Dreyfus Investment Portfolios
Core Bond Portfolio
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
Technology Growth Portfolio
PROSPECTUS May 1, 2000
(reg.tm)
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.
Contents
The Portfolios
- --------------------------------------------------------------------------------
Core Bond Portfolio INSIDE COVER
Core Value Portfolio 3
Emerging Leaders Portfolio 6
Emerging Markets Portfolio 9
European Equity Portfolio 12
Founders Discovery Portfolio 15
Founders Growth Portfolio 18
Founders International
Equity Portfolio 21
Founders Passport Portfolio 24
Japan Portfolio 27
MidCap Stock Portfolio 30
Technology Growth Portfolio 33
Management 36
Financial Highlights 44
Account Information
- --------------------------------------------------------------------------------
Account Policies 50
Distributions and Taxes 51
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIOS' RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolios. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, as to which the portfolios assume no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
Each portfolio has its own investment strategy and risk/return profile. The
differences in strategy among the portfolios determine the types of securities
in which each portfolio invests and can be expected to affect the degree of risk
each portfolio is subject to and its performance.
While the portfolios' investment objectives and policies may be similar to those
of other funds managed by the investment advisers, the portfolios' investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
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.
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.
[Page]
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:
* the prices of foreign bonds can be affected by political and economic
instability or changes in currency exchange rates
* 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.
Core Bond Portfolio
[Page 1]
CORE BOND PORTFOLIO (CONTINUED)
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%
- --------------------------------------------------------------------------------
TOTAL 0.85%
- --------------------------------------------------------------------------------
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.
Core Value Portfolio
[Page 2]
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:
* 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.
* SOUND BUSINESS FUNDAMENTALS: a company's balance sheet and income data are
examined to determine the company's financial history.
* POSITIVE BUSINESS MOMENTUM: a company's earnings and forecast changes are
analyzed and sales and earnings trends are reviewed to determine the
company's financial condition.
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or falls short of the portfolio
manager's expectations.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
LARGE-CAP COMPANIES: established companies that are considered "known
quantities." Large-cap companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
[Page 3]
CORE VALUE PORTFOLIO (CONTINUED)
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
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 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, 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.
[Page 4]
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 (%)
19.73
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '99 +13.16%
WORST QUARTER: Q3 '99 -10.40%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/98)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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.
</TABLE>
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 0.75%
- --------------------------------------------------------------------------------
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%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$102 $425 $771 $1,748
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. 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 5] Core Value Portfolio
Emerging Leaders Portfolio
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.
[Page 6}
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.
[Page 7} Emerging Leaders Portfolio
EMERGING LEADERS PORTFOLIO (CONTINUED)
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 8}
Emerging Markets Portfolio
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 9}
EMERGING MARKETS PORTFOLIO (CONTINUED)
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.
[Page 10}
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 11} Emerging Markets Portfolio
European Equity Portfolio
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 12}
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.
[Page 13} European Equity Portfolio
EUROPEAN EQUITY PORTFOLIO (CONTINUED)
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%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$153 $1,194 $2,234 $4,832
</TABLE>
This example shows what an investor could pay in expenses over time. It uses
the same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. 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 14}
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.
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 15}
FOUNDERS DISCOVERY PORTFOLIO (CONTINUED)
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, 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.
[Page 16}
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 17} Founders Discovery Portfolio
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.
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 18}
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.
[Page 19} Founders Growth Portfolio
FOUNDERS GROWTH PORTFOLIO (CONTINUED)
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 (%)
39.01
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '99 +30.13%
WORST QUARTER: Q3 '99 -4.29%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO 39.01% 57.77%
<S> <C> <C>
S&P 500 BARRA GROWTH 28.25% 45.19%
S&P 500 COMPOSITE 21.03% 35.94%
</TABLE>
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 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%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$102 $600 $1,124 $2,563
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. 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 20]
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.
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 21]
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO (CONTINUED)
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.
[Page 22]
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 (%)
60.69
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '99 +40.36%
WORST QUARTER: Q1 '99 +2.44%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year (9/30/98)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PORTFOLIO 60.69% 63.30%
MSCI WORLD
(EX. US) INDEX 27.93% 41.33%
</TABLE>
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 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%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$153 $943 $1,752 $3,865
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. 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 23] Founders International Equity Portfolio
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.
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 24]
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.
[Page 25] Founders Passport Portfolio
FOUNDERS PASSPORT PORTFOLIO (CONTINUED)
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 (%)
76.05
90 91 92 93 94 95 96 97 98 99
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%
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 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%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$153 $916 $1,701 $3,758
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only. 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 26}
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.
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.
[Page 27}
JAPAN PORTFOLIO (CONTINUED)
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.
[Page 28}
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 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 29} Japan Portfolio
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.
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 30}
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.
[Page 31} MidCap Stock Portfolio
MIDCAP STOCK PORTFOLIO (CONTINUED)
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 (%)
10.82
90 91 92 93 94 95 96 97 98 99
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$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.
</TABLE>
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 32]
Technology Growth Portfolio
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 33]
TECHNOLOGY GROWTH PORTFOLIO (CONTINUED)
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.
[Page 34]
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.
[Page 35] Technology Growth Portfolio
MANAGEMENT
The investment adviser for the portfolios 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. 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.
CORE BOND PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual
management fee of 0.60% of the portfolio' s average daily net assets.
CORE VALUE PORTFOLIO -- 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.
EMERGING LEADERS PORTFOLIO -- 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.
EMERGING MARKETS PORTFOLIO -- 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.
EUROPEAN EQUITY PORTFOLIO -- 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.
FOUNDERS DISCOVERY PORTFOLIO -- 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.
FOUNDERS GROWTH PORTFOLIO -- 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.
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO -- 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.
FOUNDERS PASSPORT PORTFOLIO -- 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.
JAPAN PORTFOLIO -- 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.
MIDCAP STOCK PORTFOLIO -- 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.
[Page 36]
TECHNOLOGY GROWTH PORTFOLIO -- 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 has engaged its affiliate, Founders Asset Management LLC, to serve as
the sub-investment adviser for the Founders Discovery Portfolio, Founders Growth
Portfolio, Founders International Equity Portfolio and Founders Passport
Portfolio. 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.
Dreyfus has engaged its affiliate, Newton Capital Management Limited, to serve
as sub-investment adviser for the European Equity Portfolio and the Japan
Portfolio. 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.
Portfolio managers
The primary portfolio managers of the portfolios are as follows:
CORE BOND PORTFOLIO -- 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.
CORE VALUE PORTFOLIO -- The portfolio's primary portfolio manager is Valerie J.
Sill. She has been a portfolio manager of the portfolio since its inception. Ms.
Sill is a portfolio manager of Dreyfus and senior vice president of The Boston
Company Asset Management, Inc. ("TBCAM"), an affiliate of Dreyfus. She is also a
member of the Equity Policy Group of TBCAM. She previously served as director of
equity research and as an equity research analyst for TBCAM.
EMERGING LEADERS PORTFOLIO -- 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.
EMERGING MARKETS PORTFOLIO -- 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.
EUROPEAN EQUITY PORTFOLIO -- 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.
FOUNDERS DISCOVERY PORTFOLIO -- 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.
[Page 37] Management
MANAGEMENT (CONTINUED)
FOUNDERS GROWTH PORTFOLIO -- 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.
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO -- 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.
FOUNDERS PASSPORT PORTFOLIO -- 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.
JAPAN PORTFOLIO -- 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.
MIDCAP STOCK PORTFOLIO -- John O'Toole is the portfolio's primary portfolio
manager, a position he has held since the portfolio's inception. He has been
employed by Dreyfus since October 1994. Mr. O'Toole also is a senior vice
president and a portfolio manager for Mellon Equity Associates, an affiliate of
Dreyfus, and has been employed by Mellon Bank, N.A. since 1979.
TECHNOLOGY GROWTH PORTFOLIO -- 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.
Each portfolio, Dreyfus, Founders, Newton and Dreyfus Service Corporation (each
portfolio' s distributor) 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 a 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.
[Page 38]
Core Bond, Emerging Leaders, Emerging Markets and Founders Discovery portfolios
- -- Performance Information for Related Public Funds
Although the Core Bond 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 "Premier Core Bond
Fund"). The portfolio currently has the same investment team as the Premier Core
Bond Fund. The table below shows average annual total return information for the
Premier Core Bond Fund and for the Merrill Lynch Domestic Master Index, the
benchmark index of the portfolio and the Premier Core Bond Fund.
Historical performance information for Class A shares of the Premier Core Bond
Fund and the Merrill Lynch Domestic Master Index for various periods ended
December 31, 1999, as calculated pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
DREYFUS PREMIER
CORE BOND FUND
<S> <C> <C> <C>
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.
</TABLE>
Although the Emerging Leaders 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 -- Dreyfus Emerging Leaders 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 Dreyfus
Emerging Leaders Fund and the Insurance Fund. The table below shows average
annual total return information for the Dreyfus Emerging Leaders Fund, the
Insurance Fund and the Russell 2000 Index, the benchmark index of the portfolio,
the Dreyfus Emerging Leaders Fund and the Insurance Fund.
Historical performance information for the Dreyfus Emerging Leaders 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:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
1 Year 5 Years inception(2)
- ------------------------------------------------------------------------------------------------------------------------------------
DREYFUS EMERGING
<S> <C> <C>
LEADERS FUND 38.26% -- 33.61%
DREYFUS SMALL CAP
PORTFOLIO 23.15% 15.93% 35.65%
RUSSELL 2000 INDEX(3) 21.26% 16.69% 13.63%(4)
16.57%(5)
(2) THE INCEPTION DATES OF THE DREYFUS EMERGING LEADERS FUND AND INSURANCE FUND
WERE 9/29/95 AND 8/31/90, RESPECTIVELY.
(3) 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.
(4) FOR COMPARATIVE PURPOSES FOR THE DREYFUS EMERGING LEADERS FUND, THE VALUE
OF THE INDEX ON 9/30/95 IS USED AS THE BEGINNING VALUE ON 9/29/95.
(5) FOR COMPARATIVE PURPOSES FOR THE INSURANCE FUND, THE VALUE OF THE INDEX ON
8/31/90 IS USED AS THE BEGINNING VALUE.
[Page 39] Management
</TABLE>
MANAGEMENT (CONTINUED)
Although the Emerging Markets 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 -- Dreyfus Premier Emerging Markets Fund -- Class A shares (the "Premier
Emerging Markets Fund"). The portfolio has the same primary portfolio manager as
the Premier Emerging Markets Fund. The table below shows average annual total
return information for the Premier Emerging Markets Fund and for the Morgan
Stanley Capital International (MSCI) Emerging Markets (Free) Index, the
benchmark index of the portfolio and the Premier Emerging Markets Fund.
The one-year performance of the Premier Emerging Markets 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 Premier Emerging
Markets 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(6) 66.41% 9.39%
(6) 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.
Although the Founders Discovery 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 -- Dreyfus Founders Discovery Fund (the "Founders Discovery Fund"). The
portfolio currently has the same primary portfolio manager as the Founders
Discovery Fund. The table below shows average annual total return information
for the Founders Discovery Fund and for the Russell 2000 Index, the benchmark
index of the portfolio and the Founders Discovery Fund.
The one-year performance of the Founders Discovery Fund was due in part to the
allocation to the Founders Discovery Fund of securities sold in initial public
offerings (" IPOs" ). There is no guarantee that the Founders Discovery 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 Founders Discovery Fund and for the
Russell 2000 Index for various periods ended December 31, 1999, as calculated
pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
FOUNDERS DISCOVERY
<S> <C> <C> <C>
FUND 94.59% 31.68% 23.96%
RUSSELL 2000
INDEX(7) 21.26% 16.69% 13.40%
(7) 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.
</TABLE>
[Page 40]
Investors should not consider this performance data as an indication of the
future performance of the portfolios. The performance figures for the Premier
Core Bond Fund, Dreyfus Emerging Leaders Fund, Insurance Fund, Premier Emerging
Markets Fund and Founders Discovery Fund reflect the deduction of the historical
fees and expenses paid by the funds, and not those to be paid by the respective
portfolios. The Premier Core Bond Fund's total annual operating expenses for the
fiscal year ended October 31, 1999 were 1.18% of its average daily net assets.
The total annual operating expenses, after fee waiver and expense reimbursement,
if any, for the fiscal year ended August 31, 1999 for the Dreyfus Emerging
Leaders 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
Premier Emerging Markets 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 Founders Discovery 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 also do not reflect the deduction of charges or expenses
attributable to VA contracts or VLI policies, which would lower the performance
quoted. Policy owners should refer to the applicable insurance company
prospectus for information on any such charges and expenses. Additionally,
although it is anticipated that each portfolio and its corresponding 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 Public Funds and Founders Growth, Founders
International Equity and Founders Passport portfolios
Each of the Founders Growth, Founders International Equity and Founders Passport
portfolios 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
Dreyfus Founders International Equity Fund and the Dreyfus Founders Passport
Fund, respectively (the "Public Funds"). Each portfolio currently has the same
primary portfolio managers as its corresponding Public Fund. The first three
tables on page 42 show average annual total return information for the Public
Funds and for the appropriate securities index. The fourth table shows average
annual total return information for each portfolio and for the appropriate
securities index.
Investors should not consider this performance data as an indication of the
future performance of the portfolios. The performance figures for the Public
Funds reflect the deduction of the historical fees and expenses paid by the
Public Funds, and not those to be paid by the respective portfolio. The Public
Funds' total annual operating expenses, after fee waiver and expense
reimbursement, for the year ended December 31, 1999 were 1.09% of Dreyfus
Founders Growth Fund' s average daily net assets, 1.80% of Dreyfus Founders
International Equity Fund' s average daily net assets and 1.64% of Dreyfus
Founders Passport Fund's average daily net assets.
The performance figures for the Public Funds and the portfolios also do not
reflect the deduction of charges or expenses attributable to VA contracts or VLI
policies, which would lower the performance quoted. Policy owners should refer
to the applicable insurance company prospectus for information on any such
charges and expenses. Additionally, although it is anticipated that each
portfolio and its corresponding Public Fund will hold similar secu-
[Page 41] Management
MANAGEMENT (CONTINUED)
rities, their investment results are expected to differ. In particular,
differences in asset size and in cash flow resulting from purchases and
redemptions of portfolio shares may result in different security selections,
differences in the relative weightings of securities or differences in the price
paid for particular portfolio holdings. Performance information for the Public
Funds and portfolios reflect the reinvestment of dividends and other
distributions.
The one-year performance of the Dreyfus Founders International Equity Fund and
the Dreyfus Founders Passport Fund was due in part to the allocation to those
funds of securities sold in initial public offerings ("IPOs"). There is no
guarantee that the Dreyfus Founders International Equity Fund's and the Dreyfus
Founders Passport 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.
PUBLIC FUNDS
Historical performance information for the corresponding Public Funds and for
the securities indexes for various periods ended December 31, 1999, as
calculated pursuant to SEC guidelines, is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
DREYFUS FOUNDERS
<S> <C> <C> <C>
GROWTH FUND -- CLASS F(1) 39.06% 30.16% 20.07%
S&P 500 BARRA
GROWTH INDEX(2) 28.25% 33.61% 20.59%
S&P 500 COMPOSITE
INDEX(3) 21.03% 28.54% 18.19%
- ------------------------------------------------------------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
</TABLE>
Since
inception
1 Year (12/29/95)
- --------------------------------------------------------------------------------
DREYFUS FOUNDERS INTERNATIONAL
EQUITY FUND -- CLASS F(1) 58.71% 26.45%
MSCI WORLD
(EX. US) INDEX(4) 27.93% 13.49%(5)
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (11/16/93)
- ------------------------------------------------------------------------------------------------------------------------------------
DREYFUS FOUNDERS
<S> <C> <C> <C> <C>
PASSPORT FUND -- CLASS F(1) 87.44% 26.20% 19.79%
MSCI WORLD
(EX US) INDEX(4) 27.93% 13.09% 13.21%(6)
</TABLE>
FOUNDERS GROWTH, FOUNDERS INTERNATIONAL EQUITY AND FOUNDERS PASSPORT PORTFOLIOS
Average annual total return for each portfolio and securities 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 (9/30/98)
- --------------------------------------------------------------------------------
FOUNDERS
GROWTH PORTFOLIO 39.01% 57.77%
S&P 500 BARRA
GROWTH INDEX(2) 28.25% 45.19%
S&P 500 COMPOSITE INDEX(3) 21.03% 35.94%
FOUNDERS INTERNATIONAL
EQUITY PORTFOLIO 60.69% 63.30%
MSCI WORLD (EX US) INDEX(4) 27.93% 41.33%
FOUNDERS PASSPORT PORTFOLIO 76.05% 76.79%
MSCI WORLD (EX US) INDEX(4) 27.93% 41.33%
- --------------------------------------------------------------------------------
(1) CLASS F SHARES ARE GENERALLY CLOSED TO NEW INVESTORS.
(2) THE S& P BARRA GROWTH INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF ALL THE
STOCKS IN THE S&P 500 COMPOSITE INDEX THAT HAVE HIGH PRICE-TO-BOOK
RATIOS. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND
OTHER DISTRIBUTIONS.
(3) THE S& P 500 COMPOSITE INDEX IS A WIDELY RECOGNIZED, UNMANAGED INDEX OF
STOCK PERFORMANCE. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF
DIVIDENDS AND OTHER DISTRIBUTIONS.
(4) 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 RESPECTIVE PUBLIC FUNDS AND THE PORTFOLIO.
(5) FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 12/31/95 IS USED AS THE
BEGINNING VALUE ON 12/29/95.
(6) FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 11/30/93 IS USED AS THE
BEGINNING VALUE ON 11/16/93.
[Page 42]
Japan Portfolio -- 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 -- 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 (1.50% 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(1)
- --------------------------------------------------------------------------------
NEWTON JAPAN FUND 59.6% 56.6%
NEWTON UGF JAPANESE
EQUITY FUND 59.5% 53.0%
MSCI JAPAN INDEX(2) 61.8% 6.7%
(1) 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.
(2) 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 43] Management
FINANCIAL HIGHLIGHTS
The following tables describe each 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
portfolios' financial statements, is included in the annual report, which is
available upon request. Keep in mind that fees and charges imposed by
participating insurance companies, which are not reflected in the tables, would
reduce the investment returns that are shown. No financial information is
provided for the Core Bond Portfolio, which had not commenced operations as of
the date of this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CORE VALUE PORTFOLIO 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.
PERIOD ENDED
DECEMBER 31,
EMERGING LEADERS PORTFOLIO 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .01
Net realized and unrealized gain (loss) on investments .93
Total from investment operations .94
Net asset value, end of period 13.44
Total return (%) 7.52(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .07(2)
Ratio of net investment income to average net assets (%) .04(2)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.25(2)
Portfolio turnover rate (%) 1.79(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,150
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) NOT ANNUALIZED.
[Page 44]
PERIOD ENDED
DECEMBER 31,
EMERGING MARKETS PORTFOLIO 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .02
Net realized and unrealized gain (loss) on investments 1.11
Total from investment operations 1.13
Net asset value, end of period 13.63
Total return (%) 9.04(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .09(2)
Ratio of net investment income to average net assets (%) .18(2)
Decrease reflected in above expense ratio
due to actions by Dreyfus (%) 1.51(2)
Portfolio turnover rate (%) .43(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,181
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) NOT ANNUALIZED.
PERIOD ENDED
DECEMBER 31,
EUROPEAN EQUITY PORTFOLIO 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .04(2)
Net realized and unrealized gain (loss) on investments 3.61
Total from investment operations 3.65
Distributions: Dividends from investment income -- net (.03)
Dividends from net realized gain on investments (.16)
Total distributions (.19)
Net asset value, end of period 15.96
Total return (%) 29.20(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.01(3)
Ratio of net investment income to average net assets (%) .32(3)
Decrease reflected in above expense ratio due to actions by Dreyfus (%) 2.38(3)
Portfolio turnover rate (%) 99.89(3)
- --------------------------------------------------------------------------------
Net assets, end of period ($ 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.
[Page 45] Financial Highlights
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31,
FOUNDERS DISCOVERY PORTFOLIO 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .01
Net realized and unrealized gain (loss)
on investments 1.38
Total from investment operations 1.39
Net asset value, end of period 13.89
Total return (%) 11.12(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .07(2)
Ratio of net investment income to average net assets (%) .06(2)
Decrease reflected in above expense ratio
due to actions by Dreyfus (%) 1.45(2)
Portfolio turnover rate (%) 7.49(2)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,223
(1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999.
(2) NOT ANNUALIZED.
YEAR ENDED DECEMBER 31,
FOUNDERS GROWTH PORTFOLIO 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 15.90 12.50
Investment operations: Investment income -- net (.02)(2) .01
Net realized and unrealized gain (loss) on investments 5.79 3.39
Total from investment operations 5.77 3.40
Distributions: Dividends from investment income -- net (.01) --
Dividends from net realized gain on investments (1.79) --
Total distributions (1.80) --
Net asset value, end of period 19.87 15.90
Total return (%) 39.01 27.20(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 .25(3)
Ratio of net investment income to average net assets (%) (.11) .05(3)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) 1.33 .31(3)
Portfolio turnover rate (%) 115.08 75.65(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ 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.
[Page 46]
YEAR ENDED DECEMBER 31,
FOUNDERS INTERNATIONAL EQUITY PORTFOLIO 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 14.36 12.50
Investment operations: Investment income (loss) -- net (.02)(2) (.01)
Net realized and unrealized gain (loss) on investments 8.73 1.87
Total from investment operations 8.71 1.86
Distributions: Dividends from net realized gain on investments (1.42) --
Net asset value, end of period 21.65 14.36
Total return (%) 60.69 14.88(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.50 .38(3)
Ratio of investment (loss) to average net assets (%) (.11) (.08)(3)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) 2.27 .81(3)
Portfolio turnover rate (%) 190.80 29.25(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ 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.
YEAR ENDED DECEMBER 31,
FOUNDERS PASSPORT PORTFOLIO 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 14.46 12.50
Investment operations: Investment income (loss) -- net (.10)(2) .00(3)
Net realized and unrealized gain (loss) on investments 11.04 1.97
Total from investment operations 10.94 1.97
Distributions: Dividends from investment income -- net -- (.00)(3)
Dividends from net realized gain on investments (1.58) (.01)
Total distributions (1.58) (.01)
Net asset value, end of period 23.82 14.46
Total return (%) 76.05 15.79(4)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.50 .38(4)
Ratio of net investment income to average net assets (%) (.60) .02(4)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) 2.14 .30(4)
Portfolio turnover rate (%) 319.31 3.98(4)
- --------------------------------------------------------------------------------
Net assets, end of period ($ 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 $.01 PER SHARE.
(4) NOT ANNUALIZED.
[Page 47] Financial Highlights
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED
DECEMBER 31,
JAPAN PORTFOLIO 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment income -- net .00(2)
Net realized and unrealized gain (loss) on investments .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 $.01 PER SHARE.
(3) NOT ANNUALIZED.
YEAR ENDED DECEMBER 31,
MIDCAP STOCK PORTFOLIO 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
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.
[Page 48}
PERIOD ENDED
DECEMBER 31,
TECHNOLOGY GROWTH PORTFOLIO 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.50
Investment operations: Investment (loss) (.02)(2)
Net realized and unrealized gain (loss) on investments 6.97
Total from investment operations 6.95
Net asset value, end of period 19.45
Total return (%) 55.60(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .36(3)
Ratio of net investment (loss) income to average net assets (%) (.14)(3)
Decrease reflected in above expense ratio
due to actions by Dreyfus (%) .09(3)
Portfolio turnover rate (%) 20.01(3)
- --------------------------------------------------------------------------------
Net assets, end of period ($ 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 49] Financial Highlights
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: name of portfolio), for purchase
of portfolio shares. The wire must include the portfolio account number (for new
accounts, a taxpayer identification number should be included instead) and
account registration and dealer number, if applicable, of the participating
insurance company.
CORE BOND PORTFOLIO -- generally values investments 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.
EACH PORTFOLIO OTHER THAN CORE BOND PORTFOLIO -- Each portfolio's investments
are generally valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good faith by the board
of trustees. Foreign securities held by each of the Emerging Markets, European
Equity, Founders International Equity, Founders Passport and Japan portfolios
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.
[Page 50]
DISTRIBUTIONS AND TAXES
CORE BOND PORTFOLIO -- usually pays dividends from its net investment income
once a month, and distributes any net capital gains it has realized once a year.
EACH PORTFOLIO OTHER THAN CORE BOND 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 relevant portfolio unless it is
instructed otherwise by a participating insurance company.
Since each portfolio' s shareholders are the participating insurance companies
and their separate accounts, the tax treatment of dividends and distributions
will depend on the tax status of the participating insurance company.
Accordingly, no discussion is included as to the federal income tax consequences
to VA contract holders or VLI policyholders. For this information, VA contract
holders and VLI policyholders should consult the applicable prospectus of the
separate account of the participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolios. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
[Page 51] Account Information
NOTES
[Page]
NOTES
[Page]
For More Information
Dreyfus Investment Portfolios
- ----------------------------------------
SEC file number: 811-08673
More information on the portfolios is available free upon request, including the
following:
Annual/Semiannual Report
Describes each portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolios and their policies. A current SAI is
on file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of 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
[Page]
