File Nos.333-47011
811-08673
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 6 [X]
(Check appropriate box or boxes.)
DREYFUS INVESTMENT PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
X on May 1, 1999 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Dreyfus Investment Portfolios
Core Value Portfolio
MidCap Stock Portfolio
PROSPECTUS May 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Core Value Portfolio
Dreyfus Investment Portfolios
Core Value Portfolio
MidCap Stock Portfolio
Contents
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Core Value Portfolio
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
MidCap Stock Portfolio
Goal/Approach 3
Main Risks 4
Past Performance 5
Expenses 5
Management 6
Financial Highlights 7
Account Information
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Account Policies 8
Distributions and Taxes 8
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIOS' RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolios. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolios assume no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
Each portfolio has its own investment strategy and risk/return profile. The
differences in strategy between the portfolios determine the types of securities
in which each portfolio invests and can be expected to affect the degree of risk
each portfolio is subject to and its performance.
While the portfolios' investment objectives and policies may be similar to those
of other funds managed by the investment adviser, the portfolios' investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The Core Value Portfolio seeks long-term growth of capital, with current income
as a secondary objective. To pursue these goals, it invests primarily in stocks
of large-cap value companies (market capitalizations of $1 billion and above).
The portfolio typically invests mainly in the stocks of U.S. issuers, and will
limit its foreign stock holdings to 20% of the value of its total assets. The
portfolio's stock investments may include common stocks, preferred stocks,
convertible securities and depositary receipts.
In choosing stocks, the portfolio manager focuses on individual stock selection
(a "bottom-up" approach) rather than forecasting stock market trends (a
"top-down" approach), and looks for value companies. A three-step value
screening process is used to select stocks:
(pound) value: quantitative screens track traditional measures such as
price-to-earnings, price-to-book and price-to-sales. These ratios
are analyzed and compared against the market.
(pound) sound business fundamentals: a company's balance sheet and income
data are examined to determine the company's financial history.
(pound) positive business momentum: a company's earnings and forecast
changes are analyzed and sales and earnings trends are reviewed
to determine the company's financial condition.
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or falls short of the portfolio
manager's expectations.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
LARGE-CAP COMPANIES: established companies that are considered "known
quantities." Large-cap companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Value stocks involve the risk that they may never reach what the portfolio
manager believes is their full market value, either because the market fails to
recognize the stock's intrinsic worth or the portfolio manager misgauged that
worth. They also may decline in price, even though in theory they are already
underpriced. Because different types of stocks tend to shift in and out of favor
depending on market and economic conditions, the portfolio's performance may
sometimes be lower or higher than that of other types of funds (such as those
emphasizing growth stocks).
Any foreign securities purchased by the portfolio include special risks, such as
exposure to currency fluctuations, changing political climate, lack of
comprehensive company information and potentially less liquidity.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During the period, the portfolio may not achieve its primary investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goals, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures, and in foreign currencies. These practices, when
employed, are used primarily to hedge the portfolio but may be used to increase
returns; however, such practices sometimes may reduce returns or increase
volatility. Derivatives can be illiquid, and a small investment in certain
derivatives could have a potentially large impact on the portfolio's
performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
Core Value Portfolio
<PAGE 1>
CORE VALUE PORTFOLIO (CONTINUED)
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, average
annual total return information for the portfolio is not included in the
prospectus.
EXPENSES
Investors pay certain fees and expenses in connection with the portfolio, which
are described in the table below. Annual portfolio operating expenses are paid
out of portfolio assets, so their effect is included in the portfolio's share
price. These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 1.35%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 2.10%
Fee waiver and/or expense reimbursement (1.10%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.00%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 1999, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year** 3 Years** 5 Years** 10 Years**
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<S> <C> <C> <C>
$102 $552 $1,028 $2,344
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
** FIRST YEAR IS BASED ON A CONTRACTUAL AGREEMENT.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MidCap Stock Portfolio
GOAL/APPROACH
The MidCap Stock Portfolio seeks 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((reg.tm)) Index ("S&P 400"). To pursue this goal, the portfolio
invests primarily in a blended portfolio of growth and value stocks of
medium-size companies, those whose market values generally range between $200
million and $10 billion. Stocks are chosen through a disciplined process
combining computer modeling techniques, fundamental analysis and risk
management. Consistency of returns and stability of the portfolio's share price
compared to the S&P 400 are primary goals of the process. The portfolio's stock
investments may include common stocks, preferred stocks, convertible securities
and depositary receipts.
Dreyfus uses a computer model to identify and rank stocks within an industry or
sector based on:
(pound) value, or how a stock is priced relative to its
perceived intrinsic worth
(pound) growth, in this case the sustainability or
growth of earnings
(pound) financial profile, which measures the financial
health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities.
Dreyfus then manages risk by diversifying across companies and industries,
limiting the potential adverse impact from any one stock or industry. The
portfolio is structured so that its sector weightings and risk characteristics,
such as growth, size, quality and yield, are similar to those of the S&P 400.
Concepts to understand
MIDCAP COMPANIES: established companies that may not be well known. Midcap
companies have the potential to grow faster than large-cap companies, but may
lack the resources to weather economic shifts, and are more volatile than large
companies.
COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe
of over 2,000 stocks. Dreyfus reviews each of the screens on a regular basis.
Dreyfus also maintains the flexibility to adapt the screening criteria to
changes in market conditions.
MidCap Stock Portfolio
<PAGE 3>
MIDCAP STOCK PORTFOLIO (CONTINUED)
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Medium-size companies carry additional risks because their earnings tend to be
less predictable, their share prices more volatile and their securities less
liquid than larger, more established companies. Some of the portfolio's
investments will rise and fall based on investor perception rather than
economics.
Although the portfolio seeks to manage risk by broadly diversifying among
industries and by maintaining a risk profile very similar to the S&P 400, the
portfolio is expected to hold fewer securities than the index. Owning fewer
securities and the ability to purchase stocks of companies not listed in the S&P
400 can cause the portfolio to underperform the index.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if earnings expectations are not
met or investors believe the prospects for a stock, industry or the economy in
general are weak. Growth stocks also typically lack the dividend yield that
could cushion stock prices in market downturns. With value stocks, there is the
risk that they may never reach what the manager believes is their full market
value, or that their intrinsic values may fall. While investments in value
stocks may limit downside risk over time, they may produce smaller gains than
riskier stocks.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During the period, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures. These practices, when employed, are used to hedge the
portfolio and increase returns; however, such practices sometimes may reduce
returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
<PAGE 4>
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, average
annual total return information for the portfolio is not included in the
prospectus.
EXPENSES
Investors pay certain fees and expenses in connection with the portfolio, which
are described in the table below. Annual portfolio operating expenses are paid
out of portfolio assets, so their effect is included in the portfolio's share
price. These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 1.14%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 1.89%
Fee waiver and/or expense reimbursement (0.89%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.00%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 1999, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year** 3 Years** 5 Years** 10 Years**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$102 $507 $939 $2,139
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
** FIRST YEAR IS BASED ON A CONTRACTUAL AGREEMENT.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
MidCap Stock Portfolio
<PAGE 5>
MANAGEMENT
The investment adviser for the portfolios is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in over 160
mutual fund portfolios. Dreyfus is the primary mutual fund business of Mellon
Bank Corporation, a broad-based financial services company with a bank at its
core. With more than $389 billion of assets under management and $1.9 trillion
of assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
For the fiscal period May 1, 1998 through December 31, 1998, neither portfolio
paid Dreyfus an investment advisory fee as a result of a fee waiver/expense
reimbursement in effect.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Portfolio managers
The primary portfolio managers of the portfolios are as follows:
(pound) Core Value Portfolio: The portfolio's primary portfolio manager is
Valerie J. Sill. She has been a portfolio manager of the portfolio
since its inception. Ms. Sill is a portfolio manager of Dreyfus and
Senior Vice President of The Boston Company Asset Management, Inc.
("TBCAM"), an affiliate of Dreyfus. She is also a member of the
Equity Policy Group of TBCAM. She previously served as director of
equity research and as an equity research analyst for TBCAM.
(pound) MidCap Stock Portfolio: John O'Toole is the portfolio's primary
portfolio manager, a position he has held since the portfolio's
inception. He has been employed by Dreyfus since October 1994.
Mr. O'Toole also is a Senior Vice President and a portfolio
manager for Mellon Equity Associates, an affiliate of Dreyfus,
and has been employed by Mellon Bank, N.A. since 1979.
Concepts to understand
YEAR 2000 ISSUES: the portfolios could be adversely affected if the computer
systems used by Dreyfus and the portfolios' other service providers do not
properly process and calculate date-related information from and after January
1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the portfolios invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a portfolio's investments and its share price.
<PAGE 6>
FINANCIAL HIGHLIGHTS
The following tables describe each portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during the period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolios' financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the tables, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
CORE VALUE PORTFOLIO 1998(1)
- --------------------------------------------------------------------------------
<S> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .07
Net realized and unrealized gain (loss) on investments (.77)
Total from investment operations (.70)
Distributions: Dividends from investment income -- net (.08)
Net asset value, end of period 11.72
Total return (%) (5.59)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .67(2)
Ratio of net investment income to average net assets (%) .62(2)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) .74(2)
Portfolio turnover rate (%) 47.37(2)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 5,959
(1) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) NOT ANNUALIZED.
PERIOD ENDED
DECEMBER 31,
MIDCAP STOCK PORTFOLIO 1998(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .02
Net realized and unrealized gain (loss) on investments (.34)
Total from investment operations (.32)
Distributions: Dividends from investment income -- net (.02)
Net asset value, end of period 12.16
Total return (%) (2.53)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .67(2)
Ratio of net investment income to average net assets (%) .18(2)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) .60(2)
Portfolio turnover rate (%) 75.74(2)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 10,506
(1) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) NOT ANNUALIZED.
</TABLE>
<PAGE 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Core Value Portfolio and/or
MidCap Stock Portfolio), for purchase of portfolio shares. The wire must include
the portfolio account number (for new accounts, a taxpayer identification number
should be included instead), account registration and dealer number, if
applicable, of the participating insurance company.
Each portfolio's investments are generally valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
Each portfolio generally pays dividends from net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the relevant portfolio unless it is
instructed otherwise by a participating insurance company.
Since each portfolio's shareholders are the participating insurance companies
and their separate accounts, the tax treatment of dividends and distributions
will depend on the tax status of the participating insurance company.
Accordingly, no discussion is included as to the federal income tax consequences
to VA contract holders and VLI policyholders. For this information, VA contract
holders and VLI policyholders should consult the prospectus of the separate
account of the participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolios. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt a portfolio's net asset value per share (NAV).
<PAGE 8>
NOTES
<PAGE>
For More Information
Dreyfus Investment Portfolios
Core Value Portfolio
MidCap Stock Portfolio
- ----------------------------------------
SEC file number: 811-08673
More information on the portfolios is available free upon request, including the
following:
Annual/Semiannual Report
Describes each portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolios and their policies. A current SAI is
on file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of portfolio documents can be viewed online
or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation
172/174P0599
<PAGE>
Dreyfus Investment Portfolios
Founders Growth Portfolio
Founders Passport Portfolio
PROSPECTUS May 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Dreyfus Investment Portfolios
Founders Growth Portfolio
Founders Passport Portfolio
Founders Growth Portfolio
GOAL/APPROACH
The portfolio seeks long-term growth of capital. To pursue this goal, it invests
primarily in equity securities of well-established, high quality "growth"
companies. These companies tend to have strong performance records, solid market
positions and reasonable financial strength, and have continuous operating
records of three years or more.
The portfolio managers will seek investment opportunities for the portfolio,
generally, in companies which they believe have fundamental strengths that
indicate the potential for growth in earnings per share. The portfolio managers
focus on individual stock selection (a "bottom-up" approach) rather than on
forecasting stock market trends (a "top-down" approach).
The portfolio may invest up to 30% of its assets in foreign securities, and up
to 25% of its assets in any one foreign country. The portfolio also may invest
in investment grade debt securities of domestic or foreign issuers that the
portfolio managers believe -- based on market conditions, the financial
condition of the issuer, general economic conditions, and other relevant factors
- -- offer opportunities for capital growth.
Contents
- --------------------------------------------------------------------------------
Founders Growth Portfolio INSIDE COVER
Founders Passport Portfolio 3
Management 6
Financial Highlights 8
Account Information
- --------------------------------------------------------------------------------
Account Policies 9
Distributions and Taxes 9
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIOS' RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolios. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, over which the portfolios assume no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
Each portfolio has its own investment strategy and risk/return profile. The
differences in strategy between the portfolios determine the types of securities
in which each portfolio invests and can be expected to affect the degree of risk
each portfolio is subject to and its performance.
While the portfolios' investment objectives and policies may be similar to those
of other funds managed by the investment advisers, the portfolios' investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities that
are rated at the time of purchase at least B by a credit rating agency or the
unrated equivalent as determined by the portfolio's sub-adviser.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
While the portfolio's investments in stocks of well-established companies may
limit the overall downside risk of the portfolio over time, the portfolio may
produce more modest gains than riskier stock funds as a trade-off for this
potentially lower-risk.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately --
even if earnings showed an absolute increase. In addition, growth stocks
typically lack the dividend yield that can cushion stock prices in market
downturns.
Any foreign securities purchased by the portfolio include special risks, such as
exposure to currency fluctuations, changing political climate, lack of
comprehensive company information and potentially less liquidity.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such period, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
Founders Growth Portfolio
<PAGE 1>
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, average
annual total return information for the portfolio is not included in this
section of the prospectus.
EXPENSES
Investors pay certain fees and expenses in connection with the portfolio, which
are described in the table below. Annual portfolio operating expenses are paid
out of portfolio assets, so their effect is included in the portfolio's share
price. These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 1.45%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 2.20%
Fee waiver and/or expense reimbursement (1.20%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.00%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 1999, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%.
- --------------------------------------------------------------------------------
Expense example
1 Year** 3 Years**
- --------------------------------------------------------------------------------
$102 $573
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
**FIRST YEAR IS BASED ON A CONTRACTUAL AGREEMENT.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE 2>
Founders Passport Portfolio
GOAL/APPROACH
The portfolio seeks capital appreciation. To pursue this goal, it invests
primarily in equity securities of foreign issuers with market capitalizations or
annual revenues of $1 billion or less and which are characterized as "growth"
companies.
The portfolio manager will seek investment opportunities for the portfolio,
generally, in companies which he believes have fundamental strengths that
indicate the potential for growth in earnings per share. The portfolio manager
focuses on individual stock selection (a "bottom-up" approach) rather than on
forecasting stock market trends (a "top-down" approach).
The portfolio will invest primarily in foreign issuers from at least three
foreign countries with established or emerging economies. The portfolio may
invest in securities of larger foreign issuers or in U.S. issuers if the
portfolio manager believes these securities offer attractive opportunities for
capital appreciation.
The portfolio also may invest in investment grade debt securities of domestic or
foreign issuers that the portfolio manager believes -- based on market
conditions, the financial condition of the issuer, general economic conditions,
and other relevant factors -- offer opportunities for capital appreciation.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities that
are rated at the time of purchase at least B by a credit rating agency or the
unrated equivalent as determined by the portfolio's sub-adviser.
Founders Passport Portfolio
<PAGE 3>
MAIN RISKS
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in foreign countries. Like the stocks of U.S.
companies, the securities of foreign issuers fluctuate in price, often based on
factors unrelated to the issuers' value, and such fluctuations can be
pronounced. Unlike investing in U.S. companies, foreign securities include
special risks such as exposure to currency fluctuations, a lack of comprehensive
company information, political instability, and differing auditing and legal
standards. The value of a shareholder's investment in the portfolio will go up
and down, which means that shareholders could lose money.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately --
even if earnings showed an absolute increase. In addition, growth stocks
typically lack the dividend yield that can cushion stock prices in market
downturns.
The portfolio may invest in the stocks of companies located in developed
countries and in emerging markets. Emerging market countries generally have
economic structures that are less diverse and mature, and political systems that
are less stable, than those of developed countries. Emerging markets may be more
volatile than the markets of more mature economies, and the securities of
companies located in emerging markets are often subject to rapid and large
changes in price; however, these markets also may provide higher long-term rates
of return.
The portfolio invests primarily in securities issued by companies with
relatively small market capitalizations. Smaller companies typically carry
additional risks because their earnings tend to be less predictable, their share
prices more volatile and their securities less liquid than larger,
more-established companies.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such period, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
<PAGE 4>
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, average
annual total return information for the portfolio is not included in this
section of the prospectus.
EXPENSES
Investors pay certain fees and expenses in connection with the portfolio, which
are described in the table below. Annual portfolio operating expenses are paid
out of portfolio assets, so their effect is included in the portfolio's share
price. These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 1.67%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 2.67%
Fee waiver and/or expense reimbursement (1.17%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.50%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 1999, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%.
- --------------------------------------------------------------------------------
Expense example
1 Year** 3 Years**
- --------------------------------------------------------------------------------
$152 $718
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
**FIRST YEAR IS BASED ON A CONTRACTUAL AGREEMENT.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
Founders Passport Portfolio
<PAGE 5>
MANAGEMENT
The investment adviser for the portfolios is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $120 billion in over 160
mutual fund portfolios. Dreyfus is the primary mutual fund business of Mellon
Bank Corporation, a broad-based financial services company with a bank at its
core. With more than $389 billion of assets under management and $1.9 trillion
of assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
For the fiscal period September 30, 1998 through December 31, 1998, the
portfolios did not pay Dreyfus an investment advisory fee as a result of a fee
waiver/expense reimbursement in effect.
Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as
each portfolio's sub-investment adviser. Founders, located at Founders Financial
Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor
companies have been offering tools to help investors pursue their financial
goals since 1938. As of December 31, 1998, Founders managed mutual funds and
other client accounts having aggregate assets of approximately $7.56 billion.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Portfolio managers
The primary portfolio managers of the portfolios are as follows:
Founders Growth Portfolio: Scott A. Chapman and Thomas M. Arrington. Mr. Chapman
and Mr. Arrington have been the portfolio's primary portfolio managers, and
employed by Founders, since December 1998. Mr. Chapman is a Vice President of
Investments and Director of Research at Founders. Mr. Arrington is a Vice
President of Investments at Founders. Prior to joining Founders, Mr. Chapman was
employed for seven years at HighMark Capital Management, Inc., a subsidiary of
Union BanCal Corporation, as a securities research analyst and, most recently,
as a vice president and director of growth strategy. Prior to joining Founders,
Mr. Arrington was employed for eight years at HighMark Capital where he held
various positions, including vice president and director of income and growth
strategy, securities research analyst and, most recently, vice president and
director of income equity strategy.
Founders Passport Portfolio: Michael W. Gerding. He has been the portfolio's
primary portfolio manager since the portfolio's inception and has been employed
by Founders since 1990. He is a Senior Vice President of Investments at
Founders.
Concepts to understand
YEAR 2000 ISSUES: these portfolios could be adversely affected if the computer
systems used by Dreyfus and the portfolios' other service providers do not
properly process and calculate date-related information from and after January
1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the portfolios invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a portfolio's investments and its share price.
<PAGE 6>
Performance Information for Public Funds and Portfolios
Although the portfolios are newly organized and do not yet have their own full
year of performance, each portfolio has the same investment objective and
follows substantially the same investment policies and strategies as a
corresponding series of another open-end investment company advised by Founders
(the "Public Funds"). The first two tables at right show average annual total
return information for the Public Funds, which correspond to the portfolios
offered in this prospectus, and for an appropriate securities index. The third
table shows the aggregate total return for each portfolio from its commencement
of operations through December 31, 1998. Each portfolio currently has the same
primary portfolio managers as its corresponding Public Fund.
Investors should not consider this performance data as an indication of the
future performance of the portfolios. The performance figures for the Public
Funds reflect the deduction of the historical fees and expenses paid by the
Public Funds, and not those to be paid by the respective portfolio. The Public
Funds' total annual operating expenses, after fee waiver and expense
reimbursement, for the year ended December 31, 1998 were 1.08% of Founders
Growth Fund's average daily net assets and 1.47% of Founders Passport Fund's
average daily net assets. The figures for the Public Funds and the portfolios
also do not reflect the deduction of charges or expenses attributable to VA
contracts or VLI policies, which would lower the performance quoted. Policy
owners should refer to the applicable insurance company prospectus for
information on any such charges and expenses. Additionally, although it is
anticipated that each portfolio and its corresponding Public Fund will hold
similar securities, their investment results are expected to differ. In
particular, differences in asset size and in cash flow, resulting from purchases
and redemptions of portfolio shares, may result in different security
selections, differences in the relative weightings of securities or differences
in the price paid for particular portfolio holdings. Performance information for
the Public Funds and portfolios reflect the reinvestment of dividends and other
distributions.
PUBLIC FUNDS
Historical performance information for the corresponding Public Funds and for
the securities indexes for various periods ended December 31, 1998, as
calculated pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOUNDERS
GROWTH FUND 25.04% 21.02% 20.30%
S&P 500 INDEX* 28.60% 24.05% 19.19%
- ---------------------------------------------------------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Since
inception
1 Year 5 Years (11/16/93)
- --------------------------------------------------------------------------------------------------------------------------------
FOUNDERS
PASSPORT FUND 12.50% 8.89% 9.77%
MSCI WORLD (EX US)
INDEX** 18.77% 9.19% 10.50%***
</TABLE>
PORTFOLIOS
Aggregate total return for each portfolio and securities index for the period
ended December 31, 1998, as calculated pursuant to SEC guidelines, is as
follows:
- --------------------------------------------------------------------------------
Aggregate total return AS OF 12/31/98
Since inception
(9/30/98)
- --------------------------------------------------------------------------------
FOUNDERS GROWTH PORTFOLIO 27.20%
S&P 500 INDEX* 21.28%
FOUNDERS PASSPORT PORTFOLIO 15.79%
MSCI WORLD (EX US) INDEX** 20.46%
- --------------------------------------------------------------------------------
* THE S&P 500 INDEX IS A WIDELY RECOGNIZED UNMANAGED INDEX OF STOCK
PERFORMANCE. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS
AND OTHER DISTRIBUTIONS.
** THE MSCI WORLD (EX US) INDEX IS AN ARITHMETICAL AVERAGE OF THE
PERFORMANCE OF OVER 1,000 SECURITIES LISTED ON THE STOCK EXCHANGES OF
EUROPE, CANADA, AUSTRALIA, NEW ZEALAND AND THE FAR EAST. TOTAL RETURN
FIGURES FOR THE INDEX ASSUME CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AFTER DEDUCTION OF LOCAL TAXES.
*** FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 11/30/93 IS USED AS
THE BEGINNING VALUE ON 11/16/93.
Management
<PAGE 7>
FINANCIAL HIGHLIGHTS
The following tables describe each portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during the period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolios' financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the tables, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1998(1)
- --------------------------------------------------------------------------------
<S> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .01
Net realized and unrealized gain (loss) on investments 3.39
Total from investment operations 3.40
Net asset value, end of period 15.90
Total return (%) 27.20(2)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .25(2)
Ratio of net investment income to average net assets (%) .05(2)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) .31(2)
Portfolio turnover rate (%) 75.65(2)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,544
(1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) NOT ANNUALIZED.
PERIOD ENDED
DECEMBER 31,
1998(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .00(2)
Net realized and unrealized gain (loss) on investments 1.97
Total from investment operations 1.97
Distributions: Dividends from investment income -- net (.00)(2)
Dividends from net realized gain on investments (.01)
Total distributions (.01)
Net asset value, end of period 14.46
Total return (%) 15.79(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .38(3)
Ratio of net investment income to average net assets (%) .02(3)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) .30(3)
Portfolio turnover rate (%) 3.98(3)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 5,788
(1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE 8>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Name of Portfolio), for purchase
of portfolio shares. The wire must include the portfolio account number (for new
accounts, a taxpayer identification number should be included instead), account
registration and dealer number, if applicable, of the participating insurance
company.
Each portfolio's investments are generally valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the board of trustees. Foreign securities held by
Founders Passport Portfolio may trade on days when the portfolio does not
calculate its NAV and thus affect the portfolio's NAV on days when investors
have no access to the portfolio.
DISTRIBUTIONS AND TAXES
Each portfolio generally pays dividends from net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the relevant portfolio unless it is
instructed otherwise by a participating insurance company.
Since each portfolio's shareholders are the participating insurance companies
and their separate accounts, the tax treatment of dividends and distributions
will depend on the tax status of the participating insurance company.
Accordingly, no discussion is included as to the federal income tax consequences
to VA contract holders and VLI policyholders. For this information, VA contract
holders and VLI policyholders should consult the prospectus of the separate
account of the participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolios. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt a portfolio's net asset value per share (NAV).
Account Information
<PAGE 9>
For More Information
Dreyfus Investment Portfolios
Founders Growth Portfolio
Founders Passport Portfolio
- ----------------------------------------
SEC file number: 811-08673
More information on the portfolios is available free upon request, including the
following:
Annual/Semiannual Report
Describes each portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolios and their policies. A current SAI is
on file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of portfolio documents can be viewed online
or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation
FOUP0599
<PAGE>
Dreyfus Investment Portfolios
Founders International Equity Portfolio
Investing in stocks of foreign growth
companies for long-term capital growth
PROSPECTUS May 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Investment Portfolios
Founders International Equity Portfolio
GOAL/APPROACH
The portfolio seeks long-term growth of capital. To pursue this goal, it invests
primarily in equity securities of foreign issuers which are characterized as
"growth" companies.
The portfolio manager will seek investment opportunities for the portfolio,
generally, in companies which he believes have fundamental strengths that
indicate the potential for growth in earnings per share. The portfolio manager
focuses on individual stock selection (a "bottom-up" approach) rather than on
forecasting stock market trends (a "top-down" approach).
The portfolio will invest primarily in foreign issuers from at least three
foreign countries with established or emerging economies, but will not invest
more than 50% of its assets in issuers in any one foreign country. The portfolio
also may invest in investment grade debt securities of foreign issuers that the
portfolio manager believes -- based on market conditions, the financial
condition of the issuer, general economic conditions, and other relevant factors
- -- offer opportunities for capital growth.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI- ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities that
are rated at the time of purchase at least B by a credit rating agency or the
unrated equivalent as determined by the portfolio's sub-adviser.
<PAGE>
MAIN RISKS
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in foreign countries. Like the stocks of U.S.
companies, the securities of foreign issuers fluctuate in price, often based on
factors unrelated to the issuers' value, and such fluctuations can be
pronounced. Unlike investing in U.S. companies, foreign securities include
special risks such as exposure to currency fluctuations, a lack of comprehensive
company information, political instability, and differing auditing and legal
standards. The value of a shareholder's investment in the portfolio will go up
and down, which means that shareholders could lose money.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately --
even if earnings showed an absolute increase. In addition, growth stocks
typically lack the dividend yield that can cushion stock prices in market
downturns.
The portfolio may invest in the stocks of companies located in developed
countries and in emerging markets. Emerging market countries generally have
economic structures that are less diverse and mature, and political systems that
are less stable, than those of developed countries. Emerging markets may be more
volatile than the markets of more mature economies, and the securities of
companies located in emerging markets are often subject to rapid and large
changes in price; however, these markets also may provide higher long-term rates
of return.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such period, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, average
annual total return information for the portfolio is not included in this
section of the prospectus.
EXPENSES
Investors pay certain fees and expenses in connection with the portfolio, which
are described in the table below. Annual portfolio operating expenses are paid
out of portfolio assets, so their effect is included in the portfolio's share
price. These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 3.67%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 4.67%
Fee waiver and/or expense reimbursement (3.17%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.50%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 1999, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%.
- --------------------------------------------------------------------------------
Expense example
1 Year** 3 Years**
- --------------------------------------------------------------------------------
$152 $1,123
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
** FIRST YEAR IS BASED ON A CONTRACTUAL AGREEMENT.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $120 billion in over 160
mutual fund portfolios. Dreyfus is the primary mutual fund business of Mellon
Bank Corporation, a broad-based financial services company with a bank at its
core. With more than $389 billion of assets under management and $1.9 trillion
of assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
For the fiscal period September 30, 1998 through December 31, 1998, the
portfolio did not pay Dreyfus an investment advisory fee as a result of a fee
waiver/expense reimbursement in effect.
Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as
the portfolio's sub-investment adviser. Founders, located at Founders Financial
Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor
companies have been offering tools to help investors pursue their financial
goals since 1938. As of December 31, 1998, Founders managed mutual funds and
other client accounts having aggregate assets of approximately $7.56 billion.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Portfolio manager
The portfolio's primary portfolio manager is Douglas A. Loeffler. He has been
the portfolio's primary portfolio manager since the portfolio's inception and
has been employed by Founders since 1995. He is a Vice President of Investments
at Founders. Prior to joining Founders, Mr. Loeffler was employed for seven
years at Scudder, Stevens & Clark as an international equities and quantitative
analyst.
Concepts to understand
YEAR 2000 ISSUES: the portfolio could be adversely affected if the computer
systems used by Dreyfus and the portfolio's other service providers do not
properly process and calculate date-related information from and after January
1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the portfolio invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the portfolio's investments and its share price.
The Portfolio
<PAGE 3>
Performance information for Public Fund and Portfolio
Although the portfolio is newly organized and does not yet have its own full
year of performance, the portfolio has the same investment objective and follows
substantially the same investment policies and strategies as a corresponding
series of another open-end investment company advised by Founders -- Founders
International Equity Fund (the "Public Fund"). The first table at right shows
average annual total return information for the Public Fund and for the MSCI
World (ex US) Index, the benchmark index of the portfolio and the Public Fund.
The second table shows the aggregate total return for the portfolio from its
commencement of operations through December 31, 1998. The portfolio currently
has the same primary portfolio manager as the Public Fund.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those to be paid by the portfolio. The Public Fund's total annual
operating expenses, after fee waiver and expense reimbursement, for the year
ended December 31, 1998 were 1.80% of its average daily net assets. The figures
for the Public Fund and portfolio also do not reflect the deduction of charges
or expenses attributable to VA contracts or VLI policies, which would lower the
performance quoted. Policy owners should refer to the applicable insurance
company prospectus for information on any such charges and expenses.
Additionally, although it is anticipated that the portfolio and the Public Fund
will hold similar securities, their investment results are expected to differ.
In particular, differences in asset size and in cash flow resulting from
purchases and redemptions of portfolio shares may result in different security
selections, differences in the relative weightings of securities or differences
in the price paid for particular portfolio holdings.
PUBLIC FUND
Historical performance information for the Public Fund and for the MSCI World
(ex US) Index for various periods ended December 31, 1998, as calculated
pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Since inception
1 Year (12/29/95)
- --------------------------------------------------------------------------------
FOUNDERS INTERNATIONAL
EQUITY FUND 17.01% 17.18%
MSCI WORLD
(EX US) INDEX* 18.77% 9.06%
PORTFOLIO
Aggregate total return for the portfolio and the MSCI World (ex US) Index for
the period ended December 31, 1998, as calculated pursuant to SEC guidelines, is
as follows:
- --------------------------------------------------------------------------------
Aggregate total return AS OF 12/31/98
Since inception
(9/30/98)
- --------------------------------------------------------------------------------
FOUNDERS INTERNATIONAL
EQUITY PORTFOLIO 14.88%
MSCI WORLD (EX US)
INDEX* 20.46%
- --------------------------------------------------------------------------------
* THE MSCI WORLD (EX US) INDEX IS AN ARITHMETICAL AVERAGE OF THE PERFORMANCE OF
OVER 1,000 SECURITIES LISTED ON THE STOCK EXCHANGES OF EUROPE, CANADA,
AUSTRALIA, NEW ZEALAND AND THE FAR EAST. TOTAL RETURN FIGURES FOR THE INDEX
ASSUME CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AFTER DEDUCTION OF
LOCAL TAXES, BUT DO NOT DEDUCT ANY FEES OR EXPENSES WHICH ARE CHARGED THE PUBLIC
FUND AND THE PORTFOLIO. PERFORMANCE INFORMATION FOR THE PUBLIC FUND AND
PORTFOLIO REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS.
<PAGE 4>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during the period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1998(1)
- --------------------------------------------------------------------------------
<S> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income (loss) -- net (.01)
Net realized and unrealized gain (loss) on investments 1.87
Total from investment operations 1.86
Net asset value, end of period 14.36
Total return (%) 14.88(2)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .38(2)
Ratio of investment (loss) to average net assets (%) (.08)(2)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) .81(2)
Portfolio turnover rate (%) 29.25(2)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,297
(1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) NOT ANNUALIZED.
</TABLE>
The Fund
<PAGE 5>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Founders International Equity
Portfolio), for purchase of portfolio shares. The wire must include the
portfolio account number (for new accounts, a taxpayer identification number
should be included instead), account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio generally pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE 6>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Investment Portfolios Founders International Equity Portfolio
- ----------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of portfolio documents can be viewed online
or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation
2026P0599
<PAGE>
DREYFUS INVESTMENT PORTFOLIOS
CORE VALUE PORTFOLIO
MIDCAP STOCK PORTFOLIO
FOUNDERS GROWTH PORTFOLIO
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
FOUNDERS PASSPORT PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
the Core Value and MidCap Stock Portfolios, dated May 1, 1999, and the
Founders Growth, Founders International Equity and Founders Passport
Portfolios, dated May 1, 1999 (collectively, the "Portfolios"), each a
separate series of Dreyfus Investment Portfolios (the "Fund"), as each
Prospectus may be revised from time to time. To obtain a copy of the
relevant Portfolio's Prospectus, please write to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or call 1-800-554-4611 or
(516) 338-3300.
Shares of the Portfolios are offered only to variable annuity and
variable life insurance separate accounts established by insurance companies
("Participating Insurance Companies") to fund variable annuity contracts and
variable life insurance policies (collectively, "Policies").
The most recent Annual Report and Semi-Annual Report to Shareholders
for each Portfolio are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing in the Annual Report are
incorporated by reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund and Portfolios B-2
Management of the Fund B-16
Management Arrangements B-19
How to Buy Shares B-24
How to Redeem Shares B-25
Determination of Net Asset Value B-26
Dividends, Distributions and Taxes B-27
Portfolio Transactions B-28
Performance Information B-30
Information About the Fund and Portfolios B-31
Counsel and Independent Auditors B-32
Appendix B-34
DESCRIPTION OF THE FUND AND PORTFOLIOS
The Fund is a Massachusetts business trust that commenced operations on
May 1, 1998. Each Portfolio is a separate series of the Fund, an open-end
management investment company, known as a mutual fund. Each Portfolio is a
diversified fund, which means that, with respect to 75% of the Portfolio's
total assets, the Portfolio will not invest more than 5% of its assets in
the securities of any single issuer.
The Dreyfus Corporation (the "Manager") serves as each Portfolio's
investment adviser. The Manager has engaged Founders Asset Management LLC
("Founders") to serve as sub-investment adviser to each of the Founders
Growth, Founders International Equity and Founders Passport Portfolios
(collectively, the "Founders Portfolios") and to provide day-to-day
management of the Founders Portfolios' investments, subject to the
supervision of the Manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Portfolios' shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the relevant Portfolio's Prospectus.
Depositary Receipts. (All Portfolios) Each Portfolio may invest in
the securities of foreign issuers in the form of American Depositary
Receipts and American Depositary Shares (collectively, "ADRs") and Global
Depositary Receipts and Global Depositary Shares (collectively, "GDRs") and
other forms of depositary receipts. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or
trust company which evidence ownership of underlying securities issued by a
foreign corporation. GDRs are receipts issued outside the United States
typically by non-United States banks and trust companies that evidence
ownership of either foreign or domestic securities. Generally, ADRs in
registered form are designed for use in the United States securities markets
and GDRs in bearer form are designed for use outside the United States.
These securities may be purchased through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depositary, whereas a depositary may establish an
unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored depositary receipts generally bear all the
costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited
securities.
Foreign Government Obligations; Securities of Supranational Entities.
(Founders Portfolios only) Each Founders Portfolio may invest in
obligations issued or guaranteed by one or more foreign governments or any
of their political subdivisions, agencies or instrumentalities that are
determined by Founders to be of comparable quality to the other obligations
in which the Portfolio may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities
to promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Investment Companies. (All Portfolios) Each Portfolio may invest in
securities issued by investment companies. Under the Investment Company Act
of 1940, as amended (the "1940 Act"), the Portfolio's investment in such
securities, subject to certain exceptions, currently is limited to (i) 3% of
the total voting stock of any one investment company, (ii) 5% of the
Portfolio's total assets with respect to any one investment company and
(iii) 10% of the Portfolio's total assets in the aggregate. Investments in
the securities of other investment companies may involve duplication of
advisory fees and certain other expenses.
Money Market Instruments. (All Portfolios) When the Manager (or
Founders with respect to the Founders Portfolios) determines that adverse
market conditions exist, the Portfolio may adopt a temporary defensive
position and invest some or all of its assets in money market instruments,
including U.S. Government securities, repurchase agreements, bank
obligations and commercial paper. Each Portfolio also may purchase Money
Market Instruments when it has cash reserves or in anticipation of taking a
market position.
Convertible Securities. (All Portfolios) Convertible securities may
be converted at either a stated price or stated rate into underlying shares
of common stock. Convertible securities have characteristics similar to
both fixed-income and equity securities. Convertible securities generally
are subordinated to other similar but non-convertible securities of the same
issuer, although convertible bonds, as corporate debt obligations, enjoy
seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of
the subordination feature, however, convertible securities typically have
lower ratings than similar non-convertible securities.
Although to a lesser extent than with fixed-income securities
generally, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value
of convertible securities tends to vary with fluctuations in the market
value of the underlying common stock. A unique feature of convertible
securities is that as the market price of the underlying common stock
declines, convertible securities tend to trade increasingly on a yield
basis, and so may not experience market value declines to the same extent as
the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities
generally entail less risk than investments in common stock of the same
issuer.
Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
There can be no assurance of capital appreciation, however, because
securities prices fluctuate. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.
Warrants. (All Portfolios) A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified
amount of the corporation's capital stock at a set price for a specified
period of time. Each Portfolio may invest up to 5% of its net assets in
warrants, except that this limitation does not apply to warrants purchased
by the Portfolio that are sold in units with, or attached to, other
securities.
Illiquid Securities. (All Portfolios) Each Portfolio may invest up to
15% of the value of its net assets in securities as to which a liquid
trading market does not exist, provided such investments are consistent with
the Portfolio's investment objective. These securities may include
securities that are not readily marketable, such as securities that are
subject to legal or contractual restrictions on resale, repurchase
agreements providing for settlement in more than seven days after notice,
and certain privately negotiated, non-exchange traded options and securities
used to cover such options. As to these securities, the Portfolio is
subject to a risk that should the Portfolio desire to sell them when a ready
buyer is not available at a price the Portfolio deems representative of
their value, the value of the Portfolio's net assets could be adversely
affected.
Investment Techniques
The following information supplements and should be read in conjunction
with the relevant Portfolio's Prospectus.
Foreign Currency Transactions. (Core Value and Founders Portfolios
only) Each of these Portfolios may enter into foreign currency transactions
for a variety of purposes, including: to fix in U.S. dollars, between trade
and settlement date, the value of a security the Portfolio has agreed to buy
or sell; to hedge the U.S. dollar value of securities the Portfolio already
owns, particularly if it expects a decrease in the value of the currency in
which the foreign security is denominated; or to gain exposure to the
foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Portfolio's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Portfolio agreeing
to exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Portfolio contracted to receive
in the exchange. The Portfolio's success in these transactions will depend
principally on the ability of the Manager (or Founders with respect to the
Founders Portfolios) to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar.
Currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by the forces of supply and demand
in the foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. Currency
exchange rates also can be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the United States or abroad.
Borrowing Money. (All Portfolios) Each Portfolio is permitted to
borrow to the extent permitted under the 1940 Act, which permits an
investment company to borrow in an amount up to 33-1/3% of the value of its
total assets. Each Founders Portfolio currently intends to borrow money
only for temporary or emergency (not leveraging) purposes. Money borrowed
will be subject to interest costs. While borrowings exceed 5% of the
Portfolio's total assets, the Portfolio will not make any additional
investments. The Core Value and MidCap Stock Portfolios may borrow money
for investment purposes as described below.
Leverage. (Core Value and MidCap Stock Portfolios only) Leveraging
(that is, buying securities using borrowed money) exaggerates the effect on
net asset value of any increase or decrease in the market value of a
Portfolio's investments. These borrowings will be subject to interest costs
which may or may not be recovered by appreciation of the securities
purchased; in certain cases, interest costs may exceed the return received
on the securities purchased. For borrowings for investment purposes, the
1940 Act requires the Portfolio to maintain continuous asset coverage (that
is, total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the required coverage should
decline as a result of market fluctuations or other reasons, the Portfolio
may be required to sell some of its portfolio securities within three days
to reduce the amount of its borrowings and restore the 300% asset coverage,
even though it may be disadvantageous from an investment standpoint to sell
securities at that time. The Portfolio also may be required to maintain
minimum average balances in connection with such borrowing or pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest
rate.
Each of these Portfolios may enter into reverse repurchase agreements
with banks, brokers or dealers. This form of borrowing involves the
transfer by the Portfolio of an underlying debt instrument in return for
cash proceeds based on a percentage of the value of the security. The
Portfolio retains the right to receive interest and principal payments on
the security. At an agreed upon future date, the Portfolio repurchases the
security at principal plus accrued interest. To the extent a Portfolio
enters into a reverse repurchase agreement, the Portfolio will segregate
permissible liquid assets at least equal to the aggregate amount of its
reverse repurchase obligations, plus accrued interest, in certain cases, in
accordance with releases promulgated by the Securities and Exchange
Commission. The Securities and Exchange Commission views reverse repurchase
transactions as collateralized borrowings by a Portfolio. Except for these
transactions, borrowings by the Core Value and MidCap Stock Portfolios
generally will be unsecured. Reverse repurchase agreements may be
preferable to a regular sale and later repurchase of the securities because
it avoids certain market risks and transaction costs. Such transactions,
however, may increase the risk of potential fluctuations in the market value
of the Portfolio's assets. In addition, interest costs on the cash received
may exceed the return on the securities purchased.
Lending Portfolio Securities. (All Portfolios) Each Portfolio may
lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
The Portfolio continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned securities,
which affords the Portfolio an opportunity to earn interest on the amount of
the loan and on the loaned securities' collateral. Loans of portfolio
securities may not exceed 33-1/3% of the value of the Portfolio's total
assets, and the Portfolio will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the
Portfolio at any time upon specified notice. The Portfolio might experience
risk of loss if the institution with which it has engaged in a portfolio
loan transaction breaches its agreement with the Portfolio. In connection
with its securities lending transactions, a Portfolio may return to the
borrower or a third party which is unaffiliated with the Portfolio, and
which is acting as a "placing broker," a part of the interest earned from
the investment of collateral received for securities loaned.
Derivatives. (All Portfolios) Each Portfolio may invest in, or enter
into, derivatives, such as options and futures, for a variety of reasons,
including to hedge certain market risks, to provide a substitute for
purchasing or selling particular securities or to increase potential income
gain. Derivatives may provide a cheaper, quicker or more specifically
focused way for the Portfolio to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular derivative and
the portfolio as a whole. Derivatives permit a Portfolio to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Portfolio can increase
or decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities. However,
derivatives may entail investment exposures that are greater than their cost
would suggest, meaning that a small investment in derivatives could have a
large potential impact on a Portfolio's performance.
If a Portfolio invests in derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Portfolio's
return or result in a loss. A Portfolio also could experience losses if its
derivatives were poorly correlated with its other investments, or if the
Portfolio were unable to liquidate its position because of an illiquid
secondary market. The market for many derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for derivatives.
Although neither the Fund nor any Portfolio will be a commodity pool,
certain derivatives subject the Portfolios to the rules of the Commodity
Futures Trading Commission which limit the extent to which a Portfolio can
invest in such derivatives. A Portfolio may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However,
no Portfolio may invest in such contracts and options for other purposes if
the sum of the amount of initial margin deposits and premiums paid for
unexpired options with respect to such contracts, other than for bona fide
hedging purposes, exceeds 5% of the liquidation value of the Portfolio's
assets, after taking into account unrealized profits and unrealized losses
on such contracts and options; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount
may be excluded in calculating the 5% limitation.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
derivatives. Exchange-traded derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter derivatives. Therefore, each party to an over-
the-counter derivative bears the risk that the counterparty will default.
Accordingly, the Manager (or Founders with respect to the Founders
Portfolios) will consider the creditworthiness of counterparties to over-the-
counter derivatives in the same manner as it would review the credit quality
of a security to be purchased by a Portfolio. Over-the-counter derivatives
are less liquid than exchange-traded derivatives since the other party to
the transaction may be the only investor with sufficient understanding of
the derivative to be interested in bidding for it.
Futures Transactions--In General. Each Portfolio may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and
the International Monetary Market of the Chicago Mercantile Exchange, or,
except for the MidCap Stock Portfolio, on exchanges located outside the
United States, such as the London International Financial Futures Exchange,
the Deutsche Termine Borse and the Sydney Futures Exchange Limited. Foreign
markets may offer advantages such as trading opportunities or arbitrage
possibilities not available in the United States. Foreign markets, however,
may have greater risk potential than domestic markets. For example, some
foreign exchanges are principal markets so that no common clearing facility
exists and an investor may look only to the broker for performance of the
contract. In addition, any profits that a Portfolio might realize in
trading could be eliminated by adverse changes in the exchange rate, or the
Portfolio could incur losses as a result of those changes. Transactions on
foreign exchanges may include both commodities which are traded on domestic
exchanges and those which are not. Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to a Portfolio
which could adversely affect the value of the Portfolio's net assets.
Although each Portfolio intends to purchase or sell futures contracts only
if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond that limit or
trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive
trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Portfolio to
substantial losses.
Successful use of futures by a Portfolio also is subject to the ability
of the Manager (or Founders with respect to the Founders Portfolios) to
predict correctly movements in the direction of the relevant market and, to
the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged
and the price movements of the futures contract. For example, if a
Portfolio uses futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices of such
securities instead increase, the Portfolio will lose part or all of the
benefit of the increased value of securities which it has hedged because it
will have offsetting losses in its futures positions. Furthermore, if in
such circumstances the Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. A Portfolio may have
to sell such securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Portfolio may be required to segregate
permissible liquid assets to cover its obligations relating to its
transactions in derivatives. To maintain this required cover, the Portfolio
may have to sell portfolio securities at disadvantageous prices or times
since it may not be possible to liquidate a derivative position at a
reasonable price. In addition, the segregation of such assets will have the
effect of limiting a Portfolio's ability otherwise to invest those assets.
Specific Futures Transactions. Each Portfolio may purchase and sell stock
index futures contracts. A stock index future obligates the Portfolio to
pay or receive an amount of cash equal to a fixed dollar amount specified in
the futures contract multiplied by the difference between the settlement
price of the contract on the contract's last trading day and the value of
the index based on the stock prices of the securities that comprise it at
the opening of trading in such securities on the next business day.
The Core Value Portfolio and the Founders Portfolios may purchase and
sell currency futures. A foreign currency future obligates the Portfolio to
purchase or sell an amount of a specific currency at a future date at a
specific price.
Each Portfolio may purchase and sell interest rate futures contracts.
An interest rate future obligates the Portfolio to purchase or sell an
amount of a specific debt security at a future date at a specific price.
Successful use by the Portfolio of futures contracts will be subject to
the Manager's (or Founders with respect to the Founders Portfolios) ability
to predict correctly movements in the prices of individual stocks, the stock
market generally, foreign currencies or interest rates. To the extent such
predictions are incorrect, the Portfolio may incur losses.
Options--In General. Each Portfolio may invest up to 5% of its assets,
represented by the premium paid, in the purchase of call and put options. A
Portfolio may write (i.e., sell) covered call and put option contracts to
the extent of 20% of the value of its net assets at the time such option
contracts are written. A call option gives the purchaser of the option the
right to buy, and obligates the writer to sell, the underlying security or
securities at the exercise price at any time during the option period, or at
a specific date. Conversely, a put option gives the purchaser of the option
the right to sell, and obligates the writer to buy, the underlying security
or securities at the exercise price at any time during the option period, or
at a specific date.
A covered call option written by a Portfolio is a call option with
respect to which the Portfolio owns the underlying security or otherwise
covers the transaction by segregating cash or other securities. A put
option written by a Portfolio is covered when, among other things, cash or
liquid securities having a value equal to or greater than the exercise price
of the option are placed in a segregated account to fulfill the obligation
undertaken. The principal reason for writing covered call and put options
is to realize, through the receipt of premiums, a greater return than would
be realized on the underlying securities alone. A Portfolio receives a
premium from writing covered call or put options which it retains whether or
not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered call
option writer, the Portfolio is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Specific Options Transactions. Each Portfolio may purchase and sell call
and put options in respect of specific securities (or groups or "baskets" of
specific securities) or stock indices listed on national securities
exchanges or traded in the over-the-counter market. An option on a stock
index is similar to an option in respect of specific securities, except that
settlement does not occur by delivery of the securities comprising the
index. Instead, the option holder receives an amount of cash if the closing
level of the stock index upon which the option is based is greater than, in
the case of a call, or less than, in the case of a put, the exercise price
of the option. Thus, the effectiveness of purchasing or writing stock index
options will depend upon price movements in the level of the index rather
than the price of a particular stock.
The Core Value Portfolio and Founders Portfolios may purchase and sell
call and put options on foreign currency. These options convey the right to
buy or sell the underlying currency at a price which is expected to be lower
or higher than the spot price of the currency at the time the option is
exercised or expires.
Each Portfolio may purchase cash-settled options on equity index swaps
in pursuit of its investment objective. Equity index swaps involve the
exchange by the Portfolio with another party of cash flows based upon the
performance of an index or a portion of an index of securities which usually
includes dividends. A cash-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated
transactions from financial institutions, including securities brokerage
firms.
Successful use by a Portfolio of options will be subject to the ability
of the Manager (or Founders with respect to the Founders Portfolios) to
predict correctly movements in the prices of individual stocks, the stock
market generally, foreign currencies or interest rates. To the extent such
predictions are incorrect, a Portfolio may incur losses.
Future Developments. (All Portfolios) A Portfolio may take advantage
of opportunities in the area of options and futures contracts and options on
futures contracts and any other derivatives which are not presently
contemplated for use by the Portfolio or which are not currently available
but which may be developed, to the extent such opportunities are both
consistent with the Portfolio's investment objective and legally permissible
for the Portfolio. Before entering into such transactions or making any
such investment on behalf of a Portfolio, the Fund will provide appropriate
disclosure in its Prospectus or Statement of Additional Information.
Forward Commitments. (All Portfolios) Each Portfolio may purchase
securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed when
the Portfolio enters into the commitment, but the Portfolio does not make a
payment until it receives delivery from the counter party. The Portfolio
will commit to purchase such securities only with the intention of actually
acquiring the securities, but the Portfolio may sell these securities before
the settlement date if it is deemed advisable. The Portfolio will segregate
permissible liquid assets at least equal at all times to the amount of the
Portfolio's purchase commitments.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest
rates rise) based upon the public's perception of the creditworthiness of
the issuer and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may expose
a Portfolio to risks because they may experience such fluctuations prior to
their actual delivery. Purchasing securities on a when-issued basis can
involve the additional risk that the yield available in the market when the
delivery takes place actually may be higher than that obtained in the
transaction itself. Purchasing securities on a forward commitment or when-
issued basis when a Portfolio is fully or almost fully invested may result
in greater potential fluctuation in the value of the Portfolio's net assets
and its net asset value per share.
Investment Considerations and Risks
Equity Securities. (All Portfolios) Equity securities, including
common stock, preferred stock, convertible securities and warrants,
fluctuate in value, often based on factors unrelated to the value of the
issuer of the securities, and such fluctuations can be pronounced. Changes
in the value of the Portfolio's investments will result in changes in the
value of its shares and thus the Portfolio's total return to investors.
Fixed Income Securities. (All Portfolios) The Core Value Portfolio
may invest up to 5% of its total net assets in fixed-income securities,
including those of companies that are close to entering, or already in,
reorganization proceedings which are rated below investment grade by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), Fitch IBCA, Inc. ("Fitch") or Duff & Phelps Credit Rating Co.
("Duff" and together with S&P, Moody's and Fitch, the "Rating Agencies").
The MidCap Stock Portfolio also may invest in corporate obligations rated at
least Baa by Moody's or BBB by S&P, Fitch or Duff, or, if unrated, of
comparable quality as determined by the Manager. Founders Growth Portfolio
and Founders Passport Portfolio may invest in debt securities of foreign
issuers that management believes, based on market conditions, the financial
condition of the issuer, general economic conditions and other relevant
factors, offer opportunities for capital growth. The bonds, debentures and
corporate obligations (other than convertible securities and preferred
stock) in which each Founders Portfolio may invest must be rated not lower
than Baa by Moody's or BBB by S&P, Fitch and Duff, or, if unrated, deemed to
be of comparable quality by Founders. Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities generally are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Certain securities that may be purchased by a Portfolio, such
as those with interest rates that fluctuate directly or indirectly based on
multiples of a stated index, are designed to be highly sensitive to changes
in interest rates and can subject the holders thereof to extreme reductions
of yield and possibly loss of principal.
The values of fixed-income securities also may be affected by changes
in the credit rating or financial condition of the issuer. Certain
securities that may be purchased by each Portfolio, such as those rated Baa
or lower by Moody's and BBB or lower by S&P, Fitch and Duff, may be subject
to such risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining whether
to continue to hold the security.
Lower Rated Securities. (All Portfolios, except MidCap Stock
Portfolio) Each of these Portfolios may invest a portion of its assets in
higher yielding (and, therefore, higher risk) debt securities (convertible
securities and preferred stocks with respect to the Founders Portfolios)
such as those rated Ba by Moody's or BB by S&P, Fitch or Duff, or as low as
those rated B by a Rating Agency in the case of the Founders Portfolios, or
as low as the lowest rating assigned by a Rating Agency in the case of the
Core Value Portfolio. They may be subject to certain risks with respect to
the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. The retail secondary market
for these securities may be less liquid than that of higher rated
securities; adverse conditions could make it difficult at times for the
Portfolio to sell certain securities or could result in lower prices than
those used in calculating the Portfolio's net asset value.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with higher rated
securities and will fluctuate over time. For example, during an economic
downturn or a sustained period of rising interest rates, highly leveraged
issuers of these securities may experience financial stress. During such
periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations also may be affected adversely by specific corporate
developments, or the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing. The risk of loss
because of default by the issuer is significantly greater for the holders of
these securities because such securities generally are unsecured and often
are subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Portfolio's ability to dispose of
particular issues when necessary to meet such Portfolio's liquidity needs or
in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid security market for
certain securities also may make it more difficult for the Portfolio to
obtain accurate market quotations for purposes of valuing its portfolio and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic downturns.
It is likely that any economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Core Value Portfolio and the Founders Portfolios may acquire these
securities during an initial offering. Such securities may involve special
risks because they are new issues. The Fund has no arrangement with any
persons concerning the acquisition of such securities, and the Manager (or
Founders with respect to the Founders Portfolios) will review carefully the
credit and other characteristics pertinent to such new issues.
The ratings of the Ratings Agencies represent their opinions as to the
quality of the obligations which they undertake to rate. Ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, the Manager (or
Founders with respect to the Founders Portfolios) also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal.
Foreign Securities. (All Portfolios) Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers, including depositary receipts, foreign
government obligations and securities of supranational entities, are less
liquid and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can be greater
than in the United States.
Because evidences of ownership of such securities usually are held
outside the United States, the Portfolio will be subject to additional risks
which include possible adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental
restrictions which might adversely affect or restrict the payment of
principal and interest on the foreign securities to investors located
outside the country of the issuer, whether from currency blockage or
otherwise.
With respect to certain securities that may be purchased by the
Founders Portfolios only, developing countries have economic structures that
are generally less diverse and mature, and political systems that are less
stable, than those of developed countries. The markets of developing
countries may be more volatile than the markets of more mature economies;
however, such markets may provide higher rates of return to investors. Many
developing countries providing investment opportunities for the Portfolio
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have adverse effects on the economies and
securities markets of certain of these countries.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.
The percentage of a Portfolio's assets which may be invested in foreign
securities as noted above is not a fundamental policy and may be changed at
any time without shareholder approval.
State Insurance Regulation. (All Portfolios) The Fund is intended to
be a funding vehicle for VA contracts and VLI policies to be offered by
Participating Insurance Companies and will seek to be offered in as many
jurisdictions as possible. Certain states have regulations concerning
concentration of investments, purchase and sale of future contracts and
short sales of securities, among other techniques. If applied to a
Portfolio, the Portfolio may be limited in its ability to engage in such
techniques and to manage its portfolio with the flexibility provided herein.
It is the Fund's intention that each Portfolio operate in material
compliance with current insurance laws and regulations, as applied, in each
jurisdiction in which the Portfolio is offered.
Simultaneous Investments. (All Portfolios) Investment decisions for
each Portfolio are made independently from those of the other Portfolios and
investment companies managed by the Manager (and, where applicable,
Founders). If, however, such other Portfolios or investment companies
desire to invest in, or dispose of, the same securities as the Portfolio,
available investments or opportunities for sales will be allocated equitably
to each. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by a Portfolio or the price paid or
received by a Portfolio.
Investment Restrictions
Each Portfolio's investment objective is a fundamental policy, which
cannot be changed without approval by the holders of a majority (as defined
in the 1940 Act) of the Portfolio's outstanding voting shares. In addition,
each Portfolio has adopted investment restrictions numbered 1 through 10 as
fundamental policies. Investment restrictions numbered 11 through 15 are
not fundamental policies and may be changed, as to a Portfolio, by a vote of
a majority of the Fund's Board members at any time. No Portfolio may:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
2. Invest more than 5% of its assets in the obligations of any
one issuer, except that up to 25% of the value of the Portfolio's total
assets may be invested, and securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities may be purchased, without
regard to any such limitations.
3. Purchase the securities of any issuer if such purchase would
cause the Portfolio to hold more than 10% of the voting securities of such
issuer. This restriction applies only with respect to 75% of the
Portfolio's total assets.
4. Invest in commodities, except that a Portfolio may purchase
and sell options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but a Portfolio may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate or real estate investment
trusts.
6. Borrow money, except to the extent permitted under the 1940
Act (which currently limits borrowing to no more than 33-1/3% of the value
of the Portfolio's total assets). For purposes of this Investment
Restriction, the entry into options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices shall not constitute borrowing.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Portfolio
may lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.
8. Act as an underwriter of securities of other issuers, except
to the extent a Portfolio may be deemed an underwriter under the Securities
Act of 1933, as amended, by virtue of disposing of portfolio securities.
9. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 4, 6, 12 and 13 may be deemed to give rise to a
senior security.
10. Purchase securities on margin, but a Portfolio may make
margin deposits in connection with transactions in options, forward
contracts, futures contracts, including those relating to indices, and
options on futures contracts or indices.
11. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the securities
it owns as a shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to
the purchase of securities on a when-issued or forward commitment basis and
the deposit of assets in escrow in connection with writing covered put and
call options and collateral and initial or variation margin arrangements
with respect to options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices.
13. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Prospectus and Statement of Additional
Information.
14. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid,
if, in the aggregate, more than 15% of the value of its net assets would be
so invested.
15. Purchase securities of other investment companies, except to
the extent permitted under the 1940 Act.
* * *
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
In addition, each Portfolio has adopted the following policies as non-
fundamental policies. Each Portfolio intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h)
of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) to
comply in all material respects with insurance laws and regulations that the
Fund has been advised are applicable to investments of separate accounts of
Participating Insurance Companies. As non-fundamental policies, these
policies may be changed by vote of a majority of the Board members at any
time.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of
each Portfolio. The Board approves all significant agreements with those
companies that furnish services to the Fund. These companies are as
follows:
The Dreyfus Corporation Investment Adviser
Founders Asset Management LLC Sub-Investment Adviser for the Founders
Portfolios
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
The Bank of New York Custodian for the Founders International
Equity and Founders Passport Portfolios
Mellon Bank, N.A. Custodian for the Core Value, Founders
Growth and MidCap Stock Portfolios
Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He is also
a director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk
management services to health and other benefit programs, The Noel
Group, Inc., a venture capital company, Carlyle Industries, Inc.
(formerly, Belding Heminway, Inc.), a button packager and distributor,
Staffing Resources, Inc., a temporary placement agency, and Century
Business Services, Inc., a provider of various outsourcing services for
small and medium size companies. For more than five years prior to
January 1995, he was President, a director and, until August 1994,
Chief Operating Officer of the Manager and Executive Vice President and
a director of Dreyfus Service Corporation, a wholly-owned subsidiary of
the Manager. From August 1994 until December 31, 1994, he was a
director of Mellon Bank Corporation. He is 55 years old and his
address is 200 Park Avenue, New York, New York 10166.
CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981, Mr.
Alexander served as Secretary of the Army and Chairman of the Board of
the Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation,
Cognizant Corporation, The Dun & Bradstreet Corporation, MCI
Communications Corporation, Mutual of America Life Insurance Company
and TLC Beatrice International Holdings, Inc. He is 65 years old and
his address is 400 C Street, N.E., Washington, D.C. 20002.
LUCY WILSON BENSON, Board Member. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
Communications Satellite Corporation and Logistics Management
Institute. She is also a Trustee of the Alfred P. Sloan Foundation,
Vice Chairman of the Board of Trustees of Lafayette College, Vice
Chairman of the Citizens Network for Foreign Affairs and of The
Atlantic Council of the U.S. and a member of the Council on Foreign
Relations. From 1980 to 1994, Mrs. Benson was a director of The
Grumman Corporation and of the General RE Corporation from 1990 to
1998. Mrs. Benson served as a consultant to the U.S. Department of
State and to SRI International from 1980 and 1981. From 1977 to 1980,
she was Under Secretary of State for Security Assistance, Science and
Technology. She is 71 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund, and by all other funds
in the Dreyfus Family of Funds for which such person is a Board member (the
number of which is set forth in parenthesis next to each Board member's
total compensation)* for the year ended December 31, 1998, is as follows:
Total Compensation
From Fund and Fund
Aggregate Complex Paid
Name of Board Member Compensation From Fund** to Board Member
Joseph S. DiMartino $2,500 $619,660 (187)
Clifford L. Alexander, Jr. $2,000 $80,918 (38)
Lucy Wilson Benson $2,000 $77,168 (24)
___________________
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
**Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $211 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She has been employed by Funds
Distributor, Inc. for more than the past five years. She is 42 years
old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. She is
39 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was Second
Vice President with Chase Manhattan Bank. She is 30 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. She is 35
years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. He is 44 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 36 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. He is 30 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. He is 34 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From July 1994 to November 1995, she was a Fund Accountant
for Investors Bank & Trust Company. She is 26 years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
March 1990 to May 1996, she was employed by U.S. Trust Company of New
York where she held various sales and marketing positions. She is 37
years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The fund's Board members and officers, as a group, owned less than 1%
of each Portfolio's shares outstanding on April 20, 1999.
The following shareholders are known by the Fund to own of record 5% or
more of the indicated Portfolio's shares outstanding on April 20, 1999:
Shareholder Portfolio Percentage of Shares
MBCIC Core Value 75.13%
c/o Mellon Bank, N.A. MidCap Stock 32.23%
919 North Market Street Founders Growth 100.00%
Wilmington, DE 19801-3023 Founders International Equity 100.00%
Founders Passport 100.00%
TransAmerica Occidental Core Value 18.76%
Life Insurance Company MidCap Stock 46.17%
Separate Account VA-2L
Accounting Department
P.O. Box 33849
Charlotte, NC 28233-3849
First TransAmerica Life Core Value 6.12%
Insurance Company MidCap Stock 21.60%
Separate Account VA-2LNY
Accounting Department
P.O. Box 33849
Charlotte, NC 28233-3849
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Federal
Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated April 16, 1998, as amended
July 16, 1998. As to each Portfolio, the Agreement is subject to annual
approval by (i) the Fund's Board or (ii) vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of such Portfolio,
provided that in either event the continuance also is approved by a majority
of the Board members who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Manager, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Agreement was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Agreement, at a meeting
held on July 16, 1998. As to each Portfolio, the Agreement is terminable
without penalty, on 60 days' notice, by the Fund's Board or by vote of the
holders of a majority of the shares of such Portfolio, or, upon not less
than 90 days' notice, by the Manager. The Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its assignment
(as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo, and Richard F. Syron, directors.
The Manager has a personal securities trading policy (the "Policy")
which restricts the personal securities transactions of its employees. Its
primary purpose is to ensure that personal trading by the Manager's
employees does not disadvantage any fund managed by the Manager. Under the
Policy, the Manager's employees must preclear personal transactions in
securities not exempt under the Policy. In addition, the Manager's
employees must report their personal securities transactions and holdings,
which are reviewed for compliance with Policy. In that regard, the
Manager's portfolio managers and other investment personnel also are subject
to the oversight of Mellon's Investment Ethics Committee. The Manager's
portfolio managers and other investment personnel who comply with the
Policy's preclearance and disclosure procedures, and the requirements of the
Committee, may be permitted to purchase, sell or hold securities which also
may be or are held in fund(s) they manage or for which they otherwise
provide investment advice.
Sub-Investment Advisory Agreement. With respect to the Founders
Portfolios, the Manager has entered into a Sub-Investment Advisory
Agreement with Founders dated July 16, 1998 (the "Founders Sub-Advisory
Agreement"). As to each Founders Portfolio, the Founders Sub-Advisory
Agreement is subject to annual approval by (i) the Fund's Board or (ii)
vote of a majority (as defined in the 1940 Act) of the Portfolio's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund or Founders,
by vote cast in person at a meeting called for the purpose of voting on
such approval. The Founders Sub-Advisory Agreement was last approved by
the Fund's Board, including a majority of the Board members who are not
"interested persons" of any party to the Founders Sub-Advisory Agreement,
at a meeting held on July 16, 1998. As to each Founders Portfolio, the
Founders Sub-Advisory Agreement is terminable without penalty, (i) by the
Manager on 60 days' notice, (ii) by the Fund's Board or by vote of the
holders of a majority of the Portfolio's outstanding voting securities on
60 days' notice, or (iii) upon not less than 90 days' notice, by Founders.
The Founders Sub-Advisory Agreement will terminate automatically, as to the
relevant Founders Portfolio, in the event of its assignment (as defined in
the 1940 Act).
The following persons are officers of Founders: Richard W. Sabo,
President and Chief Executive Officer; Robert T. Ammann, Vice President;
Thomas M. Arrington, Vice President; Angelo Barr, Vice President and
National Sales Manager; Scott A. Chapman, Vice President; Kenneth R.
Christoffersen, Vice President, General Counsel and Secretary; Gregory P.
Contillo, Senior Vice President and Chief Marketing Officer; Francis P.
Gaffney, Vice President; Roberto Galindo, Jr., Vice President; Laurine
Garrity, Vice President; Michael W. Gerding, Senior Vice President, Brian
F. Kelly, Vice President; Paul A. LaRocco, Vice President; Douglas A.
Loeffler, Vice President; David L. Ray, Senior Vice President and
Treasurer; and Linda M. Ripley, Vice President.
The Manager manages the investments of each Portfolio in accordance
with the stated policies of the Portfolio, subject to the approval of the
Fund's Board. With respect to each Founders Portfolio, Founders provides
day-to-day management of the Portfolio's investments, subject to the
supervision of the Manager and the Fund's Board. The Manager and Founders
are responsible for investment decisions with respect to the Core Value and
MidCap Stock Portfolios and Founders Portfolios, respectively, and provide
the Fund with portfolio managers who are authorized by the Fund's Board to
execute purchases and sales of securities for the relevant Portfolio. The
portfolio managers of Core Value Portfolio are Francis DeAngelis, William
Goldenberg and Valerie Sill. The primary portfolio managers of Founders
Growth Portfolio are Scott A. Chapman and Thomas M. Arrington. The primary
portfolio manager of Founders International Equity Portfolio is Douglas A.
Loeffler. The primary portfolio manager of Founders Passport Portfolio is
Michael W. Gerding. The portfolio managers of MidCap Stock Portfolio are
John O'Toole, Ronald Gala, Steven Falci, Robert Wilke, Mark Sickorski, Harry
Grosse and Jocelyn Reed.
The Manager and Founders maintain research departments with
professional portfolio managers and securities analysts who provide research
services for the Portfolios and for other funds advised by the Manager or
Founders.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager (or, if
applicable, Founders). The expenses borne by the Fund include:
organizational costs, taxes, interest, loan commitment fees, dividends and
interest on securities sold short, brokerage fees and commissions, if any,
fees of Board members who are not officers, directors, employees or holders
of 5% or more of the outstanding voting securities of the Manager or
Founders or any of their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory fees, charges of
custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal expenses,
costs of maintaining the Fund's existence, costs of independent pricing
services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders'
reports and meetings, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, and any extraordinary expenses.
Expenses attributable to a particular Portfolio are charged against the
assets of that Portfolio; other expenses of the Fund are allocated among the
Portfolios on the basis determined by the Fund's Board, including, but not
limited to, proportionately in relation to the net assets of each Portfolio.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager, from time to time, may make payments
from its own assets to Participating Insurance Companies in connection with
the provision of certain administrative services to one or more Portfolios
and/or to purchasers of VA contracts or VLI policies. The Manager also may
make such advertising and promotional expenditures, using its own resources,
as it from time to time deems appropriate.
As compensation for its services, the Fund has agreed to pay the
Manager a monthly fee at the annual rate set forth below as a percentage of
the relevant Portfolio's average daily net assets.
Name of Portfolio Management Fee
Core Value Portfolio .75%
MidCap Stock Portfolio .75%
Founders Growth Portfolio .75%
Founders International Equity Portfolio 1.00%
Founders Passport Portfolio 1.00%
The fees payable by the Fund to the Manager with respect to each
Portfolio for the period from its commencement of operations through
December 31, 1998, were as follows:
Name of Portfolio Management Fee Payable*
Core Value Portfolio(1) $26,068
MidCap Stock Portfolio(1) $40,453
Founders Growth Portfolio(2) $ 4,286
Founders International Equity Portfolio(2) $ 5,388
Founders Passport Portfolio(2) $13,578
_________________
* The management fees payable by each Portfolio to the Manager for the
fiscal year ended December 31, 1998 were waived pursuant to undertakings
by the Manager, resulting in no management fees being paid by the
Portfolios for the fiscal year ended December 31, 1998.
(1) From May 1, 1998 (commencement of operations) through December 31, 1998.
(2) From September 30, 1998 (commencement of operations) through December 31,
1998.
As compensation for Founders' services, the Manager has agreed to pay
Founders a monthly sub-advisory fee at the annual rate set forth below as a
percentage of the relevant Founders Portfolio's average daily net assets:
Name of Portfolio
Sub-Investment
Founders Growth Portfolio Advisory Fee
0 to $100 million of average daily net assets .25%
$100 million to $1 billion of average daily net assets .20%
$1 billion to $1.5 billion of average daily net assets .16%
$1.5 billion or more of average daily net assets .10%
Founders International Equity Portfolio and
Founders Passport Portfolio
0 to $100 million of average daily net assets .35%
$100 million to $1 billion of average daily net assets .30%
$1 billion to $1.5 billion of average daily net assets .26%
$1.5 billion or more of average daily net assets .20%
The fees payable by the Manager to Founders with respect to the
Founders Growth, Founders International Equity and Founders Passport
Portfolios for the period from September 30, 1998 (commencement of
operations) through December 31, 1998 were waived in their entirety by
Founders pursuant to an undertaking.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's assets increases.
Distributor. The Distributor, located at 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's distributor on a best efforts
basis pursuant to an agreement which is renewable annually.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the
Manager, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's
transfer and dividend disbursing agent. Under a transfer agency agreement
with the Fund, the Transfer Agent arranges for the maintenance of
shareholder account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment of
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses.
Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian with respect
to the Core Value, Founders Growth, and MidCap Stock Portfolios. Under a
custody agreement with the Fund, Mellon Bank, N.A. holds each such
Portfolio's securities and keeps all necessary accounts and records. For
its custody services, Mellon Bank, N.A. receives a monthly fee based on the
market value of each such Portfolio's assets held in custody and receives
certain securities transaction charges.
The Bank of New York, 90 Washington Street, New York, New York 10286,
serves as the Fund's custodian with respect to the Founders International
Equity and Founders Passport Portfolios. The Bank of New York has no part
in determining the investment policies of the Portfolios or which securities
are to be purchased or sold by the Portfolios.
HOW TO BUY SHARES
Fund shares currently are offered only to separate accounts of
Participating Insurance Companies. Individuals may not place purchase
orders directly with the Fund.
Separate accounts of the Participating Insurance Companies place orders
based on, among other things, the amount of premium payments to be invested
pursuant to VA contracts and VLI policies. See the prospectus of the
separate account of the applicable Participating Insurance Company for more
information on the purchase of Fund shares and with respect to the
availability for investment in specific portfolios of the Fund. The Fund
does not issue share certificates.
Purchase orders from separate accounts based on premiums and
transaction requests received by the Participating Insurance Company on a
given business day in accordance with procedures established by the
Participating Insurance Company will be effected at the net asset value of
the applicable Portfolio determined on such business day if the orders are
received by the Fund in proper form and in accordance with applicable
requirements on the next business day and Federal Funds (monies of member
banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) in the net amount of such orders are received by the
Fund on the next business day in accordance with applicable requirements.
It is each Participating Insurance Company's responsibility to properly
transmit purchase orders and Federal Funds in accordance with applicable
requirements. VA contract holders and VLI policy holders should refer to
the prospectus for their contracts or policies in this regard.
Portfolio shares are sold on a continuous basis. Net asset value per
share is determined as of the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York time), on each day that the
New York Stock Exchange is open for business. For purposes of determining
net asset value, options and futures will be valued 15 minutes after the
close of trading on the floor of the New York Stock Exchange. Net asset
value per share is computed by dividing the value of the net assets of each
Portfolio (i.e., the value of its assets less liabilities) by the total
number of Portfolio shares outstanding. Each Portfolio's investments are
valued based on market value, or where market quotations are not readily
available, based on fair value as determined in good faith by the Fund's
Board. For further information regarding methods employed in valuing each
Portfolio's investments, see "Determination of Net Asset Value."
HOW TO REDEEM SHARES
Portfolio shares may be redeemed at any time by the separate accounts
of the Participating Insurance Companies. Individuals may not place
redemption orders directly with the Fund. Redemption requests received by
the Participating Insurance Company from separate accounts on a given
business day in accordance with procedures established by the Participating
Insurance Company will be effected at the net asset value of the applicable
Portfolio determined on such business day if the requests are received by
the Fund in proper form and in accordance with applicable requirements on
the next business day. It is each Participating Insurance Company's
responsibility to properly transmit redemption requests in accordance with
applicable requirements. VA contract holders and VLI policy holders should
consult their Participating Insurance Company in this regard. The value of
the shares redeemed may be more or less than their original cost, depending
on the Portfolio's then-current net asset value. No charges are imposed by
the Fund when shares are redeemed.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission.
Should any conflict between VA contract holders and VLI policy holders
arise which would require that a substantial amount of net assets be
withdrawn, orderly portfolio management could be disrupted to the potential
detriment of such contract holders and policy holders.
Redemption Commitment. The Fund has committed to pay in cash all
redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of a
Portfolio's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission and is a fundamental policy, as to a Portfolio, which may not be
changed without shareholder approval of such Portfolio. In the case of
requests for redemption in excess of such amount, the Fund's Board reserves
the right to make payments in whole or part in securities or other assets of
the Portfolio in case of an emergency or any time a cash distribution would
impair the liquidity of the Portfolio to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Portfolio's investments are valued. If the recipient sells
such securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
Each Portfolio's investment securities are valued at the last sale
price on the securities exchange or national securities market on which such
securities are primarily traded. Securities not listed on an exchange or
national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except in the case of open short positions where the asked price is
used for valuation purposes. Bid price is used when no asked price is
available. Market quotations for foreign securities denominated in foreign
currencies are translated into U.S. dollars at the prevailing rates of
exchange. Because of the need to obtain prices as of the close of trading
on various exchanges throughout the world, the calculation of net asset
value may not take place contemporaneously with the determination of prices
of the Core Value Portfolio's or any Founders Portfolio's foreign investment
securities. If events materially affecting the value of such securities
occur between the time when their price is determined and the time when the
Portfolio's net asset value is calculated, such securities may be valued at
fair value as determined in good faith by the Board. Short-term investments
are carried at amortized cost, which approximates value. Any securities or
other assets for which recent market quotations are not readily available
are valued at fair value as determined in good faith by the Fund's Board.
Expenses and fees, including the management fee (reduced by the expense
limitation, if any), are accrued daily and taken into account for the
purpose of determining the net asset value of shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Fund's Board, are valued at fair value as determined
in good faith by the Fund's Board. The Fund's Board will review the method
of valuation on a current basis. In making their good faith valuation of
restricted securities, the Board members generally will take the following
factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a
public market exists usually will be valued at market value less the same
percentage discount at which purchased. This discount will be revised
periodically by the Fund's Board if the Board members believe that it no
longer reflects the value of the restricted securities. Restricted
securities not of the same class as securities for which a public market
exists usually will be valued initially at cost. Any subsequent adjustment
from cost will be based upon considerations deemed relevant by the Fund's
Board.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that each Portfolio has qualified as a regulated
investment company under the Code for the period ended December 31, 1998.
Each Portfolio intends to continue to so qualify as long as such
qualification is in the best interests of its shareholders. As a regulated
investment company, each Portfolio will pay no Federal income tax on net
investment income and net realized securities gains to the extent that such
income and gains are distributed to shareholders in accordance with
applicable provisions of the Code. To qualify as a regulated investment
company, the Portfolio must meet several requirements. These requirements
include the following: (1) at least 90% of the Portfolio's gross income must
be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or disposition of stock, securities or foreign
currencies or other income (including gain from options, futures or forward
contracts) derived in connection with the Portfolio's investment business,
(2) at the close of each quarter of the Portfolio's taxable year, (a) at
least 50% of the value of the Portfolio's assets must consist of cash,
United States Government securities, securities of other regulated
investment companies and other securities (limited generally with respect to
any one issuer to not more than 5% of the total assets of the Portfolio and
not more than 10% of the outstanding voting securities of such issuer) and
(b) not more than 25% of the value of the Portfolio's assets may be invested
in the securities of any one issuer (other than United States Government
securities or securities of other regulated investment companies) or of two
or more issuers which the Portfolio controls and which are determined to be
engaged in similar or related trades or businesses and (3) at least 90% of
the Portfolio's net income (consisting of net investment income and net
short-term capital gain) must be distributed to its shareholders. The
Portfolios may be subject to a non-deductible 4% excise tax, measured with
respect to certain undistributed amount of investment income and capital
gains. The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
Investment by a Portfolio in securities issued or acquired at a
discount or providing for deferred interest or for payment of interest in
the form of additional obligations could, under special tax rules, affect
the amount, timing and character of distributions to shareholders by causing
the Portfolio to recognize income prior to the receipt of cash payments.
For example, the Portfolio could be required to accrue a portion of the
discount (or deemed discount) at which the securities were issued each year
and to distribute such income in order to maintain its qualification as a
regulated investment company. In such case, the Portfolio may have to
dispose of securities which it might otherwise have continued to hold in
order to generate cash to satisfy these distribution requirements. In
addition, if a Portfolio invests in an entity that is classified as a
"passive foreign investment company" ("PFIC") for Federal income tax
purposes, the operation of certain provisions of the Code applying to PFICs
could result in the imposition of certain Federal income taxes on the
Portfolio.
Shareholders of the Portfolios will be variable annuity and variable
life insurance separate accounts established by insurance companies to fund
Policies. Section 817(h) of the Code and the regulations thereunder set
standards for diversification of the investments underlying Policies in
order for the Policies to be treated as life insurance. These requirements,
which are in addition to diversification requirements applicable to the
Portfolios under Subchapter M of the Code, may affect the composition of a
Portfolio's investments.
The Secretary of the Treasury may in the future issue additional
regulations or revenue rulings that will prescribe the circumstances in
which a Policy owner's control of the investments of a separate account may
cause the Policy owner, rather than the insurance company, to be treated as
the owner of assets of the separate account. Failure to comply with Section
817(h) of the Code or any regulation thereunder, or with any regulations or
revenue rulings on Policy owner control, if promulgated, would cause
earnings regarding a Policy owner's interest in the separate account to be
includable in the Policy owner's gross income in the year earned.
If a Portfolio fails to qualify as a regulated investment company, the
Portfolio will be subject to federal, and possibly state, corporate taxes on
its taxable income and gains, distributions to its shareholders will be
taxed as ordinary dividend income to the extent of such Portfolio's
available earnings and profits, and Policy owners could be subject to
current tax on distributions received with respect to Portfolio shares.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities on a securities exchange
are effected by the Manager (or Founders with respect to the Founders
Portfolios) through brokers who charge a negotiated commission for their
services based on the quality and quantity of execution services provided by
the broker in the light of generally prevailing rates. In the over-the-
counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to
the dealer. In underwritten offerings, securities are purchased at a fixed
price that includes an amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount. Transactions are
allocated to various dealers by the Fund's portfolio managers in their best
judgment. The primary consideration is prompt and effective execution of
orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager and Founders
to supplement their own research and analysis with the views and information
of other securities firms and may be selected based upon their sales of
shares of funds advised by the Manager or its affiliates. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy, and
performance of accounts; and effect securities transactions, and perform
functions incidental thereto (such as clearance and settlement).
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager and Founders in advising
other funds or accounts and, conversely, research services furnished to the
Manager and Founders by brokers in connection with other funds or accounts
may be used in advising a Portfolio. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall research
department expenses.
Brokers also will be selected based on their sales of shares of other
funds advised by the Manager or its affiliates, as well as their ability to
handle special executions such as are involved in large block trades or
broad distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds in the Dreyfus
Family of Funds being engaged simultaneously in the purchase or sale of the
same security. Certain of the Portfolios' transactions in securities of
foreign issuers may not benefit from the negotiated commission rates
available for transactions in securities of domestic issuers. Higher
portfolio turnover rates are likely to result in comparatively greater
brokerage expenses. The overall reasonableness of brokerage commissions paid
is evaluated based upon knowledge of available information as to the general
level of commissions paid by other institutional investors for comparable
services.
The Fund contemplates that, consistent with the policy of obtaining the
most favorable net price, brokerage transactions may be conducted through
the Manager or Founders or their affiliates. The Fund's Board has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that
all brokerage commissions paid to the Manager or Founders or their
affiliates are reasonable and fair.
In connection with its portfolio securities transactions for the period
ended December 31, 1998, each Portfolio indicated below paid brokerage
commissions and, where determinable, concessions on principal transactions,
none of which was paid to the Distributor, in the following amounts:
Concessions on Principal
Name of Portfolio Brokerage Commissions Paid Transactions
Core Value(1) $ 9,350 $0
MidCap Stock(1) $20,261 $0
Founders Growth(2) $ 4,258 $0
Founders International Equity(2) $ 7,518 $0
Founders Passport(2) $11,415 $0
__________________
(1) From May 1, 1998 (commencement of operations) through December 31, 1998.
(2) From September 30, 1998 (commencement of operations) through December
31, 1998.
The aggregate amount of transactions during the period ended December
31, 1998 in securities effected on an agency basis through a broker for,
among other things, research services, and the commissions and concessions
related to such transactions were as follows:
Name of Portfolio Transaction Amount Commissions and Concessions
Core Value(1) $631,983 $480
MidCap Stock(1) $134,821 $406
Founders Growth(2) $768,658 $811
Founders International Equity(2) $273,807 $265
Founders Passport(2) $ 0 $ 0
__________________
(1) From May 1, 1998 (commencement of operations) through December 31, 1998.
(2) From September 30, 1998 (commencement of operations) through December
31, 1998.
PERFORMANCE INFORMATION
Performance figures for the Portfolios will not reflect the separate
charges applicable to the Policies offered by Participating Insurance
Companies.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
Total return (not annualized) for each of the following Portfolios for
the period indicated was:
Period Ended December 31, 1998
Portfolio
Core Value(1) -5.59%
MidCap Stock(1) -2.53%
Founders Growth(2) 27.20%
Founders International Equity(2) 14.88%
Founders Passport(2) 15.79%
__________________
(1) From May 1, 1998 (commencement of operations) through December 31, 1998.
(2) From September 30, 1998 (commencement of operations) through December
31, 1998.
Total return is calculated by subtracting the amount of the relevant
Portfolio's net asset value per share at the beginning of a stated period
from the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and distributions during the
period), and dividing the result by the net asset value per share at the
beginning of the period.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember
that performance is a function of portfolio management in selecting the type
and quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance. The effective yield
and total return for a Portfolio should be distinguished from the rate of
return of a corresponding sub-account or investment division of a separate
account of a Participating Insurance Company, which rate will reflect the
deduction of additional charges, including mortality and expense risk
charges, and will therefore be lower. Policy owners should consult the
prospectus for their Policy.
Calculations of the Portfolios' performance information may reflect
absorbed expenses pursuant to any undertaking that may be in effect.
Comparative performance information may be used from time to time in
advertising a Portfolio's shares, including data from Lipper Analytical
Services, Inc., IBC's Money Fund ReportT, Money Magazine, Bank Rate
MonitorT, Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index"), Standard & Poor's MidCap 400 Index, Russell 2500r Index, Morgan
Stanley Capital International World (ex US) Index, the Dow Jones Industrial
Average, Morningstar, Inc., Value Line Mutual Fund Survey and other industry
publications.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events. From time to time, advertising materials for the Fund also
may refer to Morningstar ratings and related analyses supporting the rating,
and may refer to, or include, commentary by the Fund's portfolio managers
relating to their investment strategy, asset growth of the Portfolio,
current or past business, political, economic or financial conditions and
other matters of general interest to shareholders.
INFORMATION ABOUT THE FUND AND PORTFOLIOS
Each Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Portfolio shares are of one class and have equal rights as to dividends and
in liquidation. Shares have no preemptive, subscription or conversion
rights and are freely transferable.
Under Massachusetts law, shareholders, under certain circumstances,
could be held personally liable for the obligations of the Fund. However,
the Fund's Agreement and Declaration of Trust (the "Trust Agreement")
disclaims shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or a Trustee.
The Trust Agreement provides for indemnification from the Fund's property
for all losses and expenses of any shareholder held personally liable for
the obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon
payment of any liability incurred by the Fund, the shareholder paying such
liability will be entitled to reimbursement from the general assets of the
Fund. The Fund intends to conduct its operations in such a way so as to
avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a
result, shareholders may not consider each year the election of Board
members or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Fund to
hold a special meeting of shareholders for purposes of removing a Board
member from office. Shareholders may remove a Board member by the
affirmative vote of two-thirds of the Fund's outstanding voting shares. In
addition, the Board will call a meeting of shareholders for the purpose of
electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
To date, the Board has authorized the creation of seven Portfolios of
shares. All consideration received by the Fund for shares of one of the
Portfolios, and all assets in which such consideration is invested, will
belong to that Portfolio (subject only to the rights of creditors of the
Fund) and will be subject to the liabilities related thereto. The income
attributable to, and the expenses of, one Portfolio would be treated
separately from those of the other Portfolios. The Fund has the ability to
create, from time to time, new series without shareholder approval.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of any
investment company, such as the Fund, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each portfolio affected by such matter. Rule 18f-2
further provides that a portfolio shall be deemed to be affected by a matter
unless it is clear that the interests of each portfolio in the matter are
identical or that the matter does not affect any interest of such portfolio.
However, the Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the rule.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectuses.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the
Fund. The auditors examine the Fund's financial statements and provide
other audit, tax and related services.
APPENDIX
Description of certain ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade bonds. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, they are not likely
to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC- rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major ratings
categories, except in the AAA (Prime Grade) category.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a rating for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to
other obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk factors
are negligible, being only slightly more than for risk-free U.S. Treasury
debt.
AA
Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because
of economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection factors
but still considered sufficient for prudent investment. Considerable
variability in risk exists during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the
category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds
may be in default or have considerable uncertainty as to timely payment of
interest, preferred dividends and/or principal. Protection factors are
narrow and risk can be substantial with unfavorable economic or industry
conditions and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled
principal and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except AAA)
to indicate the relative position of a credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by ample asset
protection. Risk factors are minor.
DREYFUS INVESTMENT PORTFOLIOS
PART C. OTHER INFORMATION
_________________________
Item 23. Exhibits
_______ ________
(a) Registrant's Agreement and Declaration of Trust is incorporated by
reference to the Registration Statement on Form N-1A, filed on
February 28, 1998.
(b) Registrant's By-Laws are incorporated by reference to the
Registration Statement on Form N-1A, filed on February 28, 1998.
(d)(1) Management Agreement is incorporated by reference to Exhibit (5)(a)
of Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A, filed on September 15, 1998.
(d)(2) Sub-Investment Advisory Agreement with Founders Asset Management LLC
is incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on July 17, 1998.
(d)(3) Sub-Investment Advisory Agreement with Newton Capital Management
Limited is incorporated by reference to Exhibit (d)(3) of
Post-Effective Amendment No. 5 to the Registration Statement
on Form N-1A filed on April 29, 1999.
(e) Distribution Agreement is incorporated by reference to Exhibit
(6) of Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, filed on September 15, 1998.
(g) Custody Agreement is incorporated by reference to Exhibit (8) of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on April 24, 1998.
(i) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, filed on April 24, 1998.
(j) Consent of Independent Auditors.
(m) Financial Data Schedule.
Other Exhibits
______________
(a) Certificate of Assistant Secretary is incorporated by
reference to Other Exhibits (a) of Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A, filed on
April 24, 1998.
(b) Rule 18f-1 Election Assistant is incorporated by reference
to Other Exhibits (b) of Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, filed on April 24,
1998.
Item 24. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 25. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 27 of Part C of
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1A, filed on September 15, 1998.
Reference is also made to the Distribution Agreement filed as
Exhibit (6) of Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, filed on September 15, 1998.
Item 26. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
(a) Manager - The Dreyfus Corporation
________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary
companies comprise a financial service organization whose
business consists primarily of providing investment management
services as the investment adviser, manager and distributor
for sponsored investment companies registered under the
Investment Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other
investment companies. Dreyfus Service Corporation, a wholly-
owned subsidiary of Dreyfus, serves primarily as a registered
broker-dealer of shares of investment companies sponsored by
Dreyfus and of other investment companies for which Dreyfus
acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various
pension plans, institutions and individuals.
<TABLE>
<CAPTION>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
Officers and Directors of Investment Adviser
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
Christopher M. Condron Franklin Portfolio Associates, LLC* Director 1/97 - Present
Chairman of the Board and
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Pareto Partners Partner Representative 11/95 - 5/97
271 Regent Street
London, England W1R 8PP
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 -Present
Mellon Capital Management Director 5/95 -Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 -1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Christopher M. Condron The Boston Company, Inc.* Vice Chairman 1/94 - Present
Chairman and Chief Director 5/93 - Present
Executive Officer
(Continued) Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 -Present
Company*
The Boston Company Financial President 6/89 - Present
Strategies, Inc. * Director 6/89 - Present
Mandell L. Berman Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
Burton C. Borgelt DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Bank Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
Stephen E. Canter Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, LLC* Director 2/99 - Present
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Stephen E. Canter Founders Asset Management, LLC Member, Board of 12/97 - Present
President, Chief Operating 2930 East Third Ave. Managers
Officer, Chief Investment Denver, CO 80206 Acting Chief Executive 7/98 - 12/98
Officer, and Director Officer
(Continued)
The Dreyfus Trust Company+++ Director 6/ 95 - Present
Thomas F. Eggers Dreyfus Service Corporation++ Executive Vice President 4/96 - Present
Vice Chairman - Institutional Director 9/96 - Present
and Director
Founders Asset Management, LLC Member, Board of 2/99 - Present
2930 East Third Avenue Managers
Denver, CO 80206
Steven G. Elliott Mellon Bank Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Financial Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+ Chairman 7/89 - 11/97
President 4/88 - 11/97
Chief Executive Officer 4/88 - 11/97
Mellon International Investment Director 9/89 - 8/97
Corporation+
Steven G. Elliott Mellon Financial Services Treasurer 12/87 - Present
Director (Continued) Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
Lawrence S. Kash Dreyfus Investment Director 4/97 - Present
Vice Chairman Advisors, Inc.++
And Director
Dreyfus Brokerage Services, Inc. Chairman 11/97 - Present
401 North Maple Ave. Chief Executive Officer 11/97 - Present
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.++ + Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - Present
Organization, Inc.++ President 1/97 - Present
Seven Six Seven Agency, Inc. ++ Director 1/97 - Present
Dreyfus Insurance Agency of Chairman 5/97 - Present
Massachusetts, Inc.++++ President 5/97 - Present
Director 5/97 - Present
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - Present
Corporation++ President 5/97 - Present
Director 12/94 - Present
Founders Asset Management, LLC Member, Board of 12/97 - Present
2930 East Third Avenue Managers
Denver, CO. 80206
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Lawrence S. Kash Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Vice Chairman Chairman 9/93 - 1/98
And Director (Continued) President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Martin G. McGuinn Mellon Bank Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
Mellon Financial Vice President 9/86 - 10/97
Corporation (MD)
Rockville, Maryland
J. David Officer Dreyfus Service Corporation++ Executive Vice President 5/98 - Present
Vice Chairman Director 3/99 - Present
And Director
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - Present
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - Present
Services, Inc.* Director 8/96 - Present
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
J. David Officer Mellon Trust of New York Director 6/96 - Present
Vice Chairman and 1301 Avenue of the Americas
Director (Continued) New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon Bank, N.A.+ Executive Vice President 2/94 - Present
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
Richard W. Sabo Founders Asset Management LLC President 12/98 - Present
Director 2930 East Third Avenue Chief Executive Officer 12/98 - Present
Denver, CO. 80206
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
Richard F. Syron American Stock Exchange Chairman 4/94 - Present
Director 86 Trinity Place Chief Executive Officer 4/94 - Present
New York, NY 10006
Ronald P. O'Hanley Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
TBCAM Holdings, Inc.* Chairman 6/98 - Present
Director 10/97 - Present
The Boston Company Asset Chairman 6/98 - Present
Management, LLC* Director 1/98 - 6/98
The Boston Company Asset Director 2/97 - 12/97
Management, Inc. *
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 5/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon Equity Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon-France Corporation+ Director 3/97 - Present
Ronald P. O'Hanley Laurel Capital Advisors+ Trustee 3/97 - Present
Vice Chairman (Continued)
Mark N. Jacobs Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - Present
Organization, Inc.++
William H. Maresca The Dreyfus Trust Company+++ Director 3/97 - Present
Controller
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 -Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Assistant Treasurer 3/93 - Present
Organization, Inc.++
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
William T. Sandalls, Jr. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97-12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
William T. Sandalls, Jr. Dreyfus-Lincoln, Inc. Director 12/96 - Present
Executive Vice President 4500 New Linden Hill Road President 1/97 - Present
(Continued) Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
Dreyfus Partnership President 1/97 - 6/97
Management, Inc.++ Director 1/96 - 6/97
Dreyfus Service Organization, Director 1/96 - 6/97
Inc.++ Executive Vice President 1/96 - 6/97
Treasurer 10/96- Present
Dreyfus Insurance Agency of Director 5/97 - Present
Massachusetts, Inc.++++ Treasurer 5/97- Present
Executive Vice President 5/97 - Present
Diane P. Durnin Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
Patrice M. Kozlowski None
Vice President - Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Theodore A. Schachar Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
Dreyfus Investment Advisors, Inc.++ Vice President - Tax 10/96 - Present
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Inc.++ Vice President - Tax 10/96 - Present
Wendy Strutt None
Vice President
Richard Terres None
Vice President
Andrew S. Wasser Mellon Bank Corporation+ Vice President 1/95 - Present
Vice-President -
Information Systems
James Bitetto The TruePenny Corporation++ Secretary 9/98 - Present
Assistant Secretary
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
Steven F. Newman Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
_______________________________
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Debt and Equity Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus U.S. Treasury Intermediate Term Fund
60) Dreyfus U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Municipal Bond Fund
71) Dreyfus Premier New York Municipal Bond Fund
72) Dreyfus Premier State Municipal Bond Fund
73) Dreyfus Premier Value Fund
74) Dreyfus Short-Intermediate Government Fund
75) Dreyfus Short-Intermediate Municipal Bond Fund
76) The Dreyfus Socially Responsible Growth Fund, Inc.
77) Dreyfus Stock Index Fund, Inc.
78) Dreyfus Tax Exempt Cash Management
79) The Dreyfus Third Century Fund, Inc.
80) Dreyfus Treasury Cash Management
81) Dreyfus Treasury Prime Cash Management
82) Dreyfus Variable Investment Fund
83) Dreyfus Worldwide Dollar Money Market Fund, Inc.
84) Founders Funds, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Funds, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Chief Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Jean M. O'Leary+ Assistant Vice President, None
Assistant Secretary and
Assistant Clerk
William J. Nutt+ Chairman of the Board None
Stephanie D. Pierce++ Vice President Vice President,
Assistant Secretary
and Assistant
Treasurer
Patrick W. McKeon+ Vice President None
Joseph A. Vignone+ Vice President None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 28. Location of Accounts and Records
_______ ________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. The Bank of New York
90 Washington Street
New York, New York 10286
4. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
5. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
6. Founders Asset Management LLC
Founders Financial Center
2930 East Third Center
Denver, Colorado 80206
Item 29. Management Services
_______ ___________________
Not Applicable
Item 30. Undertakings
_______ ____________
None
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 28th day of April, 1999.
DREYFUS INVESTMENT PORTFOLIOS
BY:/s/Marie E. Connolly*
____________________________
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities and on the date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President and Treasurer 4/28/99
______________________________ (Principal Executive, Financial
Marie E. Connolly and Accounting Officer)
/s/Clifford L. Alexander, Jr.* Director 4/28/99
_____________________________
Clifford L. Alexander, Jr.
/s/Lucy Wilson Benson* Director 4/28/99
______________________________
Lucy Wilson Benson
/s/Joseph S. DiMartino* Chairman of the Board of Directors 4/28/99
_____________________________
Joseph S. DiMartino
*BY: /s/Elba Vasquez
__________________________
Elba Vasquez,
Attorney-in-Fact
INDEX OF EXHIBITS
(j) Consent of Independent Auditors.
(m) Financial Data Schedule.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our
reports dated February 4, 1999 for Core Value Portfolio, Founders Growth
Portfolio, Founders International Equity Portfolio, Founders Passport
Portfolio and MidCap Stock Portfolio, which is incorporated by reference, in
this Registration Statement (Form N-1A 333-47011) of Dreyfus Investment
Portfolios.
ERNST & YOUNG LLP
New York, New York
April 28, 1999
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