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 31st day of August, 1999.
DREYFUS INVESTMENT PORTFOLIOS
BY:
/s/Marie E. Connolly*
____________________________
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities and on the date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President and Treasurer 08/31/99
______________________________ (Principal Executive, Financial
Marie E. Connolly and Accounting Officer)
/s/Clifford L. Alexander, Jr.* Director 08/31/99
_____________________________
Clifford L. Alexander, Jr.
/s/Lucy Wilson Benson* Director 08/31/99
______________________________
Lucy Wilson Benson
/s/Joseph S. DiMartino* Chairman of the Board of Directors 08/31/99
_____________________________
Joseph S. DiMartino
*BY: /s/Stephanie Pierce
__________________________
Stephanie Pierce,
Attorney-in-Fact
EXHIBIT INDEX
Exhibits
(d) (1) Management Agreement, as revised
(e) Distribution Agreement, as revised
(j) Consent of Independent Auditors
Other Exhibits
(a) Certificate of Assistant Secretary
(c) Power of Attorney
MANAGEMENT AGREEMENT
DREYFUS INVESTMENT PORTFOLIOS
200 Park Avenue
New York, New York 10166
April 16, 1998
As Amended, July 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. We have discussed and concur in your employing
on this basis for as long as you deem it appropriate each indicated sub-
adviser (each, a "Sub-Investment Adviser") named on Schedule 1 hereto to act
as the Fund's sub-investment adviser with respect to the Series indicated on
Schedule 1 hereto (the "Sub-Advised Series") to provide day-to-day
management of the Sub-Advised Series' investments.
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, or with
respect to the Sub-Advised Series, supervise, 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 neither you nor the Sub-Investment Adviser
shall 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 or the Sub-Investment Adviser
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,
or to which the Sub-Investment Adviser would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of
its duties under its Sub-Investment Advisory Agreement with you or by reason
of its reckless disregard of its obligations and duties under said
Agreement.
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 and will pay all fees of the Sub-
Investment Adviser in connection with its duties in respect of the Fund.
All other expenses to be incurred in the operation of the Fund (other than
those borne by the Sub-Investment Adviser) 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 the outstanding voting securities of you or the Sub-Investment
Adviser or any affiliate of you or the Sub-Investment Adviser, 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 and the Sub-Investment Adviser now
act, and that from time to time hereafter you or the Sub-Investment Adviser
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
and the Sub-Investment Adviser's 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.
Neither you nor the Sub-Investment Adviser shall 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 and, in the case of
the Sub-Investment Adviser, for a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties
or from reckless disregard by it of its obligations and duties under its Sub-
Investment Advisory 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.
In addition, the Fund recognizes that from time to time the Sub-
Investment Adviser's 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 Sub-Investment
Adviser's primary name as part of their name, and that the Sub-Investment
Adviser's corporation or its affiliates may enter into sub-investment
advisory or other agreements with such other entities. If the Sub-
Investment Adviser ceases to act as the Sub-Advised Series' sub-investment
adviser, and none of the Sub-Investment Adviser's directors, officers or
employees act as a portfolio manager for such Sub-Advised Series, the Fund
agrees that, at the Sub-Investment Adviser's request, the Fund will take all
necessary action to change the name of the Sub-Advised Series to a name not
including the Sub-Investment Adviser's primary name in any form or
combination of words.
The Fund is agreeing to the provisions of this Agreement that
limit the Sub-Investment Adviser's liability and other provisions relating
to the Sub-Investment Adviser so as to induce the Sub-Investment Adviser to
enter into its Sub-Investment Advisory Agreement with you and to perform its
obligations thereunder. The Sub-Investment Adviser is expressly made a
third party beneficiary of this Agreement with rights as respects the Sub-
Advised Series to the same extent as if it had been a party hereto.
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:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Bond Market Index .30% April 16, 2001 April 16th
Portfolio
Core Value Portfolio .75% April 16, 2000 April 16th
European Equity 1.00% April 16, 2001 April 16th
Portfolio1
MidCap Stock .75% April 16, 2000 April 16th
Portfolio
Technology Growth .75% July 29, 2001 July 29th
Portfolio
Founders Growth .75% April 16, 2000 April 16th
Portfolio2
Founders 1.00% April 16, 2000 April 16th
International
Equity Portfolio2
Founders Passport 1.00% April 16, 2000 April 16th
Portfolio2
Revised as of: July 29, 1999
_______________________________
1 The Dreyfus Corporation has employed Newton Capital Management Limited to
act as sub-investment adviser to this Series.
2 The Dreyfus Corporation has employed Founders Asset Management LLC to act
as sub-investment adviser to this Series.
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:_______________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Bond Market Index Portfolio April 16, 2001 April 16th
Core Value Portfolio April 16, 2000 April 16th
European Equity Portfolio April 16, 2001 April 16th
MidCap Stock Portfolio April 16, 2000 April 16th
Technology Growth Portfolio July 29, 2001 July 29th
Founders Growth Portfolio April 16, 2000 April 16th
Founders International Equity April 16, 2000 April 16th
Portfolio
Founders Passport Portfolio April 16, 2000 April 16th
Revised as of: July 29, 1999
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Counsel and
Independent Auditors" in this Registration Statement (Form N-1A 333-47011)
of Dreyfus Investment Portfolios (comprising of Bond Market Index Portfolio,
Core Value Portfolio, European Equity Portfolio, Founders Growth Portfolio,
Founders International Equity Portfolio, Founders Passport Portfolio, MidCap
Stock Portfolio and Technology Growth Portfolio) and consent to the reference
to our firm under the captions "Financial Highlights" and to the use of our
reports dated February 4, 1999 for Core Value Portfolio, Founders Growth
Portfolio, Founders International Equity Portfolio, Founders Passport
Portfolio and MidCap Stock Portfolio, which is incorporated by reference, in
this Registration Statement (Form N-1A 333-47011) of Dreyfus Investment
Portfolios.
ERNST & YOUNG LLP
New York, New York
August 25, 1999
DREYFUS INVESTMENT PORTFOLIOS
ASSISTANT SECRETARY'S CERTIFICATE
I, Stephanie Pierce, Vice President, Assistant Treasurer and Assistant
Secretary of Dreyfus Investment Portfolios (the "Fund"), hereby certify that
set forth below is a copy of the resolutions adopted by the Fund's Board
members by Unanimous Written Consent dated June 1, 1999.
RESOLUTIONS
RESOLVED, that the following persons be, and they hereby are, elected to the
offices set forth opposite their respective names, to serve at the pleasure
of the Fund's Board:
President and Treasurer Marie E. Connolly
Vice President and Secretary Margaret W. Chambers
Vice President and Assistant Treasurer John P. Covino
Vice President and Assistant Treasurer Mary A. Nelson
Vice President and Assistant Treasurer George A. Rio
Vice President and Assistant Treasurer Joseph F. Tower, III
Vice President, Assistant Treasurer and Frederick C. Dey
Assistant Secretary
Vice President, Assistant Treasurer and Stephanie Pierce
Assistant Secretary
Vice President and Assistant Secretary Douglas C. Conroy
Vice President and Assistant Secretary Christopher J. Kelley
Vice President and Assistant Secretary Kathleen K. Morrissey
Vice President and Assistant Secretary Elba Vasquez
Vice President and Assistant Secretary Karen Jacoppo-Wood
; and it be further
RESOLVED, that the Registration Statement and any and all amendments and
supplements thereto may be signed by any one of Margaret W. Chambers, Marie
E. Connolly, Douglas C. Conroy, Frederick C. Dey, Christopher J. Kelley,
Kathleen K. Morrissey, Stephanie Pierce, Elba Vasquez and Karen Jacoppo-
Wood, 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 by name and affixed seal of the
Fund on August 31, 1999.
/s/Stephanie Pierce
_________________________
Stephanie Pierce
Vice President, Assistant Treasurer
and Assistant Secretary
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Douglas C. Conroy, Frederick C. Dey, Christopher J.
Kelley, Kathleen K. Morrisey, Stephanie Pierce, Elba Vasquez and Karen
Jacoppo-Wood, and each of them, with full power to act without the other,
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her, and in his or her name,
place and stead, in any and all capacities (until revoked in writing) to
sign any and all amendments to the Registration Statement of Dreyfus
Investment Portfolios (including post-effective amendments and amendments
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 or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
/s/ Clifford Alexander June 1, 1999
__________________________
Clifford Alexander
/s/ Lucy Wilson Benson June 1, 1999
__________________________
Lucy Wilson Benson
/s/ Joseph S. DiMartino June 1, 1999
__________________________
Joseph S. DiMartino
August 25, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are counsel to Dreyfus Investment Portfolios (the "Fund"), and
in so acting have reviewed Post-Effective Amendment No. 8 (the
"Post-Effective Amendment") to the Fund's Registration Statement
on Form N-1A, Registration File No. 33-47011. Representatives of
the Fund have advised us that the Fund will file the Post-
Effective Amendment pursuant to paragraph (b) of Rule 485 ("Rule
485") promulgated under the Securities Act of 1933. In connection
therewith, the Fund has requested that we provide this letter.
In our examination of the Post-Effective Amendment, we have
assumed the conformity to the originals of all documents submitted
to us as copies.
Based upon the foregoing, we hereby advise you that the prospectus
included as part of the Post-Effective Amendment does not include
disclosure which we believe would render it ineligible to become
effective pursuant to paragraph (b) of Rule 485.
Very truly yours,
/s/STROOCK & STROOCK & LAVAN LLP
STROOCK & STROOCK & LAVAN LLP
August 31, 1999
Filing Desk
U.S. Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Dreyfus Investment Portfolios
Registration Statement File Nos. 333-47011; 811-08673
Gentlemen/Ladies:
Transmitted for filing is one (1) copy of an EDGARized version of Post-
Effective Amendment No. 8 to the above-referenced Registration Statement on
Form N-1A. Parts B and C have been marked to show changes from Post-
Effective Amendment No. 7 which was filed with the Securities and Exchange
Commission on June 15, 1999.
This filing is made pursuant to Rule 485(b) under the Securities Act of
1933, as amended, to become effective on August 31, 1999. The filing
reflects certain editorial changes and a general updating of language and
financial data. Pursuant to paragraph (b) (4) of such Rule, enclosed is a
letter from Stroock & Stroock & Lavan, LLP, counsel to the Fund.
Please address any comments or questions to the attention of the
undersigned at (212) 922-6806.
Very truly yours,
/s/Judy Nieves
Judy Nieves
Paralegal
JN\
Enclosures
cc: Ernst & Young LLP
Stroock & Stroock & Lavan
Jeff Prusnofsky
