Dreyfus
Investment Portfolios,
Core Value Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
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The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation 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.
<PAGE>
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
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Dreyfus Investment Portfolios, The Portfolio
Core Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Investment
Portfolios, Core Value Portfolio, covering the six-month period from January 1,
1999 through June 30, 1999. Inside you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with the portfolio manager, Valerie J. Sill.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader S&P 500 Index and the technology-laden
NASDAQ Index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Investment Portfolios, Core Value
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
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DISCUSSION OF PERFORMANCE
Valerie J. Sill, Portfolio Manager
How did Dreyfus Investment Portfolios, Core Value Portfolio perform relative to
its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Investment Portfolios,
Core Value Portfolio produced a total return of 17.92%.(1) In comparison, the
Standard & Poor' s 500 Composite Stock Price Index produced a total return of
12.38% and the Standard & Poor's 500/BARRA Value Index produced a total return
of 13.96% for the same period.(2) A major reason for the portfolio' s
outperformance of the indices was the addition of economically sensitive stocks
early in 1999 before there was wide recognition of the United States economy's
surprisingly strong growth. Economically sensitive stocks in such sectors as
chemicals, energy, metals and paper generally produce stronger earnings as the
economy improves.
What is the portfolio's investment approach?
The portfolio invests primarily in companies that are considered undervalued
based on traditional measures such as price-to-earnings ratios. In choosing
stocks, we use a bottom-up stock selection approach that focuses on individual
companies, rather than a top-down approach that forecasts market trends. We also
focus on a company' s relative value, financial strength, sales and earnings
momentum and likely catalysts that could ignite the stock price.
Last winter, our quantitative screening process identified many economically
cyclical stocks that were very attractively valued. Examples include Dow
Chemical, duPont (E.I.) de Nemours & Co., and Honeywell, three companies that
all turned out to be very positive contributors to the portfolio's six-month
performance. Dow Chemical was initially purchased last fall at the height of
concerns about a U.S. recession brought on by the Asian economic crisis. As an
economically cyclical company, the stock was shunned by the investment
community. When we did our analysis, however, we believed that
The Portfolio
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DISCUSSION OF PERFORMANCE (CONTINUED)
Wall Street' s outlook was far too pessimistic on the company, considering that
the U.S. economy had shown no signs of slowing, so we increased our position
during the reporting period. duPont, a chemical company that owns 80% of the oil
company Conoco, presented a different investment challenge. Early in the period,
we determined that duPont's core life sciences and specialty chemicals divisions
deserved a higher market value than the stock price indicated. That's because we
believed it offered higher profit margins than the typical commodity chemical
company. Meanwhile, oil prices rebounded from $11 to $18 per barrel during the
six-month period, which served to boost the value of Conoco, as well as duPont.
Another inexpensive stock was Honeywell, which, despite its strong business
fundamentals, was trading at a substantial discount to its peers in the capital
equipment sector. The company' s status as a major supplier to Boeing was
perceived as a negative, since Boeing had a significant amount of business in
Asia. Once Asia' s economy stabilized, Honeywell's shares rose substantially.
Late in the period, the company was in merger discussions with Allied-Signal,
which lifted the stock' s price again. We then sold the Honeywell position in
early June after Allied-Signal announced the takeover of the firm.
What other factors influenced the portfolio's performance?
By far, the largest sector in the portfolio continues to be financial services.
Last year' s global economic crisis was very difficult for bank and brokerage
stocks, but it did create new opportunities for the portfolio to pick up several
bargain-priced companies including Citigroup. Although the company reported poor
profits in 1998, we determined that the stock was very inexpensive when adding
up its potential earnings in investment banking, credit card operations and
corporate lending. In addition, the company would realize cost savings after its
merger with Travelers Group. As a result, Citigroup has been a very successful
stock for the portfolio.
We have also enjoyed success with stocks in the consumer nondurable sector,
which includes companies such as Nike Cl. B and Mattel. In
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1998, Nike Cl. B shares had sold off sharply due to the company's exposure in
Asia as well as general pessimism about the shoe business. However, the
company's cash flow remained strong and its sales steadily improved. Ultimately,
the Asia cloud lifted and the stock rebounded sharply. As for Mattel, we
purchased shares of the company in December when it announced the acquisition of
the Learning Company, a division that specializes in educational software. We
believed that educational software was a very important market for the company.
What is the portfolio's current strategy?
With Asia' s apparent stabilization and the strength of the U.S. economy,
traditional value companies, such as manufacturers, energy producers and other
economically cyclical stocks, have outperformed traditional growth stocks during
the first half of 1999. We believe that the portfolio outperformed the S&P 500
Composite Stock Price Index and the S&P 500/BARRA Value Index during the period
because it holds stocks that are not only undervalued, but also have catalysts
in place for strong performance. We will continue to pursue the same strategy of
seeking to select the best stocks in the value universe.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN
CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE
RETURNS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF
U.S. STOCK MARKET PERFORMANCE. THE STANDARD & POOR'S 500/BARRA VALUE INDEX IS A
CAPITALIZATION-WEIGHTED INDEX OF ALL THE STOCKS IN THE STANDARD AND POOR'S 500
COMPOSITE STOCK PRICE INDEX THAT HAVE LOW PRICE-TO-BOOK RATIOS.
RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH 12/31/99, AT WHICH TIME
IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT BEEN
ABSORBED, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
The Portfolio
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<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
COMMON STOCKS--94.4% Shares Value ($)
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<S> <C> <C>
BASIC INDUSTRIES--5.5%
Dow Chemical 1,400 177,625
duPont (E.I.) de Nemours & Co. 2,900 198,106
Fort James 1,600 60,600
Georgia-Pacific 2,100 99,487
Reynolds Metals 1,400 82,600
618,418
CAPITAL GOODS--7.2%
Browning-Ferris Industries 1,300 55,900
Delphi Automotive Systems 5,900 109,519
Eaton 500 46,000
Ingersoll-Rand 500 32,313
Republic Services, Cl. A 3,000 (a) 74,250
United Technologies 3,800 272,413
Waste Management 4,247 228,276
818,671
CONSUMER DURABLES--3.8%
Black & Decker 800 50,500
Ford Motor 2,500 141,094
Philips Electronics 2,334 235,442
427,036
CONSUMER NON-DURABLES--5.6%
Harcourt General 500 25,781
Hasbro 1,200 33,525
Kimberly-Clark 1,700 96,900
Loews 1,100 87,038
Mattel 8,080 213,615
NIKE, Cl. B 2,200 139,288
Tommy Hilfiger 500 (a) 36,750
632,897
CONSUMER SERVICES--8.8%
Cendant 5,600 (a) 114,800
Circuit City Group 1,100 102,300
Deluxe 1,700 66,194
Disney (Walt) 2,000 61,625
Dun & Bradstreet 1,200 42,525
Federated Department Stores 3,300 (a) 174,690
First Data 2,500 122,344
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COMMON STOCKS (CONTINUED) Shares Value ($)
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CONSUMER SERVICES (continued)
K mart 3,100 50,956
Toys R Us 3,500 (a) 72,406
Tricon Global Restaurants 2,500 (a) 135,313
Venator Group 5,300 (a) 55,319
998,472
ENERGY--9.3%
Conoco, Cl. A 5,400 150,525
Elf Aquitaine, A.D.S 1,300 95,631
Mobil 2,400 237,600
Schlumberger 1,200 76,425
Texaco 3,200 200,000
Tosco 3,500 90,781
Transocean Offshore 1,700 44,625
Unocal 3,900 154,538
1,050,125
FINANCE--21.7%
Allmerica Financial 1,200 72,975
Allstate 5,700 204,488
American General 1,100 82,913
American International Group 1,725 201,933
BankAmerica 2,778 203,662
BankBoston 4,600 235,175
Chase Manhattan 3,300 285,863
Chubb 800 55,600
Citigroup 6,600 313,500
Everest Reinsurance Holdings 900 29,363
Federal National Mortgage Association 1,700 116,237
Golden State Bancorp 4,900 (a) 107,800
Goldman Sachs Group 700 50,575
Hartford Financial Services Group 1,600 93,300
Marsh & McLennan Cos. 1,300 98,150
Morgan Stanley Dean Witter & Co. 2,000 205,000
Washington Mutual 1,444 51,082
Wells Fargo 1,300 55,575
2,463,191
HEALTH CARE--6.9%
Abbott Laboratories 900 40,950
Aetna 1,100 98,381
The Portfolio
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STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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HEALTH CARE (continued)
CIGNA 2,600 231,400
Columbia/HCA Healthcare 4,700 107,219
Johnson & Johnson 550 53,900
Pharmacia & Upjohn 2,100 119,306
Tenet Healthcare 5,700 (a) 105,806
Watson Pharmaceuticals 800 (a) 28,050
785,012
TECHNOLOGY--12.8%
Apple Computer 800 (a) 37,050
BMC Software 2,400 (a) 129,600
Computer Associates International 3,800 209,000
Compuware 3,700 (a) 117,706
Electronic Data Systems 2,000 113,125
Hewlett-Packard 2,175 218,587
International Business Machines 1,800 232,650
Nortel Networks 1,800 156,263
Sterling Commerce 1,300 (a) 47,450
Sun Microsystems 2,800 (a) 192,850
1,454,281
TRANSPORTATION--1.5%
Union Pacific 2,900 169,106
UTILITIES--11.3%
AT&T 4,611 257,351
CMS Energy 2,500 104,688
Duke Energy 1,550 84,281
Edison International 2,800 74,900
GTE 1,500 113,625
PacifiCorp 6,000 110,250
Pinnacle West Capital 1,500 60,375
SBC Communications 3,100 179,800
Southern 3,200 84,800
Sprint (FON Group) 1,800 95,063
Telefonos de Mexico, Cl. L, A.D.S. 1,400 113,138
1,278,271
TOTAL COMMON STOCKS
(cost $9,503,862) 10,695,480
</TABLE>
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<TABLE>
<CAPTION>
PREFERRED STOCKS--2.2% Shares Value ($)
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<S> <C> <C>
Consumer Services;
News Corp, A.D.R.
(cost $206,994) 7,900 249,344
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Principal
SHORT TERM INVESTMENTS--5.3% Amount ($) Value ($)
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U.S. Government Agency Discount Notes;
Federal Home Loan Banks,
4.60%, 7/1/1999
(cost $600,000) 600,000 600,000
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Total Investments (cost $10,310,856) 101.9% 11,544,824
Liabilities, Less Cash and Receivables (1.9%) (220,258)
Net Assets 100.0% 11,324,566
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
</TABLE>
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<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of Investments 10,310,856 11,544,824
Cash 99,349
Dividends and interest receivable 10,280
Prepaid expenses 23,185
Due from The Dreyfus Corporation and affiliates 8,660
11,686,298
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LIABILITIES ($):
Payable for investment securities purchased 340,376
Accrued expenses and other liabilities 21,356
361,732
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NET ASSETS ($) 11,324,566
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 10,385,611
Accumulated undistributed investment income--net 20,983
Accumulated net realized gain (loss) on investments (315,996)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 1,233,968
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NET ASSETS ($) 11,324,566
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 819,418
NET ASSET VALUE, offering and redemption price per share ($) 13.82
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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<S> <C>
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $551 foreign taxes withheld at source) 51,803
Interest 6,355
TOTAL INCOME 58,158
EXPENSES:
Investment advisory fee-Note 3(a) 27,881
Legal fees 11,980
Auditing fees 9,857
Custodian fees--Note 3(a) 3,788
Organization expenses 3,025
Prospectus and shareholders' reports 1,864
Registration fees 1,145
Trustees' fees and expenses-Note 3(b) 130
Miscellaneous 116
Total Expenses 59,786
Less-reduction in investment advisory fee due to
undertaking--Note 3(a) (22,611)
Net Expenses 37,175
Investment Income--Net 20,983
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Realized and Unrealized Gain (Loss) on Investments-Note 4 ($):
Net realized gain (loss) on investments (11,233)
Net unrealized appreciation (depreciation) on investments 1,189,258
Net Realized and Unrealized Gain (Loss) on Investments 1,178,025
Net Increase in Net Assets Resulting from Operations 1,199,008
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
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<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998*
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<S> <C> <C>
OPERATIONS ($):
Investment income--net 20,983 31,919
Net realized gain (loss) on investments (11,233) (304,763)
Net unrealized appreciation (depreciation)
on investments 1,189,258 44,710
Net Increase (Decrease) in Net Assets
Resulting from Operations 1,199,008 (228,134)
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net -- (36,433)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 4,626,306 6,187,697
Dividends reinvested -- 36,433
Cost of shares redeemed (459,501) (50,810)
Increase (Decrease) in Net Assets from
Beneficial Interest Transactions 4,166,805 6,173,320
Total Increase (Decrease) in Net Assets 5,365,813 5,908,753
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Net Assets ($):
Beginning of Period 5,958,753 50,000
End of Period 11,324,566 5,958,753
Undistributed investment income-net 20,983 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 346,423 505,520
Shares issued for dividends reinvested -- 3,358
Shares redeemed (35,353) (4,530)
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Net Increase (Decrease) in SHARES OUTSTANDING 311,070 504,348
* FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998(a)
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<S> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 11.72 12.50
Investment Operations:
Investment income--net .04 (b) .07
Net realized and unrealized gain (loss)
on investments 2.06 (.77)
Total from Investment Operations 2.10 (.70)
Distributions:
Dividends from investment income--net -- (.08)
Net asset value, end of period 13.82 11.72
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TOTAL RETURN (%) 17.92 (c) (5.59) (c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 (c) .67 (c)
Ratio of net investment income to average
net assets .28 (c) .62 (c)
Decrease reflected in above expense ratios due
to undertakings by Dreyfus .30 (c) .74 (c)
Portfolio Turnover Rate 44.07 (c) 47.37 (c)
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Net Assets, end of period ($ x 1,000) 11,325 5,959
(A) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering six series,
including the Core Value Portfolio (the "portfolio"). The portfolio is only
offered to separate accounts established by insurance companies to fund variable
annuity contracts and variable life insurance policies. The portfolio is a
diversified series. The portfolio's investment objective is to provide long-term
capital growth. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A., which
is a wholly-owned subsidiary of Mellon Bank Corporation. Premier Mutual Fund
Services, Inc. is the distributor of the portfolio's shares, which are sold
without a sales charge.
As of June 30,1999, MBC Investments Corp., an indirect subsidiary of Mellon Bank
Corporation, held 402,769 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are
<PAGE>
valued at fair value as determined in good faith under the direction of the
Board of Trustees. Investments denominated in foreign currencies are translated
to U.S. dollars at the prevailing rates of exchange. Forward currency exchange
contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio receives
net earnings credits based on available cash balances left on deposit.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, if any, are normally declared and paid annually, but the portfolio may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
Revenue Code of 1986, as amended (the "Code"). To the extent that net realized
capital gain can be offset by capital loss carryovers, it is the policy of the
portfolio not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The portfolio has an unused capital loss carryover of approximately $269,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
through December 31, 1998 which are treated, for Federal income tax purposes, as
arising in fiscal 1999. If not applied, the carryover expires in fiscal 2006.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
portfolio at rates which are related to the Federal Funds rate in effect at the
time of borrowings. During the period ended June 30, 1999, the portfolio did not
borrow under the line of credit.
NOTE 3--Investment Advisory Fee and Other Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. However, Dreyfus
has undertaken from January 1, 1999
<PAGE>
through December 31, 1999, to reduce the investment advisory fee and reimburse
such excess expenses paid by the portfolio, to the extent that the portfolio's
aggregate annual expenses, exclusive of taxes, brokerage, interest on borrowings
and extraordinary expenses, exceed an annual rate of 1% of the value of the
portfolio' s average daily net assets. The reduction in investment advisory fee,
pursuant to the undertaking, amounted to $22,611 during the period ended June
30, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999, the
portfolio was charged $3,788 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$7,243,259 and $3,227,598, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$1,233,968, consisting of $1,419,998 gross unrealized appreciation and $186,030
gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
<PAGE>
For More Information
Dreyfus Investment Portfolios,
Core Value Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999, Dreyfus Service Corporation 172SA996
<PAGE>
Dreyfus
Investment Portfolios, MidCap Stock Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation 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.
<PAGE>
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
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Dreyfus Investment Portfolios, The Portfolio
MidCap Stock Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Investment
Portfolios, MidCap Stock Portfolio, covering the six-month period from January
1, 1999 through June 30, 1999. Inside, you'll find valuable information about
how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, John O'Toole.
The past six months have been rewarding for many equity investors, including
those who own mid-capitalization stocks. Strong U.S. economic growth, low
inflation and high levels of consumer spending supported continued strength in
many broad measures of stock market performance. As a result, several major U.S.
market indices set new records.
Beginning in April, many previously out-of-favor market sectors rallied strongly
- -- including midcap stocks -- as investors became increasingly attracted to
their high growth rates. At the same time, large-cap growth stocks appear to
have paused in their advance. This has helped narrow the valuation gap that had
developed over the past several years between the large- and mid-capitalization
sectors of the stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Investment Portfolios, MidCap Stock
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE 2>
DISCUSSION OF PERFORMANCE
John O'Toole, Portfolio Manager
How did Dreyfus Investment Portfolios, MidCap Stock Portfolio perform relative
to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Investment Portfolios,
MidCap Stock Portfolio produced a total return of 4.04%.(1) In comparison, the
Standard & Poor' s MidCap 400 Index (S&P MidCap 400) produced a total return of
6.87% for the same period.(2) The portfolio's emphasis on growth companies was
not rewarded in the marketplace, particularly in the second quarter, when
investors tended to prefer value stocks that had previously been out of favor.
This preference for value companies often occurs when there is a perception that
the economy is accelerating.
What is the portfolio's investment approach?
The portfolio invests primarily in a blended selection of growth and value
stocks of midcap companies that are chosen through a disciplined investment
process that combines computer analysis with human judgment. The quantitatively
driven valuation process identifies and ranks approximately 2,500
mid-capitalization stocks as an attractive, neutral or unattractive investment,
based on approximately 15 different valuation inputs. Then, our investment
management team conducts fundamental research on each stock, which ultimately
results in their buy and sell recommendations.
The portfolio seeks to own the best performing stocks within each economic
sector of the S&P MidCap 400. By maintaining an economic sector-neutral stance,
we allow individual stock selection to drive the portfolio's performance. The
quantitative process is based upon a series of fundamentally based valuation
factors, including consensus earnings estimates, profit margin, and growth in
cash flow. We believe that these types of fundamental factors can have an
important influence on stock returns. Our goal is to build a broadly diversified
portfolio of mid-capitalization stocks that have the potential to outperform the
benchmark.
The Portfolio
<PAGE 3>
DISCUSSION OF PERFORMANCE (CONTINUED)
Even though it was a difficult six-month period for the portfolio, a number of
growth companies in the portfolio performed very well. Two pharmaceutical
stocks, Biogen and MedImmune, develop and market specialized medications for
multiple sclerosis and infectious diseases, respectively. Although
pharmaceutical companies as a group came under pressure during the period
because of the Congressional debate over Medicare coverage of prescription
drugs, Biogen and MedImmune are "niche" players with therapies used by people of
all ages, not just the elderly.
In addition, many economically sensitive companies in the portfolio performed
well during the period. In a period of accelerating economic growth,
economically sensitive companies in such industries as retailing and travel,
have a better profit outlook because their products are more in demand. Such was
the case with four stocks in the portfolio: Best Buy, SABRE Group Holdings Cl.
A, Lexmark International Group Cl. A and Hertz Cl. A.
Best Buy, a retailer of personal computers, consumer electronics, and major
appliances, continued to benefit from the strong economy, booming consumer
spending and the increasing desire of the public to access the Internet. SABRE
Group Holdings, a company that provides traditional as well as Internet-based
travel reservation services, also benefited from the strong economy and the high
demand for business and personal travel. Lexmark International Group Cl. A, a
printer manufacturer that competes with Hewlett-Packard, continued to beat
earnings expectations with high-quality products. And finally, Hertz Cl. A, the
rental car company, benefited from the strong economy and a firming of pricing
in the industry.
What other factors influenced the portfolio's performance?
On the negative side, the S&P MidCap 400 includes two stocks -- Qualcomm and
E*Trade Group -- which performed favorably during the period. Because we did not
own those stocks, our relative performance suffered. In addition, changes
brought about by the Internet are having a negative effect on some traditional
industries, particularly those that appear slow to adapt. For example, AG
Edwards, a regional
<PAGE 4>
brokerage firm which relies on full-service stockbrokers for much of its
revenue, does not have major investment banking or trading income to offset the
loss of potential business to on-line brokerage. Although there will always be a
market for personal service in the retail brokerage industry, there is no
question that traditional brokers are under pressure from the new technology.
What is the portfolio's current strategy?
We continue to make refinements to the portfolio's quantitative-driven valuation
model and our economic sector-neutral portfolio construction process. Along the
way, our goal has remained intact: to use our valuation model to allow us to
select the best performing mid-capitalization stocks in each economic sector
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN
CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE
RETURNS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURN FIGURES PROVIDED REFLECT THE
ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN
UNDERTAKING IN EFFECT THROUGH DECEMBER 31, 1999 THAT MAY BE EXTENDED, TERMINATED
OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE PORTFOLIO'S
RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S MIDCAP 400 INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF 400 COMPANIES
WITH MARKET CAPITALIZATIONS GENERALLY RANGING FROM $50 MILLION TO $10 BILLION.
RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF PORTFOLIO EXPENSES BY THE
DREYFUS CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THROUGH DECEMBER 31,
1999 THAT MAY BE EXTENDED, TERMINATED OR MODIFIED AT ANY TIME. HAD THESE
EXPENSES NOT BEEN ABSORBED, THE PORTFOLIO'S RETURNS WOULD HAVE BEEN LOWER.
The Portfolio
<PAGE 5>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
COMMON STOCKS--99.1% Shares Value ($)
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<S> <C> <C>
CONSUMER CYCLICAL--13.1%
Abercrombie & Fitch, Cl. A 3,450 (a) 165,600
Alaska Air Group 1,700 (a) 70,975
Best Buy 1,300 (a) 87,750
Bob Evans Farms 2,800 55,650
Brinker International 2,700 (a) 73,406
Dollar Tree Stores 2,700 (a) 118,800
Furniture Brands International 3,750 (a) 104,531
Harley-Davidson 1,000 54,375
International Game Technology 3,450 63,825
Leggett & Platt 3,250 90,391
Magna International, Cl. A 450 25,537
Meritor Automotive 2,750 70,125
Miller (Herman) 2,600 54,600
Nautica Enterprises 2,350 (a) 39,656
Navistar International 1,450 (a) 72,500
Ross Stores 3,400 171,275
TJX Cos. 5,650 188,216
V.F. 1,700 72,675
Zale 2,800 (a) 112,000
1,691,887
CONSUMER STAPLES--5.7%
Dial 2,750 102,266
Earthgrains 1,700 43,881
Hormel Foods 2,100 84,525
Lancaster Colony 1,950 67,275
Lauder (Estee), CI.A 1,900 95,237
Premark International 2,550 95,625
SUPERVALU 2,950 75,778
U.S. Foodservice 1,250 (a) 53,281
Universal Foods 5,400 114,075
731,943
ENERGY--7.5%
Diamond Offshore Drilling 3,350 95,056
El Paso Energy 2,850 100,284
KeySpan 3,600 94,950
NICOR 2,100 79,931
National Fuel Gas 1,950 94,575
<PAGE 6>
COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY (CONTINUED)
Questar 3,600 68,850
Sunoco 2,750 83,016
Tidewater 4,000 122,000
Tosco 2,400 62,250
Transocean Offshore 4,000 105,000
Vastar Resources 1,250 65,547
971,459
HEALTH CARE-9.3%
Bergen Brunswig, Cl. A 2,900 50,025
Biogen 6,000 (a) 385,875
Biomet 3,400 135,150
Health Management Associates, Cl. A 9,300 (a) 104,625
Lincare Holdings 2,250 (a) 56,250
MedImmune 1,800 (a) 121,950
PacifiCare Health Systems 350 (a) 25,178
Patterson Dental 550 (a) 19,112
Universal Health Services, Cl. B 2,300 (a) 109,825
VISX 1,050 (a) 83,147
Watson Pharmaceuticals 3,300 (a) 115,706
1,206,843
INTEREST SENSITIVE-13.8%
AFLAC 1,600 76,600
AmeriTrade Holding, Cl. A 300 (a) 31,800
City National 3,700 138,519
Cullen/Frost Bankers 3,000 82,687
Dime Bancorp 3,050 61,381
Edwards (A.G.) 3,150 101,588
First Tennessee National 3,600 137,925
Golden West Financial 750 73,500
Kansas City Southern Industries 1,800 114,863
Mercantile Bankshares 2,950 104,356
Nationwide Financial Services, Cl. A 2,200 99,550
North Fork Bancorp 3,000 63,937
Old Kent Financial 3,098 129,708
PMI Group 1,900 119,344
Paine Webber Group 850 39,738
Radian Group 1,450 70,778
The Portfolio
<PAGE 7>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
Regions Financial 3,300 126,844
RenaissanceRe Holdings 600 22,200
T. Rowe Price Associates 3,300 126,638
Zions Bancorporation 950 60,325
1,782,281
PRODUCER GOODS & SERVICES-10.5%
AK Steel Holding 1,700 38,250
American Power Conversion 4,700 (a) 94,587
Briggs & Stratton 1,450 83,738
Caraustar Industries 3,450 85,172
Centex Construction Products 1,800 61,425
Cleveland-Cliffs 400 12,950
Crane 3,250 102,172
Crompton & Knowles 4,300 84,119
Cytec Industries 3,300 (a) 105,188
FMC 1,050 (a) 71,728
Gulfstream Aerospace 2,150 (a) 145,259
Lennar 2,500 60,000
Louisiana-Pacific 4,900 116,375
Solutia 3,850 82,053
Trinity Industries 2,950 98,825
United Technologies 608 43,586
Vulcan Materials 1,600 77,200
1,362,627
SERVICES-9.5%
Belo (A.H.), Cl. A 3,300 64,969
CNET 650 (a) 37,456
Computer Task Group 1,850 31,450
Cox Radio, Cl. A 750 (a) 40,687
DST Systems 850 (a) 53,444
Hertz, Cl. A 3,300 204,600
King World Productions 1,250 (a) 43,516
Knight-Ridder 950 52,191
McClatchy, Cl. A 1,500 49,688
Pulitzer 900 43,706
Quintiles Transnational 3,650 (a) 153,300
<PAGE 8>
COMMON STOCKS (CONTINUED) Shares Value ($)
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SERVICES (CONTINUED)
Robert Half International 1,800 (a) 46,800
SABRE Group Holdings, Cl. A 3,800 (a) 261,250
Snyder Communications 1,800 (a) 58,950
Young & Rubicam 1,900 86,331
1,228,338
TECHNOLOGY-22.0%
Altera 8,400 (a) 309,225
Apple Computer 1,600 (a) 74,100
BMC Software 2,450 (a) 132,300
BroadVision 1,100 (a) 81,125
Citrix Systems 2,500 (a) 141,250
Compuware 4,000 (a) 127,250
Comverse Technology 1,800 (a) 135,900
Convergys 3,800 73,150
Jabil Circuit 1,800 (a) 81,225
Johnson Controls 1,250 86,641
Legato Systems 1,450 (a) 83,738
Lexmark International Group, Cl. A 2,700 (a) 178,369
Linear Technology 4,200 282,450
Maxim Integrated Products 3,800 (a) 252,700
NCR 2,900 (a) 141,556
Network Appliance 850 (a) 47,494
RF Micro Devices 1,700 (a) 126,862
Sanmina 1,800 (a) 136,575
Sterling Software 3,100 (a) 82,731
Uniphase 900 (a) 149,400
VERITAS Software 550 (a) 52,216
Waters 1,350 (a) 71,719
2,847,976
UTILITIES-7.7%
Allegheny Energy 2,400 76,950
BEC Energy 2,700 111,375
CenturyTel 3,150 125,212
Energy East 4,700 122,200
GPU 2,800 118,125
IPALCO Enterprises 5,650 119,709
The Portfolio
<PAGE 9>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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UTILITIES (CONTINUED)
OGE Energy 5,200 123,500
Pinnacle West Capital 1,900 76,475
Sierra Pacific Resources 2,050 74,569
TECO Energy 2,300 52,325
1,000,440
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TOTAL INVESTMENTS (cost $11,366,340) 99.1% 12,823,794
CASH AND RECEIVABLES (NET) .9% 115,764
NET ASSETS 100.0% 12,939,558
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of Investments 11,366,340 12,823,794
Receivable for investment securities sold 247,240
Dividends receivable 7,822
Prepaid expenses 23,909
Due from The Dreyfus Corporation and affiliates 11,886
13,114,651
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LIABILITIES ($):
Cash overdraft due to Custodian 149,270
Accrued expenses and other liabilities 25,823
175,093
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NET ASSETS ($) 12,939,558
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 12,262,450
Accumulated undistributed investment income--net 13,397
Accumulated net realized gain (loss) on investments (793,743)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 1,457,454
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NET ASSETS ($) 12,939,558
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial
Interest authorized) 1,023,066
NET ASSET VALUE, offering and redemption price per share ($) 12.65
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE 11>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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<S> <C>
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $87 foreign taxes withheld at source) 57,834
Interest 8,651
TOTAL INCOME 66,485
EXPENSES:
Investment advisory fee-Note 3(a) 41,780
Legal fees 19,120
Auditing fees 7,457
Custodian fees-Note 3(a) 7,245
Organization expenses 3,103
Prospectus and shareholder's reports 2,322
Trustees' fees and expenses-Note 3(b) 2,199
Registration fees 522
Shareholder servicing costs 425
Miscellaneous 542
TOTAL EXPENSES 84,715
Less--reduction in investment advisory fee due to
undertaking--Note 3(a) (32,256)
NET EXPENSES 52,459
INVESTMENT INCOME--NET 14,026
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 4 ($):
Net realized gain (loss) on investments (57,186)
Net unrealized appreciation (depreciation) on investments 601,512
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 544,326
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 558,352
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE 12>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998((+))
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<S> <C> <C>
OPERATIONS ($):
Investment income--net 14,026 14,763
Net realized gain (loss) on investments (57,186) (736,557)
Net unrealized appreciation (depreciation)
on investments 601,512 855,942
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 558,352 134,148
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (960) (18,543)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 3,274,124 11,816,688
Dividends reinvested 960 18,543
Cost of shares redeemed (1,399,048) (1,494,706)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 1,876,036 10,340,525
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,433,428 10,456,130
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NET ASSETS ($):
Beginning of Period 10,506,130 50,000
END OF PERIOD 12,939,558 10,506,130
Undistributed investment income-net 13,397 331
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 278,818 996,748
Shares issued for dividends reinvested 84 1,611
Shares redeemed (119,526) (138,669)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 159,376 859,690
((+))FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE 13>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998(a)
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<S> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.16 12.50
Investment Operations:
Investment income--net .02(b) .02
Net realized and unrealized gain (loss)
on investments .47 (.34)
Total from Investment Operations .49 (.32)
Distributions:
Dividends from investment income--net -- (.02)
Net asset value, end of period 12.65 12.16
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TOTAL RETURN (%) 4.04(c) (2.53)(c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .47(c) .67(c)
Ratio of net investment income
to average net assets .12(c) .18(c)
Decrease reflected in above expense ratios
due to undertakings by Dreyfus .29(c) .60(c)
Portfolio Turnover Rate 33.65(c) 75.74(c)
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Net Assets, end of period ($ x 1,000) 12,940 10,506
(A) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 14>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering six series,
including the MidCap Stock Portfolio (the "portfolio"). The portfolio is only
offered to separate accounts established by insurance companies to fund variable
annuity contracts and variable life insurance policies. The portfolio is a
diversified series. The portfolio' s investment objective is to provide
investment results that are greater than the total return performance of
publicly-traded common stocks of medium-size domestic companies in the
aggregate, as represented by the Standard & Poor's MidCap 400 Index. The Dreyfus
Corporation ("Dreyfus") serves as the portfolio's investment adviser. Dreyfus is
a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation. Premier Mutual Fund Services, Inc. is the distributor
of the portfolio's shares, which are sold without a sales charge.
As of June 30, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Bank Corporation, held 308,704 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which
The Portfolio
<PAGE 15>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
there were no transactions, are valued at the average of the most recent bid and
asked prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
(b) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $214 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(c) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, if any, are normally declared and paid annually, but the portfolio may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the portfolio not to distribute such gain.
(d) Federal income taxes: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The portfolio has an unused capital loss carryover of approximately $689,000
available for Federal income tax purposes to be applied
<PAGE 16>
against future net securities profits, if any, realized subsequent to December
31, 1998. If not applied, the carryover expires in fiscal 2006.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
portfolio at rates which are related to the Federal Funds rate in effect at the
time of borrowings. During the period ended June 30, 1999, the portfolio did not
borrow under the line of credit.
NOTE 3--Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 1999, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 1% of the value of the portfolio's average
daily net assets. The reduction in investment advisory fee, pursuant to the
undertaking, amounted to $32,256 during the period ended June 30, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999, the
portfolio was charged $7,245 pursuant to the custody agreement.
The Portfolio
<PAGE 17>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$5,717,305 and $3,699,674, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$1,457,454, consisting of $1,969,270 gross unrealized appreciation and $511,816
gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
<PAGE 18>
NOTES
<PAGE 19>
For More Information
Dreyfus
Investment Portfolios,
MidCap Stock Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999 Dreyfus Service Corporation 174SA996
Dreyfus
Investment Portfolios,
Founders Growth Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation 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.
<PAGE>
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Investment Portfolios, The Portfolio
Founders Growth Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Investment
Portfolios, Founders Growth Portfolio, covering the six-month period from
January 1, 1999 through June 30, 1999. Inside you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with the portfolio managers, Scott Chapman, CFA and Thomas Arrington,
CFA of Founders Asset Management LLC, the portfolio's sub-investment adviser.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader Standard & Poor's 500 Composite Stock
Price Index and the technology-laden NASDAQ Index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Investment Portfolios, Founders Growth
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF PERFORMANCE
Scott Chapman, CFA and Thomas Arrington, CFA,
Portfolio Managers
Founders Asset Management LLC, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, Founders Growth Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Investment Portfolios,
Founders Growth Portfolio produced a total return of 11.41%.(1) In comparison,
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") produced
a total return of 12.38% for the same period.(2)
The portfolio outperformed the S&P 500 Index during the first quarter of 1999 as
investors sought out large high-quality, consistent earnings growth companies.
However, the portfolio' s performance during the second quarter of 1999 was
adversely affected by a major shift in investor preference away from large-cap
consistent growth companies and towards economically sensitive companies and, as
a result, the portfolio underperformed the S&P 500 Index in the second quarter.
This shift occurred primarily because the United States' economy grew faster
than expected while, at the same time, Asian economies appeared to be
stabilizing. In a period of accelerating economic growth, economically sensitive
companies in such industries as chemicals, energy, metals and paper have a
better profit outlook because their products enjoy a surge in demand. In
contrast, growth companies in such industries as technology and health care,
that produce strong earnings regardless of the economic environment, are not as
sought after in boom times.
The net result of the first and second quarter was that for the six-month period
the portfolio lagged slightly behind the S&P 500 Index and performed similarly
to the average growth manager.
What is the portfolio's investment approach?
The portfolio invests in large well-managed growth companies whose performance
is not entirely dependent upon the fortunes of the econ-
The Portfolio
<PAGE>
DISCUSSION OF PERFORMANCE (CONTINUED)
omy. Utilizing a bottom-up approach, we focus on individual stock selection
rather than on forecasting stock market trends. We look for high-quality, proven
companies with an established track record of sustained earnings growth in
excess of industry averages. The companies we select must have a sustainable
competitive advantage, such as a dominant brand name, a high barrier to entry
from competition and/or large untapped market opportunities.
The portfolio had its share of strong performers. For example, American Express,
which rose approximately 28.2% during the period, is an excellent example of a
company with a strong and growing brand identity as well as a consistently
attractive earnings growth rate. The American Express credit card has been
steadily gaining market share and stands to gain even more if federal banking
regulators allow banks to issue American Express credit cards in addition to
VISA and MasterCard. Currently, there are only a handful of global credit card
companies and the barriers to entry are very high.
Another illustration of our investment process is Tellabs, a stock that has
nearly doubled in price during the first half of 1999. One of the portfolio's
criteria is to look at trends in the marketplace, such as the increasing demand
for communication capability, whether it is voice, data or video. Tellabs
creates products that accomplish these tasks. Over the past several years, the
emergence of the Internet has accelerated the demand for communications products
and services. Over that same time, Tellabs' earnings have grown at a rate of
approximately 30% to 45%.
What other factors influenced the portfolio's performance?
The pharmaceutical sector has had a particularly tough time during the past few
months. One reason is that the stock prices of these companies were at very high
levels and many equity investors sold their health care stocks and took profits
in the second quarter of this year. Another reason for the pharmaceutical
industry' s difficult quarter is that there have been heightened concerns over
whether Medicare would be expanded to cover prescription drugs. Because
investors
<PAGE>
feared that the federal government would institute price controls on the
industry, companies that actually raised their earnings forecast for 1999,
including Schering-Plough, still experienced a falling stock price during the
second quarter.
A number of other holdings in the portfolio declined in price despite strong
profitability. For example, General Electric lagged the S&P 500 Index in the
second quarter by 4.6% even though the company forecasted that its earnings
would grow 14% in 1999. On the other hand, Alcoa, a major economically sensitive
stock which was not in the portfolio, was up 51% in the month of April alone,
merely on speculation -- not realized profits -- that the company's earnings
would reaccelerate in a rebounding economy.
What is the portfolio's current strategy?
Although we were disappointed with the price movement of some of the stocks in
the portfolio during the second quarter, we have been very pleased with the
fundamental performance of the companies we hold in the portfolio. In fact,
nearly 80% of the portfolio's companies exceeded Wall Street's expectations for
earnings and 99% met or exceeded earnings estimates. We will continue to
implement our strategy of focusing on selecting the very best companies with
superior earnings growth at reasonable prices.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN
CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE
RETURNS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURN FIGURES PROVIDED REFLECT THE
ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN AGREEMENT
IN EFFECT THROUGH DECEMBER 31, 1999, AT WHICH TIME IT MAY BE EXTENDED,
TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE
FUND'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF
U.S. STOCK MARKET PERFORMANCE.
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
COMMON STOCKS--96.2% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKING--3.1%
Citigroup 583 27,692
Fifth Third Bancorp 260 17,306
Firstar 129 3,612
State Street 227 19,380
U.S. Bancorp 227 7,718
Wells Fargo 1,038 44,375
120,083
BIOTECHNOLOGY--.5%
Amgen 292 17,776
BUSINESS SERVICES--2.9%
Cintas 345 23,180
Computer Sciences 390 26,982
Fiserv 486 (a) 15,218
Interpublic Group Cos. 357 30,925
Robert Half International 650 (a) 16,900
113,205
COMPUTER EQUIPMENT--3.3%
EMC 870 (a) 47,850
International Business Machines 584 75,482
Sun Microsystems 65 (a) 4,477
127,809
COMPUTER NETWORKING--4.2%
Cisco Systems 2,532 (a) 163,314
COMPUTER SOFTWARE/SERVICES--5.5%
At Home, Cl. A 194 (a) 10,464
Automatic Data Processing 324 14,256
Intuit 162 (a) 14,600
Microsoft 1,818 (a) 163,961
Yahoo 65 (a) 11,196
214,477
CONSUMER PRODUCTS--3.4%
Avon Products 227 12,599
Clorox 65 6,942
Colgate-Palmolive 260 25,675
Dial 693 25,771
Gillette 677 27,757
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS (CONTINUED)
Hasbro 617 17,237
Procter & Gamble 195 17,404
133,385
CONSUMER SERVICES--.5%
DeVRY 877 (a) 19,622
DIVERSIFIED--2.0%
Berkshire Hathaway, Cl. B 34 (a) 76,160
ELECTRONICS--4.7%
General Electric 1,266 143,058
Jabil Circuit 133 (a) 6,002
PE Biosystems Group 162 18,590
Solectron 195 (a) 13,004
180,654
FINANCIAL SERVICES--6.4%
American Express 486 63,241
Associates First Capital, Cl. A 844 37,400
Federal National Mortgage Association 1,275 87,178
Franklin Resources 486 19,744
Northern Trust 195 18,915
Schwab (Charles) 193 21,206
247,684
FOOD & BEVERAGES--3.2%
Coca-Cola 1,406 87,875
PepsiCo 491 18,996
Tootsie Roll Industries 234 9,038
Wrigley, (Wm) Jr 97 8,730
124,639
HEALTHCARE SERVICES--1.1%
IMS Health 1,414 44,188
INSURANCE--2.9%
American International Group 486 56,892
Marsh & McLennan Cos. 746 56,322
113,214
LEISURE & ENTERTAINMENT--1.5%
Carnival 284 13,774
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT (CONTINUED)
Disney (Walt) 519 15,992
Harley-Davidson 195 10,602
Mattel 617 16,312
56,680
MANUFACTURING--3.9%
Danaher 422 24,529
Illinois Tool Works 129 10,578
Tyco International 1,239 117,395
152,502
MEDICAL SUPPLIES & EQUIPMENT--1.7%
Johnson & Johnson 390 38,220
Medtronic 357 27,801
66,021
OIL SERVICES--1.5%
Baker Hughes 910 30,485
Schlumberger 455 28,978
59,463
PHARMACEUTICALS--11.1%
American Home Products 357 20,528
Bristol-Myers Squibb 1,074 75,650
Lilly (Eli) 467 33,449
Merck & Co. 1,064 78,736
Pfizer 694 76,167
Schering-Plough 1,526 80,878
Warner-Lambert 910 63,131
428,539
PUBLISHING & BROADCASTING--8.3%
Chancellor Media 324 (a) 17,861
Clear Channel Communications 260 (a) 17,924
Comcast, Cl. A 1,785 68,611
Echostar Communications, Cl. A 41 (a) 6,291
Gannett 617 44,038
McGraw-Hill Cos. 162 8,738
MediaOne Group 357 26,552
TCA Cable TV 195 10,822
Time Warner 1,411 103,709
Washington Post, Cl. B 33 17,746
322,292
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--.5%
McDonald's 422 17,434
RETAIL--8.5%
Abercrombie & Fitch, Cl. A 390 (a) 18,720
Bed Bath & Beyond 260 (a) 10,010
Best Buy 260 (a) 17,550
Costco Cos. 455 (a) 36,428
Gap 729 36,722
Home Depot 975 62,827
Intimate Brands 195 9,238
Kohl's 292 (a) 22,539
Staples 292 (a) 9,034
Walgreen 844 24,793
Wal-Mart Stores 1,721 83,038
330,899
SEMICONDUCTORS & EQUIPMENT--5.0%
Broadcom, Cl. A 195 28,190
Intel 1,721 102,400
Texas Instruments 279 40,455
Uniphase 63 (a) 10,458
Vitesse Semiconductor 162 (a) 10,925
192,428
SUPERMARKETS--.5%
Safeway 422 (a) 20,889
TELECOMMUNICATION EQUIPMENT--6.7%
Lucent Technologies 1,689 113,902
Motorola 227 21,508
Nokia, A.D.S. 320 29,300
Qwest Communications 792 (a) 26,186
Tellabs 1,039 (a) 70,197
261,093
TELECOMMUNICATION SERVICES--2.6%
MCI WorldCom 862 (a) 74,348
Vodafone Group, A.D.R. 130 25,610
99,958
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--.7%
Kansas City Southern Industries 390 24,887
TOTAL COMMON STOCKS
(cost $3,228,657) 3,729,295
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--5.1% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER:
AI Credit, 5.70%, 7/1/1999 100,000 100,000
Consolidated Natural Gas, 5.75%, 7/1/1999 100,000 100,000
TOTAL SHORT-TERM INVESTMENTS
(cost $200,000) 200,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $3,428,657) 101.3% 3,929,295
LIABILITIES, LESS CASH AND RECEIVABLES (1.3%) (50,789)
NET ASSETS 100.0% 3,878,506
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of Investments 3,428,657 3,929,295
Cash 46,663
Receivable for investment securities sold 20,833
Dividends receivable 1,593
Due from The Dreyfus Corporation and affiliates 3,450
4,001,834
- ------------------------------------------------------------------------------------
LIABILITIES ($):
Payable for investment securities purchased 111,634
Accrued expenses 11,694
123,328
- ------------------------------------------------------------------------------------
NET ASSETS ($) 3,878,506
- ------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 3,260,184
Accumulated investment (loss) (3,691)
Accumulated net realized gain (loss) on investments 121,375
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 500,638
- ------------------------------------------------------------------------------------
NET ASSETS ($) 3,878,506
- ------------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 241,687
NET ASSET VALUE, offering and redemption price per share ($) 16.05
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
- ------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $35 foreign taxes withheld at source) 7,432
Interest 3,745
TOTAL INCOME 11,177
EXPENSES:
Investment advisory fee--Note 3(a) 10,713
Auditing fees 16,464
Legal fees 8,396
Prospectus and shareholders' reports 5,819
Custodian fees--Note 3(a) 3,819
Registration fees 906
Trustees' fees and expenses--Note 3(b) 154
Shareholder servicing costs 44
Loan commitment fees--Note 2 3
Miscellaneous 684
TOTAL EXPENSES 47,002
Less--expense reimbursement from Dreyfus due to undertaking--Note 3(a) (32,176)
NET EXPENSES 14,826
INVESTMENT (LOSS) (3,649)
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 121,450
Net unrealized appreciation (depreciation) on investments 219,298
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 340,748
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 337,099
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998((+))
- ---------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS ($):
Investment income (loss)--net (3,649) 1,078
Net realized gain (loss) on investments 121,450 261,205
Net unrealized appreciation (depreciation)
on investments 219,298 281,340
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 337,099 543,623
- ---------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (1,120) --
Net realized gain on investments (261,280) --
TOTAL DIVIDENDS (262,400) --
- ---------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 998,494 2,000,000
Dividends reinvested 262,400 --
Cost of shares redeemed (710) --
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 1,260,184 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,334,883 2,543,623
- ---------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,543,623 --
END OF PERIOD 3,878,506 2,543,623
Undistributed investment income (loss)--net (3,691) 1,078
- ---------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 65,147 160,000
Shares issued for dividends reinvested 16,586 --
Shares redeemed (46) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 81,687 160,000
((+)) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998(a)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 15.90 12.50
Investment Operations:
Investment income--net (.02)(b) .01
Net realized and unrealized gain (loss) on investments 1.81 3.39
Total from Investment Operations 1.79 3.40
Distributions:
Dividends from investment income--net (.01) --
Dividends from net realized gain on investments (1.63) --
Total Distributions (1.64) --
Net asset value, end of period 16.05 15.90
- ---------------------------------------------------------------------------------------
TOTAL RETURN (%) 11.41(c) 27.20(c)
- ---------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .51(c) .25(c)
Ratio of net investment income (loss) to average net assets (.13)(c) .05(c)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation 1.12(c) .31(c)
Portfolio Turnover Rate 38.24(c) 75.65(c)
- ---------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 3,879 2,544
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company operating as a series company currently offering six series,
including the Founders Growth Portfolio (the "portfolio"). The portfolio is only
offered to separate accounts established by insurance companies to fund variable
annuity contracts and variable life insurance policies. The portfolio is a
diversified series. The portfolio's investment objective is to provide long-term
capital growth. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A.
(" Mellon" ), which is a wholly-owned subsidiary of Mellon Bank Corporation.
Founders Asset Management LLC (" Founders" ) serves as the portfolio' s
sub-investment adviser. Founders is a 90%-owned subsidiary of Mellon. Premier
Mutual Fund Services, Inc. is the distributor of the portfolio's shares, which
are sold without a sales charge.
As of June 30, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Bank Corporation, held 176,587 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
there were no transactions, are valued at the average of the most recent bid and
asked prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are valued
at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $739 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
<PAGE>
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended June 30, 1999, the portfolio did not borrow under the Facility.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 1999, to reduce the
management fee and reimburse such excess expenses paid by the portfolio, to the
extent that the portfolio' s aggregate annual expenses, exclusive of taxes,
brokerage, interest on borrowings, commitment fees and extraordinary expenses,
exceed an annual rate of 1% of the value of the portfolio's average daily net
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
assets. The expense reimbursement, pursuant to the undertaking, amounted to
$32,176 during the period ended June 30, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment fee is payable monthly by Dreyfus, and is based upon the value of
the portfolio' s average daily net assets, computed at the following annual
rates:
AVERAGE NET ASSETS
0 to $100 million .25 of 1%
In excess of $100 million to $1 billion .20 of 1%
In excess of $1 billion to $1.5 billion .16 of 1%
In excess of $1.5 billion .10 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999, the
portfolio was charged $3,819 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$2,031,177 and $1,062,197, respectively.
<PAGE>
At June 30, 1999, accumulated net unrealized appreciation on investments was
$500,638, consisting of $527,472 gross unrealized appreciation and $26,834 gross
unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Investment Portfolios,
Founders Growth Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999 Dreyfus Service Corporation 176SA996
<PAGE>
Dreyfus Investment
Portfolios, Founders
International Equity Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation 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.
<PAGE>
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Investment Portfolios, The Portfolio
Founders International
Equity Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Investment
Portfolios, Founders International Equity Portfolio, covering the six-month
period from January 1, 1999 through June 30, 1999. Inside, you'll find valuable
information about how the portfolio was managed during the reporting period,
including a discussion with the portfolio manager, Douglas Loeffler, CFA of
Founders Asset Management LLC, the portfolio's sub-investment adviser.
Many international economies showed marked improvement after many of the world's
central banks lowered key short-term interest rates last fall to stimulate
economic growth. Less restrictive monetary policies especially helped prevent
further economic deterioration in Japan, Asia, Latin America and Eastern Europe,
where the worst of the global currency and credit crisis appears to be behind
us. In contrast, some Western European economies slowed moderately after the
formation of the European Monetary Union (EMU) and the debut of a new currency,
the euro.
These economic conditions produced mixed results for international stocks. Stock
markets in Japan and Asia began to recover over the past six months, showing
their first signs of real strength in over a year. Latin America provided good
results after concerns about Brazil' s currency devaluation abated. European
markets, on the other hand, provided mixed performance.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Investment Portfolios, Founders
International Equity Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF PERFORMANCE
Douglas Loeffler, CFA, Portfolio Manager
Founders Asset Management LLC, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, Founders International Equity Portfolio
perform relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Investment Portfolios,
Founders International Equity Portfolio produced a total return of 8.78%.(1)
This compares favorably to the 4.51% total return provided by the portfolio's
benchmark, the Morgan Stanley Capital International (MSCI) World ex U.S.A.
Index, for the same time period.(2)
We attribute the portfolio's performance to our selective investments in stocks
located in Japan and the United Kingdom that the management team chose during
the period based on what they believed offered outstanding growth potential
What is the portfolio's investment approach?
The portfolio seeks long-term growth of capital by investing primarily in
foreign companies whose fundamental strengths indicate the potential for
earnings growth. Rather than utilizing a "top-down" approach to stock selection,
which relies on forecasting stock market trends, the management team focuses
exclusively on a "bottom-up" approach to stock selection, where stocks are
chosen based on their own individual merits. Stock selection is made on a
company-by-company basis, with particular emphasis given to the companies that
the management team believes are the best managed and best positioned within
their respective industries.
The portfolio invests primarily in issuers from at least three foreign countries
with established or emerging economies, but will not invest more than 50% of its
assets in any one foreign country. The portfolio may also invest in
investment-grade debt securities of foreign issues that, based on market and
general economic conditions, the management team believes offers opportunities
for capital growth.
The Portfolio
<PAGE>
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
The primary factor influencing the portfolio's performance during the semiannual
period under review was its "bottom-up" investment approach. Following its focus
on stock selection, the portfolio increased its exposure to the Japanese and
U.K. markets, but remained underweighted to both relative to the Index. Taken as
a whole, European markets were overweighted by the portfolio in relative terms.
A surge in foreign-led buying helped enable literally all of the portfolio's
Japanese stocks to outperform the Index in relative terms. Of particular note
were Kao (a consumer products company with a strong U.S. sales base), Ryohin
Keikaku (a retailer that has been growing its sales substantially despite
Japan' s deep recession) and Konami (an electronics concern whose contract to
deliver the newest generation of SONY "playstations" has been most successful).
European holdings of the portfolio (particularly Mannesman, a German
telecommunications company) added value, even though that region's markets
overall proved disappointing.
The portfolio' s holdings in international pharmaceuticals, financial, and
consumer products stocks subtracted from overall returns. Also detracting was
the portfolio' s position in Brisa-Auto Estradas de Portugal, a Portuguese
utility company that we believed had strong growth characteristics, but which
declined on negative market sentiment. The portfolio' s focus on emerging
market-based companies that it believes can thrive in most reasonable scenarios
proved successful during the period.
What is the portfolio's current strategy?
Consistent with the emphasis of our management team on informed stock selection,
the portfolio is currently invested to capture what team members believe are
significant growth opportunities outside of the U.S. Such opportunities appear
to be especially compelling in select technology and telecommunications
companies. The portfolio is also building or enhancing positions in companies
that the management team regards as being particularly well-suited to flourish
within a strengthening Japan and the widely anticipated recoveries of emerging
markets.
<PAGE>
As of June 30, we continue to see greater value in international growth stocks
than in stocks of domestic issuers. Given these attractive relative valuations
and increasing signs that the pace of U.S. economic growth may soon be
outdistanced overseas, we believe that now may be a particularly opportune time
for investors to consider the following:
* Initiate or enhance their exposure to invest in international equity markets;
and
* Invest in Dreyfus Investment Portfolios, Founders International Equity
Portfolio as a convenient and effective way to achieve that objective.
Thank you for your continued support of the portfolio. We are confident that our
emphasis on equity selection will yield attractive long-term results for
portfolio shareholders, and we look forward to helping you achieve your
financial goals throughout the remainder of 1999 and beyond.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN
CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE
RETURNS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURN FIGURES PROVIDED REFLECT THE
ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN AGREEMENT
IN EFFECT THROUGH DECEMBER 31, 1999, AT WHICH TIME IT MAY BE EXTENDED,
TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE
FUND'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER ANAYLTICAL SERVICES, INC. -- THE MORGAN STANLEY CAPITAL
INTERNATIONAL (MSCI) WORLD EX USA INDEX IS AN ARITHMETICAL AVERAGE OF THE
PERFORMANCE OF 1,138 SECURITIES LISTED IN THE STOCK EXCHANGES OF EUROPE, CANADA,
AUSTRALIA, NEW ZEALAND AND THE FAR EAST. TOTAL RETURN FIGURES FOR THIS INDEX
ASSUME CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AFTER DEDUCTION OF
LOCAL TAXES. AN INVESTOR MAY NOT INVEST IN THIS INDEX. THE INDEX IS THE PROPERTY
OF MORGAN STANLEY & CO., INCORPORATED.
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
COMMON STOCKS--93.3% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BELGIUM--.5%
Lernout & Hauspie Speech Products, ADS 350 (a) 12,403
BRAZIL--1.9%
Petroleo Brasileiro 300 32,821
Tele Sudeste Celular, ADS 525 15,225
48,046
CANADA--5.1%
AT&T Canada 550 35,234
Le Groupe Videotron 725 11,529
Newbridge Networks 650 (a) 18,688
Telesystem International Wireless 1,400 (a) 25,560
Toronto-Dominion Bank 775 35,307
126,318
FINLAND--5.2%
Merita 6,150 35,056
Nokia, ADS 550 50,359
Tieto, Cl. B 800 33,435
UPM-Kymmene 425 12,223
131,073
FRANCE--8.3%
Accor 150 37,785
Altran Technologies 225 59,587
Canal Plus 120 33,778
Elf Aquitaine 250 36,802
Vivendi 484 39,330
207,282
GERMANY--5.7%
Continental 1,225 29,147
DePfa Deutsche Pfandbriefbank 300 27,311
Mannesmann 350 52,392
Preussag 626 33,740
142,590
HONG KONG--.7%
China Telecom (Hong Kong), ADS 325 (a) 18,525
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
IRELAND--3.3%
Allied Irish Banks 1,600 21,125
Elan, ADS 950 (a) 26,363
Esat Telecom, ADS 800 (a) 35,100
82,588
ITALY--6.6%
Alleanza Assicurazioni 3,000 34,573
Mondadori (Arnoldo) Editore 1,850 31,727
Seat Pagine Gialle-RNC 25,000 34,139
Telecom Italia 3,300 34,326
Telecom Italia Mobile-RNC 8,000 29,785
164,550
JAPAN--16.6%
Japan Telecom 2 28,418
Kao 1,800 50,558
Kita Kyushu Coca-Cola Bottling 700 39,785
Konami 1,150 47,501
NTT Mobile Communications Network 1 13,548
NTT Mobile Communications Network-Bonus Shares 4 (a) 53,532
Ryohin Keikaku 175 44,021
Shiseido 3,000 44,957
Softbank 200 40,496
Takefuji 500 51,673
414,489
LUXEMBOURG--.7%
Societe Europeenne des Satellites 100 14,535
MEXICO--1.4%
Telefonos de Mexico, ADR 425 34,345
NETHERLANDS--6.5%
ASM Lithography 620 (a) 36,813
Benckiser, Cl. B 550 29,444
ING Groep 250 13,578
STMicroelectronics 600 (a) 40,097
United Pan-Europe Communications 225 (a) 12,243
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
NETHERLANDS (continued)
VNU 750 30,065
162,240
PORTUGAL--1.5%
Brisa-Auto Estradas de Portugal 900 37,242
SINGAPORE--1.5%
Development Bank of Singapore 3,000 36,695
SOUTH KOREA--1.4%
Korea Telecom, ADR 875 (a) 35,000
SPAIN--3.4%
Banco Santander Central Hispano 3,100 32,390
Telefonica 660 31,892
Telefonica, ADS 5 736
Telefonica Publicidad e Informacion 1,000 (a) 20,018
85,036
SWEDEN--5.0%
Electrolux, Cl. B 1,450 30,505
Ericsson (LM) Tel, Cl. B, ADR 875 28,820
Skandia Forsakrings 1,800 33,827
Skandinaviska Enskilda Banken 2,800 32,763
125,915
SWITZERLAND--1.1%
Swisscom 75 28,352
TAIWAN--1.0%
Taiwan Semiconductor Manufacturing, ADS 750 (a) 25,500
UNITED KINGDOM--15.1%
BP Amoco, ADS 250 27,125
Compass 3,025 30,019
Diageo 3,275 34,231
Dixons 1,600 29,913
Energis 1,025 (a) 24,467
Glaxo Wellcome, ADR 200 11,325
Hilton 11,300 44,837
Pearson 2,600 52,875
Securicor 4,000 35,120
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM (continued)
TeleWest Communications 4,300 (a) 19,301
Vodafone AirTouch 2,325 45,852
WPP 2,800 23,700
378,765
UNITED STATES--.8%
Global TeleSystems Group 255 (a) 20,655
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,946,694) 93.3% 2,332,144
CASH AND RECEIVABELS (NET) 6.7% 166,747
NET ASSETS 100.0% 2,498,891
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of Investments 1,946,694 2,332,144
Cash 137,358
Receivable for investment securities sold 48,587
Dividends receivable 3,804
Prepaid expenses 489
Due from The Dreyfus Corporation and affiliates 6,572
2,528,954
LIABILITIES ($):
Payable for investment securities purchased 13,349
Accrued expenses 16,714
30,063
- -------------------------------------------------------------------------------------
NET ASSETS ($) 2,498,891
- -------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,998,209
Accumulated undistributed investment income--net 12,114
Accumulated net realized gain (loss) on investments
and foreign currency transactions 103,205
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 385,363
- -------------------------------------------------------------------------------------
NET ASSETS ($) 2,498,891
- -------------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 160,000
NET ASSET VALUE, offering and redemption price per share ($) 15.62
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
- -----------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $3,220 foreign taxes withheld at source) 28,028
Interest 1,792
TOTAL INCOME 29,820
EXPENSES:
Investment advisory fee-Note 3(a) 11,804
Auditing fees 16,263
Custodian fees 11,650
Legal fees 3,843
Prospectus and shareholders' reports 2,577
Trustees' fees and expenses-Note 3(b) 539
Shareholder servicing costs 23
Loan commitment fees-Note 2 2
Miscellaneous 539
Total Expenses 47,240
Less--expense reimbursement from Dreyfus
due to undertaking--Note 3(a) (29,534)
Net Expenses 17,706
Investment Income--Net 12,114
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 131,479
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 58,150
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 189,629
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 201,743
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31 1998((+))
- --------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS ($):
Investment income (loss)--net 12,114 (1,791)
Net realized gain (loss) on investments 131,479 (28,274)
Net unrealized appreciation (depreciation)
on investments 58,150 327,213
Net Increase (Decrease) in Net Assets
Resulting from Operations 201,743 297,148
- --------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold -- 2,000,000
Total Increase (Decrease) in Net Assets 201,743 2,297,148
- --------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,297,148 --
END OF PERIOD 2,498,891 2,297,148
Undistributed investment income-net 12,114 --
- --------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold -- 160,000
((+)) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period. These figures have been derived
from the portfolio's financial statements.
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998(a)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 14.36 12.50
Investment Operations:
Investment income (loss)--net .08(b) (.01)
Net realized and unrealized gain (loss)
on investments 1.18 1.87
Total from Investment Operations 1.26 1.86
Net asset value, end of period 15.62 14.36
- -----------------------------------------------------------------------------------------
TOTAL RETURN (%) 8.78(c) 14.88(c)
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .74(c) .38(c)
Ratio of net investment income (loss)
to average net assets .51(c) (.08)(c)
Decrease reflected in above expense ratio due
to undertakings by Dreyfus 1.24(c) .81(c)
Portfolio Turnover Rate 80.92(c) 29.25(c)
- -----------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,499 2,297
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"),as a open-end management investment
company operating as a series company currently offering six portfolios,
including the Founders International Equity Portfolio (the "portfolio"). The
fund is only offered to separate accounts established by insurance companies to
fund variable annuity contracts and variable life insurance policies. The
portfolio is a diversified series. The portfolio's investment objective is to
provide long-term capital growth. The Dreyfus Corporation ("Dreyfus") serves as
the portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon
Bank, N.A. (" Mellon" ), which is a wholly-owned subsidiary of Mellon Bank
Corporation. Founders Asset Management LLC (" Founders" ) serves as the
portfolio' s sub-investment adviser. Founders is a 90%-owned subsidiary of
Mellon. Premier Mutual Fund Services, Inc. is the distributor of the portfolio's
shares, which are sold without a sales charge.
As of June 30, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Bank Corporation, held 160,000 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent
<PAGE>
bid and asked prices, except for open short positions, where the asked price is
used for valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are valued
at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $1,131 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the portfolio not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The portfolio has an unused capital loss carryover of approximately $16,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
through December 31, 1998, which are treated, for Federal income tax purposes,
as arising in fiscal 1999. If not applied, the carryover expires in fiscal 2006.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended June 30, 1999, the portfolio did not borrow under the Facility.
<PAGE>
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee And Other
Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 1999, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses
(exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses) exceed an annual rate of 1.50% of the value of the portfolio's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $29,534 during the period ended June 30, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fee is payable monthly by Dreyfus, and is based upon the
value of the portfolio' s average daily net assets, computed at the following
annual rates:
AVERAGE NET ASSETS
0 to $100 million . . . . . . . . . . . . . . . . . .35 of 1%
In excess of $100 million to $1billion. . . . . . . .30 of 1%
In excess of $1 billion to $1.5 billion . . . . . . .26 of 1%
In excess of $1.5 billion . . . . . . . . . . . . . .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$1,855,186 and $1,938,633, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$385,450, consisting of $423,091 gross unrealized appreciation and $37,641 gross
unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Investment Portfolios,
Founders International
Equity Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999, Dreyfus Service Corporation 177SA996
<PAGE>
Dreyfus Investment Portfolios, Founders Passport Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation 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.
<PAGE>
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Investment Portfolios, The Portfolio
Founders Passport Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Investment
Portfolios, Founders Passport Portfolio, covering the six-month period from
January 1, 1999 through June 30, 1999. Inside, you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Michael W. Gerding, CFA of Founders Asset
Management LLC, the portfolio's sub-investment adviser.
Many international economies showed marked improvement after many of the world's
central banks lowered key short-term interest rates last fall to stimulate
economic growth. Less restrictive monetary policies especially helped prevent
further economic deterioration in Japan, Asia, Latin America and Eastern Europe,
where the worst of the global currency and credit crisis appears to be behind
us. In contrast, some Western European economies slowed moderately after the
formation of the European Monetary Union (EMU) and the debut of a new currency,
the euro.
These economic conditions produced mixed results for international stocks. Stock
markets in Japan and Asia began to recover over the past six months, showing
their first signs of real strength in over a year. Latin America provided good
results after concerns about Brazil' s currency devaluation abated. European
markets, on the other hand, provided mixed performance.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Investment Portfolios, Founders Passport
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF PERFORMANCE
Michael W. Gerding, CFA, Portfolio Manager
Founders Asset Management LLC, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, Founders Passport Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Investment Portfolios,
Founders Passport Portfolio produced a total return of 9.36%.(1) In comparison,
the Morgan Stanley Capital International World ex U.S.A. Small Cap Index, the
portfolio's benchmark, produced a total return of 12.16% for the same period.(2)
Although we are pleased that our performance was in line with the benchmark, the
portfolio was hampered by its underweighting in Japan, a market that produced
very strong returns during the reporting period.
What is the portfolio's investment approach?
The portfolio invests primarily in foreign companies with annual revenues or
market capitalizations of $1 billion or less that have demonstrated superior
earnings growth. Although we don't try to match an index in terms of country or
industry weighting, we can't ignore the fact that Japan made up a larger percent
of our benchmark than the fund as of June 30, 1999, and its total return as a
market had a major influence on our relative performance. Japan was one of the
world' s best performing markets in the first half of 1999, even though the
country has yet to show much economic growth. One explanation is that Internet
mania has hit Japan. However, just like many Internet stocks in the United
States that have no earnings and little revenue growth, the same holds true for
many Japanese companies. Therefore, our investment process would not consider
them likely candidates.
Of course, there are some Japanese stocks that do fit our criteria. For example,
one of the portfolio's biggest winners was a Japanese software company, Nippon
System Development, which, as of June 30, 1999, was reporting strong earnings
growth. Japan is far behind the U.S. and
The Portfolio
<PAGE>
DISCUSSION OF PERFORMANCE (CONTINUED)
Europe in terms of the implementation of new software, which suggests that
Nippon System Development has a great deal of growth in front of it. One of our
objectives is to find companies that are growing faster than the countries in
which they are located, and we believe that is certainly the case with Nippon
System Development.
While Japan represented approximately 12% of the portfolio as of June 30, 1999,
the United Kingdom was by far the largest segment at approximately 19%. Another
company that illustrates our investment process is PizzaExpress, a United
Kingdom-based restaurant chain that is also the portfolio's largest holding.
PizzaExpress, which specializes in high-end pizza, continues to grow their
number of restaurants at 20% per year. They are expanding across Europe, have
franchises in the Middle East and have demonstrated superior earnings growth
with continued growth prospects for the next several years. Two other U.K.
companies performed very well during the period: Weatherspoon (J.D.), Britain's
fastest-growing pub operator, and Energis, a rapidly expanding
telecommunications company. Like PizzaExpress, Weatherspoon (J.D.) focuses on
the high-end establishment, with large, well-lit, nonsmoking facilities that
attract a wide range of clientele. Energis, a company that has diversified
outside the U.K. and into Continental Europe, is benefiting from the demands
that the Internet is placing on telecommunications infrastructure.
What other factors influenced the portfolio's performance?
Compared to our benchmark, the portfolio has a greater percentage of its
holdings in Europe. Because the new euro currency has devalued about 14% versus
the dollar since its inception on January 1, 1999, our total returns were
negatively affected. Many of the stocks that we selected performed well in
euros, but not when those devalued euros are converted to dollar terms, which is
the most relevant currency for investors in the portfolio. The recent rise in
U.S. interest rates only serves to make the situation worse, because capital is
drawn to the U.S. bond
<PAGE>
market, making the dollar even stronger. However, because Europe's economy is
improving and the euro has already declined sharply, we currently believe that
the currency is less likely to continue to fall.
What is the portfolio's current strategy?
We believe that we own companies that are growing their earnings at a rapid
rate, yet are selling at reasonable stock prices. For instance, while the
average company in the portfolio is growing at a rate of about 24%, the
price/earnings ratio of the portfolio is only about 19. In comparison, the
average company in our benchmark is only growing in the mid-single digits, yet
its price/earnings ratio is 24. That means the average company in our portfolio
is growing three times as fast as our benchmark, yet the stock price sells at a
lower multiple of earnings.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN
CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE
RETURNS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURN FIGURES PROVIDED REFLECT THE
ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN AGREEMENT
IN EFFECT THROUGH DECEMBER 31, 1999, AT WHICH TIME IT MAY BE EXTENDED,
TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE
FUND'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: MORGAN STANLEY & CO., INCORPORATED -- THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S.A. SMALL CAP INDEX IS A WEIGHTED AVERAGE OF THE
PERFORMANCE OF SECURITIES IN 21 COUNTRIES THAT INCLUDES COMPANIES WITH MARKET
CAPITALIZATIONS BETWEEN U.S. $200 MILLION AND $800 MILLION. IT REFLECTS THE
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<S> <C> <C>
COMMON STOCKS--86.0% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
AUSTRIA--.7%
KTM-Sportsmotorcycle 700 46,925
BRAZIL--1.1%
Aracruz Celulose, ADS 3,300 72,600
CANADA--4.7%
Cinar, ADR 7,700 (a) 188,650
Dorel Industries, Cl. B 4,500 (a) 98,417
Research in Motion 1,500 (a) 30,251
317,318
DENMARK--1.9%
Vestas Wind Systems 1,450 (a) 127,581
FINLAND--2.8%
KCI Konecranes International 1,950 67,191
Raisio Group 12,900 120,105
187,296
FRANCE--4.9%
Altran Technologies 825 218,487
Coflexip, ADR 975 42,413
Dassault Systemes 1,425 47,246
Royal Canin 375 21,724
329,870
GERMANY--6.8%
Douglas Holding 1,925 86,627
Ixos Software 275 (a) 46,941
PrimaCom 375 (a) 16,875
Rhoen-Klinikum 300 29,949
Schwarz Pharma 1,650 76,470
Singulus Technologies 550 (a) 65,432
Sixt 1,875 131,510
453,804
GREECE--1.2%
Chipita International 2,937 76,869
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
IRELAND--4.5%
Esat Telecom, ADR 1,750 (a) 76,781
Ryanair Holdings, ADS 4,175 (a) 221,275
298,056
ITALY--6.7%
Bulgari 25,025 168,481
Class Editori 3,225 25,786
Ducati Motor Holding 6,000 (a) 15,747
Gruppo Editoriale L'Espresso 9,950 160,802
Industrie Natuzzo, ADR 4,075 79,208
450,024
JAPAN--12.3%
Fancl 1,000 181,744
Fuji Soft ABC 2,600 154,646
Nippon System Development 4,000 237,918
Ryohin Keikaku 1,000 251,549
825,857
MEXICO--1.0%
Grupo Posadas, Cl. A 100,000 69,797
NETHERLANDS--5.9%
Beter Bed Holding 1,100 31,863
Hunter Douglas 2,650 91,290
IHC Caland 2,350 92,381
Grand Hotel Krasnapolsky 350 23,516
Nutreco 3,175 112,989
Ordina Beheer 1,560 (a) 45,186
397,225
NORWAY--2.3%
Stolt Comex Seaway, ADR 3,475 (a) 37,791
Tomra Systems 3,100 116,597
154,388
SINGAPORE--2.0%
Natsteel Electronics 31,000 135,813
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
SPAIN--2.7%
Baron de Ley 2,200 (a) 76,015
TelePizza 19,800 (a) 102,825
178,840
SWEDEN--1.2%
Haldex 2,425 31,814
Ortivus, Cl. B 2,225 (a) 12,360
Semcon 4,000 35,931
80,105
SWITZERLAND--3.3%
Kudelski 30 (a) 107,592
Logitech International 525 (a) 76,368
Phonak Holding 25 33,603
217,563
UNITED KINGDOM--19.1%
Capital Radio 7,600 100,660
Eidos, ADR 3,850 (a) 127,291
Filtronic 7,000 82,443
Flextech 11,150 (a) 181,213
ICON, ADR 3,300 (a) 64,763
PizzaExpress 17,525 254,372
Psion 14,350 185,648
Scoot.com 63,850 (a) 38,027
Select Appointments Holdings 11,500 137,347
Wetherspoon (J.D) 22,000 102,393
1,274,157
UNITED STATES--.9%
United International Holdings 850 (a) 57,481
TOTAL COMMON STOCKS
(cost $4,608,749) 5,751,569
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--6.2%
- -----------------------------------------------------------------------------------------------------------------------------------
GERMANY:
Marschollek, Lautenschlaeger und Partner 375 179,228
Porsche 100 235,866
TOTAL PREFERRED STOCKS
(cost $368,950) 415,094
<PAGE>
Principal
SHORT-TERM INVESTMENTS--12.0% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER:
AI Credit, 5.70%, 7/1/99 200,000 200,000
Assoc. Corp. North 5%, 7/1/99 300,000 300,000
Prudential Funding, 5.10%, 7/1/99 300,000 300,000
TOTAL SHORT-TERM INVESTMENTS
(cost $800,000) 800,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $5,777,699) 104.2% 6,966,663
LIABILITIES, LESS CASH AND RECEIVABLES (4.2%) (278,548)
NET ASSETS 100.0% 6,688,115
A NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of Investments 5,777,699 6,966,663
Cash 205,550
Receivable for investment securities sold 11,775
Dividends receivable 6,858
Prepaid expenses 2
Due from The Dreyfus Corporation and affiliates 7,395
7,198,243
LIABILITIES ($):
Payable for investment securities purchased 492,732
Payable for shares of Beneficial Interest redeemed 14
Accrued expenses 17,382
510,128
- -------------------------------------------------------------------------------------
NET ASSETS ($) 6,688,115
- -------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 5,361,221
Accumulated investment (loss) (2,642)
Accumulated net realized gain (loss) on investments and
foreign currency transactions 140,654
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 1,188,882
- -------------------------------------------------------------------------------------
NET ASSETS ($) 6,688,115
- -------------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 423,412
- -------------------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per share ($) 15.80
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
- ------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $4,479 foreign taxes withheld at source) 24,701
Interest 17,512
TOTAL INCOME 42,213
EXPENSES:
Investment advisory fee-Note 3(a) 29,964
Auditing fees 17,925
Legal fees 10,796
Custodian fees 8,177
Prospectus and shareholders' reports 3,877
Trustees' fees and expenses-Note 3(b) 802
Registration fees 99
Shareholder servicing costs 8
Loan commitment fees-Note 2 6
Miscellaneous 413
TOTAL EXPENSES 72,067
Less-reduction in investment advisory fee due to
undertaking--Note 3(a) (27,121)
NET EXPENSES 44,946
INVESTMENT (LOSS) (2,733)
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 144,782
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions 407,354
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 552,136
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 549,403
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998*
- --------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS ($):
Investment income (loss)--net (2,733) 1,291
Net realized gain (loss) on investments 144,782 5,477
Net unrealized appreciation (depreciation)
on investments 407,354 781,528
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 549,403 788,296
- --------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net - (1,200)
Net realized gain on investments (5,205) (4,400)
TOTAL DIVIDENDS (5,205) (5,600)
- --------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 350,575 5,000,000
Dividends reinvested 5,205 5,600
Cost of shares redeemed (159) -
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 355,621 5,005,600
TOTAL INCREASE (DECREASE) IN NET ASSETS 899,819 5,788,296
- --------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 5,788,296 -
END OF PERIOD 6,688,115 5,788,296
Undistributed investment income (loss)-net (2,642) 91
- --------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 22,684 400,000
Shares issued for dividends reinvested 348 390
Shares redeemed (10) -
- --------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 23,022 400,390
* FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998(a)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 14.46 12.50
Investment Operations:
Investment income (loss)--net (.01)(b) .00(c)
Net realized and unrealized gain (loss)
on investments 1.36 1.97
Total from Investment Operations 1.35 1.97
Distributions:
Dividends from investment income--net -- (.00)(c)
Dividends from net realized gain on investments (.01) (.01)
Total Distributions (.01) (.01)
Net asset value, end of period 15.80 14.46
- -----------------------------------------------------------------------------------------
TOTAL RETURN (%) 9.36(d) 15.79(d)
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .74(d) .38(d)
Ratio of net investment income (loss) to average
net assets (.05)(d) .02(d)
Decrease reflected in above expense ratios due
to undertakings by Dreyfus .45(d) .30(d)
Portfolio Turnover Rate 23.07(d) 3.98(d)
- -----------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 6,688 5,788
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering six series,
including the Founders Passport Portfolio (the "portfolio"). The portfolio is
only offered to separate accounts established by insurance companies to fund
variable annuity contracts and variable life insurance policies. The portfolio
is a diversified series. The portfolio's investment objective is to provide
capital appreciation. The Dreyfus Corporation (" Dreyfus" ) serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. ("Mellon"), which is a wholly-owned subsidiary of Mellon Bank Corporation.
Founders Asset Management LLC (" Founders" ) serves as the portfolio' s
sub-investment adviser. Founders is a 90%-owned subsidiary of Mellon. Premier
Mutual Fund Services, Inc. is the distributor of the portfolio's shares, which
are sold without a sales charge.
As of June 30, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Bank Corporation, held 400,738 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the
national securities market, or securities for which
<PAGE>
there were no transactions, are valued at the average of the most recent bid and
asked prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolios
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $119 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement
is included in interest income.
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended June 30, 1999, the portfolio did not borrow under the Facility.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee And Other
Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 1999, to reduce the
investment advisory and reimburse such excess expenses paid by the portfolio, to
the extent that the portfolio's aggregate annual expenses (exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses) exceed an annual
rate of 1.50%
<PAGE>
of the value of the portfolio's average daily net assets. The reduction in
investment advisory fees, pursuant to the undertaking, amounted to $27,121
during the period ended June 30, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fees is payable monthly by Dreyfus, and is based upon
the value of the portfolio's average daily net assets, computed at the following
annual rates:
AVERAGE NET ASSETS
0 to $100 million. . . . . . . . . . . . . . . . . .35 of 1%
In excess of $100 million to $1 billion. . . . . . .30 of 1%
In excess of $1 billion to $1.5 billion. . . . . . .26 of 1%
In excess of $1.5 billion. . . . . . . . . . . . . .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$1,887,718 and $1,234,599, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$1,188,964, consisting of $1,407,009 gross unrealized appreciation and $218,045
gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
<PAGE>
For More Information
Dreyfus Investment Portfolios,
Founders Passport Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999, Dreyfus Service Corporation 178SA996
<PAGE>
Dreyfus
Investment Portfolios,
European Equity Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation 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.
<PAGE>
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Investment Portfolios, The Portfolio
European Equity Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this first report for Dreyfus Investment Portfolios,
European Equity Portfolio, covering the period from April 30, 1999 (commencement
of operations) through June 30, 1999. Inside, you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Joanna Bowen of Newton Capital Management
Limited, the portfolio's sub-investment adviser.
Many international economies showed marked improvement after many of the world's
central banks lowered key short-term interest rates last fall to stimulate
economic growth. Less restrictive monetary policies especially helped prevent
further economic deterioration in Japan, Asia, Latin America and Eastern Europe,
where the worst of the global currency and credit crisis appears to be behind
us. In contrast, some Western European economies slowed moderately after the
formation of the European Monetary Union (EMU) and the debut of a new currency,
the euro.
These economic conditions produced mixed results for international stocks. Stock
markets in Japan and Asia began to recover over the past six months, showing
their first signs of real strength in over a year. Latin America provided good
results after concerns about Brazil' s currency devaluation abated. European
markets, on the other hand, provided mixed performance.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Investment Portfolios, European Equity
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF PERFORMANCE
Joanna Bowen, Portfolio Manager
Newton Capital Management Limited, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, European Equity Portfolio perform during
the period?
Dreyfus Investment Portfolios, European Equity Portfolio commenced operations on
April 30, 1999. For the two-month period ended June 30, 1999, the portfolio
produced a total return of -2.24%(1) against a stock market which fell -3.61%
(FTSE Eurotop 300 in U.S. dollars) (2) and rising global interest rates.
Generally, the European economy was sluggish during the period, and the new euro
currency slipped in value compared to the United States dollar. However,
Europe' s outlook brightened as evidence of an improving global economy emerged.
As a result, economically sensitive manufacturers, whose earnings improve as the
economy accelerates, performed the best during the period.
What is the portfolio's investment approach?
The portfolio, which seeks to outperform the European stock market in U.S.
dollar terms, invests primarily in the 300 largest European companies. We
identify investment themes, such as the impact of new technologies, aging
populations, and the communications revolution, and invest in those companies
that we believe are best positioned to benefit from these trends. Within markets
and sectors, we seek attractively priced companies that possess a sustainable
competitive advantage. In addition, we identify and forecast key economic
variables, such as gross domestic product, inflation and interest rates.
Currently, about 33% of the portfolio is invested in the United Kingdom with the
balance invested in Continental Europe.
As theme-driven investors, we have been extremely positive on the
telecommunications industry because of the liberalization of markets across
Europe and the resulting rapid growth in voice and data traffic across networks.
Telecom operators, such as Mannesmann, Vodafone
The Portfolio
<PAGE>
DISCUSSION OF PERFORMANCE (CONTINUED)
AirTouch and Equant have been clear beneficiaries. Telefonaktiebolaget LM
Ericsson, a Swedish producer of telecommunications equipment, also benefited
from the massive growth in telephone traffic brought about by government
deregulation and the Internet, as operators built new networks and upgraded
existing ones. Another theme, heightened merger and acquisition activity,
resulting from increasing intra-European and global competition, has led to
investments in industries ripe for consolidation, such as the oil and truck
industries and companies that stand to benefit from restructuring, such as the
recent Hoechst/Rhone-Poulenc merger. Investments have been made in companies
that we believe are well positioned to benefit from cost savings and improved
market position. In Europe, there is increasing pressure from investors for
corporate management to improve profitability and returns on capital.
Other themes include the Asian recovery and the rapid growth in savings
resulting from Europe' s changing demographics. For example, Tag Heuer
International, a Swiss watch manufacturer with heavy exposure to Asia, is
benefiting from the region' s recovery. Skandia Forsakrings, a major Swedish
insurance company, is benefiting from Europe's growing 45+ age population, many
of whom are increasingly saving for retirement.
What other factors influenced the portfolio's performance?
Because the new euro currency has continued to devalue since its inception on
January 1, 1999, our total returns were negatively affected. Many of the stocks
that we selected performed well in euros, but not when those devalued euros were
converted to dollar terms, which is the most relevant currency for investors in
the portfolio. The differential between U.S. and European interest rates and
lack of a cohesive "euro policy" is not supportive of the euro. However, because
Europe' s economy is improving and the euro has already declined sharply, we
currently believe that the currency is less likely to experience decline of this
magnitude going forward.
<PAGE>
What is the portfolio's current strategy?
We will continue to focus on investment themes, selecting what we believe are
the best stocks throughout Europe. Much has been written about how the European
Monetary Union and the euro have compelled investment managers to compare
companies on an industry-wide basis throughout Europe rather than by individual
countries. Nevertheless, there are still striking differences in the economies
of various countries that cannot be ignored. For example, Spain's economy is
growing very rapidly, whereas Germany' s economy remains very weak with high
unemployment. Even though we may favor a theme and an industry sector, we still
must consider the countries in which they do business very carefully.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BUT DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN
CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE
RETURNS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(2) THE FTSE EUROTOP 300 IS A MARKET CAPITALIZATION INDEX OF EUROPE'S LARGEST
300 COMPANIES. IT REFLECTS THE REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS.
RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THAT MAY BE EXTENDED,
TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE
FUND'S RETURNS WOULD HAVE BEEN LOWER.
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<S> <C> <C>
COMMON STOCKS--91.2% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FRANCE--16.9%
Axa 280 34,267
Equant 210 (a) 19,422
Lafarge 410 39,106
Rexel 380 29,542
Rhone-Poulenc 870 39,880
Societe Generale, Cl. A 230 40,663
Total, Cl. B 350 45,296
Usinor 2,420 36,175
Vivendi 556 45,180
329,531
GERMANY--14.5%
Apcoa Parking 410 30,963
Bayerische Motoren Werke 70 48,300
Deutsche Bank 670 40,998
Hoechst 860 39,056
Linde 90 54,094
Mannesmann 250 37,423
Zapf Creation 1,330 (a) 33,022
283,856
ITALY--5.0%
Telecom Italia 6,350 66,052
Unicem 2,600 31,507
97,559
NETHERLANDS--5.4%
Fortis 980 30,364
ING Groep 640 34,759
TNT Post 560 13,411
VNU 660 26,457
104,991
SPAIN--5.1%
Argentaria 1,450 33,136
Funespana 1,490 29,286
Telefonica 760 36,724
99,146
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
SWEDEN--6.2%
Skandia Forsakrings 1,050 19,732
Telefonaktiebolaget LM Ericsson 1,870 60,227
Volvo, Cl. B 1,450 42,245
122,204
SWITZERLAND--5.4%
Kuoni Reisen 8 30,992
TAG Heuer International 280 29,312
UBS 150 44,975
105,279
UNITED KINGDOM--32.7%
Bank of Scotland 2,050 27,169
Barclays 870 25,338
Berkeley 2,580 30,976
Billiton 11,720 40,911
Bodycote International 5,750 35,970
CGU 1,850 26,750
Glaxo Wellcome 1,610 44,782
Granada 2,160 40,110
Great Universal Stores 3,280 36,379
National Westminster Bank 1,460 30,981
Northern Rock 3,210 24,208
Prudential 2,480 36,545
Reed International 4,330 28,914
Rentokil Initial 6,770 26,436
Reuters 2,580 33,968
Shell Transport & Trading 8,510 63,882
Stagecoach Holdings 10,190 36,535
Standard Chartered 1,330 21,739
Vodafone AirTouch 1,400 27,610
639,203
TOTAL COMMON STOCKS
(cost $1,851,160) 1,781,769
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
PREFERRED STOCKS--4.7% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
GERMANY--3.5%
Fielmann 800 29,711
Fresenius 220 39,032
68,743
PORTUGAL--1.2%
Lusomundo 2,340 (a) 23,917
TOTAL PREFERRED STOCKS
(cost $98,167) 92,660
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,949,327) 95.9% 1,874,429
CASH AND RECEIVABLES (NET) 4.1% 79,964
NET ASSETS 100.0% 1,954,393
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of Investments 1,949,327 1,874,429
Cash denominated in foreign currencies 10 10
Receivable for investment securities sold 123,857
Dividends receivable 7,729
Due from The Dreyfus Corporation and affiliates 2,145
2,008,170
- ------------------------------------------------------------------------------------
LIABILITIES ($):
Cash overdraft due to Custodian 46,065
Net unrealized depreciation on
forward currency exchange contracts--Note 3(a) 31
Accrued expenses 7,681
53,777
- ------------------------------------------------------------------------------------
NET ASSETS ($) 1,954,393
- ------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,000,000
Accumulated undistributed investment income--net 6,590
Accumulated net realized gain (loss) on investments 23,066
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions (75,263)
- ------------------------------------------------------------------------------------
NET ASSETS ($) 1,954,393
- ------------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 160,000
NET ASSET VALUE, offering and redemption price per share ($) 12.21
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
from April 30, 1999 (commencement of operations) to June 30, 1999 (Unaudited)
- -----------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $1,539 foreign taxes withheld at source) 8,675
Interest 2,853
TOTAL INCOME 11,528
EXPENSES:
Investment advisory fee--Note 2(a) 3,292
Auditing fees 5,000
Custodian fees 4,303
Registration fees 556
Prospectus and shareholders' reports 300
Trustees' fees and expenses--Note 2(b) 258
Shareholder servicing costs--Note 2(a) 102
Legal fees 86
Miscellaneous 178
TOTAL EXPENSES 14,075
Less--expense reimbursement from Dreyfus due to
undertaking--Note 2(a) 9,137
NET EXPENSES 4,938
INVESTMENT INCOME--NET 6,590
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments and foreign currency transactions
29,700
Net realized gain (loss) on forward currency exchange contracts (6,634)
NET REALIZED GAIN (LOSS) 23,066
Net unrealized appreciation (depreciation) on investments (75,263)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (52,197)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (45,607)
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
from April 30, 1999 (commencement of operations) to June 30, 1999 (Unaudited)
OPERATIONS ($): <C>
<S>
Investment income--net 6,590
Net realized gain (loss) on investments 23,066
Net unrealized appreciation (depreciation) on investments (75,263)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (45,607)
- ------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
NET PROCEEDS FROM SHARES SOLD 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,954,393
- ------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 1,954,393
Undistributed investment income--net 6,590
- ------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 160,000
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from April 30, 1999
(commencement of operations) to June 30, 1999. Total return shows how much your
investment in the portfolio would have increased (or decreased) during the
period. These figures have been derived from the portfolio' s financial
statements.
Period Ended
June 30, 1999
(Unaudited)
- ----------------------------------------------------------------------------------
<S> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.50
Investment Operations:
Investment income--net .04(a)
Net realized and unrealized gain (loss) on investments (.33)
Total from Investment Operations (.29)
Net asset value, end of period 12.21
- ----------------------------------------------------------------------------------
TOTAL RETURN (%) (2.24)(b)
- ----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .25(b)
Ratio of net investment income to average net assets .34(b)
Decrease reflected in above expense ratio due to undertaking by Dreyfus .47(b)
Portfolio Turnover Rate 28.46(b)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,954
A BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
B NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund) is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company operating as a series company currently offering six series,
including the European Equity Portfolio (the "portfolio" ) which commenced
operations on April 30, 1999. The portfolio is only offered to separate accounts
established by insurance companies to fund variable annuity contracts and
variable life insurance policies. The portfolio is a diversified series. The
portfolio' s investment objective is to provide long-term capital growth. The
Dreyfus Corporation (" Dreyfus") serves as the portfolio's investment adviser.
Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a
wholly-owned subsidiary of Mellon Bank Corporation. Newton Capital Management
Limited (" Newton") serves as the portfolio's sub-investment adviser. Newton is
an affiliate of Mellon. Premier Mutual Fund Services, Inc. is the distributor of
the portfolio's shares, which are sold without a sales charge.
As of June 30, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Bank Corporation, held 160,000 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
there were no transactions, are valued at the average of the most recent bid and
asked prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are valued
at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $2,853 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
<PAGE>
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to qualify as a
regulated investment company, if such qualification is in the best interests of
its shareholders, by complying with the applicable provisions of the Code, and
to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
NOTE 2--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from April 30, 1999 through December 31, 1999 to reduce the
management fee and reimburse such excess expenses paid by the portfolio, to the
extent that the portfolio' s aggregate annual expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed an annual
rate of 1.50% of the value of the portfolio's average daily net assets. The
expense reimbursement, pursuant to the undertaking, amounted to $9,137 during
the period ended June 30, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Newton, the sub-investment
advisory fee is payable monthly by Dreyfus, and is based upon the value of the
portfolio's average daily net assets, computed at the following annual rates:
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
AVERAGE NET ASSETS
0 to $100 million............................................. .35 of 1%
In excess of $100 million to $1 billion........................ .30 of 1%
In excess of $1 billion to $1.5 billion.......................... .26 of 1%
In excess of $1.5 billion.......................................... .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended June 30, 1999, amounted to $2,291,226 and $356,834,
respectively.
The following summarizes open forward currency exchange contracts at June 30,
1999:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
CURRENCY DEPRECIATION
FORWARD CURRENCY EXCHANGE CONTRACTS AMOUNTS PROCEEDS ($) VALUE ($) ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES:
Euro, expiring 7/1/99 46,621 48,201 48,229 (28)
Swedish Krona, expiring 7/2/99 180,534 21,335 21 (3)
TOTAL (31)
</TABLE>
The portfolio enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to settle foreign currency transactions. When executing
forward currency exchange contracts, the portfolio is obligated to buy or sell a
foreign currency at a specified rate on a certain date in the future. With
respect to sales of for-
<PAGE>
ward currency exchange contracts, the portfolio would incur a loss if the value
of the contract increases between the date the forward contract is opened and
the date the forward contract is closed. The portfolio realizes a gain if the
value of the contract decreases between those dates. With respect to purchases
of forward currency exchange contracts, the portfolio would incur a loss if the
value of the contract decreases between the date the forward contract is opened
and the date the forward contract is closed. The portfolio realizes a gain if
the value of the contract increases between those dates. The portfolio is also
exposed to credit risk associated with counter party nonperformance on these
forward currency exchange contracts which is typically limited to the unrealized
gain on each open contract.
(B) At June 30, 1999, accumulated net unrealized depreciation on investments and
forward currency exchange contracts was $74,929, consisting of $39,556 gross
unrealized appreciation and $114,485 gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
<PAGE>
For More Information
Dreyfus Investment Portfolios,
European Equity Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Advisor
Newton Capital Management Limited
71 Queen Victoria Street
London, EC4V 4DR
England
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999 Dreyfus Service Corporation 181SA996
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