YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this first annual report for Dreyfus
Investment Portfolios -- Core Value Portfolio for the period from its inception
on May 1, 1998 through December 31, 1998. Over this period, your Portfolio's
total return was -5.59%.* This compares with a total return of 11.72% for the
Standard & Poor' s 500 Composite Stock Price Index (S&P 500) for the same
period.**
ECONOMIC REVIEW
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year, but world economic weakness generated powerful enough disinflationary
forces that the Fed acted instead to ease credit beginning in September. After
many years of subpar economic growth, continental Europe moved into a sustained
economic expansion. The overall European economy benefited as interest rates in
peripheral countries such as Spain and Italy fell, approaching the lower levels
established by Germany, on the eve of currency unification. Unlike the U.S.,
Europe has substantial excess capacity of productive plant and labor. In Asia,
weak economies were pervasive as a result of a financial crisis. The Latin
American economies weakened in turn as the financial stresses spread throughout
that region. On balance, there was a substantial weakening of the world economy
over the course of 1998 moderated mainly by the American consumer's role as
"spender of last resort."
A main influence on the U.S. economy during the year was the foreign
financial crisis and consequent cooling of the world economy. The positive
effects hit first. Actual inflation and expected inflation dropped, causing a
decline in long-term Treasury bond yields and mortgage rates. This caused a boom
in housing. The fall in inflation left more of the growth in consumer income
with which to buy goods and services. Thus, consumers benefited from a
combination of good growth in income after inflation, a strong labor market, and
increases in the prices of assets they owned, including bonds, stocks and real
estate. In a sense, 1998 was a year of disinflationary boom in the U.S., as
above-trend economic growth coincided with negligible inflation.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports.
Evidence of a weaker world economy accumulated during 1998 as the financial
stresses continued. A worsened financial crisis occurred between the Russian
default in mid-August and the fallout from the Long Term Capital Management
hedge fund crisis through early October. However, energetic steps were taken to
stabilize the Japanese banks, design a support package for Brazil, ease monetary
policy, and help overinvested financial institutions rebuild their cash
reserves. Indications of a calming of financial fears were evident in the final
months of the year. In any case, there appears to have been a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
The global economy survived a triple financial crisis in 1998 from Japan,
emerging market countries and overextended financial institutions. Excess
capacity persists in many worldwide industries after years of high capital
spending followed by the onset of a worldwide weakening in demand. Fortunately,
the U.S. has led the world in making the transition away from the old
manufacturing industries to the new growth industries, such as biotechnology,
software, computer hardware and the Internet. This contributed to the favorable
combination of low unemployment and low inflation in the U.S., and may yet lead
toward more efficient allocation of capital elsewhere in the world.
As 1998 ended, interest rates set by central banks remained in a downtrend in
most parts of the world including Europe and the U.S. A similar trend had even
begun in many emerging countries, as the stresses of financial crisis relaxed.
MARKET OVERVIEW
Volatility was the overriding characteristic of equity markets in the year
ended December 31. There was stock market strength during the early part of the
year. Small-cap indices started to erode in the spring and were joined by
large-cap indices by midsummer. Indices declined sharply until the end of August
followed by a rebound and then a renewed decline amidst financial fears until
early October. A strong rally followed in the last three months of the year in
response to the easing of monetary policy. Over the 12-month period, the total
return on the Standard and Poor's 500 Composite Stock Price Index was 28.60%.
Returns on mid-cap and small-cap stock indices continued to be weaker, with a
negative total return on small-cap indices.
Three key trends influenced stock market behavior during the year. First, the
Federal Reserve kept the Federal Funds rate flat at 5.5% for nearly nine months
of the year, but then began a succession of easing moves. Second, weakness in
the economies of emerging countries contributed to declining commodity prices
and a drop in long-term Treasury bond yields to multidecade lows. Third,
expectations for corporate profits dropped, first in the sectors sensitive to
Asian developments such as oil, basic materials and exports and then for a
broader list of stocks.
The trigger for the sharp decline in stocks in August appeared to be the
Russian default that month. This resulted in deepening concerns about weaker
economic growth and corporate profits. There was also a global margin call on
risky assets held by hedge funds and financial institutions. This raised the
cost of debt financing for many corporations and many emerging countries.
Expectations for economic activity in emerging countries in Asia and Latin
America sank; those for U.S. corporate profits were put on hold. Despite the
fall in Treasury bond yields, financial stocks led the summer selloff due to
concerns that financial difficulties might spread among emerging countries, who
might fail to repay loans. However, in the last three months of the year, these
fears began to ebb in response to Federal Reserve easing moves.
The erosion of expectations for corporate profit growth over the last year
contributed to an outperformance by a small group of "supercap" growth stocks
for much of the year. Investors had more confidence in the prospect for strong
persistent earnings growth for this small group of stocks than for the broad
market. Value stocks, which often have greater cyclical sensitivity to earnings
fluctuations, lagged behind these "supercap" growth stocks. In addition, many of
the financial stocks that fall into the value category fell sharply following
the Russian default and global margin call concerns, before rebounding strongly
after the Federal Reserve acted.
The year ended December 31, 1998 was characterized by very different
performances of the various market sectors. For example, the total return for
the year on the Russell 1000 Index, with a heavy large-cap representation, was
27.02%, while the Russell 1000 Growth Index returned 38.71% and the Russell 1000
Value Index returned 15.63%. The return on the Russell Midcap Index was 10.09%
while the small-cap Russell 2000 Index return was negative 2.55%.
Another pattern in 1998 was that high quality assets outperformed medium and
low quality assets. Treasury bonds outperformed junk bonds; U.S. and European
stocks outperformed emerging market stocks; blue chip stocks, especially major
growth stocks, generally rose more than the average stock. In an environment of
concern about financial risks, the high-grade assets were the market leaders.
PORTFOLIO FOCUS
The Portfolio' s performance trailed that of the S& P 500 in 1998. The
Portfolio' s orientation made it challenging to surpass the index's performance,
which was primarily driven by large-capitalization growth stocks. The vast
disparity between growth and value styles during 1998 made it difficult for the
Portfolio, which has a value orientation, to surpass the index's performance.
Growth stocks in the S&P 500 appreciated 42.2%, whereas value stocks returned
14.7% in 1998. In fact, the top ten contributors to the S&P 500 Index's returns
in 1998, including Microsoft, General Electric, Wal-Mart Stores, Lucent
Technologies and Cisco Systems, generated over 40% of the index's total return.
The high valuation levels of these stocks precluded the Portfolio from owning
them and thus from participating in this portion of the stock market rally. The
Portfolio did not keep pace with the S&P Barra Value Index in 1998 primarily
because of its underweight position in telephone utilities and consumer
durables. Performance of this index was even more concentrated than that of the
S&P 500, with the top ten stocks accounting for 65% of the index's 1998 return.
The Portfolio' s best performing sectors during 1998 included consumer
services and capital goods. The Portfolio was overweight in both of these
sections throughout the year. The Portfolio's top five performing stocks were
Sun Microsystems, International Business Machines, Alcatel, McDonald's, and
Tricon Global Restaurants. Among the weakest performing sectors in the Portfolio
were health care and technology. Due to the high valuation levels of these
sectors, the Portfolio was underweighted in both of these areas throughout the
year. Venator Group, Republic Industries, RJR Nabisco Holdings, Bankers Trust
New York and Lam Research were the weakest securities in the Portfolio.
The Portfolio' s investment policies remain unchanged. It continues to
emphasize large cap value stocks with strong operating fundamentals and positive
business momentum. The Portfolio is highly diversified with over 80 holdings in
12 different economic sectors.
Currently, the Portfolio is overweighted in financial services, consumer
services, and energy and underweighted in technology and health care. Recent
strategy changes included increasing the consumer durables, technology and
utilities weightings and decreasing the basic industries and energy weightings.
We believe that the holdings in the Portfolio represent compelling value and
expect that underlying value to be recognized as the valuation disparity between
growth and value stocks narrows.
We appreciate the opportunity to serve your investment needs.
Sincerely,
[Valerie J. Sill signature]
Valerie J. Sill
Portfolio Manager
January 11, 1999
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts, which will reduce returns.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index of
U.S. stock market performance. The Russell 1000 Index measures the performance
of the 1,000 largest companies in the Russell 3000 Index, which represents
approximately 89% of the total market capitalization of the Russell 3000 Index.
The Russell 1000 Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap Index consists of the bottom 800 securities in the Russell
1000 Index as ranked by total market capitalization and is a widely accepted
measure of medium-cap stock market performance. The Russell 2000 Index is
composed of the 2,000 smallest companies in the Russell 3000 Index. The Russell
3000 Index is composed of 3,000 of the largest U.S. companies by market
capitalization. All indices are unmanaged and include reinvested dividends.
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO DECEMBER 31, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS INVESTMENT
PORTFOLIOS, CORE VALUE PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX AND THE STANDARD & POOR'S BARRA VALUE INDEX
Dollars
$11,172
Standard & Poor's 500 Composite Stock Price Index*
$10,160
Standard & Poor's Barra Value Index*
$9,441
Dreyfus Investment Portfolios, Core Value Portfolio
*Source: Lipper Analytical Services, Inc.
Actual Aggregate Total Return
- -----------------------------------------------------------------------------
From Inception (5/1/98)
to December 31, 1998
____________________
-5.59%
- ---------------
Past performance is not predictive of future performance.
THE PORFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
The above graph compares a $10,000 investment made in Dreyfus Investment
Portfolios, Core Value Portfolio on 5/1/98 (Inception Date) to a $10,000
investment made on that date in the Standard & Poor's 500 Composite Stock Price
Index (S& P 500) as well as to the Standard & Poor's Barra Value Index (Value
Index) which are described below. All dividends and capital gain distributions
are reinvested.
The Portfolio' s performance shown in the line graph takes into account all
applicable fees and expenses of the Portfolio. The S&P 500 is a widely accepted,
unmanaged index of overall stock market performance. The Value Index is a
capitalization-weighted index of all the stocks in the S&P 500 that have low
price-to-book ratios. It is designed so that approximately 50% of the S&P 500's
market capitalization is in the Value Index. The Indices do not take into
account charges, fees and other expenses. Further information relating to
Portfolio performance, including expense reimbursements, if applicable, is
contained in the Financial Highlights section of the Prospectus and elsewhere in
this report.
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--94.9% Shares Value
- ------------------------------------------------------- ___________ __________
<S> <C> <C>
Basic Industries--2.4% Dow Chemical . . . . . . . . . . . . . . . . . . . . . 300 $ 27,281
Fort James . . . . . . . . . . . . . . . . . . . . . . 800 32,000
Reynolds Metals . . . . . . . . . . . . . . . . . . . 800 42,150
Union Carbide . . . . . . . . . . . . . . . . . . . . 1,000 42,500
___________
143,931
___________
Capital Goods--8.5% Federal-Mogul. . . . . . . . . . . . . . . . . . . . . 500 29,750
Ingersoll-Rand . . . . . . . . . . . . . . . . . . . . 350 16,428
Lockheed Martin . . . . . . . . . . . . . . . . . . . 800 67,800
LucasVarity, A.D.R. . . . . . . . . . . . . . . . . . 1,500 50,250
Northrop Grumman . . . . . . . . . . . . . . . . . . . 400 29,250
U.S. Filter . . . . . . . . . . . . . . . . . . . (a) 2,700 61,763
United Technologies . . . . . . . . . . . . . . . . . 1,200 130,500
Waste Management . . . . . . . . . . . . . . . . . . . 2,647 123,416
___________
509,157
___________
Consumer Cyclical--.3% NIKE, Cl. B. . . . . . . . . . . . . . . . . . . . . . 400 16,225
___________
Consumer Durables--5.5% Ford Motor . . . . . . . . . . . . . . . . . . . . . . 1,500 88,031
Lear . . . . . . . . . . . . . . . . . . . . . . . (a) 400 15,400
Philips Electronics, N.V . . . . . . . . . . . . . . . 1,750 118,453
Republic Industries . . . . . . . . . . . . . . . (a) 3,900 57,525
Whirlpool . . . . . . . . . . . . . . . . . . . . . . 900 49,838
___________
329,247
___________
Consumer Non-Durables--10.4% General Mills. . . . . . . . . . . . . . . . . . . . . 700 54,425
Harcourt General . . . . . . . . . . . . . . . . . . . 1,800 95,738
Hasbro . . . . . . . . . . . . . . . . . . . . . . . . 1,300 46,963
Kimberly-Clark . . . . . . . . . . . . . . . . . . . . 2,500 136,250
Loews . . . . . . . . . . . . . . . . . . . . . . . . 1,500 147,375
Mattel . . . . . . . . . . . . . . . . . . . . . . . . 1,200 27,375
Philip Morris Cos. . . . . . . . . . . . . . . . . . . 2,100 112,350
___________
620,475
___________
Consumer Services--14.2% ACNielsen. . . . . . . . . . . . . . . . . . . . . (a) 1,900 53,675
American Stores . . . . . . . . . . . . . . . . . . . 700 25,856
Circuit City Stores-Circuit City Group . . . . . . . . 2,300 114,856
Deluxe . . . . . . . . . . . . . . . . . . . . . . . . 1,000 36,563
Dun & Bradstreet . . . . . . . . . . . . . . . . . . . 1,300 41,031
Federated Department Stores . . . . . . . . . . . (a) 2,100 91,481
First Data . . . . . . . . . . . . . . . . . . . . . . 3,400 107,738
Limited . . . . . . . . . . . . . . . . . . . . . . . 3,200 93,200
McDonald's . . . . . . . . . . . . . . . . . . . . . . 1,400 107,275
Tele-Communications, Cl. A . . . . . . . . . . . . (a) 1,400 77,438
Tricon Global Restaurants . . . . . . . . . . . . (a) 1,200 60,150
Venator Group . . . . . . . . . . . . . . . . . . (a) 5,300 34,119
___________
843,382
___________
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ___________ __________
Energy--10.5% Canadian Pacific . . . . . . . . . . . . . . . . . . . 2,800 $ 52,850
Conoco, Cl.A . . . . . . . . . . . . . . . . . . . (a) 2,200 45,925
Elf Aquitaine, A.D.S . . . . . . . . . . . . . . . . . 900 50,963
Exxon . . . . . . . . . . . . . . . . . . . . . . . . 800 58,500
Mobil . . . . . . . . . . . . . . . . . . . . . . . . 2,000 174,246
Phillips Petroleum . . . . . . . . . . . . . . . . . . 1,400 59,675
Schlumberger . . . . . . . . . . . . . . . . . . . . . 1,300 59,963
Tosco . . . . . . . . . . . . . . . . . . . . . . . . 2,400 62,100
Unocal . . . . . . . . . . . . . . . . . . . . . . . . 2,300 67,131
___________
631,353
___________
Finance--20.3% Allmerica Financial. . . . . . . . . . . . . . . . . . 900 52,088
Allstate . . . . . . . . . . . . . . . . . . . . . . . 3,100 119,738
American General . . . . . . . . . . . . . . . . . . . 700 54,600
American International Group . . . . . . . . . . . . . 1,125 108,703
BankAmerica . . . . . . . . . . . . . . . . . . . . . 2,678 161,015
Chase Manhattan . . . . . . . . . . . . . . . . . . . 2,400 163,350
CIGNA . . . . . . . . . . . . . . . . . . . . . . . . 1,700 131,431
Equitable Cos. . . . . . . . . . . . . . . . . . . . . 1,100 63,663
Everest Reinsurance Holdings . . . . . . . . . . . . . 1,500 58,406
First Union . . . . . . . . . . . . . . . . . . . . . 2,000 121,625
Hartford Financial Services Group . . . . . . . . . . 1,000 54,875
Republic New York . . . . . . . . . . . . . . . . . . 1,200 54,675
Washington Mutual . . . . . . . . . . . . . . . . . . 1,644 62,780
___________
1,206,949
___________
Health Care--5.2% Aetna. . . . . . . . . . . . . . . . . . . . . . . . . 700 55,038
Columbia/HCA Healthcare . . . . . . . . . . . . . . . 2,400 59,400
Johnson & Johnson . . . . . . . . . . . . . . . . . . 700 58,713
Pharmacia & Upjohn . . . . . . . . . . . . . . . . . . 1,400 79,275
Tenet Healthcare . . . . . . . . . . . . . . . . . (a) 2,200 57,750
___________
310,176
___________
Technology--7.3% Compaq Computer. . . . . . . . . . . . . . . . . . . . 1,900 79,681
Hewlett-Packard . . . . . . . . . . . . . . . . . . . 1,375 93,930
International Business Machines . . . . . . . . . . . 550 101,613
Learning Company . . . . . . . . . . . . . . . . . (a) 1,100 28,531
Sun Microsystems . . . . . . . . . . . . . . . . . (a) 1,500 128,438
___________
432,193
___________
Transportation--1.3% Union Pacific. . . . . . . . . . . . . . . . . . . . . 1,700 76,606
___________
Utilities--9.0% AT&T . . . . . . . . . . . . . . . . . . . . . . . . . 900 67,725
CMS Energy . . . . . . . . . . . . . . . . . . . . . . 1,500 72,656
Duke Energy . . . . . . . . . . . . . . . . . . . . . 450 28,828
Edison International . . . . . . . . . . . . . . . . . 1,800 50,175
Entergy . . . . . . . . . . . . . . . . . . . . . . . 2,000 62,250
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ___________ __________
Utilities (continued) GTE. . . . . . . . . . . . . . . . . . . . . . . . . . 900 $ 60,694
Pinnacle West Capital . . . . . . . . . . . . . . . . 1,200 50,850
SBC Communications . . . . . . . . . . . . . . . . . . 1,500 80,438
Southern . . . . . . . . . . . . . . . . . . . . . . . 2,100 61,031
___________
534,647
___________
TOTAL COMMON STOCKS
(cost $5,614,052) . . . . . . . . . . . . . . . . $5,654,341
___________
Preferred Stocks--1.8%
- -------------------------------------------------------
Consumer Services; News Corp, A.D.R.
(cost $99,267) . . . . . . . . . . . . . . . . . . 4,200 $ 103,688
___________
Principal
Short-Term Investments--2.9% Amount
- ------------------------------------------------------------------------------------------- ___________
Agency Discount Notes; Federal Home Loan Banks,
4.30%, 1/4/1999
(cost $174,937) . . . . . . . . . . . . . . . . . $...175,000 $ 174,937
___________
TOTAL INVESTMENTS (cost $5,888,256). . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.6% $5,932,966
_______ ___________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4% $ 25,787
_______ ___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $5,958,753
_______ ___________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
___________ __________
ASSETS: Investments in securities--See Statement of Investments . . $5,888,256 $5,932,966
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 78,763
Receivable for investment securities sold . . . . . . . . 26,457
Dividends receivable . . . . . . . . . . . . . . . . . . 7,124
Prepaid expenses--Note 1(f) . . . . . . . . . . . . . . . 26,252
Due from The Dreyfus Corporation and affliliates . . . . 1,987
___________
6,073,549
___________
LIABILITIES: Payable for investment securities purchased . . . . . . . 80,654
Accrued expenses and other liabilities . . . . . . . . . 34,142
___________
114,796
___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,958,753
___________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $6,218,806
Accumulated net realized gain (loss) on investments . . . (304,763)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 . . . . . . . . . . . . . . . . 44,710
___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,958,753
___________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED). . . . . . 508,348
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $11.72
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $1,254 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . $ 54,427
Interest . . . . . . . . . . . . . . . . . . . . . . . . 12,249
_________
Total Income . . . . . . . . . . . . . . . . . . . $ 66,676
EXPENSES: Investment advisory fee--Note 2(a) . . . . . . . . . . . 26,068
Auditing fees . . . . . . . . . . . . . . . . . . . . . . 20,000
Custodian fees--Note 2(a) . . . . . . . . . . . . . . . . 8,468
Legal fees . . . . . . . . . . . . . . . . . . . . . . . 4,495
Organization expenses--Note 1(f) . . . . . . . . . . . . 4,033
Prospectus and shareholders' reports . . . . . . . . . . 3,917
Trustees' fees and expenses--Note 2(b) . . . . . . . . . 3,092
Registration fees . . . . . . . . . . . . . . . . . . . . 1,741
Shareholder servicing costs . . . . . . . . . . . . . . . 596
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 798
_________
Total Expenses . . . . . . . . . . . . . . . . . . 73,208
Less--expense reimbursement from Dreyfus due to
undertaking--Note 2(a) . . . . . . . . . . . . . . . . (38,451)
_________
Net Expenses . . . . . . . . . . . . . . . . . . . 34,757
__________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,919
__________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments . . . . . . . . . $ (304,763)
Net unrealized appreciation (depreciation) on investments . . 44,710
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . (260,053)
__________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $ (228,134)
__________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
<S> <C>
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,919
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (304,763)
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . . . . . . . . . 44,710
___________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . (228,134)
___________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,433)
___________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,187,697
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,433
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,810)
___________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . . . . . . . . . . . . . 6,173,320
___________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,908,753
NET ASSETS:
Beginning of Period--Note 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
___________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,958,753
___________
Shares
___________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505,520
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,358
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,530)
___________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . 504,348
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from May 1, 1998 (commencement
of operations) to December 31, 1998. This information has been derived from the
Series' financial statements.
<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 INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.59%)*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67%*
Ratio of net investment income to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . .62%*
Decrease reflected in above expense ratio due to undertaking by Dreyfus . . . . . . . . . . . . . . . . 74%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.37%*
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,959
- ------------------------
* Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Portfolios (the "Fund") had no operations until May 1,
1998 (commencement of operations) other than matters relating to its
organization and registration as a diversified open-end management investment
company under the Investment Company Act of 1940, as amended (the "Act"), and
the Securities Act of 1933 and the sale and issuance of 4,000 shares of
Beneficial Interest ("Initial Shares") to The Dreyfus Corporation ("Dreyfus").
The Fund operates as a series company currently offering five series, including
the Core Value Portfolio (the "Series"). The Fund is only offered to variable
annuity and variable life insurance separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies and to qualified pension and retirement plans. The Series' investment
objective is to provide long-term capital growth. Dreyfus serves as the Series'
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A.
(" Mellon" ), which is a wholly-owned subsidiary of Mellon Bank Corporation.
Premier Mutual Fund Services, Inc. is the distributor of the Series' shares,
which are sold without a sales charge.
As of December 31, 1998, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 402,775 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Series does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Series' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the value of
assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Series received net
earnings credits of $357 during the period ended December 31, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain, if any, are normally declared and paid annually, but the Series
may make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers it is the policy of the Series not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Series to qualify as a
regulated investment company, if such qualification is in the best interests of
its shareholders, by complying with the applicable provisions of the Code, and
to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Series has an unused capital loss carryover of approximately $269,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
through December 31, 1998 which are treated, for Federal income tax purposes, as
arising in fiscal 1999. If not applied, the carryover expires in fiscal 2006.
During the period ended December 31, 1998, the Series reclassified $4,514
between paid-in capital and accumulated undistributed investment income-net. Net
assets were not affected by this reclassification.
(F) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from May 1, 1998, the date
operations commenced, over the period during which it is expected that a benefit
will be realized, not to exceed five years. At December 31, 1998, the
unamortized balance of such expenses amounted to $26,217. In the event that any
of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses in
the same proportion as the number of such shares being redeemed bears to the
number of such shares outstanding at the time of such redemption.
NOTE 2--INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
Series' average daily net assets and is payable monthly. However, Dreyfus had
undertaken from May 1, 1998 through December 31, 1998, to reduce the management
fee and reimburse such excess expenses paid by the Series, to the extent that
the Series' aggregate annual expenses (exclusive of taxes, brokerage, interest
on borrowings and extraordinary expenses) exceeded an annual rate of 1% of the
value of the Series' average daily net assets. The expense reimbursement,
pursuant to the undertaking, amounted to $38,451 during the period ended
December 31, 1998.
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series. During the period
ended December 31, 1998, the Series was charged $64 pursuant to the transfer
agency agreement.
The Series compensates Mellon under a custody agreement for providing
custodial services for the Series. During the period ended December 31, 1998,
the Series was charged $8,468 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1998
amounted to $8,378,988 and $2,360,906, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $44,710, consisting of $460,902 gross unrealized appreciation and $416,192
gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Investment Portfolios, Core
Value Portfolio (one of the Series constituting Dreyfus Investment Portfolios)
as of December 31, 1998, and the related statements of operations and changes in
net assets and financial highlights for the period from May 1, 1998
(commencement of operations) to December 31, 1998. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Core Value Portfolio at December 31, 1998, and
the results of its operations, the changes in its net assets and the financial
highlights for the period from May 1, 1998 to December 31, 1998, in conformity
with generally accepted accounting principles.
New York, New York
February 4, 1999
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates 100% of the ordinary
dividends paid during the fiscal year ended December 31, 1998 as qualifying for
the corporate dividends received deduction.
[reg.tm logo]
(reg.tm)
DREYFUS INVESTMENT PORTFOLIOS,
CORE VALUE PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 172AR9812
Investment Portfolios,
CORE VALUE PORTFOLIO
Annual Report
December 31, 1998
YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for Dreyfus Investment
Portfolios -- MidCap Stock Portfolio. From its inception on May 1, 1998, through
December 31, 1998, the total return of the Portfolio during this period was
- -2.53% .* This compares with a total return of 5.37% for the Portfolio's
benchmark, the Standard & Poor's MidCap 400 Index, during the same period.**
In the Portfolio Focus section of this letter, we review reasons for the
underperformance.
ECONOMIC REVIEW
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board (the "Fed") to contemplate a rise in interest rates
early in the year, but world economic weakness generated powerful enough
disinflationary forces that the Fed acted instead to ease credit beginning in
September. After many years of subpar economic growth, continental Europe moved
into a sustained economic expansion. The overall European economy benefited as
interest rates in peripheral countries such as Spain and Italy fell, approaching
the lower levels established by Germany, on the eve of currency unification.
Unlike the U.S., Europe has substantial excess capacity of productive plant and
labor. In Asia, weak economies were pervasive as a result of a financial crisis.
The Latin American economies weakened in turn as the financial stresses spread
throughout that region. On balance, there was a substantial weakening of the
world economy over the course of 1998 moderated mainly by the American
consumer's role as "spender of last resort."
A main influence on the U.S. economy during the year was the foreign
financial crisis and consequent cooling of the world economy. The positive
effects hit first. Actual inflation and expected inflation dropped, causing a
decline in long-term Treasury bond yields and mortgage rates. This caused a boom
in housing. The fall in inflation left more of the growth in consumer income
with which to buy goods and services. Thus, consumers benefited from a
combination of good growth in income after inflation, a strong labor market, and
increases in the prices of assets they owned, including bonds, stocks and real
estate. In a sense, 1998 was a year of disinflationary boom in the U.S., as
above-trend economic growth coincided with negligible inflation.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports.
Evidence of a weaker world economy accumulated during 1998 as the financial
stresses continued. A worsened financial crisis occurred between the Russian
default in mid-August and the fallout from the Long-Term Capital Management
hedge fund crisis through early October. However, energetic steps were taken to
stabilize the Japanese banks, design a support package for Brazil, ease monetary
policy, and help overinvested financial institutions rebuild their cash
reserves. Indications of a calming of financial fears were evident in the final
months of the year. In any case, there appears to have been a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
The global economy survived a triple financial crisis in 1998 from Japan,
emerging market countries and overextended financial institutions. Excess
capacity persists in many worldwide industries after years of high capital
spending followed by the onset of a worldwide weakening in demand. Fortunately,
the U.S. has led the world in making the transition away from the old
manufacturing industries to the new growth industries, such as biotechnology,
software, computer hardware and the Internet. This contributed to the favorable
combination of low unemployment and low inflation in the U.S., and may yet lead
toward more efficient allocation of capital elsewhere in the world.
As 1998 ended, interest rates set by central banks remained in a downtrend in
most parts of the world including Europe and the U.S. A similar trend had even
begun in many emerging countries, as the stresses of financial crisis relaxed.
MARKET OVERVIEW
Volatility was the overriding characteristic of equity markets in the year
ended December 31. There was stock market strength during the early part of the
year. Small-cap indices started to erode in the spring and were joined by
large-cap indices by midsummer. Indices declined sharply until the end of August
followed by a rebound and then a renewed decline amidst financial fears until
early October. A strong rally followed in the last three months of the year in
response to the easing of monetary policy. Over the 12-month period, the total
return on the Standard and Poor's 500 Composite Stock Price Index was 28.60%.
Returns on mid-cap and small-cap stock indices continued to be weaker, with a
negative total return on small-cap indices.
Three key trends influenced stock market behavior during the year. First, the
Federal Reserve kept the Federal Funds rate flat at 5.5% for nearly nine months
of the year, but then began a succession of easing moves. Second, weakness in
the economies of emerging countries contributed to declining commodity prices
and a drop in long-term Treasury bond yields to multidecade lows. Third,
expectations for corporate profits dropped, first in the sectors sensitive to
Asian developments such as oil, basic materials and exports and then for a
broader list of stocks.
The trigger for the sharp decline in stocks in August appeared to be the
Russian default that month. This resulted in deepening concerns about weaker
economic growth and corporate profits. There was also a global margin call on
risky assets held by hedge funds and financial institutions. This raised the
cost of debt financing for many corporations and many emerging countries.
Expectations for economic activity in emerging countries in Asia and Latin
America sank; those for U.S. corporate profits were put on hold. Despite the
fall in Treasury bond yields, financial stocks led the summer selloff due to
concerns that financial difficulties might spread among emerging countries, who
might fail to repay loans. However, in the last three months of the year, these
fears began to ebb in response to Federal Reserve easing moves.
The erosion of expectations for corporate profit growth over the last year
contributed to an outperformance by a small group of "supercap" growth stocks
for much of the year. Investors had more confidence in the prospect for strong
persistent earnings growth for this small group of stocks than for the broad
market. Value stocks, which often have greater cyclical sensitivity to earnings
fluctuations, lagged behind these supercap growth stocks. In addition, many of
the financial stocks that fall into the value category fell sharply following
the Russian default and global margin call concerns, before rebounding strongly
after the Federal Reserve acted.
The year ended December 31, 1998 was characterized by very different
performances of the various market sectors. For example, the total return for
the year on the Russell 1000 Index, with a heavy large-cap representation, was
27.02%, while the Russell 1000 Growth Index returned 38.71% and the Russell 1000
Value Index returned 15.63%. The return on the Russell MidCap Index was 10.09%
while the small-cap Russell 2000 Index return was -2.55%.***
Another pattern in 1998 was that high quality assets outperformed medium and
low quality assets. Treasury bonds outperformed junk bonds; U.S. and European
stocks outperformed emerging market stocks; blue chip stocks, especially major
growth stocks, generally rose more than the average stock. In an environment of
concern about financial risks, the high-grade assets were the market leaders.
PORTFOLIO FOCUS
The Portfolio's performance from May 1, 1998 (inception) through December 31,
1998 was below the performance of the Standard & Poor's MidCap 400 Index during
the same period and was obviously disappointing. The primary factor that
adversely affected Portfolio performance was stock selection, with some other
portfolio risk factors also contributing to the underperformance.
The Standard & Poor' s MidCap 400 Index was dominated in 1998 by the
performance of America Online (AOL) . At the beginning of the year, AOL was
approximately 1% of the benchmark, while by year end it was over 7% of the
benchmark. This one stock had a return of 585.64% for 1998, and thus greatly
affected the return of the Index. We did not initiate a position in AOL until
midyear, and though we held the position until the end of the year, we were for
the most part either equal-weighted or underweighted in the company compared to
the benchmark. Thus, this one stock had a meaningful impact on relative
performance.
In addition to some of the unique issues pertaining to the benchmark, the
quantitative valuation process used in the management of the Portfolio did not
perform up to the Portfolio' s historical expectations. Stock selection
influenced performance throughout the reporting period, and this problem was
especially acute in September and October.
Portfolio risk factors that also adversely influenced returns were the
Portfolio' s modestly-smaller-than-benchmark average market capitalization. Even
this modest position hurt performance because, as mentioned above, 1998 was
categorized as a year where large and mid-size companies outperformed small
capitalization firms. Finally, the Portfolio's performance also suffered from
the Portfolio' s below-benchmark price-to-earnings (P/E) ratio during a period
when higher P/E stocks generally outperformed lower P/E issues.
Nonetheless, despite the events described above, we remain committed to our
quantitative equity valuation process along with our fully-invested and
sector-neutral portfolio construction methods.
Sincerely,
[John O'Toole signature]
John O'Toole
Portfolio Manager
January 15, 1999
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts, which will reduce returns.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor's MidCap 400 Index is a widely accepted, unmanaged index of midcap stock
market performance.
***The Russell 1000 Index measures the performance of the 1,000 largest
companies in the Russell 3000 Index which represents approximately 89% of the
total market capitalization of the Russell 3000 Index. The Russell 1000 Growth
Index measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values. The Russell 1000 Value
Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values. The Russell MidCap
Index consists of the bottom 800 securities in the Russell 1000 Index as ranked
by total market capitalization and is a widely accepted measure of medium-cap
stock market performance. The Russell 2000 Index is composed of the 2,000
smallest companies in the Russell 3000 Index. The Russell 3000 Index is composed
of 3,000 of the largest U.S. companies by market capitalization. All indices are
unmanaged and include reinvested dividends.
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO DECEMBER 31, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS INVESTMENT
PORTFOLIOS, MIDCAP STOCK PORTFOLIO AND THE STANDARD & POOR'S MIDCAP 400 INDEX
Dollars
$10,537
Standard & Poor's MidCap 400 Index*
$9,747
Dreyfus Investment Portfolios, MidCap Stock Portfolio
*Source: Lipper Analytical Services, Inc.
Actual Aggregate Total Return
- -----------------------------------------------------------------------------
From Inception (5/1/98)
to December 31, 1998
____________________
-2.53%
- ---------------
Past performance is not predictive of future performance.
THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
The above graph compares a $10,000 investment made in Dreyfus Investment
Portfolios, MidCap Stock Portfolio on 5/1/98 (Inception Date) to a $10,000
investment made in the Standard & Poor's MidCap 400 Index on that date. All
dividends and capital gain distributions are reinvested.
The Portfolio' s performance shown in the line graph takes into account all
applicable fees and expenses of the Portfolio. The Standard & Poor's MidCap 400
Index is a broad-based index of 400 companies with market capitalizations
generally ranging from $50 million to $10 billion and is a widely accepted,
unmanaged index of overall midcap stock market performance, which does not take
into account charges, fees and other expenses. Further information relating to
Portfolio performance, including expense reimbursements, if applicable, is
contained in the Financial Highlights section of the Prospectus and elsewhere in
this report.
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
<S> <C> <C>
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--97.7% Shares Value
- ------------------------------------------------------- ____________ ___________
Basic Industries--6.0% Ball . . . . . . . . . . . . . . . . . . . . . . . . . 2,150 $ 98,363
Caraustar Industries . . . . . . . . . . . . . . . . . 3,250 92,828
Centex Construction Products . . . . . . . . . . . . . 1,550 62,969
Crompton & Knowles . . . . . . . . . . . . . . . . . . 3,700 76,544
Cytec Industries . . . . . . . . . . . . . . . . . . . 2,550 (a) 54,188
Georgia-Pacific Group . . . . . . . . . . . . . . . . 1,350 32,147
Rohm & Haas . . . . . . . . . . . . . . . . . . . . . 2,850 85,856
Solutia . . . . . . . . . . . . . . . . . . . . . . . 2,950 66,006
Vulcan Materials . . . . . . . . . . . . . . . . . . . 500 65,781
____________
634,682
____________
Capital Spending--22.3% Allied Waste Industries. . . . . . . . . . . . . . . . 2,300 (a) 54,338
American Power Conversion . . . . . . . . . . . . . . 1,850 (a) 89,609
Apple Computer . . . . . . . . . . . . . . . . . . . . 1,150 (a) 47,078
BMC Software . . . . . . . . . . . . . . . . . . . . . 1,850 (a) 82,441
Computer Task Group . . . . . . . . . . . . . . . . . 1,450 39,331
Compuware . . . . . . . . . . . . . . . . . . . . . . 3,000 (a) 234,375
Crane . . . . . . . . . . . . . . . . . . . . . . . . 1,800 54,338
DST Systems . . . . . . . . . . . . . . . . . . . . . 700 (a) 39,944
Graco . . . . . . . . . . . . . . . . . . . . . . . . 1,550 45,725
Gulfstream Aerospace . . . . . . . . . . . . . . . . . 1,750 (a) 93,188
Harte-Hanks Communications . . . . . . . . . . . . . . 1,700 48,450
Hertz, Cl. A . . . . . . . . . . . . . . . . . . . . . 2,550 116,344
Ingram Micro, Cl. A . . . . . . . . . . . . . . . . . 1,550 (a) 54,056
J D Edwards . . . . . . . . . . . . . . . . . . . . . 900 (a) 25,538
Kaydon . . . . . . . . . . . . . . . . . . . . . . . . 1,500 60,094
Leggett & Platt . . . . . . . . . . . . . . . . . . . 2,750 60,500
Lexmark International Group, Cl. A . . . . . . . . . . 1,250 (a) 125,625
NCR . . . . . . . . . . . . . . . . . . . . . . . . . 1,250 (a) 52,188
Network Associates . . . . . . . . . . . . . . . . . . 2,150 (a) 142,438
Premark International . . . . . . . . . . . . . . . . 2,150 74,444
Quintiles Transnational . . . . . . . . . . . . . . . 2,800 (a) 149,450
Robert Half International . . . . . . . . . . . . . . 1,500 (a) 67,032
SABRE Group Holdings, Cl. A . . . . . . . . . . . . . 3,000 (a) 133,500
Snyder Communications . . . . . . . . . . . . . . . . 2,650 (a) 89,438
Sterling Software . . . . . . . . . . . . . . . . . . 2,600 (a) 70,363
Sundstrand . . . . . . . . . . . . . . . . . . . . . . 1,000 51,875
Sylvan Learning Systems . . . . . . . . . . . . . . . 1,400 (a) 42,700
Trinity Industries . . . . . . . . . . . . . . . . . . 2,250 86,625
United Stationers . . . . . . . . . . . . . . . . . . 1,600 (a) 41,600
VERITAS Software . . . . . . . . . . . . . . . . . . . 500 (a) 29,969
Young & Rubicam . . . . . . . . . . . . . . . . . . . 1,400 (a) 45,325
____________
2,347,921
____________
Consumer Cyclical--13.7% Abercromobie & Fitch, Cl. A. . . . . . . . . . . . . . 1,000 (a) 70,750
Best Buy . . . . . . . . . . . . . . . . . . . . . . . 1,700 (a) 104,338
Dollar Tree Stores . . . . . . . . . . . . . . . . . . 2,100 (a) 91,744
Federal-Mogul . . . . . . . . . . . . . . . . . . . . 1,150 68,425
Furniture Brands International . . . . . . . . . . . . 3,150 (a) 85,838
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ____________ ___________
Consumer Cyclical (continued) Harley-Davidson. . . . . . . . . . . . . . . . . . . . 1,650 $ 78,169
IHOP . . . . . . . . . . . . . . . . . . . . . . . . . 1,350 (a) 53,916
International Game Technology . . . . . . . . . . . . 2,800 68,075
King World Productions . . . . . . . . . . . . . . . . 1,150 (a) 33,853
Knight-Ridder . . . . . . . . . . . . . . . . . . . . 900 46,013
Magna International, Cl.A . . . . . . . . . . . . . . 400 24,800
McClatchy Newspapers, Cl. A . . . . . . . . . . . . . 1,250 44,219
Meritor Automotive . . . . . . . . . . . . . . . . . . 2,050 43,434
Nautica Enterprises . . . . . . . . . . . . . . . . . 1,750 (a) 26,250
Pulitzer Publishing . . . . . . . . . . . . . . . . . 900 77,963
Ross Stores . . . . . . . . . . . . . . . . . . . . . 2,650 104,344
SUPERVALU . . . . . . . . . . . . . . . . . . . . . . 2,350 65,800
TJX Cos. . . . . . . . . . . . . . . . . . . . . . . . 4,500 130,500
U.S. Foodservice . . . . . . . . . . . . . . . . . . . 1,100 (a) 53,900
V.F. . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 70,313
Zale . . . . . . . . . . . . . . . . . . . . . . . . . 2,950 (a) 95,138
____________
1,437,782
____________
Consumer Staples--4.3% CBRL Group . . . . . . . . . . . . . . . . . . . . . . 2,500 58,281
Dial . . . . . . . . . . . . . . . . . . . . . . . . . 2,150 62,081
Earthgrains . . . . . . . . . . . . . . . . . . . . . 1,250 38,671
International Home Foods . . . . . . . . . . . . . . . 2,650 (a) 44,718
Lancaster Colony . . . . . . . . . . . . . . . . . . . 1,650 53,006
Lauder (Estee), Cl. A . . . . . . . . . . . . . . . . 800 68,400
Universal Foods . . . . . . . . . . . . . . . . . . . 4,800 131,700
____________
456,857
____________
Electronics--8.7% Advanced Micro Devices . . . . . . . . . . . . . . . . 2,300 (a) 66,556
Altera . . . . . . . . . . . . . . . . . . . . . . . . 3,250 (a) 197,844
Arrow Electronics . . . . . . . . . . . . . . . . . . 2,900 (a) 77,394
Linear Technology . . . . . . . . . . . . . . . . . . 1,750 156,734
Maxim Integrated Products . . . . . . . . . . . . . . 3,300 (a) 144,169
QUALCOMM . . . . . . . . . . . . . . . . . . . . . . . 300 (a) 15,544
Sanmina . . . . . . . . . . . . . . . . . . . . . . . 1,000 (a) 62,500
Tellabs . . . . . . . . . . . . . . . . . . . . . . . 1,550 (a) 106,272
Waters . . . . . . . . . . . . . . . . . . . . . . . . 1,000 (a) 87,250
____________
914,263
____________
Energy--5.6% ENSCO International. . . . . . . . . . . . . . . . . . 2,650 28,322
El Paso Energy . . . . . . . . . . . . . . . . . . . . 2,150 74,847
Helmerich & Payne . . . . . . . . . . . . . . . . . . 2,650 51,343
KeySpan Energy . . . . . . . . . . . . . . . . . . . . 2,850 88,350
National Fuel Gas . . . . . . . . . . . . . . . . . . 1,750 79,078
Questar . . . . . . . . . . . . . . . . . . . . . . . 2,750 53,281
R&B Falcon . . . . . . . . . . . . . . . . . . . . . . 2,665 (a) 20,320
Sunoco . . . . . . . . . . . . . . . . . . . . . . . . 2,250 81,141
Tidewater . . . . . . . . . . . . . . . . . . . . . . 1,250 28,984
Vastar Resources . . . . . . . . . . . . . . . . . . . 1,850 79,897
____________
585,563
____________
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ____________ ___________
Health Care--10.4% Arterial Vascular Engineering. . . . . . . . . . . . . 900 (a) $ 47,250
Biogen . . . . . . . . . . . . . . . . . . . . . . . . 2,600 (a) 215,800
Biomet . . . . . . . . . . . . . . . . . . . . . . . . 2,650 106,662
Centocor . . . . . . . . . . . . . . . . . . . . . . . 600 (a) 27,075
Elan, A.D.S. . . . . . . . . . . . . . . . . . . . . . 700 (a) 48,693
Genzyme (General Division) . . . . . . . . . . . . . . 1,100 (a) 54,725
Lincare Holdings . . . . . . . . . . . . . . . . . . . 1,750 (a) 70,984
McKesson . . . . . . . . . . . . . . . . . . . . . . . 1,350 106,734
PacifiCare Health Systems, Cl. B . . . . . . . . . . . 600 (a) 47,700
Patterson Dental . . . . . . . . . . . . . . . . . . . 500 (a) 21,750
STERIS . . . . . . . . . . . . . . . . . . . . . . . . 4,600 (a) 130,812
Total Renal Care Holdings . . . . . . . . . . . . . . 1,800 (a) 53,212
Watson Pharmaceuticals . . . . . . . . . . . . . . . . 2,550 (a) 160,331
____________
1,091,728
____________
Interest Sensitive--13.8% AFLAC. . . . . . . . . . . . . . . . . . . . . . . . . 3,700 162,800
CMAC Investment . . . . . . . . . . . . . . . . . . . 1,000 45,937
Centura Banks . . . . . . . . . . . . . . . . . . . . 700 52,062
City National . . . . . . . . . . . . . . . . . . . . 2,850 118,631
Cullen/Frost Bankers . . . . . . . . . . . . . . . . . 1,250 68,594
Dime Bancorp . . . . . . . . . . . . . . . . . . . . . 2,350 62,128
Edwards (A.G.) . . . . . . . . . . . . . . . . . . . . 2,400 89,400
First Tennessee National . . . . . . . . . . . . . . . 2,750 104,672
Golden West Financial . . . . . . . . . . . . . . . . 700 64,181
Mercantile Bankshares . . . . . . . . . . . . . . . . 2,250 86,625
Nationwide Financial Services, Cl. A . . . . . . . . . 1,550 80,115
Old Kent Financial . . . . . . . . . . . . . . . . . . 2,250 104,625
PMI Group . . . . . . . . . . . . . . . . . . . . . . 1,350 66,656
Regions Financial . . . . . . . . . . . . . . . . . . 2,550 102,797
RenaissanceRe Holdings . . . . . . . . . . . . . . . . 600 21,975
T. Rowe Price Associates . . . . . . . . . . . . . . . 2,550 87,337
Wilmington Trust . . . . . . . . . . . . . . . . . . . 500 30,812
Zions Bancorporation . . . . . . . . . . . . . . . . . 1,550 96,681
____________
1,446,028
____________
Mining and Metals--.5% Cleveland-Cliffs . . . . . . . . . . . . . . . . . . . 400 16,125
General Cable . . . . . . . . . . . . . . . . . . . . 1,750 35,875
____________
52,000
____________
Transportation--1.7% Alaska Air Group . . . . . . . . . . . . . . . . . . . 1,000 (a) 44,250
Kansas City Southern Industries . . . . . . . . . . . 1,700 83,619
Royal Caribbean Cruises . . . . . . . . . . . . . . . 1,300 48,100
____________
175,969
____________
Utilities--10.7% BEC Energy . . . . . . . . . . . . . . . . . . . . . . 3,600 148,275
Century Telephone Enterprises . . . . . . . . . . . . 3,300 222,750
Commonwealth Energy Systems . . . . . . . . . . . . . 2,000 81,000
Energy East . . . . . . . . . . . . . . . . . . . . . 1,800 101,700
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ____________ ___________
Utilities (continued) IPALCO Enterprises . . . . . . . . . . . . . . . . . . 2,250 $ 124,453
Montana Power . . . . . . . . . . . . . . . . . . . . 1,700 96,156
Pinnacle West Capital . . . . . . . . . . . . . . . . 2,750 116,531
SCANA . . . . . . . . . . . . . . . . . . . . . . . . 3,600 116,100
Sierra Pacific Resources . . . . . . . . . . . . . . . 1,650 62,700
TECO Energy . . . . . . . . . . . . . . . . . . . . . 1,750 49,328
____________
1,118,993
____________
TOTAL COMMON STOCKS
(cost $9,405,872) . . . . . . . . . . . . . . . . . $10,261,786
____________
Principal
Amount
Short-Term Investments--1.7% ____________
- -------------------------------------------------------
U.S. Treasury Bills: 4.37%, 2/4/99. . . . . . . . . . . . . . . . . . . . . $ 69,000 $ 68,717
4.33%, 3/18/99 . . . . . . . . . . . . . . . . . . . . 15,000 14,867
4.31%, 3/25/99 . . . . . . . . . . . . . . . . . . . . 96,000 95,040
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $178,596) . . . . . . . . . . . . . . . . . . $ 178,624
____________
TOTAL INVESTMENTS (cost $9,584,468). . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.4% $10,440,410
_______ ____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6% $ 65,720
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $10,506,130
_______ ____________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
____________ ___________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $ 9,584,468 $10,440,410
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 163,051
Receivable for investment securities sold . . . . . . . . 629,227
Dividends receivable . . . . . . . . . . . . . . . . . . 6,871
Prepaid expenses--Note 1(e) . . . . . . . . . . . . . . . 26,911
____________
11,266,470
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 2,205
Payable for investment securities purchased . . . . . . . 717,934
Accrued expenses and other liabilities . . . . . . . . . 40,201
____________
760,340
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,506,130
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $10,386,414
Accumulated undistributed investment income--net . . . . 331
Accumulated net realized gain (loss) on investments . . . (736,557)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 . . . . . . . . . . . . . . . . 855,942
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,506,130
____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 863,690
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $12.16
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $12 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . $ 49,738
Interest . . . . . . . . . . . . . . . . . . . . . . . . 18,962
__________
Total Income . . . . . . . . . . . . . . . . . . . $ 68,700
EXPENSES: Investment advisory fee--Note 2(a) . . . . . . . . . . . 40,453
Auditing fees . . . . . . . . . . . . . . . . . . . . . . 21,250
Custodian fees--Note 2(a) . . . . . . . . . . . . . . . . 14,320
Legal fees . . . . . . . . . . . . . . . . . . . . . . . 7,437
Trustees' fees and expenses--Note 2(b) . . . . . . . . . 5,300
Prospectus and shareholders' reports . . . . . . . . . . 5,143
Organization expenses--Note 1(e) . . . . . . . . . . . . 4,111
Registration fees . . . . . . . . . . . . . . . . . . . . 2,889
Shareholder servicing costs . . . . . . . . . . . . . . . 258
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 799
__________
Total Expenses . . . . . . . . . . . . . . . . . . 101,960
Less--expense reimbursement from Dreyfus due to
undertaking--Note 2(a) . . . . . . . . . . . . . . . . (48,023)
__________
Net Expenses . . . . . . . . . . . . . . . . . . . 53,937
__________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,763
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments . . . . . . . . . $ (736,557)
Net unrealized appreciation (depreciation) on investments . . 855,942
__________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 119,385
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $134,148
__________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
<S> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,763
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (736,557)
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . . . . . . . 855,942
____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . 134,148
____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,543)
____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,816,688
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,543
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,494,706)
____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . . . . . . . . . . 10,340,525
____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . 10,456,130
NET ASSETS:
Beginning of Period--Note 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,506,130
____________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 331
____________
Shares
____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 996,748
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,611
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (138,669)
____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 859,690
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from May 1, 1998 (commencement
of operations) to December 31, 1998. This information has been derived from the
Series' financial statements.
<S> <C>
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 INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.53%)*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67%*
Ratio of net investment income to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . .18%*
Decrease reflected in above expense ratio due to undertaking by Dreyfus . . . . . . . . . . . . . . . . .60%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.74%*
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,506
- ------------------------
* Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Portfolios (the "Fund") had no operations until May 1,
1998 (commencement of operations) other than matters relating to its
organization and registration as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "Act"), and the Securities
Act of 1933 and the sale and issuance of 4,000 shares of Beneficial Interest
(" Initial Shares") to The Dreyfus Corporation ("Dreyfus"). The Fund operates as
a series company currently offering five series, including the MidCap Stock
Portfolio (the "Series" ). The Series is only offered to variable annuity and
variable life insurance separate accounts established by insurance companies to
fund variable annuity contracts and variable life insurance policies and to
qualified pension and retirement plans. The Series is a diversified portfolio.
The Series' investment objective is to provide investment results that are
greater than the total return performance of publicly-traded common stocks of
medium-size domestic companies in the aggregate, as represented by the Standard
& Poor' s MidCap 400 Index. Dreyfus serves as the Series' investment adviser.
Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a
wholly-owned subsidiary of Mellon Bank Corporation. Premier Mutual Fund
Services, Inc. is the distributor of the Series' shares, which are sold without
a sales charge.
As of December 31, 1998, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 308,677 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Series received net
earnings credits of $2,227 during the period ended December 31, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain , if any, are normally declared and paid annually, but the Series
may make DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The Series has an unused capital loss carryover of approximately $689,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. If not
applied, the carryover expires in fiscal 2006.
During the period ended December 31, 1998, the Series reclassified $4,111
between paid-in capital and accumulated undistributed investment income-net. Net
assets were not affected by this reclassification.
(E) OTHER: Organization expenses paid by the Series are included in prepaid
expenses and are being amortized to operations from May 1, 1998, the date
operations commenced, over the period during which it is expected that a benefit
will be realized, not to exceed five years. At December 31, 1998, the
unamortized balance of such expenses amounted to $26,891. In the event that any
of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses in
the same proportion as the number of such shares being redeemed bears to the
number of such shares outstanding at the time of such redemption.
NOTE 2--INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
Series' average daily net assets and is payable monthly. However, Dreyfus had
undertaken from May 1, 1998 through December 31, 1998, to reduce the management
fee and reimburse such excess expenses paid by the Series, to the extent that
the Series' aggregate annual expenses (exclusive of taxes, brokerage, interest
on borrowings and extraordinary expenses) exceeded an annual rate of 1% of the
value of the Series' average daily net assets. The expense reimbursement,
pursuant to the undertaking, amounted to $48,023 during the period ended
December 31, 1998.
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series.
The Series compensates Mellon under a custody agreement for providing
custodial services for the Series. During the period ended December 31, 1998,
the Series was charged $14,320 pursuant to the custody agreement.
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1998,
amounted to $16,262,763 and $6,120,567, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $855,942, consisting of $1,218,916 gross unrealized appreciation and
$362,974 gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Investment Portfolios, MidCap
Stock Portfolio (one of the Series constituting Dreyfus Investment Portfolios)
as of December 31, 1998, and the related statements of operations and changes in
net assets and financial highlights for the period from May 1, 1998
(commencement of operations) to December 31, 1998. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, MidCap Stock Portfolio at December 31, 1998, and
the results of its operations, the changes in its net assets and the financial
highlights for the period from May 1, 1998 to December 31, 1998, in conformity
with generally accepted accounting principles.
New York, New York
February 4, 1999
DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK PORTFOLIO
- -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates 100% of the ordinary
dividends paid during the fiscal year ended December 31, 1998 as qualifying for
the corporate dividends received deduction.
[reg.tm logo]
(reg.tm)
DREYFUS INVESTMENT PORTFOLIOS,
MIDCAP STOCK PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 174AR9812
Investment Portfolios,
MIDCAP STOCK PORTFOLIO
Annual Report
December 31, 1998
YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my pleasure to introduce the new co-managers of Dreyfus Investment
Portfolios -- Founders Growth Portfolio, Scott A. Chapman and Thomas M.
Arrington. They each joined the staff of Founders Asset Management LLC, an
affiliate of The Dreyfus Corporation and sub-investment advisor to the
Portfolio, in December 1998, as Vice President of Investments.
Scott A. Chapman, Director of Research for Founders, is a Chartered Financial
Analyst who joined Founders from HighMark Capital Management, Inc., a subsidiary
of Union BanCal Corporation. At that firm, he served as Vice President and
Director of Growth Strategy (1993-98) and a securities research analyst
(1991-93) . A graduate of Santa Clara University, Scott received an MBA from
Golden Gate University.
Thomas M. Arrington is a Chartered Financial Analyst, who also joined Founders
from HighMark Capital Management. Before joining Founders, Tom had held the
following posts at HighMark: Vice President and Director of Income Equity
Strategy (1994-98) , securities research analyst (1991-94) and business
administration manager (1990-91) . He graduated from the University of
California, Los Angeles, and earned an MBA at San Francisco State University.
We have great confidence in the ability of Scott Chapman and Tom Arrington, as
co-lead portfolio managers, to manage the Portfolio on your behalf.
Sincerely,
[Stephen E. Canter, President signature]
Stephen E. Canter, President
The Dreyfus Corporation
January 19, 1999
New York, N.Y.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance of the Dreyfus Investment Portfolios
- -- Founders Growth Portfolio. The Portfolio produced a total return of 27.20% in
the three months since its inception on September 30, 1998, through December 31,
1998,* and outperformed its benchmark, the Standard & Poor's 500 Composite Stock
Price Index, which had a total return of 21.28% over the same period.**
ECONOMIC REVIEW
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board (the "Fed") to contemplate a rise in interest rates
early in the year, but world economic weakness generated powerful enough
disinflationary forces that the Fed acted instead to ease credit beginning in
September. After many years of subpar economic growth, continental Europe moved
into a sustained economic expansion. The overall European economy benefited as
interest rates in peripheral countries such as Spain and Italy fell, approaching
the lower levels established by Germany, on the eve of currency unification.
Unlike the U.S., Europe has substantial excess capacity of productive plant and
labor. In Asia, weak economies were pervasive as a result of a financial crisis.
The Latin American economies weakened in turn as the financial stresses spread
throughout that region. On balance, there was a substantial weakening of the
world economy over the course of 1998, moderated mainly by the American
consumer's role as "spender of last resort."
A main influence on the U.S. economy during the year was the foreign financial
crisis and consequent cooling of the world economy. The positive effects hit
first. Actual inflation and expected inflation dropped, causing a decline in
long-term Treasury bond yields and mortgage rates. This caused a boom in
housing. The fall in inflation left more of the growth in consumer income with
which to buy goods and services. Thus, consumers benefited from a combination of
good growth in income after inflation, a strong labor market, and increases in
the prices of assets they owned, including bonds, stocks and real estate. In a
sense, 1998 was a year of disinflationary boom in the U.S., as above-trend
economic growth coincided with negligible inflation.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports.
Evidence of a weaker world economy accumulated during 1998 as the financial
stresses continued. A worsened financial crisis occurred between the Russian
default in mid-August and the fallout from the Long-Term Capital Management
hedge fund crisis through early October. However, energetic steps were taken to
stabilize the Japanese banks, design a support package for Brazil, ease monetary
policy, and help overinvested financial institutions rebuild their cash
reserves. Indications of a calming of financial fears were evident in the final
months of the year. In any case, there appears to have been a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
The global economy survived a triple financial crisis in 1998 from Japan,
emerging market countries and overextended financial institutions. Excess
capacity persists in many worldwide industries after years of high capital
spending followed by the onset of a worldwide weakening in demand. Fortunately,
the U.S. has led the world in making the transition away from the old
manufacturing industries to the new growth industries, such as biotechnology,
software, computer hardware and the Internet. This contributed to the favorable
combination of low unemployment and low inflation in the U.S., and may yet lead
toward more efficient allocation of capital elsewhere in the world.
As 1998 ended, interest rates set by central banks remained in a downtrend in
most parts of the world including Europe and the U.S. A similar trend had even
begun in many emerging countries, as the stresses of financial crises relaxed.
MARKET OVERVIEW
Volatility was the overriding characteristic of equity markets in the year
ended December 31. There was stock market strength during the early part of the
year. Small-cap indices started to erode in the spring and were joined by
large-cap indices by midsummer. Indices declined sharply until the end of
August, followed by a rebound and then a renewed decline amidst financial fears
until early October. A strong rally followed in the last three months of the
year in response to the easing of monetary policy.
Three key trends influenced stock market behavior during the year. First, the
Federal Reserve kept the Federal Funds rate flat at 5.5% for nearly nine months
of the year, but then began a succession of easing moves. Second, weakness in
the economies of emerging countries contributed to declining commodity prices
and a drop in long-term Treasury bond yields to multidecade lows. Third,
expectations for corporate profits dropped, first in the sectors sensitive to
Asian development, such as oil, basic materials and exports, and then for a
broader list of stocks.
The trigger for the sharp stock decline in August appeared to be the Russian
default that month. This resulted in deepening concerns about weaker economic
growth and corporate profits. There was also a global margin call on risky
assets held by hedge funds and financial institutions. This raised the cost of
debt financing for many corporations and many emerging countries. Expectations
for economic activity in emerging countries in Asia and Latin America sank;
those for U.S. corporate profits were put on hold. Despite the fall in Treasury
bond yields, financial stocks led the summer selloff due to concerns that
financial difficulties might spread among emerging countries, which might fail
to repay loans. However, in the last three months of the year, these fears began
to ebb in response to Federal Reserve easing moves.
PORTFOLIO COMPOSITION
During the reporting period, the Portfolio benefited from its holdings in
strong performers such as America Online (+172%), MCI WorldCom (+38%), Best Buy
(+41% ), Gap Stores (+48% ), and Intuit (+55% ). The Portfolio had a modest
relative weight in the booming technology sector and was underweighted in drugs,
a sector that investors valued because of its earnings predictability and
stability.
Some companies which were added to the Portfolio during the latter part of the
period include Airtouch Communications, American Express, Cisco Systems,
Coca-Cola, Gillette, Home Depot, McDonalds, State Street, Sun Microsystems,
Walgreen, Wal-Mart Stores, and Disney (Walt).
The Portfolio' s financial securities were somewhat hurt as investors fretted
over Russia' s effective loan default and the near collapse of hedge fund
Long-Term Capital Management LP. The Portfolio also made some disappointing
investments in gaming stocks. Also, the Portfolio held some mid-cap companies
that did not keep up with the giant-cap names that led the market higher in
1998.
INVESTMENT STRATEGY
To find investments for the Portfolio, we use a bottom-up process that begins
with quantitative screens, resulting in approximately 200 well-established,
high-quality companies from a 10,000 stock universe. We do hands-on fundamental
research to further narrow stock selection, resulting in a portfolio of
approximately 100 companies.
We appreciate your investment in Dreyfus Investment Portfolios -- Founders
Growth Portfolio.
Sincerely,
[Scott Chapman, CFA signature] [Thomas Arrington, CFA signature]
Scott Chapman, CFA Thomas Arrington, CFA
Portfolio Manager Portfolio Manager
January 21, 1999
Denver, CO
*Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable contracts, which
will reduce returns.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index of
U.S. stock market performance.
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--95.1% Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C> <C>
Banking--2.5% Citigroup . . . . . . . . . . . . . . . . . 500 $ 24,750
Firstar . . . . . . . . . . . . . . . . . . 150 13,988
State Street . . . . . . . . . . . . . . . . 175 12,173
U.S. Bancorp . . . . . . . . . . . . . . . . 350 12,425
___________
63,336
___________
Biotechnology--1.5% Amgen . . . . . . . . . . . . . . . . . .(a) 375 39,211
___________
Business Services--3.0% Cintas . . . . . . . . . . . . . . . . . . . 200 14,088
Computer Sciences . . . . . . . . . . . . . 300 19,331
Fiserv . . . . . . . . . . . . . . . . . .(a) 500 25,719
Interpublic Group Cos. . . . . . . . . . . . 75 5,981
Robert Half International . . . . . . . .(a) 250 11,172
___________
76,291
___________
Chemicals--.2% Monsanto . . . . . . . . . . . . . . . . . . 125 5,938
___________
Computer Equipment--5.1% Compaq Computer . . . . . . . . . . . . . . 300 12,581
Dell Computer . . . . . . . . . . . . . .(a) 425 31,105
EMC . . . . . . . . . . . . . . . . . . .(a) 275 23,375
International Business Machines . . . . . . 275 50,806
Sun Microsystems . . . . . . . . . . . . .(a) 150 12,844
___________
130,711
___________
Computer Networking--1.8% Cisco Systems . . . . . . . . . . . . . .(a) 500 46,406
___________
Computer Software--5.5% Automatic Data Processing . . . . . . . . . 100 8,019
Intuit . . . . . . . . . . . . . . . . . .(a) 175 12,688
Microsoft . . . . . . . . . . . . . . . .(a) 775 107,483
Oracle . . . . . . . . . . . . . . . . . .(a) 275 11,859
___________
140,049
___________
Consumer Services--.6% DeVry . . . . . . . . . . . . . . . . . .(a) 475 14,547
___________
Consumer Products--5.4% Clorox . . . . . . . . . . . . . . . . . . . 50 5,841
Colgate-Palmolive . . . . . . . . . . . . . 200 18,575
Dial . . . . . . . . . . . . . . . . . . . . 425 12,272
Gillette . . . . . . . . . . . . . . . . . . 775 37,442
Philip Morris . . . . . . . . . . . . . . . 675 36,113
Procter & Gamble . . . . . . . . . . . . . . 300 27,393
___________
137,636
___________
Diversified--2.3% Bershire Hathaway, Cl. B . . . . . . . . .(a) 25 58,750
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
Electronics--5.7% General Electric . . . . . . . . . . . . . . 1,100 $ 112,263
Perkin-Elmer . . . . . . . . . . . . . . . . 25 2,439
Solectron . . . . . . . . . . . . . . . .(a) 325 30,205
___________
144,907
___________
Financial--4.2% American Express . . . . . . . . . . . . . . 250 25,563
Associates First Capital, Cl. A . . . . . . 300 12,713
Federal National Mortgage Association . . . 600 44,400
Franklin Resources . . . . . . . . . . . . . 150 4,800
Northern Trust . . . . . . . . . . . . . . . 150 13,097
Schwab (Charles) . . . . . . . . . . . . . . 125 7,023
___________
107,596
___________
Foods And Beverages--2.8% Coca-Cola . . . . . . . . . . . . . . . . . 700 46,813
Hershey Foods . . . . . . . . . . . . . . . 100 6,219
PepsiCo . . . . . . . . . . . . . . . . . . 300 12,281
Wrigley, (Wm) Jr . . . . . . . . . . . . . . 75 6,717
___________
72,030
___________
Health Services--2.4% IMS Health . . . . . . . . . . . . . . . . . 800 60,350
___________
Insurance--2.4% American International Group . . . . . . . . 375 36,234
Marsh & McLennan . . . . . . . . . . . . . . 425 24,836
___________
61,070
___________
Leisure & Entertainment--3.7% America Online . . . . . . . . . . . . . . . 300 48,000
Carnival, Cl. A . . . . . . . . . . . . . . 150 7,200
Disney (Walt) . . . . . . . . . . . . . . . 900 27,000
Harley-Davidson . . . . . . . . . . . . . . 150 7,106
Mattel . . . . . . . . . . . . . . . . . . . 175 3,992
___________
93,298
___________
Manufacturing--1.5% Danaher . . . . . . . . . . . . . . . . . . 225 12,220
Illinois Tool Works . . . . . . . . . . . . 200 11,600
Tyco International . . . . . . . . . . . . . 175 13,202
___________
37,022
___________
Medical Supplies &
Equipment--1.8% Johnson & Johnson . . . . . . . . . . . . . 150 12,581
Medtronic . . . . . . . . . . . . . . . . . 450 33,413
___________
45,994
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
Pharmaceuticals--13.2% ALZA . . . . . . . . . . . . . . . . . . .(a) 250 $ 13,063
Bristol-Myers Squibb . . . . . . . . . . . . 300 40,144
Glaxo PLC, A.D.R. . . . . . . . . . . . . . 100 6,950
Lilly (Eli) . . . . . . . . . . . . . . . . 700 62,213
Merck & Co. . . . . . . . . . . . . . . . . 175 25,845
Pfizer . . . . . . . . . . . . . . . . . . . 700 87,806
Schering-Plough . . . . . . . . . . . . . . 875 48,344
Warner-Lambert . . . . . . . . . . . . . . . 700 52,631
___________
336,996
___________
Publishing and Broadcasting--5.3% Comcast, Cl. A . . . . . . . . . . . . . . . 675 39,614
Gannett . . . . . . . . . . . . . . . . . . 175 11,583
McGraw-Hill Cos. . . . . . . . . . . . . . . 50 5,094
MediaOne Group . . . . . . . . . . . . . .(a) 500 23,500
Tele-Communications, Cl. A, TCI Group . .(a) 675 37,336
Time Warner . . . . . . . . . . . . . . . . 275 17,067
___________
134,194
___________
Restaurants--1.6% McDonald's . . . . . . . . . . . . . . . . . 425 32,566
Outback Steakhouse . . . . . . . . . . . .(a) 225 8,972
___________
41,538
___________
Retail--7.7% Bed Bath & Beyond . . . . . . . . . . . .(a) 200 6,825
Best Buy . . . . . . . . . . . . . . . . .(a) 100 6,138
Costco Cos. . . . . . . . . . . . . . . .(a) 350 25,266
Gap . . . . . . . . . . . . . . . . . . . . 375 21,094
Home Depot . . . . . . . . . . . . . . . . . 650 39,772
Kohl's . . . . . . . . . . . . . . . . . .(a) 225 13,823
Staples . . . . . . . . . . . . . . . . .(a) 150 6,553
Wal-Mart Stores . . . . . . . . . . . . . . 700 57,006
Walgreen . . . . . . . . . . . . . . . . . . 325 19,033
___________
195,510
___________
Semiconductors--3.5% Intel . . . . . . . . . . . . . . . . . . . 675 80,030
Texas Instruments . . . . . . . . . . . . . 100 8,556
___________
88,586
___________
Supermarkets--.8% Safeway . . . . . . . . . . . . . . . . .(a) 325 19,805
___________
Telecommunication
Equipment--4.4% Lucent Technologies . . . . . . . . . . . . 575 63,250
Motorola . . . . . . . . . . . . . . . . . . 175 10,686
Nokia, Cl. A, A.D.R. . . . . . . . . . . . . 200 24,088
Qwest Communications . . . . . . . . . . .(a) 250 12,500
___________
110,524
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
Telecommunication Services--6.2% Airtouch Communications . . . . . . . . .(a) 475 $ 34,259
BellSouth . . . . . . . . . . . . . . . . . 475 23,691
MCI WorldCom . . . . . . . . . . . . . . .(a) 1,050 75,338
SBC Communications . . . . . . . . . . . . . 450 24,131
___________
157,419
___________
TOTAL INVESTMENTS (cost $2,138,374). . . . . . . . . . . . . . . . . . . . . . . 95.1% $2,419,714
_______ ___________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9% $ 123,909
_______ ___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $2,543,623
_______ ___________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
___________ ___________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $2,138,374 $2,419,714
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 110,212
Receivable for investment securities sold . . . . . . . . 351,850
Dividends receivable . . . . . . . . . . . . . . . . . . 1,492
Due from The Dreyfus Corporation and affiliates . . . . . 2,400
____________
2,885,668
____________
LIABILITIES: Payable for investment securities purchased . . . . . . . 335,263
Accrued expenses . . . . . . . . . . . . . . . . . . . . 6,782
____________
342,045
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,543,623
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $2,000,000
Accumulated undistributed investment income--net . . . . 1,078
Accumulated net realized gain (loss) on investments . . . 261,205
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,340
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,543,623
____________
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized) . . . . . . 160,000
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $15.90
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . $ 2,802
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,991
_________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 6,793
EXPENSES: Investment advisory fee--Note 2(a) . . . . . . . . . . . . . . 4,286
Auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . 6,150
Prospectus and shareholders' reports . . . . . . . . . . . . 828
Trustees' fees and expenses--Note 2(b) . . . . . . . . . . . 683
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . 276
Custodian fees--Note 2(a) . . . . . . . . . . . . . . . . . . . 174
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 31
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 208
_________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 12,636
Less--expense reimbursement from Dreyfus due to
undertaking--Note 2(a) . . . . . . . . . . . . . . . . . . (6,921)
_________
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 5,715
__________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,078
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments . . . . . . . . . . . . $261,205
Net unrealized appreciation (depreciation) on investments . . . 281,340
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 542,545
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $543,623
__________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
<S> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,078
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261,205
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . 281,340
____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . . . 543,623
____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,543,623
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,543,623
____________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,078
____________
Shares
____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from September 30, 1998
(commencement of operations) to December 31, 1998. This information has been
derived from the Series' financial statements.
<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 INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.20%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25%*
Ratio of net investment income to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .05%*
Decrease reflected in above expense ratio due to undertaking by Dreyfus . . . . . . . . . . . . . . . . . . .31%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.65%*
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,544
- -----------------------------
* Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Portfolios (the "Fund") had no operations until May 1, 1998
(commencement of operations) other than matters relating to its organization and
registration as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "Act") and the Securities Act of 1933. The
Fund operates as a series company currently offering five series, including the
Founders Growth Portfolio (the "Series") which commenced operations on September
30, 1998. The Series is only offered to variable annuity and variable life
insurance separate accounts established by insurance companies to fund variable
annuity contracts and variable life insurance policies and to qualified pension
and retirement plans. The Series is a diversified portfolio. The Series'
investment objective is to provide long-term capital growth. The Dreyfus
Corporation (" Dreyfus") serves as the Series' investment adviser. Dreyfus is a
direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned
subsidiary of Mellon Bank Corporation. Founders Asset Management LLC
(" Founders" ) serves as the Series sub-investment adviser. Founders is a 90%
- -owned subsidiary of Mellon. Premier Mutual Fund Services, Inc. is the
distributor of the Series' shares, which are sold without a sales charge.
As of December 31, 1998, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 160,000 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the
national securities market, or securities for which there were no transactions,
are valued at the average of the most recent bid and asked prices, except for
open short positions, where the asked price is used for valuation purposes. Bid
price is used when no asked price is available. Securities for which there are
no such valuations are valued at fair value as determined in good faith under
the direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Series does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Series' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the value of
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Series receives net
earnings credits based on available cash balances left on deposit.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, are normally declared and paid annually, but the Series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
Series' average daily net assets and is payable monthly. Dreyfus had undertaken
from September 30, 1998 through December 31, 1998, to reduce the management fee
and reimburse such excess expenses paid by the Series, to the extent that the
Series' aggregate annual expenses (exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses) exceeded an annual rate of 1% of the
value of the Series' average daily net assets. The expense reimbursement,
pursuant to the undertaking, amounted to $6,921 during the period ended December
31, 1998.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment fees are payable monthly by Dreyfus, and are based upon the value
of the Series' average daily net assets, computed at the following annual rates
Average Net Assets
______________
0 to $100 million .25 of 1%
In excess of $100 million to $1 billion .20 of 1%
In excess of $1 billion to $1.5 billion .16 of 1%
In excess of $1.5 billion .10 of 1%
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series compensates Mellon under a custody agreement for providing
custodial services for the Series. During the period ended December 31, 1998,
the Series was charged $174 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1998,
amounted to $3,490,264 and $1,612,381, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $281,340, consisting of $289,303 gross unrealized appreciation and $7,963
gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments of Dreyfus Investment Portfolios,
Founders Growth Portfolio (one of the series constituting Dreyfus Investment
Portfolios) as of December 31, 1998, and the related statements of operations,
changes in net assets and financial highlights for the period from September 30,
1998 (commencement of operations) to December 31, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders Growth Portfolio at December 31, 1998,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from September 30, 1998 to December 31,
1998, in conformity with generally accepted accounting principles.
New York, New York
February 04, 1999
[This Page Intentionally Left Blank]
[reg.tm logo]
(reg.tm)
DREYFUS INVESTMENT PORTFOLIOS,
FOUNDERS GROWTH PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 176AR9812
Investment Portfolios,
FOUNDERS GROWTH
PORTFOLIO
Annual Report
December 31, 1998
YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my privilege to introduce you to Douglas A. Loeffler, the portfolio
manager of Dreyfus Investment Portfolios -- Founders International Equity
Portfolio, which is subadvised by Founders Asset Management, LLC, a corporate
affiliate of The Dreyfus Corporation.
Doug Loeffler, who is Vice President of Investments at Founders and a
Chartered Financial Analyst, joined Founders in 1995 as a senior international
equities analyst. Before that he served for seven years with Scudder, Stevens &
Clark as an international equities analyst and a quantitative analyst. He has a
role in all of Founders' international products.
Doug received a BA from Washington State University and an MBA in finance from
the University of Chicago. He is also a member of the Association for Investment
Management and Research.
Doug Loeffler has amply demonstrated at Founders his ability to manage
international investments, and we are confident of his ability to manage this
new portfolio on your behalf.
Sincerely,
[Stephen E. Canter, President signature]
Stephen E. Canter, President
The Dreyfus Corporation
January 29, 1999
New York, N.Y.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Investment Portfolios -- Founders International Equity Portfolio,
which commenced operations on September 30, 1998, produced a total return of
14.88% through December 31, 1998,* but lagged the 20.46% return of its
benchmark, the Morgan Stanley Capital International (MSCI) World ex U.S.A.
Index, for that period.** The reporting period was a tumultuous one for global
stock markets. It began with a bang, as stock markets fell sharply the first
week of October, and ended with a bang as many markets rebounded 30% or more
from their early October lows.
With the Founders International Equity Portfolio, we concentrate our research
process on company fundamentals, not top-down forecasts or country allocations.
The strong upward movement in share prices in the fourth quarter occurred at the
same time as companies' earnings were being revised down sharply. We observed
the rapid deterioration in companies' earning prospects during the reporting
period and were cautious in our stock selection. The sharp snap-back in stock
prices was led primarily by those stocks which had earlier fallen the most. As
we did not own many of these companies, the Portfolio's performance suffered. In
hindsight, our weighting in the technology sector was too low, which was costly
to our performance when compared to many other international growth funds. At
the time, we did not participate in the sharp rebound in many Southeast Asian
markets, which caused us to underperform many international value funds.
The approaching launch of the Euro in January 1999 began to occupy many
investors' minds in the fourth quarter. We believed that the Euro currency
launch would lead to a flow of funds into larger cap stocks in this region. We
accordingly focused much of our research attention on larger cap Euro stocks and
were able to find many attractive growth companies there. At the end of 1998,
approximately 61% of the Portfolio was invested in the 11 Euro countries versus
46% for the MSCI World ex U.S.A. benchmark. This overweighted position benefited
us during the quarter and, we believe, leaves us well-positioned for 1999.
MARKET OVERVIEW
While we do not expect to see a global recession, it is our belief that the
global economy is slowing, and that this trend will continue through 1999.
Many areas of the world are still dealing with the devastation caused by the
financial crises of 1998, especially in Asia. Some, particularly Brazil, are
just beginning to face the problems brought by these crises. We do currently
believe, however, that many of the Asian economies have seen the worst of these
effects and are slowly recovering.
This recovery is being helped in some countries, like Thailand and South
Korea, by their governments' efforts to solve the problems in the economy and in
the financial system. Japan is still struggling through a very difficult
economic environment, and as we continue through 1999, it seems unlikely to us
that we will see substantive reform of the Japanese economic system.
We currently believe that China will once again be the relative bright spot in
Asia, although if 1999 is to be the year in which China begins to address the
problems within its banks and state-owned enterprises, it could slightly damper
the economy.
LOOKING AHEAD
We remain cautiously optimistic about foreign markets in 1999. Despite a
weakened growth environment for Europe, we find it encouraging that in contrast
to the U.S., many European markets such as Germany and France are not even close
to their highs of last July.
The Portfolio is still underweight in Japan and the rest of Asia, but we
continue to look for attractive growth companies in this and all other regions.
We are still waiting to see whether company earnings will live up to forecasts
in 1999. The answer to this question can have a large effect on global valuation
levels and whether or not strong stock market performance continues. We
continually monitor our Portfolio in seeking to ensure that our holdings live up
to expectations.
We will continue to use a bottom-up approach to invest in strong international
names with competitive market positions, innovative products, and seasoned
management.
Sincerely,
[Douglas A. Loeffer, CFA signature]
Douglas A. Loeffer, CFA
Portfolio Manager
January 29, 1999
Denver, CO
*Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts, which will reduce returns.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- The Morgan Stanley Capital
International (MSCI) World ex U.S.A. Index is an arithmetical average of the
performance of 1,138 securities listed on the stock exchanges of Europe, Canada,
Australia, New Zealand, and the Far East. Total return figures for this index
assume change in share price and reinvestment of dividends after deduction of
local taxes. An investor may not invest in this Index. The Index is the property
of Morgan Stanley & Co. Incorporated and includes net dividends reinvested
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--94.7% Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Argentina--1.5% YPF Sociedad Anonima, ADS . . . . . . . . . 1,225 $ 34,223
___________
Austria--2.3% Austria Tabak . . . . . . . . . . . . . . . 375 28,769
KTM Motorraholding . . . . . . . . . . . . . 375 25,249
___________
54,018
___________
Brazil--.3% Aracruz Celulose, ADS . . . . . . . . . . . 1,000 8,000
___________
Canada--1.6% MetroNet Communications, Cl. B . . . . . . . 600 (a) 20,100
Newbridge Networks . . . . . . . . . . . . . 525 (a) 15,947
___________
36,047
___________
Finland--8.7% Kone . . . . . . . . . . . . . . . . . . . . 300 34,957
Merita . . . . . . . . . . . . . . . . . . . 7,600 48,331
Nokia, ADS . . . . . . . . . . . . . . . . . 375 45,164
Sonera Group . . . . . . . . . . . . . . . . 2,700 (a) 48,525
Sponda . . . . . . . . . . . . . . . . . . . 3,800 (a) 22,289
___________
199,266
___________
France--7.5% Altran Technologies . . . . . . . . . . . . 250 60,327
Cap Gemini . . . . . . . . . . . . . . . . . 200 32,115
Danone . . . . . . . . . . . . . . . . . . . 175 50,123
Dassault Systemes . . . . . . . . . . . . . 625 29,392
___________
171,957
___________
Germany--10.1% Continental . . . . . . . . . . . . . . . . 900 24,856
DaimlerChrysler . . . . . . . . . . . . . . 630 (a) 60,519
Deutsche Lufthansa . . . . . . . . . . . . . 950 20,989
Douglas Holding . . . . . . . . . . . . . . 700 42,447
Dresdner Bank . . . . . . . . . . . . . . . 400 16,811
Mannesmann . . . . . . . . . . . . . . . . . 450 51,603
Schwarz Pharma . . . . . . . . . . . . . . . 250 14,411
___________
231,636
___________
Greece--.6% Panafon Hellenic Telecom, ADS . . . . . . . 550 (a) 14,575
___________
Ireland--2.3% Elan, ADS . . . . . . . . . . . . . . . . . 750 (a) 52,172
___________
Italy--6.2% Alleanza Assicurazioni . . . . . . . . . . . 2,600 36,868
Banca di Roma . . . . . . . . . . . . . . . 10,000 (a) 16,975
Mondadori (Arnoldo) Editore . . . . . . . . 2,700 (a) 35,874
Telecom Italia . . . . . . . . . . . . . . . 1,500 12,798
Telecom Italia RNC . . . . . . . . . . . . . 2,500 15,712
Unicredito Italiano . . . . . . . . . . . . 4,000 23,678
___________
141,905
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
Japan--10.8% Kao . . . . . . . . . . . . . . . . . . . . 1,800 $ 40,537
Konami . . . . . . . . . . . . . . . . . . . 1,200 34,655
NTT Mobile Communications Network . . . . . 2 82,134
Ryohin Keikaku . . . . . . . . . . . . . . . 300 39,875
Takefuji . . . . . . . . . . . . . . . . . . 700 51,002
___________
248,203
___________
Netherlands--8.3% Benckiser . . . . . . . . . . . . . . . . . 600 39,324
ING Groep . . . . . . . . . . . . . . . . . 700 42,708
Oce . . . . . . . . . . . . . . . . . . . . 625 22,480
TNT Post Group . . . . . . . . . . . . . . . 1,275 41,103
VNU . . . . . . . . . . . . . . . . . . . . 1,225 46,214
___________
191,829
___________
Portugal--5.0% Brisa-Auto Estradas de Portugal . . . . . . 1,250 73,580
Portugal Telecom . . . . . . . . . . . . . . 900 41,265
___________
114,845
___________
Spain--4.8% Superdiplo . . . . . . . . . . . . . . . . . 1,450 (a) 40,882
Telefonica, ADS . . . . . . . . . . . . . . 255 34,520
Union Electrica Fenosa . . . . . . . . . . . 2,000 34,934
___________
110,336
___________
Sweden--3.0% Netcom, Cl. B . . . . . . . . . . . . . . . 1,050 (a) 42,647
Skandinaviska Enskilda Banken . . . . . . . 2,400 25,256
___________
67,903
___________
Switzerland--4.8% Novartis . . . . . . . . . . . . . . . . . . 35 68,777
Swisscom . . . . . . . . . . . . . . . . . . 100 (a) 41,849
___________
110,626
___________
Taiwan--.6% Taiwan Semiconductor Manufacturing, ADS . . 900 (a) 12,769
___________
United Kingdom--15.4% Allied Irish Banks . . . . . . . . . . . . . 1,600 28,383
British Telecommunications . . . . . . . . . 1,075 16,138
Cable & Wireless Communications . . . . . . 7,800 (a) 70,995
Compass Group . . . . . . . . . . . . . . . 3,525 40,237
Dixons Group . . . . . . . . . . . . . . . . 2,200 30,839
Esprit Telecom Group, ADR . . . . . . . . . 275 (a) 12,856
Glaxo Wellcome, ADR . . . . . . . . . . . . 375 26,062
Ladbroke Group . . . . . . . . . . . . . . . 11,000 44,042
Pearson . . . . . . . . . . . . . . . . . . 2,900 57,358
Royal & Sun Alliance Insurance Group . . . . 3,400 27,663
___________
354,573
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------------ ------------------
United States--.9% Global Telesystems Group . . . . . . . . . . 375 (a) $ 20,906
___________
TOTAL COMMON STOCKS
(cost $1,832,514) . . . . . . . . . . . . $2,175,789
___________
Preferred Stocks--2.2%
- -------------------------------------------------------------------------------
Germany: Hornbach Holding . . . . . . . . . . . . . . 350 $ 20,803
ProSieben Media . . . . . . . . . . . . . . 625 28,894
___________
TOTAL PREFERRED STOCKS
(cost $65,758) . . . . . . . . . . . . . . $ 49,697
___________
Principal
Short-Term Investments--3.4% Amount
- ------------------------------------------------------------------------------- -----------
U.S. Treasury Bills: 3.87%, 1/14/99 . . . . . . . . . . . . . . . $ 21,000 $ 20,973
4.42%, 1/21/99 . . . . . . . . . . . . . . . 58,000 57,858
___________
TOTAL SHORT-TERM INVESTMENTS
(cost $78,828) . . . . . . . . . . . . . . $ 78,831
___________
TOTAL INVESTMENTS (cost $1,977,100). . . . . . . . . . . . . . . . . . . . . . . 100.3% $2,304,317
_______ ___________
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . (.3%) $ (7,169)
_______ ___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $2,297,148
_______ ___________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
___________ ___________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $1,977,100 $2,304,317
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,729
Receivable for investment securities sold . . . . . . . . . . . 22,188
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 444
Due from The Dreyfus Corporation and affiliates . . . . . . . . 1,912
____________
2,361,590
____________
LIABILITIES: Payable for investment securities purchased . . . . . . . . . . 46,795
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 17,647
____________
64,442
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,297,148
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $1,998,209
Accumulated net realized gain (loss) on investments
and foreign currency transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,274)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions . . . . . . . . . . . . . . . . . . . . . 327,213
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,297,148
____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 160,000
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $14.36
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,397
Cash dividends (net of $242 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . 1,894
_________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 6,291
EXPENSES: Investment advisory fee--Note 2(a) . . . . . . . . . . . . . . 5,388
Auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . 5,879
Prospectus and shareholders' reports . . . . . . . . . . . . 2,203
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 556
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Trustees' fees and expenses--Note 2(b) . . . . . . . . . . . 153
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 8
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 475
_________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 25,162
Less--expense reimbursement from Dreyfus
due to undertaking--Note 2(a) . . . . . . . . . . . . . . (17,080)
_________
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 8,082
__________
INVESTMENT (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,791)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments
and foreign currency transactions . . . . . . . . . . . . . $ (28,274)
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions . . . . . . . . . . . . . 327,213
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 298,939
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $297,148
__________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
OPERATIONS:
<S> <C>
Investment (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,791)
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,274)
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . 327,213
____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . . . 297,148
____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,297,148
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,297,148
____________
Shares
____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from September 30, 1998
(commencement of operations) to December 31, 1998. This information has been
derived from the Series' financial statements.
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.50
________
Investment Operations:
Investment (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.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 INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.88%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38%*
Ratio of investment (loss) to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.08%)*
Decrease reflected in above expense ratio due to undertaking by Dreyfus . . . . . . . . . . . . . . . . . . .81%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.25%*
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,297
- -----------------------------
* Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Portfolios (the "Fund") had no operations until May 1, 1998
(commencement of operations) other than matters relating to its organization and
registration as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "Act") and the Securities Act of 1933. The
Fund operates as a series company currently offering five series, including the
Founders International Equity Portfolio (the "Series" ) which commenced
operations on September 30, 1998. The Series is only offered to variable annuity
and variable life insurance separate accounts established by insurance companies
to fund variable annuity contracts and variable life insurance policies and to
qualified pension and retirement plans. The Series is a diversified portfolio.
The Series' investment objective is to provide long-term capital growth. The
Dreyfus Corporation (" Dreyfus" ) serves as the Series' investment adviser.
Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a
wholly-owned subsidiary of Mellon Bank Corporation. Founders Asset Management
LLC ("Founders") serves as the Series' sub-investment adviser. Founders is a 90%
- -owned subsidiary of Mellon. Premier Mutual Fund Services, Inc. is the
distributor of the Series' shares, which are sold without a sales charge.
As of December 31, 1998, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 160,000 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Series does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Series' books
and the U.S. dollar equivalent of the DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS
INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
amounts actually received or paid. Net unrealized foreign exchange gains or
losses arise from changes in the value of assets and liabilities other than
investments in securities resulting from changes in exchange rates. Such gains
and losses are included with net realized and unrealized gain or loss on
investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Series received net
earnings credits of $673 during the period ended December 31, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, if any, are normally declared and paid annually, but the Series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The Series has an unused capital loss carryover of approximately $16,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
through December 31, 1998 which are treated, for Federal income tax purposes, as
arising in fiscal 1999. If not applied, the carryover expires in fiscal 2006.
During the period ended December 31, 1998, the Series reclassified $1,791
between paid-in capital and accumulated undistributed investment income-net. Net
assets were not affected by this reclassification.
NOTE 2--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the Series'
average daily net assets and is payable monthly. Dreyfus had undertaken from
September 30, 1998 through December 31, 1998, to reduce the management fee and
reimburse such excess expenses paid by the Series, to the extent that the
Series' aggregate annual expenses (exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses) exceeded an annual rate of 1.50% of the
value of the Series' average daily net assets. The expense reimbursement,
pursuant to the undertaking, amounted to $17,080 during the period ended
December 31, 1998.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fees are payable monthly by Dreyfus, and are based upon
the value of the Series' average daily net assets, computed at the following
annual rates:
Average Net Assets
______________
0 to $100 million .35 of 1%
In excess of $100 million to $1 billion .30 of 1%
In excess of $1 billion to $1.5 billion .26 of 1%
In excess of $1.5 billion .20 of 1%
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1998,
amounted to $2,529,168 and $601,715, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $327,217, consisting of $356,714 gross unrealized appreciation and $29,497
gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Investment Portfolios,
Founders International Equity Portfolio (one of the series constituting Dreyfus
Investment Portfolios) as of December 31, 1998, and the related statements of
operations and changes in net assets and financial highlights for the period
from September 30, 1998 (commencement of operations) to December 31, 1998. These
financial statements and financial highlights are the responsibility of the
Fund' s management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders International Equity Portfolio at
December 31, 1998, and the results of its operations, the changes in its net
assets and the financial highlights for the period from September 30, 1998 to
December 31, 1998, in conformity with generally accepted accounting principles.
New York, New York
February 4, 1999
[reg.tm logo]
(reg.tm)
DREYFUS INVESTMENT PORTFOLIOS,
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 177AR9812
Investment Portfolios,
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
Annual Report
December 31, 1998
YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my privilege to introduce you to Michael W. Gerding who manages Dreyfus
Investment Portfolios -- Founders Passport Portfolio. He is a Senior Vice
President of Investments for Founders Asset Management LLC, our corporate
affiliate and subinvestment adviser of the Portfolio, and also is a Chartered
Financial Analyst.
Mike Gerding has been a member of the Founders Investment Department since
1990, when he joined the firm. Before joining Founders, he was a portfolio
manager and research analyst with NCNB Texas from 1985 to 1990. He earned a BA
in finance and an MBA from Texas Christian University.
Mike Gerding has amply demonstrated his ability to manage international
investments. We have full confidence that his experience at Founders will
benefit investors in the Dreyfus Investment Portfolios -- Founders Passport
Portfolio.
Sincerely,
[Stephen E. Canter, President signature]
Stephen E. Canter, President
The Dreyfus Corporation
January 29, 1999
New York, N.Y.
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Investment Portfolios -- Founders Passport Portfolio, which
commenced operations on September 30, 1998, outperformed its benchmark index
through December 31, 1998. The Portfolio gained 15.79%,* compared to the Morgan
Stanley Capital International World ex U.S.A. Small Cap Index return of 13.51%
for the same period.**
Our strongest performance came from the Portfolio's telecommunications and
technology stocks in Europe, as these industries rebounded dramatically from the
lows set in the second week of October. And although our Japanese weighting was
lower than the benchmark, it did contribute positively to the performance of the
Portfolio in the fourth quarter.
MARKET OVERVIEW
1998 was characterized by strong economic growth in Europe and the U.S., and
crisis in nearly all the rest of the world. Markets reacted to this, and even in
just the fourth quarter, we saw both the depths of despair as markets fell in
response to several crises, and a major rebound as stock markets came to reflect
what may be a more realistic assessment of the world's economies. It is our
belief that the global economy began slowing in the second half of 1998, and
that this trend will continue into 1999.
Many areas of the world spent 1998 dealing with the devastation caused by the
financial crises of 1998, especially Asia and Russia. Some, particularly Brazil,
are just beginning to face the problems brought on by these crises. We do
currently believe, however, that many of the Asian economies have seen the worst
of these effects, and are slowly recovering. However, companies may not reflect
this for some time, and as growth stock investors, we found very few investments
in Asia during the reporting period.
PORTFOLIO FOCUS
During the reporting period, our bottom-up, stock-by-stock focus on rapidly
growing small companies for the Founders Passport Portfolio led us to a
substantial overweighting in Europe. Approximately 70% of the Portfolio was
invested in Europe at the end of the period, with the largest weights in the
United Kingdom, Germany and France.
Because it was so difficult to find growing companies in Japan, our weight
there at the close of the period was very low, at 7%. Also, because of the
crisis in Asia, earnings growth there has been nearly non-existent, and
consequently, we owned only two names in all of the rest of Asia, with a total
portfolio weight of only 2.4%.
LOOKING AHEAD
We remain cautiously optimistic about foreign markets in 1999. Despite a
weakened growth environment for Europe, we find it encouraging that in contrast
to the U.S., many European markets such as Germany and France are not even close
to their highs of last July.
In this environment, our disciplined investment process becomes even more
important. We will continue to choose investments for the Dreyfus Investment
Portfolios -- Founders Passport Portfolio one by one, going anywhere in the
world to find well managed, small companies that meet our growth criteria.
Sincerely,
[Michael W. Gerding, CFA signature]
Michael W. Gerding, CFA
Portfolio Manager
January 29, 1999
Denver, CO
* Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts, which will reduce returns.
**SOURCE: Morgan Stanley & Co. Incorporated--The Morgan Stanley Capital
International World ex U.S.A. Small Cap Index is a weighted average of the
performance of securities in 21 countries that includes companies with market
capitalizations between US $200 million and $800 million. Total return figures
assume change in share price and deduction of local taxes and excludes dividends
reinvested. The Index is an unmanaged group of securities that does not reflect
the costs of managing a mutual fund. An investor may not invest directly in this
Index. The Index is the property of Morgan Stanley & Co. Incorporated.
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--78.1% Shares Value
- -------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Austria--.7% KTM Motorraholding . . . . . . . . . . . . . 550 $ 37,032
___________
Brazil--.3% Aracruz Celulose, ADS . . . . . . . . . . . 2,250 18,000
___________
Canada--4.0% Cinar, ADR . . . . . . . . . . . . . . . . . 7,000 (a) 177,625
Dorel Industries, Cl. B . . . . . . . . . . 3,350 (a) 54,685
___________
232,310
___________
Denmark--2.7% Kobenhavns Lufthavne . . . . . . . . . . . . 775 95,806
Vestas Wind Systems . . . . . . . . . . . . 1,125 (a) 60,031
___________
155,837
___________
Finland--2.8% KCI Konecranes International . . . . . . . . 1,450 65,865
Raisio Group . . . . . . . . . . . . . . . . 9,100 98,847
___________
164,712
___________
France--6.2% Altran Technologies . . . . . . . . . . . . 900 217,178
Dassault Systemes . . . . . . . . . . . . . 2,650 124,620
Royal Canin . . . . . . . . . . . . . . . . 250 15,664
___________
357,462
___________
Germany--6.5% Douglas Holding . . . . . . . . . . . . . . 1,550 93,990
IXOS Software . . . . . . . . . . . . . . . 275 (a) 61,915
Schwarz Pharma . . . . . . . . . . . . . . . 1,650 95,111
Sixt . . . . . . . . . . . . . . . . . . . . 1,575 123,874
___________
374,890
___________
Greece--.5% Chipita International . . . . . . . . . . . 900 29,219
___________
Hong Kong--1.8% VTech Holdings . . . . . . . . . . . . . . . 24,000 104,710
___________
Ireland--2.0% Ryanair Holdings, ADS . . . . . . . . . . . 3,125 (a) 117,969
___________
Italy--3.9% Bulgari . . . . . . . . . . . . . . . . . . 18,025 107,170
Gruppo Editoriale L'Espresso . . . . . . . . 4,625 40,628
Industrie Natuzzi, ADS . . . . . . . . . . . 3,125 77,734
___________
225,532
___________
Japan--7.0% Doutor Coffee . . . . . . . . . . . . . . . 2,400 79,484
Fuji Soft ABC . . . . . . . . . . . . . . . 2,000 101,563
Nippon System Development . . . . . . . . . 3,000 92,732
Ryohin Keikaku . . . . . . . . . . . . . . . 1,000 132,915
___________
406,694
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------- ---------- ------------
Netherlands--5.7% Beter Bed Holding . . . . . . . . . . . . . 1,100 $ 38,392
Brunel International . . . . . . . . . . . . 1,725 34,928
Hunter Douglas . . . . . . . . . . . . . . . 2,175 72,087
IHC Caland . . . . . . . . . . . . . . . . . 1,775 73,773
Nutreco Holding . . . . . . . . . . . . . . 2,750 108,435
___________
327,615
___________
Norway--1.4% Tomra Systems . . . . . . . . . . . . . . . 2,475 81,067
___________
Singapore--.6% Natsteel Electronics . . . . . . . . . . . . 14,000 35,615
___________
Spain--5.4% Baron de Ley . . . . . . . . . . . . . . . . 1,150 (a) 37,739
TelePizza . . . . . . . . . . . . . . . . . 28,800 (a) 273,375
___________
311,114
___________
Sweden--3.9% Haldex . . . . . . . . . . . . . . . . . . . 2,425 24,474
NetCom . . . . . . . . . . . . . . . . . . . 3,725 (a) 151,296
Ortivus . . . . . . . . . . . . . . . . . . 2,225 (a) 16,157
Semcon . . . . . . . . . . . . . . . . . . . 4,000 32,985
___________
224,912
___________
Switzerland--1.6% Kudelski . . . . . . . . . . . . . . . . . . 20 (a) 55,313
Logitech International . . . . . . . . . . . 300 36,245
___________
91,558
___________
United Kingdom--19.1% BTG . . . . . . . . . . . . . . . . . . . . 4,700 27,273
British-Borneo Oil & Gas . . . . . . . . . . 17,975 31,290
Capital Radio . . . . . . . . . . . . . . . 5,500 53,343
Eidos, ADR . . . . . . . . . . . . . . . . . 2,450 (a) 39,353
Energis . . . . . . . . . . . . . . . . . . 8,600 (a) 191,056
Filtronic . . . . . . . . . . . . . . . . . 2,700 27,082
Flextech . . . . . . . . . . . . . . . . . . 9,150 (a) 92,536
ICON, ADR . . . . . . . . . . . . . . . . . 2,300 77,050
JBA Holdings . . . . . . . . . . . . . . . . 11,450 36,068
Misys . . . . . . . . . . . . . . . . . . . 7,750 56,245
PizzaExpress . . . . . . . . . . . . . . . . 14,050 186,814
Psion . . . . . . . . . . . . . . . . . . . 15,200 146,664
Select Appointment Holdings . . . . . . . . 8,500 87,371
Wetherspoon (J.D) . . . . . . . . . . . . . 18,000 53,418
___________
1,105,563
___________
United States--2.0% Global TeleSystems Group . . . . . . . . . . 2,100 (a) 117,075
___________
TOTAL COMMON STOCKS
(cost $3,812,964) . . . . . . . . . . . . $4,518,886
___________
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Preferred Stocks--7.6% Shares Value
- -------------------------------------------------------------------------------- ---------- -----------
Germany: Marschollek, Lautenschlaeger und Partner . . 375 $ 213,887
Porsche . . . . . . . . . . . . . . . . . . 100 228,146
___________
TOTAL PREFERRED STOCKS
(cost $366,337) . . . . . . . . . . . . . $ 442,033
___________
Principal
Short-Term Investments--14.0% Amount
------------------------------------------------------------------------------------------- ----------
U.S. Treasury Bills: 4.22%, 1/21/99 . . . . . . . . . . . . . . . $ 802,000 $ 800,039
4.31%, 2/4/99 . . . . . . . . . . . . . . . 11,000 10,955
___________
TOTAL SHORT-TERM INVESTMENTS
(cost $811,075) . . . . . . . . . . . . . $ 810,994
___________
TOTAL INVESTMENTS (cost $4,990,376). . . . . . . . . . . . . . . . . . . . . . . 99.7% $5,771,913
_______ ___________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . .3% $ 16,383
_______ ___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $5,788,296
_______ ___________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
___________ ___________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $4,990,376 $5,771,913
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,116
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 1,279
Due from The Dreyfus Corporation and affiliates . . . . . . . . 1,179
____________
5,812,487
____________
LIABILITIES: Payable for investment securities purchased . . . . . . . . . . 4,381
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 19,810
____________
24,191
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,788,296
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $5,005,600
Accumulated undistributed investment income--net . . . . . . . 91
Accumulated net realized gain (loss) on investments
and foreign currency transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,077
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions . . . . . . . . . . . . . . . . . . . . . 781,528
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,788,296
____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 400,390
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $14.46
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,703
Cash dividends (net of $435 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . 3,955
_________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 21,658
EXPENSES: Investment advisory fee--Note 2(a) . . . . . . . . . . . . . . 13,578
Auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . 7,526
Prospectus and shareholders' reports . . . . . . . . . . . . 2,203
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 1,392
Trustees' fees and expenses--Note 2(b) . . . . . . . . . . . 537
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 8
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 458
_________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 36,202
Less--expense reimbursement from Dreyfus
due to undertaking--Note 2(a) . . . . . . . . . . . . . . (15,835)
_________
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 20,367
_________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,291
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments
and foreign currency transactions . . . . . . . . . . . . . $ 5,477
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions . . . . . . . . . . . . . 781,528
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 787,005
_________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $788,296
_________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
OPERATIONS:
<S> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,291
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,477
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . 781,528
___________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . . . 788,296
___________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,200)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,400)
___________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,600)
___________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,600
___________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . . . . . . . . . . . . . . . . 5,005,600
___________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,788,296
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
___________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,788,296
___________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91
___________
Shares
__________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
___________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,390
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from September 30, 1998
(commencement of operations) to December 31, 1998. This information has been
derived from the Series' financial statements.
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.50
________
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .00(1)
Net realized and unrealized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . 1.97
________
Total from Investment Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.97
________
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.00)(1)
Dividends from net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.01)
________
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.01)
________
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14.46
________
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.79%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38%(2)
Ratio of net investment income to average net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .02%(2)
Decrease reflected in above expense ratio due to undertaking by Dreyfus . . . . . . . . . . . . . . . . . . .30%(2)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.98%(2)
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,788
- -----------------------------
(1) Amount represents less than $.01 per share.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Portfolios (the "Fund") had no operations until May 1, 1998
(commencement of operations) other than matters relating to its organization and
registration as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "Act") and the Securities Act of 1933. The
Fund operates as a series company currently offering five series, including the
Founders Passport Portfolio (the "Series" ) which commenced operations on
September 30, 1998. The Series is only offered to variable annuity and variable
life insurance separate accounts established by insurance companies to fund
variable annuity contracts and variable life insurance policies and to qualified
pension and retirement plans. The Series is a diversified portfolio. The Series'
investment objective is to provide capital appreciation. The Dreyfus Corporation
(" Dreyfus" ) serves as the Series' investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Bank Corporation. Founders Asset Management LLC ("Founders") serves as
the Series' sub-investment adviser. Founders is a 90%-owned subsidiary of
Mellon. Premier Mutual Fund Services, Inc. is the distributor of the Series'
shares, which are sold without a sales charge.
As of December 31, 1998, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 400,390 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Series does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Series' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the value of
assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Series received net
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
earnings credits of $1,254 during the period ended December 31, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the Series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the Series'
average daily net assets and is payable monthly. Dreyfus had undertaken from
September 30, 1998 through December 31, 1998, to reduce the management fee and
reimburse such excess expenses paid by the Series, to the extent that the
Series' aggregate annual expenses (exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses) exceeded an annual rate of 1.50% of the
value of the Series' average daily net assets. The expense reimbursement,
pursuant to the undertaking, amounted to $15,835 during the period ended
December 31, 1998.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fees are payable monthly by Dreyfus, and are based upon
the value of the Series' average daily net assets, computed at the following
annual rates:
Average Net Assets
_________________
0 to $100 million .35 of 1%
In excess of $100 million to $1 billion .30 of 1%
In excess of $1 billion to $1.5 billion .26 of 1%
In excess of $1.5 billion .20 of 1%
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1998,
amounted to $4,352,387 and $176,634, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $781,537, consisting of $893,115 gross unrealized appreciation and $111,578
gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
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REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Investment Portfolios,
Founders Passport Portfolio (one of the series constituting Dreyfus Investment
Portfolios) as of December 31, 1998, and the related statements of operations
and changes in net assets and financial highlights for the period from September
30, 1998 (commencement of operations) to December 31, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders Passport Portfolio at December 31, 1998,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from September 30, 1998 to December 31,
1998, in conformity with generally accepted accounting principles.
New York, New York
February 4, 1999
[reg.tm logo]
(reg.tm)
DREYFUS INVESTMENT PORTFOLIOS,
FOUNDERS PASSPORT PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 178AR9812
Investment Portfolios,
FOUNDERS PASSPORT PORTFOLIO
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE
PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX AND THE STANDARD & POOR'S BARRA
VALUE INDEX
EXHIBIT A:
STANDARD DREYFUS
& POOR'S 500 STANDARD INVESTMENT
COMPOSITE & POOR'S PORTFOLIOS,
STOCK BARRA CORE
PERIOD PRICE VALUE VALUE
INDEX * INDEX* PORTFOLIO
5/1/98 10,000 10,000 10,000
5/31/98 9,828 9,859 9,648
6/30/98 10,227 9,934 9,632
7/31/98 10,119 9,718 9,288
8/31/98 8,656 8,156 7,888
9/30/98 9,211 8,652 8,224
10/31/98 9,959 9,329 8,802
11/30/98 10,563 9,815 9,244
12/31/98 11,172 10,160 9,441
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK
PORTFOLIO AND THE STANDARD & POOR'S MIDCAP 400
INDEX
EXHIBIT A:
DREYFUS
STANDARD & POOR'S INVESTMENT
PERIOD MIDCAP 400 PORTFOLIOS, MIDCAP
INDEX * STOCK PORTFOLIO
5/1/98 10,000 10,000
5/31/98 9,550 9,600
6/30/98 9,610 9,560
7/31/98 9,237 9,200
8/31/98 7,518 7,472
9/30/98 8,220 7,952
10/31/98 8,955 8,328
11/30/98 9,401 8,832
12/31/98 10,537 9,747
* Source: Lipper Analytical Services, Inc.
