File Nos. 333-47011
811-08673
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 12 [_]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 12 [X]
(Check appropriate box or boxes.)
DREYFUS INVESTMENT PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on May 1, 2000 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(1)
----
on (date) pursuant to paragraph (a)(1)
----
75 days after filing pursuant to paragraph (a)(2)
----
on (date) pursuant to paragraph (a)(2) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
----
<PAGE>
Dreyfus Investment Portfolios
Core Bond Portfolio
Investing in fixed-income securities to maximize total return
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Core Bond Portfolio
GOAL/APPROACH
The portfolio seeks to maximize total return through capital appreciation and
current income. To pursue this goal, the portfolio invests at least 65% of its
assets in fixed-income securities, such as: U.S. government bonds and notes,
corporate bonds, convertible securities, preferred stocks, asset-backed
securities, mortgage-related securities, and foreign bonds. The portfolio also
may own warrants and common stock acquired in "units" with bonds.
Generally, the portfolio seeks to maintain an investment grade (BBB/Baa) average
credit quality. However, the portfolio may invest up to 35% of its assets in
lower-rated securities (" high yield" or "junk" bonds). The portfolio has the
flexibility to shift its investment focus among different fixed-income
securities, based on market conditions and other factors. In choosing market
sectors and securities for investment, the issuer's financial strength, and the
current state and long-term outlook of the industry or sector are reviewed.
Current and forecasted interest rate and liquidity conditions also are important
factors in this regard.
Typically, the portfolio can be expected to have an average effective maturity
of between 5 and 10 years and an average effective duration between 3.5 and 6
years. While the portfolio' s duration and maturity usually will stay within
these ranges, if the maturity or duration of the portfolio's benchmark index
moves outside these ranges, so may the portfolio's.
Contents
The Portfolio
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
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Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
AVERAGE EFFECTIVE MATURITY: an average of the stated maturity of bonds, adjusted
to reflect provisions that may cause a bond's principal to be repaid earlier
than at maturity.
DURATION: an indication of an investment's "interest rate risk," or how
sensitive a bond or mutual fund portfolio may be to changes in interest rates.
Generally speaking, the longer a portfolio's duration, the more it is likely to
react to interest rate fluctuations and the greater its long-term risk/return
potential.
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. A rise in
rates usually causes a drop in bond prices and therefore in the portfolio's
share price as well.
The longer the portfolio's maturity and duration, the more its share price is
likely to react to interest rate movements. The value of a shareholder's
investment in the portfolio could go up and down, which means that shareholders
could lose money.
Mortgage-related securities may react differently to interest rate changes than
other bonds, because of prepayments and other factors. When rates fall, mortgage
pass-through securities may be paid off earlier than expected, and the portfolio
may reinvest those assets at lower rates. This lessens price-appreciation
potential from rate declines. When rates rise, prices may decline less, given
their generally higher coupon, and it may effectively lengthen a mortgage
security' s expected maturity and cause its value to fluctuate more widely as
rates change.
High yield bonds involve greater credit risk than investment grade bonds, and
are considered speculative. The prices of high yield bonds can fall in response
to bad news about the issuer or its industry, or the economy in general, or if
an issuer fails to make timely interest or principal payments.
Other risk factors that could have an effect on the portfolio's performance:
o the prices of foreign bonds can be affected by political and economic
instability or changes in currency exchange rates
o if the portfolio holds securities that are traded in a market that
becomes "illiquid," typically when there are many more sellers than
buyers for the securities, the value of such securities, and the
portfolio's share price, may fall dramatically
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
Other potential risks
Most mortgage and asset-backed securities are a form of derivative. The
portfolio, at times, may also invest in other derivative securities, such as
options and futures. Futures and options are used primarily to hedge the
portfolio, but may be used to increase returns; however, such practices may
lower returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
The portfolio may buy securities on a forward-commitment basis, and enter into
reverse repurchase agreements, which are forms of borrowing that can increase
the portfolio's overall price volatility.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
PAST PERFORMANCE
As a new portfolio, past performance information is not available for the
portfolio as of the date of this prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.60%
Other expenses 0.25%
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TOTAL 0.85%
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Expense example 1 Year 3 Years
- --------------------------------------------------------------------------------
$87 $271
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 0.60% of the portfolio's average daily net
assets. Dreyfus is the primary mutual fund business of Mellon Financial
Corporation, a global financial services company with approximately $2.5
trillion of assets under management, administration or custody, including
approximately $485 billion under management. Mellon provides wealth management,
global investment services and a comprehensive array of banking services for
individuals, businesses and institutions. Mellon is headquartered in Pittsburgh,
Pennsylvania.
The Dreyfus Taxable Fixed Income team makes investment decisions for the
portfolio. No individual team member is primarily responsible for making these
investment decisions. The portfolio managers comprising the team are identified
in the Statement of Additional Information.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund
The Portfolio
Performance Information for a Related Public Fund
Although the portfolio is newly organized and does not yet have its own
performance record, the portfolio has the same investment objective and follows
substantially the same investment policies and strategies as a corresponding
series of another open-end investment company advised by Dreyfus -- Dreyfus
Premier Core Bond Fund -- Class A shares (the "Public Fund"). The portfolio
currently has the same investment team as the Public Fund. The table at the
right shows average annual total return information for the Public Fund and for
the Merrill Lynch Domestic Master Index, the benchmark index of the portfolio
and the Public Fund.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those to be paid by the portfolio. The Public Fund's total annual
operating expenses for the fiscal year ended October 31, 1999 were 1.18% of its
average daily net assets. The performance figures also do not reflect the
deduction of charges or expenses attributable to VA contracts or VLI policies,
which would lower the performance quoted. Policy owners should refer to the
applicable insurance company prospectus for information on any such charges and
expenses. Additionally, although it is anticipated that the portfolio and the
Public Fund will hold similar securities, their investment results are expected
to differ. In particular, differences in asset size and in cash flow resulting
from purchases and redemptions of portfolio shares may result in different
security selections, differences in the relative weightings of securities or
differences in the price paid for particular portfolio holdings.
Historical performance information for Class A shares of the Public Fund and the
Merrill Lynch Domestic Master Index for various periods ended December 31, 1999,
as calculated pursuant to SEC guidelines, is as follows:
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Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
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DREYFUS PREMIER CORE BOND FUND
CLASS A (NAV) 4.92% 9.41% 8.76%
CLASS A (WITH SALES LOAD) -1.12% 8.12% 8.11%
MERRILL LYNCH
DOMESTIC MASTER INDEX(1) -.96% 7.74% 7.75%(
(1) THE MERRILL LYNCH DOMESTIC MASTER INDEX IS AN UNMANAGED PERFORMANCE
BENCHMARK FOR U.S. GOVERNMENT SECURITIES AND INVESTMENT GRADE CORPORATE
SECURITIES WITH MATURITIES GREATER THAN OR EQUAL TO ONE YEAR. ALL PERFORMANCE
FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS.
<PAGE>
FINANCIAL HIGHLIGHTS
No financial information is provided for the portfolio, which had not commenced
operations as of the date of this prospectus.
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided the orders are received by the portfolio in proper form on the next
business day. The participating insurance company is responsible for properly
transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Core Bond Portfolio) , for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead)
and account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio' s investments are generally valued by using available market
quotations or at fair value, which may be determined by one or more pricing
services approved by the fund's board.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income once a
month, and distributes any net capital gains it has realized once a year
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Core Bond Portfolio
- -------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
165P0500
<PAGE>
Dreyfus Investment Portfolios
Core Value Portfolio
Investing in large-cap stocks for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Core Value Portfolio
GOAL/APPROACH
The portfolio seeks long-term growth of capital, with current income as a
secondary objective. To pursue these goals, the portfolio invests primarily in
stocks of large-cap value companies (market capitalizations of $1 billion and
above). The portfolio typically invests mainly in the stocks of U.S. issuers,
and will limit its foreign stock holdings to 20% of the value of its total
assets. The portfolio's stock investments may include common stocks, preferred
stocks, convertible securities and depositary receipts.
In choosing stocks, the portfolio manager focuses on individual stock selection
(a "bottom-up" approach) rather than forecasting stock market trends (a
"top-down" approach), and looks for value companies. A three-step value
screening process is used to select stocks:
o value: quantitative screens track traditional measures such as
price-to-earnings, price-to-book and price-to-sales. These ratios are
analyzed and compared against the market.
o sound business fundamentals: a company's balance sheet and income data
are examined to determine the company's financial history.
o positive business momentum: a company's earnings and forecast changes
are analyzed and sales and earnings trends are reviewed to determine
the company's financial condition.
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or falls short of the portfolio
manager's expectations.
Contents
The Portfolio
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objectives and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
LARGE-CAP COMPANIES: established companies that are considered "known
quantities." Large-cap companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Value stocks involve the risk that they may never reach what the portfolio
manager believes is their full market value, either because the market fails to
recognize the stock's intrinsic worth or the portfolio manager misgauged that
worth. They also may decline in price, even though in theory they are already
underpriced. Because different types of stocks tend to shift in and out of favor
depending on market and economic conditions, the portfolio's performance may
sometimes be lower or higher than that of other types of funds (such as those
emphasizing growth stocks).
Any foreign securities purchased by the portfolio include special risks, such as
exposure to currency fluctuations, changing political climate, lack of
comprehensive company information and potentially less liquidity.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its primary investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goals, although as with all mutual
funds, it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures, and in foreign currencies. These practices, when
employed, are used primarily to hedge the portfolio but may be used to increase
returns; however, such practices sometimes may reduce returns or increase
volatility. Derivatives can be illiquid, and a small investment in certain
derivatives could have a potentially large impact on the portfolio's
performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
The Portfolio
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the portfolio's performance for its first full
calendar year of operations. The table compares the portfolio's average annual
total returns to those of the Standard & Poor's 500/BARRA Value Index (S&P 500
BARRA Value),which has been selected as the portfolio's primary index based on
the portfolio's and the index's value orientation, and the Standard & Poor's
500((reg.tm)) Composite Stock Price Index (S&P 500 Composite), the portfolio's
former primary index, each a broad measure of stock performance. Performance for
the S&P 500 Composite will not be shown in the future. All performance figures
reflect the reinvestment of dividends and distributions. Of course, past
performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q4 '99 +13.16%
WORST QUARTER: Q3 '99 -10.40%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/98)
- --------------------------------------------------------------------------------
PORTFOLIO 19.73% 7.61%
S&P 500 BARRA VALUE 12.72% 8.46%*
S&P 500 COMPOSITE 21.03% 19.80%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 4/30/98 IS USED AS THE
BEGINNING VALUE ON 5/1/98.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.75%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 1.50%
Fee waiver and/or expense reimbursement (0.50%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.00%
* THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%.
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$102 $425 $771 $1,748
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. The one-year number is based on the net
operating expenses. The longer-term numbers are based on total annual portfolio
operating expenses.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the fiscal year ended
December 31, 1999, the portfolio paid Dreyfus an annual management fee of 0.25%
of the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The portfolio's primary portfolio manager is Valerie J. Sill. She has been a
portfolio manager of the portfolio since its inception. Ms. Sill is a portfolio
manager of Dreyfus and senior vice president of The Boston Company Asset
Management, Inc. ("TBCAM"), an affiliate of Dreyfus. She is also a member of the
Equity Policy Group of TBCAM. She previously served as director of equity
research and as an equity research analyst for TBCAM.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during each period, assuming the investor had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the
portfolio's financial statements, is included in the annual report, which is
available upon request. Keep in mind that fees and charges imposed by
participating insurance companies, which are not reflected in the table, would
reduce the investment returns that are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998(1)
- ---------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of period 11.72 12.50
Investment operations: Investment income -- net .07(2) .07
Net realized and unrealized gain (loss) on investments 2.24 (.77)
Total from investment operations 2.31 (.70)
Distributions: Dividends from investment income -- net (.06) (.08)
Net asset value, end of period 13.97 11.72
Total return (%) 19.73 (5.59)(3)
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 .67(3)
Ratio of net investment income to average net assets (%) .56 .62(3)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) .50 .74(3)
Portfolio turnover rate (%) 97.14 47.37(3)
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 15,343 5,959
(1) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Core Value Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
For More Information
Dreyfus Investment Portfolios Core Value Portfolio
- --------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
172P0500
<PAGE>
Dreyfus Investment Portfolios
Founders International Equity Portfolio
Investing in stocks of foreign growth companies for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Founders International Equity Portfolio
GOAL/APPROACH
The portfolio seeks long-term growth of capital. To pursue this goal, the
portfolio invests primarily in equity securities of foreign issuers which are
characterized as "growth" companies. The portfolio may purchase securities of
companies in initial public offerings or shortly thereafter.
The portfolio will seek investment opportunities, generally, in companies which
the portfolio manager believes have fundamental strengths that indicate the
potential for growth in earnings per share. The portfolio manager focuses on
individual stock selection (a "bottom-up" approach) rather than on forecasting
stock market trends (a "top-down" approach).
The portfolio will invest primarily in foreign issuers from at least three
foreign countries with established or emerging economies, but will not invest
more than 50% of its assets in issuers in any one foreign country. The portfolio
also may invest in investment grade debt securities of foreign issuers that the
portfolio manager believes -- based on market conditions, the financial
condition of the issuer, general economic conditions, and other relevant factors
- -- offer opportunities for capital growth.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities that
are rated at the time of purchase at least B by a credit rating agency or the
unrated equivalent as determined by the portfolio's sub-adviser.
MAIN RISKS
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in foreign countries. Like the stocks of U.S.
companies, the securities of foreign issuers fluctuate in price, often based on
factors unrelated to the issuers' value, and such fluctuations can be
pronounced. The prices of securities purchased in initial public offerings or
shortly thereafter may be very volatile. Unlike investing in U.S. companies,
foreign securities include special risks such as exposure to currency
fluctuations, a lack of comprehensive company information, political
instability, and differing auditing and legal standards. The value of a
shareholder's investment in the portfolio will go up and down, which means that
shareholders could lose money.
Because the portfolio may allocate relatively more assets to certain industry
sectors than others, the portfolio's performance may be more susceptible to any
developments which affect those sectors emphasized by the portfolio.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately,
even if earnings do increase. In addition, growth stocks typically lack the
dividend yield that can cushion stock prices in market downturns.
The portfolio may invest in the stocks of companies located in developed
countries and in emerging markets. Emerging market countries generally have
economic structures that are less diverse and mature, and political systems that
are less stable, than those of developed countries. Emerging markets may be more
volatile than the markets of more mature economies, and the securities of
companies located in emerging markets are often subject to rapid and large
changes in price; however, these markets also may provide higher long-term rates
of return.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The Portfolio
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the portfolio's performance for its first full
calendar year of operations. The table compares the portfolio's average annual
total returns to those of the Morgan Stanley Capital International World (ex.
US) Index (MSCI World (ex. US) Index), a broad measure of international stock
performance. All performance figures reflect the reinvestment of dividends and
distributions. Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q4 '99 +40.36%
WORST QUARTER: Q1 '99 +2.44%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- --------------------------------------------------------------------------------
PORTFOLIO 60.69% 63.30%
MSCI WORLD (EX. US) INDEX 27.93% 41.33%
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 2.77%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 3.77%
Fee waiver and/or expense reimbursement (2.27%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.50%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%.
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$153 $943 $1,752 $3,865
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. The one-year number is based on net
operating expenses. The longer-term numbers are based on total annual portfolio
operating expenses.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the fiscal year ended
December 31, 1999, the portfolio did not pay Dreyfus a management fee as a
result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as
the portfolio's sub-investment adviser. Founders, located at Founders Financial
Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor
companies have been offering tools to help investors pursue their financial
goals since 1938. As of December 31, 1999, Founders managed mutual funds and
other client accounts having aggregate assets of approximately $7.94 billion.
The portfolio's primary portfolio manager is Douglas A. Loeffler, C.F.A. He has
been the portfolio's primary portfolio manager since the portfolio's inception
and has been employed by Founders since 1995. He is a vice president of
investments at Founders. Prior to joining Founders, Mr. Loeffler was employed
for seven years at Scudder, Stevens & Clark as an international equities and
quantitative analyst.
The portfolio, Dreyfus, Founders and Dreyfus Service Corporation (the
portfolio's distributor) each have adopted a code of ethics that permits its
personnel, subject to such code, to invest in securities, including securities
that may be purchased or held by the portfolio. The Dreyfus and Founders codes
of ethics restrict the personal securities transactions of their employees, and
require portfolio managers and other investment personnel to comply with the
code's preclearance and disclosure procedures. Each code's primary purpose is to
ensure that personal trading by Dreyfus or Founders employees does not
disadvantage any Dreyfus- or Founders-managed fund.
The Portfolio
Performance information for Public Fund and Portfolio
The portfolio has the same investment objective and follows substantially the
same investment policies and strategies as a corresponding series of another
open-end investment company advised by Founders, the Dreyfus Founders
International Equity Fund (the "Public Fund"). The portfolio currently has the
same primary portfolio manager as the Public Fund. The first table at right
shows average annual total return information for the Public Fund and for the
MSCI World (ex. US) Index, the benchmark index of the portfolio and the Public
Fund. The second table shows average annual total return information for the
portfolio and the MSCI World (ex. US) Index.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those to be paid by the portfolio. The Public Fund's total annual
operating expenses, after fee waiver and expense reimbursement, for the year
ended December 31, 1999 were 1.80% of its average daily net assets. The
performance figures for the Public Fund and the portfolio also do not reflect
the deduction of charges or expenses attributable to VA contracts or VLI
policies, which would lower the performance quoted. Policy owners should refer
to the applicable insurance company prospectus for information on any such
charges and expenses. Additionally, although it is anticipated that the
portfolio and the Public Fund will hold similar securities, their investment
results are expected to differ. In particular, differences in asset size and in
cash flow resulting from purchases and redemptions of portfolio shares may
result in different security selections, differences in the relative weightings
of securities or differences in the price paid for particular portfolio
holdings. Performance information for the Public Fund and the portfolio reflect
the reinvestment of dividends and other distributions.
PUBLIC FUND
The one-year performance of the Public Fund was due in part to the allocation to
the Public Fund of securities sold in initial public offerings ("IPOs"). There
is no guarantee that the Public Fund's investments in IPOs will continue to have
a similar impact on performance, and such returns should not be expected over
the long term.
Historical performance information for the Public Fund and for the MSCI World
(ex. US) Index for various periods ended December 31, 1999, as calculated
pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (12/29/95)
- --------------------------------------------------------------------------------
DREYFUS FOUNDERS INTERNATIONAL
EQUITY FUND -- CLASS F* 58.71% 26.45%
MSCI WORLD
(EX. US) INDEX** 27.93% 13.49%
PORTFOLIO
Average annual total returns for the portfolio and the MSCI World (ex. US) Index
for various periods ended December 31, 1999, as calculated pursuant to SEC
guidelines, are as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (9/30/98)
- --------------------------------------------------------------------------------
FOUNDERS INTERNATIONAL
EQUITY PORTFOLIO 60.69% 63.30%
MSCI WORLD
(EX. US) INDEX** 27.93% 41.33%
- --------------------------------------------------------------------------------
* CLASS F SHARES ARE GENERALLY CLOSED TO NEW INVESTORS.
** THE MSCI WORLD (EX. US) INDEX IS AN ARITHMETICAL AVERAGE OF THE PERFORMANCE
OF OVER 1,000 SECURITIES LISTED ON THE STOCK EXCHANGES OF EUROPE, CANADA,
AUSTRALIA, NEW ZEALAND AND THE FAR EAST. TOTAL RETURN FIGURES FOR THE INDEX
ASSUME CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AFTER DEDUCTION OF
LOCAL TAXES, BUT DO NOT DEDUCT ANY FEES OR EXPENSES WHICH ARE CHARGED TO THE
PUBLIC FUND AND THE PORTFOLIO.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during each period, assuming the investor had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the
portfolio's financial statements, is included in the annual report, which is
available upon request. Keep in mind that fees and charges imposed by
participating insurance companies, which are not reflected in the table, would
reduce the investment returns that are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998(1)
- -------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of period 14.36 12.50
Investment operations: Investment income (loss) -- net (.02)(2) (.01)
Net realized and unrealized gain (loss) on investments 8.73 1.87
Total from investment operations 8.71 1.86
Distributions: Dividends from net realized gain on investments (1.42) --
Net asset value, end of period 21.65 14.36
Total return (%) 60.69 14.88(3)
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.50 .38(3)
Ratio of investment (loss) to average net assets (%) (.11) (.08)(3)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) 2.27 .81(3)
Portfolio turnover rate (%) 190.80 29.25(3)
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 4,608 2,297
(1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Founders International Equity
Portfolio), for purchase of portfolio shares. The wire must include the
portfolio account number (for new accounts, a taxpayer identification number
should be included instead), account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Founders International Equity Portfolio
- ---------------------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
177P0500
<PAGE>
Dreyfus Investment Portfolios
Founders Passport Portfolio
Investing in stocks of smaller foreign growth companies for capital appreciation
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Founders Passport Portfolio
GOAL/APPROACH
The portfolio seeks capital appreciation. To pursue this goal, the portfolio
invests primarily in equity securities of foreign issuers with market
capitalizations or annual revenues of $1 billion or less and which are
characterized as "growth" companies. The portfolio may purchase securities of
companies in initial public offerings or shortly thereafter.
The portfolio seeks investment opportunities, generally, in companies which the
portfolio manager believes have fundamental strengths that indicate the
potential for growth in earnings per share. The portfolio manager focuses on
individual stock selection (a "bottom-up" approach) rather than on forecasting
stock market trends (a "top-down" approach).
The portfolio will invest primarily in foreign issuers from at least three
foreign countries with established or emerging economies. The portfolio may
invest in securities of larger foreign issuers or in U.S. issuers, if the
portfolio manager believes these securities offer attractive opportunities for
capital appreciation.
The portfolio also may invest in investment grade debt securities of domestic or
foreign issuers that the portfolio manager believes -- based on market
conditions, the financial condition of the issuer, general economic conditions,
and other relevant factors -- offer opportunities for capital appreciation.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities that
are rated at the time of purchase at least B by a credit rating agency or the
unrated equivalent as determined by the portfolio's sub-adviser.
<PAGE>
MAIN RISKS
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in foreign countries. Like the stocks of U.S.
companies, the securities of foreign issuers fluctuate in price, often based on
factors unrelated to the issuers' value, and such fluctuations can be
pronounced. Unlike investing in U.S. companies, foreign securities include
special risks such as exposure to currency fluctuations, a lack of comprehensive
company information, political instability, and differing auditing and legal
standards. The value of a shareholder's investment in the portfolio will go up
and down, which means that shareholders could lose money.
Because the portfolio may allocate relatively more assets to certain industry
sectors than others, the portfolio's performance may be more susceptible to any
developments which affect those sectors emphasized by the portfolio.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately,
even if earnings do increase. In addition, growth stocks typically lack the
dividend yield that can cushion stock prices in market downturns.
The portfolio may invest in the stocks of companies located in developed
countries and in emerging markets. Emerging market countries generally have
economic structures that are less diverse and mature, and political systems that
are less stable, than those of developed countries. Emerging markets may be more
volatile than the markets of more mature economies, and the securities of
companies located in emerging markets are often subject to rapid and large
changes in price; however, these markets also may provide higher long-term rates
of return.
The portfolio invests primarily in securities issued by companies with
relatively small market capitalizations. Smaller companies typically carry
additional risks because their earnings tend to be less predictable, their share
prices more volatile and their securities less liquid than larger,
more-established companies. The prices of securities purchased in initial public
offerings or shortly thereafter may be very volatile.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The Portfolio
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the portfolio's performance for its first full
calendar year of operations. The table compares the portfolio's average annual
total returns to those of the Morgan Stanley Capital International World (ex.
US) Index (MSCI World (ex. US) Index), a broad measure of international stock
performance. All performance figures reflect the reinvestment of dividends and
distributions. Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q4 '99 +53.13%
WORST QUARTER: Q1 '99 +3.55%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- --------------------------------------------------------------------------------
PORTFOLIO 76.05% 76.79%
MSCI WORLD (EX. US)
INDEX 27.93% 41.33%
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 2.64%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 3.64%
Fee waiver and/or expense reimbursement (2.14%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.50%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%.
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$153 $916 $1,701 $3,758
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. The one-year number is based on net
operating expenses. The longer-term numbers are based on total annual portfolio
operating expenses.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the fiscal year ended
December 31, 1999, the portfolio did not pay Dreyfus a management fee as a
result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as
the portfolio's sub-investment adviser. Founders, located at Founders Financial
Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor
companies have been offering tools to help investors pursue their financial
goals since 1938. As of December 31, 1999, Founders managed mutual funds and
other client accounts having aggregate assets of approximately $7.94 billion.
The portfolio's primary portfolio manager is Tracy P. Stouffer. She has been the
portfolio's primary portfolio manager, and has been employed by Founders, since
July 1999. Prior to joining Founders, Ms. Stouffer was a vice president and
portfolio manager with Federated Global Incorporated from 1995 to July 1999, and
a vice president and portfolio manager with Clariden Asset Management, Inc. from
1988 to 1995.
The portfolio, Dreyfus, Founders and Dreyfus Service Corporation (the
portfolio's distributor) each have adopted a code of ethics that permits its
personnel, subject to such code, to invest in securities, including securities
that may be purchased or held by the portfolio. The Dreyfus and Founders codes
of ethics restrict the personal securities transactions of their employees, and
require portfolio managers and other investment personnel to comply with the
code's preclearance and disclosure procedures. Each code's primary purpose is to
ensure that personal trading by Dreyfus or Founders employees does not
disadvantage any Dreyfus- or Founders-managed fund.
The Portfolio
Performance information for Public Fund and Portfolio
The portfolio has the same investment objective and follows substantially the
same investment policies and strategies as a corresponding series of another
open-end investment company advised by Founders, the Dreyfus Founders Passport
Fund (the "Public Fund"). The portfolio currently has the same primary portfolio
manager as the Public Fund. The first table at right shows average annual total
return information for the Public Fund and for the MSCI World (ex. US) Index,
the benchmark index of the portfolio and the Public Fund. The second table shows
average annual total return information for the portfolio and the MSCI World
(ex. US) Index.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those paid by the portfolio. The Public Fund's total annual
operating expenses, after fee waiver and expense reimbursement, for the year
ended December 31, 1999 were 1.64% of its average daily net assets. The
performance figures for the Public Fund and the portfolio also do not reflect
the deduction of charges or expenses attributable to VA contracts or VLI
policies, which would lower the performance quoted. Policy owners should refer
to the applicable insurance company prospectus for information on any such
charges and expenses. Additionally, although it is anticipated that the
portfolio and the Public Fund will hold similar securities, their investment
results are expected to differ. In particular, differences in asset size and in
cash flow resulting from purchases and redemptions of portfolio shares may
result in different security selections, differences in the relative weightings
of securities or differences in the price paid for particular portfolio
holdings. Performance information for the Public Fund and the portfolio reflects
the reinvestment of dividends and other distributions.
PUBLIC FUND
The one-year performance of the Public Fund was due in part to the allocation to
the Public Fund of securities sold in initial public offerings ("IPOs"). There
is no guarantee that the Public Fund's investments in IPOs will continue to have
a similar impact on performance, and such returns should not be expected over
the long term.
Historical performance information for the Public Fund and for the MSCI World
(ex. US) Index for various periods ended December 31, 1999, as calculated
pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (11/16/93)
- -------------------------------------------------------------------------------
DREYFUS FOUNDERS
PASSPORT FUND --
CLASS F* 87.44% 26.20% 19.79%
MSCI WORLD (EX. US)
INDEX** 27.93% 13.09% 13.21%***
PORTFOLIO
Average annual total returns for the portfolio and the MSCI World (ex. US) Index
for various periods ended December 31, 1999, as calculated pursuant to SEC
guidelines, are as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- --------------------------------------------------------------------------------
FOUNDERS
PASSPORT PORTFOLIO 76.05% 76.79%
MSCI WORLD (EX. US)
INDEX** 27.93% 41.33%
- --------------------------------------------------------------------------------
* CLASS F SHARES ARE GENERALLY CLOSED TO NEW INVESTORS.
** THE MSCI WORLD (EX. US) INDEX IS AN ARITHMETICAL AVERAGE OF THE PERFORMANCE
OF OVER 1,000 SECURITIES LISTED ON THE STOCK EXCHANGES OF EUROPE, CANADA,
AUSTRALIA, NEW ZEALAND AND THE FAR EAST. TOTAL RETURN FIGURES FOR THE INDEX
ASSUME CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AFTER DEDUCTION OF
LOCAL TAXES, BUT DO NOT DEDUCT ANY FEES OR EXPENSES WHICH ARE CHARGED TO THE
PUBLIC FUND AND THE PORTFOLIO.
*** FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 11/30/93 IS USED AS THE
BEGINNING VALUE ON 11/16/93.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during each period, assuming the investor had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the
portfolio's financial statements, is included in the annual report, which is
available upon request. Keep in mind that fees and charges imposed by
participating insurance companies, which are not reflected in the table, would
reduce the investment returns that are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998(1)
- ---------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of period 14.46 12.50
Investment operations: Investment income (loss) -- net (.10)(2) .00(3)
Net realized and unrealized gain (loss) on investments 11.04 1.97
Total from investment operations 10.94 1.97
Distributions: Dividends from investment income -- net -- (.00)(3)
Dividends from net realized gain on investments (1.58) (.01)
Total distributions (1.58) (.01)
Net asset value, end of period 23.82 14.46
Total return (%) 76.05 15.79(4)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.50 .38(4)
Ratio of net investment income to average net assets (%) (.60) .02(4)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) 2.14 .30(4)
Portfolio turnover rate (%) 319.31 3.98(4)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 14,836 5,788
(1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(4) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Founders Passport Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Founders Passport Portfolio
- ---------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
178P0500
<PAGE>
Dreyfus Investment Portfolios
Japan Portfolio
Investing in stocks of Japanese companies for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Japan Portfolio
GOAL/APPROACH
The portfolio seeks long-term capital growth. To pursue this goal, the portfolio
invests primarily in stocks of Japanese companies. Generally, the portfolio
invests at least 60% of its assets in Japanese companies with market caps of at
least $1.5 billion at the time of investment. The portfolio's investments may
include common stocks, preferred stocks and convertible securities.
In choosing stocks, the portfolio manager identifies and forecasts: key trends
in economic variables, such as gross domestic product, inflation and interest
rates; investment themes, such as the impact of new technologies and the
globalization of industries and brands; relative values of equity securities,
bonds and cash; company fundamentals and long-term trends in currency movements
Within markets and sectors determined to be relatively attractive, the portfolio
manager seeks what are believed to be attractively priced companies that possess
a sustainable competitive advantage in their market or sector. The portfolio
manager generally sells securities when themes or strategies change or when the
portfolio manager determines that a company's prospects have changed or that its
stock is fully valued by the market.
Many of the securities in which the portfolio invests are denominated in yen. To
protect the portfolio against potential depreciation of the yen versus the U.S.
dollar, the portfolio manager may engage in currency hedging.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
JAPANESE COMPANY: a company organized under the laws of Japan or for which the
principal securities trading market is Japan; or a company, wherever organized,
with a majority of its assets or business in Japan.
CURRENCY HEDGING: the value of the yen can fluctuate significantly relative to
the U.S. dollar and potentially result in losses for investors. To help offset
such losses, the portfolio manager may employ certain techniques designed to
reduce the portfolio's foreign currency exposure. Generally, this involves
buying options, futures, or forward contracts for the foreign currency.
MAIN RISKS
While stocks have historically been a choice of long-term investors, they do
fluctuate in price. The value of a shareholder's investment in the portfolio
will go up and down, which means that shareholders could lose money.
The portfolio's performance will be influenced by political, social and economic
factors affecting investments in Japanese companies. These risks include changes
in currency exchange rates, a lack of comprehensive company information,
political instability, less liquidity and differing auditing and legal
standards. Each of those risks could result in more volatility for the
portfolio. While investments in all foreign countries are subject to those
risks, the portfolio' s concentration in Japanese securities could cause the
portfolio' s performance to be more volatile than that of more geographically
diversified funds.
Small companies carry additional risks because their operating histories tend to
be more limited, their earnings less predictable, their share prices more
volatile and their securities less liquid than larger, more established
companies. Some of the portfolio' s investments will rise and fall based on
investor perceptions rather than economics.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. The portfolio may also sell short, which
involves selling a security it does not own in anticipation of a decline in the
market price of the security. When employed, these practices are used primarily
to hedge the portfolio but may also be used to increase returns; however, such
practices sometimes may reduce returns or increase volatility. In addition,
derivatives can be illiquid and highly sensitive to changes in their underlying
instrument. A small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
The portfolio can buy securities with borrowed money (a form of leverage), which
could magnify the portfolio's gains or losses.
The Portfolio
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, annual total
return information for the portfolio is not included in this section of the
prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 0.25%
- --------------------------------------------------------------------------------
TOTAL 1.25%
- --------------------------------------------------------------------------------
Expense example 1 Year 3 Years
- --------------------------------------------------------------------------------
$127 $397
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all asrpects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 1.00% of the portfolio's average daily net
assets. For the fiscal period December 15, 1999 (commencement of operations)
through December 31, 1999, the portfolio did not pay Dreyfus a management fee as
a result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged its affiliate, Newton Capital Management Limited, to serve
as the portfolio's sub-investment adviser. Newton, located at 71 Queen Victoria
Street, London, EC4V 4DR, England, was formed in 1977 and, as of December 31,
1999, together with its parent and its parent' s subsidiaries, managed
approximately $29 billion in discretionary separate accounts and other
investment accounts.
The portfolio' s primary portfolio manager is Miki Sugimoto. She has been the
portfolio' s primary portfolio manager since the portfolio's inception and has
been employed by Newton since 1995. Prior to joining Newton, Ms. Sugimoto was
employed for five years at S.G. Warburg where she worked primarily in the
corporate finance department.
The portfolio, Dreyfus, Newton and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
PERFORMANCE INFORMATION FOR RELATED INVESTMENT ACCOUNTS
Although the portfolio is newly organized and does not yet have its own full
year of performance, the portfolio has a substantially similar investment
objective and follows substantially similar investment policies and strategies
as two investment accounts advised by Newton, the Newton Japan Fund and Newton
Universal Growth Funds Japanese Equity Fund (collectively, the "Investment
Accounts" ). The portfolio currently has the same portfolio managers as the
Investment Accounts. The table at the right shows composite average annual total
return information for the Investment Accounts and for the Morgan Stanley
Capital International (MSCI) Japan Index, the benchmark index of the portfolio
and the Investment Accounts.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Investment
Accounts were calculated by Micropal on a "bid-bid" basis (i.e., the price at
which an investor can sell its shares) with the accounts' gross income
reinvested in U.S. dollars. The performance figures were then adjusted to
reflect the deduction of the historical annual management fee paid by the
Investment Accounts (1.5% of each Investment Account's net assets), and not
those to be paid by the portfolio. The performance figures for the Investment
Accounts do not reflect the deduction of charges or expenses attributable to VA
contracts or VLI policies, which would lower the performance quoted. Policy
owners should refer to the applicable insurance company prospectus for
information on any such charges and expenses. Moreover, the performance of the
Investment Accounts could have been adversely affected by the imposition of
certain regulatory requirements, restrictions and limitations if the accounts
had been regulated as investment companies under the U.S. federal securities and
tax laws. Additionally, although it is anticipated that the portfolio and the
Investment Accounts will hold similar securities, their investment results are
expected to differ. In particular, differences in asset size and in cash flow
resulting from purchases and redemptions of portfolio shares may result in
different security selections, differences in the relative weightings of
securities or differences in the price paid for particular portfolio holdings.
The one-year performance of the Investment Accounts was due in large part to a
period of extremely strong stock market performance in Japan, which should not
be expected over the long term.
Historical performance information for the Investment Accounts and for the MSCI
Japan Index for various periods ended December 31, 1999 is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
1 Year 11/22/94*
- --------------------------------------------------------------------------------
NEWTON JAPAN FUND 59.6% 56.6%
NEWTON UGF JAPANESE
EQUITY FUND 59.5% 53.0%
MSCI JAPAN INDEX** 61.8% 6.7%
*NEWTON BEGAN MANAGING THE INVESTMENT ACCOUNTS ON NOVEMBER 22, 1994. PRIOR
THERETO, THE INVESTMENT ACCOUNTS WERE MANAGED BY CAPITAL HOUSE, LLC, A
SUBSIDIARY OF THE ROYAL BANK OF SCOTLAND. PERFORMANCE FOR THE MSCI JAPAN INDEX
IS CALCULATED FROM OCTOBER 31, 1994.
**THE MSCI JAPAN INDEX IS A CAPITALIZATION WEIGHTED INDEX (ADJUSTED IN U.S.
DOLLARS) OF COMPANIES IN JAPAN INTENDED TO REPLICATE THE INDUSTRY COMPOSITION OF
THE LOCAL MARKET. THE CHOSEN LIST OF STOCKS INCLUDES A REPRESENTATIVE SAMPLING
OF LARGE, MEDIUM AND SMALL CAPITALIZATION WEIGHTED STOCKS, TAKING EACH STOCK'S
LIQUIDITY INTO ACCOUNT. THE RETURNS OF THE INDEX ASSUME REINVESTMENT NET OF
WITHHOLDING TAX AND, UNLIKE FUND RETURNS, DO NOT REFLECT ANY FEES OR EXPENSES
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during the period, assuming the investor had reinvested
all dividends and distributions. These figures have been independently audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1999(1)
- -----------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .00(2)
Net realized and unrealized gain (loss) on investments .34
Total from investment operations .34
Net asset value, end of period 12.84
Total return (%) 2.64(3)
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .07(3)
Ratio of net investment income to average net assets (%) .03(3)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.35(3)
Portfolio turnover rate (%) --
- -----------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,054
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided the orders are received by the portfolio in proper form on the next
business day. The participating insurance company is responsible for properly
transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is with a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Japan Portfolio), for purchase of
portfolio shares. The wire must include the portfolio account number (for new
accounts, a taxpayer identification number should be included instead) and
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Japan Portfolio
- ---------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
189P0500
<PAGE>
Dreyfus Investment Portfolios
Founders Discovery Portfolio
Investing in stocks of smaller-cap growth companies for capital appreciation
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Founders Discovery Portfolio
GOAL/APPROACH
The portfolio seeks capital appreciation. To pursue this goal, the portfolio
invests primarily in equity securities of small, U.S.-based companies which are
characterized as "growth" companies. These companies typically are not listed on
a national securities exchange, but trade on the over-the-counter market. The
portfolio may purchase securities of companies in initial public offerings or
shortly thereafter.
The portfolio manager seeks investment opportunities for the portfolio in
companies with fundamental strengths that indicate the potential for growth in
earnings per share. The portfolio manager focuses on individual stock selection
(a "bottom-up" approach) rather than on forecasting stock market trends (a
"top-down" approach).
The portfolio may invest up to 30% of its assets in foreign securities. The
portfolio may invest in securities of larger issuers if the portfolio manager
believes these securities offer attractive opportunities for capital
appreciation. The portfolio also may invest in investment grade debt securities
of domestic or foreign issuers that the portfolio manager believes -- based on
market conditions, the financial condition of the issuer, general economic
conditions, and other relevant factors -- offer opportunities for capital
appreciation.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
SMALL COMPANIES: generally, those companies with market capitalizations of less
than $2.2 billion. This range may fluctuate depending on changes in the value of
the stock market as a whole. Small companies tend to grow faster than large-cap
companies, but frequently are more volatile, are more vulnerable to major
setbacks, and have a higher failure rate than large companies.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities rated
at the time of purchase at least B by a credit rating agency or the unrated
equivalent as determined by the portfolio's sub-adviser.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, sometimes dramatically, which means that
shareholders could lose money.
Small companies carry additional risks because their operating histories tend to
be more limited, their earnings less predictable, their share prices more
volatile and their securities less liquid than larger, more established
companies. The prices of securities purchased in initial public offerings or
shortly thereafter may be very volatile. Some of the portfolio's investments
will rise and fall based on investor perceptions rather than economics.
Because the portfolio may allocate relatively more assets to certain industry
sectors than others, the portfolio's performance may be more susceptible to any
developments which affect those sectors emphasized by the portfolio.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately,
even if earnings do increase. In addition, growth stocks typically lack the
dividend yield that can cushion stock prices in market downturns.
Any foreign securities purchased by the portfolio are subject to special risks,
such as exposure to currency fluctuations, changing political climate, lack of
comprehensive company information and potentially less liquidity.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. These practices, when employed, are used
to hedge its portfolio; however, such practices sometimes may reduce returns or
increase volatility. In addition, derivatives can be illiquid and highly
sensitive to changes in their underlying instrument. A small investment in
certain derivatives could have a potentially large impact on the portfolio's
performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The Portfolio
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, annual total
return information for the portfolio is not included in this section of the
prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.90%
Other expenses 0.25%
- --------------------------------------------------------------------------------
TOTAL 1.15%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$117 $365
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 0.90% of the portfolio's average daily net
assets. For the fiscal period December 15, 1999 (commencement of operations)
through December 31, 1999, the portfolio did not pay Dreyfus a management fee as
a result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as
the portfolio's sub-investment adviser. Founders, located at Founders Financial
Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor
companies have been offering tools to help investors pursue their financial
goals since 1938. As of December 31, 1999, Founders managed mutual funds and
other client accounts having aggregate assets of approximately $7.94 billion.
The portfolio's primary portfolio manager is Robert T. Ammann, C.F.A. He has
been the portfolio's primary portfolio manager since the portfolio's inception
and has been employed by Founders since 1993. He is a vice president of
investments at Founders.
The portfolio, Dreyfus, Founders and Dreyfus Service Corporation (the
portfolio's distributor) each have adopted a code of ethics that permits its
personnel, subject to such code, to invest in securities, including securities
that may be purchased or held by the portfolio. The Dreyfus and Founders codes
of ethics restrict the personal securities transactions of their employees, and
require portfolio managers and other investment personnel to comply with the
code's preclearance and disclosure procedures. Each code's primary purpose is to
ensure that personal trading by Dreyfus or Founders employees does not
disadvantage any Dreyfus- or Founders-managed fund.
The Portfolio
Performance Information for Related Public Fund
Although the portfolio is newly organized and does not yet have its own full
year of performance, the portfolio has the same investment objective and follows
substantially the same investment policies and strategies as a corresponding
series of another open-end investment company advised by Founders, the Dreyfus
Founders Discovery Fund (the "Public Fund"). The portfolio currently has the
same primary portfolio manager as the Public Fund. The table at the right shows
average annual total return information for the Public Fund and for the Russell
2000 Index, the benchmark index of the portfolio and the Public Fund.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those to be paid by the portfolio. The Public Fund's total annual
operating expenses, after fee waiver and expense reimbursement, for the year
ended December 31, 1999 were 1.46% of its average daily net assets. The
performance figures for the Public Fund also do not reflect the deduction of
charges or expenses attributable to VA contracts or VLI policies, which would
lower the performance quoted. Policy owners should refer to the applicable
insurance company prospectus for information on any such charges and expenses.
Additionally, although it is anticipated that the portfolio and the Public Fund
will hold similar securities, their investment results are expected to differ.
In particular, differences in asset size and in cash flow resulting from
purchases and redemptions of portfolio shares may result in different security
selections, differences in the relative weightings of securities or differences
in the price paid for particular portfolio holdings.
The one-year performance of the Public Fund was due in part to the allocation to
the Public Fund of securities sold in initial public offerings ("IPOs"). There
is no guarantee that the Public Fund's investments in IPOs will continue to have
a similar impact on performance, and such returns should not be expected over
the long term.
Historical performance information for the Public Fund and for the Russell 2000
Index for various periods ended December 31, 1999, as calculated pursuant to SEC
guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
FOUNDERS DISCOVERY FUND 94.59% 31.68% 23.96%
RUSSELL 2000 INDEX* 21.26% 16.69% 13.40%
* THE RUSSELL 2000 INDEX IS A WIDELY RECOGNIZED, UNMANAGED SMALL-CAP INDEX
COMPRISED OF THE COMMON STOCKS OF THE 2,000 U.S. PUBLIC COMPANIES NEXT IN SIZE
AFTER THE LARGEST 1,000 PUBLICLY TRADED U.S. COMPANIES. ALL PERFORMANCE FIGURES
REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during the period, assuming the investor had reinvested
all dividends and distributions. These figures have been independently audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
1999(1)
- -----------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .01
Net realized and unrealized gain (loss)
on investments 1.38
Total from investment operations 1.39
Net asset value, end of period 13.89
Total return (%) 11.12(2)
- -----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .07(2)
Ratio of net investment income to average net assets (%) .06(2)
Decrease reflected in above expense ratio
due to actions by Dreyfus (%) 1.45(2)
Portfolio turnover rate (%) 7.49(2)
- -----------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,223
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided the orders are received by the portfolio in proper form on the next
business day. The participating insurance company is responsible for properly
transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Founders Discovery Portfolio),
for purchase of portfolio shares. The wire must include the portfolio account
number (for new accounts, a taxpayer identification number should be included
instead) and account registration and dealer number, if applicable, of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Founders Discovery Portfolio
- ----------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
193P0500
<PAGE>
Dreyfus Investment Portfolios
Founders Growth Portfolio
Investing in stocks of growth companies for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Founders Growth Portfolio
GOAL/APPROACH
The portfolio seeks long-term growth of capital. To pursue this goal, the
portfolio invests primarily in equity securities of well-established, high
quality "growth" companies. These companies tend to have strong performance
records, solid market positions and reasonable financial strength, and have
continuous operating records of three years or more.
The portfolio will seek investment opportunities, generally, in companies which
the portfolio managers believe have fundamental strengths that indicate the
potential for growth in earnings per share. The portfolio managers focus on
individual stock selection (a "bottom-up" approach) rather than on forecasting
stock market trends (a "top-down" approach).
The portfolio may invest up to 30% of its assets in foreign securities, and up
to 25% of its assets in any one foreign country. The portfolio also may invest
in investment grade debt securities of domestic or foreign issuers that the
portfolio managers believe -- based on market conditions, the financial
condition of the issuer, general economic conditions, and other relevant factors
- -- offer opportunities for capital growth.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
EQUITY SECURITIES: common stocks, preferred stocks and convertible securities.
The portfolio will invest in preferred stocks and convertible securities that
are rated at the time of purchase at least B by a credit rating agency or the
unrated equivalent as determined by the portfolio's sub-adviser.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
While the portfolio's investments in stocks of well-established companies may
limit the overall downside risk of the portfolio over time, the portfolio may
produce more modest gains than riskier stock funds as a trade-off for this
potentially lower risk.
Because the portfolio may allocate relatively more assets to certain industry
sectors than others, the portfolio's performance may be more susceptible to any
developments which affect those sectors emphasized by the portfolio.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately,
even if earnings do increase. In addition, growth stocks typically lack the
dividend yield that can cushion stock prices in market downturns.
Any foreign securities purchased by the portfolio include special risks, such as
exposure to currency fluctuations, changing political climate, lack of
comprehensive company information and potentially less liquidity.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The Portfolio
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the portfolio's performance for its first full
calendar year of operations. The table compares the portfolio's average annual
total returns to those of the Standard & Poor's 500/BARRA Growth Index (S&P 500
BARRA Growth), which has been selected as the portfolio's primary index based on
the portfolio's and the index's growth orientation, and the Standard & Poor's
500 Composite Stock Price Index (S&P 500 Composite), the portfolio's former
primary index, each a broad measure of stock performance. Performance for the S&
P 500 Composite will not be shown in the future. All performance figures reflect
the reinvestment of dividends and distributions. Of course, past performance is
no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q4 '99 +30.13%
WORST QUARTER: Q3 '99 -4.29%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- --------------------------------------------------------------------------------
PORTFOLIO 39.01% 57.77%
S&P 500 BARRA GROWTH 28.25% 45.19%
S&P 500 COMPOSITE 21.03% 35.94%
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 1.58%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 2.33%
Fee waiver and/or expense reimbursement (1.33%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.00%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%.
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$102 $600 $1,124 $2,563
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. The one-year number is based on net
operating expenses. The longer-term numbers are based on total annual portfolio
operating expenses.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the fiscal year ended
December 31, 1999, the portfolio did not pay Dreyfus a management fee as a
result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as
the portfolio's sub-investment adviser. Founders, located at Founders Financial
Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor
companies have been offering tools to help investors pursue their financial
goals since 1938. As of December 31, 1999, Founders managed mutual funds and
other client accounts having aggregate assets of approximately $7.94 billion.
The portfolio's primary portfolio managers are Scott A. Chapman, C.F.A. and
Thomas M. Arrington, C.F.A. Mr. Chapman and Mr. Arrington have been the
portfolio's primary portfolio managers, and have been employed by Founders,
since December 1998. Mr. Chapman is a vice president of investments and director
of research at Founders. Mr. Arrington is a vice president of investments at
Founders. Prior to joining Founders, Mr. Chapman was employed for seven years at
HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation,
most recently as a vice president and director of growth strategy. Prior to
joining Founders, Mr. Arrington was employed for eight years at HighMark Capital
where he held various positions, including vice president and director of income
and growth strategy, securities research analyst and, most recently, vice
president and director of income equity strategy.
The portfolio, Dreyfus, Founders and Dreyfus Service Corporation (the
portfolio's distributor) each have adopted a code of ethics that permits its
personnel, subject to such code, to invest in securities, including securities
that may be purchased or held by the portfolio. The Dreyfus and Founders codes
of ethics restrict the personal securities transactions of their employees, and
require portfolio managers and other investment personnel to comply with the
code's preclearance and disclosure procedures. Each code's primary purpose is to
ensure that personal trading by Dreyfus or Founders employees does not
disadvantage any Dreyfus- or Founders-managed fund.
The Portfolio
Performance information for Public Fund and Portfolio
The portfolio has the same investment objective and follows substantially the
same investment policies and strategies as a corresponding series of another
open-end investment company advised by Founders, the Dreyfus Founders Growth
Fund (the "Public Fund"). The portfolio currently has the same primary portfolio
managers as the Public Fund. The first table at right shows average annual total
return information for the Public Fund, the S&P 500 BARRA Growth and the S&P
500( )Composite. The second table shows average annual total return information
for the portfolio, the S&P 500 BARRA Growth and the S&P 500 Composite.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those to be paid by the portfolio. The Public Fund's total annual
operating expenses, after fee waiver and expense reimbursement, for the year
ended December 31, 1999 were 1.09% of its average daily net assets. The
performance figures for the Public Fund and the portfolio also do not reflect
the deduction of charges or expenses attributable to VA contracts or VLI
policies, which would lower the performance quoted. Policy owners should refer
to the applicable insurance company prospectus for information on any such
charges and expenses. Additionally, although it is anticipated that the
portfolio and the Public Fund will hold similar securities, their investment
results are expected to differ. In particular, differences in asset size and in
cash flow resulting from purchases and redemptions of portfolio shares may
result in different security selections, differences in the relative weightings
of securities or differences in the price paid for particular portfolio
holdings. Performance information for the Public Fund and the portfolio reflect
the reinvestment of dividends and other distributions.
PUBLIC FUND
Historical performance information for the Public Fund, the S&P 500 BARRA Growth
and the S&P 500 Composite for various periods ended December 31, 1999, as
calculated pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
DREYFUS FOUNDERS GROWTH FUND -- CLASS F* 39.06% 30.16% 20.07%
S&P 500 BARRA
GROWTH** 28.25% 33.61% 20.59%
S&P 500 COMPOSITE*** 21.03% 28.54% 18.19%
PORTFOLIO
Average annual total returns for the portfolio, the S&P BARRA Growth and the S&P
500 Composite for various periods ended December 31, 1999, as calculated
pursuant to SEC guidelines, are as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- --------------------------------------------------------------------------------
FOUNDERS GROWTH PORTFOLIO 39.01% 57.77%
S&P 500 BARRA GROWTH** 28.25% 45.19%
S&P 500 COMPOSITE*** 21.03% 35.94%
- --------------------------------------------------------------------------------
* CLASS F SHARES ARE GENERALLY CLOSED TO NEW INVESTORS.
** THE S&P BARRA GROWTH IS A CAPITALIZATION-WEIGHTED INDEX OF ALL THE STOCKS IN
THE S&P 500 COMPOSITE THAT HAVE HIGH PRICE-TO-BOOK RATIOS. ALL PERFORMANCE
FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS.
*** THE S&P 500 COMPOSITE IS A WIDELY RECOGNIZED UNMANAGED INDEX OF STOCK
PERFORMANCE. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND
OTHER DISTRIBUTIONS.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during each period, assuming the investor had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the
portfolio's financial statements, is included in the annual report, which is
available upon request. Keep in mind that fees and charges imposed by
participating insurance companies, which are not reflected in the table, would
reduce the investment returns that are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998(1)
- -----------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of period 15.90 12.50
Investment operations: Investment income -- net (.02)(2) .01
Net realized and unrealized gain (loss) on investments 5.79 3.39
Total from investment operations 5.77 3.40
Distributions: Dividends from investment income -- net (.01) --
Dividends from net realized gain on investments (1.79) --
Total distributions (1.80) --
Net asset value, end of period 19.87 15.90
Total return (%) 39.01 27.20(3)
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 .25(3)
Ratio of net investment income to average net assets (%) (.11) .05(3)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) 1.33 .31(3)
Portfolio turnover rate (%) 115.08 75.65(3)
- --------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 7,485 2,544
(1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Founders Growth Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Founders Growth Portfolio
- --------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio managers discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
176P0500
<PAGE>
Dreyfus Investment Portfolios
MidCap Stock Portfolio
Investing in stocks of medium-size companies for investment results that exceed
the total return performance of the S&P 400
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
MidCap Stock Portfolio
GOAL/APPROACH
The portfolio seeks investment results that are greater than the total return
performance of publicly traded common stocks of medium-size domestic companies
in the aggregate, as represented by the Standard & Poor's MidCap 400((reg.tm))
Index ("S&P 400"). To pursue this goal, the portfolio invests primarily in a
blended portfolio of growth and value stocks of medium-size companies, those
whose market values generally range between $200 million and $10 billion. Stocks
are chosen through a disciplined process combining computer modeling techniques,
fundamental analysis and risk management. Consistency of returns and stability
of the portfolio's share price compared to the S&P 400 are primary goals of the
process. The portfolio's stock investments may include common stocks, preferred
stocks, convertible securities and depositary receipts.
Dreyfus uses a computer model to identify and rank stocks within an industry or
sector, based on:
* value, or how a stock is priced relative to its perceived intrinsic
worth
* growth, in this case the sustainability or growth of earnings
* financial profile, which measures the financial health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities.
Dreyfus then manages risk by diversifying across companies and industries,
limiting the potential adverse impact from any one stock or industry. The
portfolio is structured so that its sector weightings and risk characteristics,
such as growth, size, quality and yield, are similar to those of the S&P 400.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
MIDCAP COMPANIES: established companies that may not be well known. Midcap
companies have the potential to grow faster than large-cap companies, but may
lack the resources to weather economic shifts, and are more volatile than large
companies.
COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe
of over 2,000 stocks. Dreyfus reviews each of the screens on a regular basis.
Dreyfus also maintains the flexibility to adapt the screening criteria to
changes in market conditions.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Medium-size companies carry additional risks because their earnings tend to be
less predictable, their share prices more volatile and their securities less
liquid than larger, more established companies. Some of the portfolio's
investments will rise and fall based on investor perception rather than
economics.
Although the portfolio seeks to manage risk by broadly diversifying among
industries and by maintaining a risk profile very similar to the S&P 400, the
portfolio is expected to hold fewer securities than the index. Owning fewer
securities and the ability to purchase stocks of companies not listed in the S&P
400 can cause the portfolio to underperform the index.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if earnings expectations are not
met or investors believe the prospects for a stock, industry or the economy in
general are weak. Growth stocks also typically lack the dividend yield that
could cushion stock prices in market downturns. With value stocks, there is the
risk that they may never reach what the manager believes is their full market
value, or that their intrinsic values may fall. While investments in value
stocks may limit downside risk over time, they may produce smaller gains than
riskier stocks.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures. These practices, when employed, are used to hedge the
portfolio and increase returns; however, such practices sometimes may reduce
returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
The Portfolio
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the portfolio's performance for its first full
calendar year of operations. The table compares the portfolio's average annual
total returns to those of the S&P 400, a broad measure of midcap stock
performance. All performance figures reflect the reinvestment of dividends and
distributions. Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q4 '99 +14.67%
WORST QUARTER: Q3 '99 -7.11%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/98)
- --------------------------------------------------------------------------------
PORTFOLIO 10.82% 4.72%
S&P 400 14.72% 12.02%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/98 IS USED AS THE
BEGINNING VALUE ON 5/1/98.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.71%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 1.46%
Fee waiver and/or expense reimbursement (0.46%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.00%
*THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%. FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1999, DREYFUS FURTHER REIMBURSED THE PORTFOLIO FOR OTHER
EXPENSES SO THAT TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES WERE 0.97% INSTEAD OF
1.00%. THIS ADDITIONAL EXPENSE REIMBURSEMENT WAS VOLUNTARY.
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$102 $414 $751 $1,707
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. The one-year number is based on the net
operating expenses. The longer-term numbers are based on total annual portfolio
operating expenses.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages more than $127
billion in over 160 mutual fund portfolios. For the fiscal year ended December
31, 1999, the portfolio paid Dreyfus an annual management fee of 0.26% of the
portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
John O'Toole is the portfolio's primary portfolio manager, a position he has
held since the portfolio's inception. He has been employed by Dreyfus since
October 1994. Mr. O'Toole also is a senior vice president and a portfolio
manager for Mellon Equity Associates, an affiliate of Dreyfus, and has been
employed by Mellon Bank, N.A. since 1979.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during each period, assuming the investor had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the
portfolio's financial statements, is included in the annual report, which is
available upon request. Keep in mind that fees and charges imposed by
participating insurance companies, which are not reflected in the table, would
reduce the investment returns that are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998(1)
- --------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of period 12.16 12.50
Investment operations: Investment income -- net .03(2) .02
Net realized and unrealized gain (loss) on investments 1.28 (.34)
Total from investment operations 1.31 (.32)
Distributions: Dividends from investment income -- net (.03) (.02)
Net asset value, end of period 13.44 12.16
Total return (%) 10.82 (2.53)(3)
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .97 .67(3)
Ratio of net investment income to average net assets (%) .26 .18(3)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) .49 .60(3)
Portfolio turnover rate (%) 77.73 75.74(3)
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 15,563 10,506
(1) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: MidCap Stock Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
For More Information
Dreyfus Investment Portfolios MidCap Stock Portfolio
- ----------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
174P0500A
<PAGE>
Dreyfus Investment Portfolios
Technology Growth Portfolio
Investing in technology companies for capital appreciation
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Technology Growth Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks capital appreciation. To pursue this goal, the portfolio
invests primarily in the stocks of growth companies of any size that Dreyfus
believes to be leading producers or beneficiaries of technological innovation.
Up to 25% of the portfolio's assets may be invested in foreign securities. The
portfolio's stock investments may include common stocks, preferred stocks and
convertible securities.
In choosing stocks, the portfolio looks for sectors in technology that are
expected to outperform on a relative scale. The more attractive sectors are
overweighted; those sectors with less appealing prospects are underweighted.
Among the sectors evaluated are those that develop, produce or distribute
products or services in the computer, semi-conductor, electronics,
communications, healthcare, biotechnology, computer software and hardware,
electronic components and systems, network and cable broadcasting,
telecommunications, defense and aerospace, and environmental sectors.
Although the portfolio looks for companies with the potential for strong
earnings growth rates, some of the portfolio's investments may currently be
experiencing losses. Moreover, the portfolio may invest in small-, mid- and
large-cap securities in all available trading markets, including initial public
offerings and the aftermarket.
Concepts to understand
SMALL AND MIDSIZE COMPANIES: new and often entrepreneurial companies. These
companies tend to grow faster than large-cap companies and typically use any
profits for expansion rather than for paying dividends. They are also more
volatile than larger companies and fail more often.
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. In fact, the technology sector has been among the
most volatile sectors of the stock market. The value of a shareholder's
investment in the portfolio will go up and down, sometimes dramatically, which
means that shareholders could lose money.
Technology companies, especially small-cap technology companies, involve greater
risk because their earnings tend to be less predictable, their share prices more
volatile and their securities less liquid than larger, more established
companies. The prices of securities purchased in initial public offerings or
shortly thereafter may be very volatile. Some of the portfolio's investments in
technology companies will rise and fall based on investor perception rather than
economics. Other portfolio investments are made in anticipation of future
products and services which, if delayed or cancelled, could cause the stock
price to drop dramatically.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately,
even if earnings do increase. In addition, growth stocks typically lack the
dividend yield that can cushion stock prices in market downturns.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. The portfolio may also sell short, which
involves selling a security it does not own in anticipation of a decline in the
market price of the security. These practices, when employed, are used primarily
to hedge its portfolio but also may be used to increase returns; however, such
practices sometimes may reduce returns or increase volatility. In addition,
derivatives can be illiquid and highly sensitive to changes in their underlying
instrument. A small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
The Portfolio
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, annual total
return information for the portfolio is not included in this section of the
prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.25%
- --------------------------------------------------------------------------------
TOTAL 1.00%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$102 $318
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 0.75% of the portfolio's average daily net
assets. For the fiscal period August 31, 1999 (commencement of operations)
through December 31, 1999, Dreyfus waived or reimbursed a portion of its
management fee so that the net fee paid by the portfolio was 0.49%. Dreyfus is
the primary mutual fund business of Mellon Financial Corporation, a global
financial services company with approximately $2.5 trillion of assets under
management, administration or custody, including approximately $485 billion
under management. Mellon provides wealth management, global investment services
and a comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The portfolio's primary portfolio manager is Mark Herskovitz. Mr. Herskovitz has
been the primary portfolio manager of the portfolio since its inception and has
been employed by Dreyfus since 1996. From 1992 to 1996, he served as a senior
technology analyst at National City Bank.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during the period, assuming the investor had reinvested
all dividends and distributions. These figures have been independently audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1999(1)
- --------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 12.50
Investment operations: Investment (loss) (.02)(2)
Net realized and unrealized gain (loss) on investments 6.97
Total from investment operations 6.95
Net asset value, end of period 19.45
Total return (%) 55.60(3)
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .36(3)
Ratio of net investment (loss) income to average net assets (%) (.14)(3)
Decrease reflected in above expense ratio
due to actions by Dreyfus (%) .09(3)
Portfolio turnover rate (%) 20.01(3)
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 65,707
(1) FROM AUGUST 31, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Technology Growth Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
For More Information
Dreyfus Investment Portfolios Technology Growth Portfolio
- ---------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
175P0500
<PAGE>
Dreyfus Investment Portfolios
European Equity Portfolio
Investing in European companies for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
European Equity Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks long-term capital growth. To pursue this goal, the portfolio
generally invests at least 80% of its total assets in stocks included within the
universe of the 300 largest European companies. The portfolio may invest up to
10% of its total assets in the stocks of non-European companies. The portfolio's
stock investments may include common stocks, preferred stocks and convertible
securities.
In choosing stocks, the portfolio manager identifies and forecasts: key trends
in economic variables, such as gross domestic product, inflation and interest
rates; investment themes, such as the impact of new technologies and the
globalization of industries and brands; relative values of equity securities,
bonds and cash; and long-term trends in currency movements.
Within markets and sectors determined to be relatively attractive, the portfolio
manager seeks what are believed to be attractively priced companies that possess
a sustainable competitive advantage in their market or sector. The portfolio
manager generally sells securities when themes or strategies change or when the
portfolio manager determines that the company's prospects have changed or that
its stock is fully valued by the market.
Concepts to understand
EUROPEAN COMPANY: a company organized under the laws of a European country or
for which the principal securities trading market is in Europe; or a company,
wherever organized, with a majority of its assets or business in Europe.
PREFERRED STOCK: stock that pays dividends at a specified rate and has
preference over common stock in the payment of dividends and the liquidation of
assets. Preferred stock ordinarily does not carry voting rights.
CONVERTIBLE SECURITIES: corporate securities, usually preferred stock or bonds,
that are exchangeable for a set amount of another form of security, usually
common stock, at a prestated price.
<PAGE>
MAIN RISKS
While stocks have historically been a choice of long-term investors, they do
fluctuate in price. The value of a shareholder's investment in the portfolio
will go up and down, which means that shareholders could lose money.
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in European countries and throughout the world.
These risks include changes in currency exchange rates, a lack of comprehensive
company information, political instability, less liquidity and differing
auditing and legal standards.
The portfolio expects to invest primarily in the stocks of companies located in
developed European countries. However, the portfolio may invest in the stocks of
companies located in certain European countries which are considered to be
emerging markets. These countries generally have economic structures that are
less diverse and mature, and political systems that are less stable, than those
of developed countries. Emerging markets may be more volatile than the markets
of more mature economies, and the securities of companies located in emerging
markets are often subject to rapid and large changes in price; however, these
markets may provide higher rates of return to investors.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. The portfolio may also sell short, which
involves selling a security it does not own in anticipation of a decline in the
market price of the security. These practices, when employed, are used primarily
to hedge its portfolio but also may be used to increase returns; however, such
practices sometimes may reduce returns or increase volatility. In addition,
derivatives can be illiquid and highly sensitive to changes in their underlying
instrument. A small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
The Portfolio
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, annual total
return information for the portfolio is not included in this section of the
prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 4.03%
- --------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 5.03%
Fee waiver and/or expense reimbursement (3.53%)
- --------------------------------------------------------------------------------
NET OPERATING EXPENSES* 1.50%
* THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES
(EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST
EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%.
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$153 $1,194 $2,234 $4,832
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. The one-year number is based on net
operating expenses. The longer-term numbers are based on total annual portfolio
operating expenses.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 1.00% of the portfolio's average daily net
assets. For the fiscal period April 30, 1999 (commencement of operations)
through December 31, 1999, the portfolio did not pay Dreyfus a management fee as
a result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged its affiliate, Newton Capital Management Limited, to serve
as the portfolio's sub-investment adviser. Newton, located at 71 Queen Victoria
Street, London, EC4V 4DR, England, was formed in 1977 and, as of December 31,
1999, together with its parent and its parent's subsidiaries, managed
approximately $29 billion in discretionary separate accounts and other
investment accounts.
The portfolio's primary portfolio manager is Joanna Bowen. Ms. Bowen has been a
primary portfolio manager for the portfolio since its inception. She joined
Newton in 1993 as a European fund manager, was appointed an associate director
of Newton in 1997, and was appointed a director of Newton in 1999.
The portfolio, Dreyfus, Newton and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during the period, assuming the investor had reinvested
all dividends and distributions. These figures have been independently audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1999(1)
- ------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .04(2)
Net realized and unrealized gain (loss) on investments 3.61
Total from investment operations 3.65
Distributions: Dividends from investment income -- net (.03)
Dividends from net realized gain on investments (.16)
Total distributions (.19)
Net asset value, end of period 15.96
Total return (%) 29.20(3)
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.01(3)
Ratio of net investment income to average net assets (%) .32(3)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) 2.38(3)
Portfolio turnover rate (%) 99.89(3)
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 6,592
(1) FROM APRIL 30, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: European Equity Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE>
For More Information
Dreyfus Investment Portfolios European Equity Portfolio
- -------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
181P0500
<PAGE>
Dreyfus Investment Portfolios
Emerging Markets Portfolio
Investing in emerging markets for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Investment Portfolios
Emerging Markets Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks long-term capital growth. To pursue this goal, the portfolio
invests primarily in the stocks of companies organized, or with a majority of
its assets or business, in emerging market countries. Normally, the portfolio
will not invest more than 25% of its total assets in the securities of companies
in any one emerging market country. The portfolio may invest up to 35% of its
net assets in the high yield debt securities of such companies as Dreyfus deems
appropriate in light of market conditions.
In choosing stocks, the portfolio emphasizes growth-oriented stocks and employs
a top-down country allocation approach which involves identifying and
forecasting: key trends in global economic variables, such as gross domestic
product, inflation and interest rates; investment themes, such as the impact of
new technologies and the globalization of industries and brands; relative values
of equity securities, bonds and cash; and long-term trends in currency
movements.
Within countries and sectors determined to be relatively attractive, the
portfolio seeks what the portfolio manager believes to be attractively priced
companies that possess a sustainable competitive advantage in their country or
sector. The portfolio typically will sell a security when themes or strategies
change, or when the portfolio manager determines that the company's prospects
have changed or that its stock is fully valued by the market.
Concepts to understand
EMERGING MARKET COUNTRIES: consist of all countries represented by the Morgan
Stanley Capital International (MSCI) Emerging Markets (Free) Index, which
currently includes Argentina, Brazil, Chile, China, Colombia, the Czech
Republic, Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea,
Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, Sri Lanka, South
Africa, Taiwan, Thailand, Turkey and Venezuela, or any other country Dreyfus
believes has an emerging economy or market.
GROWTH COMPANIES: companies of any capitalization whose earnings are expected to
grow faster than the overall market. Often, growth stocks have relatively high
price-to-earnings and price-to-book ratios, and tend to be more volatile than
value stocks.
<PAGE>
MAIN RISKS
The stock markets of emerging market countries can be extremely volatile. The
value of a shareholder's investment in the portfolio will go up and down,
sometimes dramatically, which means that shareholders could lose money rapidly.
The portfolio's performance will be influenced by political, social and economic
factors affecting investments in companies in emerging market countries. These
countries generally have economic structures that are less diverse and mature,
and political systems that are less stable, than those of developed countries.
Emerging markets may be more volatile than the markets of more mature economies,
and the securities of companies located in emerging markets are often subject to
rapid and large changes in price. Special risks include exposure to currency
fluctuations, less liquidity, less developed or efficient trading markets, a
lack of comprehensive company information, political instability, and differing
auditing and legal standards. Such risks could result in more volatility for the
portfolio.
Because the stock prices of growth companies are based in part on future
expectations, these stocks may fall sharply if investors believe the prospects
for a stock, industry or the economy in general are weak. In addition, growth
stocks typically lack the dividend yield that could cushion stock prices in
market downturns.
The fund may invest in companies of any size. Investments in smaller companies
carry additional risks because their earnings tend to be less predictable, their
share prices more volatile and their securities less liquid than larger, more
established companies.
High yield ("junk") bonds involve greater credit risk, including the risk of
default, than investment grade bonds. They tend to be more volatile in price and
less liquid and are considered speculative.
The portfolio is non-diversified and may invest a greater percentage of its
assets in a particular company compared with other funds. Accordingly, the
portfolio may be more sensitive to changes in the market value of a single
company or industry.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. The portfolio may also sell short, which
involves selling a security it does not own in anticipation of a decline in the
market price of the security. These practices, when employed, are used primarily
to hedge its portfolio but also to increase returns; however, such practices
sometimes may reduce returns or increase volatility. In addition, derivatives
can be illiquid and highly sensitive to changes in their underlying instrument.
A small investment in certain derivatives could have a potentially large impact
on the portfolio's performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, annual total
return information for the portfolio is not included in this section of the
prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.25%
Other expenses 0.25%
- --------------------------------------------------------------------------------
TOTAL 1.50%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$153 $474
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 1.25% of the portfolio's average daily net
assets. For the fiscal period December 15, 1999 (commencement of operations)
through December 31, 1999, the portfolio did not pay Dreyfus a management fee as
a result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The portfolio's primary portfolio manager is Daniel Beneat. Mr. Beneat has been
the primary portfolio manager of the portfolio since its inception and has been
employed by Dreyfus since May 1996. For the three previous years, he was a vice
president and portfolio manager at UBS Asset Management (NY), Inc.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
Performance Information for Related Public Fund
Although the portfolio is newly organized and does not yet have its own full
year of performance, the portfolio has the same investment objective and follows
substantially the same investment policies and strategies as a corresponding
series of another open-end investment company advised by Dreyfus, the Dreyfus
Premier Emerging Markets Fund -- Class A shares (the "Public Fund"). The
portfolio has the same primary portfolio manager as the Public Fund. The table
at right shows average annual total return information for the Public Fund and
for the Morgan Stanley Capital International (MSCI) Emerging Markets (Free)
Index, the benchmark index of the portfolio and the Public Fund.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
reflect the deduction of the historical fees and expenses paid by the Public
Fund, and not those to be paid by the portfolio. The Public Fund's total annual
operating expenses, after fee waiver and expense reimbursement, for the year
ended September 30, 1999 were 2.25% of its average daily net assets. The
performance figures for the Public Fund also do not reflect the deduction of
charges or expenses attributable to VA contracts or VLI policies, which would
lower the performance quoted. Policy owners should refer to the applicable
insurance company prospectus for information on any such charges and expenses.
Additionally, although it is anticipated that the portfolio and the Public Fund
will hold similar securities, their investment results are expected to differ.
In particular, differences in asset size and in cash flow resulting from
purchases and redemptions of portfolio shares may result in different security
selections, differences in the relative weightings of securities or differences
in the price paid for particular portfolio holdings.
The one-year performance of the Public Fund and the index was due in large part
to an economic recovery in emerging markets and a recovery of liquidity in the
asset class. Such returns should not be expected over the long term.
Historical performance information for Class A shares of the Public Fund and for
the MSCI Emerging Markets (Free) Index for various periods ended December 31,
1999, as calculated pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (3/31/98)
- --------------------------------------------------------------------------------
DREYFUS PREMIER EMERGING MARKETS FUND
CLASS A (NAV) 104.56% 16.30%
CLASS A (WITH SALES LOAD) 92.83% 12.45%
MSCI EMERGING MARKETS
(FREE) INDEX* 66.41% 9.39%
* THE MSCI EMERGING MARKETS (FREE) INDEX IS A MARKET-CAPITALIZATION-WEIGHTED
INDEX COMPOSED OF COMPANIES REPRESENTATIVE OF THE MARKET STRUCTURE OF 25
EMERGING MARKET COUNTRIES IN EUROPE, LATIN AMERICA AND THE PACIFIC BASIN AND
INCLUDES GROSS DIVIDENDS REINVESTED. THE INDEX EXCLUDES CLOSED MARKETS AND THOSE
SHARES IN OTHERWISE FREE MARKETS WHICH ARE NOT PURCHASABLE BY FOREIGNERS.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during the period, assuming the investor had reinvested
all dividends and distributions. These figures have been independently audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1999(1)
- -----------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .02
Net realized and unrealized gain (loss) on investments 1.11
Total from investment operations 1.13
Net asset value, end of period 13.63
Total return (%) 9.04(2)
- -----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .09(2)
Ratio of net investment income to average net assets (%) .18(2)
Decrease reflected in above expense ratio
due to actions by Dreyfus (%) 1.51(2)
Portfolio turnover rate (%) .43(2)
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,181
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided the orders are received by the portfolio in proper form on the next
business day. The participating insurance company is responsible for properly
transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Emerging Markets Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead)
and account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Emerging Markets Portfolio
- --------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
191P0500
<PAGE>
Dreyfus Investment Portfolios
Emerging Leaders Portfolio
Investing in small companies for capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Investment Portfolios
Emerging Leaders Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 5
Account Information
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 6
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks capital growth. To pursue this goal, the portfolio invests
in companies Dreyfus believes to be emerging leaders: small companies
characterized by new or innovative products, services or processes having the
potential to enhance earnings growth. The portfolio invests at least 65% of its
total assets in companies with total market values of less than $1.5 billion at
the time of purchase. The portfolio's investments may include common stocks,
preferred stocks and convertible securities.
In choosing stocks, the portfolio uses a blended approach, investing in a
combination of growth and value stocks. Using fundamental research and direct
management contact, the portfolio managers seek stocks with dominant positions
in major product lines, sustained achievement records and strong financial
condition. They also seek special situations, such as corporate restructurings
or management changes, that could increase the stock price.
The portfolio managers use a sector management approach, supervising a team of
sector managers who assist in making buy and sell decisions within their
respective areas of expertise. The portfolio's sector weightings typically
approximate those of the Russell 2000 Index.
The portfolio typically sells a stock when the reasons for buying it no longer
apply, when the company begins to show deteriorating fundamentals or poor
relative performance, or when a stock is fully valued by the market.
Concepts to understand
SMALL COMPANIES: new, often entrepreneurial companies. Small companies tend to
grow faster than large-cap companies, but frequently are more volatile, are more
vulnerable to major setbacks, and have a higher failure rate than larger
companies.
GROWTH COMPANIES: companies of any capitalization whose earnings are expected to
grow faster than the overall market. Often, growth stocks have relatively high
price-to-earnings and price-to-book ratios, and tend to be more volatile than
value stocks.
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, sometimes dramatically, which means that
shareholders could lose money.
Small companies carry additional risks because their operating histories tend to
be more limited, their earnings less predictable, their share prices more
volatile and their securities less liquid than larger, more established
companies. Some of the portfolio's investments will rise and fall based on
investor perceptions rather than economics. In addition, some of the portfolio's
investments will be made in anticipation of future products and services that,
if delayed, could cause the stock price to drop.
Growth companies are expected to increase their earnings at a certain rate. If
these expectations are not met, investors can punish the stocks inordinately,
even if earnings do increase. In addition, growth stocks typically lack the
dividend yield that can cushion stock prices in market downturns.
Value stocks are subject to the risk that their intrinsic values may never be
realized by the market, or their prices may go down. Further, while the
portfolio's investments in value stocks may limit the overall downside risk of
the portfolio over time, the portfolio may produce more modest gains than
riskier small-company stock funds as a trade-off for this potentially lower
risk.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could reduce the benefit from any upswing in the market. During such
periods, the portfolio may not achieve its investment objective.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures, and in foreign currencies. The portfolio may also sell short, which
involves selling a security it does not own in anticipation of a decline in the
market price of the security. These practices, when employed, are used primarily
to hedge the portfolio but may be used to increase returns; however, such
practices sometimes may reduce returns or increase volatility. In addition,
derivatives can be illiquid and highly sensitive to changes in their underlying
instrument. A small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives shareholders the opportunity to participate in financial
markets. It strives to reach its stated goal, although as with all mutual funds,
it cannot offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
PAST PERFORMANCE
Since the portfolio has less than one calendar year of performance, annual total
return information for the portfolio is not included in this section of the
prospectus.
EXPENSES
Investors using this portfolio to fund a VA contract or a VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
These figures do not reflect any fees or charges imposed by participating
insurance companies under their VA contracts or VLI policies. Owners of VA
contracts or VLI policies should refer to the applicable insurance company
prospectus for information on those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.90%
Other expenses 0.25%
- --------------------------------------------------------------------------------
TOTAL 1.15%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$117 $365
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: estimated fees to be paid by the portfolio for the current
fiscal year for miscellaneous items such as transfer agency, custody,
professional and registration fees.
<PAGE>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. The portfolio has agreed to pay
Dreyfus an annual management fee of 0.90% of the portfolio's average daily net
assets. For the fiscal period December 15, 1999 (commencement of operations)
through December 31, 1999, the portfolio did not pay Dreyfus a management fee as
a result of a fee waiver/expense reimbursement in effect. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The portfolio's primary portfolio managers are Paul Kandel and Hilary Woods. Mr.
Kandel and Ms. Woods have been the portfolio's primary portfolio managers since
its inception. Mr. Kandel joined Dreyfus in 1994 as senior sector manager for
the technology and telecommunications industries. Ms. Woods joined Dreyfus in
1987 as senior sector manager for the capital goods industry.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
Performance Information for Related Funds
Although the portfolio is newly organized and does not yet have its own full
year of performance, the portfolio has substantially the same investment
objective and follows substantially the same investment policies and strategies
as two corresponding series of separate open-end investment companies advised by
Dreyfus, the Dreyfus Emerging Leaders Fund (the "Public Fund"), which is offered
to the public, and Dreyfus Small Cap Portfolio (the "Insurance Fund"), which,
like the portfolio, serves as a funding vehicle for variable insurance products.
The portfolio currently has the same primary portfolio managers as the Public
Fund and the Insurance Fund. The table at the right shows average annual total
return information for the Public Fund, the Insurance Fund and the Russell 2000
Index, the benchmark index of the portfolio, the Public Fund and the Insurance
Fund.
Investors should not consider this performance data as an indication of the
future performance of the portfolio. The performance figures for the Public Fund
and the Insurance Fund reflect the deduction of the historical fees and expenses
paid by such funds, and not those to be paid by the portfolio. The total annual
operating expenses, after fee waiver and expense reimbursement, if any, for the
fiscal year ended August 31, 1999 for the Public Fund were 1.38% and for the
fiscal year ended December 31, 1999 for the Insurance Fund were 0.78% of the
respective fund's average daily net assets. The performance figures also do not
reflect the deduction of charges or expenses attributable to VA contracts or VLI
policies, which would lower the performance quoted. Policy owners should refer
to the applicable insurance company prospectus for information on any such
charges and expenses. Additionally, although it is anticipated that the
portfolio, the Public Fund and the Insurance Fund will hold similar securities,
their investment results are expected to differ. In particular, differences in
asset size and in cash flow resulting from purchases and redemptions of
portfolio shares may result in different security selections, differences in the
relative weightings of securities or differences in the price paid for
particular portfolio holdings.
Historical performance information for the Public Fund, the Insurance Fund and
the Russell 2000 Index for various periods ended December 31, 1999, as
calculated pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
1 Year 5 Years inception(1)
- --------------------------------------------------------------------------------
DREYFUS EMERGING
LEADERS FUND 38.26% -- 33.61%
DREYFUS SMALL CAP
PORTFOLIO 23.15% 15.93% 35.65%
RUSSELL 2000 INDEX(2) 21.26% 16.69% 13.63%(3)
16.57%(4)
(1) THE INCEPTION DATES OF THE PUBLIC FUND AND INSURANCE FUND WERE 9/29/95 AND
8/31/90, RESPECTIVELY.(
(2) THE RUSSELL 2000 INDEX IS A WIDELY RECOGNIZED, UNMANAGED SMALL-CAP INDEX
COMPRISED OF THE COMMON STOCKS OF THE 2,000 U.S. PUBLIC COMPANIES NEXT IN
SIZE AFTER THE LARGEST 1,000 PUBLICLY TRADED U.S. COMPANIES. ALL
PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER
DISTRIBUTIONS.
(3) FOR COMPARATIVE PURPOSES FOR THE PUBLIC FUND, THE VALUE OF THE INDEX ON
9/30/95 IS USED AS THE BEGINNING VALUE ON 9/29/95.
(4) FOR COMPARATIVE PURPOSES FOR THE INSURANCE FUND, THE VALUE OF THE INDEX ON
8/31/90 IS USED AS THE BEGINNING VALUE.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much an investment in the portfolio would have
increased (or decreased) during the period, assuming the investor had reinvested
all dividends and distributions. These figures have been independently audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment return that is
shown.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1999(1)
- -------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .01
Net realized and unrealized gain (loss) on investments .93
Total from investment operations .94
Net asset value, end of period 13.44
Total return (%) 7.52(2)
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .07(2)
Ratio of net investment income to average net assets (%) .04(2)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.25(2)
Portfolio turnover rate (%) 1.79(2)
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,150
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) NOT ANNUALIZED.
</TABLE>
The Portfolio
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided the orders are received by the portfolio in proper form on the next
business day. The participating insurance company is responsible for properly
transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900375108/Dreyfus Investment Portfolios: Emerging Leaders Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead)
and account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
<PAGE>
NOTES
NOTES
NOTES
For More Information
Dreyfus Investment Portfolios Emerging Leaders Portfolio
- --------------------------------------------------------
SEC file number: 811-08673
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio managers discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
192P0500
<PAGE>
- -------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS
CORE BOND PORTFOLIO
CORE VALUE PORTFOLIO
EMERGING LEADERS PORTFOLIO
EMERGING MARKETS PORTFOLIO
EUROPEAN EQUITY PORTFOLIO
JAPAN PORTFOLIO
MIDCAP STOCK PORTFOLIO
TECHNOLOGY GROWTH PORTFOLIO
FOUNDERS DISCOVERY PORTFOLIO
FOUNDERS GROWTH PORTFOLIO
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO
FOUNDERS PASSPORT PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
- -------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the relevant current
Prospectus of the Core Bond, Core Value, Emerging Leaders, Emerging Markets,
European Equity, Japan, MidCap Stock, Technology Growth, Founders Growth,
Founders International Equity, Founders Passport and Founders Discovery
Portfolios, each dated May 1, 2000 (collectively, the "Portfolios"), each a
separate series of Dreyfus Investment Portfolios (the "Fund"), as each
Prospectus may be revised from time to time. To obtain a copy of the relevant
Portfolio's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611 or (516) 338-3300.
Shares of the Portfolios are offered only to variable annuity and
variable life insurance separate accounts established by insurance companies
("Participating Insurance Companies") to fund variable annuity contracts and
variable life insurance policies (collectively, "Policies"). Individuals may not
purchase shares of any Portfolio directly from the Fund.
The most recent Annual Report and Semi-Annual Report to Shareholders
for each Portfolio are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing in the Annual Report are incorporated
by reference into this Statement of Additional Information.
<PAGE>
TABLE OF CONTENTS
PAGE
Description of the Fund and Portfolios.....................................B-3
Management of the Fund.....................................................B-33
Management Arrangements....................................................B-38
How to Buy Shares..........................................................B-45
How to Redeem Shares.......................................................B-45
Determination of Net Asset Value...........................................B-46
Dividends, Distributions and Taxes.........................................B-48
Portfolio Transactions.....................................................B-50
Performance Information....................................................B-52
Information About the Fund and Portfolios..................................B-55
Counsel and Independent Auditors...........................................B-56
Year 2000 Issues...........................................................B-56
Appendix...................................................................B-57
<PAGE>
DESCRIPTION OF THE FUND AND PORTFOLIOS
The Fund is a Massachusetts business trust that commenced operations
on May 1, 1998. Each Portfolio is a separate series of the Fund, an open-end
management investment company, known as a mutual fund. Each Portfolio, except
the Emerging Markets Portfolio, is a diversified fund, which means that, with
respect to 75% of the Portfolio's total assets, the Portfolio will not invest
more than 5% of its assets in the securities of any single issuer nor hold more
than 10% of the outstanding voting securities of any single issuer. The Emerging
Markets Portfolio is a non-diversified fund, which means that the proportion of
the Portfolio's assets that may be invested in the securities of a single issuer
is not limited by the Investment Company Act of 1940, as amended (the "1940
Act").
The Dreyfus Corporation (the "Manager") serves as each Portfolio's
investment adviser. The Manager has engaged Founders Asset Management LLC
("Founders") to serve as sub-investment adviser to each of the Founders
Discovery, Founders Growth, Founders International Equity and Founders Passport
Portfolios (collectively, the "Founders Portfolios") and to provide day-to-day
management of the Founders Portfolios' investments, subject to the supervision
of the Manager. The Manager has engaged Newton Capital Management Limited
("Newton") to serve as sub-investment adviser to each of the European Equity and
Japan Portfolios and to provide day-to-day management of the European Equity and
Japan Portfolios' investments, subject to the supervision of the Manager.
Dreyfus Service Corporation (the "Distributor") is the distributor of
the Portfolios' shares.
CERTAIN PORTFOLIO SECURITIES
The following information supplements and should be read in
conjunction with the relevant Portfolio's Prospectus.
DEPOSITARY RECEIPTS. (All Portfolios, except the Core Bond and
Emerging Leaders Portfolios) Each of these Portfolios may invest in the
securities of foreign issuers in the form of American Depositary Receipts and
American Depositary Shares (collectively, "ADRs") and Global Depositary Receipts
and Global Depositary Shares (collectively, "GDRs") and other forms of
depositary receipts. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a United States bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
GDRs are receipts issued outside the United States typically by non-United
States banks and trust companies that evidence ownership of either foreign or
domestic securities. Generally, ADRs in registered form are designed for use in
the United States securities markets and GDRs in bearer form are designed for
use outside the United States.
These securities may be purchased through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depositary. A depositary may establish an unsponsored
facility without participation by the issuer of the deposited security. Holders
of unsponsored depositary receipts generally bear all the costs of such
facilities, and the depositary of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through voting rights to the holders of such
receipts in respect of the deposited securities.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES.
(Core Bond Portfolio, Founders Portfolios, Emerging Markets Portfolio, European
Equity Portfolio and Japan Portfolio only) Each of these Portfolios may invest
in obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by Founders (in the case of the Founders Portfolios), the Manager (in the case
of the Core Bond and Emerging Markets Portfolios) or Newton (in the case of the
European Equity and Japan Portfolios) to be of comparable quality to the other
obligations in which the Portfolio may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the International
Bank for Reconstruction and Development (the World Bank), the European Coal and
Steel Community, the Asian Development Bank and the InterAmerican Development
Bank.
MORTGAGE-RELATED SECURITIES. (Core Bond Portfolio only)
Mortgage-related securities are a form of derivative collateralized by pools of
commercial or residential mortgages. Pools of mortgage loans are assembled as
securities for sale to investors by various governmental, government-related and
private organizations. These securities may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed securities,
mortgage pass-through securities, interests in real estate mortgage investment
conduits ("REMICs"), adjustable rate mortgages, real estate investment trusts
("REITs"), or other kinds of mortgage-backed securities, including those with
fixed, floating and variable interest rates, those with interest rates based on
multiples of changes in a specified index of interest rates and those with
interest rates that change inversely to changes in interest rates, as well as
those that do not bear interest. See "Investment Considerations and Risks"
below.
RESIDENTIAL MORTGAGE-RELATED SECURITIES--The Core Bond Portfolio may invest in
mortgage-related securities representing participation interests in pools of
one- to four-family residential mortgage loans issued or guaranteed by
governmental agencies or instrumentalities, such as the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), or issued by
private entities. Similar to commercial mortgage-related securities, residential
mortgage-related securities have been issued using a variety of structures,
including multi-class structures featuring senior and subordinated classes.
Mortgage-related securities issued by GNMA include GNMA Mortgage
Pass-Through Certificates (also know as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA certificates also
are supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by FNMA
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of FNMA and are not backed by or
entitled to the full faith and credit of the United States. Fannie Maes are
guaranteed as to timely payment of principal and interest by FNMA.
Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Bank and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. When FHLMC
does not guarantee timely payment of principal, FHLMC may remit the amount due
on account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable.
COMMERCIAL MORTGAGE-RELATED SECURITIES--Commercial mortgage-related securities
generally are multi-class debt or pass-through certificates secured by mortgage
loans on commercial properties. These mortgage-related securities generally are
constructed to provide protection to the senior classes investors against
potential losses on the underlying mortgage loans. This protection generally is
provided by having the holders of subordinated classes of securities
("Subordinated Securities") take the first loss if there are defaults on the
underlying commercial mortgage loans. Other protection, which may benefit all of
the classes or particular classes, may include issuer guarantees, reserve funds,
additional Subordinated Securities, cross-collateralization and
over-collateralization.
SUBORDINATED SECURITIES--The Core Bond Portfolio may invest in Subordinated
Securities issued or sponsored by commercial banks, savings and loan
institutions, mortgage bankers, private mortgage insurance companies and other
non-governmental issuers. Subordinated Securities have no governmental
guarantee, and are subordinated in some manner as to the payment of principal
and/or interest to the holders of more senior mortgage-related securities
arising out of the same pool of mortgages. The holders of Subordinated
Securities typically are compensated with a higher stated yield than are the
holders of more senior mortgage-related securities. On the other hand,
Subordinated Securities typically subject the holder to greater risk than senior
mortgage-related securities and tend to be rated in a lower rating category, and
frequently a substantially lower rating category, than the senior
mortgage-related securities issued in respect of the same pool of mortgage.
Subordinated Securities generally are likely to be more sensitive to changes in
prepayment and interest rates and the market for such securities may be less
liquid than is the case for traditional fixed-income securities and senior
mortgage-related securities.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") AND MULTI-CLASS
PASS-THROUGH-SECURITIES--A CMO is a multiclass bond backed by a pool of mortgage
pass-through certificates or mortgage loans. CMOs may be collateralized by (a)
Ginnie Mae, Fannie Mae, or Freddie Mac pass-through certificates, (b)
unsecuritized mortgage loans insured by the Federal Housing Administration or
guaranteed by the Department of Veterans' Affairs, (c) unsecuritized
conventional mortgages, (d) other mortgage-related securities, or (e) any
combination thereof.
Each class of CMOs, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
The principal and interest on the underlying mortgages may be allocated among
the several classes of a series of a CMO in many ways. One or more tranches of a
CMO may have coupon rates which reset periodically at a specified increment over
an index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes more
than one index). These floating rate CMOs typically are issued with lifetime
caps on the coupon rate thereon. The Portfolio also may invest in inverse
floating rate CMOs. Inverse floating rate CMOs constitute a tranche of a CMO
with a coupon rate that moves in the reverse direction to an applicable index
such a LIBOR. Accordingly, the coupon rate thereon will increase as interest
rates decrease. Inverse floating rate CMOs are typically more volatile than
fixed or floating rate tranches of CMOs.
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying inversely
to a multiple of an applicable index creates a leverage factor. Inverse floaters
based on multiples of a stated index are designed to be highly sensitive to
changes in interest rates and can subject the holders thereof to extreme
reductions of yield and loss of principal. The markets for inverse floating rate
CMOs with highly leveraged characteristics at times may be very thin. The
Portfolio's ability to dispose of its positions in such securities will depend
on the degree of liquidity in the markets for such securities. It is impossible
to predict the amount of trading interest that may exist in such securities, and
therefore the future degree of liquidity.
STRIPPED MORTGAGE-BACKED SECURITIES--The Core Bond Portfolio also may invest in
stripped mortgage-backed securities which are created by segregating the cash
flows from underlying mortgage loans or mortgage securities to create two or
more new securities, each with a specified percentage of the underlying
security's principal or interest payments. Mortgage securities may be partially
stripped so that each investor class receives some interest and some principal.
When securities are completely stripped, however, all of the interest is
distributed to holders of one type of security, known as an interest-only
security, or IO, and all of the principal is distributed to holders of another
type of security known as a principal-only security, or PO. Strips can be
created in a pass-through structure or as tranches of a CMO. The yields to
maturity on IOs and POs are very sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Portfolio may not fully recoup its initial investment in IOs.
Conversely, if the underlying mortgage assets experience less than anticipated
prepayments of principal, the yield on POs could be materially and adversely
affected.
REAL ESTATE INVESTMENT TRUSTS--A REIT is a corporation, or a business trust that
would otherwise be taxed as a corporation, which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
Code permits a qualifying REIT to deduct dividends paid, thereby effectively
eliminating corporate level Federal income tax and making the REIT a
pass-through vehicle for Federal income tax purposes. To meet the definitional
requirements of the Code, a REIT must, among other things, invest substantially
all of its assets in interests in real estate (including mortgages and other
REITs) or cash and government securities, derive most of its income from rents
from real property or interest on loans secured by mortgages on real property,
and distribute to shareholders annually a substantial portion of its otherwise
taxable income.
REITs are characterized as equity REITs, mortgage REITs and hybrid
REITs. Equity REITs, which may include operating or finance companies, own real
estate directly and the value of, and income earned by, the REITs depends upon
the income of the underlying properties and the rental income they earn. Equity
REITs also can realize capital gains (or losses) by selling properties that have
appreciated (or depreciated) in value. Mortgage REITs can make construction,
development or long-term mortgage loans and are sensitive to the credit quality
of the borrower. Mortgage REITs derive their income from interest payments on
such loans. Hybrid REITs combine the characteristics of both equity and mortgage
REITs, generally by holding both ownership interests and mortgage interests in
real estate. The value of securities issued by REITs are affected by tax and
regulatory requirements and by perceptions of management skill. They also are
subject to heavy cash flow dependency, defaults by borrowers or tenants,
self-liquidation and the possibility of failing to qualify for tax-free status
under the Code or to maintain exemption from the 1940 Act.
ADJUSTABLE-RATE MORTGAGE LOANS ("ARMS")--ARMs eligible for inclusion in a
mortgage pool will generally provide for a fixed initial mortgage interest rate
for a specified period of time, generally for either the first three, six,
twelve, thirteen, thirty-six, or sixty scheduled monthly payments. Thereafter,
the interest rates are subject to periodic adjustment based on changes in an
index. ARMs typically have minimum and maximum rates beyond which the mortgage
interest rate may not vary over the lifetime of the loans. Certain ARMs provide
for additional limitations on the maximum amount by which the mortgage interest
rate may adjust for any single adjustment period. Negatively amortizing ARMs may
provide limitations on changes in the required monthly payment. Limitations on
monthly payments can result in monthly payments that are greater or less than
the amount necessary to amortize a negatively amortizing ARM by its maturity at
the interest rate in effect during any particular month.
PRIVATE ENTITY SECURITIES--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other nongovernmental issuers. Timely payment
of principal and interest on mortgage-related securities backed by pools created
by non-governmental issuers often is supported partially by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. There can be no assurance that the
private insurers or mortgage poolers can meet their obligations under the
policies, so that if the issuers default on their obligations the holders of the
security could sustain a loss. No insurance or guarantee covers the Portfolio or
the price of the Portfolio's shares. Mortgage-related securities issued by
non-governmental issuers generally offer a higher rate of interest than
government-agency and government-related securities because there are no direct
or indirect government guarantees of payment.
OTHER MORTGAGE-RELATED SECURITIES--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including CMO residuals. Other mortgage-related securities may
be equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose
entities of the foregoing.
ASSET-BACKED SECURITIES. (Core Bond Portfolio only) Asset-backed
securities are a form of derivative. The securitization techniques used for
asset-backed securities are similar to those used for mortgage-related
securities. These securities include debt securities and securities with
debt-like characteristics. The collateral for these securities has included home
equity loans, automobile and credit card receivables, boat loans, computer
leases, airplane leases, mobile home loans, recreational vehicle loans and
hospital account receivables. The Portfolio may invest in these and other types
of asset-backed securities that may be developed in the future.
Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities may provide the
Portfolio with a less effective security interest in the related collateral than
do mortgage-backed securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available to
support payments on these securities.
VARIABLE AND FLOATING RATE SECURITIES. (Core Bond Portfolio only)
Variable and floating rate securities provide for a periodic adjustment in the
interest rate paid on the obligations. The terms of such obligations must
provide that interest rates are adjusted periodically based upon an interest
rate adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be event
based, such as based on a change in the prime rate.
The Portfolio may invest in floating rate debt instruments
("floaters"). The interest rate on a floater is a variable rate which is tied to
another interest rate, such as a money-market index or Treasury bill rate. The
interest rate on a floater resets periodically, typically every six months.
Because of the interest rate reset feature, floaters provide the Portfolio with
a certain degree of protection against rises in interest rates, although the
Portfolio will participate in any declines in interest rates as well.
The Portfolio also may invest in inverse floating rate debt
instruments ("inverse floaters"). The interest rate on an inverse floater resets
in the opposite direction from the market rate of interest to which the inverse
floater is indexed or inversely to a multiple of the applicable index. An
inverse floating rate security may exhibit greater price volatility than a fixed
rate obligation of similar credit quality.
INVESTMENT COMPANIES. (All Portfolios) Each Portfolio may invest in
securities issued by investment companies. The Emerging Markets Portfolio may
invest in securities issued by closed-end investment companies which principally
invest in securities in which it invests. Under the 1940 Act, a Portfolio's
investment in such securities, subject to certain exceptions, currently is
limited to (i) 3% of the total voting stock of any one investment company, (ii)
5% of the Portfolio's total assets with respect to any one investment company
and (iii) 10% of the Portfolio's total assets in the aggregate. Investments in
the securities of other investment companies may involve duplication of advisory
fees and certain other expenses.
CONVERTIBLE SECURITIES. (All Portfolios) Convertible securities may be
converted at either a stated price or stated rate into underlying shares of
common stock. Convertible securities have characteristics similar to both
fixed-income and equity securities. Convertible securities generally are
subordinated to other similar but non-convertible securities of the same issuer,
although convertible bonds, as corporate debt obligations, enjoy seniority in
right of payment to all equity securities, and convertible preferred stock is
senior to common stock, of the same issuer. Because of the subordination
feature, however, convertible securities typically have lower ratings than
similar non-convertible securities.
Although to a lesser extent than with fixed-income securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the underlying
common stock. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.
Convertible securities provide for a stable stream of income with
generally higher yields than common stocks, but there can be no assurance of
current income because the issuers of the convertible securities may default on
their obligations. A convertible security, in addition to providing fixed
income, offers the potential for capital appreciation through the conversion
feature, which enables the holder to benefit from increases in the market price
of the underlying common stock. There can be no assurance of capital
appreciation, however, because securities prices fluctuate. Convertible
securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.
WARRANTS. (All Portfolios) A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time. Each Portfolio may invest up to 5% of its net assets in warrants, except
that this limitation does not apply to warrants purchased by the Portfolio that
are sold in units with, or attached to, other securities.
PARTICIPATION INTERESTS. (Core Bond Portfolio only) The Core Bond
Portfolio may invest in short-term corporate obligations denominated in U.S. and
foreign currencies that are originated, negotiated and structured by a syndicate
of lenders ("Co-Lenders"), consisting of commercial banks, thrift institutions,
insurance companies, financial companies or other financial institutions one or
more of which administers the security on behalf of the syndicate (the "Agent
Bank"). Co-Lenders may sell such securities to third parties called
"Participants." The Portfolio may invest in such securities either by
participating as a Co-Lender at origination or by acquiring an interest in the
security from a Co-Lender or a Participant (collectively, "participation
interests"). Co-Lenders and Participants interposed between the Portfolio and
the corporate borrower (the "Borrower"), together with Agent Banks, are referred
herein as "Intermediate Participants."
The Portfolio also may purchase a participation interest in a portion
of the rights of an Intermediate Participant, which would not establish any
direct relationship between the Portfolio and the Borrower. A participation
interest gives the Portfolio an undivided interest in the security in the
proportion that the Portfolio's participation interest bears to the total
principal amount of the security. These instruments may have fixed, floating or
variable rates of interest. The Portfolio would be required to rely on the
Intermediate Participant that sold the participation interest not only for the
enforcement of the Portfolio's rights against the Borrower but also for the
receipt and processing of payments due to the Portfolio under the security.
Because it may be necessary to assert through an Intermediate Participant such
rights as may exist against the Borrower, in the event the Borrower fails to pay
principal and interest when due, the Portfolio may be subject to delays,
expenses and risks that are greater than those that would be involved if the
Portfolio would enforce its rights directly against the Borrower. Moreover,
under the terms of a participation interest, the Portfolio may be regarded as a
creditor of the Intermediate Participant (rather than of the Borrower), so that
the Portfolio may also be subject to the risk that the Intermediate Participant
may become insolvent. Similar risks may arise with respect to the Agent Bank if,
for example, assets held by the Agent Bank for the benefit of the Portfolio were
determined by the appropriate regulatory authority or court to be subject to the
claims of the Agent Bank's creditors. In such case, the Portfolio might incur
certain costs and delays in realizing payment in connection with the
participation interest or suffer a loss of principal and/or interest. Further,
in the event of the bankruptcy or insolvency of the Borrower, the obligation of
the Borrower to repay the loan may be subject to certain defenses that can be
asserted by such Borrower as a result of improper conduct by the Agent Bank or
Intermediate Participant.
MUNICIPAL OBLIGATIONS. (Core Bond Portfolio) Municipal obligations are
debt obligations issued by states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities, or multistate agencies or authorities, the interest from
which, in the opinion of bond counsel to the issuer, is exempt from Federal
income tax. Municipal obligations generally include debt obligations issued to
obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
obligations are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds that do not carry the pledge
of the credit of the issuing municipality, but generally are guaranteed by the
corporate entity on whose behalf they are issued. Notes are short-term
instruments which are obligations of the issuing municipalities or agencies and
are sold in anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or equipment
issued by municipalities. Municipal obligations bear fixed, floating or variable
rates of interest, which are determined in some instances by formulas under
which the municipal obligation's interest rate will change directly or inversely
to changes in interest rates or an index, or multiples thereof, in many cases
subject to a maximum and minimum. Certain municipal obligations are subject to
redemption at a date earlier than their stated maturity pursuant to call
options, which may be separated from the related municipal obligation and
purchased and sold separately. The Core Bond Portfolio also may acquire call
options on specific municipal obligations. The Portfolio generally would
purchase these call options to protect the Portfolio from the issuer of the
related municipal obligation redeeming, or other holder of the call option from
calling away, the municipal obligation before maturity.
While, in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal obligations
of similar quality, certain municipal obligations are taxable obligations,
offering yields comparable to, and in some cases greater than, the yields
available on other permissible Portfolio investments. Dividends received by
shareholders on Portfolio shares which are attributable to interest income
received by the Portfolio from municipal obligations generally will be subject
to Federal income tax. The Portfolio may invest in municipal obligations, the
ratings of which correspond with the ratings of other permissible Fund
investments. The Portfolio currently intends to invest no more than 25% of its
assets in municipal obligations. However, this percentage may be varied from
time to time without shareholder approval.
ZERO COUPON SECURITIES. (Core Bond Portfolio only) The Core Bond
Portfolio may invest in zero coupon U.S. Treasury securities, which are Treasury
Notes and Bonds that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. Zero coupon securities also are issued by
corporations and financial institutions which constitute a proportionate
ownership of the issuer's pool of underlying U.S. Treasury securities. A zero
coupon security pays no interest to its holders during its life and is sold at a
discount to its face value at maturity. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.
Zero coupon securities issued by private entities include bonds,
notes, and debentures that do not pay current interest and are issued at
substantial discounts from par value or, in some cases, that pay no current
interest until a stated date one or more years in the future, after which the
issuer is obligated to pay interest until maturity (in which case the interest
rate is usually higher than if interest were payable from the issuance date).
Zero coupon securities, including those issued by private entities, are subject
to the risk of the issuer's failure to pay interest and repay the principal
value of the security, which risk is enhanced in the case of below investment
grade rated (or of comparable quality, if unrated) zero coupon securities.
Private entities also may issue zero coupon securities which constitute a
proportionate interest of the issuer's pool of underlying U.S. Treasury
securities. Zero coupon securities issued directly by the U.S. Treasury include
notes and bonds which have been stripped of their interest coupons and receipts.
While U.S. Treasury-related zero coupon securities are not subject to the same
credit risk as a security issued directly by a private entity, they are subject
to interest rate risk to the same extent.
The Portfolio is required to accrue taxable income on zero coupon
securities and is required to distribute it to shareholders. Such distributions
may require the Portfolio to sell other securities and incur a gain or loss at a
time it may otherwise not want to in order to obtain the cash needed for these
distributions.
ILLIQUID SECURITIES. (All Portfolios) Each Portfolio may invest up to
15% of the value of its net assets in securities as to which a liquid trading
market does not exist, provided such investments are consistent with the
Portfolio's investment objective. These securities may include securities that
are not readily marketable, such as securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Portfolio is subject to a risk that should
the Portfolio desire to sell them when a ready buyer is not available at a price
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected.
MONEY MARKET INSTRUMENTS. (All Portfolios) When the Manager (or
Founders with respect to the Founders Portfolios or Newton with respect to the
European Equity and Japan Portfolios) determines that adverse market conditions
exist, the Portfolio may adopt a temporary defensive position and invest some or
all of its assets in money market instruments, including the securities
described below ("Money Market Instruments"). Each Portfolio also may purchase
Money Market Instruments when it has cash reserves or in anticipation of taking
a market position.
U.S. GOVERNMENT SECURITIES--Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that differ in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations from the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support for such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not obligated by law. A security
backed by the U.S. Treasury or the full faith and credit of the United States is
guaranteed only as to timely payment of interest and principal when held to
maturity. Neither the market value of such securities nor the Portfolio's share
price is guaranteed.
REPURCHASE AGREEMENTS--Each Portfolio may enter into repurchase agreements. In a
repurchase agreement, the Portfolio buys, and the seller agrees to repurchase, a
security at a mutually agreed upon time and price (usually within seven days).
The repurchase agreement thereby determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is secured by the
value of the underlying security. The Portfolio's custodian or sub-custodian
will have custody of, and will hold in a segregated account, securities acquired
by the Portfolio under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be loans by
the Portfolio that enters into them. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, each Portfolio will enter into
repurchase agreements only with domestic banks with total assets in excess of $1
billion, or primary government securities dealers reporting to the Federal
Reserve Bank of New York, with respect to securities of the type in which the
Portfolio may invest, and will require that additional securities be deposited
with it if the value of the securities purchased should decrease below resale
price. Repurchase agreements could involve risks in the event of a default or
insolvency of the other party to the agreement, including possible delays or
restrictions upon the Portfolio's ability to dispose of the underlying
securities.
BANK OBLIGATIONS--Each Portfolio may purchase certificates of deposit ("CDs"),
time deposits ("TDs"), bankers' acceptances and other short-term obligations
issued by domestic banks, foreign subsidiaries or foreign branches of domestic
banks, domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Portfolio may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers.
CDs are negotiable certificates evidencing the obligation of a bank to
repay funds deposited with it for a specified period of time.
TDs are non-negotiable deposits maintained in a banking institution
for a specified period of time (in no event longer than seven days) at a stated
interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of a bank and the drawer to pay the face amount of the
instruments upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS--Each Portfolio may
purchase commercial paper consisting of short-term, unsecured promissory notes
issued to finance short-term credit needs. The commercial paper purchased by the
Portfolio will consist only of direct obligations which, at the time of their
purchase, are rated at least Prime-1 by Moody's Investors Service, Inc.
("Moody's"), A-1 by Standard & Poor's Ratings Group ("S&P"), F-1 by Fitch IBCA,
Inc. ("Fitch") or Duff-1 by Duff & Phelps Credit Rating Co. ("Duff" and,
together with Moody's, S&P and Fitch, the "Rating Agencies"), or issued by
companies having an outstanding unsecured debt issue currently rated at least A
by Moody's S&P, Fitch or Duff, or, if unrated, determined by the Manager (or
Founders with respect to the Founders Portfolios or Newton with respect to the
European Equity and Japan Portfolios) to be of comparable quality to those rated
obligations which may be purchased by the Portfolio.
These instruments also include variable amount master demand notes,
which are obligations that permit the Portfolio to invest fluctuating amounts at
varying rates of interest pursuant to direct arrangements between the Portfolio,
as lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus accrued interest,
at any time. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Portfolio's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies, and
the Portfolio may invest in them only if at the time of an investment the
borrower meets the criteria set forth above for other commercial paper issuers.
INVESTMENT TECHNIQUES
The following information supplements and should be read in
conjunction with the relevant Portfolio's Prospectus.
DURATION. (Core Bond Portfolio only) As a measure of a fixed-income
security's cash flow, duration is an alternative to the concept of "term to
maturity" in assessing the price volatility associated with changes in interest
rates. Generally, the longer the duration, the more volatility an investor
should expect. For example, the market price of a bond with a duration of three
years would be expected to decline 3% if interest rates rose 1%. Conversely, the
market price of the same bond would be expected to increase 3% if interest rates
fell 1%. The market price of a bond with a duration of six years would be
expected to increase or decline twice as much as the market price of a bond with
a three-year duration. Duration is a way of measuring a security's maturity in
terms of the average time required to receive the present value of all interest
and principal payments as opposed to its term to maturity. The maturity of a
security measures only the time until final payment is due; it does not take
account of the pattern of a security's cash flows over time, which would include
how cash flow is affected by prepayments and by changes in interest rates.
Incorporating a security's yield, coupon interest payments, final maturity and
option features into one measure, duration is computed by determining the
weighted average maturity of a bond's cash flows, where the present values of
the cash flows serve as weights. In computing the duration of the Core Bond
Portfolio, the Manager will estimate the duration of obligations that are
subject to features such as prepayment or redemption by the issuer, put options
retained by the investor or other imbedded options, taking into account the
influence of interest rates on prepayments and coupon flows.
PORTFOLIO MATURITY. (Core Bond Portfolio only) The Core Bond Portfolio
typically will maintain an average effective maturity ranging between five and
ten years. However, to the extent the maturity of the Portfolio's benchmark
index is outside this range at a particular time (generally, this may occur
during other than usual market conditions), the Portfolio's average effective
maturity also may fall outside such range. For purposes of calculating average
effective portfolio maturity, a security that is subject to redemption at the
option of the issuer on a particular date (the "call date") which is prior to
the security's stated maturity may be deemed to mature on the call date rather
than on its stated maturity date. The call date of a security will be used to
calculate average effective portfolio maturity when the Manager reasonably
anticipates, based upon information available to it, that the issuer will
exercise its right to redeem the security. The Manager may base its conclusion
on such factors as the interest-rate paid on the security compared to prevailing
market rates, the amount of cash available to the issuer of the security, events
affecting the issuer of the security, and other factors that may compel or make
it advantageous for the issuer to redeem a security prior to its stated
maturity.
FOREIGN CURRENCY TRANSACTIONS. (All Portfolios, except the MidCap
Stock Portfolio) Each of these Portfolios may enter into foreign currency
transactions for a variety of purposes, including: to fix in U.S. dollars,
between trade and settlement date, the value of a security the Portfolio has
agreed to buy or sell; to hedge the U.S. dollar value of securities the
Portfolio already owns, particularly if it expects a decrease in the value of
the currency in which the foreign security is denominated; or to gain exposure
to the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the
Portfolio's purchase of foreign currencies for U.S. dollars or the maintenance
of short positions in foreign currencies. A short position would involve the
Portfolio agreeing to exchange an amount of a currency it did not currently own
for another currency at a future date in anticipation of a decline in the value
of the currency sold relative to the currency the Portfolio contracted to
receive. The Portfolio's success in these transactions will depend principally
on the ability of the Manager (or Founders with respect to the Founders
Portfolios or Newton with respect to the European Equity and Japan Portfolios)
to predict accurately the future exchange rates between foreign currencies and
the U.S. dollar.
Currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by the forces of supply and demand in the
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates also
can be affected unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
BORROWING MONEY. (All Portfolios) Each Portfolio is permitted to
borrow to the extent permitted under the 1940 Act, which permits an investment
company to borrow in an amount up to 33-1/3% of the value of its total assets.
Each Founders Portfolio currently intends to borrow money only for temporary or
emergency (not leveraging) purposes. While such borrowings exceed 5% of the
Portfolio's total assets, the Portfolio will not make any additional
investments. Money borrowed will be subject to interest costs. The Core Bond,
Core Value, Emerging Leaders, Emerging Markets, European Equity, Japan, MidCap
Stock and Technology Growth Portfolios may borrow money for investment purposes
as described below under "Leverage."
LEVERAGE. (Core Bond, Core Value, Emerging Leaders, Emerging Markets,
European Equity, Japan, MidCap Stock and Technology Growth Portfolios only)
Leveraging (that is, buying securities using borrowed money) exaggerates the
effect on net asset value of any increase or decrease in the market value of a
Portfolio's investments. These borrowings will be subject to interest costs
which may or may not be recovered by appreciation of the securities purchased;
in certain cases, interest costs may exceed the return received on the
securities purchased. For borrowings for investment purposes, the 1940 Act
requires the Portfolio to maintain continuous asset coverage (total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the required coverage should decline as a result of market
fluctuations or other reasons, the Portfolio may be required to sell some of its
portfolio securities within three days to reduce the amount of its borrowings
and restore the 300% asset coverage, even though it may be disadvantageous from
an investment standpoint to sell securities at that time. The Portfolio also may
be required to maintain minimum average balances in connection with such
borrowing or pay a commitment or other fee to maintain a line of credit; either
of these requirements would increase the cost of borrowing over the stated
interest rate.
REVERSE REPURCHASE AGREEMENTS. (All Portfolios, except the Founders
Portfolios) Each of these Portfolios may enter into reverse repurchase
agreements with banks, brokers or dealers. This form of borrowing involves the
transfer by the Portfolio of an underlying debt instrument in return for cash
proceeds based on a percentage of the value of the security. The Portfolio
retains the right to receive interest and principal payments on the security. At
an agreed upon future date, the Portfolio repurchases the security at principal
plus accrued interest. To the extent a Portfolio enters into a reverse
repurchase agreement, the Portfolio will segregate permissible liquid assets at
least equal to the aggregate amount of its reverse repurchase obligations, plus
accrued interest, in certain cases, in accordance with releases promulgated by
the Securities and Exchange Commission. The Securities and Exchange Commission
views reverse repurchase transactions as collateralized borrowings by a
Portfolio. Except for these transactions, borrowings by the Portfolios generally
will be unsecured. Reverse repurchase agreements may be preferable to a regular
sale and later repurchase of the securities because it avoids certain market
risks and transaction costs. Such transactions, however, may increase the risk
of potential fluctuations in the market value of the Portfolio's assets. In
addition, interest costs on the cash received may exceed the return on the
securities purchased.
LENDING PORTFOLIO SECURITIES. (All Portfolios, except Emerging Leaders
Portfolio) Each of these Portfolios may lend securities from its portfolio to
brokers, dealers and other financial institutions needing to borrow securities
to complete certain transactions. The Portfolio continues to be entitled to
payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities, which affords the Portfolio an opportunity to
earn interest on the amount of the loan and on the loaned securities'
collateral. Loans of portfolio securities may not exceed 33-1/3% of the value of
the Portfolio's total assets, and the Portfolio will receive collateral
consisting of cash, U.S. Government securities or irrevocable letters of credit
which will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. Such loans are terminable by the
Portfolio at any time upon specified notice. The Portfolio might experience risk
of loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Portfolio. In connection with its
securities lending transactions, a Portfolio may return to the borrower or a
third party which is unaffiliated with the Portfolio, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
SHORT-SELLING. (Core Bond, Emerging Leaders, Emerging Markets,
European Equity, Japan and Technology Growth Portfolios only) In these
transactions, a Portfolio sells a security it does not own in anticipation of a
decline in the market value of the security. To complete the transaction, the
Portfolio must borrow the security to make delivery to the buyer. The Portfolio
is obligated to replace the security borrowed by purchasing it subsequently at
the market price at the time of replacement. The price at such time may be more
or less than the price at which the security was sold by the Portfolio, which
would result in a loss or gain, respectively.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Portfolio's net assets.
The Portfolio also may make short sales "against the box," in which
the Portfolio enters into a short sale of a security it owns. At no time will
more than 15% of the value of the Portfolio's net assets be in deposits on short
sales against the box.
Until the Portfolio closes its short position or replaces the borrowed
security, the Portfolio will: (a) segregate permissible liquid assets in an
amount that, together with the amount deposited with the broker as collateral,
always equals the current value of the security sold short; or (b) otherwise
cover its short position.
DERIVATIVES. (All Portfolios) Each Portfolio may invest in, or enter
into, derivatives, such as options and futures, for a variety of reasons,
including to hedge certain market risks, to provide a substitute for purchasing
or selling particular securities or to increase potential income gain.
Derivatives may provide a cheaper, quicker or more specifically focused way for
the Portfolio to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular derivative and the
portfolio as a whole. Derivatives permit a Portfolio to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Portfolio can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities. However, derivatives may entail investment
exposures that are greater than their cost would suggest, meaning that a small
investment in derivatives could have a large potential impact on a Portfolio's
performance.
If a Portfolio invests in derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Portfolio's return
or result in a loss. A Portfolio also could experience losses if its derivatives
were poorly correlated with its other investments, or if the Portfolio were
unable to liquidate its position because of an illiquid secondary market. The
market for many derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for derivatives.
Although neither the Fund nor any Portfolio will be a commodity pool,
certain derivatives subject the Portfolios to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Portfolio can invest in
such derivatives. A Portfolio may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, no Portfolio may
invest in such contracts and options for other purposes if the sum of the amount
of initial margin deposits and premiums paid for unexpired options with respect
to such contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter derivatives.
Exchange-traded derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such derivatives. This guarantee usually
is supported by a daily variation margin system operated by the clearing agency
in order to reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated with
derivatives purchased on an exchange. In contrast, no clearing agency guarantees
over-the-counter derivatives. Therefore, each party to an over-the-counter
derivative bears the risk that the counterparty will default. Accordingly, the
Manager (or Founders with respect to the Founders Portfolios or Newton with
respect to the European Equity and Japan Portfolios) will consider the
creditworthiness of counterparties to over-the-counter derivatives in the same
manner as it would review the credit quality of a security to be purchased by a
Portfolio. Over-the-counter derivatives are less liquid than exchange-traded
derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS--IN GENERAL. Each Portfolio may enter into futures
contracts in U.S. domestic markets, or, except for the MidCap Stock Portfolio,
on exchanges located outside the United States. Foreign markets may offer
advantages such as trading opportunities or arbitrage possibilities not
available in the United States. Foreign markets, however, may have greater risk
potential than domestic markets. For example, some foreign exchanges are
principal markets so that no common clearing facility exists and an investor may
look only to the broker for performance of the contract. In addition, any
profits a Portfolio might realize in trading could be eliminated by adverse
changes in the exchange rate, or the Portfolio could incur losses as a result of
those changes. Transactions on foreign exchanges may include both commodities
which are traded on domestic exchanges and those which are not. Unlike trading
on domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to a Portfolio
which could adversely affect the value of the Portfolio's net assets. Although
each Portfolio intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid market
will exist for any particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during the
trading day. Futures contract prices could move to the limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Portfolio to
substantial losses.
Successful use of futures by a Portfolio also is subject to the
ability of the Manager (or Founders with respect to the Founders Portfolios or
Newton with respect to the European Equity and Japan Portfolios) to predict
correctly movements in the direction of the relevant market and, to the extent
the transaction is entered into for hedging purposes, to ascertain the
appropriate correlation between the position being hedged and the price
movements of the futures contract. For example, if a Portfolio uses futures to
hedge against the possibility of a decline in the market value of securities
held in its portfolio and the prices of such securities instead increase, the
Portfolio will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Portfolio has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. A Portfolio may have to sell such securities at a time when it may
be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Portfolio may be required to segregate permissible
liquid assets to cover its obligations relating to its transactions in
derivatives. To maintain this required cover, the Portfolio may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a derivative position at a reasonable price. In addition,
the segregation of such assets will have the effect of limiting a Portfolio's
ability otherwise to invest those assets.
SPECIFIC FUTURES TRANSACTIONS. Each Portfolio may purchase and sell stock index
futures contracts. A stock index future obligates the Portfolio to pay or
receive an amount of cash equal to a fixed dollar amount specified in the
futures contract multiplied by the difference between the settlement price of
the contract on the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the opening of trading
in such securities on the next business day.
Each Portfolio, except the MidCap Stock Portfolio, may purchase and
sell currency futures. A foreign currency future obligates the Portfolio to
purchase or sell an amount of a specific currency at a future date at a specific
price.
Each Portfolio, except the Emerging Markets Portfolio, may purchase
and sell interest rate futures contracts. An interest rate future obligates the
Portfolio to purchase or sell an amount of a specific debt security at a future
date at a specific price.
Successful use by the Portfolio of futures contracts will be subject
to the ability of the Manager (or Founders with respect to the Founders
Portfolios or Newton with respect to the European Equity and Japan Portfolios)
to predict correctly movements in the prices of individual stocks, the stock
market generally, foreign currencies or interest rates. To the extent such
predictions are incorrect, the Portfolio may incur losses.
OPTIONS--IN GENERAL. Each Portfolio may invest up to 5% of its assets,
represented by the premium paid, in the purchase of call and put options. A
Portfolio may write (i.e., sell) covered call and put option contracts to the
extent of 20% of the value of its net assets at the time such option contracts
are written. A call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying security or securities at the
exercise price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, the underlying security or securities at the
exercise price at any time during the option period, or at a specific date.
A covered call option written by a Portfolio is a call option with
respect to which the Portfolio owns the underlying security or otherwise covers
the transaction by segregating permissible liquid assets. A put option written
by a Portfolio is covered when, among other things, the Portfolio segregates
permissible liquid assets having a value equal to or greater than the exercise
price of the option to fulfill the obligation undertaken. The principal reason
for writing covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying securities
alone. A Portfolio receives a premium from writing covered call or put options
which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow, or other unforeseen events, at times have rendered
certain of the clearing facilities inadequate and resulted in the institution of
special procedures, such as trading rotations, restrictions on certain types of
orders or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Portfolio is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. Each Portfolio, except the Core Bond Portfolio,
may purchase and sell call and put options in respect of specific securities (or
groups or "baskets" of specific securities) or stock indices listed on national
securities exchanges or traded in the over-the-counter market. An option on a
stock index is similar to an option in respect of specific securities, except
that settlement does not occur by delivery of the securities comprising the
index. Instead, the option holder receives an amount of cash if the closing
level of the stock index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
option. Thus, the effectiveness of purchasing or writing stock index options
will depend upon price movements in the level of the index rather than the price
of a particular stock.
Each Portfolio, except the MidCap Stock Portfolio, may purchase and
sell call and put options on foreign currency. These options convey the right to
buy or sell the underlying currency at a price which is expected to be lower or
higher than the spot price of the currency at the time the option is exercised
or expires.
Each Portfolio, except the Core Bond Portfolio, may purchase
cash-settled options on equity index swaps in pursuit of its investment
objective. Equity index swaps involve the exchange by the Portfolio with another
party of cash flows based upon the performance of an index or a portion of an
index of securities which usually includes dividends. The European Equity and
Japan Portfolios also may purchase cash-settled options on interest rate swaps
and interest rate swaps denominated in foreign currency. Interest rate swaps
involve the exchange by the Portfolio with another party of their respective
commitments to pay or receive interest (for example, an exchange of
floating-rate payments for fixed-rate payments) denominated in U.S. dollars or
foreign currency. A cash-settled option on a swap gives the purchaser the right,
but not the obligation, in return for the premium paid, to receive an amount of
cash equal to the value of the underlying swap as of the exercise date. These
options typically are purchased in privately negotiated transactions from
financial institutions, including securities brokerage firms.
Successful use by a Portfolio of options will be subject to the
ability of the Manager (or Founders with respect to the Founders Portfolios or
Newton with respect to the European Equity and Japan Portfolios) to predict
correctly movements in the prices of individual stocks, the stock market
generally, foreign currencies or interest rates. To the extent such predictions
are incorrect, a Portfolio may incur losses.
FUTURE DEVELOPMENTS. (All Portfolios) A Portfolio may take advantage
of opportunities in the area of options and futures contracts and options on
futures contracts and any other derivatives which are not presently contemplated
for use by the Portfolio or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Portfolio's investment objective and legally permissible for the Portfolio.
Before entering into such transactions or making any such investment on behalf
of a Portfolio, the Fund will provide appropriate disclosure in its Prospectus
or Statement of Additional Information.
FORWARD COMMITMENTS. (All Portfolios) Each Portfolio may purchase or
sell securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase or sell the securities. The payment obligation and the
interest rate receivable on a forward commitment or when-issued security are
fixed when the Portfolio enters into the commitment, but the purchaser does not
make a payment until it receives delivery from the counter party. The Portfolio
will commit to purchase such securities only with the intention of actually
acquiring the securities, but the Portfolio may sell these securities before the
settlement date if it is deemed advisable. The Portfolio will segregate
permissible liquid assets at least equal at all times to the amount of the
Portfolio's purchase commitments.
The Core Bond Portfolio intends to engage in forward commitments to
increase its portfolio's financial exposure to changes in interest rates and
will increase the volatility of its returns. If the Portfolio is fully or almost
fully invested when forward commitment purchases are outstanding, such purchases
may result in a form of leverage. At no time will the Portfolio have more than
33-1/3% of its assets committed to purchase securities on a forward commitment
basis.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a forward commitment or when-issued basis may expose a Portfolio to
risks because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when a
Portfolio is fully or almost fully invested may result in greater potential
fluctuation in the value of the Portfolio's net assets and its net asset value
per share.
FORWARD ROLL TRANSACTIONS. (Core Bond Portfolio only) To enhance
current income, the Portfolio may enter into forward roll transactions with
respect to mortgage-related securities. In a forward roll transaction, the
Portfolio sells a mortgage-related security to a financial institution, such as
a bank or broker-dealer, and simultaneously agrees to purchase a similar
security from the institution at a later date at an agreed upon price. The
securities that are purchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different pre-payment histories than those sold. During the period between the
sale and purchase, the Portfolio will not be entitled to receive interest and
principal payments on the securities sold. Proceeds of the sale typically will
be invested in short-term instruments, particularly repurchase agreements, and
the income from these investments, together with any additional fee income
received on the sale will be expected to generate income for the Portfolio
exceeding the yield on the securities sold. Forward roll transactions involve
the risk that the market value of the securities sold by the Portfolio may
decline below the purchase price of those securities. The Portfolio will
segregate permissible liquid assets at least equal to the amount of the
repurchase price (including accrued interest).
INVESTMENT CONSIDERATIONS AND RISKS
EQUITY SECURITIES. (All Portfolios) Equity securities, including
common stock, preferred stock, convertible securities and warrants, fluctuate in
value, often based on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be pronounced. Changes in the value of the
Portfolio's investments will result in changes in the value of its shares and
thus the Portfolio's total return to investors.
FIXED-INCOME SECURITIES. (All Portfolios) The Core Value Portfolio may
invest up to 5% of its total net assets in fixed-income securities, including
those of companies that are close to entering, or already in, reorganization
proceedings which are rated below investment grade by the Rating Agencies. The
MidCap Stock Portfolio also may invest in corporate obligations rated at least
Baa by Moody's or BBB by S&P, Fitch or Duff, or, if unrated, of comparable
quality as determined by the Manager. Each Founders Portfolio may invest in debt
securities of foreign issuers that management believes, based on market
conditions, the financial condition of the issuer, general economic conditions
and other relevant factors, offer opportunities for capital growth. The bonds,
debentures and corporate obligations (other than convertible securities and
preferred stock) in which each Founders Portfolio may invest must be rated not
lower than Baa by Moody's or BBB by S&P, Fitch and Duff, or, if unrated, deemed
to be of comparable quality by Founders. Even though interest-bearing securities
are investments which promise a stable stream of income, the prices of such
securities generally are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. Certain
securities that may be purchased by a Portfolio, such as those with interest
rates that fluctuate directly or indirectly based on multiples of a stated
index, are designed to be highly sensitive to changes in interest rates and can
subject the holders thereof to extreme reductions of yield and possibly loss of
principal.
The values of fixed-income securities also may be affected by changes
in the credit rating or financial condition of the issuer. Certain securities
that may be purchased by each Portfolio, such as those rated Baa or lower by
Moody's and BBB or lower by S&P, Fitch and Duff, may be subject to such risk
with respect to the issuing entity and to greater market fluctuations than
certain lower yielding, higher rated fixed-income securities. Once the rating of
a portfolio security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to continue to hold the security.
TECHNOLOGY SECTOR. (Technology Growth Portfolio only) The technology
sector has been among the most volatile sectors of the stock market. You should
recognize that returns are likely to be highly volatile and that, depending upon
when you purchase and sell your Portfolio shares, you may make or lose money.
The Portfolio may purchase securities of companies in initial public
offerings or shortly thereafter. The prices of these companies' securities may
be very volatile, rising and falling rapidly based, among other reasons, solely
on investor perceptions rather than economic reasons. The Portfolio may purchase
securities of companies which have no earnings or have experienced losses. The
Portfolio generally will make these investments based on a belief that actual
anticipated products or services will produce future earnings. If the
anticipated event is delayed or does not occur, or if investor perception about
the company change, the company's stock price may decline sharply and its
securities may become less liquid. The Portfolio may purchase securities of
smaller capitalization companies, the prices of which may be subject to more
abrupt or erratic market movements than larger, more established companies,
because these securities typically are traded in lower volume and the issuers
typically are more subject to changes in earnings and prospects. The Portfolio
is not limited in the amount it may invest in these securities or companies. The
Portfolio, together with other investment companies advised by the Manager and
its affiliates, may own significant positions in portfolio companies which,
depending on market conditions, may affect adversely the Portfolio's ability to
dispose of some or all of its position should it desire to do so.
LOWER RATED SECURITIES. (Core Bond Portfolio, Core Value Portfolio,
Emerging Markets Portfolio and Founders Portfolios only) Each of these
Portfolios may invest a portion of its assets in higher yielding (and,
therefore, higher risk) debt securities (convertible securities and preferred
stocks with respect to the Founders Portfolios) such as those rated Ba by
Moody's or BB by S&P, Fitch or Duff, or as low as those rated B by a Rating
Agency in the case of the Founders Portfolios, or as low as the lowest rating
assigned by a Rating Agency in the case of the Core Bond, Core Value and
Emerging Markets Portfolios. They may be subject to certain risks with respect
to the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. The retail secondary market for
these securities may be less liquid than that of higher rated securities;
adverse conditions could make it difficult at times for the Portfolio to sell
certain securities or could result in lower prices than those used in
calculating the Portfolio's net asset value.
Bond prices are inversely related to interest rate changes; however,
bond price volatility also is inversely related to coupon. Accordingly, below
investment grade securities may be relatively less sensitive to interest rate
changes than higher quality securities of comparable maturity, because of their
higher coupon. This higher coupon is what the investor receives in return for
bearing greater credit risk. The higher credit risk associated with below
investment grade securities potentially can have a greater effect on the value
of such securities than may be the case with higher quality issues of comparable
maturity, and will be a substantial factor in the Portfolio's relative share
price volatility. Although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk of
these securities. The Portfolio will rely on the judgment, analysis and
experience of the Manager (or Founders with respect to the Founders Portfolios)
in evaluating the creditworthiness of an issuer.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with higher rated securities and
will fluctuate over time. For example, during an economic downturn or a
sustained period of rising interest rates, highly leveraged issuers of these
securities may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations also may be
affected adversely by specific corporate developments, or the issuer's inability
to meet specific projected business forecasts, or the unavailability of
additional financing. The risk of loss because of default by the issuer is
significantly greater for the holders of these securities because such
securities generally are unsecured and often are subordinated to other creditors
of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold only
to a limited number of dealers or institutional investors. To the extent a
secondary trading market for these securities does exist, it generally is not as
liquid as the secondary market for higher rated securities. The lack of a liquid
secondary market may have an adverse impact on market price and yield and the
Portfolio's ability to dispose of particular issues when necessary to meet such
Portfolio's liquidity needs or in response to a specific economic event such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
security market for certain securities also may make it more difficult for the
Portfolio to obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic
downturns. It is likely that any economic recession could disrupt severely the
market for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
Each of these Portfolios may acquire these securities during an
initial offering. Such securities may involve special risks because they are new
issues. The Fund has no arrangement with any persons concerning the acquisition
of such securities, and the Manager (or Founders with respect to the Founders
Portfolios) will review carefully the credit and other characteristics pertinent
to such new issues.
The ratings of the Ratings Agencies represent their opinions as to the
quality of the obligations which they undertake to rate. Ratings are relative
and subjective and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk of
such obligations. Although these ratings may be an initial criterion for
selection of portfolio investments, the Manager (or Founders with respect to the
Founders Portfolios) also will evaluate these securities and the ability of the
issuers of such securities to pay interest and principal.
FOREIGN SECURITIES. (All Portfolios) Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers, including depositary receipts, foreign
government obligations and securities of supranational entities, are less liquid
and more volatile than securities of comparable U.S. issuers. Similarly, volume
and liquidity in most foreign securities markets are less than in the United
States and, at times, volatility of price can be greater than in the United
States.
Because evidences of ownership of such securities usually are held
outside the United States, the Portfolio will be subject to additional risks
which include possible adverse political and economic developments, seizure or
nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect or restrict the payment of principal and interest
on the foreign securities to investors located outside the country of the
issuer, whether from currency blockage or otherwise. Moreover, foreign
securities held by a Portfolio may trade on days when the Portfolio does not
calculate its net asset value and thus affect the Portfolio's net asset value on
days when investors have no access to the Portfolio.
With respect to the securities purchased by the Emerging Markets
Portfolio and certain securities that may be purchased by the Founders
Portfolios and the Core Bond, European Equity and Japan Portfolios only,
developing countries have economic structures that are generally less diverse
and mature, and political systems that are less stable, than those of developed
countries. The markets of developing countries may be more volatile than the
markets of more mature economies; however, such markets may provide higher rates
of return to investors. Many developing countries providing investment
opportunities for the Portfolio have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency rates
and exchange control regulations.
MORTGAGE-RELATED SECURITIES. (Core Bond Portfolio only)
Mortgage-related securities are complex derivative instruments, subject to both
credit and prepayment risk, and may be more volatile and less liquid, and more
difficult to price accurately, than more traditional debt securities. Although
certain mortgage-related securities are guaranteed by a third party (such as a
U.S. Government agency or instrumentality with respect to government-related
mortgage-backed securities) or otherwise similarly secured, the market value of
the security, which may fluctuate, is not secured. These securities may be
particularly susceptible to economic downturns. It is likely that an economic
recession could disrupt severely the market for such securities and may have an
adverse impact on the value of such securities. Mortgage-related securities
generally are subject to credit risks associated with the performance of the
underlying mortgage properties and to prepayment risk. In certain instances, the
credit risk associated with mortgage-related securities can be reduced by third
party guarantees or other forms of credit support. Improved credit risk does not
reduce prepayment risk which is unrelated to the rating assigned to the
mortgage-related security. Prepayment risk can lead to fluctuations in value of
the mortgage-related security which may be pronounced. If a mortgage-related
security is purchased at a premium, all or part of the premium may be lost if
there is a decline in the market value of the security, whether resulting from
changes in interest rates or prepayments on the underlying mortgage collateral.
Certain mortgage-related securities that may be purchased by the Portfolio, such
as inverse floating rate collateralized mortgage obligations, have coupons that
move inversely to a multiple of a specific index which may result in a form of
leverage. As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest rates.
However, although the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the security are more likely
to be prepaid. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the underlying
mortgages, and, therefore, it is not possible to predict accurately the
security's return to the Portfolio. Moreover, with respect to certain stripped
mortgage-backed securities, if the underlying mortgage securities experience
greater than anticipated prepayments of principal, the Portfolio may fail to
fully recoup its initial investment even if the securities are rated in the
highest rating category by a nationally recognized statistical rating
organization. During periods of rapidly rising interest rates, prepayments of
mortgage-related securities may occur at slower than expected rates. Slower
prepayments effectively may lengthen a mortgage-related security's expected
maturity which generally would cause the value of such security to fluctuate
more widely in response to changes in interest rates. Were the prepayments on
the Portfolio's mortgage-related securities to decrease broadly, the Portfolio's
effective duration, and thus sensitivity to interest rate fluctuations, would
increase. Commercial real property loans, however, often contain provisions that
reduce the likelihood that such securities will be prepaid. The provisions
generally impose significant prepayment penalties on loans and in some cases
there may be prohibitions on principal prepayments for several years following
origination.
STATE INSURANCE REGULATION. (All Portfolios) The Fund is intended to
be a funding vehicle for VA contracts and VLI policies to be offered by
Participating Insurance Companies and will seek to be offered in as many
jurisdictions as possible. Certain states have regulations concerning
concentration of investments, purchase and sale of future contracts and short
sales of securities, among other techniques. If applied to a Portfolio, the
Portfolio may be limited in its ability to engage in such techniques and to
manage its portfolio with the flexibility provided herein. It is the Fund's
intention that each Portfolio operate in material compliance with current
insurance laws and regulations, as applied, in each jurisdiction in which the
Portfolio is offered.
SIMULTANEOUS INVESTMENTS. (All Portfolios) Investment decisions for
each Portfolio are made independently from those of the other Portfolios and
investment companies managed by the Manager (and, where applicable, Founders or
Newton). If, however, such other Portfolios or investment companies desire to
invest in, or dispose of, the same securities as the Portfolio, available
investments or opportunities for sales will be allocated equitably to each. In
some cases, this procedure may adversely affect the size of the position
obtained for or disposed of by a Portfolio or the price paid or received by a
Portfolio.
INVESTMENT RESTRICTIONS
Each Portfolio's investment objective is a fundamental policy, which
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of the Portfolio's outstanding voting shares. In addition, each
Portfolio has adopted certain investment restrictions as fundamental policies
and certain other investment restrictions as non-fundamental policies, as
described below.
CORE VALUE PORTFOLIO, MIDCAP STOCK PORTFOLIO, TECHNOLOGY GROWTH
PORTFOLIO, FOUNDERS DISCOVERY PORTFOLIO, FOUNDERS GROWTH PORTFOLIO, FOUNDERS
INTERNATIONAL EQUITY PORTFOLIO AND FOUNDERS PASSPORT PORTFOLIO ONLY. Each of
these Portfolios has adopted investment restrictions numbered 1 through 10 as
fundamental policies which cannot be changed, as to a Portfolio, without
approval by the holders of a majority (as defined in the 1940 Act) of the
Portfolio's outstanding voting shares. Investment restrictions numbered 11
through 15 are not fundamental policies and may be changed, as to a Portfolio,
by a vote of a majority of the Fund's Board members at any time. None of these
Portfolios may:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. For purposes of this Investment
Restriction with respect to the Technology Growth Portfolio, the technology
sector in general is not considered an industry.
2. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Portfolio's total assets may
be invested, and securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities may be purchased, without regard to any such
limitations.
3. Purchase the securities of any issuer if such purchase would cause
the Portfolio to hold more than 10% of the voting securities of such issuer.
This restriction applies only with respect to 75% of the Portfolio's total
assets.
4. Invest in commodities, except that a Portfolio may purchase and
sell options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but a Portfolio may purchase and
sell securities that are secured by real estate or issued by companies that
invest or deal in real estate or real estate investment trusts.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
Portfolio's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Portfolio may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value of
its total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the Fund's
Board.
8. Act as an underwriter of securities of other issuers, except to the
extent a Portfolio may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
9. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 4, 6, 12 and 13 may be deemed to give rise to a senior
security.
10. Purchase securities on margin, but a Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
11. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the securities it
owns as a shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
13. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Prospectus and Statement of Additional Information.
14. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of its net assets would be so
invested.
15. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
* * *
CORE BOND PORTFOLIO, EMERGING LEADERS PORTFOLIO, EUROPEAN EQUITY
PORTFOLIO AND JAPAN PORTFOLIO. Each of these Portfolios has adopted investment
restrictions numbered 1 through 10 as fundamental policies which cannot be
changed, as to a Portfolio, without approval by the holders of a majority (as
defined in the 1940 Act) of the Portfolio's outstanding voting shares.
Investment restrictions numbered 11 through 13 are not fundamental policies and
may be changed, as to a Portfolio, by a vote of a majority of the Fund's Board
members at any time. None of these Portfolios may:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Portfolio's total assets may
be invested, and securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities may be purchased, without regard to any such
limitations.
3. Purchase the securities of any issuer if such purchase would cause
the Portfolio to hold more than 10% of the voting securities of such issuer.
This restriction applies only with respect to 75% of the Portfolio's total
assets.
4. Invest in commodities, except that the Portfolio may purchase and
sell options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but the Portfolio may purchase
and sell securities that are secured by real estate or issued by companies that
invest or deal in real estate or real estate investment trusts.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
Portfolio's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. Lend any securities or make any other loans if, as a result, more
than 33-1/3% of its total assets would be lent to others, except that this
limitation does not apply to the purchase of debt obligations and the entry into
repurchase agreements. Any loans of portfolio securities will be made according
to guidelines established by the Securities and Exchange Commission and the
Fund's Board.
8. Act as an underwriter of securities of other issuers, except to the
extent the Portfolio may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
9. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 4, 6 and 12 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but the Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
11. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the securities it
owns as a shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
13. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of its net assets would be so
invested.
* * *
EMERGING MARKETS PORTFOLIO ONLY. The Portfolio has adopted investment
restrictions numbered 1 through 8 as fundamental policies which cannot be
changed without approval by the holders of a majority (as defined in the 1940
Act) of the Portfolio's outstanding voting shares. Investment restrictions
numbered 9 through 11 are not fundamental policies and may be changed by a vote
of a majority of the Fund's Board members at any time. The Emerging Markets
Portfolio may not:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Invest in commodities, except that the Portfolio may purchase and
sell options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
3. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but the Portfolio may purchase
and sell securities that are secured by real estate or issued by companies that
invest or deal in real estate or real estate investment trusts.
4. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
Portfolio's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
5. Lend any securities or make any other loans if, as a result, more
than 33-1/3% of its total assets would be lent to others, except that this
limitation does not apply to the purchase of debt obligations and the entry into
repurchase agreements. Any loans of portfolio securities will be made according
to guidelines established by the Securities and Exchange Commission and the
Fund's Board.
6. Act as an underwriter of securities of other issuers, except to the
extent the Portfolio may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
7. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 2, 4 and 10 may be deemed to give rise to a senior security.
8. Purchase securities on margin, but the Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
9. Invest in the securities of a company for the purpose of exercising
management or control, but the Portfolio will vote the securities it owns as a
shareholder in accordance with its views.
10. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of its net assets would be so
invested.
* * *
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
In addition, each Portfolio has adopted the following policies as
non-fundamental policies. Each Portfolio intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) to comply
in all material respects with insurance laws and regulations that the Fund has
been advised are applicable to investments of separate accounts of Participating
Insurance Companies. As non-fundamental policies, these policies may be changed
by vote of a majority of the Board members at any time.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of
each Portfolio. The Board approves all significant agreements with those
companies that furnish services to the Fund. These companies are as follows:
<TABLE>
<CAPTION>
<S> <C>
The Dreyfus Corporation........................... Investment Adviser
Founders Asset Management LLC..................... Sub-Investment Adviser to the Founders Portfolios
Newton Capital Management Limited................. Sub-Investment Adviser to the European Equity and
Japan Portfolios
Dreyfus Service Corporation....................... Distributor
Dreyfus Transfer, Inc............................. Transfer Agent
The Bank of New York.............................. Custodian for the Emerging Markets, European Equity,
Founders International Equity, Founders Passport and
Japan Portfolios
Mellon Bank, N.A.................................. Custodian for the Core Bond, Core Value, Emerging
Leaders, Founders Discovery, Founders Growth, MidCap
Stock and Technology Growth Portfolios
</TABLE>
Board members and officers of the Fund, together with information as
to their principal business occupations during at least the last five years, are
shown below.
BOARD MEMBERS OF THE FUND
JOSEPH S. DiMARTINO, CHAIRMAN OF THE BOARD. Since January 1995, Chairman of the
Board of various funds in the Dreyfus Family of Funds. He also is a
director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly, Belding Heminway Company, Inc.), a button packager and
distributor, Century Business Services, Inc. (formerly, International
Alliance Services, Inc.), a provider of various outsourcing functions for
small and medium sized companies and QuikCAT.com, Inc., a private company
engaged in the development of high speed movement, routing, storage and
encryption of data across cable, wireless and all other modes of data
transport. For more than five years prior to January 1995, he was
President, a director and, until August 1994, Chief Operating Officer of
the Manager and Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, and the Fund's
distributor. From August 1994 until December 31, 1994, he was a director of
Mellon Financial Corporation. He is 56 years old and his address is 200
Park Avenue, New York, New York 10166.
CLIFFORD L. ALEXANDER, JR., BOARD MEMBER. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander served
as Secretary of the Army and Chairman of the Board of the Panama Canal
Company, and from 1975 to 1977, he was a member of the Washington, D.C. law
firm of Verner, Liipfert, Bernhard, McPherson and Alexander. He is a
director of American Home Products Corporation, IMS Health, a service
provider of marketing information and information technology, The Dun &
Bradstreet Corporation, MCI WorldCom and Mutual of America Life Insurance
Company. He is 66 years old and his address is 400 C Street, N.E.,
Washington, D.C. 20002.
LUCY WILSON BENSON, BOARD MEMBER. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of COMSAT
Corporation and The International Executive Service. She is also a Trustee
of the Alfred P. Sloan Foundation, Vice Chairman of the Board of Trustees
of Lafayette College, Vice Chairman of the Citizens Network for Foreign
Affairs and of The Atlantic Council of the U.S. and a member of the Council
on Foreign Relations. From 1980 to 1994, Mrs. Benson was a director of The
Grumman Corporation, from 1990 to 1998, she was a director of the General
RE Corporation, and from 1987 to 1999, she was a director of Logistics
Management Institute. Mrs. Benson served as a consultant to the U.S.
Department of State and to SRI International from 1980 and 1981. From 1977
to 1980, she was Under Secretary of State for Security Assistance, Science
and Technology. She is 72 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. Emeritus Board members are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The aggregate amount of compensation paid
to each Board member by the Fund, and by all funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set forth
in parenthesis next to each Board member's total compensation)* for the year
ended December 31, 1999, is as follows:
<TABLE>
<CAPTION>
Total Compensation
From Fund and Fund
Aggregate Complex Paid
NAME OF BOARD MEMBER COMPENSATION FROM FUND** TO BOARD MEMBER
- -------------------- ---------------------- ---------------
<S> <C> <C>
Joseph S. DiMartino $2,500 $642,177 (189)
Clifford L. Alexander, Jr. $2,000 $85,378 (43)
Lucy Wilson Benson $2,000 $76,500 (29)
- -------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Portfolios, for which the
Board member serves.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $1,151 for all Board members as a group.
</TABLE>
OFFICERS OF THE FUND
STEPHEN E. CANTER, PRESIDENT. President, Chief Operating Officer, Chief
Investment Officer and a director of the Manager, and an officer of other
investment companies advised and administered by the Manager. Mr. Canter
also is a Director and Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which is
an affiliate of the Manager. He is 54 years old.
MARK N. JACOBS, VICE PRESIDENT. Vice President, Secretary, and General Counsel
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 54 years old.
JOSEPH CONNOLLY, VICE PRESIDENT AND TREASURER. Director - Mutual Fund Accounting
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 42 years old.
STEVEN F. NEWMAN, SECRETARY. Assistant Secretary and Associate General Counsel
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 50 years old.
MICHAEL A. ROSENBERG, ASSISTANT SECRETARY. Associate General Counsel of the
Manager, and an officer of other investment companies advised and
administered by the Manager. He is 40 years old.
JEFF PRUSNOFSKY, ASSISTANT SECRETARY. Assistant General Counsel of the Manager,
and an officer of other investment companies advised and administered by
the Manager. He is 34 years old.
WILLIAM MCDOWELL, ASSISTANT TREASURER. Senior Accounting Manager - Taxable Fixed
Income of the Manager, and an officer of other investment companies advised
and administered by the Manager. He is 41 years old.
JAMES WINDELS, ASSISTANT TREASURER. Senior Treasury Manager of the Manager, and
an officer of other investment companies advised and administered by the
Manager. He is 41 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of each Portfolio's shares outstanding on April 3, 2000.
The following shareholders are known by the Fund to own of record 5%
or more of the indicated Portfolio's shares outstanding on April 3, 2000:
<TABLE>
<CAPTION>
SHAREHOLDER PORTFOLIO PERCENTAGE OF SHARES
<S> <C> <C>
MBCIC Core Value 35.23%
c/o Mellon Bank, N.A. Emerging Leaders 100.00%
919 North Market Street Emerging Markets 100.00%
Wilmington, DE 19801-3023 European Equity 17.60%
Founders Discovery 100.00%
Founders Growth 25.76%
Founders International Equity 53.64%
Founders Passport 25.58%
Japan Portfolio 100.00%
MidCap Stock 19.48%
Nationwide Insurance Co. European Equity 51.00%
NWVA9
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
TransAmerica Occidental Core Value 46.31%
Life Insurance Company European Equity 16.06%
Separate Account VA-2L Founders Growth 51.55%
Accounting Department Founders International Equity 37.76%
P.O. Box 33849 Founders Passport 53.54%
Charlotte, NC 28233-3849 MidCap Stock 41.88%
Technology Growth 71.28%
First TransAmerica Life Core Value 18.10%
Insurance Company European Equity 10.85%
Separate Account VA-2LNY Founders Growth 22.69%
Accounting Department Founders International Equity 8.60%
P.O. Box 33849 Founders Passport 20.87%
Charlotte, NC 28233-3849 MidCap Stock 16.48%
Technology Growth 28.71%
Allmerica Financial MidCap Stock 18.42%
Life & Annuity Co.
Attn: Separate Accounts
Mail Station S310
440 Lincoln Street
Worcester, MA 01653
</TABLE>
<PAGE>
MANAGEMENT ARRANGEMENTS
INVESTMENT ADVISER. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets.
The Manager provides management services pursuant to a Management
Agreement (the "Agreement") between the Fund and the Manager. As to each
Portfolio, the Agreement is subject to annual approval by (i) the Fund's Board
or (ii) vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of such Portfolio, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Manager, by
vote cast in person at a meeting called for the purpose of voting on such
approval. As to each Portfolio, the Agreement is terminable without penalty, on
60 days' notice, by the Fund's Board or by vote of the holders of a majority of
the shares of such Portfolio, or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically, as to the relevant
Portfolio, in the event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment Officer
and a director; Thomas F. Eggers, Vice Chairman-Institutional and a director;
Lawrence S. Kash, Vice Chairman; Ronald P. O'Hanley III, Vice Chairman; J. David
Officer, Vice Chairman and a director; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior Vice President; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Diane P. Durnin, Vice
President-Product Development; Patrice M. Kozlowski, Vice President-Corporate
Communications; Mary Beth Leibig, Vice President-Human Resources; Ray Van Cott,
Vice President-Information Systems; Theodore A. Schachar, Vice President-Tax;
Wendy Strutt, Vice President; Richard Terres, Vice President; William H.
Maresca, Controller; James Bitetto, Assistant Secretary; Steven F. Newman,
Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G.
Elliott, Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
SUB-INVESTMENT ADVISERS. With respect to the Founders Portfolios, the
Manager has entered into a Sub-Investment Advisory Agreement with Founders (the
"Founders Sub-Advisory Agreement"). As to each Founders Portfolio, the Founders
Sub-Advisory Agreement is subject to annual approval by (i) the Fund's Board or
(ii) vote of a majority (as defined in the 1940 Act) of the Portfolio's
outstanding voting securities, provided that in either event the continuance
also is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund or Founders, by vote cast in
person at a meeting called for the purpose of voting on such approval. As to
each Founders Portfolio, the Founders Sub-Advisory Agreement is terminable
without penalty, (i) by the Manager on 60 days' notice, (ii) by the Fund's Board
or by vote of the holders of a majority of the Portfolio's outstanding voting
securities on 60 days' notice, or (iii) upon not less than 90 days' notice, by
Founders. The Founders Sub-Advisory Agreement will terminate automatically, as
to the relevant Founders Portfolio, in the event of its assignment (as defined
in the 1940 Act).
The following persons are officers of Founders: Christopher M.
Condron, Chairman; Richard W. Sabo, President and Chief Executive Officer;
Robert T. Ammann, Vice President; Curtis J. Anderson, Vice President; Thomas M.
Arrington, Vice President; Marissa A. Banuelos, Vice President; Angelo Barr,
Senior Vice President and National Sales Manager; Scott A. Chapman, Vice
President; Kenneth R. Christoffersen, Senior Vice President, General Counsel and
Secretary; Gregory P. Contillo, Executive Vice President and Chief Marketing
Officer; Julie D. Dilorio, Vice President; Francis P. Gaffney, Senior Vice
President; Laurine Garrity, Senior Vice President; Douglas A. Loeffler, Vice
President; Andra C. Ozols, Vice President; David L. Ray, Senior Vice President
and Treasurer; Kevin S. Sonnett, Vice President; Tracy P. Stouffer, Vice
President; and Lisa G. Warshafsky, Vice President.
With respect to the European Equity and Japan Portfolios, the Manager
has entered into a Sub-Investment Advisory Agreement with Newton (the "Newton
Sub-Advisory Agreement"). As to each Portfolio, the Newton Sub-Advisory
Agreement is subject to annual approval by (i) the Fund's Board or (ii) vote of
a majority (as defined in the 1940 Act) of the Portfolio's outstanding voting
securities, provided that in either event the continuance also is approved by a
majority of the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or Newton, by vote cast in person at a meeting called
for the purpose of voting on such approval. As to each of the European Equity
and Japan Portfolios, the Newton Sub-Advisory Agreement is terminable without
penalty, (i) by the Manager on 60 days' notice, (ii) by the Fund's Board or by
vote of the holders of a majority of the Portfolio's outstanding voting
securities on 60 days' notice, or (iii) upon not less than 90 days' notice, by
Newton. The Newton Sub-Advisory Agreement will terminate automatically, as to
the relevant Portfolio, in the event of its assignment (as defined in the 1940
Act).
The following persons are officers and/or directors of Newton: Colin
Harris, Director; Jonathan Powell, Director; Guy Hudson, Director; Joanna Bowen,
Officer; Keiran Gallagher, Officer; Philip Collins, Officer; Guy Christie,
Officer; Helena Morrisey, Officer; April Larusse, Officer; Alexander Stanic,
Officer; Paul Butler, Officer; Susan Ritchie, Officer; Julian Campbell,
Compliance Officer; and Mary-Ann O'Hara, Chief Financial Officer.
PORTFOLIO MANAGEMENT. The Manager manages the investments of each
Portfolio in accordance with the stated policies of the Portfolio, subject to
the approval of the Fund's Board. Founders, with respect to each Founders
Portfolio, and Newton, with respect to each of the European Equity and Japan
Portfolios, provide day-to-day management of the Portfolio's investments,
subject to the supervision of the Manager and the Fund's Board. Each Portfolio's
adviser is responsible for investment decisions and provides the Fund with
portfolio managers who are authorized by the Fund's Board to execute purchases
and sales of securities for the relevant Portfolio. The portfolio managers of
Core Bond Portfolio are Michael Hoeh, Roger King, John Koerber and Gerald E.
Thunelius. The portfolio managers of Core Value Portfolio are Francis DeAngelis,
William Goldenberg and Valerie Sill. The portfolio managers of Emerging Leaders
Portfolio are Paul Kandel and Hilary Woods. The primary portfolio manager of
Emerging Markets Portfolio is Daniel Beneat. The portfolio managers of European
Equity Portfolio are Joanna Bowen and Keiran Gallagher. The primary portfolio
manager of Founders Discovery Portfolio is Robert T. Ammann. The primary
portfolio managers of Founders Growth Portfolio are Scott A. Chapman and Thomas
M. Arrington. The primary portfolio manager of Founders International Equity
Portfolio is Douglas A. Loeffler. The primary portfolio manager of Founders
Passport Portfolio is Tracy Stouffer. The portfolio managers of Japan Portfolio
are Miki Sugimoto and Martin Batty. The portfolio managers of MidCap Stock
Portfolio are John O'Toole, Ronald Gala, Steven Falci, Robert Wilke, Mark
Sickorski, Harry Grosse and Jocelyn Reed. The primary portfolio manager of
Technology Growth Portfolio is Mark Herskovitz. The Manager, Founders and Newton
maintain research departments with professional portfolio managers and
securities analysts who provide research services for the Portfolios and for
other funds advised by the Manager, Founders or Newton.
Mellon Bank, N.A., the Manager's parent, and its affiliates may have
deposit, loan and commercial banking or other relationships with the issuers of
securities purchased by a Portfolio. The Manager has informed the Fund that in
making its investment decisions it does not obtain or use material inside
information that Mellon Bank, N.A. or its affiliates may possess with respect to
such issuers.
The Fund, the Manager, Founders, Newton and the Distributor each have
adopted a code of ethics that permits its personnel, subject to such respective
code, to invest insecurities, including securities that may be purchased or held
by a Portfolio. The Manager's code of ethics (the "Code") subjects its
employees' personal securities transactions to various restrictions to ensure
that such trading does not disadvantage any fund advised by the Manager. In that
regard, the Manager's portfolio managers and other investment personnel must
preclear and report their personal securities transactions and holdings, which
are reviewed for compliance with the Code and are also subject to the oversight
of Mellon's Investment Ethics Committee. Portfolio managers and other investment
personnel who comply with the Code's preclearance and disclosure procedures, and
the requirements of the Committee, may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager, from time to time, may make payments from its
own assets to Participating Insurance Companies in connection with the provision
of certain administrative services to one or more Portfolios and/or to
purchasers of VA contracts or VLI policies. The Manager also may make such
advertising and promotional expenditures, using its own resources, as it from
time to time deems appropriate.
EXPENSES. All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by the Manager (or, if
applicable, the Portfolio's sub-investment adviser). The expenses borne by the
Fund include: organizational costs, taxes, interest, loan commitment fees,
dividends and interest on securities sold short, brokerage fees and commissions,
if any, fees of Board members who are not officers, directors, employees or
holders of 5% or more of the outstanding voting securities of the Manager or
Founders or any of their affiliates, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone and
personnel expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. Expenses attributable to a particular Portfolio are
charged against the assets of that Portfolio; other expenses of the Fund are
allocated among the Portfolios on the basis determined by the Fund's Board,
including, but not limited to, proportionately in relation to the net assets of
each Portfolio.
As compensation for its services, the Fund has agreed to pay the
Manager a monthly fee at the annual rate set forth below as a percentage of the
relevant Portfolio's average daily net assets.
NAME OF PORTFOLIO MANAGEMENT FEE
Core Bond Portfolio .60%
Core Value Portfolio .75%
Emerging Leaders Portfolio .90%
Emerging Markets Portfolio 1.25%
European Equity Portfolio 1.00%
Japan Portfolio 1.00%
MidCap Stock Portfolio .75%
Technology Growth Portfolio .75%
Founders Discovery Portfolio .90%
Founders Growth Portfolio .75%
Founders International Equity Portfolio 1.00%
Founders Passport Portfolio 1.00%
The fees payable by the Fund to the Manager with respect to each
Portfolio indicated below for the periods from its commencement of operations
through December 31, 1998 and/or 1999, were as follows:
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT FEE PAYABLE
----------------------
1998* 1999
----- ----
<S> <C> <C>
Core Value Portfolio $26,068(1) $80,234
Midcap Stock Portfolio $40,453(1) $92,701
Founders Growth Portfolio $4,286(2) $30,158
Founders International Equity Portfolio $5,388(2) $27,223
Founders Passport Portfolio $13,578(2) $73,558
European Equity Portfolio N/A $17,955(3)
Emerging Leaders Portfolio N/A $871(4)
Emerging Markets Portfolio N/A $1,216(4)
Founders Discovery Portfolio N/A $886(4)
Japan Portfolio N/A $925(4)
Technology Growth Portfolio N/A $57,840(5)
REDUCTION IN FEE
----------------
1998 1999
---- ----
Core Value Portfolio $26,068 $53,959
Midcap Stock Portfolio $40,453 $59,994
Founders Growth Portfolio $4,286 $30,158
Founders International Equity Portfolio $5,388 $27,223
Founders Passport Portfolio $13,578 $73,558
European Equity Portfolio N/A $17,955
Emerging Leaders Portfolio N/A $871
Emerging Markets Portfolio N/A $1,216
Founders Discovery Portfolio N/A $886
Japan Portfolio N/A $925
Technology Growth Portfolio N/A $19,780
NET FEE PAID
------------
1998 1999
---- ----
Core Value Portfolio $0 $26,275
Midcap Stock Portfolio $0 $32,707
Founders Growth Portfolio $0 $0
Founders International Equity Portfolio $0 $0
Founders Passport Portfolio $0 $0
European Equity Portfolio N/A $0
Emerging Leaders Portfolio N/A $0
Emerging Markets Portfolio N/A $0
Founders Discovery Portfolio N/A $0
Japan Portfolio N/A $0
Technology Growth Portfolio N/A $38,060
- -----------------
* The management fees payable by each Portfolio to the Manager for the
fiscal year ended December 31, 1998 were waived pursuant to undertakings
by the Manager, resulting in no management fees being paid by the
Portfolios for the fiscal year ended December 31, 1998.
(1) From May 1, 1998 (commencement of operations) through December 31, 1998.
(2) From September 30, 1998 (commencement of operations) through December 31, 1998.
(3) From May 1, 1999 (commencement of operations) through December 31, 1999.
(4) From December 15, 1999 (commencement of operations) through December 31, 1999.
(5) From August 31, 1999 (commencement of operations) through December 31, 1999.
</TABLE>
The Core Bond Portfolio has not completed its first fiscal year.
As compensation for Founders' services, the Manager has agreed to pay
Founders a monthly sub-advisory fee at the annual rate set forth below as a
percentage of the relevant Founders Portfolio's average daily net assets:
<TABLE>
<CAPTION>
SUB-INVESTMENT
NAME OF PORTFOLIO ADVISORY FEE
- ------------------ -----------------
<S> <C>
FOUNDERS DISCOVERY PORTFOLIO AND FOUNDERS GROWTH PORTFOLIO
- ----------------------------------------------------------
0 to $100 million of average daily net assets .25%
$100 million to $1 billion of average daily net assets .20%
$1 billion to $1.5 billion of average daily net assets .16%
$1.5 billion or more of average daily net assets .10%
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO AND FOUNDERS PASSPORT PORTFOLIO
- ------------------------------------------------------------------------
0 to $100 million of average daily net assets .35%
$100 million to $1 billion of average daily net assets .30%
$1 billion to $1.5 billion of average daily net assets .26%
$1.5 billion or more of average daily net assets .20%
</TABLE>
The fees payable by the Manager to Founders with respect to the
Founders Growth, Founders International Equity and Founders Passport Portfolios
for the period September 30, 1998 (commencement of operations) through December
31, 1998 were waived in their entirety by Founders pursuant to an undertaking.
For the fiscal year ended December 31, 1999 with respect to Founders Growth,
Founders International Equity and Founders Passport Portfolios, and for the
period December 15, 1999 (commencement of operations) through December 31, 1999
with respect to Founders Discovery Portfolio, the Manager paid Founders $0, $0,
$0 and $0, respectively, in sub-advisory fees.
As compensation for Newton's services, the Manager has agreed to pay
Newton a monthly sub-advisory fee at the annual rate set forth below as a
percentage of each of the European Equity and Japan Portfolio's average daily
net assets:
<TABLE>
<CAPTION>
ANNUAL FEE AS A PERCENTAGE
OF THE PORTFOLIO'S
AVERAGE DAILY NET ASSETS AVERAGE DAILY NET ASSETS
------------------------ ------------------------
<S> <C>
0 to $100 million................................... .35%
$100 million to $1 billion.......................... .30%
$1 billion to $1.5 billion.......................... .26%
$1.5 billion or more................................ .20%
</TABLE>
For the period May 1, 1999 (commencement of operations) through
December 31, 1999 with respect to the European Equity Portfolio and for the
period December 15, 1999 (commencement of operations) through December 31, 1999
with respect to the Japan Portfolio, the Manager paid Newton $0 and $0,
respectively, in sub-advisory fees.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's assets increases.
DISTRIBUTOR. Dreyfus Service Corporation, a wholly-owned subsidiary of
the Manager, located at 200 Park Avenue, New York, New York 10166, serves as the
Fund's distributor on a best efforts basis pursuant to an agreement with the
Fund which is renewable annually.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund, the
Transfer Agent arranges for the maintenance of shareholder account records for
the Fund, the handling of certain communications between shareholders and the
Fund and the payment of dividends and distributions payable by the Fund. For
these services, the Transfer Agent receives a monthly fee computed on the basis
of the number of shareholder accounts it maintains for the Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian with respect to
the Core Bond, Core Value, Emerging Leaders, Founders Discovery, Founders
Growth, MidCap Stock and Technology Growth Portfolios. Under a custody agreement
with the Fund, Mellon Bank, N.A. holds each such Portfolio's securities and
keeps all necessary accounts and records. For its custody services, Mellon Bank,
N.A. receives a monthly fee based on the market value of each such Portfolio's
assets held in custody and receives certain securities transaction charges.
The Bank of New York, 100 Church Street, New York, New York 10286,
serves as the Fund's custodian with respect to the Emerging Markets, European
Equity, Founders International Equity, Founders Passport and Japan Portfolios.
The Bank of New York has no part in determining the investment policies of the
Portfolios or which securities are to be purchased or sold by the Portfolios.
HOW TO BUY SHARES
Portfolio shares currently are offered only to separate accounts of
Participating Insurance Companies. Individuals may not place purchase orders
directly with the Fund.
Separate accounts of the Participating Insurance Companies place
orders based on, among other things, the amount of premium payments to be
invested pursuant to VA contracts and VLI policies. See the prospectus of the
separate account of the applicable Participating Insurance Company for more
information on the purchase of Portfolio shares and with respect to the
availability for investment in specific portfolios of the Fund. The Fund does
not issue share certificates.
Purchase orders from separate accounts based on premiums and
transaction requests received by the Participating Insurance Company on a given
business day in accordance with procedures established by the Participating
Insurance Company will be effected at the net asset value of the applicable
Portfolio determined on such business day if the orders are received by the Fund
in proper form and in accordance with applicable requirements on the next
business day and Federal Funds (monies of member banks within the Federal
Reserve System which are held on deposit at a Federal Reserve Bank) in the net
amount of such orders are received by the Fund on the next business day in
accordance with applicable requirements. It is each Participating Insurance
Company's responsibility to properly transmit purchase orders and Federal Funds
in accordance with applicable requirements. VA contract holders and VLI policy
holders should refer to the prospectus for their contracts or policies in this
regard.
Portfolio shares are sold on a continuous basis. Net asset value per
share is determined as of the close of trading on the floor of the New York
Stock Exchange ("NYSE") (currently 4:00 p.m., New York time), on each day that
the NYSE is open for business. For purposes of determining net asset value,
options and futures will be valued 15 minutes after the close of trading on the
floor of the NYSE. Net asset value per share is computed by dividing the value
of the net assets of each Portfolio (i.e., the value of its assets less
liabilities) by the total number of Portfolio shares outstanding. For
information regarding methods employed in valuing each Portfolio's investments,
see "Determination of Net Asset Value."
HOW TO REDEEM SHARES
Portfolio shares may be redeemed at any time by the separate accounts
of the Participating Insurance Companies. Individuals may not place redemption
orders directly with the Fund.
Redemption requests received by the Participating Insurance Company
from separate accounts on a given business day in accordance with procedures
established by the Participating Insurance Company will be effected at the net
asset value of the applicable Portfolio determined on such business day if the
requests are received by the Fund in proper form and in accordance with
applicable requirements on the next business day. It is each Participating
Insurance Company's responsibility to properly transmit redemption requests in
accordance with applicable requirements. VA contract holders and VLI policy
holders should consult their Participating Insurance Company in this regard. The
value of the shares redeemed may be more or less than their original cost,
depending on the Portfolio's then-current net asset value. No charges are
imposed by the Fund when shares are redeemed.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in proper
form, except as provided by the rules of the Securities and Exchange Commission.
Should any conflict between VA contract holders and VLI policy holders
arise which would require that a substantial amount of net assets be withdrawn,
orderly portfolio management could be disrupted to the potential detriment of
such contract holders and policy holders.
REDEMPTION COMMITMENT. The Fund has committed to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of a Portfolio's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount, the Fund's Board reserves the
right to make payments in whole or part in securities or other assets of the
Portfolio in case of an emergency or any time a cash distribution would impair
the liquidity of the Portfolio to the detriment of the existing shareholders. In
such event, the securities would be valued in the same manner as the Portfolio's
investments are valued. If the recipient sells such securities, brokerage
charges would be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the NYSE is closed
(other than customary weekend and holiday closings), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an emergency exists
as determined by the Securities and Exchange Commission so that disposal of the
Fund's investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and Exchange
Commission by order may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
Each Portfolio's investment securities are valued at the last sale
price on the securities exchange or national securities market on which such
securities are primarily traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
are valued at the average of the most recent bid and asked prices, except in the
case of open short positions where the asked price is used for valuation
purposes. Bid price is used when no asked price is available. Market quotations
for foreign securities denominated in foreign currencies are translated into
U.S. dollars at the prevailing rates of exchange. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place contemporaneously with the
determination of prices of certain of the foreign investment securities of the
Core Bond Portfolio, Core Value Portfolio, Emerging Leaders Portfolio, Emerging
Markets Portfolio, European Equity Portfolio, Japan Portfolio or any Founders
Portfolio. If events materially affecting the value of such securities occur
between the time when their price is determined and the time when the
Portfolio's net asset value is calculated, such securities may be valued at fair
value as determined in good faith by the Board. Short-term investments are
carried at amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in good faith by the Fund's Board. Expenses and
fees, including the management fee (reduced by any fee waiver or expense
reimbursement arrangement), are accrued daily and taken into account for the
purpose of determining the net asset value of shares.
Substantially all of the Core Bond Portfolio's investments (excluding
short-term investments) are valued each business day by an independent pricing
service (the "Service") approved by the Fund's Board. Securities valued by the
Service for which quoted bid prices in the judgment of the Service are readily
available and are representative of the bid side of the market are valued at the
mean between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other debt securities valued by
the Service are carried at fair value as determined by the Service, based on
methods which include consideration of: yields or prices of securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Debt securities that are not valued by
the Service are valued at the average of the most recent bid and asked prices in
the market in which such investments are primarily traded, or at the last sales
price for securities traded primarily on an exchange. In the absence of reported
sales of investments traded primarily on an exchange, the average of the most
recent bid and asked prices is used. Bid price is used when no asked price is
available.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Fund's Board, are valued at fair value as determined in
good faith by the Fund's Board. The Fund's Board will review the method of
valuation on a current basis. In making their good faith valuation of restricted
securities, the Board members generally will take the following factors into
consideration: restricted securities which are, or are convertible into,
securities of the same class of securities for which a public market exists
usually will be valued at market value less the same percentage discount at
which purchased. This discount will be revised periodically by the Fund's Board
if the Board members believe that it no longer reflects the value of the
restricted securities. Restricted securities not of the same class as securities
for which a public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Fund's Board.
NYSE CLOSINGS. The holidays (as observed) on which the NYSE is closed
currently are: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that each Portfolio (except the Core Bond
Portfolio which had not commenced operations) has qualified as a regulated
investment company under the Code for the period ended December 31, 1999. It is
expected that the Core Bond Portfolio will qualify as a regulated investment
company under the Code. Each Portfolio intends to continue to so qualify as long
as such qualification is in the best interests of its shareholders. As a
regulated investment company, each Portfolio will pay no Federal income tax on
net investment income and net realized securities gains to the extent that such
income and gains are distributed to shareholders in accordance with applicable
provisions of the Code. To qualify as a regulated investment company, the
Portfolio must meet several requirements. These requirements include the
following: (1) at least 90% of the Portfolio's gross income must be derived from
dividends, interest, payments with respect to securities loans, gains from the
sale or disposition of stock, securities or foreign currencies or other income
(including gain from options, futures or forward contracts) derived in
connection with the Portfolio's investment business, (2) at the close of each
quarter of the Portfolio's taxable year, (a) at least 50% of the value of the
Portfolio's assets must consist of cash, United States Government securities,
securities of other regulated investment companies and other securities (limited
generally with respect to any one issuer to not more than 5% of the total assets
of the Portfolio and not more than 10% of the outstanding voting securities of
such issuer) and (b) not more than 25% of the value of the Portfolio's assets
may be invested in the securities of any one issuer (other than United States
Government securities or securities of other regulated investment companies) or
of two or more issuers which the Portfolio controls and which are determined to
be engaged in similar or related trades or businesses and (3) at least 90% of
the Portfolio's net income (consisting of net investment income and net
short-term capital gain) must be distributed to its shareholders. The term
"regulated investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
Each Portfolio intends to comply with the diversification requirements
imposed by section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements
mentioned above, place certain limitations on the proportion of each Portfolio's
assets that may be represented by any single investment (which includes all
securities of the same issuer). For purposes of section 817(h), all securities
of the same issuer, all interests in the same real property project, and all
interest in the same commodity are treated as a single investment. In addition,
each U.S. Government agency or instrumentality is treated as a separate issuer,
while the securities of a particular foreign government and its agencies,
instrumentalities and political subdivisions all will be considered securities
issued by the same issuer.
Generally, a regulated investment company must distribute
substantially all of its ordinary income and capital gains in accordance with a
calendar year distribution requirement in order to avoid a nondeductible 4%
excise tax. However, the excise tax does not apply to a fund whose only
shareholders are certain tax exempt trusts or segregated asset accounts of life
insurance companies held in connection with variable contracts. In order to
avoid this excise tax, each Portfolio intends to qualify for this exemption or
to make its distributions in accordance with the calendar year.
In order to maintain its qualifications as a regulated investment
company, a Portfolio's ability to invest in certain types of financial
instruments (for example, securities issued or acquired at a discount) may be
restricted and a Portfolio may be required to maintain or dispose of its
investments in certain types of financial instruments beyond the time when it
might otherwise be advantageous to do so.
If a Portfolio fails to qualify as a regulated investment company, the
Portfolio will be subject to Federal, and possibly state, corporate taxes on its
taxable income and gains, distributions to its shareholders will be taxed as
ordinary dividend income to the extent of such Portfolio's available earnings
and profits, and Policy owners could lose the benefit of tax deferral on
distributions made to the separate accounts of Participating Insurance
Companies. Similarly, if a Portfolio failed to comply with the diversification
requirements of section 817(h) of the Code and the regulations thereunder,
Policy owners could be subject to current tax on distributions made to the
separate accounts of Participating Insurance Companies.
Portfolios investing in foreign securities or currencies may be
required to pay withholding, income or other taxes to foreign governments or
U.S. possessions. Foreign tax withholding from dividends and interest, if any,
is generally at a rate between 10% and 35%. The investment yield of any
Portfolio that invests in foreign securities or currencies is reduced by these
foreign taxes. Policy owners investing in such Portfolios bear the cost of any
foreign taxes but will not be able to claim a foreign tax credit or deduction
for these foreign taxes. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and foreign
countries generally do not impose taxes on capital gains in respect of
investments by foreign investors.
Certain Portfolios may invest in securities of "passive foreign
investment companies" ("PFICs"). A PFIC is a foreign corporation that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. A Portfolio investing in
securities of PFICs may be subject to U.S. Federal income taxes and interest
charges, which would reduce the investment yield of a Portfolio making such
investments. Policy owners investing in such Portfolios would bear the cost of
these taxes and interest charges. In certain cases, a Portfolio may be eligible
to make certain elections with respect to securities of PFICs which could reduce
taxes and interest charges payable by the Portfolio. However, a Portfolio's
intention to qualify annually as a regulated investment company may limit a
Portfolio's elections with respect to PFIC securities and no assurance can be
given that such elections can or will be made.
The foregoing is only a general summary of some of the important
Federal income tax considerations generally affecting the Portfolios and their
shareholders. No attempt is made to present a complete explanation of the
Federal tax treatment of the Portfolios' activities or to discuss state and
local tax matters affecting the Portfolios. Policy owners are urged to consult
their own tax advisers for more detailed information concerning tax implications
of investments in the Portfolios.
For more information concerning the Federal income tax consequences,
Policy owners should refer to the prospectus for their contracts or policies.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities on a securities exchange
are effected by the Manager (or, if applicable, the Portfolio's sub-investment
adviser) through brokers who charge a negotiated commission for their services
based on the quality and quantity of execution services provided by the broker
in the light of generally prevailing rates. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. Transactions are allocated to various dealers by the
Fund's portfolio managers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager (and, if
applicable, the Portfolio's sub-investment adviser) to supplement its own
research and analysis with the views and information of other securities firms
and may be selected based upon their sales of shares of funds advised by the
Manager or its affiliates. Such services may include advice concerning the value
of securities; the advisability of investing in, purchasing, or selling
securities; and the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts; and effect securities
transactions, and perform functions incidental thereto (such as clearance and
settlement).
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager (and, if applicable, the
Portfolio's sub-investment adviser) in advising other funds or accounts and,
conversely, research services furnished to the Manager (and, if applicable, the
Portfolio's sub-investment adviser) by brokers in connection with other funds or
accounts may be used in advising a Portfolio. Although it is not possible to
place a dollar value on these services, it is the opinion of the Manager that
the receipt and study of such services should not reduce the overall research
department expenses.
Brokers also will be selected based on their sales of shares of other
funds advised by the Manager or its affiliates, as well as their ability to
handle special executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block trades
may, in certain cases, result from two or more funds in the Dreyfus Family of
Funds being engaged simultaneously in the purchase or sale of the same security.
Certain of the Portfolios' transactions in securities of foreign issuers may not
benefit from the negotiated commission rates available for transactions in
securities of domestic issuers. Higher portfolio turnover rates are likely to
result in comparatively greater brokerage expenses. The overall reasonableness
of brokerage commissions paid is evaluated based upon knowledge of available
information as to the general level of commissions paid by other institutional
investors for comparable services.
In connection with its portfolio securities transactions for the
fiscal periods ended December 31, 1998 and 1999, each Portfolio indicated below
paid brokerage commissions and, where determinable, concessions on principal
transactions, none of which was paid to the Distributor, in the following
amounts:
<TABLE>
<CAPTION>
CONCESSIONS ON PRINCIPAL
NAME OF PORTFOLIO BROKERAGE COMMISSIONS PAID TRANSACTIONS
- ----------------- -------------------------- ------------------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Core Value $9,350(1) $24,894 $0 $23,159
MidCap Stock $20,261(1) $21,859 $0 $0
Founders Growth $4,258(2) $6,510 $0 $1,488
Founders International Equity $7,518(2) $23,532 $0 $0
Founders Passport $11,415(2) $134,550 $0 $0
European Equity N/A $12,362(3) N/A $0
Emerging Leaders N/A $2,569(4) N/A $0
Emerging Markets N/A $5,818(4) N/A $0
Founders Discovery N/A $664(4) N/A $0
Japan N/A $3,445(4) N/A $0
Technology Growth N/A $10,889(5) N/A $7,978
- ------------------
(1) From May 1, 1998 (commencement of operations) through December 31, 1998.
(2) From September 30, 1998 (commencement of operations) through December 31, 1998.
(3) From May 1, 1999 (commencement of operations) through December 31, 1999.
(4) From December 15, 1999 (commencement of operations) through December 31, 1999.
(5) From August 31, 1999 (commencement of operations) through December 31, 1999.
</TABLE>
The aggregate amount of transactions during the fiscal period ended
December 31, 1999 in securities effected on an agency basis through a broker
for, among other things, research services, and the commissions and concessions
related to such transactions were as follows:
<TABLE>
<CAPTION>
NAME OF PORTFOLIO TRANSACTION AMOUNT COMMISSIONS AND CONCESSIONS
- ----------------- -------------------------- ------------------------------
<S> <C> <C>
Core Value $0 $0
MidCap Stock $0 $0
Founders Growth $0 $0
Founders International Equity $0 $0
Founders Passport $0 $0
European Equity(1) $0 $0
Emerging Leaders(2) $45,438 $120
Emerging Markets(2) $16,000 $50
Founders Discovery(2) $0 $0
Japan(2) $0 $0
Technology Growth(3) $878,081 $550
- ------------------
(1) From May 1, 1999 (commencement of operations) through December 31, 1999.
(2) From December 15, 1999 (commencement of operations) through December 31, 1999.
(3) From August 31, 1999 (commencement of operations) through December 31, 1999.
</TABLE>
The Core Bond Portfolio has not completed its first fiscal year.
The Fund contemplates that, consistent with the policy of obtaining
the most favorable net price, brokerage transactions may be conducted through
the Manager, Founders or Newton or their affiliates, including Dreyfus
Investment Services Corporation and Dreyfus Brokerage Services, Inc. ("DBS").
The Fund's Board has adopted procedures in conformity with Rule 17e-1 under the
1940 Act to ensure that all brokerage commissions paid to the Manager, Founders,
Newton or their affiliates are reasonable and fair.
For the period August 31, 1999 (commencement of operations) through
December 31, 1999, Technology Growth Portfolio paid to DBS brokerage commissions
of $3,025. During this period, this amounted to approximately 28% of the
aggregate brokerage commissions paid by Technology Growth Portfolio for
transactions involving approximately 30% of the aggregate dollar amount of
transactions for which the Technology Growth Portfolio paid brokerage
commissions.
PERFORMANCE INFORMATION
Performance figures for the Portfolios will not reflect the separate
charges applicable to the Policies offered by Participating Insurance Companies.
Current yield is computed pursuant to a formula which operates as
follows: The amount of the relevant Portfolio's expenses accrued for the 30-day
period (net of reimbursements) is subtracted from the amount of the dividends
and interest earned (computed in accordance with regulatory requirements) by
such Portfolio during the period. That result is then divided by the product of:
(a) the average daily number of such Portfolio's shares outstanding during the
period that were entitled to receive dividends, and (b) the net asset value per
share on the last day of the period less any undistributed earned income per
share reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying the
result by 2.
The average annual total return for the periods indicated ended
December 31, 1999, for the indicated Portfolios was as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL AVERAGE ANNUAL
TOTAL RETURN TOTAL RETURN
NAME OF PORTFOLIO ONE YEAR SINCE INCEPTION
- ----------------- ---------------- ------------------
<S> <C> <C>
Core Value 19.73% 7.61% (1)
MidCap Stock 10.82% 4.72% (1)
Founders Growth 39.01% 57.77% (2)
Founders International Equity 60.69% 63.30% (2)
Founders Passport 76.05% 76.79% (2)
- --------------------
(1) From May 1, 1998 (commencement of operations) through December 31, 1999.
(2) From September 30, 1998 (commencement of operations) through December 31, 1999.
</TABLE>
No average annual total return figures are provided for the European
Equity, Emerging Leaders, Emerging Markets, Founders Discovery, Japan and
Technology Growth Portfolios since they had not completed a full year of
operations as of the date of the performance figures provided for the other
Portfolios.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return (not annualized) for the periods indicated ended December
31, 1999, for the indicated Portfolios was as follows:
<TABLE>
<CAPTION>
TOTAL RETURN
NAME OF PORTFOLIO (NOT ANNUALIZED)
- ------------------ ------------------
<S> <C>
Core Value(1) 13.04%
Midcap Stock(1) 8.01%
Founders Growth(2) 76.82%
Founders International Equity(2) 84.60%
Founders Passport(2) 103.85%
European Equity(3) 29.20%
Emerging Leaders(4) 7.52%
Emerging Markets(4) 9.04%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL RETURN
NAME OF PORTFOLIO (NOT ANNUALIZED)
- ----------------- ----------------
<S> <C>
Founders Discovery(4) 11.12%
Japan(4) 2.64%
Technology Growth(5) 55.60%
- -------------------
(1) From May 1, 1998 (commencement of operations) through December 31, 1999.
(2) From September 30, 1998 (commencement of operations) through December 31, 1999.
(3) From May 1, 1999 (commencement of operations) through December 31, 1999.
(4) From December 15, 1999 (commencement of operations) through December 31, 1999.
(5) From August 31, 1999 (commencement of operations) through December 31, 1999.
</TABLE>
The Core Bond Portfolio has not completed its first fiscal year and,
therefore, no performance data has been provided for such Portfolio.
Total return is calculated by subtracting the amount of the relevant
Portfolio's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect to
the reinvestment of dividends and distributions during the period), and dividing
the result by the net asset value per share at the beginning of the period.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance. The effective yield and total
return for a Portfolio should be distinguished from the rate of return of a
corresponding sub-account or investment division of a separate account of a
Participating Insurance Company, which rate will reflect the deduction of
additional charges, including mortality and expense risk charges, and will
therefore be lower. Policy owners should consult the prospectus for their
Policy.
Calculations of the Portfolios' performance information may reflect
absorbed expenses pursuant to any undertaking that may be in effect. Comparative
performance information may be used from time to time in advertising a
Portfolio's shares, including data from Lipper Analytical Services, Inc., the
Aggregate Bond Index, Government/Corporate Bond Index, CDA Technologies Indexes,
Consumer Price Index, IBC's Money Fund Report(TM), International Finance
Corporation Index, Money Magazine, Bank Rate Monitor(TM), Standard & Poor's 500
Composite Stock Price Index, Standard & Poor's MidCap 400 Index, Russell 2000(R)
Index, Russell 2500(R) Index, Morgan Stanley Capital International (MSCI)
Emerging Markets (Free) Index, MSCI Europe Index, MSCI World (ex US) Index, MSCI
Japan Index, the Dow Jones Industrial Average, Morningstar, Inc., Value Line
Mutual Fund Survey and other industry publications.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events. From time to time, advertising materials for the Fund also may
refer to Morningstar ratings and related analyses supporting the rating, and may
refer to, or include, commentary by the Fund's portfolio managers relating to
their investment strategy, asset growth of the Portfolio, current or past
business, political, economic or financial conditions and other matters of
general interest to shareholders.
INFORMATION ABOUT THE FUND AND PORTFOLIOS
Each Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Portfolio shares are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights and
are freely transferable.
Under Massachusetts law, shareholders, under certain circumstances,
could be held personally liable for the obligations of the Fund. However, the
Fund's Agreement and Declaration of Trust (the "Trust Agreement") disclaims
shareholder liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Fund or a Trustee. The Trust Agreement provides
for indemnification from the Fund's property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations, a possibility which management believes is remote. Upon
payment of any liability incurred by the Fund, the shareholder paying such
liability will be entitled to reimbursement from the general assets of the Fund.
The Fund intends to conduct its operations in such a way so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of the Fund.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of Board members or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office.
Shareholders may remove a Board member by the affirmative vote of two-thirds of
the Fund's outstanding voting shares. In addition, the Board will call a meeting
of shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for certain
matters under the 1940 Act and for other purposes. A shareholder of one
portfolio is not deemed to be a shareholder of any other portfolio. For certain
matters shareholders vote together as a group; as to others they vote separately
by portfolio.
To date, the Board has authorized the creation of 12 Portfolios of
shares. All consideration received by the Fund for shares of one of the
Portfolios, and all assets in which such consideration is invested, will belong
to that Portfolio (subject only to the rights of creditors of the Fund) and will
be subject to the liabilities related thereto. The income attributable to, and
the expenses of, one Portfolio would be treated separately from those of the
other Portfolios. The Fund has the ability to create, from time to time, new
series without shareholder approval.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of any investment
company, such as the Fund, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each portfolio affected by such matter. Rule 18f-2 further provides that a
portfolio shall be deemed to be affected by a matter unless it is clear that the
interests of each portfolio in the matter are identical or that the matter does
not affect any interest of such portfolio. However, the Rule exempts the
selection of independent accountants and the election of Board members from the
separate voting requirements of the rule.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Fund's Prospectuses.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the Fund.
The auditors examine the Fund's financial statements and provide other audit,
tax and related services.
YEAR 2000 ISSUES
The Fund could be adversely affected if the computer systems used by
the Manager and the Fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000.
The Manager 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.
<PAGE>
APPENDIX
Description of certain ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade bonds. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
CC
Bonds rated CC typically are subordinated to senior debt which is
assigned an actual or implied CCC rating.
C
Bonds rated C typically are subordinated to senior debt which is
assigned an actual or implied CCC- rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major ratings
categories, except in the AAA (Prime Grade) category.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Moody's
Bond Ratings
Aaa
Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba
Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B
Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca
Bonds rated Ca present obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C
Bonds rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a rating for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be evidenced
by leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings take
into consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or reorganization of
the obligor. DDD represents the highest potential for recovery on these bonds
and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection
factors but still considered sufficient for prudent investment. Considerable
variability in risk exists during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds
may be in default or have considerable uncertainty as to timely payment of
interest, preferred dividends and/or principal. Protection factors are narrow
and risk can be substantial with unfavorable economic or industry conditions
and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled
principal and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except
AAA) to indicate the relative position of a credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by ample asset
protection. Risk factors are minor.
DREYFUS INVESTMENT PORTFOLIOS
PART C. OTHER INFORMATION
--------------------------------
ITEM 23. EXHIBITS
(a) Registrant's Agreement and Declaration of Trust is incorporated
by reference to the Registration Statement on Form N-1A, filed on
February 28, 1998.
(b) Registrant's By-Laws, as amended, are incorporated by reference
to Exhibit (b) of Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A, filed on February 14, 2000.
(d)(1) Revised Management Agreement is incorporated by reference to
Exhibit (d)(1) of Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A, filed on February 14, 2000.
(d)(2) Sub-Investment Advisory Agreements are incorporated by reference
to Exhibit (d)(2) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A, filed on December 15, 1999.
(e) Form of Distribution Agreement.
(g) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit (8) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 24, 1998.
(i) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 24, 1998.
(j) Consent of Independent Auditors.
(p)(1) Code of Ethics adopted by the Registrant.
(p)(2) Codes of Ethics adopted by the Sub-Investment Advisers to the
Registrant.
<PAGE>
OTHER EXHIBITS
(a) Powers of Attorney.
(b) Certificate of Assistant Secretary.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not Applicable
ITEM 25. INDEMNIFICATION
The Statement as to the general effect of any contract,
arrangements or statute under which a Board member, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
Board member, officer, affiliated person or underwriter for their
own protection, is incorporated by reference to Item 27 of Part C
of Post-Effective Amendment No. 2 to the Registration Statement
on From N-1A, filed on September 15, 1998.
Reference is also made to the Distribution Agreement attached as
Exhibit (e).
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser and manager for sponsored investment companies
registered under the Investment Company Act of 1940 and as an
investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves
primarily as a registered broker-dealer and distributor of other
investment companies advised and administered by Dreyfus. Dreyfus
Investment Advisors, Inc., another wholly-owned subsidiary,
provides investment management services to various pension plans,
institutions and individuals.
<TABLE>
<CAPTION>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER (CONTINUED)
OFFICERS AND DIRECTORS OF INVESTMENT ADVISER
NAME AND POSITION
WITH DREYFUS OTHER BUSINESSES POSITION HELD DATES
- ------------------ ---------------- ------------- -----
<S> <C> <C> <C>
CHRISTOPHER M. CONDRON Franklin Portfolio Associates, Director 1/97 - Present
Chairman of the Board and LLC*
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Director 4/95 - 1/98
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 - Present
Mellon Capital Management Director 5/95 - Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 - 1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Financial Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Founders Asset Management, Chairman 12/97 - Present
LLC**** Director 12/97 - Present
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Executive Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 - Present
Company*
The Boston Company Financial President 6/89 - 1/97
Strategies, Inc. * Director 6/89 - 1/97
MANDELL L. BERMAN Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
BURTON C. BORGELT DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Financial Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
STEPHEN R. BYERS Dreyfus Service Corporation++ Senior Vice President 3/00 - Present
Director of Investments
Gruntal & Co., LLC Executive Vice President 5/97 - 11/99
New York, NY Partner 5/97 - 11/99
Executive Committee 5/97 - 11/99
Member
Board of Directors 5/97 - 11/99
Member
Treasurer 5/97 - 11/99
Chief Financial Officer 5/97 - 6/99
STEPHEN E. CANTER Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, Director 2/99 - Present
LLC*
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Founders Asset Management, Member, Board of 12/97 - Present
LLC**** Managers
Acting Chief Executive 7/98 - 12/98
Officer
The Dreyfus Trust Company+++ Director 6/95 - Present
Chairman 1/99 - Present
President 1/99 - Present
Chief Executive Officer 1/99 - Present
THOMAS F. EGGERS Dreyfus Service Corporation++ Chief Executive Officer 3/00 - Present
Vice Chairman - Institutional and Chairman of the
And Director Board
Executive Vice President 4/96 - 3/00
Director 9/96 - Present
Founders Asset Management, Member, Board of 2/99 - Present
LLC**** Managers
Dreyfus Investment Advisors, Inc. Director 1/00 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 3/99 - Present
Massachusetts, Inc. +++
Dreyfus Brokerage Services, Inc. Director 11/97 - 6/98
401 North Maple Avenue
Beverly Hills, CA.
STEVEN G. ELLIOTT Mellon Financial Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Executive Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 4/97 - 12/99
Vice Chairman Advisors, Inc.++
Dreyfus Brokerage Services, Inc. Chairman 11/97 - 2/99
401 North Maple Ave. Chief Executive Officer 11/97 - 2/98
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.+++ Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Inc. ++ Director 1/97 - 4/99
Dreyfus Insurance Agency of Chairman 5/97 - 3/99
Massachusetts, Inc.++++ President 5/97 - 3/99
Director 5/97 - 3/99
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - 6/99
Corporation++ President 5/97 - 6/99
Director 12/94 - 6/99
Founders Asset Management, Member, Board of 12/97 - 12/99
LLC**** Managers
The Boston Company Advisors, Chairman 12/95 - 1/99
Inc. Chief Executive Officer 12/95 - 1/99
Wilmington, DE President 12/95 - 1/99
The Boston Company, Inc.* Director 5/93 - 1/99
President 5/93 - 1/99
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Boston Safe Deposit & Trust Co.+ Director 6/93 - 1/99
Executive Vice President 6/93 - 4/98
MARTIN G. MCGUINN Mellon Financial Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
J. DAVID OFFICER Dreyfus Service Corporation++ President 3/00 - Present
Vice Chairman Executive Vice President 5/98 - 3/00
And Director Director 3/99 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Dreyfus Brokerage Services, Inc. Chairman 3/99 - Present
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - 1/99
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - 6/99
Services, Inc.* Director 8/96 - 6/99
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
RICHARD W. SABO Founders Asset Management President 12/98 - Present
Director LLC**** Chief Executive Officer 12/98 - Present
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
RICHARD F. SYRON Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive Officer 6/99 - Present
Waltham, MA 02454-9046
American Stock Exchange Chairman 4/94 - 6/99
86 Trinity Place Chief Executive Officer 4/94 - 6/99
New York, NY 10006
RONALD P. O'HANLEY Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
Franklin Portfolio Associates, Director 3/97 - Present
LLC*
Boston Safe Deposit and Trust Executive Committee 1/99 - Present
Company* Member
Director 1/99 - Present
The Boston Company, Inc.* Executive Committee 1/99 - Present
Member 1/99 - Present
Director
Buck Consultants, Inc.++ Director 7/97 - Present
Newton Asset Management LTD Executive Committee 10/98 - Present
(UK) Member
London, England Director 10/98 - Present
Mellon Asset Management Non-Resident Director 11/98 - Present
(Japan) Co., LTD
Tokyo, Japan
TBCAM Holdings, Inc.* Director 10/97 - Present
The Boston Company Asset Director 1/98 - Present
Management, LLC*
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 2/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates; LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon Equity Associates; LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
MARK N. JACOBS Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
WILLIAM H. MARESCA The Dreyfus Trust Company+++ Chief Financial Officer 3/99 - Present
Controller Treasurer 9/98 - Present
Director 3/97 - Present
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 - Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant Treasurer 3/93 - 3/99
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
WILLIAM T. SANDALLS, JR. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97 - 12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company +++ Director 1/96 - Present
Dreyfus Service Organization, Treasurer 10/96 - 3/99
Inc.++
Dreyfus Insurance Agency of Director 5/97 - 3/99
Massachusetts, Inc.++++ Treasurer 5/97 - 3/99
Executive Vice President 5/97 - 3/99
DIANE P. DURNIN Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
PATRICE M. KOZLOWSKI NONE
Vice President - Corporate
Communications
MARY BETH LEIBIG NONE
Vice President -
Human Resources
THEODORE A. SCHACHAR Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
The Dreyfus Consumer Credit Chairman 6/99 - Present
Corporation ++ President 6/99 - Present
Dreyfus Investment Advisors, Vice President - Tax 10/96 - Present
Inc.++
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Vice President - Tax 10/96 - Present
Inc.++
WENDY STRUTT None
Vice President
RICHARD TERRES None
Vice President
RAYMOND J. VAN COTT Mellon Financial Corporation+ Vice President 7/98 - Present
Vice-President -
Information Systems
Computer Sciences Corporation Vice President 1/96 - 7/98
El Segundo, CA
JAMES BITETTO The TruePenny Corporation++ Secretary 9/98 - Present
ASSISTANT SECRETARY
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
STEVEN F. NEWMAN Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
**** The address of the business so indicated is 2930 East Third Avenue, Denver, Colorado 80206.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109.
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Other investment companies for which Registrant's principal underwriter
(exclusive distributor) acts as principal underwriter or exclusive distributor:
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Intermediate Bond Fund
56) Dreyfus New York Tax Exempt Money Market Fund
57) Dreyfus U.S. Treasury Intermediate Term Fund
58) Dreyfus U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Premier California Municipal Bond Fund
64) Dreyfus Premier Equity Funds, Inc.
65) Dreyfus Premier International Funds, Inc.
66) Dreyfus Premier GNMA Fund
67) Dreyfus Premier Worldwide Growth Fund, Inc.
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Equity Funds
72) Dreyfus Short-Intermediate Government Fund
73) Dreyfus Short-Intermediate Municipal Bond Fund
74) The Dreyfus Socially Responsible Growth Fund, Inc.
75) Dreyfus Stock Index Fund
76) Dreyfus Tax Exempt Cash Management
77) The Dreyfus Premier Third Century Fund, Inc.
78) Dreyfus Treasury Cash Management
79) Dreyfus Treasury Prime Cash Management
80) Dreyfus Variable Investment Fund
81) Dreyfus Worldwide Dollar Money Market Fund, Inc.
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Funds, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Funds, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
(b)
<TABLE>
<CAPTION>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS POSITIONS AND OFFICES WITH THE DISTRIBUTOR REGISTRANT
- ---------------- ------------------------------------------ -------------
<S> <C> <C>
Thomas F. Eggers* Chief Executive Officer and Chairman of the Board None
J. David Officer* President and Director None
Stephen Burke* Executive Vice President None
Charles Cardona* Executive Vice President None
Anthony DeVivio** Executive Vice President None
David K. Mossman** Executive Vice President None
Jeffrey N. Nachman*** Executive Vice President and Chief Operations Officer None
William T. Sandalls, Jr.* Executive Vice President and Director None
Wilson Santos** Executive Vice President and Director of Client Services None
William H. Maresca* Chief Financial Officer None
Ken Bradle** Senior Vice President None
Stephen R. Byers* Senior Vice President None
Frank J. Coates* Senior Vice President None
Joseph Connolly* Senior Vice President Vice President
and Treasurer
William Glenn* Senior Vice President None
Michael Millard** Senior Vice President None
Mary Jean Mulligan** Senior Vice President None
Bradley Skapyak* Senior Vice President None
Jane Knight* Chief Legal Officer and Secretary None
Stephen Storen* Chief Compliance Officer None
Jeffrey Cannizzaro* Vice President - Compliance None
Maria Georgopoulos* Vice President - Facilities Management None
William Germenis Vice President - Compliance None
Walter T. Harris* Vice President None
Janice Hayles* Vice President None
Hal Marshall* Vice President - Compliance None
Paul Molloy* Vice President None
Theodore A. Schachar* Vice President - Tax None
James Windels* Vice President Assistant Treasurer
James Bitetto* Assistant Secretary None
* Principal business address is 200 Park Avenue, New York, NY 10166.
** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY 11556-0144.
*** Principal business address is 401 North Maple Avenue, Beverly Hills, CA 90210.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it meets all of the requirements for effectiveness of
this Amendment to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York on the 26th day of
April, 2000.
DREYFUS INVESTMENT PORTFOLIOS
BY: /S/STEPHEN E. CANTER*
---------------------
STEPHEN E. CANTER, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signatures Title Date
---------- ----- ----
/S/ STEPHEN E. CANTER* President (Principal 4/26/00
- --------------------------------- Executive Officer)
Stephen E. Canter
/S/ JOSEPH CONNOLLY* Treasurer (Principal Financial 4/26/00
- --------------------------------- and Accounting Officer)
Joseph Connolly
/S/ JOSEPH S. DIMARTINO* Chairman of the Board 4/26/00
- --------------------------------
Joseph S. DiMartino
/S/ CLIFFORD L. ALEXANDER, JR.* Trustee 4/26/00
- -------------------------------
Clifford L. Alexander, Jr.
/S/ LUCY WILSON BENSON* Trustee 4/26/00
- -------------------------------
Lucy Wilson Benson
*BY: /S/ JEFF PRUSNOFSKY
--------------------
Jeff Prusnofsky
Attorney-in-Fact
<PAGE>
INDEX OF EXHIBITS
(e) Revised Distribution Agreement.
(j) Consent of Independent Auditors.
(p1) Code of Ethics adopted by the Registrant.
(p2) Code of Ethics adopted by the Sub-Investment Advisers to the
Registrant
OTHER EXHIBITS
(a) Powers of Attorney.
(b) Certificate of Secretary.
Exhibit (e)
DISTRIBUTION AGREEMENT
[NAME OF FUND]
200 Park Avenue
New York, New York 10166
March 22, 2000
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the "Fund") has
agreed that you shall be, for the period of this agreement, the distributor of
(a) shares of each Series of the Fund set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes of this
agreement the term "Shares" shall mean the authorized shares of the relevant
Series, if any, and otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by,
and in accordance with, the registration statement and prospectus then in effect
under the Securities Act of 1933, as amended, and will transmit promptly any
orders received by you for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing.
1.2 You agree to use your best efforts to solicit orders for the sale
of Shares. It is contemplated that you will enter into sales or servicing
agreements with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended, by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by abnormal circumstances of any kind, the
Fund's officers may decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such orders and to
make such sales and the Fund shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in connection with
the registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided, however,
that nothing contained herein shall be deemed to require the Fund to pay any of
the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Fund's officers in connection with
the qualification of Shares for sale in such states as you may designate to the
Fund and the Fund may approve, and the Fund agrees to pay all expenses which may
be incurred in connection with such qualification. You shall pay all expenses
connected with your own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this agreement, all other
expenses incurred by you in connection with the sale of Shares as contemplated
in this agreement.
1.7 The Fund shall furnish you from time to time, for use in
connection with the sale of Shares, such information with respect to the Fund or
any relevant Series and the Shares as you may reasonably request, all of which
shall be signed by one or more of the Fund's duly authorized officers; and the
Fund warrants that the statements contained in any such information, when so
signed by the Fund's officers, shall be true and correct. The Fund also shall
furnish you upon request with: (a) semi-annual reports and annual audited
reports of the Fund's books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings statements prepared by
the Fund, (c) a monthly itemized list of the securities in the Fund's or, if
applicable, each Series' portfolio, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition as you may
reasonably request.
1.8 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully prepared in
conformity with the requirements of said Acts and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Fund represents and warrants to you
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Fund may
but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not file any amendment
to any registration statement or supplement to any prospectus without giving you
reasonable notice thereof in advance; provided, however, that nothing contained
in this agreement shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the form
furnished to you from time to time, in connection with the sale of Shares. The
Fund agrees to indemnify, defend and hold you, your several officers and
directors, and any person who controls you within the meaning of Section 15 of
the Securities Act of 1933, as amended, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you, your officers and directors,
or any such controlling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Fund's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's agreement to
indemnify you, your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Fund at
its address set forth above within ten days after the summons or other first
legal process shall have been served. The failure so to notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this paragraph
1.9. The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case, such defense
shall be conducted by counsel of good standing chosen by the Fund and approved
by you. In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained by
any of them; but in case the Fund does not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by you or them. The Fund's indemnification agreement
contained in this paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of you, your officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your several officers and directors, and their respective estates, and to the
benefit of any controlling persons and their successors. The Fund agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Fund or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its officers or Board members, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or otherwise,
but only to the extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting from such claims
or demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
you to the Fund specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your address set forth above within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on your part, and in any other event the Fund,
its officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 1.10. This agreement of
indemnity will inure exclusively to the Fund's benefit, to the benefit of the
Fund's officers and Board members, and their respective estates, and to the
benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any litigation or
proceedings against you or any of your officers or directors in connection with
the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund under any of
the provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission
for amendments to the registration statement or prospectus then in
effect or for additional information;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the effectiveness of
the registration statement or prospectus then in effect or the
initiation of any proceeding for that purpose;
(c) of the happening of any event which makes untrue any
statement of a material fact made in the registration statement or
prospectus then in effect or which requires the making of a change in
such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission
with respect to any amendments to any registration statement or
prospectus which may from time to time be filed with the Securities
and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be
offered for sale at a price per share (the "offering price") approximately equal
to (a) their net asset value (determined in the manner set forth in the Fund's
charter documents) plus (b) a sales charge, if any and except to those persons
set forth in the then-current prospectus, which shall be the percentage of the
offering price of such Shares as set forth in the Fund's then-current
prospectus. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred sales charge as
set forth in the Fund's then-current prospectus. You shall be entitled to
receive any sales charge or contingent deferred sales charge in respect of the
Shares. Any payments to dealers shall be governed by a separate agreement
between you and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval Date")
set forth on Exhibit A hereto (and, if the Fund has Series, a separate
Reapproval Date shall be specified on Exhibit A for each Series), and thereafter
shall continue automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A hereto, provided such
continuance is specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may be, provided that
in either event its continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in said Act) of any party
to this agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable without penalty, on 60
days' notice, (a) by vote of holders of a majority of the Fund's or, as to any
relevant Series, such Series' outstanding voting securities, or (b) by the
Fund's Board as to the Fund or the relevant Series, as the case may be, or (c)
by you. This agreement also will terminate automatically, as to the Fund or
relevant Series, as the case may be, in the event of its assignment (as defined
in said Act).
4. Miscellaneous
[4.1] The Fund recognizes that from time to time your directors,
officers, and employees may serve as trustees, directors, partners, officers,
and employees of other business trusts, corporations, partnerships, or other
entities (including other investment companies) and that such other entities may
include the name "Dreyfus" as part of their name, and that your corporation or
its affiliates may enter into distribution or other agreements with such other
entities. If you cease to act as the distributor of the Fund's shares or if The
Dreyfus Corporation or any of its affiliates ceases to act as the Fund's
investment adviser, the Fund agrees that, at the request of The Dreyfus
Corporation, the Fund will take all necessary action to change the name of the
Fund to a name not including "Dreyfus" in any form or combination of words.
4.2 (FOR MBTS ONLY) This agreement has been executed on behalf of the
Fund by the undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this agreement shall only be binding upon the assets
and property of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with your
understanding and indicate your any acceptance hereof by signing below,
whereupon it shall become a binding agreement between us.
Very truly yours,
[NAME OF FUND]
By: _______________________
Accepted:
DREYFUS SERVICE CORPORATION
By:_______________________________
<PAGE>
EXHIBIT A**
REAPPROVAL DATE REAPPROVAL DAY
[Name of Series] [Reapproval Date] [Reapproval Day]
**No changes will be made to a Fund's current Reapproval Date or Day.
Exhibit (j)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our reports
dated February 7, 2000 for Core Value Portfolio, Emerging Leaders Portfolio,
Emerging Markets Portfolio, European Equity Portfolio, Founders Discovery
Portfolio, Founders Growth Portfolio, Founders International Equity Portfolio,
Founders Passport Portfolio, Japan Portfolio, MidCap Stock Portfolio and
Technology Growth Portfolio, which are incorporated by reference, in this
Registration Statement (Form N-1A 333-47011) of Dreyfus Investment Portfolios.
ERNST & YOUNG LLP
New York, New York
April 24, 2000
Exhibit (p1)
CONFIDENTIAL INFORMATION AND
SECURITIES TRADING POLICY
<PAGE>
Page
- ------------------------------
INTRODUCTION ................................................... 1
PART I
APPLICABLE TO ALL ASSOCIATES
SECTION ONE
CONFIDENTIAL INFORMATION............................ 2
-Types of Confidential Information.................. 2
-Rules for Protecting Confidential Information...... 3
-Supplemental Procedures............................ 4
SECTION TWO
INSIDER TRADING AND TIPPING......................... 5
-Legal Prohibitions................................. 5
-Mellon's Policy.................................... 6
SECTION THREE
RESTRICTIONS ON THE FLOW OF INFORMATION
WITHIN MELLON (THE "CHINESE WALL").................. 7
-Rules for Maintaining the Chinese Wall............. 7
-Reporting Receipt of Material Nonpublic
Information........................................ 8
-Functions "Above the Wall"......................... 9
-Supplemental Procedures............................ 9
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS IN MELLON
SECURITIES..........................................10
-Beneficial Ownership...............................11
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS IN OTHER
SECURITIES..........................................12
SECTION SIX
CLASSIFICATION OF ASSOCIATES........................14
-Insider Risk Associate.............................14
-Investment Associate...............................15
-Other Associate....................................15
PART II
APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY ...................................................16
-Prohibition on Investments in Securities of
Financial Services Organizations..................16
-Conflict of Interest..............................17
-Preclearance for Personal Securities
Transactions......................................17
-Personal Securities Transactions Reports..........19
-Confidential Treatment............................19
PART III
APPLICABLE TO INVESTMENT
ASSOCIATES ONLY ..................................................20
-Special Standards of Conduct for
Investment Associates............................20
-Preclearance for Personal Securities
Transactions.....................................21
-Personal Securities Transactions Reports.........23
-Confidential Treatment...........................24
PART IV
APPLICABLE TO OTHER
ASSOCIATES ONLY ..................................................25
-Preclearance for Personal Securities
Transactions.....................................25
-Personal Securities Transactions Reports.........25
-Restrictions on Transactions in Other
Securities.......................................25
-Confidential Treatment...........................26
PART V
APPLICABLE TO NONMANAGEMENT
BOARD MEMBERS ..................................................27
-Nonmanagement Board Member.......................27
-Standards of Conduct for Nonmanagement
Board Member.....................................27
-Preclearance for Personal Securities
Transactions.....................................28
-Personal Securities Transactions Reports.........29
-Confidential Treatment...........................29
GLOSSARY Definitions.......................................30
INDEX OF EXHIBITS .................................................33
<PAGE>
INTRODUCTION
- ------------------------------
Mellon Bank Corporation ("Mellon") and its associates, and
the registered investment companies for which The Dreyfus
Corporation ("Dreyfus") and/or Mellon serves as investment
adviser, sub-investment adviser or administrator, are
subject to certain laws and regulations governing the use
of confidential information and personal securities
trading. Mellon has developed this Confidential Information
and Securities Trading Policy (the "Policy") to establish
specific standards to promote compliance with applicable
laws. Further, the Policy is intended to protect Mellon's
business secrets and proprietary information as well as
that of its customers and any entity for which it acts in a
fiduciary capacity.
The Policy set forth procedures and limitations which
govern the personal securities transactions of every Mellon
associate and certain other individuals associated with the
registered investment companies for which Dreyfus and/or
Mellon serves as investment adviser, sub-investment adviser
or administrator. The Policy is designed to reinforce
Mellon's reputation for integrity by avoiding even the
appearance of impropriety in the conduct of Mellon's
business.
Associates should be aware that they may be held personally
liable for any improper or illegal acts committed during
the course of their employment, and that "ignorance of the
law" is not a defense. Associates may be subject to civil
penalties such as fines, regulatory sanctions including
suspensions, as well as criminal penalties.
Associates outside the United States are also subject to
applicable laws of foreign jurisdictions, which may differ
substantially from U.S. law and which may subject such
associates to additional requirements. Such associates must
comply with applicable requirements of pertinent foreign
laws as well as with the provisions of the Policy. To the
extent any particular portion of the Policy is inconsistent
with foreign law, associates should consult the General
Counsel or the Manager of Corporate Compliance.
Any provision of this Policy may be waived or exempted at
the discretion of the Manager of Corporate Compliance. Any
such waiver or exemption will be evidenced in writing and
maintained in the Risk Management and Compliance
Department.
Associates must read the Policies and MUST COMPLY
with them. Failure to comply with the provisions
of the Policies may result in the imposition of
serious sanctions, including but not limited to
disgorgement of profits, dismissal, substantial
personal liability and referral to law enforcement
agencies or other regulatory agencies. Associates
should retain the Policies in their records for
future reference. Any questions regarding the
Policies should be referred to the Manager of
Corporate Compliance or his/her designee.
<PAGE>
PART I - APPLICABLE TO ALL ASSOCIATES
- ------------------------------
SECTION ONE
CONFIDENTIAL INFORMATION
As an associate you may receive information about Mellon,
its customers and other parties that, for various reasons,
should be treated as confidential. All associates are
expected to strictly comply with measures necessary to
preserve the confidentiality of information.
TYPES OF CONFIDENTIAL INFORMATION - Although it is
impossible to provide an exhaustive list of information
that should remain confidential, the following are examples
of the general types of confidential information that
associates might receive in the ordinary course of carrying
out their job responsibilities.
o Information Obtained from Business Relations - An associate
might receive confidential information regarding customers
or other parties with whom Mellon has business
relationships. If released, such information could have a
significant effect on their operations, their business
reputations or the market price of their securities.
Disclosing such information could expose both the associate
and Mellon to liability for damages.
o Mellon Financial Information - An associate might receive
financial information regarding Mellon before such
information has been disclosed to the public. It is the
policy of Mellon to disclose all material corporate
information to the public in such a manner that all those
who are interested in Mellon and its securities have equal
access to the information. Disclosing such information to
unauthorized persons could subject both the associate and
Mellon to liability under the federal securities laws.
o Mellon Proprietary Information - Certain nonfinancial
information developed by Mellon - such as business plans,
customer lists, methods of doing business, computer
software, source codes, databases and related documentation
- constitutes valuable Mellon proprietary information.
Disclosure of such information to unauthorized persons
could harm, or reduce a benefit to, Mellon and could result
in liability for both the associate and Mellon.
o Mellon Examination Information - Banks and certain other
Mellon subsidiaries are periodically examined by regulatory
agencies. Certain reports made by those regulatory agencies
are the property of those agencies and are strictly
confidential. Giving information from these reports to
anyone not officially connected with Mellon is a criminal
offense.
o Portfolio Management Information - Portfolio management
information relating to investment accounts or funds
managed by Mellon or Dreyfus, including investment
decisions or strategies developed for the benefit of
investment companies advised by Dreyfus, is for the benefit
of such account or fund. Disclosure or exploitation of such
information by an associate in an unauthorized manner may
cause detriment to such accounts or funds and may subject
the associate to liability under the federal securities
laws.
RULES FOR PROTECTING CONFIDENTIAL INFORMATION - The
following are some basic rules to follow to protect
confidential information.
o Limited Communication to Outsiders - Confidential
information should not be communicated to anyone outside
Mellon, except to the extent they need to know the
information in order to provide necessary services to
Mellon.
o Limited Communication to Insiders - Confidential
information should not be communicated to other associates,
except to the extent they need to know the information to
fulfill their job responsibilities and their knowledge of
the information is not likely to result in misuse or a
conflict of interest. In this regard, Mellon has
established specific restrictions with respect to material
nonpublic information in order to separate and insulate
different functional areas and personnel within Mellon.
Please refer to Section Three, "Restrictions on The Flow of
Information Within Mellon" (The "Chinese Wall").
o Corporate Use Only - Confidential information should be
used only for Corporate purposes. Under no circumstances
may an associate use it, directly or indirectly, for
personal gain or for the benefit of any outside party who
is not entitled to such information.
o Other Customers - Where appropriate, customers should be
made aware that associates will not disclose to them other
customers' confidential information or use the confidential
information of one customer for the benefit of another.
o Notification of Confidentiality - When confidential
information is communicated to any person, either inside or
outside Mellon, they should be informed of the
information's confidential nature and the limitations on
its further communication.
o Prevention of Eavesdropping - Confidential matters should
not be discussed in public or in places, such as in
building lobbies, restaurants or elevators, where
unauthorized persons may overhear. Precautions, such as
locking materials in desk drawers overnight, stamping
material "Confidential" and delivering materials in sealed
envelopes, should be taken with written materials to ensure
they are not read by unauthorized persons.
o Data Protection - Data stored on personal computers and
diskettes should be properly secured to ensure they are not
accessed by unauthorized persons. Access to computer files
should be granted only on a need-to-know basis. At a
minimum, associates should comply with applicable Mellon
policies on electronic data security.
o Confidentiality Agreements - Confidentiality agreements to
which Mellon is a party must be complied with in addition
to, but not in lieu of, this Policy. Confidentiality
agreements that deviate from commonly used forms should be
reviewed in advance by the Legal Department.
o Contact with the Public - All contacts with institutional
shareholders or securities analysts about Mellon must be
made through the Investor Relations Division of the Finance
Department. All contacts with the media and all speeches or
other public statements made on behalf of Mellon or about
Mellon's businesses must be cleared in advance by Corporate
Affairs. In speeches and statements not made on behalf of
Mellon, care should be taken to avoid any implication that
Mellon endorses the views expressed.
SUPPLEMENTAL PROCEDURES - Mellon entities, departments,
divisions and groups should establish their own
supplemental procedures for protecting confidential
information, as appropriate. These procedures may include:
o establishing records retention and destruction policies;
o using code names;
o limiting the staffing of confidential matters (for example,
limiting the size of working groups and the use of
temporary employees, messengers and word processors); and
o requiring written confidentiality agreements from certain
associates.
Any supplemental procedures should be used only to protect
confidential information and not to circumvent appropriate
reporting and recordkeeping requirements.
<PAGE>
SECTION TWO
INSIDER TRADING AND TIPPING
LEGAL PROHIBITIONS - Federal securities laws generally
prohibit the trading of securities while in possession of
"material nonpublic" information regarding the issuer of
those securities (insider trading). Any person who passes
along the material nonpublic information upon which a trade
is based (tipping) may also be liable.
"Material" - Information is material if there is a
substantial likelihood that a reasonable investor would
consider it important in deciding whether to buy, sell or
hold securities. Obviously, information that would affect
the market price of a security would be material. Examples
of information that might be material include:
o a proposal or agreement for a merger, acquisition or
divestiture, or for the sale or purchase of substantial
assets;
o tender offers, which are often material for the party
making the tender offer as well as for the issuer of the
securities for which the tender offer is made;
o dividend declarations or changes;
o extraordinary borrowings or liquidity problems;
o defaults under agreements or actions by creditors,
customers or suppliers relating to a company's credit
standing;
o earnings and other financial information, such as large
or unusual write-offs, write-downs, profits or losses;
o pending discoveries or developments, such as new products,
sources of materials, patents, processes, inventions or
discoveries of mineral deposits;
o a proposal or agreement concerning a financial
restructuring;
o a proposal to issue or redeem securities, or a
development with respect to a pending issuance or
redemption of securities;
o a significant expansion or contraction of operations;
o information about major contracts or increases or
decreases in orders;
o the institution of, or a development in, litigation or a
regulatory proceeding;
o developments regarding a company's senior management;
o information about a company received from a director of
that company; and
o information regarding a company's possible noncompliance
with environmental protection laws.
This list is not exhaustive. All relevant circumstances
must be considered when determining whether an item of
information is material.
"Nonpublic" - Information about a company is nonpublic if
it is not generally available to the investing public.
Information received under circumstances indicating that it
is not yet in general circulation and which may be
attributable, directly or indirectly, to the company or its
insiders is likely to be deemed nonpublic information.
If an associate can refer to some public source to show
that the information is generally available (that is,
available not from inside sources only) and that enough
time has passed to allow wide dissemination of the
information, the information is likely to be deemed public.
While information appearing in widely accessible sources -
such as newspapers - becomes public very soon after
publication, information appearing in less accessible
sources - such as regulatory filings - may take up to
several days to be deemed public. Similarly, highly complex
information might take longer to become public than would
information that is easily understood by the average
investor.
MELLON'S POLICY - Associates who possess material nonpublic
information about a company - whether that company is
Mellon, another Mellon entity, a Mellon customer or
supplier, or other company - may not trade in that
company's securities, either for their own accounts or for
any account over which they exercise investment discretion.
In addition, associates may not recommend trading in those
securities and may not pass the information along to
others, except to associates who need to know the
information in order to perform their job responsibilities
with Mellon. These prohibitions remain in effect until the
information has become public.
Associates who have investment responsibilities should take
appropriate steps to avoid receiving material nonpublic
information. Receiving such information could create severe
limitations on their ability to carry out their
responsibilities to Mellon's fiduciary customers.
Associates managing the work of consultants and temporary
employees who have access to the types of confidential
information described in this Policy are responsible for
ensuring that consultants and temporary employees are aware
of Mellon's policy and the consequences of noncompliance.
Questions regarding Mellon's policy on material nonpublic
information, or specific information that might be subject
to it, should be referred to the General Counsel.
<PAGE>
SECTION THREE
RESTRICTIONS ON THE FLOW OF
INFORMATION WITHIN MELLON
(THE "CHINESE WALL")
As a diversified financial services organization, Mellon
faces unique challenges in complying with the prohibitions
on insider trading and tipping of material nonpublic
information and misuse of confidential information. This is
because one Mellon unit might have material nonpublic
information about a company while other Mellon units may
have a desire, or even a fiduciary duty, to buy or sell
that company's securities or recommend such purchases or
sales to customers. To engage in such broad-ranging
financial services activities without violating laws or
breaching Mellon's fiduciary duties, Mellon has established
a "Chinese Wall" policy applicable to all associates. The
"Chinese Wall" separates the Mellon units or individuals
that are likely to receive material nonpublic information
(Potential Insider Functions) from the Mellon units or
individuals that either trade in securities - for Mellon's
account or for the accounts of others - or provide
investment advice (Investment Functions).
Examples of Potential Insider Functions - Potential Insider
Functions include, among others, certain commercial
lending, corporate finance, and credit policy areas.
Insider Risk Associates (see Section Six, "Insider Risk
Associates") should consider themselves to be in Potential
Insider Functions unless their particular job
responsibilities clearly indicate otherwise.
Examples of Investment Functions - Investment Functions
include, among others, securities sales and trading,
investment management and advisory services, investment
research and various trust or fiduciary functions.
RULES FOR MAINTAINING THE "CHINESE WALL" - Without the
prior approval of the General Counsel, material nonpublic
information obtained by anyone in a Potential Insider
Function should not be communicated to anyone in an
Investment Function. To reduce the risk of material
nonpublic information being communicated, communications
between these associates in these functions must be limited
to the maximum extent consistent with valid business needs.
Particular rules -
o File Restrictions - Associates in Investment Functions must
not have access to commercial credit files, corporate
finance files, or any other Potential Insider Function
files that might contain material nonpublic information.
All such files that contain material nonpublic information
should be marked as "Confidential" and, if feasible,
segregated from nonconfidential files.
o Electronic Data - Associates in Investment Functions must
not have access to personal computer or word processing
files of associates in Potential Insider Functions.
o Meetings - Associates in Investment Functions must not
attend meetings between customers and associates in
Potential Insider Functions unless appropriate steps have
been taken to ensure that material nonpublic information
will not be disclosed or discussed.
o Committee Service - Without the prior approval of the
General Counsel, associates other than those "Above the
Wall" (see page 9) must not serve simultaneously on a
committee having responsibility for any Investment Function
and a committee having responsibility for any Potential
Insider Function.
o Information Requests - Requests for nonmaterial information
or public information across the "Chinese Wall" should be
made in writing to an appropriate associate in the
applicable area. Associates sending or receiving such a
request should resolve any questions regarding the
materiality or nonpublic nature of the requested
information by consulting their department head, who will
contact the General Counsel, as appropriate.
o Information Backflow - Associates should take care to avoid
inadvertent backflow of information that may be interpreted
as the prohibited communication of material nonpublic
information. For example, the mere fact that someone in a
Potential Insider Function, such as a mergers and
acquisitions specialist, requests information from an
associate in an Investment Function could give the latter
person a clue as to possible material developments
affecting a customer.
o Customers - Associates in Investment Functions must not
state or imply to customers that associates making
decisions or recommendations will have the benefit of
information from Mellon's Potential Insider Functions. When
appropriate, associates should inform customers of Mellon's
"Chinese Wall" policy.
o Conflicts of Interest - Associates should not receive or
pass on any information that would create an undue risk of
Mellon or any associate having a conflict of interest or
breaching a fiduciary obligation.
REPORTING RECEIPT OF MATERIAL NONPUBLIC INFORMATION -
Associates in Investment Functions who receive any
suspected material nonpublic information must report such
receipt promptly to their department or entity head. A
department or entity head who receives information believed
to be material and nonpublic should report the matter
promptly to the General Counsel. If the General Counsel
determines that the information is material and nonpublic,
the affected department or entity will:
o immediately suspend all trading in the securities of the
issuer to which the information applies, as well as all
recommendations with respect to such securities. The
suspension will remain in effect as long as the information
remains both material and nonpublic.
O notify the General Counsel before resuming transactions or
recommendations in the affected securities. The General
Counsel will advise as to possible further steps, including
ascertaining the validity and nonpublic nature of the
information with the issuer of the securities; requesting
the issuer of the securities, or other appropriate parties,
to disseminate the information promptly to the public if
the information is valid and nonpublic; and publishing the
information.
In certain circumstances, the department or entity head may
be able to demonstrate conclusively that the receipt of the
material nonpublic information has been confined to an
individual or small group of individuals and that measures
other than those described above will comparably reduce the
likelihood of trading on the basis of the information.
These measures might include temporarily relieving
individuals of responsibility for any Investment Functions
and preventing any contact between those individuals and
associates in Investment Functions. In these circumstances,
the department head, with the approval of the General
Counsel, may take those measures rather than the measures
described above.
FUNCTIONS "ABOVE THE WALL" - Some functions at Mellon are
deemed to be "Above the Wall." For example, members of
senior management, Auditing, Risk Management and
Compliance, and the Legal Department will typically need to
have access to information on both sides of the "Chinese
Wall" to carry out their job responsibilities. These
individuals cannot rely on the procedural safeguards of the
"Chinese Wall" and, therefore, need to be particularly
careful to avoid any improper use or dissemination of
material nonpublic information.
SUPPLEMENTAL PROCEDURES - As appropriate, certain Mellon
departments or areas, such as Mellon Trust, should
establish their own procedures to reduce the possibility of
information being communicated to associates who should not
have access to that information.
<PAGE>
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS
IN MELLON SECURITIES
Associates who engage in transactions involving Mellon
securities should be aware of their unique responsibilities
with respect to such transactions arising from the
employment relationship and should be sensitive to even the
appearance of impropriety.
The following restrictions apply to all transactions in
Mellon's publicly traded securities occurring in the
associate's own account and in all other accounts over
which the associate could be expected to exercise influence
or control (see provisions under "Beneficial Ownership"
below for a more complete discussion of the accounts to
which these restrictions apply). These restrictions are to
be followed in addition to any restrictions that apply to
particular officers or directors (such as restrictions
under Section 16 of the Securities Exchange Act of 1934).
o Short Sales - Short sales of Mellon securities by
associates are prohibited.
o Sales Within 60 Days of Purchase - Sales of Mellon
securities within 60 days of acquisition are prohibited.
For purposes of the 60-day holding period, securities will
be deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the
other, or if the value of one is expressly dependent on the
value of the other (e.g., derivative securities).
In cases of extreme hardship, associates (other than senior
management) may obtain permission to dispose of Mellon
securities acquired within 60 days of the proposed
transaction, provided the transaction is pre-cleared with
the Manager of Corporate Compliance and any profits earned
are disgorged in accordance with procedures established by
senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period
restriction in the event of severe market disruption.
o Margin Transactions - Purchases on margin of Mellon's
publicly traded securities by associates is prohibited.
Margining Mellon securities in connection with a cashless
exercise of an employee stock option through the Human
Resources Department is exempt from this restriction.
Further, Mellon securities may be used to collateralize
loans or the acquisition of securities other than those
issued by Mellon.
o Option Transactions - Option transactions involving
Mellon's publicly traded securities are prohibited.
Transactions under Mellon's Long-Term Incentive Plan or
other associate option plans are exempt from this
restriction.
o Major Mellon Events - Associates who have knowledge of
major Mellon events that have not yet been announced are
prohibited from buying and selling Mellon's publicly traded
securities before such public announcements, even if the
associate believes the event does not constitute material
nonpublic information.
o Mellon Blackout Period - Associates are prohibited from
buying or selling Mellon's publicly traded securities
during a blackout period, which begins the 16th day of the
last month of each calendar quarter and ends three business
days after Mellon publicly announces the financial results
for that quarter. In cases of extreme hardship, associates
(other than senior management) may request permission from
the Manager of Corporate Compliance to dispose of Mellon
securities during the blackout period.
BENEFICIAL OWNERSHIP - The provisions discussed above apply
to transactions in the associate's own name and to all
other accounts over which the associate could be expected
to exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom
substantial support is contributed;
o accounts of any other member of the associate's household
(e.g., a relative living in the same home);
o trust accounts for which the associate acts as trustee or
otherwise exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by
the associate;
o arrangements similar to trust accounts that are established
for bona fide financial purposes and benefit the associate;
and
o any other account for which the associate is the beneficial
owner (see Glossary for a more complete legal definition of
"beneficial owner").
<PAGE>
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS
IN OTHER SECURITIES
Purchases or sales by an associate of the securities of
issuers with which Mellon does business, or other third
party issuers, could result in liability on the part of
such associate. Associates should be sensitive to even the
appearance of impropriety in connection with their personal
securities transactions. Associates should refer to the
provisions under "Beneficial Ownership" (Section Four,
"Restrictions on Transactions in Mellon Securities"), which
are equally applicable to the following provisions.
The Mellon Code of Conduct contains certain restrictions on
investments in parties that do business with Mellon.
Associates should refer to the Code of Conduct and comply
with such restrictions in addition to the restrictions and
reporting requirements set forth below.
The following restrictions apply to all securities
transactions by associates:
o Credit or Advisory Relationship - Associate may not buy or
sell securities of a company if they are considering
granting, renewing or denying any credit facility to that
company or acting as an adviser to that company with
respect to its securities. In addition, lending associates
who have assigned responsibilities in a specific industry
group are not permitted to trade securities in that
industry. This prohibition does not apply to transactions
in securities issued by open-end investment companies.
o Customer Transactions - Trading for customers and Mellon
accounts should always take precedence over associates'
transactions for their own or related accounts.
o Front Running - Associates may not engage in "front
running," that is, the purchase or sale of securities for
their own accounts on the basis of their knowledge of
Mellon's trading positions or plans.
o Initial Public Offerings - Mellon prohibits its associates
from acquiring any securities in an initial public offering
("IPO").
o Margin Transactions - Margin trading is a highly leveraged
and relatively risky method of investing that can create
particular problems for financial services employees. For
this reason, all associates are urged to avoid margin
trading.
Prior to establishing a margin account, the associate must
obtain the written permission of the Manager of Corporate
Compliance. Any associate having a margin account prior to
the effective date of this Policy must notify the Manager
of Corporate Compliance of the existence of such account.
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance
as an interested party on that account. Associates must
ensure that the Manager of Corporate Compliance promptly
receives copies of all trade confirmations and statements
relating to the account directly from the broker. If
requested by a brokerage firm, please contact the Manager
of Corporate Compliance to obtain a letter (sometimes
referred to as a "407 letter") granting permission to
maintain a margin account. Trade confirmations and
statements are not required on margin accounts established
at Dreyfus Investment Services Corporation for the sole
purpose of cashless exercises of employee stock options. In
addition, products may be offered by a broker/dealer that,
because of their characteristics, are considered margin
accounts but have been determined by the Manager of
Corporate Compliance to be outside the scope of this Policy
(e.g., a Cash Management Account which provides overdraft
protection for the customer). Any questions regarding the
establishment, use and reporting of margin accounts should
be directed to the Manager of Corporate Compliance.
Examples of an instruction letter to a broker are shown in
Exhibits B1 and B2.
o Material Nonpublic Information - Associates possessing
material nonpublic information regarding any issuer of
securities must refrain from purchasing or selling
securities of that issuer until the information becomes
public or is no longer considered material.
o Naked Options, Excessive Trading - Mellon discourages all
associates from engaging in short-term or speculative
trading, in trading naked options, in trading that could be
deemed excessive or in trading that could interfere with an
associate's job responsibilities.
o Private Placements - Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Preclearance
Compliance Officer (applicable only to Investment
Associates), the Manager of Corporate Compliance and the
associate's department head. Approval must be given by all
appropriate aforementioned persons for the acquisition to
be considered approved. After receipt of the necessary
approvals and the acquisition, associates are required to
disclose that investment when they participate in any
subsequent consideration of an investment in the issuer for
an advised account. Final decision to acquire such
securities for an advised account will be subject to
independent review.
o Scalping - Associates may not engage in "scalping," that
is, the purchase or sale of securities for their own or
Mellon's accounts on the basis of knowledge of customers'
trading positions or plans or Mellon's forthcoming
investment recommendations.
o Short-Term Trading - Associates are discouraged from
purchasing and selling, or from selling and purchasing, the
same (or equivalent) securities within 60 calendar days.
With respect to Investment Associates only, any profits
realized on such short-term trades must be disgorged in
accordance with procedures established by senior
management.
<PAGE>
SECTION SIX
CLASSIFICATION OF ASSOCIATES
Associates are engaged in a wide variety of activities for
Mellon. In light of the nature of their activities and the
impact of federal and state laws and the regulations
thereunder, the Policy imposes different requirements and
limitations on associates based on the nature of their
activities for Mellon. To assist the associates in
complying with the requirements and limitations imposed on
them in light of their activities, associates are
classified into one of three categories: Insider Risk
Associate, Investment Associate and Other Associate.
Appropriate requirements and limitations are specified in
the Policy based upon the associate's classification.
INSIDER RISK ASSOCIATE -
You are considered to be an Insider Risk Associate if you
are:
o employed in any of the following departments or functional
areas, however named, of a Mellon entity other than Dreyfus
(see Glossary for definition of "Dreyfus"):
<TABLE>
<CAPTION>
<S> <C>
- Auditing - International
- Capital Markets - Leasing
- Corporate Affairs - Legal
- Credit Policy - Mellon Business Credit
- Credit Recovery - Middle Market
- Credit Review - Portfolio and Funds Management
- Domestic Corporate Banking - Risk Management and Compliance
- Finance - Strategic Planning
- Institutional Banking - Wholesale, Administration and
Operations
</TABLE>
o a member of the Mellon Senior Management Committee,
provided that those members of the Mellon Senior Management
Committee who have management responsibility for fiduciary
activities or who routinely have access to information
about customers' securities transactions are considered to
be Investment Associates and are subject to those
provisions of the Policy pertaining to Investment
Associates;
o employed by a broker/dealer subsidiary of a Mellon
entity other than Dreyfus;
o an associate in the Stock Transfer business unit and have
been specifically designated as an Insider Risk Associate
by the Manager of Corporate Compliance; or
o an associate specifically designated as an Insider Risk
Associate by the Manager of Corporate Compliance.
<PAGE>
INVESTMENT ASSOCIATE -
You are considered to be an Investment Associate if you
are:
o a member of Mellon's Senior Management Committee who, as
part of his/her usual duties, has management responsibility
for fiduciary activities or routinely has access to
information about customers' securities transactions;
o a Dreyfus associate;
o an associate of a Mellon entity registered under the
Investment Advisers Act of 1940;
o employed in the trust area of Mellon and:
- have the title of Vice President, First Vice President
or Senior Vice President; or
- have access to material, confidential information
regarding securities transactions by or on behalf of
Mellon customers; or
o an associate specifically designated as an Investment
Associate by the Manager of Corporate Compliance.
OTHER ASSOCIATE -
You are considered to be an Other Associate if you are an
associate of Mellon Bank Corporation or any of its direct
or indirect subsidiaries who is not either an Insider Risk
Associate or an Investment Associate.
<PAGE>
PART II - APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY
- ------------------------------
PROHIBITION ON INVESTMENTS IN SECURITIES OF FINANCIAL
SERVICES ORGANIZATIONS
You are prohibited from acquiring any security issued by a
financial services organization if you are:
o a member of the Mellon Senior Management Committee. For
purposes of this restriction only, this prohibition also
applies to those members of the Mellon Senior Management
Committee who are considered Investment Associates.
o employed in any of the following departments of a Mellon
entity other than Dreyfus (see Glossary for definition of
"Dreyfus"):
- Strategic Planning - Finance
- Institutional Banking - Legal
o an associate specifically designated by the Manager of
Corporate Compliance and informed that this prohibition is
applicable to you.
Financial Services Organizations - The term "security
issued by a financial services organization" includes any
security issued by:
<TABLE>
<CAPTION>
<S> <C>
- Commercial Banks - Bank Holding Companies
(other than Mellon) (other than Mellon)
- Thrifts - Savings and Loan Associations
- Insurance Companies - Broker/Dealers
- Investment Advisory Companies - Transfer Agents
- Shareholder Servicing - Other Depository
Companies Institutions
</TABLE>
The term "securities issued by a financial services
organization" DOES NOT INCLUDE securities issued by mutual
funds, variable annuities or insurance policies. Further,
for purposes of determining whether a company is a
financial services organization, subsidiaries and parent
companies are treated as separate issuers.
Effective Date - The foregoing restrictions will be
effective upon adoption of this Policy. Securities of
financial services organizations properly acquired before
the later of the effective date of this Policy or the date
of hire may be maintained or disposed of at the owner's
discretion.
Additional securities of a financial services organization
acquired through the reinvestment of the dividends paid by
such financial services organization through a dividend
reinvestment program (DRIP) are not subject to this
prohibition, provided your election to participate in the
DRIP predates the later of the effective date of this
Policy or date of hire. Optional cash purchases through a
DRIP are subject to this prohibition.
Within 30 days of the later of the effective date of this
Policy or date of becoming subject to this prohibition, all
holdings of securities of financial services organizations
must be disclosed in writing to the Manager of Corporate
Compliance. Periodically, you will be asked to file an
updated disclosure of all your holdings of securities of
financial services organizations.
CONFLICT OF INTEREST - No Insider Risk Associate may engage
in or recommend any securities transaction that places, or
appears to place, his or her own interests above those of
any customer to whom investment services are rendered,
including mutual funds and managed accounts, or above the
interests of Mellon.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Insider Risk Associates must notify the Manager of
Corporate Compliance in writing and receive preclearance
before they engage in any purchase or sale of a security.
Insider Risk Associates should refer to the provisions
under "Beneficial Ownership" (Section Four, "Restrictions
on Transactions in Mellon Securities"), which are equally
applicable to these provisions.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
O purchases or sales of Exempt Securities (see Glossary);
o purchases or sales of municipal bonds;
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (e.g., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Manager of Corporate Compliance, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
o transactions that are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an
associate stock option if the sale is part of a "netting of
shares" or "cashless exercise" administered by the Human
Resources Department (for which the Human Resources
Department will forward information to the Manager of
Corporate Compliance);
o the automatic reinvestment of dividends under a DRIP
(preclearance is required for optional cash purchases under
a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described
above; and/or
O those situations where the Manager of Corporate Compliance
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Manager of Corporate Compliance by completing a
Preclearance Request Form (see Exhibit C1).
The Manager of Corporate Compliance will notify the Insider
Risk Associate whether the request is approved or denied,
without disclosing the reason for such approval or denial.
Notifications may be given in writing or verbally by the
Manager of Corporate Compliance to the Insider Risk
Associate. A record of such notification will be maintained
by the Manager of Corporate Compliance. However, it shall
be the responsibility of the Insider Risk Associate to
obtain a written record of the Manager of Corporate
Compliance's notification within 24 hours of such
notification. The Insider Risk Associate should retain a
copy of this written record.
As there could be many reasons for preclearance being
granted or denied, Insider Risk Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Insider Risk Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
O preclearance requests should not be made for a
transaction that the Insider Risk Associate does not
intend to make; and
o Insider Risk Associates should not discuss with anyone
else, inside or outside Mellon, the response they received
to a preclearance request.
Every Insider Risk Associate must follow these procedures
or risk serious sanctions, including dismissal. If you have
any questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - The Manager of Corporate Compliance will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Insider Risk Associates.
Restricted List(s) will not be distributed outside of the
Risk Management and Compliance Department. From time to
time, such trading restrictions may be appropriate to
protect Mellon and its Insider Risk Associates from
potential violations, or the appearance of violations, of
securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information to avoid unwarranted
inferences.
To assist the Manager of Corporate Compliance in
identifying companies that may be appropriate for inclusion
on the Restricted List, the department heads of sections in
which Insider Risk Associates are employed will inform the
Manager of Corporate Compliance in writing of any companies
they believe should be included on the Restricted List,
based upon facts known or readily available to such
department heads. Although the reasons for inclusion on the
Restricted List may vary, they could typically include the
following:
o Mellon is involved as a lender, investor or adviser in a
merger, acquisition or financial restructuring involving
the company;
o Mellon is involved as a selling shareholder in a public
distribution of the company's securities;
o Mellon is involved as an agent in the distribution of the
company's securities;
o Mellon has received material nonpublic information on the
company;
o Mellon is considering the exercise of significant
creditors' rights against the company; or
o The company is a Mellon borrower in Credit Recovery.
Department heads of sections in which Insider Risk
Associates are employed are also responsible for notifying
the Manager of Corporate Compliance in writing of any
change in circumstances making it appropriate to remove a
company from the Restricted List.
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Insider Risk Associates are
required to instruct their brokers to submit directly to
the Manager of Corporate Compliance copies of all trade
confirmations and statements relating to their account. An
example of an instruction letter to a broker is contained
in Exhibit B1.
o Report of Transactions in Mellon Securities - Insider Risk
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND BY
OTHER PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
<PAGE>
PART III - APPLICABLE TO
INVESTMENT ASSOCIATES ONLY
- ------------------------------
Because of their particular responsibilities, Investment
Associates are subject to different preclearance and
personal securities reporting requirements as discussed
below.
SPECIAL STANDARDS OF CONDUCT FOR INVESTMENT ASSOCIATES
Conflict of Interest - No Investment Associate may
recommend a securities transaction for a Mellon customer to
whom a fiduciary duty is owed, or for Mellon, without
disclosing any interest he or she has in such securities or
issuer (other than an interest in publicly traded
securities where the total investment is equal to or less
than $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Investment Associate in
such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Investment Associate or
any party in which the Investment Associate has a
beneficial ownership interest (see "Beneficial Ownership"
in Section Four, "Restrictions On Transactions in Mellon
Securities").
Portfolio Information - No Investment Associate may divulge
the current portfolio positions, or current or anticipated
portfolio transactions, programs or studies, of Mellon or
any Mellon customer to anyone unless it is properly within
his or her job responsibilities to do so.
Material Nonpublic Information - No Investment Associate
may engage in or recommend a securities transaction, for
his or her own benefit or for the benefit of others,
including Mellon or its customers, while in possession of
material nonpublic information regarding such securities.
No Investment Associate may communicate material nonpublic
information to others unless it is properly within his or
her job responsibilities to do so.
Short-Term Trading - Any Investment Associate who purchases
and sells, or sells and purchases, the same (or equivalent)
securities within any 60-calendar-day period is required to
disgorge all profits realized on such transaction in
accordance with procedures established by senior
management. For this purpose, securities will be deemed to
be equivalent if one is convertible into the other, if one
entails a right to purchase or sell the other, or if the
value of one is expressly dependent on the value of the
other (e.g., derivative securities).
Additional Restrictions For Dreyfus Associates and
Associates of Mellon Entities Registered Under The
Investment Advisers Act of 1940 ONLY ("40 Act
Associates")
o Outside Activities - No 40 Act associate may serve on the
board of directors/trustees or as a general partner of any
publicly traded company (other than Mellon) without the
prior approval of the Manager of Corporate Compliance.
o Gifts - All 40 Act associates are prohibited from accepting
gifts from outside companies, or their representatives,
with an exception for gifts of (1) a de minimis value and
(2) an occasional meal, a ticket to a sporting event or the
theater, or comparable entertainment for the 40 Act
associate and, if appropriate, a guest, which is neither so
frequent nor extensive as to raise any question of
impropriety. A gift shall be considered de minimis if it
does not exceed an annual amount per person fixed
periodically by the National Association of Securities
Dealers, which is currently $100 per person.
o Blackout Period - 40 Act associates will not be given
clearance to execute a transaction in any security that is
being considered for purchase or sale by an affiliated
investment company, managed account or trust, for which a
pending buy or sell order for such affiliated account is
pending, and for two business days after the transaction in
such security for such affiliated account has been
effected. This provision does not apply to transactions
effected or contemplated by index funds.
In addition, portfolio managers for the investment
companies are prohibited from buying or selling a security
within seven calendar days before and after such investment
company trades in that security. Any violation of the
foregoing will require the violator to disgorge all profit
realized with respect to such transaction.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Investment Associates must notify the Preclearance
Compliance Officer (see Glossary) in writing and receive
preclearance before they engage in any purchase or sale of
a security.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
o purchases or sales of "Exempt Securities" (see Glossary);
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (i.e., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Preclearance Compliance Officer, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
O transactions which are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an
associate stock option if the sale is part of a "netting of
shares" or "cashless exercise" administered by the Human
Resources Department (for which the Human Resources
Department will forward information to the manager of
Corporate Compliance);
o purchases which are part of an automatic reinvestment of
dividends under a DRIP (Preclearance is required for
optional cash purchases under a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described
above; and/or
o those situations where the Preclearance Compliance Officer
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Preclearance Compliance Officer by completing a
Preclearance Request Form. (Investment Associates other
than Dreyfus associates are to use the Preclearance Request
Form shown as Exhibit C1. Dreyfus associates are to use the
Preclearance Request Form shown as Exhibit C2.)
The Preclearance Compliance Officer will notify the
Investment Associate whether the request is approved or
denied without disclosing the reason for such approval or
denial.
Notifications may be given in writing or verbally by the
Preclearance Compliance Officer to the Investment
Associate. A record of such notification will be maintained
by the Preclearance Compliance Officer. However, it shall
be the responsibility of the Investment Associate to obtain
a written record of the Preclearance Compliance Officer's
notification within 24 hours of such notification. The
Investment Associate should retain a copy of this written
record.
As there could be many reasons for preclearance being
granted or denied, Investment Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Investment Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
day on which preclearance is given;
o preclearance requests should not be made for a transaction
that the Investment Associate does not intend to make; and
o Investment Associates should not discuss with anyone else,
inside or outside Mellon, the response the Investment
Associate received to a preclearance request.
Every Investment Associate must follow these procedures or
risk serious sanctions, including dismissal. If you have
any questions about these procedures, consult the
Preclearance Compliance Officer. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - Each Preclearance Compliance Officer will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Investment Associates in their
area. From time to time, such trading restrictions may be
appropriate to protect Mellon and its Investment Associates
from potential violations, or the appearance of violations,
of securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information in order to avoid
unwarranted inferences.
In order to assist the Preclearance Compliance Officer in
identifying companies that may be appropriate for inclusion
on the Restricted List, the head of the
entity/department/area in which Investment Associates are
employed will inform the appropriate Preclearance
Compliance Officer in writing of any companies that they
believe should be included on the Restricted List based
upon facts known or readily available to such department
heads.
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Investment Associates are required
to instruct their brokers to submit directly to the Manager
of Corporate Compliance copies of all trade confirmations
and statements relating to their account. Examples of
instruction letters to a broker are contained in Exhibits
B1 and B2.
o Report of Transactions in Mellon Securities - Investment
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan, and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
o Statement of Securities Holdings - Within ten days of
receiving this Policy and on an annual basis thereafter,
all Investment Associates must submit to the Manager of
Corporate Compliance a statement of all securities in which
they presently have any direct or indirect beneficial
ownership other than Exempt Securities, as defined in the
Glossary. Investment Associates should refer to "Beneficial
Ownership" in Section Four, "Restrictions on Transactions
in Mellon Securities," which is also applicable to
Investment Associates. Such statements should be in the
format shown in Exhibit D. The annual report must be
submitted by January 31 and must report all securities
holdings other than Exempt Securities. The annual statement
of securities holdings contains an acknowledgment that the
Investment Associate has read and complied with this
Policy.
o Special Requirement with Respect to Affiliated Investment
Companies - The portfolio managers, research analysts and
other Investment Associates specifically designated by the
Manager of Corporate Compliance are required within ten
calendar days of receiving this Policy (and by no later
than ten calendar days after the end of each calendar
quarter) to report every transaction in the securities
issued by an affiliated investment company occurring in an
account in which the Investment Associate has a beneficial
ownership interest. The quarterly reporting requirement may
be satisfied by notifying the Manager of Corporate
Compliance of the name of the investment company, account
name and account number for which such quarterly reports
must be submitted.
<PAGE>
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES, AND BY
OTHER PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
DOCUMENTS RECEIVED FROM DREYFUS ASSOCIATES ARE ALSO
AVAILABLE FOR INSPECTION BY THE BOARDS OF DIRECTORS OF
DREYFUS AND BY THE BOARDS OF DIRECTORS (OR TRUSTEES OR
MANAGING GENERAL PARTNERS, AS APPLICABLE) OF THE INVESTMENT
COMPANIES MANAGED OR ADMINISTERED BY DREYFUS.
<PAGE>
PART IV - APPLICABLE TO
OTHER ASSOCIATES ONLY
- ------------------------------
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - Except
for private placements, Other Associates are permitted to
engage in personal securities transactions without
obtaining prior approval from the Manager of Corporate
Compliance (for preclearance of private placements, use the
Preclearance Request Form shown as Exhibit C1.)
PERSONAL SECURITIES TRANSACTIONS REPORTS - Other Associates
are not required to report their personal securities
transactions other than margin transactions and
transactions involving Mellon securities as discussed
below. Other Associates are required to instruct their
brokers to submit directly to the Manager of Corporate
Compliance copies of all confirmations and statements
pertaining to margin accounts. Examples of an instruction
letter to a broker are shown in Exhibit B1.
Report of Transactions in Mellon Securities - Other
Associates must report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities. Purchases and sales of
Mellon securities include the following:
o DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
o Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
RESTRICTIONS ON TRANSACTIONS IN OTHER SECURITIES
Margin Transactions - Prior to establishing a margin
account, Other Associates must obtain the written
permission of the Manager of Corporate Compliance. Other
Associates having a margin account prior to the effective
date of this Policy must notify the Manager of Corporate
Compliance of the existence of such account.
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance
as an interested party on each account. Associates must
ensure that the Manager of Corporate Compliance promptly
receives copies of all trade confirmations and statements
relating to the accounts directly from the broker. If
requested by a brokerage firm, please contact the Manager
of Corporate Compliance to obtain a letter (sometimes
referred to as a "407 letter") granting permission to
maintain a margin account. Trade confirmations and
statements are not required on margin accounts established
at Dreyfus Investment Services Corporation for the sole
purpose of cashless exercises of Mellon employee stock
options. In addition, products may be offered by a
broker/dealer that, because of their characteristics, are
considered margin accounts but have been determined by the
Manager of Corporate Compliance to be outside the scope of
this Policy (e.g., a Cash Management account which provides
overdraft protection for the customer). Any questions
regarding the establishment, use and reporting of margin
accounts should be directed to the Manager of Corporate
Compliance. An example of an instruction letter to a broker
is shown in Exhibit B1.
Private Placements - Other Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Manager of
Corporate Compliance and the Associate's department head.
Approval must be given by both of the aforementioned
persons for the acquisition to be considered approved.
As there could be many reasons for preclearance being
granted or denied, Other Associates should not infer from
the preclearance response anything regarding the security
for which preclearance was requested.
Although making a preclearance request does not obligate an
Other Associate to do the transaction, it should be noted
that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
o preclearance requests should not be made for a transaction
that the Other Associate does not intend to make; and
o Other Associates should not discuss with anyone else,
inside or outside Mellon, the response they received to a
preclearance request.
Every Other Associate must follow these procedures or risk
serious sanctions, including dismissal. If you have any
questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
<PAGE>
PART V - APPLICABLE TO
NONMANAGEMENT BOARD MEMBER
- ------------------------------
NONMANAGEMENT BOARD MEMBER -
You are considered to be a Nonmanagement Board Member if
you are:
o a director of Dreyfus who is not also an officer or
employee of Dreyfus ("Dreyfus Board Member"); or
o a director, trustee or managing general partner of any
investment company who is not also an officer or employee
of Dreyfus ("Mutual Fund Board Member").
The term "Independent" Mutual Fund Board Member means those
Mutual Fund Board Members who are not deemed "interested
persons" of an investment company, as defined by the
Investment Company Act of 1940, as amended.
STANDARDS OF CONDUCT FOR NONMANAGEMENT BOARD MEMBER
Outside Activities - Nonmanagement Board Members are
prohibited from:
o accepting nomination or serving as a director, trustee or
managing general partner of an investment company not
advised by Dreyfus, without the express prior approval of
the board of directors of Dreyfus and the board of
directors/trustees or managing general partners of the
pertinent Dreyfus-managed fund(s) for which a Nonmanagement
Board Member serves as a director, trustee or managing
general partner;
o accepting employment with or acting as a consultant to any
person acting as a registered investment adviser to an
investment company without the express prior approval of
the board of directors of Dreyfus;
o owning Mellon securities if the Nonmanagement Board Member
is an "Independent" Mutual Fund Board Member, (since that
would destroy his or her "independent" status); and/or
o buying or selling Mellon's publicly traded securities
during a blackout period, which begins the 16th day of the
last month of each calendar quarter and ends three business
days after Mellon publicly announces the financial results
for that quarter.
Insider Trading and Tipping - The provisions set forth in
Section Two, "Insider Trading and Tipping," are applicable
to Nonmanagement Board Members.
Conflict of Interest - No Nonmanagement Board Member may
recommend a securities transaction for Mellon, Dreyfus or
any Dreyfus-managed fund without disclosing any interest he
or she has in such securities or issuer thereof (other than
an interest in publicly traded securities where the total
investment is less than or equal to $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Nonmanagement Board
Member in such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Nonmanagement Board Member
or any party in which the Nonmanagement Board Member has a
beneficial ownership interest (see "Beneficial Ownership",
Section Four, "Restrictions on Transaction in Mellon
Securities").
Portfolio Information - No Nonmanagement Board Member may
divulge the current portfolio positions, or current or
anticipated portfolio transactions, programs or studies, of
Mellon, Dreyfus or any Dreyfus-managed fund, to anyone
unless it is properly within his or her responsibilities as
a Nonmanagement Board Member to do so.
Material Nonpublic Information - No Nonmanagement Board
Member may engage in or recommend any securities
transaction, for his or her own benefit or for the benefit
of others, including Mellon, Dreyfus or any Dreyfus-managed
fund, while in possession of material nonpublic
information. No Nonmanagement Board Member may communicate
material nonpublic information to others unless it is
properly within his or her responsibilities as a
Nonmanagement Board Member to do so.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS -
Nonmanagement Board Members are permitted to engage in
personal securities transactions without obtaining prior
approval from the Preclearance Compliance Officer.
<PAGE>
PERSONAL SECURITY TRANSACTIONS REPORTS -
o "Independent" Mutual Fund Board Members - Any "Independent"
Mutual Fund Board Members, as defined above, who effects a
securities transaction where he or she knew, or in the
ordinary course of fulfilling his or her official duties
should have known, that during the 15-day period
immediately preceding or after the date of such
transaction, the same security was purchased or sold, or
was being considered for purchase or sale by Dreyfus
(including any investment company or other account managed
by Dreyfus), are required to report such personal
securities transaction. In the event a personal securities
transaction report is required, it must be submitted to the
Preclearance Compliance Officer not later than ten days
after the end of the calendar quarter in which the
transaction to which the report relates was effected. The
report must include the date of the transaction, the title
and number of shares or principal amount of the security,
the nature of the transaction (e.g., purchase, sale or any
other type of acquisition or disposition), the price at
which the transaction was effected and the name of the
broker or other entity with or through whom the transaction
was effected. This reporting requirement can be satisfied
by sending a copy of the confirmation statement regarding
such transactions to the Preclearance Compliance Officer
within the time period specified. Notwithstanding the
foregoing, personal securities transaction reports are not
required with respect to any securities transaction
described in "Exemption from the Requirement to Preclear"
in Part III.
o Dreyfus Board Members and "Interested" Mutual Fund Board
Members - Dreyfus Board Members and Mutual Fund Board
Members who are "interested persons" of an investment
company, as defined by the Investment Company Act of 1940,
are required to report their personal securities
transactions. Personal securities transaction reports are
required with respect to any securities transaction other
than those described in "Exemptions from Requirement to
Preclear" on Page 21. Personal securities transaction
reports are required to be submitted to the Preclearance
Compliance Officer not later than ten days after the end of
the calendar quarter in which the transaction to which the
report relates was effected. The report must include the
date of the transaction, the title and number of shares or
principal amount of the security, the nature of the
transaction (e.g., purchase, sale or any other type of
acquisition or disposition), the price at which the
transaction was effected and the name of the broker or
other entity with or through whom the transaction was
effected. This reporting requirement can be satisfied by
sending a copy of the confirmation statement regarding such
transactions to the Preclearance Compliance Officer within
the time period specified.
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL PERSONAL SECURITIES
TRANSACTION REPORTS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
<PAGE>
GLOSSARY
- ------------------------------
DEFINITIONS
o APPROVAL - written consent or written notice of
nonobjection.
o ASSOCIATE - any employee of Mellon Bank Corporation or its
direct or indirect subsidiaries; does not include outside
consultants or temporary help.
o BENEFICIAL OWNERSHIP - securities owned of record or held
in the associate's name are generally considered to be
beneficially owned by the associate.
Securities held in the name of any other person are deemed
to be beneficially owned by the associate if by reason of
any contract, understanding, relationship, agreement or
other arrangement, the associate obtains therefrom benefits
substantially equivalent to those of ownership, including
the power to vote, or to direct the disposition of, such
securities. Beneficial ownership includes securities held
by others for the associate's benefit (regardless of record
ownership), e.g. securities held for the associate or
members of the associate's immediate family, defined below,
by agents, custodians, brokers, trustees, executors or
other administrators; securities owned by the associate,
but which have not been transferred into the associate's
name on the books of the company; securities which the
associate has pledged; or securities owned by a corporation
that should be regarded as the associate's personal holding
corporation. As a natural person, beneficial ownership is
deemed to include securities held in the name or for the
benefit of the associate's immediate family, which includes
the associate's spouse, the associate's minor children and
stepchildren and the associate's relatives or the relatives
of the associate's spouse who are sharing the associate's
home, unless because of countervailing circumstances, the
associate does not enjoy benefits substantially equivalent
to those of ownership. Benefits substantially equivalent to
ownership include, for example, application of the income
derived from such securities to maintain a common home,
meeting expenses that such person otherwise would meet from
other sources, and the ability to exercise a controlling
influence over the purchase, sale or voting of such
securities. An associate is also deemed the beneficial
owner of securities held in the name of some other person,
even though the associate does not obtain benefits of
ownership, if the associate can vest or revest title in
himself at once, or at some future time.
In addition, a person will be deemed the beneficial owner
of a security if he has the right to acquire beneficial
ownership of such security at any time (within 60 days)
including but not limited to any right to acquire: (1)
through the exercise of any option, warrant or right; (2)
through the conversion of a security; or (3) pursuant to
the power to revoke a trust, nondiscretionary account or
similar arrangement.
With respect to ownership of securities held in trust,
beneficial ownership includes ownership of securities as a
trustee in instances where either the associate as trustee
or a member of the associate's "immediate family" has a
vested interest in the income or corpus of the trust, the
ownership by the associate of a vested beneficial interest
in the trust and the ownership of securities as a settlor
of a trust in which the associate as the settlor has the
power to revoke the trust without obtaining the consent of
the beneficiaries. Certain exemptions to these trust
beneficial ownership rules exist, including an exemption
for instances where beneficial ownership is imposed solely
by reason of the associate being settlor or beneficiary of
the securities held in trust and the ownership, acquisition
and disposition of such securities by the trust is made
without the associate's prior approval as settlor or
beneficiary. "Immediate family" of an associate as trustee
means the associate's son or daughter (including any
legally adopted children) or any descendant of either, the
associate's stepson or stepdaughter, the associate's father
or mother or any ancestor of either, the associate's
stepfather or stepmother and his spouse.
To the extent that stockholders of a company use it as a
personal trading or investment medium and the company has
no other substantial business, stockholders are regarded as
beneficial owners, to the extent of their respective
interests, of the stock thus invested or traded in. A
general partner in a partnership is considered to have
indirect beneficial ownership in the securities held by the
partnership to the extent of his pro rata interest in the
partnership. Indirect beneficial ownership is not, however,
considered to exist solely by reason of an indirect
interest in portfolio securities held by any holding
company registered under the Public Utility Holding Company
Act of 1935, a pension or retirement plan holding
securities of an issuer whose employees generally are
beneficiaries of the plan and a business trust with over 25
beneficiaries.
Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or any
other contract, arrangement or device with the purpose or
effect of divesting such person of beneficial ownership as
part of a plan or scheme to evade the reporting
requirements of the Securities Exchange Act of 1934 shall
be deemed the beneficial owner of such security.
The final determination of beneficial ownership is a
question to be determined in light of the facts of a
particular case. Thus, while the associate may include
security holdings of other members of his family, the
associate may nonetheless disclaim beneficial ownership of
such securities.
o "CHINESE WALL" POLICY - procedures designed to restrict the
flow of information within Mellon from units or individuals
who are likely to receive material nonpublic information to
units or individuals who trade in securities or provide
investment advice. (see pages 12-14).
o CORPORATION - Mellon Bank Corporation.
o DREYFUS - The Dreyfus Corporation and its subsidiaries.
o DREYFUS ASSOCIATE - any employee of Dreyfus; does not
include outside consultants or temporary help.
<PAGE>
o EXEMPT SECURITIES - Exempt Securities are defined as:
- securities issued or guaranteed by the United States
government or agencies or instrumentalities;
- bankers' acceptances;
- bank certificates of deposit and time deposits;
- commercial paper;
- repurchase agreements; and
- securities issued by open-end investment companies.
o GENERAL COUNSEL - General Counsel of Mellon Bank
Corporation or any person to whom relevant authority is
delegated by the General Counsel.
o INDEX FUND - an investment company which seeks to mirror
the performance of the general market by investing in the
same stocks (and in the same proportion) as a broad-based
market index.
o INITIAL PUBLIC OFFERING (IPO) - the first offering of a
company's securities to the public.
o INVESTMENT COMPANY - a company that issues securities that
represent an undivided interest in the net assets held by
the company. Mutual funds are investment companies that
issue and sell redeemable securities representing an
undivided interest in the net assets of the company.
o MANAGER OF CORPORATE COMPLIANCE - - the associate within
the Risk Management and Compliance Department of Mellon
Bank Corporation who is responsible for administering the
Confidential Information and Securities Trading Policy, or
any person to whom relevant authority is delegated by the
Manager of Corporate Compliance.
o MELLON - Mellon Bank Corporation and all of its direct and
indirect subsidiaries.
o NAKED OPTION - an option sold by the investor which
obligates him or her to sell a security which he or she
does not own.
o NONDISCRETIONARY TRADING ACCOUNT - an account over which
the associated person has no direct or indirect control
over the investment decision-making process.
o OPTION - a security which gives the investor the right but
not the obligation to buy or sell a specific security at a
specified price within a specified time.
o PRECLEARANCE COMPLIANCE OFFICER - a person designated by
the Manager of Corporate Compliance, to administer, among
other things, associates' preclearance request for a
specific business unit.
o PRIVATE PLACEMENT - an offering of securities that is
exempt from registration under the Securities Act of 1933
because it does not constitute a public offering.
o SENIOR MANAGEMENT COMMITTEE - the Senior Management
Committee of Mellon Bank Corporation.
o SHORT SALE - the sale of a security that is not owned by
the seller at the time of the trade.
<PAGE>
INDEX OF EXHIBITS
- ------------------------------
EXHIBIT A SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
EXHIBIT B SAMPLE INSTRUCTION LETTER TO BROKER
EXHIBIT C PRECLEARANCE REQUEST FORM
EXHIBIT D PERSONAL SECURITIES HOLDINGS FORM
<PAGE>
EXHIBIT A
- ------------------------------
SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
- --------------------------------------------------------------------------------
MELLON INTEROFFICE
MEMORANDUM
Date: From: Associate
To: Manager, Corporate Compliance Dept:
Aim #:
Aim #: 151-4342 Phone:
Fax:
- --------------------------------------------------------------------------------
RE: REPORT OF SECURITIES TRADE
Type of Associate: ____________ Insider Risk
____________ Investment
____________ Other
Type of Security: ____________ Mellon Bank Corporation
____________ Mellon Bank Corporation - optional
cash purchases under Dividend
Reinvestment and Common Stock
Purchase Plan
____________ Mellon Bank Corporation - exercise
of an employee stock option
Attached is a copy of the confirmation slip for a securities trade I
engaged in on _____________________, 19xx.
or
On _____________________, 19xx, I (purchased/sold)__________________
shares of ___________________________ through (broker). I will
arrange to have a copy of the confirmation slip for this trade
delivered to you as soon as possible.
<PAGE>
EXHIBIT B1
- ------------------------------
FOR NON-DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm
noted above, please be advised that the Risk Management and
Compliance Department of Mellon Bank should be noted as an
"Interested Party" with respect to my accounts. They should,
therefore, be sent copies of all trade confirmations and account
statements relating to my account.
Please send the requested documentation ensuring the account
holder's name appears on all correspondence to:
Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Manager, Corporate Compliance (151-4342)
<PAGE>
EXHIBIT B2
- ------------------------------
FOR DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm
noted above, please be advised that the Risk Management and
Compliance Department of Dreyfus Corporation should be noted as an
"Interested Party" with respect to my accounts. They should,
therefore, be sent copies of all trade confirmations and account
statements relating to my account.
Please send the requested documentation ensuring the account
holder's name appears on all correspondence to:
Compliance Officer at The Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Dreyfus Compliance
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EXHIBIT C1
- ------------------------------
PRECLEARANCE REQUEST FORM Non Dreyfus Associates
====================================================================================================
To: Manager, Corporate Compliance 151-4342 (All Insider and Other Associates)
Designated Preclearance Compliance Officer (All Investment Associates excluding Dreyfus)
- ----------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
- ----------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
ACCOUNT INFORMATION
- ----------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
- ----------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
- ----------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
====================================================================================================
TRANSACTION DETAIL
- ----------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: No. of Shares:
- ----------------------------------------------------------------------------------------------------
If sale, date acquired: Margin Transaction: Initial Public Offering: Private Placement:
/ / Yes / / Yes / / Yes
- ----------------------------------------------------------------------------------------------------
====================================================================================================
DISCLOSURE STATEMENT
- ----------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is
(1) attempting to benefit personally from any existing business relationship between the issuer and
Mellon or any Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive
trading activity; (3) in possession of any material non-public information concerning the security
to which is request relates.
- ----------------------------------------------------------------------------------------------------
Associate Signature: Date:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
COMPLIANCE OFFICER USE ONLY
- ----------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
- ----------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on __________________, 19__.
If you decide not to effect the trade, please notify me.
- ----------------------------------------------------------------------------------------------------
Date: By:
- ----------------------------------------------------------------------------------------------------
EXHIBIT C2
- ------------------------------
PRECLEARANCE REQUEST FORM Dreyfus Associates Only
====================================================================================================
To: Dreyfus Compliance Officer
- ----------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
- ----------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
ACCOUNT INFORMATION
- ----------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
- ----------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
- ----------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
====================================================================================================
TRANSACTION DETAIL
- ----------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: Symbol:
- ----------------------------------------------------------------------------------------------------
Amount: Current Market Price: If sale, date acquired: Margin Transaction:
- ----------------------------------------------------------------------------------------------------
Is this a New Issue? Is this a Private Placement?
/ / Yes / / No / / Yes / / No
- ----------------------------------------------------------------------------------------------------
Reason for Transaction, identify source:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
DISCLOSURE STATEMENT
- ----------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is
(1) attempting to benefit personally from any existing business relationship between the issuer and
Mellon or any Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive
trading activity; (3) in possession of any material non-public information concerning the security
to which is request relates.
- ----------------------------------------------------------------------------------------------------
Associate Signature: Date:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
COMPLIANCE OFFICER USE ONLY
- ----------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
- ----------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on __________________, 19__.
If you decide not to effect the trade, please notify me.
- ----------------------------------------------------------------------------------------------------
Date: By:
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT D1
- ------------------------------
Return to: Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
STATEMENT OF SECURITY HOLDINGS
As of
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you
or your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a
beneficial ownership - (see Glossary in Policy). If none, write NONE.
Securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities, bankers' acceptances, bank certificates of deposit and
time deposits, commercial paper, repurchase agreements and shares of
registered investment companies need not be listed. IF YOUR LIST IS
EXTENSIVE, PLEASE ATTACH A COPY OF THE MOST RECENT STATEMENT FROM YOUR
BROKER(S), RATHER THAN LIST THEM ON THIS FORM.
-----------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your
registered representative (if applicable), the account registration and
the relevant account numbers. If none, write NONE.
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
-----------------------------------------------------------------------------
Date: Printed Name:
-----------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------------
<PAGE>
EXHIBIT D2
- ------------------------------
Return to: Compliance Officer at the Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
STATEMENT OF SECURITY HOLDINGS
As of
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you
or your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a
beneficial interest. If none, write NONE. Securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities, bankers'
acceptances, bank certificates of deposit and time deposits, commercial
paper, repurchase agreements and shares of registered investment
companies need not be listed. IF YOUR LIST IS EXTENSIVE, PLEASE ATTACH A
COPY OF THE MOST RECENT STATEMENT FROM YOUR BROKER(S), RATHER THAN LIST
THEM ON THIS FORM.
-----------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your
registered representative (if applicable), the account registration and
the relevant account numbers. If none, write NONE.
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
-----------------------------------------------------------------------------
Date: Printed Name:
-----------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------------
Exhibit (p2)
CODE OF ETHICS
FOR
DREYFUS FOUNDERS FUNDS, INC. AND
FOUNDERS ASSET MANAGEMENT LLC
(AS AMENDED DECEMBER 10, 1999,
TO BE EFFECTIVE JANUARY 1, 2000)
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION...................................................................1
ENTITIES SUBJECT TO THIS CODE OF ETHICS...................................1
STATEMENT OF GENERAL PRINCIPLES...........................................1
SECTION 1: DEFINITIONS........................................................2
ACCESS PERSON.............................................................3
AFFILIATE.................................................................3
AFFILIATED PRINCIPAL UNDERWRITER..........................................3
APPROVAL OFFICER..........................................................3
BENEFICIAL OWNERSHIP......................................................4
CLIENT....................................................................4
CONTROL...................................................................4
DE MINIMIS TRANSACTION....................................................4
FOUNDERS EMPLOYEE.........................................................4
INDEPENDENT DIRECTOR......................................................4
FUND AFFILIATED OFFICER...................................................4
LEGAL DEPARTMENT..........................................................4
PREMIER CODE OF ETHICS....................................................5
PURCHASE OR SALE OF A SECURITY............................................5
RESTRICTED SECURITIES.....................................................5
SECURITY..................................................................5
A SECURITY IS BEING CONSIDERED FOR PURCHASE OR SALE.......................5
A SECURITY IS BEING PURCHASED OR SOLD.....................................5
SECTION 2: GENERAL POLICY.....................................................5
SECTION 3: PROHIBITED PURCHASES AND SALES.....................................6
GENERAL PROHIBITION.......................................................6
INITIAL PUBLIC OFFERING...................................................7
SECTION 4: PRE-TRANSACTION APPROVAL...........................................7
SECTION 5: SHORT-TERM TRADING PROFITS.........................................8
SECTION 6: POTENTIAL CONFLICTS OF INTEREST....................................8
GIFTS.....................................................................8
TRIPS.....................................................................9
PREFERENTIAL TREATMENT....................................................9
INVESTMENT ADVICE TO OTHERS...............................................9
OUTSIDE AFFILIATIONS......................................................9
SECTION 7: INVESTMENT CLUBS...................................................9
SECTION 8: SERVICE AS A DIRECTOR OF PUBLICLY TRADED COMPANIES................10
SECTION 9: BROKER ACCOUNTS AND BROKER CONFIRMATIONS..........................10
SECTION 10: REPORTING REQUIREMENTS...........................................11
A. INITIAL REPORT BY NEW ACCESS PERSON..................................11
B. PERIODIC REPORTS BY ACCESS PERSONS AND FOUNDERS EMPLOYEES............11
C. ANNUAL REPORTS BY ACCESS PERSONS.....................................13
D. MONITORING OF PERIODIC AND ANNUAL REPORTS BY LEGAL DEPARTMENT........13
E. WRITTEN CERTIFICATION................................................13
F. LEGAL DEPARTMENT REPORT..............................................14
SECTION 11: EXEMPTIONS.......................................................15
A. EXEMPT TRANSACTIONS..................................................15
B. INDEPENDENT DIRECTOR AND FUND AFFILIATED OFFICER EXEMPTIONS..........15
SECTION 12: DISSEMINATION, CORPORATE RECORD RETENTION,
DISCLOSURE, AND CONFIDENTIALITY................................16
SECTION 13: PERSONAL RECORD RETENTION........................................17
SECTION 14: MATERIAL INSIDE (NON-PUBLIC) INFORMATION.........................17
SECTION 15: VIOLATIONS.......................................................17
SECTION 16: REVIEW...........................................................19
APPENDIX 1: LIST OF ACCESS PERSONS AND APPROVAL OFFICERS.....................21
APPENDIX 2: PORTION OF RULE 16A-1 OF SECURITIES EXCHANGE ACT OF 1934
AND PORTIONS OF SECTION 2.(A) OF THE INVESTMENT
COMPANY ACT OF 1940............................................22
APPENDIX 3: POLICY STATEMENT ON INSIDER TRADING..............................27
ADDENDUM......................................................................32
EXHIBIT A: Request for Approval of Security Transaction in Personal Account
EXHIBIT B: Notification of Intention to Engage in De Minimis Transaction
EXHIBIT C: Approval Form for Trips Where a Portion of the Cost is Paid by a
Third Party
EXHIBIT D: Approval Form for Outside Employment or Business Activity
EXHIBIT E: Notification of Possible Security Transaction by Investment Club
or Similar Entity
EXHIBIT F: Initial Report Form
EXHIBIT G: Report of Occurrence of Securities Transactions and Initiation of
Brokerage Accounts Within Last Calendar Quarter
EXHIBIT H: Report of Securities Ownership/Report of Establishment of
Brokerage Accounts
EXHIBIT I: Compliance Certification
<PAGE>
INTRODUCTION
ENTITIES SUBJECT TO THIS CODE OF ETHICS.
Dreyfus Founders Funds, Inc. (which, collectively with each of its
series portfolios, is hereinafter referred to as the "Fund") is an open-end,
diversified, externally managed investment company registered under the
Investment Company Act of 1940 (the "Act").
Founders Asset Management LLC ("Founders") serves as the external
investment manager of the Fund pursuant to an investment advisory agreement with
each series portfolio ("Portfolio" or collectively, "Portfolios") of the Fund.
Founders is an investment adviser registered under the Investment Advisers Act
of 1940 (the "Advisers Act").
Premier Mutual Fund Services, Inc. currently serves as the principal
underwriter of the Fund ("Premier"). For the purposes of this Code of Ethics,
Premier is an affiliated principal underwriter since officers of Premier also
serve as officers of the Fund. Premier, which has adopted its own code of
ethics, is subject only to certain reporting and certification provisions of
this Code of Ethics.
STATEMENT OF GENERAL PRINCIPLES.
The directors ("directors"), officers, employees, and other access
persons of the Fund ("Access Persons," as defined in Section 1 of this Code of
Ethics) and the directors, officers, and employees of Founders ("Founders
Employees," as hereinafter more specifically defined) are cognizant of and
committed to the performance of their fiduciary duties under general corporate
law and as more specifically articulated in the Act and the Advisers Act,
including, without limitation, proscriptions against overreaching, self-dealing,
insider trading, and conflicts of interests. Moreover, with respect to certain
legal matters and ethical questions arising in the course of their deliberations
and actions, directors, other Access Persons, and Founders Employees regularly
seek the advice of counsel.
This Code of Ethics is directed to the particular objective of
compliance with the provisions of Rule 17j-1 under the Act as such provisions
are applicable to Access Persons, of compliance with various provisions of the
Advisers Act as such provisions are applicable to Founders Employees, and to the
prevention of engagement in any personal securities transactions by Access
Persons and Founders Employees which might conflict with or adversely affect the
interests and welfare of the Fund and its shareholders and, with respect to
Founders Employees, of other clients of Founders ("Clients," as defined in
Section 1 of this Code of Ethics).
The general principles and procedures which guide the activities of
all Access Persons and Founders Employees are augmented by this Code of Ethics,
which is based upon the fundamental recognition that Access Persons have a
fiduciary relationship with the Fund and its shareholders and Founders Employees
may have such a relationship with other Clients, which requires the maintenance
by all such individuals of the highest standards of integrity and conduct.
Access Persons must at all times recognize, respect, and act in the
best interests of the shareholders of the Fund, and Founders Employees must so
act with respect to the Fund and other Clients. In furtherance of their
fiduciary responsibilities, Access Persons and Founders Employees must ensure
that they do not take any inappropriate advantage of their positions as
directors, officers, employees, or agents of the Fund and of Founders. Access
Persons and Founders Employees must avoid any situations which might compromise
their exercise of fully independent judgment in the interests of or on behalf of
the Fund and its shareholders and other Clients, as applicable.
Professional and legal responsibilities to the Fund and its
shareholders and to other Clients dictate that not only conflicts of interests,
but the appearance of conflicts of interests, be avoided. Although compliance by
Access Persons and Founders Employees with the provisions of this Code of Ethics
is mandatory, codes of ethics cannot define all conflict and potential conflict
situations. Therefore, in addition to assuring that one's conduct comports with
this Code of Ethics, Access Persons and Founders Employees must avoid engaging
in any conduct that may create a conflict of interest or the potential for a
conflict of interest. Access Persons and Founders Employees must adhere not only
to the letter but also to the spirit of the Code of Ethics and the principles
articulated herein.
All activities of an Access Person and a Founders Employee must be
governed by the high fiduciary standard of scrupulous avoidance of serving one's
own personal interests ahead of the interests of the Fund and other Clients, as
applicable. In one's business activities, one must act in all respects in the
best interests of the Fund and its shareholders and of other Clients.
SECTION 1: DEFINITIONS
For the purpose of this Code of Ethics, the following general
definitions shall apply:
1. ACCESS PERSON shall mean:
a. Any director or officer of the Fund or of Founders; and
b. Any employee of the Fund or of Founders who, in connection with
his or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of a security by
the Fund or a Client, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
c. Any natural person in a control relationship to the Fund or to
Founders who obtains information concerning recommendations made to
the Fund or a Client with regard to the purchase or sale of a
security.
Access Person shall not include an employee of the Fund or of Founders
who receives no information about current recommendations or trading or an
employee who obtains information in a single instance, infrequently or
inadvertently.
2. AFFILIATE. One is an "Affiliate" of another person or company if he
or she:
i. is a partner, director, officer, or employee of such other
person or company; or
ii. directly or indirectly owns, controls or holds with power to
vote 5% or more of the outstanding voting securities of such company;
or
iii. directly or indirectly controls such company.
3. AFFILIATED PRINCIPAL UNDERWRITER is a principal underwriter which
is affiliated with the Fund or its investment adviser, or is a principal
underwriter, any officer, director, or general partner of which is an officer,
director, or general partner of the Fund or an investment adviser of the Fund.
At present, Premier serves as the principal underwriter of the Fund. Premier is
an affiliated principal underwriter, since officers of the principal underwriter
also serve as officers of the Fund.
4. APPROVAL OFFICER means the person(s) designated by the president of
Founders to provide certain written approvals required by this Code of Ethics.
The Approval Officer(s) is identified on Appendix 1.
5. BENEFICIAL OWNERSHIP shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person has or acquires.
A copy of the relevant portions of Rule 16a-1, which defines beneficial
ownership in accordance with Section 16, is included on Appendix 2.
6. CLIENT means an investment advisory client of Founders other than
the Fund.
7. CONTROL shall have the meaning set forth in Section 2(a)(9) of the
Act. A copy of Section 2(a)(9) of the Act is included on Appendix 2.
8. DE MINIMIS TRANSACTION means a securities transaction for which
pre-transaction approval is not required, as more fully described and defined in
Section 4.2 of this Code of Ethics.
9. FOUNDERS EMPLOYEE means an officer, director, and/or employee of
Founders.
10. INDEPENDENT DIRECTOR means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19) of the
Act and who, in connection with his or her normal and regular responsibilities,
does not make or participate in decisions with respect to the purchase or sale
of a security by the Fund or make any recommendations with respect to such
purchases or sales. An independent director is further defined as one who does
not normally obtain information regarding the purchase or sale of a security by
the Fund within fifteen days before or after the purchase or sale. A copy of
Section 2(a)(19) of the Act is included on Appendix 2.
11. FUND AFFILIATED OFFICER means an officer of the Fund who is not a
director, officer, or employee of Founders or any affiliate thereof (other than
the officer's being affiliated with Founders as an officer of the Fund) and who,
in connection with his or her normal and regular responsibilities, does not make
or participate in decisions with respect to the purchase or sale of a security
by the Fund or make any recommendations with respect to such purchases or sales.
A Fund Affiliated Officer is further defined as one who does not normally obtain
information regarding the purchase or sale of a security by the Fund within
fifteen days before or after the purchase or sale. A Fund Affiliated Officer may
be an "interested person" of the Fund within the meaning of Section 2(a)(19) of
the Act.
12. LEGAL DEPARTMENT means the Legal Department of Founders of which
the general counsel of Founders has supervision. The general counsel shall
designate in writing the individual responsible for reviewing Reports pursuant
to the provisions of Section 10.D. and shall maintain this written designation.
13. PREMIER CODE OF ETHICS means the code of ethics promulgated in
accordance with Rule 17j-1 of the Act or equivalent document of Premier.
14. PURCHASE OR SALE OF A SECURITY shall include the writing of an
option to purchase or sell the security.
15. RESTRICTED SECURITIES shall include securities which are not
readily marketable and securities which cannot be resold or distributed to the
public or to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"), without an effective
registration statement under the 1933 Act. A security which is not readily
marketable is one which, for whatever reason, cannot be disposed of within seven
days in the ordinary course of business at approximately the amount at which the
security is reasonably valued.
16. SECURITY shall have the meaning set forth in Section 2(a)(36) of
the Act, and shall also include related securities, such as rights and
convertible instruments, and financial instruments such as options, futures,
commodities, and derivative instruments which are related to, but are not the
same as, securities that may be held or acquired by the Fund or a Client, and
which may not be defined as securities in Section 2(a)(36) of the Act. The term
security shall include restricted securities as defined herein. Security shall
not include: government securities as defined in Section 2(a)(16) of the Act;
high quality short-term debt instruments including, but not limited to, bankers'
acceptances, bank certificates of deposit, commercial paper, and repurchase
agreements; and shares of registered open-end investment companies. Copies of
Sections 2(a)(36) and 2(a)(16) of the Act are included on Appendix 2.
17. A SECURITY IS BEING CONSIDERED FOR PURCHASE OR SALE when a
recommendation to purchase or sell a security has been made and communicated or,
with respect to the person making the recommendation, when such person seriously
considers making such a recommendation.
18. A SECURITY IS BEING PURCHASED OR SOLD when, within the most recent
seven-day period, a transaction in such security has been effected for the Fund
or a Client, or when a transaction in such security is pending or in progress
for the Fund or a Client.
SECTION 2: GENERAL POLICY
Directors and other Access Persons are specifically reminded that it
is unlawful for any of them, in connection with the purchase or sale, directly
or indirectly, of a security held or to be acquired by the Fund:
1. To employ any device, scheme or artifice to defraud the Fund;
2. To make any untrue statement of a material fact to the Fund or omit
to state to the Fund a material fact necessary in order to make the
statements made, in light of the circumstances under which they are made,
not misleading;
3. To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the Fund; or
4. To engage in any manipulative practice with respect to the Fund.
For purposes of this Section 2, a security held or to be acquired by
the Fund means any security as defined herein which, within the most recent
15-day period, is or has been held by the Fund or is being or has been
considered by the Fund or by Founders for purchase by the Fund.
These proscriptions apply to Founders Employees not only with respect
to the Fund but also with respect to Clients.
The provisions of this Code of Ethics have been instituted, in part,
in an effort to ensure that directors, other Access Persons, and Founders
Employees do not, inadvertently or otherwise, violate the proscriptions outlined
above.
SECTION 3: PROHIBITED PURCHASES AND SALES
GENERAL PROHIBITION.
Except as provided in Section 11 of this Code of Ethics, no Access
Person or Founders Employee shall purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which to his or her actual knowledge
at the time of such purchase or sale:
1. Is being considered for purchase or sale by the Fund or, as to
Founders Employees, a Client; or
2. Is being purchased or sold by the Fund or, as to Founders
Employees, a Client.
INITIAL PUBLIC OFFERING.
Except as provided in Section 11 of this Code of Ethics, no Access
Person and no Founders Employee shall purchase, directly or indirectly, any
securities which are offered in an initial public offering.
SECTION 4: PRE-TRANSACTION APPROVAL
1. Every Access Person and Founders Employee shall obtain written
approval of an Approval Officer prior to effecting any transactions in
securities for his or her direct or indirect personal gain or in which he
or she may have any beneficial interest. Such prior written approval shall
also be required of any such transactions effected by, for, or on behalf of
any member of the Access Person's and Founders Employee's household.
Written approval shall be obtained by use of the form attached hereto as
Exhibit A. Such approval shall be effective for three trading days. The
legal department of Founders (the "Legal Department") shall retain the
original copies of all completed approval forms.
2. The pre-transaction approval requirements of this Section 4 shall
not apply to "de minimis" transactions, defined as any purchase or sale of
a security by an Access Person or Founders Employee who is not also buying
or selling the same security for the Fund or a Client, and which:
a. Is issued by a company with a market capitalization of at least
$1 billion and has an average daily trading volume of at least 100,000
shares; AND
b. Involves no more than 100 shares or units, regardless of the
dollar amount of the transaction, or any number of shares or units
having a value of no more than $5,000.
If, during any two consecutive calendar quarters, aggregate purchase
or sale transactions by the Access Person or Founders Employee in shares or
units of the same issuer exceed 300 shares or units or a cumulative value of
$15,000, whichever is the last to occur, subsequent transactions in the issuer's
securities shall no longer be regarded as "de minimis" transactions. Within
three business days of the transaction which causes a limit of 300 shares or
units or $15,000 to be exceeded, the Access Person or Founders Employee shall
notify the Legal Department of the occurrence of the transaction. Transactions
in the applicable issuer's securities during the next 12 months will be subject
to the pre-clearance provisions of this Section 4.
Any Access Person or Founders Employee who desires to engage in a de
minimis transaction (subject to the limits set forth in the preceding paragraph)
shall complete the form attached hereto as Exhibit B prior to each such
transaction, and return that form to the Legal Department.
3. Any Access Person or Founders Employee who has obtained written
approval to purchase a restricted security and who has purchased and
continues to maintain the security in reliance upon such approval must
disclose the investment to his or her Approval Officer in any instance in
which the Access Person or Founders Employee is involved in consideration
by the Fund or a Client of an investment in the issuer of the restricted
security. In any such circumstance, the decision of a Fund or a Client to
purchase an investment in the issuer of the restricted security must be
reviewed independently by one or more investment personnel of Founders,
selected by the Approval Officer, who have no personal interest in the
issuer, who must execute written approval of the investment in the issuer
prior to the investment's being made.
SECTION 5: SHORT-TERM TRADING PROFITS
Every Access Person or Founders Employee who obtains a profit from a
purchase and sale, or a sale and purchase, of the same or equivalent securities
in which the individual has a beneficial ownership interest within sixty (60)
calendar days shall disgorge such profit, with the profit to be allocated in
whole or in part among Portfolios of the Fund as determined equitably by the
Fund's board of directors (any portion of the profit not so allocated shall be
allocated among Clients as determined by Founders' board of directors);
provided, however, that such disgorgement of short-term trading profits shall
not apply to "de minimis" transactions as defined in Section 4 of this Code of
Ethics or to securities transactions of Access Persons or of Founders Employees
under circumstances, determined in the sole discretion of the board of directors
of the Fund, in which disgorgement of profits would be inequitable.
SECTION 6: POTENTIAL CONFLICTS OF INTEREST
GIFTS.
No Access Person or Founders Employee shall give, seek or accept any
gift, favor, or other item of value in excess of $100 to or from any person or
entity having a direct or indirect business and/or professional relationship
with the Fund or Founders or any affiliated entities of the Fund or Founders. No
Access Person or Founders Employee shall participate individually or on behalf
of Founders, a Client or the Fund, directly or indirectly, in any transaction
involving the payment or receipt of any bribe or kickback, or the payment or
receipt of any other amount with an understanding that part or all of such
amount will be refunded or delivered to a third party in violation of any law
applicable to the transaction.
TRIPS.
Any trip to be taken by an Access Person or a Founders Employee must
be approved in advance, by use of the form attached hereto as Exhibit C, if any
portion of trip related expenses is to be paid by a broker, by a company whose
securities are publicly traded, or by any other person or entity with which
Founders may have a current or anticipated business relationship.
PREFERENTIAL TREATMENT.
No Access Person or Founders Employee shall give, seek or accept any
preferential treatment in dealings with any broker, dealer, portfolio company,
financial institution, supplier or any other organization with which Founders
transacts business or anticipates transacting business.
INVESTMENT ADVICE TO OTHERS.
Access Persons and Founders Employees are strictly prohibited from
acting jointly or individually in an investment advisory capacity for an account
other than a Fund or Client.
OUTSIDE AFFILIATIONS.
Access Persons and Founders Employees are prohibited from receiving
direct or indirect compensation of more than minimal value as a result of
services provided to any outside entity or from otherwise engaging in any
outside for-profit business activities without first receiving the written
approval of the Approval Officer on the form attached hereto as Exhibit D. The
Legal Department shall retain copies of all such approvals.
SECTION 7: INVESTMENT CLUBS
Notwithstanding any other provisions of this Code of Ethics to the
contrary, family members, such as husband, wife, and other dependent relatives
of an Access Person or a Founders Employee may participate in investment clubs
or similar investment groups if, and only if, all of the following conditions
are present and are adhered to:
a. The Access Person or Founders Employee does not provide
investment advice to the family member or to other club participants
with respect to any security which is being considered for purchase or
sale by the Fund or a Client or is being purchased or sold by the Fund
or a Client.
b. The family member immediately notifies the Access Person or
Founders Employee when he or she is aware that the investment club has
purchased or sold or is considering the purchase or sale of a
security.
c. Upon being notified by the family member in accordance with item
(b), the Access Person or Founders Employee completes and signs
Exhibit E and submits Exhibit E to the Approval Officer for
acknowledgment. The Legal Department shall retain copies of all such
forms.
SECTION 8: SERVICE AS A DIRECTOR OF PUBLICLY TRADED COMPANIES
No Access Person or Founders Employee shall be permitted to serve on
the board of directors of a publicly traded company unless prior written
authorization has first been obtained from the president of Founders. Approval
of such service by the president shall be based upon a determination that the
service is consistent with the interests of the Fund and its shareholders and
the Clients. In instances in which authorization to serve is granted, the Access
Person or Founders Employee serving as a director shall refrain from any direct
or indirect involvement in the consideration for purchase or sale and in the
purchase or sale by the Fund or a Client (i) of any securities of the company on
the board of directors of which the Access Person or the Founders Employee
serves as a director, or (ii) of any securities of an affiliate of such company.
SECTION 9: BROKER ACCOUNTS AND BROKER CONFIRMATIONS
1. Each Access Person and Founders Employee is required to provide the
Legal Department with the name, address, and telephone number of any brokerage
firm with which the Access Person or Founders Employee establishes or maintains
a brokerage account or in which such Access Person or Founders Employee or any
member of such Access Person's or Founders Employee's household has any direct
or indirect beneficial ownership, and the account number and registered owner
designation of any such account. Such information as to existing brokerage
accounts shall be provided upon filing of the initial written certification
required of an Access Person and Founders Employee by use of the form attached
hereto as Exhibit F. Such information with respect to the establishment of a new
brokerage account not previously reported to the Legal Department shall be
provided by the Access Person or Founders Employee to the Legal Department
within ten days of establishment of the account.
2. All Access Persons and Founders Employees are required to direct
any broker effecting a transaction in any security in which such Access Person
or Founders Employee or any member of such Access Person's or Founders
Employee's household has any direct or indirect beneficial ownership to provide
the Legal Department with duplicate copies of the applicable trade confirmations
and periodic account statements.
SECTION 10: REPORTING REQUIREMENTS
A. INITIAL REPORT BY NEW ACCESS PERSON.
Within ten (10) days of the date upon which an individual becomes an
Access Person, the new Access Person shall provide the Legal Department with an
initial report containing a list of all securities in which such Access Person
or any member of such Access Person's household has any direct or indirect
beneficial ownership. The list shall include the title and number of shares or
interests of each security owned, each security's ticker symbol, if any, the
date(s) of purchase of the security, and the price(s) paid for the security. The
initial report shall also include all other information required by Rule 17j-1
of the Act. The initial report shall be made by use of a form similar to that
attached hereto as Exhibit F.
B. PERIODIC REPORTS BY ACCESS PERSONS AND FOUNDERS EMPLOYEES.
1. Except as is otherwise provided in Section 10.B.2., every Access
Person and Founders Employee shall report to the Legal Department the
information described in paragraph 3 of this Section 10B with respect to
transactions in any security in which such Access Person or Founders Employee or
any member of such Access Person's or Founders Employee's household has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
in the security. Such report shall be made by use of a form similar to that
attached hereto as Exhibit G not later than ten days after the end of the
calendar quarter in which the transaction occurred.
2. An Independent Director shall be exempt from the reporting
requirements imposed by Section 10.B.1. and need only report a transaction in a
security if such Director, at the time of that transaction knew or, in the
ordinary course of fulfilling his official duties as a director of the Fund
should have known, that during the 15-day period immediately preceding or after
the date of the transaction by the Director, such security was purchased or sold
by the Fund or was being considered by the Fund or Founders for purchase or sale
by the Fund. Any such transaction should be reported to the Fund's counsel not
later than ten (10) days after the end of the calendar quarter in which the
transaction occurred.
3. At the end of each calendar quarter, the Legal Department will
provide each Access Person and Founders Employee who effected securities
transactions during the quarter with a form similar to that attached as Exhibit
G containing (i) the name of any broker, dealer, or other institution with which
an account was established by the individual during the quarter and the date the
account was established, and (ii) a list of all securities transactions for
which the individual has submitted reports on Exhibits A and B during the
quarter and/or for which broker trade confirmations of the individual's
securities transactions have been received by the Legal Department during the
quarter. The Access Person or Founders Employee is responsible for verifying the
accuracy and completeness of the information on the report provided by the Legal
Department and for adding (i) the identity of any broker, dealer, or other
institution with which an account was established by the individual during the
proceeding quarter which is not included on the report, and (ii) any transaction
which was effected during the preceding quarter which is not included on the
report. All reports shall contain the following information:
a. The title of each security involved in the transaction, each
security's ticker symbol, if any, the amount of each security
purchased or sold, the date of the transaction, and the price at which
the transaction was executed;
b. The nature of the transaction (i.e., purchase, sale, or any
other type of acquisition or disposition);
c. If the transaction was effected through a brokerage firm, a
broker's confirmation of such transaction (unless the Legal Department
already has received a copy of the confirmation);
d. If no brokerage firm was involved in the transaction, an
explanation of the circumstances surrounding the transaction and the
manner in which the transaction was executed; and
e. The name of the broker, dealer, or other institution with which
an account was established and the date the account was established.
4. Such reports and, if applicable, accompanying confirmations shall
be retained by the Fund's counsel or the Legal Department for a period of at
least six years.
5. Any such report may contain a statement that the report shall not
be construed as an admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the security to which the report
relates.
C. ANNUAL REPORTS BY ACCESS PERSONS.
On or before February 1 of each calendar year, each Access Person
shall provide to the Legal Department a report ("Report") which shall include a
list of all securities in which, as of the preceding December 31, the Access
Person had any direct or indirect beneficial ownership interest. The list shall
contain the title and number of shares or interests of each security owned, the
date(s) of purchase of the security, and the price(s) paid for the security. The
Report shall also include all additional information required by Rule 17j-1 of
the Act. The Report shall be provided by use of a form similar to that attached
hereto as Exhibit H.
D. MONITORING OF PERIODIC AND ANNUAL REPORTS BY LEGAL DEPARTMENT.
1. Upon receipt by the Legal Department of each periodic report
provided pursuant to Sections 10.A. and 10.B., the Legal Department will review
the report to determine whether the Access Person or Founders Employee may have
engaged in possible violations of this Code of Ethics, paying particular
attention to trading patterns and activities of the Access Person or Founders
Employee which may identify potential infractions of this Code of Ethics.
2. Upon receipt by the Legal Department of each annual report provided
pursuant to Section 10.C., the Legal Department shall prepare a list of all
securities shown on the reports and shall compare the list with records of
securities purchased or sold by the Fund and by Clients during the prior twelve
months. The Legal Department shall determine, based upon such comparison and
upon any further review of any Access Person's securities transactions deemed
necessary, whether any violations of this Code of Ethics may have occurred.
E. WRITTEN CERTIFICATION.
On a basis no less frequently than annually, each Independent Director
of the Fund shall report to the Fund's counsel, and each other Access Person or
Founders Employee shall be required to provide to the Legal Department, a
written certification that the Access Person or Founders Employee has read and
understands this Code of Ethics and recognizes that he or she is subject to
certain terms and provisions thereof. Each Access Person and Founders Employee
shall further be required annually to certify in writing that he or she has
complied with the requirements of this Code of Ethics and has disclosed or
reported all personal securities transactions required to be disclosed or
reported pursuant to the requirements of this Code of Ethics. Attached hereto as
Exhibit I is the form to be used by Access Persons, other than Independent
Directors, and by Founders Employees to comply with this certification.
F. LEGAL DEPARTMENT REPORT.
On a basis no less frequently than annually, the Legal Department
shall prepare and, as to Premier, arrange to receive from an appropriate
representative of Premier, a written report ("Report") to the board of directors
of the Fund or to a standing committee of the board designated by the
Independent Directors to receive such Reports, which shall provide the following
information:
a. A summary of existing procedures concerning investments in
securities by all Access Persons and Founders Employees who are
required to report their securities transactions to the Legal
Department and any changes in such procedures which were implemented
in the past six (6) months;
b. Any issues arising under this Code of Ethics, the Premier Code
of Ethics, or under the code of ethics of any investment adviser or
affiliated principal underwriter of the Fund, including, but not
limited to, material or recurring violations of this Code of Ethics,
the Premier Code of Ethics, or any other code of ethics of any
investment adviser or affiliated principal underwriter of the Fund
committed by any access person or Founders Employee during the period
from the most recent prior Report;
c. Any recommended changes in existing restrictions or procedures
to this Code of Ethics or to the Premier Code of Ethics based upon (i)
the experience of the Fund, Founders, or Premier under their
respective Codes of Ethics, (ii) the experience of any other
investment adviser or affiliated principal underwriter of the Fund
which may have a separate code of ethics, (iii) evolving industry
practices, or (iv) developments in applicable laws or regulations; and
d. A certification that the Fund, Founders, and Premier, and any
other investment adviser or affiliated principal underwriter of the
Fund, have adopted such procedures as are reasonably necessary to
prevent any access person or Founders' Employee from violating any
codes of ethics applicable to the entity.
SECTION 11: EXEMPTIONS
A. EXEMPT TRANSACTIONS.
The prohibitions of Section 3 of this Code of Ethics and the
pre-transaction, short-term trading, and reporting requirements of Sections 4,
5, and 10B of this Code of Ethics shall not apply to:
1. Purchases or sales of securities effected in any account over which
an Access Person or Founders Employee has no direct or indirect influence or
control;
2. Purchases or sales which are non-volitional on the part of an
Access Person or a Founders Employee, including transactions in accounts in
which complete investment discretion has been delegated to a person or entity
not an Access Person or a Founders Employee or a member of such Access Person's
or Founders Employee's household;
3. Purchases which are part of an automatic dividend reinvestment
plan;
4. Purchases effected upon the exercise of rights issued by an issuer
PRO RATA to all holders of a class of its securities, to the extent such rights
were acquired from such issuer, and sales of such rights so acquired;
5. Purchases or sales of securities other than restricted securities
which receive the prior approval of the president of Founders or such other
senior officer as any such president may designate to grant such approval in his
absence, because they are only remotely potentially harmful to the Fund or a
Client since they would be very unlikely to affect a highly institutional
market, or because they clearly are not related economically to the securities
to be purchased, sold, or held by the Fund or a Client.
B. INDEPENDENT DIRECTOR AND FUND AFFILIATED OFFICER EXEMPTIONS.
Notwithstanding any language in this Code of Ethics to the contrary,
the initial public offering prohibition of Section 3, the provisions of Section
4.1, the provisions of Section 5, the provisions of Section 6, the provisions of
Section 7, the provisions of Section 8, and the provisions of Section 9 of this
Code of Ethics shall not apply to Independent Directors or to Fund Affiliated
Officers. The provisions of Section 10.A. and the provisions of Section 10.C. of
this Code of Ethics shall not apply to Independent Directors.
SECTION 12: DISSEMINATION, CORPORATE RECORD RETENTION,
DISCLOSURE, AND CONFIDENTIALITY
1. Founders shall provide a copy of this Code of Ethics to all Access
Persons and to all Founders Employees and shall inform such individuals of their
duties and responsibilities imposed by this Code of Ethics, including their
reporting responsibilities. Founders shall obtain a written certification from
each Founders Employee stating that he/she has read, understands, and will
comply with this Code of Ethics by use of the form attached hereto as Exhibit F.
2. The Fund and Founders shall maintain for a six-year period in an
easily accessible place the following records:
a. A copy of this Code of Ethics;
b. A record of any violation of this Code of Ethics and of any
action taken as a result of such violation;
c. A copy of each report made by an Access Person or Founders
Employee pursuant to this Code of Ethics;
d. A list of all persons who are, or within the past six years have
been, required to make reports pursuant to this Code of Ethics.
Founders shall arrange for a list of all current Access Persons to be
attached to this Code of Ethics as Appendix 1 and to be amended when
necessary to add or delete Access Persons; and
e. A list of Approval Officers. Founders shall arrange for a list
of all current Approval Officers to be included on Appendix 1 and to
be amended when necessary to add or delete Approval Officers.
3. The prospectuses and/or the statements of additional information of
the Fund shall provide disclosure with respect to the general policies and
procedures applicable to Access Persons by this Code of Ethics, including
specific disclosure with regard to the extent to which Access Persons are
permitted to engage in personal securities transactions. Such disclosure shall
further include a brief description of the procedures initiated by the Fund to
address conflicts of interests occurring as a result of violations of this Code
of Ethics, and shall include the manner in which a Fund investor may obtain a
copy of the Code of Ethics, including the availability of the Code of Ethics
from the public files of the Securities and Exchange Commission. Legal counsel
for Founders and for the Fund are to review the disclosure for adequacy and are
further directed to attach a copy of the Code of Ethics, the Premier Code of
Ethics, and any other codes of ethics of the Fund's investment advisers and
affiliated principal underwriters as exhibits to the Fund's registration
statement.
4. The Legal Department, Approval Officers, and other individuals who
may receive (i) reports of securities transactions and/or securities holdings of
Access Persons and (ii) other information with respect to Access Persons' and
other Founders Employees' compliance with or violation of any provisions of this
Code of Ethics shall receive and maintain the information in confidence. Such
information shall only be disclosed to those persons or entities who have either
a need or a legal obligation to receive such information or have the legal
authority to be provided with the information. Persons and entities to whom such
information may appropriately be disclosed include, but are not necessarily
limited to, the directors of the Fund, the president of Founders, compliance,
accounting, and legal personnel of the Fund and of Founders, Approval Officers,
state and federal regulatory agencies, and appropriate representatives of the
National Association of Securities Dealers, Inc.
SECTION 13: PERSONAL RECORD RETENTION
Each Access Person and Founders Employee is encouraged to retain in
his or her personal files for a period of at least six years broker's
confirmations, monthly statements, or other appropriate information covering all
personal securities transactions, and all transactions in securities effected
by, for, or on behalf of any member of the Access Person's and Founders
Employee's household, showing the amount of each security purchased or sold, the
date of the transaction, the price at which it was executed, and the name and
address of the executing broker or dealer, if any.
SECTION 14: MATERIAL INSIDE (NON-PUBLIC) INFORMATION
It is unlawful under the Securities Exchange Act of 1934 and SEC Rule
10b-5 thereunder for any person to trade or recommend trading in securities on
the basis of material, inside (non-public) information. Founders has adopted a
Policy Statement On Insider Trading, a copy of which is included as Appendix 3
and is incorporated herein by this reference. By acknowledging that they have
read, understand and will comply with this Code of Ethics, Access Persons and
Founders Employees are also acknowledging that they have read, understand and
will comply with the attached Policy Statement on Insider Trading.
SECTION 15: VIOLATIONS
1. Any Access Person or Founders Employee who becomes aware of a
violation or apparent violation of this Code of Ethics by an officer, director,
or employee of the Fund shall advise the president of Founders or the Fund's
legal counsel of the matter. The person to whom the violation or apparent
violation is made known shall thereupon report the matter to the Fund's board of
directors. The board shall determine whether a violation has occurred and, if
so, will impose or, where applicable, recommend such sanctions, if any, as it
deems appropriate, including verbal or written warnings, a letter of censure,
suspension, termination of employment, or other sanctions. Prior to the final
determination by the board of directors, Founders shall provide such
investigation of a reported violation and shall make such recommendations to the
board with respect thereto as Founders and/or the board shall deem advisable.
2. Any Access Person or Founders Employee who becomes aware of a
violation or apparent violation of this Code of Ethics by an officer, director,
employee, or other access person of Founders who is not also an officer,
director, or employee of the Fund shall advise the president, the Legal
Department or Founders' legal counsel of the matter. The person to whom the
violation or apparent violation is made known shall thereupon report the matter
to Founders' president or, if the violation or apparent violation involves
Founders' president, Founders' chairman of the board of directors. Founders'
president or chairman of the board, as appropriate, in consultation with the
Legal Department (if not involved with the violation or apparent violation),
shall determine whether a violation has occurred and, if so, will impose such
sanctions, if any, as he or she may deem appropriate, including verbal or
written warnings, a letter of censure, suspension, termination of employment, or
other sanctions.
3. In addition to any other sanctions which may be imposed upon an
Access Person or a Founders Employee who has violated this Code of Ethics, and
particularly in circumstances in which the violation involves the sale or
purchase of a security, the Access Person or Founders Employee having engaged in
the violation may be required either to unwind the purchase or sale transaction
or, if that is impractical, disgorge all profits from the transaction. Any such
profits are to be allocated in whole or in part among Portfolios of the Fund and
Clients as determined equitably by the Fund's board of directors, if the
sanction is imposed by the Fund's board, and by Founders' president or chairman
of its board of directors, as appropriate, if the sanction is imposed by
Founders.
4. The Legal Department shall notify the Fund's board of directors, or
a standing committee of the board designated by the Independent Directors, of
violations of this Code of Ethics committed by an officer, director, employee,
or other access person of Founders who is not also an officer or director of the
Fund and of the sanctions, if any, which have been imposed by Founders upon the
person having committed the violation. Such a report will be provided at the
next regularly scheduled meeting of the Fund's board of directors following the
determination of the occurrence of the violation.
The Fund's board of directors will review the report and other
presentations concerning the violation and the sanctions imposed with respect
thereto, and may either:
a. Take no further action; or
b. Recommend reconsideration of the determination that a violation
has occurred, the sanctions imposed with respect thereto, and/or of
the allocation of any disgorgement, accompanied by specific
suggestions for change in the actions taken by the chairman of the
board or the president of Founders as the board of directors may deem
appropriate.
5. Upon receipt of a recommendation for reconsideration from the
Fund's board of directors in accordance with item 4.b. above, the chairman of
the board or the president of Founders, as applicable, will consider the
directors' recommendations and will take such final action as he or she deems
appropriate under the circumstances. A report of the action taken will be
provided at the next regularly scheduled meeting of the Fund's board of
directors.
SECTION 16: REVIEW
1. The board of directors of the Fund, including a majority of the
Fund's independent directors, shall approve this Code of Ethics, the Premier
Code of Ethics, and the code of ethics of any other investment adviser and
affiliated principal underwriter of the Fund, and any material changes to such
codes of ethics.
2. Approval of codes of ethics and any material changes thereto shall
be based upon a determination that the codes contain provisions reasonably
necessary to prevent access persons from engaging in conduct prohibited by Rule
17j-1 under the Act.
3. Prior to approving a code of ethics, the directors of the Fund must
receive a certification from the Fund and each Fund's investment adviser and
affiliated principal underwriter that each entity has adopted procedures
reasonably necessary to prevent access persons of the respective entity from
violating the entity's code of ethics.
4. Approval by the Fund's directors of the code of ethics of a Fund's
investment adviser or affiliated principal underwriter must occur prior to the
initial retention of services of the investment adviser or affiliated principal
underwriter.1 Approval of material changes to a code of ethics must occur no
later than six months after adoption of the material change.
5. The general counsel of Founders is directed to advise the Fund's
board of directors at their next regularly scheduled meeting of any material
amendments to the code of ethics of any investment adviser or affiliated
principal underwriter of the Fund.
APPROVED AND AMENDED to be effective as of January 1, 2000, by vote of
a majority of the directors of the Fund, including a majority of the Independent
Directors, and by vote of the board of managers of Founders.
- --------
1 Since the Fund has heretofore retained the services of its investment adviser
and affiliated principal underwriter, this requirement will be satisfied by the
approval by the Fund's directors of the codes of ethics of Founders and Premier
by September 1, 2000.
<PAGE>
APPENDIX 1
TO
CODE OF ETHICS
LIST OF ACCESS PERSONS AND APPROVAL OFFICERS
[Please contact Founders' Legal Department to obtain the current list of
Access Persons and Approval Officers. This list can also be found on the
Legal Department section of FNet, Founders' intranet site.]
<PAGE>
APPENDIX 2
TO
CODE OF ETHICS
Reg. ss. 240.16a-1.
(a) The term "beneficial owner" shall have the following applications:
(2) ... the term "beneficial owner" shall mean any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect pecuniary interest
in the equity securities, subject to the following:
(i) The term "pecuniary interest" in any class of equity securities
shall mean the opportunity, directly or indirectly, to profit or share
in any profit derived from a transaction in the subject securities.
(ii) The term "indirect pecuniary interest" in any class of equity
securities shall include, but not be limited to:
(A) securities held by members of a person's immediate family
sharing the same household; provided, however, that the presumption
of such beneficial ownership may be rebutted; see also ss.
240.16a-1(a)(4); [Amended in Release No. 34-29131 (P. 26,086A),
effective May 1, 1991, 56 F.R. 19925.]
(B) a general partner's proportionate interest in the
portfolio securities held by a general or limited partnership. The
general partner's proportionate interest, as evidenced by the
partnership agreement in effect at the time of the transaction and
the partnership's most recent financial statements, shall be the
greater of:
(1) the general partner's share of the partnership's
profits, including profits attributed to any limited
partnership interests held by the general partner and any
other interests in profits that arise from the purchase and
sale of the partnership's portfolio securities; or
(2) the general partner's share of the partnership capital
account, including the share attributable to any limited
partnership interest held by the general partner.
(C) a performance-related fee, other than an asset-based fee,
received by any broker, dealer, bank, insurance company, investment
company, investment adviser, investment manager, trustee or person
or entity performing a similar function; provided, however, that no
pecuniary interest shall be present where:
(1) the performance-related fee, regardless of when
payable, is calculated based upon net capital gains and/or net
capital appreciation generated from the portfolio or from the
fiduciary's overall performance over a period of one year or
more; and
(2) equity securities of the issuer do not account for
more than ten percent of the market value of the portfolio. A
right to a nonperformance-related fee alone shall not
represent a pecuniary interest in the securities;
(D) A person's right to dividends that is separated or
separable from the underlying securities. Otherwise, a right to
dividends alone shall not represent a pecuniary interest in the
securities;
(E) A person's interest in securities held by a trust, as
specified in ss. 240.16a-8(b); and
(F) A person's right to acquire equity securities through the
exercise or conversion of any derivative security, whether or not
presently exercisable.
(iii) A shareholder shall not be deemed to have a pecuniary
interest in the portfolio securities held by a corporation or similar
entity in which the person owns securities if the shareholder is not a
controlling shareholder of the entity and does not have or share
investment control over the entity's portfolio.
(e) The term "immediate family" shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and shall include adoptive relationships.
GENERAL DEFINITIONS
Sec. 2.(a) When used in this title, unless the context other requires --
[Control]
(9) "Control" means the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely the result
of an official position with such company.
[Government Security]
(16) "Government security" means any security issued or guaranteed as
to principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
[Interested Person]
(19) "Interested person" of another person means --
(A) when used with respect to an investment company --
(i) any affiliated person of such company,
(ii) any member of the immediate family of any natural person who
is an affiliated person of such company,
(iii) any interested person of any investment adviser of or
principal underwriter for such company,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal years of
such company has acted as legal counsel for such company,
(v) any broker or dealer registered under the Securities Exchange
Act of 1934 or any affiliated person of such a broker or dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having had, at any
time since the beginning of the last two completed fiscal years of
such company, a material business or professional relationship with
such company or with the principal executive officer of such company
or with any other investment company having the same investment
adviser or principal underwriter or with the principal executive
officer of such other investment company:
Provided, That no person shall be deemed to be an interested person of an
investment company solely by reason of (aa) his being a member of its board of
directors or advisory board or an owner of its securities, or (bb) his
membership in the immediate family of any person specified in clause (aa) of
this proviso; and
(B) when used with respect to an investment adviser of or principal
underwriter for any investment company --
(i) any affiliated person of such investment adviser or principal
underwriter,
(ii) any member of the immediate family of any natural person who
is an affiliated person of such investment adviser or principal
underwriter,
(iii) any person who knowingly has any direct or indirect
beneficial interest in, or who is designated as trustee, executor, or
guardian of any legal interest in, any security issued either by such
investment adviser or principal underwriter or by a controlling person
of such investment adviser or principal underwriter,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal years of
such investment company has acted as legal counsel for such investment
adviser or principal underwriter,
(v) any broker or dealer registered under the Securities Exchange
Act of 1934 or any affiliated person of such a broker or dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having had at any
time since the beginning of the last two completed fiscal years of
such investment company a material business or professional
relationship with such investment adviser or principal underwriter or
with the principal executive officer or any controlling person of such
investment adviser or principal underwriter.
For the purposes of this paragraph (19), "member of the immediate family" means
any parent, spouse of a parent, child, spouse of a child, spouse, brother or
sister, and includes step and adoptive relationships. The Commission may modify
or revoke any order issued under clause (vi) of subparagraph (A) or (B) of this
paragraph whenever it finds that such order is no longer consistent with the
facts. No order issued pursuant to clause (vi) of subparagraph (A) or (B) of
this paragraph shall become effective until at least sixty days after the entry
thereof, and no such order shall affect the status of any person for the
purposes of this title or for any purpose for any period prior to the effective
date of such order.
[Security]
(36) "Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.
<PAGE>
APPENDIX 3
TO
CODE OF ETHICS
FOUNDERS ASSET MANAGEMENT LLC
POLICY STATEMENT ON INSIDER TRADING
INTRODUCTION
Founders Asset Management LLC ("Founders") forbids any officer,
director or employee from trading, either personally or on behalf of others
(such as mutual funds or private accounts managed by Founders), on material
nonpublic information or communicating material nonpublic information to others
in violation of the law. This conduct is frequently referred to as "insider
trading." Any questions regarding this policy should be referred to Founders'
General Counsel (the "Reviewing Officer").
A. WHAT IS "INSIDER TRADING"?
"Insider trading" refers generally to buying or selling a security, in
breach of a fiduciary duty or other relationship of trust and confidence, while
in possession of material, nonpublic information about the security. Insider
trading violations may also include "tipping" such information, securities
trading by the person "tipped" and securities trading by those who
misappropriate such information. Examples of insider trading cases that have
been brought by the SEC are cases against: corporate officers, directors, and
employees who traded the corporation's securities after learning of significant,
confidential corporate developments; friends, business associates, family
members, and other "tippees" of such officers, directors, and employees, who
traded the securities after receiving such information; employees of law,
banking, brokerage and printing firms who were given such information in order
to provide services to the corporation whose securities they traded; government
employees who learned of such information because of their employment by the
government; and other persons who misappropriated, and took advantage of,
confidential information from their employers.
Because insider trading undermines investor confidence in the fairness
and integrity of the securities markets, it is imperative that all employees and
officers understand and comply with this legal requirement. The penalties for
insider trading are severe and the SEC considers insider trading violations as
one of its enforcement priorities.
B. WHAT IS "MATERIAL INFORMATION"?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant expansion or curtailment of operations, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
major litigation, liquidation problems, and extraordinary management
development. Individuals should exercise caution when questioning the
materiality of the information provided and should contact the Reviewing Officer
for clarification of its materiality.
C. WHAT IS NONPUBLIC INFORMATION?
Nonpublic information, often referred to as "insider information," is
information that has not been communicated to the marketplace. One must be able
to point to some fact to show that the information is generally public. For
example, information found in a report filed with the SEC, or appearing in DOW
JONES, REUTERS ECONOMIC SERVICE, THE WALL STREET JOURNAL, or other publications
of general circulation would be considered public.
D. PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material nonpublic
information are severe, both for individuals involved in such unlawful conduct
and their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
o civil injunction
o treble (i.e., triple) damages
o disgorgement of profits
o jail sentence
o fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person
actually benefited, and
o fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
Any violation of this policy statement can be expected to result in
serious sanctions by Founders, including termination of employment.
E. RELEVANT TOPICS
CONTACT WITH PUBLIC COMPANIES
For Founders, contact with public companies represents an important
part of its research efforts. Investment decisions may be made by Founders on
the basis of conclusions formed through such contact and analysis of publicly
available information. Difficult legal issues arise, however, when directors,
officers or employees of Founders become aware of material nonpublic
information. This could happen, for example, if a company's chief financial
officer prematurely discloses quarterly results to an analyst or an investor
relations representative makes a selective disclosure of adverse news to a
handful of investors. In order to protect Founders and yourself, you must
contact the Reviewing Officer if you believe you have received material,
nonpublic information.
TENDER OFFERS
Tender offers represent a particular concern in the law of insider
trading. Tender offer activity often produces extraordinary gyrations in the
price of the target company's securities. Trading during this time period is
also more likely to attract regulatory attention (and produces a
disproportionate percentage of insider trading cases). Officers, directors, and
employees of Founders should exercise extreme caution any time they become aware
of nonpublic information relating to a tender offer.
F. PROCEDURES TO PREVENT INSIDER TRADING
The following procedures have been established to aid the officers,
directors, and employees of Founders to avoid insider trading, and to aid
Founders in preventing, detecting, and imposing sanctions against insider
trading. Every officer, director, and employee of Founders must follow these
procedures or risk serious sanctions including dismissal, substantial personal
liability, and criminal penalties. If you have any questions about these
procedures you should consult the Reviewing Officer.
IDENTIFYING INSIDE INFORMATION
Before trading for yourself or others, including mutual funds and
privately managed accounts managed by Founders, in the securities of a company
about which you have potential inside information, ask yourself the following
questions:
i. Is the information material? Is this information that an
investor would consider important in making his or her investment
decision? Is this information that would substantially affect the
market price of the security if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in REUTERS, THE WALL STREET Journal, or
other publications of general circulation?
If, after consideration of the above, you believe that the information
may be material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you MUST take the following steps:
i. Do NOT purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
Founders.
ii. Report the matter immediately to the Reviewing Officer. If the
Reviewing Officer is not available and an immediate determination is
necessary, such judgment may be made by the President of Founders or
its outside legal counsel.
iii. Do not communicate the information inside or outside Founders,
other than to the designated Reviewing Officer, the President of
Founders, or Founders' outside legal counsel.
iv. After the Reviewing Officer has reviewed the issue, you will be
instructed to continue the prohibitions against trading or
communicating the information received, or you will be allowed to
trade and communicate the information.
G. RESTRICTING ACCESS TO MATERIAL NONPUBLIC INFORMATION
Information in your possession that you identify as material and
nonpublic may not be communicated to anyone, including persons within Founders,
with the exception of Founders' Reviewing Officer, the President of Founders, or
Founders' outside legal counsel. In addition, care should be taken so that such
information is handled in a manner which Founders employees and others cannot
access. For example, physical documents containing such information should be
placed in a locked file cabinet and computer files should be password protected
and restricted from access.
H. PERSONAL SECURITIES TRANSACTIONS
All Founders employees are required to obtain pre-clearance for
securities transactions in which they have a beneficial interest. Please refer
to the Code of Ethics or contact Founders' Legal Department for details
regarding how to obtain prior approval. By requesting approval to engage in a
personal securities transaction, an individual is also certifying that they are
not acting on inside information.
MEMORANDUM
[LOGO]Founder
TO: All Employees
FROM: Ken Christoffersen
DATE: June 2, 1998
RE: Addendum to the Code of Ethics
- --------------------------------------------------------------------------------
At its May 28 meeting, the Board of Managers of Founders Asset Management LLC
adopted the attached "Restrictions on Transactions in Mellon Securities" as an
addendum to the Founders Code of Ethics. Please read this addendum and keep it
with your copy of the Code of Ethics.
The addendum contains a number of provisions relating to trading in the
securities of Mellon Bank Corporation that are required because Mellon is a
public company. These restrictions apply to all employees of Mellon and its
subsidiaries (referred to as "associates" in the document), other than outside
consultants or temporary employees. These restrictions apply to all Founders
employees effective immediately.
If you have any questions concerning the attached addendum, please feel free to
contact Allen French or me.
<PAGE>
ADDENDUM TO THE CODE OF ETHICS
MAY 28, 1998
RESTRICTIONS ON TRANSACTIONS IN MELLON SECURITIES
Associates who engage in transactions involving Mellon securities should be
aware of their unique responsibilities with respect to such transactions arising
from the employment relationship and should be sensitive to even the appearance
of impropriety.
The following restrictions apply to all transactions in Mellon's publicly traded
securities occurring in the associate's own account and in all other accounts
over which the associate could be expected to exercise influence or control (see
provisions under "Beneficial Ownership" below for a more complete discussion of
the accounts to which these restrictions apply). These restrictions are to be
followed in addition to any restrictions that apply to particular officers or
directors (such as restrictions under Section 16 of the Securities Exchange Act
of 1934).
o Short Sales--Short sales of Mellon securities by associates are prohibited.
o Sales Within 60 Days of Purchase--Sales of Mellon securities within 60 days
of acquisition arE prohibited. For purposes of the 60-day holding period,
securities will be deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the other, or if the value
of one is expressly dependent on the value of the other (e.g., derivative
securities).
In cases of extreme hardship, associates (other than senior management) may
obtain permission to dispose of Mellon securities acquired within 60 days of the
proposed transaction, provided the transaction is precleared with the Manager of
Corporate Compliance and any profits earned are disgorged in accordance with
procedures established by senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period restriction in the event
of severe market disruption.
o Margin Transactions--Purchases on margin of Mellon's publicly traded
securities by associates iS prohibited. Margining Mellon securities in
connection with a cashless exercise of an employee stock option through the
Human Resources Department is exempt from this restriction. Further, Mellon
securities may be used to collateralize loans or the acquisition of
securities other than those issued by Mellon.
o Option Transactions--Option transactions involving Mellon's publicly traded
securities are prohibited. Transactions under Mellon's Long-Term Incentive
Plan or other associate option plans are exempt from this restriction.
o Major Mellon Events--Associates who have knowledge of major Mellon events
that have not yet beeN announced are prohibited from buying and selling
Mellon's publicly traded securities before such public announcements, even
if the associate believes the event does not constitute material nonpublic
information.
o Mellon Blackout Period--Associates are prohibited from buying or selling
Mellon's publicly tradeD securities during a blackout period, which begins
the 16th day of the last month of each calendar quarter and ends three
business days after Mellon publicly announces the financial results for that
quarter. In cases of extreme hardship, associates (other than senior
management) may request permission from the Manager of Corporate Compliance
to dispose of Mellon securities during the blackout period.
BENEFICIAL OWNERSHIP--The provisions discussed above apply to transactions in
the associate's own name and to all other accounts over which the associate
could be expected to exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom substantial
support is contributed;
o accounts of any other member of the associate's household (e.g., a relative
living in the same home);
o trust accounts for which the associate acts as trustee or otherwise
exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by the associate;
o arrangements similar to trust accounts that are established for bona fide
financial purposes and benefit the associate; and
o any other account for which the associate is the beneficial owner.
<PAGE>
EXHIBIT A
REQUEST FOR APPROVAL OF SECURITY TRANSACTION
IN PERSONAL ACCOUNT
NAME: __________________________________________________________________________
DATE: ___________________________________
BUY: ___________________ SELL: ___________________
AMOUNT OR SHARES: ____________________________ PRICE: _________________________
NAME OF SECURITY: ______________________________________________________________
BROKER: _______________________________________
*Address: _____________________________________
_____________________________________
*Telephone: ___________________________________
*Account No.: ___________________ *Registered Owner: __________________________
THIS IS A NEW ISSUE: _______ YES ________ NO
THIS IS A SECONDARY: _______ YES ________ NO
I have not acted on inside information.
I have verified that the security described above is not being considered for
purchase or sale by a Client or Fund and is not being purchased or sold by a
Client or Fund. I have further verified that the security has not been purchased
or sold by a Client or Fund at any time during the SEVEN days prior to the date
set forth above.
EMPLOYEE SIGNATURE: ___________________________________________________________
CONFIRMATION THAT SECURITY HAS NOT BEEN PURCHASED OR SOLD WITHIN PRIOR SEVEN
DAYS:
_____________________________________
_____________________________________ Date: ________________________________
Trading Department
APPROVED BY: ________________________** Date: ________________________________
Approval Officer
* Complete if not previously provided.
** The Approval Officer Line must be signed by Tom Arrington, Rob Ammann, Scott
Chapman, or Doug Loeffler. Transactions must be approved by an Approval Officer
other than the employee effecting the transaction. No other Founders personnel
are authorized to approve this transaction.
<PAGE>
EXHIBIT B
NOTIFICATION OF INTENTION TO ENGAGE IN
DE MINIMIS TRANSACTION
NAME: __________________________________________________________________________
DATE: __________________________________________________________________________
BUY: __________ SELL: __________
AMOUNT OR SHARES: ________________________________ (cannot exceed the greater of
100 shares or $5,000 per transaction)
NAME OF SECURITY: ______________________________________________________________
BROKER: _____________________________________________
*Address: ___________________________________________
___________________________________________
*Telephone: _________________________________________
*Account No.: _________________ *Registered Owner: _________________________
I have not acted on inside information.
I am not involved in buying or selling this security for any Founders mutual
fund or private account client.
I have attached information confirming that this security is issued by a company
with a market capitalization of at least $1 billion and has an average daily
trading volume of at least 100,000 shares.
EMPLOYEE SIGNATURE: ____________________________________________________________
ACKNOWLEDGED:
_________________________________ Date: ____________________________________
Legal Department
*Complete if not previously provided.
<PAGE>
EXHIBIT C
APPROVAL FORM FOR TRIPS
WHERE A PORTION OF THE COST IS PAID BY A THIRD PARTY
Name of Founders Employee: _____________________________________________________
Name of Person or Entity paying for any portion of the trip: ___________________
________________________________________________________________________________
Type of Entity:
[ ] broker
[ ] publicly traded company
[ ] person or entity with which Founders may have a current or anticipated
business relationship
[ ] other
Purpose for trip: ______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The foregoing trip is hereby:
[ ] Approved [ ] Disapproved
FOUNDERS ASSET MANAGEMENT LLC
By: _________________________* By: _________________________*
Dated: ______________________ Dated: ______________________
* Must be signed by Department Manager and Founders Chief Executive Officer.
<PAGE>
EXHIBIT D
APPROVAL FORM FOR OUTSIDE EMPLOYMENT OR
BUSINESS ACTIVITY
Name of Founders Employee: _____________________________________________________
Name of Outside Employer: ______________________________________________________
(If self-employed, please so indicate.)
Type of Business: ______________________________________________________________
Brief Job Description: _________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Typical Weekly Work Schedule: __________________________________________________
________________________________________________________________________________
The foregoing employment/business activity is hereby:
[ ] Approved [ ] Disapproved
FOUNDERS ASSET MANAGEMENT LLC
By: ______________________________*
Dated: ___________________________
CC: Department Manager of Employee
Human Resources
* Must be signed by Founders Chief Executive Officer or Ken Christoffersen
following consultation with Department Manager.
<PAGE>
EXHIBIT E
NOTIFICATION OF POSSIBLE SECURITY TRANSACTION
BY
INVESTMENT CLUB OR SIMILAR ENTITY
Name of Investment Club: _______________________________________________________
Name of Employee: ______________________________________________________________
Name of Family Member: _________________________________________________________
Name of Security: ______________________________________________________________
[ ] Buy
[ ] Sell
Employee Signature: ____________________________________________________________
Date: __________________________________________________________________________
This form must be acknowledged by Tom Arrington, Rob Ammann, Scott Chapman, or
Doug Loeffler, and returned to the Legal Department.
ACKNOWLEDGED:
___________________________
Approval Officer
<PAGE>
EXHIBIT F
FOUNDERS ASSET MANAGEMENT LLC
CODE OF ETHICS
INITIAL REPORT
By my signature below, I certify that I have received and read a copy of the
Code of Ethics for Founders Asset Management LLC (the "Code"), including,
without limitation, the Policy Statement on Insider Trading, and that I
understand the provisions and requirements of the Code as they apply to me. In
addition, I certify that the information provided herein with respect to
brokerage accounts and securities holdings is accurate and complete. I agree to
comply with all of the terms and provisions of the Code which are applicable to
me, and to disclose or report all personal securities transactions and other
information required to be disclosed or reported pursuant to the requirements of
the Code.
BROKERAGE ACCOUNTS. [Applicable to all employees.] The information provided
below is for all brokerage accounts in which I or any member of my household has
any direct or indirect beneficial ownership. I agree to notify the Legal
Department within ten days of the establishment of a new brokerage account not
previously reported to the Legal Department.
[ ] I have no brokerage accounts to report at this time.
[ ] The following brokerage accounts are maintained by me or a member of my
household (use additional copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ________________________________________ Telephone: __________________
Registered Owner Designation: ____________________ Account No.: ________________
SECURITIES. [Applicable to Access Persons only.] The information provided below
is for all securities in which I or any member of my household has any direct or
indirect beneficial ownership.
[ ] I have no securities to report at this time.
[ ] The following securities are ones in which I or a member of my household
have direct or indirect beneficial ownership (use additional copies of this
form if necessary):
Name of Ticker Number Date Transaction Price Principal Amount
Security Symbol of Shares Purchased (Equity Security) (Debt Security)
- -------- ------ --------- --------- ----------------- ----------------
Employee Signature ____________________________________ Date: _________________
Print Name: __________________________________________
<PAGE>
<TABLE>
<CAPTION>
REPORT OF OCCURRENCE OF SECURITIES TRANSACTIONS EXHIBIT G
AND INITIATION OF BROKERAGE ACCOUNTS WITHIN LAST CALENDAR QUARTER
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | INTEREST | | | |
| | | | | RATE/ | TRANSACTION | PRINCIPAL | |
| | | | DATE | MATURITY | PRICE | AMOUNT | |
| AMOUNT OR | | TICKER | | DATE (IF | (EQUITY | (DEBT | |
| SHARES | SECURITY NAME | SYMBOL | BOUGHT SOLD | APPLICABLE) | SECURITY) | SECURITY) | NAME OF DEALER OR BANK |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
</TABLE>
The above is a record of one or more purchase or sale transactions in securities
in which I have acquired or disposed of a direct or indirect beneficial
ownership in the last calendar quarter, as more fully defined in the Fund's and
Founders' Codes of Ethics.
BROKERAGE ACCOUNTS. In the past quarter, I established the brokerage account(s)
described below, which have not previously been reported to the Legal
Department.
[ ] I have no brokerage accounts to report at this time.
[ ] The following brokerage accounts have been established in the last
calendar quarter and are maintained by me or a member of my household (use
additional copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ____________________________________________ Telephone: ______________
Registered Owner Designation: _______________________ Account No.: ____________
Date of Establishment of Account: ___________________
DATE: ___________________________ SIGNATURE: _______________________________
Print Name: ______________________________
Note 1. If the transaction is other than a sale or purchase, please explain
the transaction on a separate page.
Note 2. If no broker or bank was involved in the transaction, describe on a
separate page the circumstances surrounding the transaction and the
manner in which the transaction was executed.
Note 3. If a broker was involved in the transaction, a copy of the broker's
confirmation of the transaction is attached or has previously been
received by Founders' Legal Department.
Note 4. This report shall not be construed as an admission by me that I have
acquired any direct or indirect beneficial ownership in the securities
involved in the transactions reported, which have been marked by me
with an asterisk(*). Such transactions are reported solely to meet the
standards imposed by Rule 17j-1 under the Investment Company Act of
1940.
<PAGE>
<TABLE>
<CAPTION>
REPORT OF SECURITIES OWNERSHIP EXHIBIT H
REPORT OF ESTABLISHMENT OF BROKERAGE ACCOUNTS
FOR CALENDAR YEAR ENDING DECEMBER 31, _____
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
| | | | | | CHECK TYPE OF ACCOUNT |
| AMOUNT OR | | DATE | TRANSACTION | PRINCIPAL | |
| SHARES | SECURITY NAME | BOUGHT | PRICE (EQUITY | AMOUNT (DEBT | HOUSEHOLD FIDUCIARY OR OTHER |
| | | | SECURITY) | SECURITY) | PERSONAL MEMBER BENEFICIAL OWNERSHIP |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
</TABLE>
The above is a listing of every security in which I have any direct or indirect
beneficial ownership as of the end of the above-described calendar year, as more
fully defined in the Fund's and Founders' Codes of Ethics.
BROKERAGE ACCOUNTS. I currently have the brokerage account(s) described below.
[ ] I have no new brokerage accounts to report at this time.
[ ] The following brokerage accounts have been established and are maintained
by me or a member of my household (use additional copies of this form if
necessary):
Name of brokerage firm: ________________________________________________________
Address: ____________________________________________ Telephone: ______________
Registered Owner Designation: _______________________ Account No.: ____________
Date of Establishment of Account: ___________________
DATE: ___________________________ SIGNATURE: _______________________________
Print Name: ______________________________
Note 1. This report shall not be construed as an admission by me that I have
acquired any direct or indirect beneficial ownership in the securities
listed above which have been marked by me with an asterisk(*). Such
transactions are reported solely to meet the standards imposed by Rule
17j-1 under the Investment Company Act of 1940.
<PAGE>
EXHIBIT I
FOUNDERS ASSET MANAGEMENT LLC
CODE OF ETHICS COMPLIANCE CERTIFICATION
By my signature below, I certify that I have received and read a copy of the
Code of Ethics for Founders Asset Management LLC (the "Code"), including,
without limitation, the Policy Statement on Insider Trading, that I understand
the requirements of the Code, and that I recognize that I am subject to the
provisions of the Code. I also certify that as of the date below, I have
complied with the requirements of the Code and have disclosed or reported all
personal securities transactions and other information required to be disclosed
or reported pursuant to the requirements of the Code.
Employee Signature ______________________________ Date ________________________
Print Name ______________________________________
<PAGE>
NEWTON
PERSONAL ACCOUNT
DEALING RULES
AND
CODE OF ETHICS
CONTENTS:
A BACKGROUND
1. Why do these rules exist?
B GENERAL APPLICATION
2. Who do these rules apply to?
3. Access Persons
4. What transactions do these rules cover?
5. Derivatives
6. Investment Clubs
7. Spread Betting
C DEALING IN MELLON SECURITIES
8. Dealing Restrictions
9. Knowledge of Major Mellon Events
10. Mellon Closed Period
D NEWTON POLICY & YOUR OBLIGATIONS
11. Newton Policy
12. Your Obligations
E ESTABLISHING & OPERATING YOUR PERSONAL ACCOUNT
13. Dealing Methods
14. In House - Quasar Account
15. In House - Execution Only
16. In House - Discretionary Accounts
17. External Broker
F OBTAINING APPROVAL TO DEAL
18. Completing a PA Deal Slip
19. Obtaining Approval to Deal
G GENERAL DEALING RESTRICTIONS
20. 60-Day Trading Profit Prohibition
21. Black Out Period
22. De Minimis Exemption
H DISGORGEMENT POLICY
23. What is disgorgement and why do we have it?
24. How does it work?
I PRIVATE PLACEMENTS AND IPOS
25. Definitions
26. The Approval Process
J INVESTMENT ETHICS COMMITTEE ("IEC")
27. Purpose of IEC
28. Operation of IEC
K CONTEMPORANEOUS DISCLOSURE
29. Purpose of the Requirement
30. How does it work?
31. De Minimis Exemption
L HOLDINGS & TRANSACTION REPORTS
32. The Requirement
33. What is Covered by this Requirement
34. Initial Holdings Report
35. Quarterly Transaction Report
36. Annual Holdings Report
M MONITORING COMPLIANCE WITH THESE RULES
37. Internal Monitoring
38. UK Regulators
39. US Regulators
40. Clients
===============================================================================
IMPORTANT NOTICE:
FAILURE TO COMPLY WITH THESE RULES IS A BREACH OF YOUR CONTRACT OF
EMPLOYMENT WITH NEWTON. A SERIOUS BREACH WOULD BE TREATED AS GROSS
MISCONDUCT IN ACCORDANCE WITH THE NEWTON DISCIPLINARY POLICY AND
COULD LEAD TO DISMISSAL.
FURTHERMORE, A BREACH OF THESE RULES MAY ALSO BE A BREACH OF THE
IMRO RULES OR US REGULATIONS. REGISTERED INDIVIDUALS ARE REMINDED
THAT IMRO HAS UNLIMITED POWERS TO DISCIPLINE INDIVIDUALS FOR
BREACHES OF THEIR RULES. ALSO, US REGULATORS (E.G. THE SEC AND THE
FEDERAL RESERVE BANK) HAVE POWERS TO SANCTION FIRMS AND INDIVIDUALS
WHO VIOLATE THEIR REGULATIONS.
===============================================================================
A. BACKGROUND
1. WHY DO THESE RULES EXIST?
1.1. Newton, together with all investment management companies in the UK,
has an obligation to ensure that its staff comply with the financial
services industry code of conduct in respect of dealing in investments
on their personal account. In the UK this code is embodied in the IMRO
rules and is strictly enforced by Newton.
1.2. As a part of Mellon Financial Corporation ("Mellon") and as managers
of US client portfolios, Newton is also required to comply with a
number of US regulations which impact on personal account dealing ("PA
dealing") activities.
1.3. The main aim of the rules is to ensure that when employees of
investment management companies deal on their own accounts they do not
conflict with their employer's fiduciary responsibility to its
clients. In other words, clients' interests must always come first,
ahead of those of Newton staff.
1.4. It is impossible to lay down detailed rules to suit all situations and
members of staff will be expected to use their own common sense in
applying these rules. It is important that we comply with the spirit
as well as the letter of the regulations. If in doubt please contact
the Compliance department or the Dealing director.
B. GENERAL APPLICATION
2. WHO DO THESE RULES APPLY TO?
2.1. NEWTON DIRECTORS AND EMPLOYEES - The rules apply to all directors and
employees of Newton. This includes non-executive directors and
contractors/consultants working on-site for prolonged periods and any
other individuals who, through their involvement with Newton, are
likely to come into contact with the company's investment information.
-----------------------------------------------------------
PLEASE NOTE THAT THROUGHOUT THESE RULES ANY REFERENCES TO PA
DEALS ALSO INCLUDE DEALS EXECUTED ON BEHALF OF CONNECTED PERSONS.
-----------------------------------------------------------
2.2. CONNECTED PERSONS - The securities holdings and transactions of
"Connected Persons" also come within these rules. Connected Persons
are essentially close relatives and associates of the staff member.
The IMRO Rules give the following definition:
"anyone connected by reason of a domestic or business
relationship ..... such that the officer or employee has influence
over that person's judgement as to how to invest his property or
exercise any rights attaching to his investments."
This definition would obviously include partners and minor
children but goes beyond this to include anyone that an employee could
in some way influence or control. This could include, for example, a
trust of which a member of staff is a trustee. If you are in any doubt
as to who falls within this definition you should contact the
Compliance department for clarification.
Please note that although it is necessary to report all dealings
for Connected Persons it may not be appropriate/permissible for their
deals to be executed through the in-house dealing facility. In this
case you should comply with the requirements of paragraph 17 in
respect of using external brokers.
2.3. TEMPORARY STAFF - Temporary staff are not entitled to use the in-house
dealing facility but must comply with paragraph 17 in respect of
dealings with external brokers.
3. ACCESS PERSONS
3.1. Under US regulations we are required to maintain a register of those
members of staff who are classified as Access Persons for the purposes
of the US Investment Company Act of 1940. Access Persons are
essentially any individuals who are involved in making investment
decisions, or are aware of them being made, for US Investment
Companies (Mutual Funds), for example:
- Research analysts & fund managers
- Dealers (Including the Allocations team)
- Trade Operations staff
- Directors and officers of Newton Capital
Management Limited
3.2. If you are an Access Person you will be notified accordingly. At
present, the only additional obligation under these rules, for
individuals classified as Access Persons, is the requirement to
produce holdings reports in accordance with Section L of these rules.
4. WHAT TRANSACTIONS DO THESE RULES COVER?
4.1. The rules cover the purchase and sale of all investments on your own
account or the account of a Connected Person unless specifically
excluded.
4.2. Examples of investments covered by the rules:
- Shares (of any class, listed & unlisted)
including shares in Investment Trusts and the Newton
Corporate Money Fund Limited.
- Bonds, debentures and UK government securities
(i.e. gilts)
- Warrants
- Futures, options & contracts for differences
- Units in unauthorised unit trusts
- Securities listed above held through a PEP or ISA.
This list is not exhaustive. If you have any
queries, please contact Compliance for clarification.
4.3. Investments to which the rules do not apply:
- Units in authorised unit trusts and shares in
OEICs incorporated in the UK
- Life assurance policies
5. DERIVATIVES
5.1. For the purposes of these rules derivatives include futures, options
and contracts for difference.
5.2. Mellon discourages employees from engaging in short-term or
speculative trading.
5.3. Newton does not have a facility for operating futures and options
accounts for staff members. Accordingly, if you wish to deal in these
securities you will need to establish your own dealing arrangements
with an external broker. Please ensure that you follow the
requirements of paragraph 17 below.
6. INVESTMENT CLUBS
6.1. These rules cover situations where a staff member (or Connected
Person) is the beneficiary of a joint investment arrangement and is
involved in the investment decision making process in respect of that
arrangement e.g. Investment Clubs where a number of individuals pool
their cash and make collective investment decisions to deal in
investments (as defined in paragraph 4.2 of these rules).
6.2. Staff members involved in such arrangements should follow the
requirements of paragraph 17 of these rules.
7. SPREAD BETTING
7.1. These rules cover situations where staff members (or Connected
Persons) are involved in spread betting arrangements (e.g. IG Index)
where the bet is based on investments (as defined in paragraph 4.2 of
these rules).
7.2. Staff members involved in such arrangements should follow the
requirements of paragraph 17 of these rules.
C. DEALING IN MELLON SECURITIES
8. DEALING RESTRICTIONS
8.1. Staff who deal in securities issued by Mellon Financial Corporation
("Mellon securities") should be aware of the sensitivities relating to
such transactions and need to avoid any suggestion of impropriety.
8.2. The following restrictions apply to all PA dealing activity (including
Connected Persons) in Mellon's publicly traded securities:
8.2.1. Short sales (i.e. the sale of a security which you do not own
at the time of the sale) of Mellon securities are prohibited.
8.2.2. Purchases of Mellon securities on margin are prohibited.
8.2.3. Option transactions involving Mellon securities are prohibited
(NB: separate arrangements exist for the sale of share options
granted under employee incentive schemes).
9. KNOWLEDGE OF MAJOR MELLON EVENTS
9.1. Staff who have knowledge of major Mellon events are prohibited from
dealing in Mellon securities before the event is publicly announced.
This restriction applies even if you believe that the event does not
constitute price sensitive information.
10. MELLON CLOSED PERIOD
10.1. Staff are prohibited from dealing in Mellon securities during a
closed period. Closed periods begin on the 16th day of the last month
of each calendar quarter and end three business days after Mellon
publicly announces the financial results for that quarter.
D. NEWTON POLICY & YOUR OBLIGATIONS
11. NEWTON POLICY
Newton staff may deal on their own account provided that the following
principles are observed:
11.1. Client conflicts are always avoided regardless of any disadvantage
that may arise to the staff member.
11.2. Investment decisions are made prudently without excessive financial
outlay or exposure to unreasonable personal risk.
11.3. Personal account dealing must not interfere with your normal duties.
You should be aware that such transactions involve other staff, such
as the dealers and the trade operations section, in extra work and you
should be careful not to deal in such a way as to disrupt these people
in the performance of their duties. Client interests are paramount. In
circumstances where the processing of staff transactions may affect
the timely handling of client orders, staff deals will be deferred
until adequate resources are available.
12. YOUR OBLIGATIONS
12.1. Read and understand these rules. If you are unclear about any aspect
of the rules you should contact Compliance for clarification.
12.2. Follow the procedures set out in these rules for arranging your PA
deals. Please remember that "PA deals" include deals for Connected
Persons.
12.3. Do not deal on insider information (see Compliance Manual module 3).
Dealing on inside information is a criminal offence which carries
severe penalties with a maximum of an unlimited fine and 7 years
imprisonment.
12.4. Ensure that to the best of your knowledge your decision to deal will
not conflict with the interests of any Newton clients. Dealing ahead
of known or expected client deals would be treated as a conflict of
interest.
12.5. Comply with the dealing restrictions set out in Section G below.
12.6. Do not transact directly with clients who have portfolios under
discretionary management with Newton.
E. ESTABLISHING & OPERATING YOUR PERSONAL ACCOUNT
13. DEALING METHODS
13.1. All staff are expected to deal in-house. There are 3 types of
in-house arrangements and these are described below.
13.2. In exceptional circumstances (e.g. investment in a product that
Newton does not offer) Compliance may grant permission to deal with an
external broker. Permission will not be granted on the grounds of a
cheaper service being available through an external broker. The rules
relating to external brokers are in paragraph 17 below.
13.3. A dealing charge (currently (pound)15) is levied on all in-house
deals. Staff should be aware that dealings in certain instruments and
in certain markets can entail more work and expense to the company.
Newton retains the right to levy a higher than the standard charge in
these circumstances to recoup these extra costs.
14. IN HOUSE - QUASAR ACCOUNT
14.1. The in-house dealing facility is only available to members of staff
and their immediate families (i.e. spouses, including common law
partners, and dependent children). You may operate accounts in the
name of these family members but you are not permitted to operate more
than one account in your own name.
14.2. Before you can commence PA dealing you must first open a Quasar
account (Quasar is the computerised investment accounting system used
by Newton). The procedure for opening an account simply involves
contacting the Standing Data Supervisor (PIM Operations team,
Edinburgh) who will arrange for an account to be set up and will
notify you of your Quasar account number. You must quote your Quasar
account number on all PA Deal Slips.
14.3. Quasar account names should clearly identify the beneficial owner of
the account. You are not permitted to share Quasar accounts with other
individuals (staff or non staff).
14.4. Cash Management - As your Quasar account forms part of the Newton
general clients pooled account, IT IS IMPERATIVE THAT YOUR ACCOUNT
DOES NOT BECOME OVERDRAWN. To minimise the risk of an overdraft, the
following requirements apply:
14.4.1. You must ensure that sufficient cash is always available to
meet any transaction obligations.
14.4.2. Unless you are funding a purchase through the sale of another
security (see 14.4.3 below), sufficient cash must be in your
account on the day a purchase transaction is actually effected.
YOU CANNOT WAIT UNTIL THE SETTLEMENT DATE TO PROVIDE FUNDS.
14.4.3. If you are selling a holding to raise funds to pay for a
purchase (or to make a cash withdrawal) you must allow two clear
business days after the sale transaction is due to settle before
the purchase transaction settlement date (or withdrawing the
cash). You are responsible for checking that the sale proceeds
have arrived into your account before the purchase
transaction/cash withdrawal is paid for/made. If funds have not
been received then you will be required to fund the shortfall
forthwith (or be prohibited from withdrawing the cash).
14.4.4. Special care should also be taken to ensure that adequate
funds are available, at least two clear business days, before
payment is due, to meet any cash obligations e.g. calls on part
paid shares or warrants.
14.4.5. You are not able to offset shortfalls in one account with
credit balances in a related account (e.g. your spouses account).
Each account must be treated independently for the purposes of
avoiding overdrafts.
14.5. Please note that with a Quasar account your assets will be held in
safe custody by the Bank of New York (Europe) along with those of
Newton clients.
15. IN HOUSE - EXECUTION ONLY
15.1. This arrangement exists for staff wishing to sell securities where
they already hold the share certificates (i.e. not held through
Quasar).
15.2. Because of the extra work required to process these deals, and the
subsequent cost to the firm, the purchase of securities through this
arrangement is discouraged and will only be permitted in exceptional
circumstances.
15.3. When completing a PA Deal slip (see paragraph 18 below) you will need
to record the fact that you do not hold the security on Quasar.
Certificates and stock transfer forms must be passed to the
Transitions Manager on the day that the deal is effected. You will
receive contract notes and payment by cheque directly from the
brokers.
15.4. Where permission has been given to register stock in your own name
outside of the Quasar system, you should provide details of your full
name and address in the appropriate section of the PA Deal slip.
16. IN HOUSE - DISCRETIONARY ACCOUNTS
16.1. A staff member may become a discretionary portfolio management client
of Newton. In this case staff must sign a full client agreement and
the fee basis will be subject to negotiation. The portfolio will be
managed on a discretionary basis by a fund manager (other than the
staff member) and will rank equally with other discretionary clients.
16.2. The staff member should in no way seek to influence the fund manager
as regards specific investment decisions. Staff portfolios managed in
this way will not be subject to these PA dealing rules (other than
Section L).
17. EXTERNAL BROKER
17.1. In order to utilise the services of an external broker staff must
comply with the conditions set out below.
17.1.1. You must obtain prior consent from Compliance to use the
services of an external broker.
17.1.2. You must inform the broker that you are an employee of Newton.
17.1.3. You must instruct the broker to forward a copy contract note
in respect of every deal directly to the Newton Compliance
department forthwith upon completion of the trade.
17.1.4. You are not permitted to accept from the broker any credit or
special dealing services without first receiving specific consent
from the Newton Compliance department.
17.1.5. For each transaction, before instructing the broker to deal,
you must complete the "External Broker Approval Form" which will
enable the Dealing director to check that your proposed deal will
not conflict with any known client deals.
F. OBTAINING APPROVAL TO DEAL
18. COMPLETING A PA DEAL SLIP
18.1. Before the transaction can be arranged you will need to complete a PA
Deal slip (blue for purchase, pink for sale) which is available from
the Dealing Room in London. Please ensure that you give full details
of the stock that you intend to deal in. If a deal is done in the name
of a Connected Person, the name of the member of staff must also be
stated on the deal slip.
18.2. Staff members with portfolio management responsibilities for US
Investment Companies (Mutual Funds) will also be required to complete
a separate declaration form before the transaction can be arranged.
18.3. You are required to sign the declaration on the PA Deal slip for each
deal. You have a duty to report any potential conflicts with clients'
interests that you are aware of to the Dealing director at the time
you are seeking approval to deal. Specific examples of such conflicts
include:
o Research personnel making a recommendation that could reasonably
be expected to result in a transaction for a client portfolio in
respect of the stock that they are seeking approval to deal for
their own account.
o Fund managers who are contemplating dealing on behalf of clients
in a stock that they are seeking approval to deal in.
o Other staff who may have become aware of any intention of Newton
to trade in a stock in which they seek approval to deal.
18.4. This list is not exhaustive. If you are uncertain about the risk of
such a conflict of interest please obtain clarification from the
Dealing director or Compliance.
19. OBTAINING APPROVAL TO DEAL
19.1. The completed PA Deal slip must be forwarded to the Dealing director
who will ensure that, as far as he is aware:
19.1.1. There is no conflict of interest between the member of staff
and any client or between the company and a client.
19.1.2. There are no outstanding deals to be executed for a client in
that investment.
19.2. In the Dealing director's absence, approval can be obtained from his
appointed deputy. If neither is available you should contact the
Compliance department.
G. GENERAL DEALING RESTRICTIONS
20. 60-DAY TRADING PROFIT PROHIBITION
20.1. This restriction applies to all securities covered by these rules (as
defined in paragraph 4.2) with the exception of the following:
- UK Government Bonds (Gilts)
- Shares in Newton Corporate Money Fund Limited
20.2. You are prohibited from retaining a profit from:
- A purchase and subsequent sale of the same or an equivalent
security if the stock has been held for less than 60-calendar
days.
- A sale and subsequent purchase of the same or an equivalent
security if less than 60-calendar days has passed since the sale.
20.3. For this purpose, securities will be deemed equivalent if one is
convertible into the other or one entails a right to purchase or sell
the other; or if the value of one is expressly dependent on the value
of the other (e.g. derivative securities).
20.4. The 60-day rule does not prohibit dealing within that period but you
cannot benefit from any profit made on transactions where the purchase
or sale was within 60 days of the related sale or purchase. You can
close out a loss during that period in which case, as no profit has
been realised, no profit is forfeited.
20.5. Where a profit arises from a transaction during the 60-calendar day
period the Disgorgement Policy will be invoked in order to deal with
the prohibited profit (see Section H below for details).
21. BLACK OUT PERIOD
21.1. This rule only applies to staff members with portfolio management
responsibilities for US Investment Companies (Mutual Funds). You will
be formally notified if this rule applies to you.
21.2. You are prohibited from dealing in a security during the period of 7
days before and 7 days after a deal ("the Black Out Period") in the
same security has been executed for the US Mutual Fund for which you
have portfolio management responsibilities.
21.3. For example, if the fund purchases/sells the same security 5 days
after you sold your holding, you will be required to "give up" any
profit made (realised or unrealised) during the Black Out Period in
addition to any other appropriate sanctions. This will be calculated
in accordance with the Newton Disgorgement Policy (see Section H below
for details).
21.4. Certain securities are exempted from this prohibition if they qualify
under the de minimis exemption set out in paragraph 22 below. If you
are intending to use this exemption you must indicate this in the
appropriate section of the dealing slip.
22. DE MINIMIS EXEMPTION
22.1. A security would be exempt from the restrictions imposed under the
Black Out Period if they qualify under the criteria set out below.
o The PA transaction is less than(pound)15,000 in value, and
o The security is issued by a company which is a component of
either the FTSE 350 or the FT S&P World Index.
22.2. An up to date list of the companies which make up these indices is
kept in the Dealing Room.
H. DISGORGEMENT POLICY
23. WHAT IS DISGORGEMENT AND WHY DO WE HAVE IT?
23.1. Disgorgement is the process whereby profits made on PA deals during
restricted periods are "given up" by the staff member. In some
instances this may include unrealised profits e.g. a PA purchase which
retroactively falls into a Black Out Period where the staff member
still holds the security.
23.2. In order to efficiently operate the 60-day trading profit prohibition
there needs to be a mechanism which allows staff to deal during these
periods (e.g. so that staff are not locked into loss making positions)
whilst maintaining the integrity of the dealing restriction.
24. HOW DOES IT WORK?
24.1. Where you have made a profit from a PA deal during a restricted
period you are required to notify the Compliance Officer of this fact.
The Compliance department will be closely monitoring PA dealing
activity to test for adherence to this requirement.
24.2. The Compliance Officer is responsible for determining the formula for
calculating any profit on a deal and he will inform you of his
findings. Each case will be considered on its own merits but every
effort will be made to ensure that staff are not disadvantaged (other
than forgoing the profit) as a result of this policy.
24.3. If you are not satisfied with the method used to calculate the profit
figure you have a right of appeal to the Personnel Director whose
decision will be final.
24.4. The profit will be paid to a charity of your choice.
I. PRIVATE PLACEMENTS & IPOS
25. DEFINITIONS
25.1. Private Placement - for the purposes of these rules a Private
Placement is an issue that is offered to a limited number of investors
as opposed to being publicly offered. This definition is deliberately
widely drawn and ranges from a placing in large quoted company to an
investment in a small private concern e.g. a joint venture between
yourself and a friend or relative.
25.2. Initial Public Offering ("IPO") - for the purposes of these rules an
IPO is the first offering to the general public of equity securities
in a company. This definition is deliberately widely drawn and
includes all types of public offers and new issues.
26. THE APPROVAL PROCESS
26.1. If you are planning to purchase securities through an IPO or a
Private Placement, you will need to apply to the Compliance Officer
(using the "IPO/Private Placement Request" form) for prior approval to
participate in the issue.
26.2. In some cases it may be necessary for the Compliance Officer to refer
the matter to the Investment Ethics Committee (see Section J below).
26.3. You must allow at least three clear business days between the date
that you notify the Compliance Officer and the date that you need to
confirm your intention to participate in the offering. This is to
allow time for the matter to be referred to the IEC if necessary.
26.4. You are not permitted to confirm your participation in the issue
until you have received the express approval of the Compliance Officer
or the IEC.
26.5. You are required to notify the Compliance Officer of your allotment
once this has been formally notified to you.
J. INVESTMENT ETHICS COMMITTEE ("IEC")
27. PURPOSE OF THE IEC
27.1. The purpose of the IEC is to provide an independent review of any PA
dealing related transaction which may involve a conflict of interest
between a staff member and clients. Examples are listed below.
o PA dealing in IPO's and Private Placements where it is felt that a
potential conflict of interest exists e.g. there is a possibility that
Newton will invest in the company in the future.
o Situations where a Contemporaneous Disclosure (see Section K) has been
made and the Compliance Officer is concerned that a conflict of
interest may have arisen.
o Other PA dealing related situations where there is a potential risk of
criticism of the actions of a fund manager so an independent review
would be advantageous.
28. OPERATION OF THE IEC
28.1. The IEC will meet as required to review situations which require an
independent assessment.
28.2. The IEC will report directly to the Executive Committee who will also
operate as an appeal body, should this be necessary.
28.3. The quorum for an IEC meeting will be three. The meeting will be
chaired by the Compliance representative, the second representative
will have investment experience and the third representative will be
from an independent business area.
28.4. Meetings will be minuted and the findings of the committee will be
reported to the staff member within one business day of the meeting.
K. CONTEMPORANEOUS DISCLOSURE
29. PURPOSE OF THIS REQUIREMENT
29.1. This rule only applies to staff with portfolio management
responsibilities.
29.2. The purpose of this requirement is to ensure that any potential
conflicts of interest between staff and their clients are clearly
disclosed so that they can be assessed and dealt with appropriately.
29.3. This requirement differs from other rules in this area in that the
disclosure obligation applies at the time of dealing for clients
rather than at the time of the PA deal.
30. HOW DOES IT WORK?
30.1. Staff with portfolio management responsibilities must complete a
"Notice of Personal Account Holding" form prior to making or acting
upon a portfolio recommendation in a security which they own
personally.
30.2. The form includes a self-authorisation sign off whereby you will be
required to confirm that your decision to deal for a client has not
been influenced by the fact that you have a personal interest in the
security.
30.3. The form should be completed prior to the first such portfolio
transaction in the security in each calendar month. For subsequent
transactions in that security in the same month, it is not necessary
to complete another form.
30.4. The completed form should be sent to the Compliance Officer
forthwith. Once this process has been completed you will then be free
to deal in the security for your clients.
30.5. The Compliance Officer may refer the matter to the Investment Ethics
Committee for further review.
31. DE MINIMIS EXEMPTION
31.1. A PA holding would be exempt from this disclosure requirement if it
qualifies under the criteria set out below.
o The PA holding is less than(pound)30,000 in value ((pound)50,000
aggregate where Connected Persons also have a holding), and
o The security is issued by a company which is a component of
either the FTSE 350 or the FT S&P World Index. An up to date list
of the companies which make up these indices is kept in the
Dealing Room.
L. HOLDINGS & TRANSACTION REPORTS
32. THE REQUIREMENT
32.1. The US regulations require that Access Persons (see paragraph 3
above) must submit three types of report to the firm concerning their
PA holdings.
32.2. This requirement is additional to the transaction based approval
process set out in these rules.
33. WHAT IS COVERED BY THIS REQUIREMENT
33.1. All holdings and transactions in securities defined in paragraph 4.2
of these rules.
33.2. For the purposes of this section, portfolios which are managed under
discretion by a third party, in which you (or a Connected Person) have
a beneficial interest, should be included in the reporting process.
34. INITIAL HOLDINGS REPORT
34.1. Within 10 days of joining the firm (or changing roles within the
company that brings them into the Access Persons category), Access
Persons are required to produce a report listing all personal holdings
(Connected Persons included where relevant) in securities covered by
these rules (see paragraph 4.2 above).
34.2. Individuals who are caught by this requirement will be notified of
their obligations together with instructions for completing the
report.
35. QUARTERLY TRANSACTION REPORT
35.1. Within 10 days of the calendar quarter end, Access Persons are
required to provide details of all PA transactions (including those of
Connected Persons where relevant) during the period.
35.2. Where details of PA transactions have already been provided to
Compliance through another process (e.g. dealing through Quasar or an
External Broker in compliance with these rules) it is not necessary
for Access Persons to provide this report. However, if you have
acquired or disposed of securities covered by these rules through some
other method (e.g. you have been gifted shares or received them in a
will settlement) this will need to be reported in a quarterly report.
35.3. Any transactions carried out in respect of portfolios which are
managed under discretion by a third party, in which you (or a
Connected Person) have a beneficial interest, should be included in
this report. An exception to this would be if they have been already
been reported to Compliance (e.g. copy contract notes at the time the
transaction was effected).
36. ANNUAL HOLDINGS REPORT
36.1. Within 30 days of the calendar year end, Access Persons are required
to provide details of all PA holdings, including those of Connected
Persons where relevant (current as of year end).
36.2. The report will be split into four sections: securities held on
Quasar, securities held through a broker, securities held through a
discretionary management arrangement and securities which you hold in
your own name.
36.3. In some cases it will be sufficient to just identify the arrangements
and confirm that all transactions during the period had been reported
in accordance with the PA Dealing rules.
36.4. You will also be required to confirm that you have complied with the
PA dealing rules at all times during the year.
M. MONITORING COMPLIANCE WITH THESE RULES
37. INTERNAL MONITORING
37.1. Under the IMRO Rules, US regulations and our obligations to the Board
of Directors of the US Mutual Funds that we manage, we are required to
actively monitor PA dealing activity.
37.2. The Compliance department will regularly monitor this area to test
adherence to these rules.
38. UK REGULATORS
38.1. IMRO/FSA always take a close interest in PA dealing activity during
their monitoring visits. They will review the adequacy of the
monitoring that we have performed as a company and will carry out
their own tests to assess compliance with the IMRO rules. They always
treat breaches of the rules as serious matters.
38.2. The London Stock Exchange has a Market Surveillance department which
conducts its own monitoring of the market in order to identify
instances of insider dealing. Where they identify suspicious
transactions they will investigate those trades and often this will
involve interviews with the individuals involved.
39. US REGULATORS
39.1. The Newton group has a US registered entity (Newton Capital
Management Limited) which is regulated by the US Securities Exchange
Commission ("SEC"). The SEC enforces compliance with the relevant US
Securities legislation and has the power to sanction UK based firms
and individuals. PA dealing activity is an area that they have
traditionally taken a very close interest in.
39.2. As a part of the Mellon group, Newton is subject to regulation by the
US Federal Reserve Bank. The "Fed" conducts regular visits to Mellon's
overseas subsidiaries and compliance with PA dealing rules is an area
that they will closely examine.
40. CLIENTS
40.1. Under the US Investment Company Act of 1940 the Board of Directors
for each of our US Mutual Fund clients is required to receive annual
reports from the fund manager (Newton) on the firm's compliance with
these PA dealing rules.
Exhibit (a)
Power of Attorney
The undersigned hereby constitute and appoint Mark N. Jacobs, Steven
Newman, Michael Rosenberg, Jeff Prusnofsky, Robert Mullery, Janette Farragher,
Mark Kornfeld and John Hammalian, and each of them, with full power to act
without the other, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her, and in his or her
name, place and stead, in any and all capacities (until revoked in writing) to
sign any and all amendments to the Registration Statement of each Fund
enumerated on Exhibit A hereto (including post-effective amendments thereto),
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
/S/ JOSEPH S. DIMARTINO March 7, 2000
- ----------------------------------
Joseph S. DiMartino
/S/ CLIFFORD L. ALEXANDER March 7, 2000
- ----------------------------------
Clifford L. Alexander
/S/ LUCY WILSON BENSON March 7, 2000
- ----------------------------------
Lucy Wilson Benson
<PAGE>
EXHIBIT A
Dreyfus Institutional Preferred Money Market Fund
Dreyfus Investment Portfolios
The Dreyfus Premier Third Century Fund, Inc.
Dreyfus Retirement Income Fund
The Dreyfus Socially Responsible Growth Fund, Inc.
<PAGE>
Power of Attorney
The undersigned hereby each constitute and appoint Mark N. Jacobs,
Steven F. Newman, Michael A. Rosenberg, Jeff Prusnofsky, Robert R. Mullery,
Janette Farragher, Mark Kornfeld, and John B. Hammalian, and each of them, with
full power to act without the other, her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for her, and in her
name, place and stead, in any and all capacities (until revoked in writing) to
sign any and all amendments to the Registration Statement of each Fund
enumerated on Exhibit A hereto (including post-effective amendments and
amendments thereto), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
/s/ Stephen E. Canter March 22, 2000
- ----------------------
Stephen E. Canter
President
/s/ Joseph W. Connolly March 22, 2000
- ---------------------------------
Joseph W. Connolly
Vice President and Treasurer
<PAGE>
EXHIBIT A
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Intermediate Bond Fund
56) Dreyfus New York Tax Exempt Money Market Fund
57) Dreyfus U.S. Treasury Intermediate Term Fund
58) Dreyfus U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Premier California Municipal Bond Fund
64) Dreyfus Premier Equity Funds, Inc.
65) Dreyfus Premier International Funds, Inc.
66) Dreyfus Premier GNMA Fund
67) Dreyfus Premier Worldwide Growth Fund, Inc.
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Equity Funds
72) Dreyfus Short-Intermediate Government Fund
73) Dreyfus Short-Intermediate Municipal Bond Fund
74) The Dreyfus Socially Responsible Growth Fund, Inc.
75) Dreyfus Stock Index Fund
76) Dreyfus Tax Exempt Cash Management
77) The Dreyfus Premier Third Century Fund, Inc.
78) Dreyfus Treasury Cash Management
79) Dreyfus Treasury Prime Cash Management
80) Dreyfus Variable Investment Fund
81) Dreyfus Worldwide Dollar Money Market Fund, Inc.
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Funds, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Funds, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
Exhibit (b)
DREYFUS INVESTMENT PORTFOLIOS
ASSISTANT SECRETARY'S CERTIFICATE
I, Jeff Prusnofsky, Assistant Secretary of Dreyfus Investment Portfolios (the
"Fund"), hereby certify that set forth below is a copy of the resolutions
adopted by the Board of Trustees of the Fund by Unanimous Written Consent dated
March 7, 2000 as if adopted by the affirmative vote of the Board of Trustees at
a duly constituted meeting and that such resolutions have not been modified or
rescinded and remain in full force and effect on the date hereof, with the
exception that Mark Kornfeld, Assistant General Counsel, resigned his position
as of April 10, 2000:
RESOLVED, that the persons listed on Appendix A hereto are hereby
elected to the offices set forth opposite their respective names,
to serve as officers for the Funds indicated thereon, at the
pleasure of the Board; and it is further
RESOLVED, that such persons shall begin to serve as officers of
the Funds effective on the date the Distribution Agreement
between each Fund and Dreyfus Service Corporation becomes
effective; and it is further
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto may be signed by any one of
Mark N. Jacobs, Steven Newman, Michael Rosenberg, John Hammalian,
Jeff Prusnofsky, Robert Mullery, Janette Farragher and Mark
Kornfeld, as the attorney-in-fact for the proper officers of the
Fund, with full power of substitution and resubstitution; and
that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in connection with such
Registration Statements and any and all amendments and
supplements thereto, as whom he or she is acting as
attorney-in-fact, might or could do in person.
IN WITNESS WHEREOF, I have hereunto signed by name and affixed seal of
the Fund on April 26, 2000.
/S/ JEFF PRUSNOFSKY
-------------------------
Jeff Prusnofsky
Assistant Secretary
<PAGE>
APPENDIX A
DREYFUS INVESTMENT PORTFOLIOS
Stephen E. Canter, President
Mark N. Jacobs, Vice President
Joseph Connolly, Vice President and Treasurer
Steven F. Newman, Secretary
Michael A. Rosenberg, Assistant Secretary
Jeff Prusnofsky, Assistant Secretary
William McDowell, Assistant Treasurer
James Windels, Assistant Treasurer
