Dreyfus
Investment Portfolios,
Core Value Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
19 Report of Independent Auditors
20 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Core Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Core Value Portfolio, covering the 12-month period from January 1, 1999 through
December 31, 1999. Inside, you' ll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
its portfolio manager, Valerie J. Sill.
The past year has been both highly volatile and rewarding for many investors in
U.S. stocks. On December 31, the last trading day of 1999, most major stock
market indices hit new highs, including the Dow Jones Industrial Average, the S&
P 500 Index of large-cap stocks, the technology-heavy Nasdaq 100 and the Russell
2000 Index of small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the stock market's
advance in 1999, however. Following the trend established over the past several
years, growth-oriented stocks handily outperformed value-oriented stocks.
Indeed, until a more broad-based rally in the fourth quarter, stellar
performance was generally limited to a handful of highly valued technology and
telecommunications companies. In our view, many fundamentally sound companies in
other market sectors may be selling at attractive valuations.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Investment Portfolios, Core Value Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Valerie J. Sill, Portfolio Manager
How did Dreyfus Investment Portfolios, Core Value Portfolio perform relative to
its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Investment Portfolios,
Core Value Portfolio produced a total return of 19.73%.(1) The Standard & Poor's
500 BARRA Value Index, the portfolio's new benchmark, returned 12.72%, and the
Standard & Poor' s 500((reg.tm)) Composite Stock Price Index ("S&P 500 Index"),
the portfolio' s former benchmark, returned 21.03% for the same period.(2) The
Standard & Poor' s 500 BARRA Value Index has been selected as the new benchmark
for comparing the portfolio' s performance based on the portfolio's and the
Index's large-cap value orientation.
Generally speaking, the growth style of investing outperformed the value style
during 1999, and that is the primary reason why the portfolio underperformed the
S& P 500 Index, which contains a high percentage of growth stocks. However, the
portfolio significantly outperformed the S&P BARRA Value Index, a measure of
value stocks.
What is the portfolio's investment approach?
The portfolio invests primarily in large-cap companies that are considered
undervalued based on traditional measures such as price-to-earnings ratios. In
choosing stocks, we use a "bottom-up" stock selection approach, focusing on
individual companies rather than a "top-down" approach that forecasts market
trends. We also focus on a company's relative value, financial strength, sales
and earnings momentum and likely catalysts that could ignite the stock price.
What other factors influenced the portfolio's performance?
The stock market ended 1999 at record levels, having nearly quadrupled during
the decade. To be sure, the overall bull market for stocks was a major influence
on our results. However, much of the market's
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
performance was dominated by the growth style of investing, while the value
style has generally lagged.
Last spring, it appeared as if value investing would dominate in terms of
performance. As the global recovery took hold, value stocks, which had been
depressed, staged an impressive, albeit a short-lived rally. The value rally was
cut short when inflation fears resurfaced after years on the sidelines,
prompting the Federal Reserve Board to shift towards a policy of higher interest
rates. In such an environment, value stocks, such as banks, began to perform
poorly as their profit margins were squeezed. And economically cyclical stocks,
another value category, began to retreat over concern that the Fed's stance
would slow the economy.
Investors turned their attention back to technology companies, particularly
Internet-related shares, whose growth was not dependent on the economy's
fortunes. Other strong groups included energy, which benefited from soaring oil
prices, and stock brokerage firms, which generated enormous trading volume from
the bull market.
During the reporting period, we continued to search for value in all industries
- -- including such hot areas of the market as telecommunications and technology,
which are normally associated exclusively with growth investing. Indeed, two of
the portfolio' s strongest performers during 1999 were Sun Microsystems and
Nortel Networks, both of which appeared undervalued when they were originally
purchased. Sun Microsystems is a company that is helping build the
infrastructure of the Internet, and Nortel Networks is a leading manufacturer of
telecommunications equipment. In addition, we still see Hewlett-Packard as a
value stock because it is trading at a low price-earnings multiple compared to
other technology companies.
We also invested in more typical value industries, such as energy, which was a
strong performer during 1999 as oil prices rebounded from $10 to reach $25 per
barrel. The portfolio's investment in Mobil benefited from Mobil's merger with
Exxon, a combination that is likely to generate tremendous cost savings.
In addition, our quantitative screening process identified many economically
cyclical stocks at the beginning of 1999 that were attractively valued at the
time. Examples include duPont (E.I.) de Nemours & Co., which has benefited from
rising oil prices, and Dow Chemical, which is expected to generate efficiencies
after it combines with Union Carbide.
What is the portfolio's current strategy?
Currently, we see significant value in the pharmaceutical sector, where we
believe investors overreacted to Congressional debate over the expansion of
Medicare to cover prescription drugs. The drug companies continue to introduce
an impressive array of new products while generating strong earnings growth.
Other attractive areas include consumer durables, such as Dutch-based Philips
Electronics, which is benefiting from the improving markets in Europe, and
consumer non-durables, such as NIKE, which is performing better along with
Asia' s economy.
In short, we believe that the portfolio continues to hold stocks that are
undervalued -- and that these companies have catalysts in place that have the
potential to unlock strong performance.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE
DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. THE RETURN
FIGURE PROVIDED REFLECTS THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH DECEMBER 31, 2000, AT
WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT
BEEN ABSORBED, THE PORTFOLIO'S RETURN WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S BARRA VALUE INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF ALL THE STOCKS
IN THE STANDARD & POOR'S 500((reg.tm)) COMPOSITE STOCK PRICE INDEX THAT HAVE LOW
PRICE-TO-BOOK RATIOS. THE STANDARD & POOR'S 500((reg.tm)) COMPOSITE STOCK PRICE
INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Investment
Portfolios, Core Value Portfolio with the Standard & Poor's 500 Composite Stock
Price Index and the Standard & Poor's 500 BARRA Value Index
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Average Annual Total Returns AS OF 12/31/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year Inception
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<S> <C> <C> <C>
PORTFOLIO 5/1/98 19.73% 7.61%
</TABLE>
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts which will reduce returns.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS INVESTMENT
PORTFOLIOS, CORE VALUE PORTFOLIO ON 5/1/98 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE ON THAT DATE IN THE STANDARD & POOR'S 500 BARRA VALUE INDEX AND
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500"). ALL DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE STANDARD & POOR'S 500 BARRA
VALUE INDEX HAS BEEN SELECTED AS THE PRIMARY INDEX FOR COMPARING THE PORTFOLIO'S
PERFORMANCE BASED ON THE PORTFOLIO'S AND THE INDEX'S VALUE ORIENTATION. THE
STANDARD & POOR'S 500 BARRA VALUE INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF
ALL THE STOCKS IN THE S&P 500 THAT HAVE LOW PRICE-TO-BOOK RATIOS. THE S&P 500 IS
A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE. PERFORMANCE
FOR THIS INDEX WILL NOT BE PROVIDED WITH THE NEXT ANNUAL REPORT, BUT IS PROVIDED
HEREWITH PURSUANT TO APPLICABLE REGULATIONS. NEITHER OF THE FOREGOING INDICES
TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION RELATING
TO PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS
CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN
THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--91.7% Shares Value ($)
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BASIC INDUSTRIES--7.7%
<S> <C> <C>
Conoco, Cl. B 13,084 325,478
Dow Chemical 1,800 240,525
duPont (E.I.) deNemours & Co. 4,851 319,560
Georgia-Pacific 3,300 167,475
Union Carbide 2,000 133,500
1,186,538
BUILDING & CONSTRUCTION--.5%
Deere & Co. 1,900 82,412
CAPITAL GOODS--6.3%
Boeing 1,900 78,969
Caterpillar 1,600 75,300
Delphi Automotive Systems 8,200 129,150
Eaton 1,100 79,887
Ingersoll-Rand 1,400 77,088
Tyco International 2,100 81,637
United Technologies 4,900 318,500
Waste Management 7,247 124,558
965,089
CONSUMER DURABLES--3.3%
Ford Motor 2,900 154,969
Philips Electronics 2,634 355,590
510,559
CONSUMER NON-DURABLES--4.1%
Kimberly-Clark 3,400 221,850
NIKE, Cl. B 4,000 198,250
Philip Morris Cos. 7,900 183,181
Tommy Hilfiger 1,300 (a) 30,306
633,587
CONSUMER SERVICES--8.4%
Cendant 4,200 (a) 111,562
Disney (Walt) 10,800 315,900
Federated Department Stores 4,500 (a) 227,531
First Data 6,800 335,325
K mart 6,000 60,375
TJX Cos. 2,400 49,050
Toys R Us 4,200 (a) 60,113
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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CONSUMER SERVICES (CONTINUED)
Tricon Global Restaurants 3,200 (a) 123,600
1,283,456
ENERGY--8.4%
Coastal 2,200 77,962
Exxon Mobil 5,652 455,383
Schlumberger 2,900 163,125
Texaco 5,500 298,719
Tosco 4,900 133,219
Transocean Sedco Forex 2,561 86,288
Unocal 2,100 70,481
1,285,177
FINANCE--21.5%
Allmerica Financial 900 50,063
American General 1,600 121,400
American International Group 4,231 457,477
Astoria Financial 1,800 54,787
Bank of America 5,878 295,002
Chase Manhattan 4,200 326,288
Citigroup 9,250 513,953
Federal National Mortgage Association 3,500 218,531
Fleet Boston Financial 9,306 323,965
Golden State Bancorp 7,000 (a) 120,750
Goldman Sachs Group 1,600 150,700
Marsh & McLennan Cos. 1,500 143,531
Morgan Stanley Dean Witter & Co. 1,700 242,675
Washington Mutual 2,144 55,744
Wells Fargo 5,500 222,406
3,297,272
HEALTH CARE--8.9%
Abbott Laboratories 11,000 399,437
Aetna 1,200 66,975
American Home Products 6,600 260,288
CIGNA 1,400 112,788
Columbia/HCA Healthcare 8,400 246,225
Pharmacia & Upjohn 4,600 207,000
Wellpoint Health Networks 1,200 (a) 79,125
1,371,838
COMMON STOCKS (CONTINUED) Shares Value ($)
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TECHNOLOGY--13.0%
Cabletron Systems 5,200 (a) 135,200
Computer Associates International 3,400 237,788
Computer Sciences 1,000 (a) 94,625
Compuware 4,000 (a) 149,000
Electronic Data Systems 3,000 200,812
Hewlett-Packard 2,275 259,208
International Business Machines 1,400 151,200
Motorola 2,100 309,225
Nortel Networks 1,900 191,900
Novell 2,900 (a) 115,819
Sun Microsystems 2,000 (a) 154,875
1,999,652
TRANSPORTATION--1.9%
Southwest Airlines 4,100 66,369
Union Pacific 5,000 218,125
284,494
UTILITIES--7.7%
CMS Energy 1,800 56,138
Duke Energy 4,650 233,081
Edison International 3,700 96,894
GTE 3,500 246,969
MCI WorldCom 4,200 (a) 222,862
SBC Communications 4,200 204,750
Scottish Power, A.D.R. 4,118 115,304
1,175,998
TOTAL COMMON STOCKS
(cost $12,987,208) 14,076,072
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PREFERRED STOCKS--1.9%
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CONSUMER SERVICES;
News Corp, ADR
(cost $225,305) 8,550 285,891
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--5.2% Amount ($) Value ($)
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U. S. GOVERNMENT AGENCY DISCOUNT NOTES;
Federal Home Loan Banks,
1.50%, 1/3/2000
(cost $799,933) 800,000 799,933
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TOTAL INVESTMENTS (cost $14,012,446) 98.8% 15,161,896
CASH AND RECEIVABLES (NET) 1.2% 180,880
NET ASSETS 100.0% 15,342,776
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 14,012,446 15,161,896
Cash 189,300
Dividends receivable 15,228
Prepaid expenses 22,441
15,388,865
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 12,846
Accrued expenses and other liabilities 33,243
46,089
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NET ASSETS ($) 15,342,776
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 14,217,311
Accumulated undistributed investment income--net 188
Accumulated net realized gain (loss) on investments (24,173)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 1,149,450
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NET ASSETS ($) 15,342,776
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
1,098,580
NET ASSET VALUE, offering and redemption price per share ($) 13.97
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $773 foreign taxes withheld at source) 148,398
Interest 18,788
TOTAL INCOME 167,186
EXPENSES:
Investment advisory fee--Note 3(a) 80,234
Auditing fees 22,109
Custodian fees--Note 3(a) 18,592
Legal fees 18,118
Prospectus and shareholders' reports 11,489
Registration fees 2,099
Trustees' fees and expenses--Note 3(b) 1,223
Shareholder servicing costs 299
Miscellaneous 6,775
TOTAL EXPENSES 160,938
Less--reduction in investment advisory fee due to
undertaking--Note 3(a) (53,959)
NET EXPENSES 106,979
INVESTMENT INCOME--NET 60,207
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 280,590
Net unrealized appreciation (depreciation) on investments 1,104,740
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,385,330
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,445,537
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
----------------------------
1999 1998a
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OPERATIONS ($):
Investment income--net 60,207 31,919
Net realized gain (loss) on investments 280,590 (304,763)
Net unrealized appreciation (depreciation)
on investments 1,104,740 44,710
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,445,537 (228,134)
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (66,069) (36,433)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 11,031,262 6,187,697
Dividends reinvested 66,069 36,433
Cost of shares redeemed (3,092,776) (50,810)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 8,004,555 6,173,320
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,384,023 5,908,753
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NET ASSETS ($):
Beginning of Period 5,958,753 50,000
END OF PERIOD 15,342,776 5,958,753
Undistributed investment income--net 188 -
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 821,212 505,520
Shares issued for dividends reinvested 4,861 3,358
Shares redeemed (235,841) (4,530)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 590,232 504,348
(A) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Year Ended December 31,
------------------------
1999 1998a
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PER SHARE DATA ($):
Net asset value, beginning of period 11.72 12.50
Investment Operations:
Investment income--net .07(b) .07
Net realized and unrealized gain (loss) on investments 2.24 (.77)
Total from Investment Operations 2.31 (.70)
Distributions:
Dividends from investment income--net (.06) (.08)
Net asset value, end of period 13.97 11.72
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TOTAL RETURN (%) 19.73 (5.59)(c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.00 .67(c)
Ratio of net investment income to average net assets .56 .62(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation .50 .74(c)
Portfolio Turnover Rate 97.14 47.37(c)
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Net Assets, end of period ($ x 1,000) 15,343 5,959
(A) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering eleven
series, including the Core Value Portfolio (the "portfolio"). The portfolio is
only offered to separate accounts established by insurance companies to fund
variable annuity contracts and variable life insurance policies. The portfolio
is a diversified series. The portfolio's investment objective is to provide
long-term capital growth. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation.
Premier Mutual Fund Services, Inc. is the distributor of the portfolio's shares,
which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 404,566 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
value as determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are valued
at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio receives
net earnings credits based on available cash balances left on deposit.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $6,050 and decreased paid-in capital by
$6,050. Net assets were not affected by this reclassification.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
portfolio at rates which are related to the Federal Funds rate in effect at the
time of borrowings. During the period ended December 31, 1999, the portfolio did
not borrow under the line of credit.
NOTE 3--Investment Advisory Fee and Other Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 1% of the value of the portfolio's average
daily net
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
assets. The reduction in investment advisory fee, pursuant to the undertaking,
amounted to $53,959 during the period ended December 31, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $44 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $18,592 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$17,162,935 and $9,937,440, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$1,149,450, consisting of $1,986,771 gross unrealized appreciation and $837,321
gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Core Value Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Core Value
Portfolio (one of the series constituting Dreyfus Investment Portfolios) as of
December 31, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Core Value Portfolio at December 31, 1999, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with accounting principles
generally accepted in the United States.
New York, New York
February 7, 2000
The Portfolio
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the portfolio hereby designates 100% of the ordinary
dividends paid during the fiscal year ended December 31, 1999 as qualifying for
the corporate dividends received deduction.
For More Information
Dreyfus
Investment Portfolios,
Core Value Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 172AR9912
================================================================================
Dreyfus
Investment Portfolios, Emerging Leaders Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
17 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Emerging Leaders Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Emerging Leaders Portfolio, covering the period from the portfolio's inception
on December 15, 1999 through December 31, 1999. Inside, you'll find valuable
information about how the portfolio was managed during the reporting period,
including a discussion with its portfolio managers, Hilary Woods and Paul
Kandel.
The past year has been both highly volatile and rewarding for investors in U.S.
stocks, including the small-capitalization sector of the market. On December 31,
the last trading day of 1999, most major stock market indices hit new highs,
including the Dow Jones Industrial Average, the S&P 500 Index of large-cap
stocks, the technology-heavy Nasdaq 100 and the Russell 2000 Index of
small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the advance of the
stock market, including the small-cap market, in 1999, however. Growth-oriented
small-cap stocks handily outperformed value-oriented small-cap stocks throughout
the year. Indeed, the overall stock market's stellar performance was generally
limited to a handful of highly valued technology and telecommunications
companies, some of which have no earnings. In our view, many fundamentally sound
small-cap companies in other market sectors may be selling at attractive
valuations.
We appreciate your confidence and we look forward to your continued
participation in Dreyfus Investment Portfolios, Emerging Leaders Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Hilary Woods and Paul Kandel, Portfolio Managers
What is the Dreyfus Investment Portfolios, Emerging Leaders Portfolio's
investment approach?
The portfolio seeks capital growth from investments primarily in a diversified
group of small-cap companies with total market values of $1.5 billion or less at
the time of purchase. We focus primarily on companies we believe are emerging
leaders in their respective industries. The companies in which we invest offer
products, processes or services that we believe enhance their prospects for
future earnings growth. Using fundamental research, we look for stocks with
dominant positions in major product lines, sustained records of achievement and
strong balance sheets. We also base investment decisions on the expected impact
of changes in a company's management or organizational structure.
Our investment approach targets growth-oriented stocks (those companies with
earnings that are expected to grow faster than the overall market) ,
value-oriented stocks (those that appear underpriced according to a number of
financial measurements) and stocks that exhibit both growth and value
characteristics. We typically sell a stock when the reasons for buying it no
longer apply or when the company begins to show deteriorating fundamentals or
poor relative performance.
In future reports, we will measure the portfolio's performance against that of
the portfolio's benchmark, the Russell 2000 Index of small-capitalization
stocks.(1)
What were the market conditions like when the portfolio was launched?
We launched the portfolio at a time of volatile market conditions. Driven by
technology-related productivity increases and by high levels of consumer
confidence and spending, the U.S. economy was approaching its longest period of
sustained expansion ever in
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
December 1999. In addition, small-cap stocks performed exceptionally well during
the month of December 1999, with the Russell 2000 Index enjoying its sharpest
monthly gain since January 1987.
The technology sector of the market benefited strongly from these conditions.
Many other sectors fared less well. Robust U.S. growth pushed interest rates
higher throughout 1999, creating an unfavorable environment for financial
stocks. The health care sector -- with the exception of biotechnology -- was
battered by an increasingly restrictive regulatory environment and the prospect
for further government-imposed limitations on Medicare and Medicaid
reimbursements. On the global scene, many developed and emerging economies
around the world showed signs of recovery, causing energy prices to rise.
However, basic industrial sectors had not yet fully recovered from the effects
of the Asian economic crisis of 1998. These conditions affected our allocation
of assets at the portfolio's inception.
What is the portfolio's current strategy?
With technology stocks already highly valued, we launched the portfolio with a
neutral technology weighting compared to our benchmark. Nevertheless, we found
attractive investments among business software providers, such as Exchange
Applications and Art Technology Group, and among companies developing components
and systems to build out telecommunications systems and the Internet, such as
NetOptix and TranSwitch. We also took advantage of Internet-related
opportunities in the retail sector, targeting established companies such as
Sotheby's Holdings, which is employing Internet strategies to enhance its growth
rate.
In the health care sector, we avoided most health care services and
pharmaceutical companies, focusing instead on biotechnology enterprises such as
Neurocrine Biosciences, Inc. and Lynx Therapeutics. We also underweighted the
financial services sector, investing primarily in insurers that we believed were
less likely to suffer from rising interest rates.
We took an overweight position relative to the benchmark in energy in seeking to
capitalize on rising commodity prices and increasing drilling activity. In other
basic industrial sectors, we concentrated on companies that we believed were
poised to benefit from increasing global industrial demand for metals, paper and
chemicals. Investments included such companies as chemical producer Wellman,
pulp producer and timberland-rich Rayonier, and metals processor and distributor
Ryerson Tull, Inc.
While no one knows whether or for how long the positive trend for small-cap
stocks established in December will persist, we continue to believe that
small-cap stocks offer the potential for strong growth over the long term. We
will continue to adhere to our blended growth-and-value investment strategy in
seeking to outperform the Russell 2000 Index. We remain sanguine on technology
and energy given the strong earnings growth prospects for these two groups and
their historically strong first quarter performance. We are sticking with our
caution on financial services near term in view of likely continued unfriendly
Fed policy.
January 14, 2000
(1) THE RUSSELL 2000 INDEX IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX
OF SMALL-CAP STOCK PERFORMANCE.
The Portfolio
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--95.9% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--5.1%
<S> <C> <C>
Exchange Applications 700 (a) 39,112
Metamor Worldwide 1,200 (a) 34,950
True North Communications 800 35,750
109,812
CONSUMER NON-DURABLES--6.0%
American Greetings, Cl. A 1,300 30,712
Church & Dwight 1,200 32,025
Cott 6,300 (a) 33,075
Flowers Industries 2,100 33,469
129,281
CONSUMER SERVICES--5.5%
Cumulus Media, Cl. A 900 (a) 45,675
Scholastic 600 (a) 37,312
Sotheby's Holdings, Cl. A 1,200 36,000
118,987
ELECTRONIC TECHNOLOGY--9.7%
Alpha Industries 600 (a) 34,388
Brio Technology 600 (a) 25,200
Cordant Technologies 1,100 36,300
L-3 Communications Holdings 800 (a) 33,300
Newport News Shipbuilding 1,300 35,750
TranSwitch 600 (a) 43,537
208,475
ENERGY MINERALS--1.7%
Ocean Energy 4,600 (a) 35,650
FINANCE--15.3%
AmeriCredit 1,800 (a) 33,300
AmerUs Life Holdings, Cl. A 1,400 32,200
Annuity and Life Re 1,400 36,575
Commerce Bancorp 600 24,263
Cullen/Frost Bankers 1,300 33,475
Everest Reinsurance Holdings 1,500 33,469
First Midwest Bancorp 1,200 31,800
One Valley Bancorp 1,000 30,625
Reckson Service Industries 600 (a) 37,425
RenaissanceRe Holdings 900 36,787
329,919
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH SERVICES--4.9%
Oxford Health Plans 2,800 (a) 35,525
PSS World Medical 3,300 (a) 31,144
Pharmacopeia 1,700 (a) 38,462
105,131
HEALTH TECHNOLOGY--9.5%
ALPHARMA, Cl. A 1,100 33,825
IDEXX Laboratories 1,900 (a) 30,638
Lynx Therapeutics 1,100 (a) 35,612
NetOptix 900 (a) 60,075
Neurocrine Biosciences 1,800 (a) 44,550
204,700
INDUSTRIAL SERVICES--3.7%
Marine Drilling 1,900 (a) 42,631
Rowan 1,700 (a) 36,869
79,500
NON-ENERGY MINERALS--4.9%
Louisiana-Pacific 2,500 35,625
Rayonier 700 33,819
Ryerson Tull 1,800 34,988
104,432
PROCESS INDUSTRIES--6.5%
American National Can Group 2,600 33,800
Ferro 1,500 33,000
Geon 1,100 35,750
Wellman 2,000 37,250
139,800
PRODUCER MANUFACTURING--5.0%
AGCO 2,600 34,938
Kennametal 1,100 36,987
Terex 1,300 (a) 36,075
108,000
RETAIL TRADE--1.5%
Pacific Sunwear of California 1,000 (a) 31,875
TECHNOLOGY SERVICES--11.7%
Art Technology Group 400 (a) 51,250
Insight Communications, Cl. A 1,200 (a) 35,550
Mpath Interactive 1,200 (a) 31,950
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY SERVICES (CONTINUED)
Netegrity 700 (a) 39,856
Primus Knowledge Solutions 600 (a) 27,188
Rare Medium Group 1,000 (a) 34,125
WebTrends 400 (a) 32,400
252,319
TRANSPORTATION--1.8%
Eagle USA Airfreight 900 (a) 38,813
UTILITIES-3.1%
Cleco 1,000 32,062
Kinder Morgan 1,700 34,319
66,381
TOTAL COMMON STOCKS
(cost $1,910,387) 2,063,075
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--3.7% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS;
5.20%, 3/30/2000
(cost $78,971) 80,000 79,002
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,989,358) 99.6% 2,142,077
CASH AND RECEIVABLES (NET) .4% 7,753
NET ASSETS 100.0% 2,149,830
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 1,989,358 2,142,077
Cash 539
Receivable for investment securities sold 7,990
Dividends receivable 675
Due from The Dreyfus Corporation and affliliates 24,376
2,175,657
- --------------------------------------------------------------------------------
LIABILITIES ($):
ACCRUED EXPENSES 25,827
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,149,830
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,000,000
Accumulated undistributed investment income--net 922
Accumulated net realized gain (loss) on investments (3,811)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 152,719
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,149,830
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
160,000
NET ASSET VALUE, offering and redemption price per share ($) 13.44
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
from December 15, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 1,897
Cash dividends 476
TOTAL INCOME 2,373
EXPENSES:
Investment advisory fee--Note 2(a) 871
Auditing fees 15,050
Legal fees 10,000
Custodian fees--Note 2(a) 766
Registration fees 528
Trustees' fees and expenses--Note 2(b) 111
Shareholder servicing costs 55
Prospectus and shareholders' reports 33
Miscellaneous 50
TOTAL EXPENSES 27,464
Less--expense reimbursement from The Dreyfus Corporation
due to undertaking--Note 2(a) (26,013)
NET EXPENSES 1,451
INVESTMENT INCOME--NET 922
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (3,811)
Net unrealized appreciation (depreciation) on investments 152,719
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 148,908
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 149,830
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
from December 15, 1999 (commencement of operations)
to December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 922
Net realized gain (loss) on investments (3,811)
Net unrealized appreciation (depreciation)
on investments 152,719
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 149,830
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
NET PROCEEDS FROM SHARES SOLD 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,149,830
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 2,149,830
Undistributed investment income--net 922
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
SHARES SOLD 160,000
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from December 15,
1999 (commencement of operations) to December 31, 1999. Total return shows how
much your investment in the portfolio would have increased (or decreased) during
the period. These figures have been derived from the portfolio's financial
statements.
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
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(a)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .07(a)
Ratio of net investment income
to average net assets .04(a)
Decrease reflected in above expense ratio
due to undertakings by The Dreyfus Corporation 1.25(a)
Portfolio Turnover Rate 1.79(a)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,150
(A) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering eleven
series, including the Emerging Leaders Portfolio (the "portfolio" ). The
portfolio is only offered to separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies. The portfolio is a diversified series. The portfolio's investment
objective is to provide capital growth. The Dreyfus Corporation ("Dreyfus")
serves as the portfolio's investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A. (" Mellon" ), which is a wholly-owned subsidiary of Mellon
Financial Corporation. Premier Mutual Fund Services, Inc. is the distributor of
the portfolio's shares, which are sold to the public without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 160,000 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses, which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles, which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked
The Portfolio
NOTES TO FINANCIAL STATEMENTS (continued)
price is used for valuation purposes. Bid price is used when no asked price is
available. Securities for which there are no such valuations are valued at fair
value as determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $199 during the period ended December 31, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain, if any, are normally declared and paid annually, but the portfolio
may make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code" ). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Investment Advisory Fee and Other Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .90 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from December 15, 1999 through December 31, 2000 to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 1.50% of the value of the portfolio's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $26,013 during the period ended December 31, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $766 pursuant to the custody agreement.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (continued)
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$1,950,834 and $36,954, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$152,719, consisting of $185,609 gross unrealized appreciation and $32,890 gross
unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees Emerging Leaders Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Emerging Leaders
Portfolio (one of the series constituting the Dreyfus Investment Portfolios) as
of December 31, 1999, and the related statements of operations and changes in
net assets and financial highlights for the period from December 15, 1999
(commencement of operations) to December 31, 1999. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Emerging Leaders Portfolio at December 31, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from December 15, 1999 to December 31, 1999,
in conformity with accounting principles generally accepted in the United
States.
New York, New York
February 7, 2000
- --------------------------------------------------------------------------------
The Portfolio
For More Information
Dreyfus Investment Portfolios,
Emerging Leaders Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 192AR9912
================================================================================
Dreyfus
Investment Portfolios, Emerging Markets Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
18 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Emerging Markets Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Emerging Markets Portfolio, covering the period from the portfolio's inception
on December 15, 1999 through December 31, 1999. Inside, you'll find valuable
information about how the portfolio was managed during the reporting period,
including a discussion with its portfolio manager, Daniel Beneat.
International economies surprised many analysts with their resiliency in 1999.
Instead of remaining mired in recession after the currency- and credit-related
dislocations that adversely affected their economies in 1997 and 1998, most
developed and emerging markets enjoyed positive economic growth trends in 1999.
As a result, international stocks generally outperformed U.S. stocks in 1999, as
measured by the MSCI EAFE and the S&P 500 indices. The international stock
markets were led higher by developed markets in Japan and Asia, where economic
recoveries and financial system reforms drove stock prices higher. Europe also
produced generally attractive returns, benefiting from corporate restructuring,
the effects of economic unification and the introduction of a single currency,
the euro. Emerging markets in Asia, Latin America and Eastern Europe also
performed well in 1999.
We appreciate your confidence and we look forward to your continued
participation in Dreyfus Investment Portfolios, Emerging Markets Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Daniel Beneat, Portfolio Manager
What is the Dreyfus Investment Portfolios, Emerging Markets Portfolio's
investment approach?
The portfolio seeks long-term capital growth by investing primarily in a
diversified portfolio of growth companies in emerging markets. Normally, the
portfolio will not invest more than 25% of its total assets in the securities of
companies in any single emerging market country.
When selecting stocks for the portfolio, we use a "top-down" country allocation
approach. We strive to identify and forecast 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 those countries, we use a "bottom-up" approach to company and sector
analysis, which focuses on companies that exhibit strong growth and are
reasonably valued. Our security selection approach evaluates growth factors on a
company-by-company basis, looking at factors such as revenue prospects,
operating cash flow, ability to achieve consistent earnings and management's
ability to achieve higher operating margins.
In future reports, we will measure the portfolio's performance against that of
the portfolio' s benchmark, the Morgan Stanley Capital International Emerging
Markets Free (MSCI EMF(SM)) Index.(1)
What were the market conditions like when the portfolio was launched?
While the portfolio had only been in operation for a two-week period as of
December 31, 1999, it's important to understand the backdrop of the markets in
which the portfolio invests.
Emerging markets experienced a remarkable turnaround in 1999. In many cases, the
countries that performed the worst in 1998 were the strongest in 1999. This was
most evident in Korea and Singapore and,
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
to a lesser degree, in Thailand and Indonesia. Stocks in other emerging market
countries also performed well, including those in Greece, Brazil and Mexico.
In Asia, we have begun to see signs of economic improvement. This is
particularly true in Japan, whose economy was spurred by government spending
aimed at stimulating the domestic economy. With currencies in many Southeast
Asian countries still down almost 50% from their highs of 1998, many investors
have determined that this region has once again become a competitive producer of
goods. As investment capital flowed into Southeast Asia as a result, the stocks
of many companies exhibited strong returns.
Throughout Eastern Europe, we' ve seen economic improvements in many emerging
market countries as they focus their energies on convergence into the European
Monetary Union (EMU). In addition, most of these countries have benefited from
the economic improvements achieved by Europe.
What is the portfolio's current strategy?
Our initial asset allocation strategy focused primarily on the Southeast Asian
region -- particularly in South Korea, Singapore, Hong Kong and Indonesia --
because we believed the region presented many compelling investment
opportunities in the wake of 1998's financial crisis. We also initiated slightly
overweighted positions in Hungary, Turkey, the Czech Republic and Russia
relative to the benchmark's weightings. While we remain cautious with respect to
Russia, many stocks within the country have performed very nicely and we believe
the portfolio can benefit from maintaining exposure there.
In Latin America, we favored investments in Brazil, where we emphasized
telecommunications and commodity-oriented stocks, such as paper and steel
companies. In addition, we have chosen to limit our Brazilian financial
holdings, preferring instead to wait until the interest-rate environment becomes
less uncertain. We also enjoyed successes from several of our investments in
Mexico and Chile.
On the other hand, we have limited our holdings in Eastern Europe, South Africa,
Israel and Greece. In the case of Greece, we believe the valuations of many of
these companies remain very high. However, looking back, the Greek stock market
did perform exceptionally well during 1999. We will continue to monitor the
region and may adjust our exposure there when valuations become more reasonable.
We are pleased with the returns generated by many stocks in emerging market
countries during the reporting period. We plan to maintain a strategy of
diversifying the portfolio across numerous countries and sectors in an effort to
seek to capture competitive returns for our shareholders.
January 14, 2000
(1) THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE (MSCI
EMF(SM)) INDEX IS A MARKET CAPITALIZATION-WEIGHTED INDEX COMPOSED OF COMPANIES
REPRESENTATIVE OF THE MARKET STRUCTURE OF 26 EMERGING MARKET COUNTRIES IN
EUROPE, LATIN AMERICA AND THE PACIFIC BASIN.
The Portfolio
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--96.8% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
BRAZIL--14.8%
<S> <C> <C>
Aracruz Celulose, ADR 2,000 52,500
Companhia Paranaense de Energia--Copel, ADR 5,000 46,562
Companhia Siderurgica Nacional, ADR 1,000 36,750
Companhia Vale do Rio Doce, ADR 800 22,125
Gerdau, ADR 1,000 26,344
Tele Centro Sul, ADR 250 22,688
Tele Norte Leste, ADR 1,000 25,500
Telecomunicacoes de Sao Paulo, ADR 2,500 61,094
Uniao de Bancos Brasileiros, GDR 1,000 30,125
323,688
CHILE--2.9%
Cia. de Telecomunicaciones de Chile, ADR 1,250 22,812
Enersis, ADR 750 17,625
Linea Aerea Nacional Chile, ADR 1,100 8,319
Santa Isabel, ADR 1,500 (a) 14,625
63,381
CZECH REPUBLIC--1.6%
Ceske Radiokomunikace, GDR 500 (a) 18,250
SPT Telecom, GDR 1,000 (a) 16,100
34,350
GREECE--4.8%
Hellenic Telecommunications Organization 2,000 47,375
National Bank of Greece 450 33,173
STET Hellas Telecommunications, ADR 800 (a) 24,400
104,948
HONG KONG--4.3%
Cathay Pacific Airways 5,000 8,909
First Pacific 20,000 15,437
Henderson Land Development 1,000 6,419
Hong Kong and China Gas 15,000 20,551
Hongkong Electric 7,500 23,445
JCG 35,000 19,698
94,459
HUNGARY--2.2%
MOL Magyar Olaj-es Gazipari, GDR 750 15,750
Magyar Tavkozlesi, ADR 875 31,500
47,250
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
INDIA--2.3%
India Fund 3,000 (a) 50,250
INDONESIA--1.8%
PT Astra International 20,000 (a) 10,734
PT Gudang Garam 2,500 6,726
PT Hanjaya Mandala Sampoerna 4,000 (a) 10,175
PT Semen Gresik 7,500 11,887
39,522
ISRAEL--1.6%
Bank Hapoalim 3,350 10,448
Bank Leumi Le-Israel 5,000 10,532
Koor Industries, ADR 650 13,000
33,980
MEXICO--13.1%
Alfa 6,000 (a) 28,165
Cemex 5,000 27,954
Coca-Cola Femsa, ADR 1,500 26,344
Corporacion Interamericana de Entretenimiento, Cl. B 6,500 (a) 25,952
Desc, ADR 2,000 (a) 33,500
Fomento Economico Mexicano, ADR 500 22,250
Grupo Imsa, ADR 2,000 34,312
Grupo Radio Centro, ADR 2,000 (a) 16,750
Grupo Televisa, GDR 250 (a) 17,062
Panamerican Beverages, ADR 1,500 30,844
Telefonos de Mexico, Cl. L, ADR 200 22,500
285,633
PERU--1.8%
Telefonica del Peru, ADR 3,000 40,125
PHILIPPINES--.9%
Equitable PCI Bank 2,300 5,108
Manila Electric, Cl. B 3,750 10,701
Metropolitan Bank & Trust 400 2,878
18,687
POLAND--.6%
KGHM Polska Miedz, GDR 900 12,240
RUSSIA--2.1%
OAO LUKoil, ADR 350 17,850
Surgutneftegaz, ADR 750 10,125
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
RUSSIA (CONTINUED)
Vimpel-Communications, ADR 400 (a) 17,850
45,825
SINGAPORE--6.0%
Asia Pulp & Paper, ADR 1,250 (a) 9,844
City Developments 5,000 29,271
DBS 2,000 32,783
Fraser & Neave 2,000 7,385
NatSteel 10,000 19,934
Neptune Orient Lines 10,000 (a) 13,389
Overseas Union Bank 3,000 17,562
130,168
SOUTH AFRICA--5.6%
Anglovaal Mining 2,000 17,417
De Beers, ADR 1,000 28,937
Profurn 37,500 41,369
Sappi 3,200 31,610
Sasol, ADR 350 2,931
122,264
SOUTH KOREA--16.6%
H&CB, GDR 1,000 (a,b) 29,750
Korea Electric Power, ADR 3,500 58,625
Korea Telecom, ADR 1,000 74,750
L.G. Chemical, GDR 800 (a,b) 29,840
Pohang Iron & Steel, ADR 1,200 42,000
SK, GDR 4,000 (a) 30,600
SK Telecom, ADR 1,545 59,289
Samsung Electronics, GDR 300 (b) 36,675
361,529
TAIWAN--7.0%
China Steel, GDR 2,000 29,950
Evergreen Marine, GDR 1,500 (a) 12,750
Siliconware Precision Industries, GDR 2,500 (a) 36,188
Taiwan Semiconductor Manufacturing, ADR 1,650 (a) 74,250
153,138
TURKEY--3.9%
Akbank T.A.S., ADR 5,000 26,875
Haci Omer Sabanci, ADR 3,000 39,750
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
TURKEY (CONTINUED)
Tansas Izmir Buyuksehir Belediyesi Ic ve Dis Ticaret 100,000 (a) 18,897
85,522
UNITED KINGDOM--1.9%
Antofagasta 6,000 41,664
VENEZUELA--1.0%
Compania Anonima Nacional Telefonos
de Venezuela, ADR 900 22,163
TOTAL COMMON STOCKS
(cost $1,935,218) 2,110,786
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--2.0% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
4.82%, 1/13/2000
(cost $43,924) 44,000 43,943
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,979,142) 98.8% 2,154,729
CASH AND RECEIVABLES (NET) 1.2% 26,530
NET ASSETS 100.0% 2,181,259
(A) NON-INCOME PRODUCING.
(B) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT DECEMBER 31, 1999,
THESE SECURITIES AMOUNTED TO $96,265 OR APPROXIMATELY 4.4% OF NET ASSETS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 1,979,142 2,154,729
Cash 144,088
Dividends receivable 2,844
Due from The Dreyfus Corporation and affliliates 30,264
2,331,925
- --------------------------------------------------------------------------------
LIABILITIES ($):
Payable for investment securities purchased 119,075
Accrued expenses 31,591
150,666
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,181,259
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,000,000
Accumulated undistributed investment income--net 3,777
Accumulated net realized gain (loss) on investments 1,895
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 175,587
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,181,259
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
160,000
NET ASSET VALUE, offering and redemption price per share ($) 13.63
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
from December 15, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $474 foreign taxes withheld at source) 3,310
Interest 2,413
TOTAL INCOME 5,723
EXPENSES:
Investment advisory fee--Note 2(a) 1,216
Auditing fees 15,000
Legal fees 10,000
Custodian fees 5,000
Prospectus and shareholders' reports 1,000
Registration fees 526
Trustees' fees and expenses--Note 2(b) 98
Shareholder servicing costs 11
Miscellaneous 575
TOTAL EXPENSES 33,426
Less--expense reimbursement from The Dreyfus Corportation
due to undertaking--Note 2(a) (31,480)
NET EXPENSES 1,946
INVESTMENT INCOME--NET 3,777
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 1,895
Net unrealized appreciation (depreciation) on investments 175,587
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 177,482
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 181,259
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
from December 15, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,777
Net realized gain (loss) on investments 1,895
Net unrealized appreciation (depreciation) on investments 175,587
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 181,259
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
NET PROCEEDS FROM SHARES SOLD 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,181,259
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 2,181,259
Undistributed investment income--net 3,777
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
SHARES SOLD 160,000
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from December 15,
1999 (commencement of operations) to December 31, 1999. Total return shows how
much your investment in the portfolio would have increased (or decreased) during
the period. These figures have been derived from the portfolio's financial
statements.
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
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(a)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .09(a)
Ratio of net investment income to average net assets .18(a)
Decrease reflected in above expense ratio
due to undertaking by The Dreyfus Corporation 1.51(a)
Portfolio Turnover Rate .43(a)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,181
(A) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering eleven
series, including the Emerging Markets Portfolio (the "portfolio" ). The
portfolio is only offered to separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies. The portfolio is a non-diversified series. The portfolio's investment
objective is to provide long-term capital growth. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon
Financial Corporation. Premier Mutual Fund Services, Inc. is the distributor of
the portfolio's shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 160,000 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(b) Foreign currency transactions: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $618 for the period ended December 31, 1999, based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
from net realized capital gain are normally declared and paid annually, but the
portfolio may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
" Code" ). To the extent that net realized capital gain can be offset by capital
loss carryovers, if any, it is the policy of the portfolio not to distribute
such gain.
(e) Federal income taxes: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1.25% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from December 15, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 2% of the value of the portfolio's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $31,480 during the period ended December 31, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$1,942,186 and $9,135, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$175,587, consisting of $183,961 gross unrealized appreciation and $8,374 gross
unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Emerging Markets Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Emerging Markets
Portfolio (one of the series constituting Dreyfus Investment Portfolios) as of
December 31, 1999 and the related statements of operations and changes in net
assets and financial highlights for the period from December 15, 1999
(commencement of operations) to December 31, 1999. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Emerging Markets Portfolio at December 31, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from December 15, 1999 to December 31, 1999,
in conformity with accounting principles generally accepted in the United
States.
New York, New York
February 7, 2000
NOTES
For More Information
Dreyfus Premier Investment Portfolios,
Emerging Markets Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 191AR9912
================================================================================
Dreyfus
Investment Portfolios,
European Equity
Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
19 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
European Equity Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
European Equity Portfolio, covering the period from its inception on April 30,
1999 to December 31, 1999. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with its portfolio manager, Joanna Bowen of Newton Capital Management Limited,
the portfolio's sub-investment adviser.
International economies surprised many analysts with their resiliency in 1999.
Instead of remaining mired in recession after the currency- and credit-related
dislocations that adversely affected their economies in 1997 and 1998, most
developed and emerging markets enjoyed positive economic growth trends in 1999.
As a result, international stocks generally outperformed U.S. stocks in 1999, as
measured by the MSCI EAFE((reg.tm)) and the S&P 500 indices. The international
stock markets were led higher by developed markets in Japan and Asia, where
economic recoveries and financial system reforms drove stock prices higher.
Europe also produced generally attractive returns, benefiting from corporate
restructuring and the effects of economic unification and the introduction of a
single currency, the euro. Emerging markets in Asia, Latin America and Eastern
Europe also performed well in 1999.
We appreciate your confidence and we look forward to your continued
participation in Dreyfus Investment Portfolios, European Equity Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Joanna Bowen, Portfolio Manager
Newton Capital Management Limited, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, European Equity Portfolio perform
relative to its benchmark?
For the period from its inception on April 30, 1999 to December 31, 1999, the
Dreyfus Investment Portfolios, European Equity Portfolio produced a total return
of 29.20% .(1) In contrast, the Financial Times Eurotop 300 Index, which serves
as the portfolio's benchmark, returned 15.87% in U.S. dollar terms for the same
period.(2)
The portfolio' s emphasis on information technology and telecommunications
companies accounted for much of its strong performance during the reporting
period. In addition, our significant holdings in aluminum and other basic
commodity companies benefited from Europe's escalating economic growth rate.
What is the portfolio's investment approach?
The portfolio, which seeks to outperform the European stock market in U.S.
dollar terms, invests primarily in the 300 largest European companies. We
identify investment themes, such as the impact of new technologies, aging
populations, and the communications revolution, and invest in companies that we
believe are best positioned to benefit from these trends. Within markets and
sectors, we seek attractively priced companies that possess a sustainable
competitive advantage. In addition, we attempt to identify and forecast key
economic variables, such as gross domestic product, inflation and interest
rates.
What other factors influenced the portfolio's performance?
During 1999, the euro declined sharply, thereby diluting U.S. dollar-denominated
investment returns. But the weak euro enhanced the competitiveness of European
exporters, providing a spark to the region's economic growth. Europe has also
been in the midst of a mergers and acquisitions boom. The driving forces behind
this activ The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
ity have been heightened global competition, government deregulation of
industries, such as telecommunications, and the increasing pressure from
investors for management to improve returns on capital. In addition, the
recovery of Asia' s economies is benefiting European exporters since Asia is a
major market for European products. Meanwhile, Europe's population is becoming
more and more sophisticated about investing and planning for retirement, which
has further fueled demand for stocks there. This increased interest in European
stocks coupled with an improving economy has boosted European stock prices, thus
benefiting the portfolio's performance.
What is the portfolio's current strategy?
The portfolio' s current strategy and strong performance reflect an emphasis on
information technology and telecommunications, two areas that have dominated
European stock markets over the past year, as well as the rest of the world.
In telecommunications, strong performers for the portfolio during the reporting
period included Portugal Telecom and Telefonica (Spain), both companies that
previously were government entities. As the telecom industry was liberalized and
privatized, competition entered the markets, driving down prices. In Germany,
our investment in Mannesmann benefited from a merger bid from Vodafone AirTouch
as well as the booming growth of wireless services throughout Europe.
The Internet has been revolutionizing Europe. For example, brokerage services
and other financial products are available over the net and are driving down
prices for financial products. We expect much of the growth in Internet usage to
stem from business-to-business rather than business-to-retail commerce. We
believe that SAP, with its business-to-business e-commerce software solutions,
has the potential to be a beneficiary. We also believe that interactive
information flows will take place through television as well as personal
computers in Europe, which is why we invested in OpenTV, a software developer
focusing on that particular kind of technology.
Internet portals require content to attract customers to their sites. We
believe that media stocks can benefit as demand for their content
increases. As of December 31, 1999, the portfolio was overweight the media
sector, holding stocks such as Reuters and VNU. The rapid development and
deployment of new technologies is driving demand for IT consulting services,
where the portfolio was also overweight at the end of the reporting period.
Another portfolio strategy is to focus on companies that might benefit from
restructuring and/or industry consolidation. For instance, Hoechst, a German
chemical company, and Rhone-Poulenc, a French pharmaceutical concern, merged to
form Aventis, resulting in significant cost savings from the combination, which
propelled the stock price upward. We sold the stock at a large gain and
reinvested into Bayer, a German chemical company that has a pharmaceutical
business. We believe this company is similarly undervalued and can benefit from
Europe's growing economy.
When we make an investment, we pay close attention to the pricing power that
these companies can command in the marketplace. If they are in an industry, such
as retailing, where there's a chance of significant price deflation, then we are
cautious. In contrast, we favor industries that are consolidating, which we
believe can result in bigger market share and better pricing power. Although
we' re maintaining our weighting in technology and telecommunications, we are
keenly aware of their extremely high stock prices. At the same time, we remain
invested there because we recognize that these industries also generally have
the greatest opportunity for growth.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION PORTFOLIO SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE
DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. RETURN
FIGURES PROVIDED REFLECT THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THAT MAY BE EXTENDED,
TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE
PORTFOLIO'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: BLOOMBERG, L.P. -- THE FINANCIAL TIMES EUROTOP 300 INDEX IS A
MARKET CAPITALIZATION INDEX OF EUROPE'S LARGEST 300 COMPANIES. REFLECTS
REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Investment
Portfolios, European Equity Portfolio and the Financial Times Eurotop 300 Index
- --------------------------------------------------------------------------------
Actual Aggregate Total Return AS OF 12/31/99
Inception From
Date Inception
- --------------------------------------------------------------------------------
PORTFOLIO 4/30/99 29.20%
(+) SOURCE: BLOOMBERG L.P.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts which will reduce returns.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS INVESTMENT
PORTFOLIOS, EUROPEAN EQUITY PORTFOLIO ON 4/30/99 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE ON THAT DATE IN THE FINANCIAL TIMES EUROTOP 300 INDEX. ALL
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE FINANCIAL TIMES EUROTOP 300
INDEX MEASURES THE PERFORMANCE OF EUROPE'S LARGEST 300 COMPANIES BY MARKET
CAPITALIZATION.
THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER
INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS,
IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE
PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--90.0% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
AUSTRIA--2.0%
<S> <C> <C>
Voest-Alpine Stahl 3,400 132,606
BELGIUM--.6%
Lernout & Hauspie Speech Products 900 a 41,625
FINLAND--2.6%
Nokia 950 172,334
FRANCE--12.6%
Axa 830 115,768
Cap Gemini 265 67,301
Elf Aquitaine 23 3,547
IPSOS 750 62,055
Rexel 740 66,001
Societe Generale, Cl. A 680 158,305
Total Fina, Cl. B 1,541 205,775
Vivendi 1,670 150,883
829,635
GERMANY--11.5%
Bayer 3,400 161,047
Bayerische Motoren Werke 2,890 88,250
Global TeleSystems 2,890 (a) 101,939
Linde 3,260 178,399
Mannesmann 680 164,130
Zapf Creation 1,920 (a) 63,854
757,619
IRELAND--1.7%
Bank of Ireland 13,900 110,667
ITALY-4.9%
ENI 20,400 111,903
Italcementi 5,100 61,641
Telecom Italia 10,600 149,023
322,567
NETHERLANDS--9.4%
Fortis 4,000 144,115
Getronics 790 63,056
ING Groep 2,130 128,668
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
NETHERLANDS (CONTINUED)
VNU 4,200 220,866
Wolters Kluwer 1,820 61,629
618,334
PORTUGAL--4.1%
Banco Pinto & Sotto Mayor 1,250 26,808
PT MULTIMEDIA 2,190 (a) 124,634
Portugal Telecom 11,050 121,273
272,715
SPAIN--4.9%
Argentaria 4,400 103,453
Funespana 4,500 59,863
Telefonica 6,440 (a) 160,958
324,274
SWEDEN--4.5%
Skandia Forsakrings 4,200 127,033
Telefonaktiebolaget LM Ericsson 2,640 169,952
296,985
SWITZERLAND--3.0%
Miracle Holding 310 (a) 89,562
UBS 390 105,326
194,888
UNITED KINGDOM--27.0%
Bank of Scotland 5,900 68,506
Barclays 2,000 57,555
Billiton 17,800 104,992
Blue Circle Industries 19,400 112,706
Bodycote International 20,400 99,820
Capital Shopping Centres 13,600 74,673
Dixons Group 3,700 88,970
Glaxo Wellcome 4,600 130,000
Granada 13,000 131,735
Great Universal Stores 11,400 66,644
Northern Rock 12,400 79,098
Prudential 7,000 137,912
Rentokil Initial 18,200 66,351
Reuters 6,100 83,683
Shell Transport & Trading 29,900 248,429
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
Stagecoach Holdings 21,200 54,606
Standard Chartered 5,800 90,011
Vodafone Air Touch 17,400 86,194
1,781,885
UNITED STATES--1.2%
OpenTV 960 (a) 77,040
TOTAL COMMON STOCKS
(cost $5,274,188) 5,933,174
- ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--5.6%
- ------------------------------------------------------------------------------------------------------------------------------------
GERMANY--4.7%
Fielmann 3,400 101,768
Fresenius 610 111,886
SAP 160 96,426
310,080
PORTUGAL--.9%
Lusomundo 6,500 58,301
TOTAL PREFERRED STOCKS
(cost $384,343) 368,381
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $5,658,531) 95.6% 6,301,555
CASH AND RECEIVABLES (NET) 4.4% 290,539
NET ASSETS 100.0% 6,592,094
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 5,658,531 6,301,555
Cash 245,855
Receivable for investment securities sold 105,063
Dividends receivable 4,766
Prepaid expenses 42
Due from The Dreyfus Corporation and affiliates 4,324
6,661,605
- --------------------------------------------------------------------------------
LIABILITIES ($):
Payable for investment securities purchased 35,805
Payable for shares of Beneficial Interest redeemed 403
Accrued expenses 33,303
69,511
- --------------------------------------------------------------------------------
NET ASSETS ($) 6,592,094
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 5,498,081
Accumulated undistributed investment income--net 621
Accumulated net realized gain (loss) on investments
and foreign currency transactions 448,351
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 645,041
- --------------------------------------------------------------------------------
NET ASSETS ($) 6,592,094
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
412,942
NET ASSET VALUE, offering and redemption price per share ($) 15.96
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
from April 30, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $4,062 foreign taxes withheld at source) 26,396
Interest 9,007
TOTAL INCOME 35,403
EXPENSES:
Investment advisory fee--Note 2(a) 17,955
Custodian fees 26,305
Auditing fees 20,156
Legal fees 15,744
Prospectus and shareholders' reports 7,239
Registration fees 1,451
Trustees' fees and expenses--Note 2(b) 723
Shareholder servicing costs 204
Miscellaneous 625
TOTAL EXPENSES 90,402
Less--expense reimbursement from TheDreyfus Corporation
due to undertaking--Note 2(a) (63,470)
NET EXPENSES 26,932
INVESTMENT INCOME--NET 8,471
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments and foreign currency
transactions 522,363
Net realized gain (loss) on forward currency exchange contracts (5,785)
NET REALIZED GAIN (LOSS) 516,578
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 645,041
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,161,619
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,170,090
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
from April 30, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 8,471
Net realized gain (loss) on investments 516,578
Net unrealized appreciation (depreciation) on investments 645,041
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,170,090
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (13,354)
Net realized gain on investments (62,723)
TOTAL DIVIDENDS (76,077)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 6,149,601
Dividends reinvested 76,077
Cost of shares redeemed (727,597)
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST
TRANSACTIONS 5,498,081
TOTAL INCREASE (DECREASE) IN NET ASSETS 6,592,094
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 6,592,094
Undistributed investment income-net 621
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 456,730
Shares issued for dividends reinvested 4,827
Shares redeemed (48,615)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 412,942
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from April 30, 1999
(commencement of operations) to December 31, 1999. Total return shows how much
your investment in the portfolio would have increased (or decreased) during the
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the portfolio's financial statements.
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.50
Investment Operations:
Investment income--net .04(a)
Net realized and unrealized gain (loss) on investments 3.61
Total from Investment Operations 3.65
Distributions:
Dividends from investment income--net (.03)
Dividends from net realized gain on investments (.16)
Total Distributions (.19)
Net asset value, end of period 15.96
- --------------------------------------------------------------------------------
TOTAL RETURN (%) 29.20(b)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.01(b)
Ratio of net investment income to average net assets .32(b)
Decrease reflected in above expense ratio due to
undertakings by The Dreyfus Corporation 2.38(b)
Portfolio Turnover Rate 99.89(b)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 6,592
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company operating as a series company currently offering eleven
series, including the European Equity Portfolio (the "portfolio" ) which
commenced operations on April 30, 1999. The portfolio is only offered to
separate accounts established by insurance companies to fund variable annuity
contracts and variable life insurance policies. The portfolio is a diversified
series. The portfolio' s investment objective is to provide long-term capital
growth. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's investment
adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A. which is a
wholly-owned subsidiary of Mellon Financial Corporation. Newton Capital
Management Limited (" Newton" ), an affiliate of Dreyfus, serves as the
portfolio' s sub-investment adviser. Premier Mutual Fund Services, Inc. is the
distributor of the portfolio's shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investment Corp., an indirect subsidiary of Mellon
Financial Corporation, held 161,909 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $8,703 during the period ended December 31, 1999 based
on avail
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
able cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $5,504 and decreased accumulated net
realized gain (loss) on investments by $5,504. Net assets were not affected by
this reclassification.
NOTE 2--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from April 30, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 1.50% of the value of the portfolio's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $63,470 during the period ended December 31, 1999.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and Newton, the
sub-investment advisory fee is payable monthly by Dreyfus, and is based upon the
value of the portfolio' s average daily net assets, computed at the following
annual rates:
AVERAGE NET ASSETS
0 to $100 million .35 of 1%
In excess of $100 million to $1 billion .30 of 1%
In excess of $1 billion to $1.5 billion .26 of 1%
In excess of $1.5 billion .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $18 pursuant to the
transfer agency agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and forward currency exchange contracts, during the period
ended December 31, 1999, amounted to $7,607,011 and $2,459,555, respectively.
The portfolio enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to settle foreign currency transactions. When executing
forward currency exchange contracts, the portfolio is obligated to buy or sell a
foreign currency at a specified rate on a certain date in the future. With
respect to sales of forward currency exchange contracts, the portfolio would
incur a loss if the value of the contract increases between the date the forward
contract is opened and the date the forward contract is closed. The port
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
folio realizes a gain if the value of the contract decreases between those
dates. With respect to purchases of forward currency exchange contracts, the
portfolio would incur a loss if the value of the contract decreases between the
date the forward contract is opened and the date the forward contract is closed.
The portfolio realizes a gain if the value of the contract increases between
those dates. The portfolio is also exposed to credit risk associated with
counter party nonperformance on these forward currency exchange contracts which
is typically limited to the unrealized gain on each open contract. At December
31, 1999, there were no forward currency exchange contracts outstanding.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$643,024, consisting of $776,689 gross unrealized appreciation and $133,665
gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, European Equity Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, European Equity
Portfolio (one of the series constituting the Dreyfus Investment Portfolios) as
of December 31, 1999, and the related statements of operations and changes in
net assets and financial highlights for the period from April 30, 1999
(commencement of operations) to December 31, 1999. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, European Equity Portfolio at December 31, 1999,
and the results of it operations, the changes in its net assets and the
financial highlights for the period from April 30, 1999 to December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
New York, New York
February 7, 2000
The Portfolio
NOTES
For More Information
Dreyfus Investment Portfolios, European Equity Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Newton Capital Management Limited
71 Queen Victoria Street
London, EC4V 4DR
England
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 181AR9912
================================================================================
Dreyfus Investment
Portfolios, Founders
Discovery Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
19 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Founders Discovery Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Founders Discovery Portfolio, covering the period from the portfolio's inception
on December 15, 1999 through December 31, 1999. Inside, you'll find valuable
information about how the portfolio was managed during the reporting period,
including a discussion with its portfolio manager, Robert Ammann of Founders
Asset Management LLC, the portfolio's sub-investment adviser.
The past year has been both highly volatile and rewarding for investors in U.S.
stocks, including the small-capitalization sector of the market. On December 31,
the last trading day of 1999, most major stock market indices hit new highs,
including the Dow Jones Industrial Average, the S&P 500 Index of large-cap
stocks, the technology-heavy Nasdaq 100 and the Russell 2000 Index of
small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the advance of the
stock market, including the small-cap market, in 1999, however. Growth-oriented
small-cap stocks handily outperformed value-oriented small-cap stocks throughout
the year. Indeed, the overall stock market's stellar performance was generally
limited to a handful of highly valued technology and telecommunications
companies, some of which have no earnings. In our view, many fundamentally sound
small-cap companies in other market sectors may be selling at attractive
valuations.
We appreciate your confidence and we look forward to your continued
participation in Dreyfus Investment Portfolios, Founders Discovery Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Robert Ammann, Portfolio Manager
Founders Asset Management LLC, Sub-Investment Adviser
What is Dreyfus Investment Portfolios, Founders Discovery Portfolio's investment
approach?
The portfolio invests primarily in small and relatively unknown companies that
we believe possess high growth potential. The portfolio will normally invest at
least 65% of its total assets in common stocks of small, rapidly growing
U.S.-based companies with market capitalizations between $10 million and $1.5
billion. Typically, these companies are not listed on national securities
exchanges, but instead trade on the over-the-counter market. The portfolio may
also invest in larger companies if, in our opinion, they represent better
prospects for capital appreciation. Although the portfolio will normally invest
in common stocks of U.S.-based companies, it may invest up to 30% of its total
assets in foreign securities.
Rather than utilizing a "top-down" approach to stock selection, which relies on
forecasting stock market trends, we focus on a "bottom-up" approach to stock
selection, in which stocks are chosen according to their own individual merits.
Stock selection is made on a company-by-company basis, with particular emphasis
given to companies that we believe are well managed and well positioned within
their industries.
In future reports, we will measure the portfolio's performance against that of
its benchmark, the Russell 2000 Index.(1)
What were the market conditions like when the portfolio was launched?
While the portfolio had only been in operation for a two-week period as of
December 31, 1999, it's important to understand the backdrop of the markets in
which it invests.
When the year began, investors were concerned that recessions in overseas
markets might cause a slowdown in the U.S. economy. Those
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
concerns quickly eased, however, when evidence emerged early in the year that
U.S. economic growth would be stronger than expected. In fact, investors soon
became concerned that unsustainable growth might re-ignite long-dormant
inflationary pressures. In response to inflation fears, the Federal Reserve
Board raised key short-term interest rates three times during the summer and
fall.
Rising interest rates and inflation fears created heightened volatility in the
stock market. In fact, despite good performance for most popular market indexes,
only a few sectors of the equity markets performed well this past year -- most
of the gains were limited to technology stocks and, to a lesser degree,
telecommunications stocks. The portfolio maintained healthy exposure to these
sectors in its short period of existence, and as a result we were able to
benefit from our holdings there.
Within technology, several positive investment themes emerged. For example, the
portfolio benefited from its holdings related to what many industry analysts are
currently referring to as "the digital revolution of consumer electronics."
Fueled by advances in the DVD (digital videodisc) player market, this theme was
strong throughout the year. However, it was especially strong during the fourth
quarter of 1999, the period in which the portfolio commenced operations.
Two other technology themes that were successful were those related to bandwidth
and Internet professional service companies. The bandwidth theme gained
significant ground in 1999, primarily due to a large number of companies that
are providing technology infrastructure to "the new economy," including numerous
telecommunications equipment and semiconductor companies. On the other hand, the
success of Internet professional service companies lies primarily in their
ability to help companies develop and implement their Internet strategies.
What is the portfolio's current strategy?
We are very pleased with the initial success of the portfolio and are
maintaining our bottom-up strategy of selecting stocks one at a time based on
their own individual merits.
In addition, while we have remained optimistic regarding the strong performance
in selected technology stocks, we have begun to seek to capitalize on the very
attractive valuations that currently exist in some recently overlooked growth
sectors within the small-cap market. We are searching for new trends in market
sectors in which we can establish or build on existing positions that, in our
opinion, will allow us to increase the portfolio's returns.
Finally, by maintaining our strategy of constructing a diversified portfolio of
growth-oriented small-cap stocks across many sectors, we hope to provide
shareholders with an investment vehicle that is able to benefit from changing
market conditions.
January 14, 2000
(1) THE RUSSELL 2000 INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF SMALL-CAP
STOCK PERFORMANCE.
The Portfolio
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--98.3% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
APPAREL--1.0%
<S> <C> <C>
Pacific Sunwear of California 723 (a) 23,046
BUILDING MATERIALS--.3%
U.S. Plastic Lumber 743 (a) 5,712
BUSINESS SERVICES--13.9%
Braun Consulting 460 (a) 32,890
CDW Computer Centers 183 (a) 14,388
Chemdex 126 (a) 13,986
Corporate Executive Board 235 (a) 13,131
Digex 115 (a) 7,906
Dycom Industries 504 (a) 22,207
4Front Technologies 813 (a) 10,874
Insight Enterprises 973 (a) 39,528
Management Network Group 656 (a) 21,402
NCO Group 232 (a) 6,989
National Information Consortium 304 (a) 9,728
Profit Recovery Group International 869 (a) 23,083
Quanta Services 869 (a) 24,549
Sykes Enterprises 443 (a) 19,437
USWeb 1,101 (a) 48,926
309,024
COMPUTER NETWORKING--.5%
Digital River 315 (a) 10,493
COMPUTER SOFTWARE/SERVICES--20.6%
Andover.Net 160 (a) 5,700
Aspect Development 406 (a) 27,811
BindView Development 373 (a) 18,533
Dendrite International 1,028 (a) 34,824
Documentum 396 (a) 23,710
Entrust Technologies 437 (a) 26,193
Exchange Applications 298 (a) 16,651
ITXC 197 (a) 6,624
JNI 75 (a) 4,950
Liquid Audio 375 (a) 9,844
Macromedia 335 (a) 24,497
Mercury Interactive 171 (a) 18,457
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES (CONTINUED)
NetIQ 127 (a) 6,612
PC-Tel 472 (a) 24,780
Peregrine Systems 445 (a) 37,463
Pinnacle Systems 641 (a) 26,081
Puma Technology 154 (a) 20,116
RAVISENT Technologies 1,105 (a) 42,473
Remedy 433 (a) 20,513
Tanning Technology 222 (a) 13,084
TenFold 789 (a) 31,511
Zamba 957 (a) 16,628
457,055
CONSUMER PRODUCTS--2.6%
Fossil 1,519 (a) 35,127
Topps 2,059 (a) 21,362
56,489
CONSUMER SERVICES--.4%
ITT Educational Services 630 (a) 9,726
DISTRIBUTION--.5%
Patterson Dental 270 (a) 11,509
ELECTRONICS--5.9%
Gentex 622 (a) 17,260
Macrovision 392 (a) 29,008
Medthode Electronics, Cl. A 808 25,957
Optimal Robotics 637 (a) 23,728
SmartDisk 251 (a) 8,220
Titan 592 (a) 27,898
132,071
FINANCIAL SERVICES--2.3%
CompuCredit 634 (a) 24,409
Pfsweb 280 (a) 10,500
Silicon Valley Bancshares 321 (a) 15,890
50,799
HEALTHCARE SERVICES--3.6%
Accredo Health 372 (a) 11,439
Albany Molecular Research 783 (a) 23,882
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE SERVICES (CONTINUED)
InfoCure 1,075 (a) 33,527
Orthodontic Centers of America 847 (a) 10,111
78,959
LEISURE & ENTERTAINMENT--3.7%
Fairfield Communities 1,371 (a) 14,738
JAKKS Pacific 1,212 (a) 22,649
3DO 1,378 (a) 12,531
Station Casinos 985 (a) 22,101
Sunterra 882 (a) 10,143
82,162
MANUFACTURING--2.6%
Insituform Technologies, Cl. A 630 (a) 17,798
Trex 295 (a) 7,891
Zomax 718 (a) 32,489
58,178
MEDICAL SUPPLIES & EQUIPMENT--1.2%
PolyMedica 1,146 (a) 26,501
OIL SERVICES--1.0%
National-Oilwell 630 (a) 9,883
Stolt Comex Seaway 1,186 (a) 13,120
23,003
PHARMACEUTICALS--.7%
King Pharmaceuticals 291 (a) 16,314
PUBLISHING & BROADCASTING--1.1%
Cox Radio, Cl. A 137 (a) 13,666
Radio Unica 344 (a) 9,933
23,599
RETAIL--10.7%
American Eagle Outfitters 387 (a) 17,415
Ames Department Stores 539 (a) 15,530
AnnTaylor Stores 6 (a) 207
Bebe Stores 608 (a) 16,416
Callaway Golf 1,291 22,835
Men's Wearhouse 879 (a) 25,821
REX Stores 1,252 (a) 43,820
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL (CONTINUED)
Sharper Image 1,171 (a) 14,857
99 Cents Only Stores 454 (a) 17,365
Tweeter Home Entertainment Group 543 (a) 19,276
Ultimate Electronics 946 (a) 23,414
Williams-Sonoma 169 (a) 7,774
Yankee Candle 858 (a) 13,996
238,726
SEMICONDUCTORS & EQUIPMENT--14.4%
ASM International 1,116 (a) 25,668
Advanced Energy Industries 234 (a) 11,525
American Xtal Technology 1,180 (a) 20,576
Applied Micro Circuits 118 (a) 15,016
AstroPower 558 (a) 7,812
Brooks Automation 670 (a) 21,817
Cree 600 (a) 51,225
EMCORE 1,075 (a) 36,550
Kopin 480 (a) 20,160
Optical Coating Laboratory 50 14,800
PRI Automation 257 (a) 17,251
Pericom Semiconductor 686 (a) 18,050
SanDisk 301 (a) 28,971
Zoran 544 (a) 30,328
319,749
TELECOMMUNICATION EQUIPMENT--6.4%
Aether Systems 80 (a) 5,730
Digital Microwave 2,832 (a) 66,375
Finisar 40 (a) 3,595
Proxim 172 (a) 18,920
REMEC 1,015 (a) 25,883
Sawtek 310 (a) 20,634
141,137
TELECOMMUNICATION SERVICES--1.1%
Allegiance Telecom 128 (a) 11,808
TeleCorp 355 (a) 13,490
25,298
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--3.8%
C.H. Robinson Worldwide 413 16,417
Circle International Group 1,236 27,501
USFreightways 851 40,742
84,660
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,968,487) 98.3% 2,184,210
CASH AND RECEIVABLES (NET) 1.7% 38,590
NET ASSETS 100.0% 2,222,800
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 1,968,487 2,184,210
Cash 10,135
Receivable for investment securities sold 73,373
Dividends receivable 59
Due from The Dreyfus Corporation and affiliates 29,819
2,297,596
- --------------------------------------------------------------------------------
LIABILITIES ($):
Payable for investment securities purchased 44,670
Accrued expenses 30,126
74,796
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,222,800
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,000,000
Accumulated undistributed investment income--net 1,214
Accumulated net realized gain (loss) on investments 5,863
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 215,723
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,222,800
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
160,000
NET ASSET VALUE, offering and redemption price per share ($) 13.89
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
from December 15, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends 59
Interest 2,631
TOTAL INCOME 2,690
EXPENSES:
Investment advisory fee--Note 2(a) 886
Auditing fees 15,000
Legal fees 10,000
Custodian fees--Note 2(a) 4,663
Registration fees 528
Prospectus and shareholders' reports 310
Shareholder servicing costs 101
Trustees' fees and expenses--Note 2(b) 69
Miscellaneous 625
TOTAL EXPENSES 32,182
Less--expense reimbursement from The Dreyfus Corporation
due to undertaking--Note 2(a) (30,706)
NET EXPENSES 1,476
INVESTMENT INCOME--NET 1,214
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 5,863
Net unrealized appreciation (depreciation) on investments 215,723
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 221,586
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 222,800
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
from December 15, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 1,214
Net realized gain (loss) on investments 5,863
Net unrealized appreciation (depreciation) on investments 215,723
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 222,800
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
NET PROCEEDS FROM SHARES SOLD 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,222,800
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 2,222,800
Undistributed investment income--net 1,214
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
SHARES SOLD 160,000
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from December 15,
1999 (commencement of operations) to December 31, 1999. Total return shows how
much your investment in the portfolio would have increased (or decreased) during
the period. These figures have been derived from the portfolio's financial
statements.
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
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(a)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .07(a)
Ratio of net investment income to average net assets .06(a)
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation 1.45(a)
Portfolio Turnover Rate 7.49(a)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,223
(A) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering eleven
series, including the Founders Discovery Portfolio (the "portfolio"). The
portfolio is only offered to separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies. The portfolio is a diversified series. The portfolio's investment
objective is to provide capital appreciation. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Founders Asset Management LLC ("Founders")
serves as the portfolio' s sub-investment adviser. Founders is a 90%-owned
subsidiary of Mellon. Premier Mutual Fund Services, Inc. is the distributor of
the portfolio's shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 160,000 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
sales price on the national securities market. Securities not listed on an
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available. Securities for which
there are no such valuations are valued at fair value as determined in good
faith under the direction of the Board of Trustees. Investments denominated in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
(b) Foreign currency transactions: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $1,170 during the period ended December 31, 1999 based
on available cash balances left on deposit. Income earned under this arrangement
is included in interest income.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(e) Federal income taxes: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .90 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from December 15, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio's aggregate expenses exclusive of
taxes, brokerage, interest on borrowings and extraordinary expenses exceed an
annual rate of 1.50% of the value of the portfolio's average daily net assets.
The expense reimbursement, pursuant to the undertaking, amounted to $30,706
during the period ended December 31, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fees are payable monthly by Dreyfus, and is
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
based upon the value of the portfolio's average daily net assets, computed at
the following annual rates:
Average Net Assets
------------------------
0 to $100 million . . . . . . . . . . . . . . . . . . . . .25 of 1%
In excess of $100 million to $1 billion . . . . . . . . . .20 of 1%
In excess of $1 billion to $1.5 billion . . . . . . . . . .16 of 1%
In excess of $1.5 billion . . . . . . . . . . . . . . . . .10 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $4,663 pursuant to the custody agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$2,126,300 and $163,676, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$215,723, consisting of $263,589 gross unrealized appreciation and $47,866 gross
unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Founders Discovery Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Founders
Discovery Portfolio (one of the series constituting Dreyfus Investment
Portfolios) as of December 31, 1999 and the related statements of operations and
changes in net assets and financial highlights for the period from December 15,
1999 (commencement of operations) to December 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders Discovery Portfolio at December 31,
1999, and the results of its operations, the changes in its net assets and the
financial highlights for the period from December 15, 1999 to December 31, 1999,
in conformity with accounting principles generally accepted in the United
States.
New York, New York
February 7, 2000
The Portfolio
NOTES
For More Information
Dreyfus Investment Portfolios,
Founders Discovery Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 193AR9912
================================================================================
Dreyfus
Investment Portfolios,
Founders Growth Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
8 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
22 Report of Independent Auditors
23 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Founders Growth Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Founders Growth Portfolio, covering the 12-month period from January 1, 1999
through December 31, 1999. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with its portfolio managers, Scott Chapman, CFA and Thomas Arrington, CFA of
Founders Asset Management LLC, the portfolio's sub-investment adviser.
The past year has been both highly volatile and rewarding for many investors in
U.S. stocks. On December 31, the last trading day of 1999, most major stock
market indices hit new highs, including the Dow Jones Industrial Average, the S&
P 500 Index of large-cap stocks, the technology-heavy Nasdaq 100 and the Russell
2000 Index of small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the stock market's
advance in 1999, however. Following the trend established over the past several
years, growth-oriented stocks handily outperformed value-oriented stocks.
Indeed, until a more broad-based rally in the fourth quarter, stellar
performance was generally limited to a handful of highly valued technology and
telecommunications companies. In our view, many fundamentally sound companies in
other market sectors may be selling at attractive valuations.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Investment Portfolios, Founders Growth
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Scott Chapman, CFA and Thomas Arrington, CFA, Portfolio Managers
Founders Asset Management LLC, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, Founders Growth Portfolio perform
relative to its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Investment Portfolios,
Founders Growth Portfolio produced a total return of 39.01%.(1) In contrast, the
Standard & Poor' s 500 BARRA Growth Index, which serves as the portfolio's new
benchmark, returned 27.98% , and the S&P 500((reg.tm)) Composite Stock Price
Index (" S& P 500"), the portfolio's former benchmark, returned 21.03% for the
same period.(2 )The Standard & Poor's 500 BARRA Growth Index has been selected
as the new benchmark for comparing the portfolio's performance based on the
portfolio' s and the Index' s large-cap growth orientation. The portfolio
outperformed its new benchmark primarily due to its stock selection in
technology and telecom companies and to its underweighting in pharmaceutical
companies.
What is the portfolio's investment approach?
The portfolio invests primarily in large, well-managed growth companies whose
performance is not entirely dependent upon the fortunes of the economy.
Utilizing a bottom-up approach, we focus on individual stock selection rather
than on forecasting stock market trends. We look for high quality, proven
companies with an established track record of sustained earnings growth in
excess of industry averages. The companies we select must have a sustainable
competitive advantage, such as a dominant brand name, a high barrier to entry
from competition and/or large untapped market opportunities. Rather than a
short-term focus on next quarter' s profits, we look at a company for its
long-term potential and its earning power over the next three to five years.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
In 1999, the Internet truly became a household fixture, whether it was used to
shop for Christmas, invest in the stock market, conduct research, read the news,
communicate with family members or simply enjoy it for its entertainment value.
Investors began to recognize the Internet's potential, as well as the wide range
of other technology companies needed to make the Internet work better and
faster. Such companies would include telecommunications firms that are building
the wiring of the Internet as well as satisfying the increasing demand for
cellular telephones throughout the world.
While this trend was taking shape, the growth style of investing was
outperforming the value style in 1999. After surging in the first quarter,
growth trailed value in the second quarter as the economy reaccelerated.
However, when interest rates began to rise in the summer, investor preference
returned to growth stocks, in particular technology companies. Leading the way
were those that investors thought would perform better in the slower economic
environment that typically results from higher interest rates. As Y2K fears
subsided, technology stocks surged towards the end of 1999.
What is the portfolio's current strategy?
Our strategy is to pick the best stocks based on individual merits rather than
weighting the portfolio by industry according to any index. However, the
portfolio did own a high proportion of technology and telecommunications stocks,
primarily because high technology is generally where the fastest global growth
resides. Despite what may appear to be high stock prices, we continue to see
significant value in these high-tech companies.
Strong performers included telecommunications companies such as JDS
Uniphase, Nortel Networks and Cisco Systems, three companies that are helping
people and businesses hook up to the Internet. We also own shares of QUALCOMM,
one of the stock market' s biggest winners for 1999, which supplies state-of
the-art technology to the cellular industry, earning a royalty on every CDMA
phone sold through out the world. This area has seen explosive growth as
consumers demand mobility in their communications.
The portfolio' s publishing and broadcasting holdings also performed well,
bolstered by a surge in "dot.com" advertising. In 1999, Internet companies, the
so-called "new media," spent millions of dollars to advertise on radio,
television, newspapers and magazines. These companies have the potential to
benefit in 2000 from political advertising as well as coverage of the Summer
Olympics.
Other traditional blue-chip growth companies were not as successful in 1999,
either because of business missteps, management transition issues or foreign
currency losses. Companies such as Coca-Cola and Gillette, which conduct a large
percentage of their business overseas, found that weaker local currencies
translated into fewer U.S. dollars of profit. In addition, the pharmaceutical
sector has been under a cloud all year due to forthcoming Congressional debates
over whether or not pharmaceutical drugs will be included as part of any
Medicare reform package. Meanwhile, rising interest rates battered financial
companies, as investors became concerned that higher rates might slow loan
growth as well as result in higher defaults. However, we believe recent
Congressional repeal of Depression-era regulations forbidding banks to own
brokerage firms and insurance companies can benefit the banking, brokerage and
insurance industries, helping them to return to profitability and growth.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION PORTFOLIO SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE
DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. RETURN
FIGURES PROVIDED REFLECT THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH DECEMBER 31, 2000, AT
WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT
BEEN ABSORBED, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.-- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
AND POOR'S 500 BARRA GROWTH INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF ALL THE
STOCKS IN THE STANDARD AND POOR'S 500((reg.tm)) COMPOSITE STOCK PRICE INDEX ("S&
P 500 INDEX") THAT HAVE HIGH PRICE-TO-BOOK RATIOS. THE S&P 500 INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of a $10,000 investment in Dreyfus Investment
Portfolios, Founders Growth Portfolio with the Standard & Poor's 500 BARRA
Growth Index and the Standard & Poor's 500 Composite Stock Price Index
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS INVESTMENT
PORTFOLIOS, FOUNDERS GROWTH PORTFOLIO ON 9/30/98 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE ON THAT DATE IN THE STANDARD AND POOR'S 500 BARRA GROWTH INDEX
AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500"). ALL
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES. THIS IS THE FIRST YEAR IN WHICH COMPARATIVE
PERFORMANCE IS BEING SHOWN FOR THE STANDARD AND POOR'S 500 BARRA GROWTH INDEX,
WHICH HAS BEEN SELECTED AS THE BENCHMARK FOR COMPARING THE FUND'S PERFORMANCE
BASED ON THE PORTFOLIO'S AND THE INDEX'S LARGE-CAP GROWTH ORIENTATION. THE
STANDARD AND POOR'S 500 BARRA GROWTH INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF
ALL THE STOCKS IN THE S&P 500 THAT HAVE HIGH PRICE-TO-BOOK RATIOS. THE S&P 500
IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
PERFORMANCE FOR THE S&P 500 WILL NOT BE PROVIDED WITH THE NEXT ANNUAL REPORT,
BUT IS PROVIDED HEREWITH PURSUANT TO APPLICABLE REGULATIONS.
NEITHER OF THE FOREGOING INDICES TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
Average Annual Total Returns AS OF 12/31/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO 9/30/98 39.01% 57.77%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
<TABLE>
<CAPTION>
The Portfolio
STATEMENT OF INVESTMENTS
December 31, 1999
COMMON STOCKS--99.9% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.6%
<S> <C> <C>
General Motors, Cl. H 1,258 (a) 120,768
BANKING--2.1%
Citigroup 1,613 89,622
Fifth Third Bancorp 385 28,249
Wells Fargo 951 38,456
156,327
BIOTECHNOLOGY--1.2%
Amgen 410 (a) 24,626
Genentech 506 (a) 68,057
92,683
BUSINESS SERVICES--1.0%
Cintas 328 17,425
Interpublic Group Cos. 1,016 58,611
76,036
COMPUTER EQUIPMENT--5.0%
Apple Computer 824 (a) 84,717
EMC 949 (a) 103,678
Sun Microsystems 2,399 (a) 185,773
374,168
COMPUTER NETWORKING--3.8%
Cisco Systems 2,632 (a) 281,953
COMPUTER SOFTWARE/SERVICES--14.3%
Amdocs 191 (a) 6,589
Automatic Data Processing 1,411 76,018
BMC Software 266 (a) 21,263
Microsoft 3,088 (a) 360,524
Oracle 1,102 (a) 123,493
Phone.com 266 30,839
RealNetworks 206 24,784
Redback Networks 609 108,097
Sapient 222 (a) 31,288
Siebel Systems 427 (a) 35,868
VeriSign 298 (a) 56,899
Veritas Software 479 (a) 68,557
Yahoo 286 (a) 123,749
1,067,968
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--2.7%
Colgate-Palmolive 770 50,050
Dial 1,665 40,480
Gillette 810 33,362
Procter & Gamble 701 76,803
200,695
CONSUMER SERVICES--1.5%
Cendant 1,729 (a) 45,927
DeVRY 2,145 (a) 39,951
United Parcel Service, Cl. B 391 26,979
112,857
CONSUMER STAPLES--.3%
Chiron 499 (a) 21,145
DIVERSIFIED--1.0%
Berkshire Hathaway, Cl. B 42 (a) 76,860
ELECTRONICS--6.2%
General Electric 1,844 285,359
Jabil Circuit 356 (a) 25,988
PE Biosystems Group 480 57,750
Solectron 205 (a) 19,501
Sony, ADR 213 60,652
Tandy 248 12,199
461,449
FINANCIAL SERVICES--2.4%
Associates First Capital, Cl. A 622 17,066
Federal National Mortgage Association 1,055 65,872
Merrill Lynch 612 51,102
Northern Trust 251 13,303
Schwab (Charles) 868 33,310
180,653
FOOD & BEVERAGES--1.3%
Coca-Cola 1,702 99,141
HOSPITAL SUPPLY--.5%
Guidant 797 (a) 37,459
HEALTHCARE SERVICES--1.0%
IMS Health 2,911 79,143
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.3%
American International Group 748 80,877
Marsh & McLennan Cos. 931 89,085
169,962
INTERNET--.5%
go.com 692 16,478
Infonet Services, Cl. B 782 20,527
37,005
LEISURE & ENTERTAINMENT--3.8%
America Online 1,523 (a) 114,891
Carnival 305 14,583
Harley-Davidson 289 18,514
Viacom, Cl. B 2,270 (a) 137,193
285,181
MANUFACTURING--.8%
Danaher 625 30,156
Tyco International 838 32,577
62,733
MEDICAL SUPPLIES & EQUIPMENT--.5%
Medtronic 1,077 39,243
PHARMACEUTICALS--5.2%
Bristol-Myers Squibb 1,659 106,487
MedImmune 147 (a) 24,384
Merck & Co. 875 58,680
Pfizer 2,098 68,054
Schering-Plough 59 2,489
Warner-Lambert 1,614 132,247
392,341
PUBLISHING & BROADCASTING--10.5%
AMFM 1,913 (a) 149,692
AT&T--Liberty Media Group, Cl. A 2,816 (a) 159,808
Comcast, Cl. A 2,407 (a) 120,952
EchoStar Communications, Cl. A 828 (a) 80,730
Gannett 1,130 92,166
Time Warner 1,887 136,690
USA Networks 808 (a) 44,642
784,680
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--.2%
McDonald's 357 14,392
RETAIL--5.8%
Amazon.com 385 (a) 29,308
Costco Wholesale 1,317 (a) 120,176
Home Depot 2,088 143,157
Intimate Brands 303 13,067
Kohl's 476 (a) 34,361
Wal-Mart Stores 1,309 90,485
430,554
SEMICONDUCTORS & EQUIPMENT--8.7%
Applied Micro Circuits 368 (a) 46,828
Intel 2,302 (a) 189,483
JDS Uniphase 1,228 (a) 198,092
Maxim Integrated Products 792 (a) 37,373
PMC-Sierra 291 (a) 46,651
Texas Instruments 1,367 132,428
650,855
TELECOMMUNICATION EQUIPMENT--9.1%
Comverse Technology 357 (a) 51,676
General Instrument 353 (a) 30,005
Lucent Technologies 531 39,725
Motorola 279 41,083
Nokia, A.D.S. 921 174,990
Omnipoint 208 (a) 25,090
QUALCOMM 1,248 (a) 219,960
RF Micro Devices 690 (a) 47,222
Sycamore Networks 40 12,320
Tellabs 355 (a) 22,787
Williams Communications Group 574 (a) 16,610
681,468
TELECOMMUNICATION SERVICES--6.6%
Level 3 Communications 713 (a) 58,377
MCI WorldCom 627 (a) 33,270
NEXTEL Communications, Cl. A 642 (a) 66,206
Nortel Networks 860 86,860
Sprint (PCS Group) 535 (a) 54,838
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES (CONTINUED)
Vodafone AirTouch, A.D.R. 479 23,711
VoiceStream Wireless 687 (a) 97,769
Western Wireless, Cl. A 437 (a) 29,170
Winstar Communications 552 (a) 41,538
491,739
TOTAL COMMON STOCKS
(cost $5,505,656) 7,479,458
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--5.4% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY--3.7%
Federal Home Loan Mortgage, 1.3%, 1/3/2000 275,000 274,980
COMMERCIAL PAPER--1.7%
American Express Credit, 4.0%, 1/3/2000 125,000 124,972
TOTAL SHORT--TERM INVESTMENTS
(cost $399,952) 399,952
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $5,905,608) 105.3% 7,879,410
LIABILITIES, LESS CASH AND RECEIVABLES (5.3%) (394,641)
NET ASSETS 100.0% 7,484,769
A NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 5,905,608 7,879,410
Cash 18,570
Receivable for investment securities sold 125,485
Dividends receivable 2,572
Prepaid expenses 25
8,026,062
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 11,455
Payable for investment securities purchased 512,565
Accrued expenses 17,273
541,293
- --------------------------------------------------------------------------------
NET ASSETS ($) 7,484,769
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 5,481,403
Accumulated net realized gain (loss) on investments 29,564
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 1,973,802
- --------------------------------------------------------------------------------
NET ASSETS ($) 7,484,769
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
376,728
NET ASSET VALUE, offering and redemption price per share ($) 19.87
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $36 foreign taxes withheld at source) 18,894
Interest 16,770
TOTAL INCOME 35,664
EXPENSES:
Investment advisory fee--Note 3(a) 30,158
Auditing fees 22,405
Prospectus and shareholders' reports 14,122
Custodian fees--Note 3(a) 12,819
Legal fees 10,499
Registration fees 1,475
Trustees' fees and expenses--Note 3(b) 1,241
Shareholder servicing costs 32
Loan commitment fees--Note 2 28
Miscellaneous 1,003
TOTAL EXPENSES 93,782
Less--expense reimbursement from The Dreyfus Corporation
due to undertaking--Note 3(a) (53,543)
NET EXPENSES 40,239
INVESTMENT (LOSS) (4,575)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 96,574
Net unrealized appreciation (depreciation) on investments 1,692,462
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,789,036
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,784,461
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
--------------------------------
1999 1998 (a)
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income (loss)--net (4,575) 1,078
Net realized gain (loss) on investments 96,574 261,205
Net unrealized appreciation (depreciation)
on investments 1,692,462 281,340
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,784,461 543,623
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (1,120) --
Net realized gain on investments (323,640) --
TOTAL DIVIDENDS (324,760) --
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 4,177,592 2,000,000
Dividends reinvested 324,760 --
Cost of shares redeemed (1,020,907) --
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 3,481,445 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,941,146 2,543,623
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,543,623 --
END OF PERIOD 7,484,769 2,543,623
Undistributed investment income--net -- 1,078
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 252,994 160,000
Shares issued for dividends reinvested 19,754 --
Shares redeemed (56,020) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 216,728 160,000
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Year Ended December 31,
-------------------------
1999 1998(a)
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.90 12.50
Investment Operations:
Investment income (loss)--net (.02)(b) .01
Net realized and unrealized
gain (loss) on investments 5.79 3.39
Total from Investment Operations 5.77 3.40
Distributions:
Dividends from investment income--net (.01) --
Dividends from net realized gain on investments (1.79) --
Total Distributions (1.80) --
Net asset value, end of period 19.87 15.90
- -------------------------------------------------------------------------------
TOTAL RETURN (%) 39.01 27.20(c)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.00 .25(c)
Ratio of net investment income (loss)
to average net assets (.11) .05(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 1.33 .31(c)
Portfolio Turnover Rate 115.08 75.65(c)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 7,485 2,544
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company operating as a series company currently offering eleven
series, including the Founders Growth Portfolio (the "portfolio"). The portfolio
is only offered to separate accounts established by insurance companies to fund
variable annuity contracts and variable life insurance policies. The portfolio
is a diversified series.The portfolio' s investment objective is to provide
long-term capital growth. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. (" Mellon" ), which is a wholly-owned subsidiary of Mellon Financial
Corporation. Founders Asset Management LLC (" Founders" ) serves as the
portfolio' s sub-investment adviser. Founders is a 90%-owned subsidiary of
Mellon. Premier Mutual Fund Services, Inc. is the distributor of the portfolio's
shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 177,977 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available. Securities for which
there are no such valuations are valued at fair value as determined in good
faith under the direction of the Board of Trustees. Investments denominated in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
(b) Foreign currency transactions: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $1,449 during the period ended December 31, 1999 based
on available cash balances left on deposit. Income earned under this arrangement
is included in interest income.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(e) Federal income taxes: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $4,617, decreased paid in-capital by $42
and decreased accumulated net realized gain (loss) on investments by $4,575. Net
assets were not affected by this reclassification.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended December 31, 1999, the portfolio did not borrow under the Facility.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the value of the portfolio's average daily net assets and is payable monthly.
Dreyfus has undertaken from January 1, 1999 through December 31, 2000, to reduce
the management fee and reimburse such excess expenses paid by the portfolio, to
the extent that the portfolio's aggregate annual expenses, exclusive of taxes,
brokerage, interest on borrowings, commitment fees and extraordinary expenses,
exceed an annual rate of 1% of the value of the portfolio's average daily net
assets. The expense reimbursement, pursuant to the undertaking, amounted to
$53,543 during the period ended December 31, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fee is payable monthly by Dreyfus, and is based upon the
value of the portfolio' s average daily net assets, computed at the following
annual rates:
Average Net Assets
0 to $100 million. . . . . . . . . . . . . . . . . .25 of 1%
In excess of $100 million to $1 billion. . . . . . .20 of 1%
In excess of $1 billion to $1.5 billion. . . . . . .16 of 1%
In excess of $1.5 billion. . . . . . . . . . . . . .10 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $25 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $12,819 pursuant to the custody agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$7,603,283 and $4,332,426, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$1,973,802, consisting of $2,051,991 gross unrealized appreciation and $78,189
gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Founders Growth Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Founders Growth
Portfolio (one of the series constituting the Dreyfus Investment Portfolios) as
of December 31, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders Growth Portfolio at December 31, 1999,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with accounting
principles generally accepted in the United States.
New York, New York
February 7, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes the portfolio hereby designates $.0200 per share as a
long-term capital gain distribution of the $.1550 per share paid on December 29,
1999.
The portfolio also designates 3.201% of the ordinary dividends paid during the
fiscal year ended December 31, 1999 as qualifying for the corporate dividends
received deduction.
The Portfolio
NOTES
For More Information
Dreyfus Investment Portfolios,
Founders Growth Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 176AR9912
================================================================================
Dreyfus
Investment Portfolios,
Founders International Equity Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
20 Report of Independent Auditors
21 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Founders International Equity Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Founders International Equity Portfolio, covering the 12-month period from
January 1, 1999 through December 31, 1999. Inside, you' ll find valuable
information about how the portfolio was managed during the reporting period,
including a discussion with its portfolio manager, Douglas A. Loeffler, CFA of
Founders Asset Management LLC, the portfolio's sub-investment adviser.
International economies surprised many analysts with their resiliency in 1999.
Instead of remaining mired in recession after the currency- and credit-related
dislocations that adversely affected their economies in 1997 and 1998, most
developed and emerging markets enjoyed positive economic growth trends in 1999.
As a result, international stocks generally outperformed U.S. stocks in 1999, as
measured by the MSCI EAFE and the S&P 500 indices. The international stock
markets were led higher by developed markets in Japan and Asia, where economic
recoveries and financial system reforms drove stock prices higher. Europe also
produced generally attractive returns, benefiting from corporate restructuring,
the effects of economic unification and the introduction of a single currency,
the euro. Emerging markets in Asia, Latin America and Eastern Europe also
performed well in 1999.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Investment Portfolios, Founders International
Equity Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Douglas A. Loeffler, CFA, Portfolio Manager
Founders Asset Management LLC, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, Founders International Equity Portfolio
perform relative to its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Investment Portfolios,
Founders International Equity Portfolio produced a total return of 60.69%.(1)
This was significantly better than the 27.93% total return provided by the
portfolio's benchmark, the Morgan Stanley Capital International (MSCI) World ex.
U.S. Index, for the same period.(2)
We attribute the portfolio' s strong performance to two factors. First, our
success in stock selection helped drive our positive returns, as did our
emphasis on stocks within the technology, telecommunications and media (cable
TV) sectors. Second, the portfolio's heavy exposure to the European markets, an
area that outperformed the Index during much of the period, helped boost
returns.
What is the portfolio's investment approach?
The portfolio seeks long-term growth of capital by investing primarily in the
stocks of foreign companies whose fundamental strengths indicate the potential
for growth in earnings per share. Rather than utilizing a "top-down" approach to
stock selection, which relies on forecasting stock market trends, the management
team focuses exclusively on a "bottom-up" approach to stock selection, where
stocks are chosen based on their individual merits. Stock selection is made on a
company-by-company basis, with particular emphasis given to companies that the
management team believes are the best managed and best positioned within their
respective industries.
The portfolio invests 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 any one foreign country. The portfolio may also invest in
investment-grade debt securities of foreign
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
issues that, based on market and general economic conditions, the management
team believes offer opportunities for capital growth.
What other factors influenced the portfolio's performance?
Developed European and Japanese equity markets moved sharply forward during 1999
as investors became increasingly enthusiastic about opportunities found within
the growth arena. This shift served to benefit the portfolio's growth investment
strategy.
A late-year surge in growth-based investing moved European markets dramatically
forward. Our overweighting in European markets captured this advance, and our
strong individual stock selections there helped fuel returns, despite a
weakening euro. In particular, the portfolio' s holdings in France and The
Netherlands were successful, as was its focus on technology, telecommunications
and media companies. Adding value were France's Altran Technologies and France's
STMicroelectronics, Perlos, a Finnish plastic parts supplier for Nokia and
Ericsson phones, and Mannesmann, a German telecommunications company. Detracting
from the portfolio's returns were Altadis (formerly named Tabacalera), a Spanish
tobacco company, and Brisa-Auto Estradas de Portugal, a Portuguese toll road
company, both of which posted below-Index advances.
In Japan, a strong yen, coupled with a much needed increase in communications
between corporate managements and shareholders, helped their stocks rebound
beginning in late July. In fact, this turnaround continued throughout 1999, as
soaring investor confidence helped growth stocks drive the Japanese market.
While the portfolio remained underweighted in Japan, our successes in stock
selection in Japan resulted in higher returns than that of the Index. The
strength of the yen provided additional rewards from our Japanese holdings. Of
particular note were Ryohin Keikaku, a key retailer, and NTT Mobile
Communications Network, a leader in Japan's red-hot wireless Internet access
industry. On the other hand, our holdings in Kao, a consumer products company,
provided disappointing returns, and it has since been sold from the portfolio.
The portfolio's focus on emerging market-based companies also proved successful.
We are particularly excited about the potential of select Latin American
companies, and have emphasized the region accordingly in our emerging markets
exposure.
What is the portfolio's current strategy?
As we enter the new millennium, the portfolio's management team is in the
unusual position of seeing too many rather than too few large- and mid-cap
investment opportunities in the international markets. In response, our strategy
has been to expand the number of stocks the portfolio holds by roughly 25% while
increasing its exposure to midcap stocks and newly listed companies. Among the
latter is Partner Communications, the first phone company to be listed in
Israel. We currently have an especially favorable outlook for a number of
portfolio holdings, such as Ireland's ESAT Telecom, that are currently targets
of hostile takeover bids. The portfolio currently continues to maintain its
strategy of emphasizing technology, telecommunications and media stocks, as well
as overweighting Europe and underweighting Japan.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION PORTFOLIO SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE
DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. RETURN
FIGURES PROVIDED REFLECT THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH DECEMBER 31, 2000, AT
WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT
BEEN ABSORBED, THE PORTFOLIO'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL -- THE MORGAN STANLEY CAPITAL
INTERNATIONAL (MSCI) WORLD EX U.S. INDEX IS AN UNMANAGED INDEX OF GLOBAL STOCK
MARKET PERFORMANCE, EXCLUDING THE U.S., CONSISTING SOLELY OF EQUITY SECURITIES.
INCLUDES NET DIVIDENDS REINVESTED.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Investment
Portfolios, Founders International Equity Portfolio and the Morgan Stanley
Capital International World ex U.S. Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 12/31/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 9/30/98 60.69% 63.30%
</TABLE>
(+) SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts which will reduce returns.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS INVESTMENT
PORTFOLIOS, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO ON 9/30/98 (INCEPTION DATE)
TO A $10,000 INVESTMENT MADE ON THAT DATE IN THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S. INDEX. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S. INDEX IS AN UNMANAGED INDEX OF GLOBAL STOCK MARKET
PERFORMANCE, EXCLUDING THE U.S., CONSISTING SOLELY OF EQUITY SECURITIES AND
INCLUDES NET DIVIDENDS REINVESTED.
THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER
INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS,
IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE
PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--105.5% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
AUSTRIA--1.4%
<S> <C> <C>
Bank Austria 1,175 66,313
CANADA--1.7%
AT&T Canada, ADR 1,925 (a) 77,481
DENMARK--1.3%
Novo Nordisk, Cl. B 450 59,737
FINLAND--3.9%
Nokia, ADS 375 71,250
Perlos 2,350 (a) 82,892
UPM-Kymmene 575 23,179
177,321
FRANCE--10.5%
Accor 1,550 74,933
Alcatel 325 74,678
Altran Technologies 150 90,702
Aventis 875 50,881
Elf Aquitaine 2 390
Thomson Multimedia 1,275 (a) 68,745
Total Fina, Cl. B 499 66,633
Vivendi 600 54,210
481,172
GERMANY--5.6%
Deutsche Bank 775 65,491
Douglas Holding 925 39,852
Mannesmann 425 102,581
Preussag 901 50,214
258,138
HONG KONG--1.6%
China Telecom (Hong Kong) 12,000 (a) 75,024
IRELAND--2.7%
ESAT Telecom, ADS 1,375 (a) 125,813
ISRAEL--2.4%
Partner Communications, ADR 4,200 (a) 108,675
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ITALY--5.0%
Alleanza Assicurazioni 6,325 77,639
Bulgari 7,200 64,812
Seat Pagine Gialle-RNC 39,775 87,466
229,917
JAPAN--19.7%
Citizen Electronics 400 72,414
FUJI MACHINE 400 32,254
Fujitsu 2,000 91,203
NEC 3,000 71,485
NTT Mobile Communications Network 3 115,373
Nippon Express 8,000 44,231
Nippon Telegraph & Telephone 6 102,750
RICOH 4,000 75,389
Ryohin Keikaku 350 70,247
SONY 525 155,666
Sakura Bank 6,000 34,759
TDK 300 41,423
907,194
LUXEMBOURG--.9%
Societe Europeenne des Satellites 275 40,186
NETHERLANDS--12.4%
ASM Lithography, ADR 620 (a) 70,525
Getronics 700 55,872
ING Groep 875 52,857
KPN 550 53,711
Koninklijke (Royal) Philips Electronics, ADS 425 57,375
STMicroelectronics 475 73,146
TNT Post Group 1,900 54,477
United Pan-Europe Communications 625 (a) 79,994
VNU 1,400 73,622
571,579
NORWAY--.4%
Tomra Systems 1,200 20,389
PORTUGAL--1.4%
Brisa-Auto Estradas de Portugal 8,200 62,971
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
SINGAPORE--2.8%
DBS Group 4,607 75,516
NatSteel Electronics 10,000 52,837
128,353
SOUTH AFRICA--1.4%
DeBeers Consolidated Mines, ADR 2,300 66,556
SOUTH KOREA--3.1%
Korea Telecom, ADR 1,125 84,094
SK Telecom, ADS 1,570 60,278
144,372
SPAIN--4.5%
Banco Santander Central Hispano 4,675 52,957
Centros Comerciales Continente 2,825 56,656
Telefonica Publicidad e Informacion 1,975 (a) 96,037
Telefonica S. A., ADR 15 (a) 1,182
206,832
SWEDEN--4.1%
Ericsson (LM) Tel, Cl. B, ADS 1,025 67,330
ForeningsSparbanken 3,300 48,547
Skandia Forsakrings 2,400 72,590
188,467
SWITZERLAND--3.8%
Roche Holding Ag-Genusscheine 4 47,481
Swatch, Cl. B 70 80,631
Synthes-Stratec 105 (a) 48,075
176,187
TAIWAN--1.3%
Taiwan Semiconductor Manufacturing, ADS 1,367 (a) 61,515
UNITED KINGDOM--11.0%
BP Amoco, ADS 875 51,898
Dixons 2,525 60,716
Energis 1,225 (a) 58,833
Jazztel, ADS 775 (a) 50,472
Marconi 3,775 (a) 66,784
Pearson 2,500 80,907
Reckitt Benckiser 3,125 29,295
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
Vodafone AirTouch 5,400 26,750
WPP 5,100 80,795
506,450
UNITED STATES--2.6%
Global TeleSystems Group 1,480 (a) 51,245
NTL 550 (a) 68,612
119,857
TOTAL COMMON STOCKS
(cost $3,592,221) 4,860,499
- ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--1.9%
- ------------------------------------------------------------------------------------------------------------------------------------
BRAZIL
Petroleo Brasileiro
(cost $49,282) 400 88,562
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
BONDS AND NOTES--.0% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM
British Aerospace
7.45%, 11/29/2003
(cost $546) 704 (b) 686
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $3,642,049) 107.4% 4,949,747
LIABILITIES, LESS CASH AND RECEIVABLES (7.4%) (341,982)
NET ASSETS 100.0% 4,607,765
(A) NON-INCOME PRODUCING.
(B) CONVERTED TO U.S. DOLLARS FROM BRITISH POUNDS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 3,642,049 4,949,747
Receivable for investment securities sold 37,504
Dividends receivable 1,651
Due from The Dreyfus Corporation and affiliates 2,114
4,991,016
- --------------------------------------------------------------------------------
LIABILITIES ($):
Cash overdraft due to Custodian 260,684
Payable for investment securities purchased 97,521
Accrued expenses 25,046
383,251
- --------------------------------------------------------------------------------
NET ASSETS ($) 4,607,765
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,965,826
Accumulated net realized gain (loss) on investments
and foreign currency transactions 334,283
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 1,307,656
- --------------------------------------------------------------------------------
NET ASSETS ($) 4,607,765
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
212,866
NET ASSET VALUE, offering and redemption price per share ($) 21.65
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $4,050 foreign taxes withheld at source) 28,932
Interest 8,986
TOTAL INCOME 37,918
EXPENSES:
Investment advisory fee--Note 3(a) 27,223
Custodian fees 31,417
Auditing fees 26,845
Prospectus and shareholders' reports 9,606
Legal fees 5,753
Trustees' fees and expenses--Note 3(b) 916
Registration fees 255
Shareholder servicing costs 35
Loan commitment fees--Note 2 16
Miscellaneous 681
TOTAL EXPENSES 102,747
Less--expense reimbursement from The Dreyfus Corporation
due to undertaking--Note 3(a) (61,913)
NET EXPENSES 40,834
INVESTMENT (LOSS) (2,916)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 645,007
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions 980,443
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,625,450
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,622,534
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
--------------------------------
1999 1998a
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (2,916) (1,791)
Net realized gain (loss) on investments 645,007 (28,274)
Net unrealized appreciation (depreciation)
on investments 980,443 327,213
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,622,534 297,148
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
NET REALIZED GAIN ON INVESTMENTS (282,839) --
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 1,317,844 2,000,000
Dividends reinvested 282,839 --
Cost of shares redeemed (629,761) --
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 970,922 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,310,617 2,297,148
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,297,148 --
END OF PERIOD 4,607,765 2,297,148
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 67,505 160,000
Shares issued for dividends reinvested 13,155 --
Shares redeemed (27,794) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 52,866 160,000
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Year Ended December 31,
-------------------------
1999 1998a
- -------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.36 12.50
Investment Operations:
Investment (loss) (.02)(b) (.01)
Net realized and unrealized gain (loss) on investments 8.73 1.87
Total from Investment Operations 8.71 1.86
Distributions:
Dividends from net realized gain on investments (1.42) --
Net asset value, end of period 21.65 14.36
- --------------------------------------------------------------------------------
TOTAL RETURN (%) 60.69 14.88(c)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 .38(c)
Ratio of net investment (loss) to average net assets (.11) (.08)(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 2.27 .81(c)
Portfolio Turnover Rate 190.80 29.25(c)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 4,608 2,297
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company operating as a series company currently offering eleven
series, including the Founders International Equity Portfolio (the "portfolio").
The fund is only offered to separate accounts established by insurance companies
to fund variable annuity contracts and variable life insurance policies. The
portfolio is a diversified series. The portfolio's investment objective is to
provide long-term capital growth. The Dreyfus Corporation ("Dreyfus") serves as
the portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon
Bank, N.A. (" Mellon"), which is a wholly-owned subsidiary of Mellon Financial
Corporation. Founders Asset Management LLC (" Founders" ) serves as the
portfolio' s sub-investment adviser. Founders is a 90%-owned subsidiary of
Mellon. Premier Mutual Fund Services, Inc. is the distributor of the portfolio's
shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 170,530 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
there were no transactions, are valued at the average of the most recent bid and
asked prices. Bid price is used when no asked price is available. Securities for
which there are no such valuations are valued at fair value as determined in
good faith under the direction of the Board of Trustees. Investments denominated
in foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $4,084 during the period ended December 31, 1999, based
on available cash balances left on deposit. Income earned under this arrangement
is included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $2,916 and accumulated net realized gain
(loss) on investments by $389 and decreased paid-in capital by $3,305. Net
assets were not effected by this reclassification.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended December 31, 1999, the portfolio did not borrow under the Facility.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions with Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings, commitment fees and
extraordinary expenses, exceed an annual rate of 1.50% of the value of the
portfolio's average daily net assets. The expense reimbursement, pursuant to the
undertaking, amounted to $61,913 during the period ended December 31, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fee is payable monthly by Dreyfus, and is based upon the
value of the portfolio' s average daily net assets, computed at the following
annual rates:
AVERAGE NET ASSETS
0 to $100 million . . . . . . . . . . . . . . . . . . . . .35 of 1%
In excess of $100 million to $1 billion . . . . . . . . . .30 of 1%
In excess of $1 billion to $1.5 billion . . . . . . . . . .26 of 1%
In excess of $1.5 billion . . . . . . . . . . . . . . . . .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $13 pursuant to the
transfer agency agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$6,152,370 and $5,048,736, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$1,307,698, consisting of $1,355,062 gross unrealized appreciation and $47,364
gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios,
Founders International Equity Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Founders
International Equity Portfolio (one of the series constituting the Dreyfus
Investment Portfolios) as of December 31, 1999, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders International Equity Portfolio at
December 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the indicated years, in conformity with
accounting principles generally accepted in the United States.
New York, New York
February 7, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the portfolio hereby designates $.1920 per share as a
long-term capital gain distribution of the $1.4150 per share paid on December
30, 1999.
The Portfolio
For More Information
Dreyfus
Investment Portfolios,
Founders International Equity Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 177AR9912
================================================================================
Dreyfus Investment Portfolios, Founders Passport Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 Statement of Investments
15 Statement of Assets and Liabilities
16 Statement of Operations
17 Statement of Changes in Net Assets
18 Financial Highlights
19 Notes to Financial Statements
24 Report of Independent Auditors
25 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Founders Passport Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Founders Passport Portfolio, covering the 12-month period from January 1, 1999
through December 31, 1999. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with its portfolio manager, Tracy Stouffer of Founders Asset Management LLC, the
portfolio's sub-investment adviser.
International economies surprised many analysts with their resiliency in 1999.
Instead of remaining mired in recession after the currency- and credit-related
dislocations that adversely affected their economies in 1997 and 1998, most
developed and emerging markets enjoyed positive economic growth trends in 1999.
As a result, international stocks generally outperformed U.S. stocks in 1999, as
measured by the MSCI EAFE((reg.tm)) and the S&P 500 indices. The international
stock markets were led higher by developed markets in Japan and Asia, where
economic recoveries and financial system reforms drove stock prices higher.
Europe also produced generally attractive returns, benefiting from corporate
restructuring and the effects of economic unification and the introduction of a
single currency, the euro. Emerging markets in Asia, Latin America and Eastern
Europe also performed well in 1999.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Investment Portfolios, Founders Passport
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Tracy Stouffer, Portfolio Manager
Founders Asset Management LLC, Sub-Investment Adviser
How did Dreyfus Investment Portfolios, Founders Passport Portfolio perform
during the period?
For the 12-month period ended December 31, 1999, Dreyfus Investment Portfolios,
Founders Passport Portfolio produced a total return of 76.05%.(1) In comparison,
the Morgan Stanley Capital International World ex U.S.A. Index produced a total
return of 27.93%(2) and the Morgan Stanley Capital International World ex U.S.A.
Small Cap Index produced a total return of 18.38%(3) for the same period.
The portfolio' s superior performance during the reporting period was driven by
an increasing investment in "new economy" stocks within the technology, wireless
communications and Internet industries. In addition, the portfolio de-emphasized
stocks in Europe where the weakening euro hurt performance, and added to our
holdings in Japan, where the yen was strengthening and stocks were appreciating
in value.
What is the portfolio's investment approach?
The portfolio invests primarily in foreign companies with annual revenues or
market capitalizations of $1 billion or less that have demonstrated strong
earnings growth as well as dominance in their market niches.
Although our recent focus has been on technology and telecommunications, our
objective is to build a broadly diversified portfolio of more than 100 stocks in
many industries. Holdings include such disparate businesses as a cable
television company in Brazil, a homebuilder in Mexico, a baker in Germany and a
bank in Egypt.
Because of this broad mandate, we believe it is very important for us to meet
with corporate management teams to assess their business strategies. We also
believe it is important to travel to the countries in which they are located to
assess the local business environment. When
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
it comes to international small-cap stocks, it is especially important to learn
as much as we can because there is a limited amount of Wall Street research
available on many of these companies.
What other factors influenced the portfolio's performance?
The global economic picture is much brighter today than it was a year ago.
Spurred by the Federal Reserve Board's actions in the U.S. to lower interest
rates in 1998, central banks around the world followed suit, stimulating
business borrowing and economic activity. Certainly, it would have been
difficult for any international portfolio to perform well this past year without
this change in economic environment.
Beyond this favorable backdrop, however, the new economy stocks that have so
dominated global markets have taken growth a quantum step further. In Europe,
for instance, economic growth remains modest, yet some of the world's fastest
growing and profitable telecommunications companies are based there. Similarly,
the Japanese economy was in a recession for much of the 1990s. While large
companies continue to make slow progress, the entrepreneurial spirit in Japan
has been unleashed. The JASDAQ, Japan's version of our Nasdaq technology index,
rose about 250% in 1999.
One of the portfolio's best performers during the reporting period was Intershop
Communications, a German software company that helps other companies create
" storefronts" on the Internet. Rather than building bricks and mortar retail
outlets, these "shop-in-a-box" solutions allow companies of any size to compete
on a global scale. Another excellent performer was Tiscali, an Italian
telecommunications company and an Internet service provider.
What is the portfolio's current strategy?
Our current strategy is to find small, fast-growing companies throughout the
world, regardless of industry or location. In 1999, many of those companies
reflected technology themes such as the ability of cellular telephones to
connect to the Internet, the need to conduct commerce over the Internet in a
secure fashion, the development of anti-virus software and other specialized
market niches.
Another important investment theme for the portfolio is outsourcing, in which
companies only hire employees to conduct their core business, and outsource as
many functions as possible, such as manufacturing and design. Over the past 10
years, we have seen a growing trend toward outsourcing in every U.S. industry,
and that trend is beginning to take hold in Asia and Europe. Small-cap
companies, many of which are in this portfolio, are often the providers of those
outsourcing services.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT
THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. THE RETURN
FIGURE PROVIDED REFLECTS THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH DECEMBER 31, 2000, AT
WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT
BEEN ABSORBED, THE PORTFOLIO'S RETURN WOULD HAVE BEEN LOWER.
(2) SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL -- REFLECTS THE REINVESTMENT
OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S.A. INDEX IS AN UNMANAGED INDEX OF GLOBAL STOCK MARKET
PERFORMANCE, EXCLUDING THE U.S., CONSISTING SOLELY OF EQUITY SECURITIES.
(3) SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL -- THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S.A. SMALL CAP INDEX IS A WEIGHTED AVERAGE OF THE
PERFORMANCE OF SECURITIES IN 21 COUNTRIES THAT INCLUDES COMPANIES WITH MARKET
CAPITALIZATIONS BETWEEN U.S. $200 MILLION AND $800 MILLION.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of a $10,000 investment in Dreyfus Investment
Portfolios, Founders Passport Portfolio with the Morgan Stanley Capital
International World ex U.S.A. Index and the Morgan Stanley Capital International
World ex U.S.A. Small Cap Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 12/31/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO 9/30/98 76.05% 76.79%
</TABLE>
(+) SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS INVESTMENT
PORTFOLIOS, FOUNDERS PASSPORT PORTFOLIO ON 9/30/98 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE ON THAT DATE IN THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD
EX U.S.A. INDEX AND THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD EX U.S.A.
SMALL CAP INDEX.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH REFLECTS THE REINVESTMENT OF
ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS AND TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S.A. INDEX IS AN UNMANAGED INDEX OF GLOBAL STOCK MARKET
PERFORMANCE, EXCLUDING THE U.S., CONSISTING SOLELY OF EQUITY SECURITIES AND
INCLUDES NET DIVIDENDS REINVESTED. THE MORGAN STANLEY CAPITAL INTERNATIONAL
WORLD EX U.S.A. SMALL CAP INDEX IS A WEIGHTED AVERAGE OF THE PERFORMANCE OF
SECURITIES IN 21 COUNTRIES THAT INCLUDES COMPANIES WITH MARKET CAPITALIZATIONS
BETWEEN U.S. $200 MILLION AND $800 MILLION.
THE INDICES DO NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER
INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS,
IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE
PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--99.0% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ARGENTINA--.7%
<S> <C> <C>
El Sitio, ADR 2,800 (a) 102,900
AUSTRALIA--5.0%
Catuity 718 (a) 8,136
Challenger International 500 1,349
Chaosmusic 4,150 (a) 2,908
Davnet 55,925 84,251
ERG 6,575 36,822
FiberTel 12,850 (a) 11,531
Formida 925 (a) 1,812
Health Communications 40,150 (a) 40,762
MultiEmedia.com 171,625 (a) 79,814
One.Tel 34,750 53,489
PowerLan 28,950 28,064
Sausage Software 25,925 (a) 88,301
Securenet 31,625 (a) 142,929
Solution 6 6,250 (a) 67,956
Westel Group 181,325 (a) 97,390
745,514
AUSTRIA--.4%
Austria Technologie & Systemtechnik 1,125 (a) 57,822
BRAZIL--1.3%
Tele Celular Sul Participacoes, ADR 2,800 88,900
Tele Centro Oeste Celular Participacoes, ADR 10,100 65,650
Tele Nordeste Celular Participacoes, ADR 900 45,450
200,000
DENMARK--.8%
Vestas Wind Systems 650 (a) 115,342
EQYPT--.4%
Commercial International Bank, GDR 3,650 52,378
FINLAND--4.7%
Comptel 1,800 (a) 126,693
Elcoteq Network 1,200 18,382
F-Secure 3,925 (a) 114,713
JOT Automation 6,150 57,331
PMJ automec 1,875 22,052
Stonesoft 6,200 (a) 82,478
TJ Group 1,650 (a) 58,200
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
FINLAND (CONTINUED)
Talentum 2,850 69,221
Teleste 9,250 (a) 151,019
700,089
FRANCE--6.1%
ALTEN 425 73,328
Avenir Telecom 200 (a) 37,933
Coheris Atix 250 (a) 46,082
Consodata 1,450 (a) 65,759
Cross Systems 175 (a) 38,800
FI System 200 60,871
IPSOS 1,025 (a) 84,809
Infosources 1,100 (a) 81,481
Ingenico 1,750 75,643
Neopost 1,650 (a) 69,425
Remy Cointreau 2,175 48,925
Silicon-On-Insulator Technologies 375 50,982
Valtech 725 (a) 59,877
Wavecom 1,225 (a) 108,023
901,938
GERMANY--11.4%
ADVA 300 (a) 54,724
Articon Information Systems 1,025 (a) 50,617
Brokat Infosystems 725 (a) 146,862
Easy Software 575 28,105
Fantastic 875 (a) 162,256
Fluxx.com 1,025 (a) 32,023
GfK 2,525 (a) 101,788
InternetMediaHouse 550 (a) 21,063
Intershop Communications 475 (a) 135,952
JUMPtec Industrielle Computertechnik 225 (a) 19,274
Kabel New Media 250 (a) 6,248
Kamps 425 29,340
Kamps-New 1,295 (a) 86,398
Pandatel 350 (a) 23,986
Pixelpark 825 (a) 93,952
ricardo.de 1,625 (a) 180,144
Secunet Security 1,775 (a) 80,498
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
GERMANY (CONTINUED)
TOMORROW Internet 1,675 (a) 84,403
Telegate 2,250 (a) 129,250
Utimaco Safeware 750 (a) 126,227
Zapf Creaton 2,900 (a) 96,446
1,689,556
GREECE--3.7%
ETBA 56,300 (a) 515,568
Intralot 350 (a) 28,579
544,147
HONG KONG--4.6%
ASM Pacific Technology 22,000 39,056
CCT Telecom 108,000 (a) 79,887
e-New Media 244,000 119,277
Global Tech 68,000 78,729
Hanny 96,000 90,770
Quality Healthcare Asia 60,000 (a) 23,155
Sino-i.com 755,000 (a) 69,930
TCL International 264,000 (a) 185,090
685,894
INDONESIA--.6%
PT Kable Farma 2,000 (a) 322
PT Multipolar 493,000 (a) 86,429
86,751
IRELAND--1.2%
Grafton 975 22,109
ITG 11,563 (a) 134,012
Jurys Doyle Hotel 2,350 17,407
173,528
ISRAEL--2.0%
AudioCodes, ADR 975 (a) 89,700
BATM Advanced Communications 1,100 90,951
GEO Interactive Media 4,050 (a) 114,456
295,107
ITALY--3.0%
Class Editori 6,875 118,140
Ericsson 2,575 146,259
Magneti Marelli 15,300 58,378
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ITALY (CONTINUED)
Olidata 4,500 (a) 27,841
Poligrafica S. Faustino 175 23,555
Tiscali 175 (a) 70,678
444,851
JAPAN--9.4%
Chiyoda Integre 4,000 52,843
ENPLAS 2,000 74,371
GLOBAL-DINING 1,000 72,414
H.I.S. 40 2,854
INES 4,000 129,563
INNOTECH 2,400 108,034
JUSTSYSTEM 1,600 97,074
KAPPA CREATE 3,000 63,118
KINSEKI 3,000 31,852
KURODA ELECTRIC 60 2,419
Koha 1,000 69,478
NIDEC COPAL ELECTRONICS 3,000 56,072
NIPPON THOMPSON 13,000 107,369
Nikko Travel 2,000 42,078
PCA 1,278 80,664
Plaza Create 700 71,925
RENOWN 3,000 7,339
Shobunsha Publications 800 50,103
TANSEISHA 3,000 20,550
TKC 1,200 45,680
Uchida Yoko 13,000 79,509
YOKOWO 4,000 99,814
ZUKEN 600 22,957
1,388,080
MEXICO--3.1%
Consorcio Ara 28,100 (a) 46,537
Corporacion Interamericana de Entretenimiento 16,075 (a) 64,181
Corporacion GEO 16,550 (a) 62,324
Datacapital 69,575 (a) 29,357
Grupo Elektra 80,075 78,892
Grupo Radio Centro, ADR 4,275 (a) 35,803
Grupo Sanborns 63,400 (a) 140,443
457,537
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--2.5%
ASM International 6,375 (a) 147,769
Detron 2,275 (a) 49,065
Meta4 3,075 (a) 22,932
Toolex International, ADR 2,100 (a) 35,700
Unit 4 4,275 (a) 109,647
365,113
NORWAY--2.5%
Norman 8,825 (a) 95,918
Opticom 700 (a) 148,666
VISMA 17,325 129,865
374,449
SINGAPORE--1.8%
JIT 5,000 17,412
Keppel Telecommunications & Transportation 37,000 60,204
Manufacturing Integration Technology 56,000 (a) 36,986
MediaRing.com 36,000 (a) 38,907
PCI 8,000 6,533
WBL 41,000 108,808
268,850
SOUTH AFRICA--.5%
Anglovaal Industries 14,100 13,653
Ixchange Technology 14,600 (a) 61,674
75,327
SWEDEN--10.7%
Arkivator 1,725 44,054
Aspiro Information 1,575 (a) 64,876
Connecta 1,625 (a) 55,461
ConNova 5,775 (a) 97,530
ConNova-New 1,700 (a) 28,710
Enea Data 800 61,669
Framtidsfabriken 600 (a) 108,744
HiQ International 1,150 (a) 73,761
Industrial & Financial Systems 1,600 (a) 34,836
Infocast, Cl. B 4,625 (a) 29,937
Information Highway 975 161,793
Mandator 7,800 116,582
Modul 1 Data 1,800 19,489
Protect Data 2,325 60,745
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
SWEDEN (CONTINUED)
Semcon 5,575 65,611
Sifo, Cl. B 1,425 18,112
Sigma, Cl. B 3,775 80,858
SwitchCore 3,825 (a) 156,655
Technology Nexus 4,425 (a) 83,324
Telelogic 1,100 (a) 58,515
Teligent 9,625 (a) 164,249
1,585,511
SWITZERLAND--1.5%
4M Technologies 350 (a) 105,295
Kudelski 10 (a) 59,666
Miracle 125 (a) 36,113
SEZ 50 27,980
229,054
UNITED KINGDOM--19.1%
AIT 625 15,342
African Lakes 18,450 (a) 29,795
Autonomy 2,450 (a) 118,825
Baltimore Technologies 2,125 (a) 176,302
Bloomsbury Publishing 4,400 57,555
Capital Radio 3,575 86,599
Celltech 6,475 (a) 55,315
Chrysalis 175 4,239
Dialog Semiconductor 2,475 (a) 180,837
Durlacher 5,000 (a) 133,633
Eidos, ADR 450 (a) 37,350
eXchange 15,200 (a) 85,422
F. I. 6,725 81,180
Fibernet 525 (a) 15,006
Glotel 2,100 (a) 24,756
Goldshield 775 8,185
Guardian IT 6,975 107,233
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
HIT Entertainment 825 28,778
Harrier 11,175 (a) 67,674
Imagination Technologies 17,950 114,500
Incepta 16,175 (a) 29,778
Independent Energy, ADR 2,675 (a) 89,111
Infobank International 2,575 (a) 79,425
International Quantum Epitaxy 1,525 (a) 59,475
Jazztel, ADR 925 (a) 60,241
Kewill Systems 2,600 65,500
Matalan 4,125 113,245
NDS, ADR 2,150 (a) 65,575
NXT 3,750 (a) 82,965
NetBenefit 900 (a) 12,572
NewMedia SPARK 22,100 (a) 57,460
Pace Micro Technology 13,500 113,366
QXL 6,000 (a) 141,465
RM 4,600 64,257
Recognition Systems 17,650 (a) 98,335
Sherwood International 4,700 96,014
Sportsworld Media 2,225 (a) 17,535
Superscape VR 4,600 (a) 25,480
Trafficmaster 6,689 (a) 98,299
Whatman 1,975 41,462
2,840,086
UNITED STATES--2.0%
FirstCom 1,550 (a) 56,963
SCM Microsystems 1,475 (a) 94,308
Sensar 1,600 (a) 95,200
TRICOM 2,425 (a) 54,562
301,033
TOTAL COMMON STOCKS
(cost $10,736,504) 14,680,857
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
</TABLE>
Principal
SHORT-TERM INVESTMENTS--5.2% Amount ($) Value ($)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER:
American Express, 4%, 1/3/2000 280,000 279,938
Associates Corp. of North America, 4%, 1/3/2000 500,000 499,889
TOTAL SHORT--TERM INVESTMENTS
(cost $779,827) 779,827
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $11,516,331) 104.2% 15,460,684
LIABILITIES, LESS CASH AND RECEIVABLES (4.2%) (624,877)
NET ASSETS 100.0% 14,835,807
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 11,516,331 15,460,684
Cash 954,357
Receivable for investment securities sold 47,860
Dividends receivable 3,404
Prepaid expenses 1,121
Due from The Dreyfus Corporation and affliliates 17,340
16,484,766
- --------------------------------------------------------------------------------
LIABILITIES ($):
Payable for investment securities purchased 1,557,594
Accrued expenses 91,365
1,648,959
- --------------------------------------------------------------------------------
NET ASSETS ($) 14,835,807
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 9,562,593
Accumulated net realized gain (loss) on investments and
foreign currency transactions 1,328,940
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 3,944,274
- --------------------------------------------------------------------------------
NET ASSETS ($) 14,835,807
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
622,830
NET ASSET VALUE, offering and redemption price per share ($) 23.82
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $5,649 foreign taxes withheld at source) 37,332
Interest 28,706
TOTAL INCOME 66,038
EXPENSES:
Investment advisory fee--Note 3(a) 73,558
Custodian fees 134,187
Auditing fees 31,009
Legal fees 14,545
Prospectus and shareholders' reports 10,733
Trustees' fees and expenses--Note 3(b) 1,428
Registration fees 1,203
Shareholder servicing costs 113
Loan commitment fees--Note 2 51
Miscellaneous 763
TOTAL EXPENSES 267,590
Less--expense reimbursement from The Dreyfus Corporation
due to undertaking--Note 3(a) (157,253)
NET EXPENSES 110,337
INVESTMENT (LOSS) (44,299)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 2,285,760
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions 3,162,746
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 5,448,506
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 5,404,207
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
--------------------------------
1999 1998 (a)
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income (loss)--net (44,299) 1,291
Net realized gain (loss) on investments 2,285,760 5,477
Net unrealized appreciation (depreciation)
on investments 3,162,746 781,528
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,404,207 788,296
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net -- (1,200)
Net realized gain on investments (913,689) (4,400)
TOTAL DIVIDENDS (913,689) (5,600)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 5,886,112 5,000,000
Dividends reinvested 913,689 5,600
Cost of shares redeemed (2,242,808) --
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 4,556,993 5,005,600
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,047,511 5,788,296
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 5,788,296 --
END OF PERIOD 14,835,807 5,788,296
Undistributed investment income--net -- 91
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 316,947 400,000
Shares issued for dividends reinvested 39,642 390
Shares redeemed (134,149) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 222,440 400,390
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Year Ended December 31,
--------------------------
1999 1998(a)
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.46 12.50
Investment Operations:
Investment income (loss)-net (.10)(b) .00(c)
Net realized and unrealized
gain (loss) on investments 11.04 1.97
Total from Investment Operations 10.94 1.97
Distributions:
Dividends from investment income--net -- (.00)(c)
Dividends from net realized gain on investments (1.58) (.01)
Total Distributions (1.58) (.01)
Net asset value, end of period 23.82 14.46
- --------------------------------------------------------------------------------
TOTAL RETURN (%) 76.05 15.79(d)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 .38(d)
Ratio of net investment income (loss)
to average net assets (.60) .02(d)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 2.14 .30(d)
Portfolio Turnover Rate 319.31 3.98(d)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 14,836 5,788
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering eleven
series, including the Founders Passport Portfolio (the "portfolio" ). The
portfolio is only offered to separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies. The portfolio is a diversified series. The portfolio's investment
objective is to provide capital appreciation. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Founders Asset Management LLC ("Founders")
serves as the portfolio' s sub-investment adviser. Founders is a 90%-owned
subsidiary of Mellon. Premier Mutual Fund Services, Inc. is the distributor of
the portfolio's shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 427,899 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
bid and asked prices. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are valued
at the forward rate.
(b) Foreign currency transactions: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $721 during the period ended December 31, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually,
but the portfolio may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code of 1986, as amended
(the "Code" ). To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the portfolio not to
distribute such gain.
(e) Federal income taxes: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $44,208 and decreased accumulated net
realized gain (loss) on investments by $44,208. Net assets were not affected by
this reclassification.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended December 31, 1999, the portfolio did not borrow under the Facility.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
on borrowings and extraordinary expenses, exceed an annual rate of 1.50% of the
value of the portfolio's average daily net assets. The reduction in investment
advisory fees and reimbursement of other expenses, pursuant to the undertaking,
amounted to $157,253 during the period ended December 31, 1999.
Pursuant to a Sub-Investment Advisory Agreement with Founders, the
sub-investment advisory fees are payable monthly by Dreyfus, and is based upon
the value of the portfolio's average daily net assets, computed at the following
annual rates:
Average Net Assets
0 to $100 million. . . . . . . . . . . . . . . . . .35 of 1%
In excess of $100 million to $1 billion. . . . . . .30 of 1%
In excess of $1 billion to $1.5 billion. . . . . . .26 of 1%
In excess of $1.5 billion. . . . . . . . . . . . . .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $23 pursuant to the
transfer agency agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$26,580,365 and $22,306,582, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$3,944,353, consisting of $4,153,340 gross unrealized appreciation and $208,987
gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Founders Passport Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Founders
Passport Portfolio (one of the series constituting the Dreyfus Investment
Portfolios) as of December 31, 1999 and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Founders Passport Portfolio at December 31, 1999,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with accounting
principles generally accepted in the United States.
New York, New York
February 7, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the portfolio hereby designates $.0820 per share as a
long-term capital gain distribution of the $1.5670 per share paid on December
28, 1999.
The Portfolio
For More Information
Dreyfus Investment Portfolios,
Founders Passport Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 178AR9912
================================================================================
Dreyfus Investment Portfolios, Japan Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
17 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Japan Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Japan Portfolio, covering the period from the portfolio's inception on December
15, 1999 through December 31, 1999. Inside, you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with its portfolio manager, Miki Sugimoto.
International economies surprised many analysts with their resiliency in 1999.
Instead of remaining mired in recession after the currency- and credit-related
dislocations that adversely affected their economies in 1997 and 1998, most
developed and emerging markets enjoyed positive economic growth trends in 1999.
As a result, international stocks, as measured by the MSCI EAFE((reg.tm) )Index,
outperformed U.S. stocks, as measured by the S& P 500 Index in 1999. The
international stock markets were led higher by developed markets in Japan and
Asia, where economic recoveries and financial system reforms drove stock prices
higher. Europe also produced generally attractive returns, benefiting from
corporate restructuring and the effects of economic unification and the
introduction of a single currency, the euro. Emerging markets in Asia, Latin
America and Eastern Europe also generally performed well in 1999.
We appreciate your confidence and we look forward to your continued
participation in Dreyfus Investment Portfolios, Japan Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Miki Sugimoto, Portfolio Manager
What is the Dreyfus Investment Portfolios, Japan Portfolio's investment
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.
The portfolio manager utilizes a "top-down," theme-driven investment approach to
stock selection. The portfolio manager first attempts to identify overall
economic trends, and then begins to narrow the search to industry groups that
are believed to have the potential to benefit from these trends. The portfolio
also considers economic variables, such as the relative valuations of equities
and bonds, and trends in the currency exchange markets. The investment themes
and economic variables provide a framework for the portfolio's stock selection
process.
We consider three primary criteria when selecting stocks for the portfolio.
First, we look either for industries with positive long-term outlooks or
industries that are undergoing dramatic change. Second, we look for companies
with quality management teams and strong franchises. Third, we strive to
identify high quality companies with high intrinsic worth as measured by
fundamental valuation criteria such as earnings outlook, business prospects, and
asset values.
We typically sell a security when a change in an investment theme occurs or when
we believe the stock has reached its full value. In addition, we regularly
examine the portfolio' s holdings, keeping a watchful eye for early signs of
financial deterioration. If a company begins to exhibit financial problems, we
will review the stock and may choose to eliminate our position.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
In future reports, we will measure the portfolio's performance against that of
the portfolio's benchmark, the Morgan Stanley Capital International (MSCI) Japan
Index.(1)
What were the market conditions like when the portfolio was launched?
While the portfolio was in operation for only a two-week period as of December
31, 1999, it is important to understand the longer term background of the market
in which the portfolio invests.
Overall, 1999 was a year of recovery for the Japanese equity markets. This
recovery followed a severe financial crisis that took place at the end of 1998
and plagued all of Asia, including the Japanese market, and eventually spread to
Russia and Latin America. In response, the Japanese government began to take
steps to resolve the country' s banking problems and encourage businesses to
restructure their operations. This restructuring process, often likened to the
corporate restructuring that took place in the United States in the early 1990s,
has been slow by most accounts.
On the other hand, a host of new, growing Japanese companies in growing niche
markets, especially Internet-related and high technology companies, have helped
support Japan' s growth over the past year. Gradual restructuring of larger,
established companies, coupled with rapid technological growth, resulted in
renewed strength in the Japanese economy in 1999.
What is the portfolio's current strategy?
We are pleased with the initial performance of the portfolio. We are also
pleased that we have been able to identify investment themes that led to the
inclusion of 34 stocks in the portfolio as of December 31, 1999.
The growth of technology represents one theme we've emphasized by
maintaining more exposure to the sector than our benchmark. We have avoided the
high flying Internet stocks because of their extremely high valuations, and we
have instead focused on semiconductor companies that are providing technology
infrastructure to "the new economy." As an extension of the portfolio's
technology theme, we have also invested in several advertising agencies. Over
the past year, many advertising agencies have been paid to launch media
campaigns on behalf of start-up Internet companies that are trying to establish
their brands.
We also have a favorable outlook for the financial services sector. The Japanese
brokerage industry has operated in a depressed market environment for several
years now, a phenomenon that has created what we believe are very attractive
valuations. At the same time, because of a shrinking cost base, brokerage firms'
operations have become much more efficient. With the renewed strength of the
Japanese equity market, revenues are growing for many of these companies, making
them even more attractive candidates for investment.
January 14, 2000
(1) THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) JAPAN INDEX IS A MARKET
CAPITALIZATION INDEX OF JAPANESE COMPANIES BASED ON MSCI-SELECTED CRITERIA.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
December 31, 1999
COMMON STOCKS--97.5 Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
JAPAN;
<S> <C> <C>
Alpine Electronics 3,000 47,236
Aoi Advertising Promotion 3,000 53,723
Credit Saison 3,000 52,256
DDI 6 82,200
Daiwa Securities Group 3,000 46,942
Dentsu Tec 700 61,650
Fuji Television Network 5 68,500
Fujitsu 1,000 45,601
Funai Electric 100 58,910
H.I.S. 1,000 71,337
IBIDEN 5,000 67,521
Ichiyoshi Securities 11,000 58,127
KYOTO KIMONO YUZEN 8 (a) 54,800
Kawasaki Kisen Kaisha 42,000 62,472
Kose 1,000 27,596
Kyorin Pharmaceutical 1,000 35,326
Liquid Audio Japan 1 (a) 63,509
Mitsubishi Estate 6,000 58,538
Mitsukoshi 15,000 (a) 52,843
NEC 2,000 47,656
Nichiei 3,800 82,552
Nippon System Development 500 72,903
Nippon Telegraph & Telephone 4 68,500
Nissan Motor 14,000 (a) 55,074
RYOSHOKU 1,000 55,778
SHOHKOH FUND 220 87,083
SONY 300 88,952
Sakura Bank 6,000 34,759
Sharp 3,000 76,769
Sumitomo Electric Industries 2,000 23,114
Tokyo Electric Power 2,200 58,988
Toyo Communication Equipment 4,000 (a) 74,371
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
JAPAN (CONTINUED)
Wako Securities 19,000 (a) 50,387
YASKAWA Electric 8,000 (a) 56,835
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,946,555) 97.5% 2,002,808
CASH AND RECEIVABLES (NET) 2.5% 51,691
NET ASSETS 100.0% 2,054,499
A NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 1,946,555 2,002,808
Cash 51,186
Dividends receivable 96
Other assets 1,174
Due from The Dreyfus Corporation and affliliates 25,867
2,081,131
- --------------------------------------------------------------------------------
LIABILITIES ($):
Accrued expenses 26,632
- -------------------------------------------------------------------------------
NET ASSETS ($) 2,054,499
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,000,000
Accumulated undistributed investment income--net 505
Accumulated net realized gain (loss) on investments (2,259)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3(b) 56,253
- --------------------------------------------------------------------------------
NET ASSETS ($) 2,054,499
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Benefical Interest authorized) 160,000
NET ASSET VALUE, offering and redemption price per share ($) 12.84
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
from December 15, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 1,796
Cash dividends (net of $17 foreign taxes withheld at source) 96
TOTAL INCOME 1,892
EXPENSES:
Investment advisory fee--Note 2(a) 925
Auditing fees 15,000
Legal fees 10,000
Custodian fees 622
Registration fees 528
Prospectus and shareholders' reports 310
Shareholder servicing costs 101
Trustees' fees and expenses--Note 2(b) 69
Miscellaneous 625
TOTAL EXPENSES 28,180
Less--expense reimbursement from The Dreyfus Corportation
due to undertaking--Note 2(a) (26,793)
NET EXPENSES 1,387
INVESTMENT INCOME--NET 505
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on foreign currency transactions (19,671)
Net realized gain (loss) on forward currency exchange contracts 17,412
NET REALIZED GAIN (LOSS) (2,259)
Net unrealized appreciation (depreciation) on investments 56,253
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 53,994
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 54,499
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS from December 15, 1999 (commencement of
operations) to December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 505
Net realized gain (loss) on investments (2,259)
Net unrealized appreciation (depreciation) on investments 56,253
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 54,499
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
NET PROCEEDS FROM SHARES SOLD 2,000,000
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,054,499
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 2,054,499
Undistributed investment income--net 505
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 160,000
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from December 15,
1999 (commencement of operations) to December 31, 1999. Total return shows how
much your investment in the portfolio would have increased (or decreased) during
the period. These figures have been derived from the portfolio's financial
statements.
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.50
Investment Operations:
Investment income-net .00(a)
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(b)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .07(b)
Ratio of net investment income
to average net assets .03(b)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation 1.35(b)
Portfolio Turnover Rate --
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,054
(A) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(B) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company operating as a series company currently offering eleven
series, including the Japan Portfolio (the "portfolio"). The portfolio is only
offered to separate accounts established by insurance companies to fund variable
annuity contracts and variable life insurance policies. The portfolio is a
diversified series. The portfolio's investment objective is to provide long-term
capital growth. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A.
(" Mellon"), which is a wholly-owned subsidiary of Mellon Financial Corporation.
Newton Capital Management Limited ("Newton") an affiliate of Dreyfus, serves as
the portfolio' s sub-investment adviser. Premier Mutual Fund Services, Inc. is
the distributor of the portfolio' s shares, which are sold without a sales
charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 160,000 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' s operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $1,796 based on available cash balances left on deposit.
Income earned under this arrangement is included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, if any, are normally declared and paid
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
annually, but the portfolio may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code of 1986,
as amended (the "Code" ). To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of the portfolio not
to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus has
undertaken from December 15, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio' s aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 1.50% of the value of the portfolio's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $26,793 during the period ended December 31, 1999.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and Newton, the
sub-investment advisory fee is payable monthly by Dreyfus, and is based upon the
value of the portfolio' s average daily net assets, computed at the following
annual rates:
AVERAGE NET ASSETS
0 to $100 million . . . . . . . . . . . . . . . . . . .35 of 1%
In excess of $100 million to $1 billion . . . . . . . .30 of 1%
In excess of $1 billion to $1.5 billion . . . . . . . .26 of 1%
In excess of $1.5 billion . . . . . . . . . . . . . . .20 of 1%
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
(A) The aggregate amount of purchases of investment securities, excluding
short-term securities and forward currency exchange contracts, during the period
ended December 31, 1999, amounted to $1,946,555.
The portfolio enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to settle foreign currency transactions. When executing
forward currency exchange contracts, the portfolio is obligated to buy or sell a
foreign currency at a specified rate on a certain date in the future. With
respect to sales of forward currency exchange contracts, the portfolio would
incur a loss if the value of the contract increases between the date the forward
contract is opened and the date the forward contract is closed. The portfolio
realizes a gain if the value of the contract decreases between those dates. With
respect to purchases of forward currency exchange contracts, the portfolio would
incur a loss if the value of the contract decreases between the date the forward
contract is opened and the date the forward contract is closed. The portfolio
realizes a gain if the value of the contract increases between those dates. The
portfolio is also exposed to credit risk associated with counter party
nonperformance on these forward currency exchange contracts which is typically
limited to the unrealized gain on each open contract. At December 31, 1999,
there were no forward currency exchange contracts outstanding.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) At December 31, 1999, accumulated net unrealized appreciation on investments
was $56,253, consisting of $142,224 gross unrealized appreciation and $85,971
gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Japan Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Japan Portfolio
(one of the series constituting the Dreyfus Investment Portfolios) as of
December 31, 1999, and the related statements of operations and changes in net
assets and financial highlights for the period from December 15, 1999
(commencement of operations) to December 31, 1999. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Japan Portfolio at December 31, 1999, and the
results of its operations, the changes in its net assets and the financial
highlights for the period from December 15, 1999 to December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
New York, New York
February 7, 2000
The Portfolio
For More Information
Dreyfus Investment Portfolios Japan Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
Newton Capital Management Limited
71 Queen Victoria Street
London, EC4V 4DR, England
Custodian
Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 189AR9912
================================================================================
Dreyfus
Investment Portfolios, MidCap Stock Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 Statement of Investments
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
15 Financial Highlights
16 Notes to Financial Statements
20 Report of Independent Auditors
21 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
MidCap Stock Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
MidCap Stock Portfolio, covering the 12-month period from January 1, 1999
through December 31, 1999. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with its portfolio manager, John O'Toole.
The past year has been both highly volatile and rewarding for investors in U.S.
stocks, including the mid-capitalization sector of the market. On December 31,
the last trading day of 1999, most major stock market indices hit new highs,
including the Dow Jones Industrial Average, the S&P 500 Index of large-cap
stocks, the technology-heavy Nasdaq 100 and the Russell 2000 Index of
small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the stock market's
advance in 1999, however. Growth-oriented midcap stocks handily outperformed
value-oriented midcap stocks. Indeed, the market' s stellar performance was
generally limited to a handful of highly valued technology and
telecommunications companies, some of which had no earnings. In our view, many
fundamentally sound midcap companies in other market sectors may now be selling
at attractive valuations.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Investment Portfolios, MidCap Stock
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
John O'Toole, Portfolio Manager
How did Dreyfus Investment Portfolios, MidCap Stock Portfolio perform relative
to its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Investment Portfolios,
MidCap Stock Portfolio produced a total return of 10.82%.(1) In contrast, the
Standard & Poor' s MidCap 400 Index, which serves as the portfolio's benchmark,
produced a total return of 14.72% for the same period.(2)
The portfolio' s approach to stock selection is a "blended" style that looks at
both value and growth valuation factors. This past year of 1999 was a time
period during which investors paid little attention to traditional value types
of factors, such as price/earnings ratio, and instead focused almost entirely on
the growth outlook of a company. This implies that any valuation process which
included traditional measures of value was not rewarded by the equity markets.
What is the portfolio's investment approach?
The portfolio invests primarily in mid-capitalization companies chosen through a
disciplined process that combines computer analysis with human judgment. The
quantitatively driven valuation process identifies and ranks approximately 2,500
midcap stocks as attractive, neutral or unattractive investments, based on more
than a dozen different valuation inputs. Those inputs, which we believe can have
an important influence on stock returns, include earnings estimates, profit
margins and growth in cash flow. We establish weights for each of these factors
based on our analysis of which factors are being rewarded by investors, making
adjustments along the way for the uniqueness of various industries and economic
sectors. For example, the equity markets may be rewarding companies with strong
growth in cash flow, in which case we would add more weight to that factor.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
Then our investment management team conducts fundamental research on each stock,
which ultimately results in their buy-and-sell recommendations. We seek to have
the portfolio own the best-performing stocks within each economic sector of the
S&P MidCap 400 Index.
What other factors influenced the portfolio's performance?
The portfolio' s relative performance was also adversely affected by investor
preference for technology- and telecommunications-related companies, whereas by
design the portfolio is more broadly diversified to manage risk.
Actually, technology and telecom did not completely dominate the markets until
the fourth quarter. In fact, last spring it appeared that investors were turning
away from growth and embracing value, as global economies were improving. By
late spring, however, the U.S. economy appeared in danger of overheating. Energy
prices soared and investors began to worry about inflation, causing the Fed to
raise interest rates in June, August and November. Rising interest rates and a
spike in the Consumer Price Index created new concerns for investors. As a
result, they began to focus on technology and telecommunications, two areas that
seemed unaffected by higher interest rates or the ups and downs of the economy.
We continue to adhere to our quantitatively driven computer valuation model for
selecting stocks. In addition, we perform fundamental research on portfolio
buy-and-sell decisions. For 1999, one of the portfolio's top performers was
Young & Rubicam, a global advertising agency that capitalized on the boom in
" dot.com" advertising that is so pervasive on radio and television. In
biotechnology, Biogen continued to beat Wall Street expectations based on its
very successful drug, Avonex, which treats multiple sclerosis, as did MedImmune,
a company that develops and markets drugs that treat infectious diseases and
cancer. In technology, the value of our holding in Altera, a company that
designs and manufactures semiconductors, rose significantly during the year. In
addition, VeriSign, an Internet security company for businesses and individuals
seeking to conduct electronic commerce,
produced very attractive returns. Recently, we added Hispanic Broadcasting, a
Spanish-language radio broadcasting company that owns and/or programs U.S. radio
stations. The company is capitalizing on the booming growth of the Hispanic
population and its increasing consumer spending power, which continue to make
Hispanic Broadcasting's radio stations a very attractive advertising vehicle.
Some individual holdings that negatively impacted return were Quintiles
Transnational and TJX Companies. Quintiles Transnational is a pharmaceutical
industry contract research organization that announced during 1999 the early
termination of several large-scale clinical programs, while TJX Companies is a
national off-price retailer that generated investor concern over less than
expected sales trends.
What is the portfolio's current strategy?
We believe the midcap sector of the market represents a collection of very
dynamic and interesting companies, many of whose stock valuations are attractive
compared to their large-cap counterparts. Given recent investor preference for
high growth companies, our current strategy is to make refinements to the
portfolio's investment model in seeking to capitalize on this trend. We continue
to strive to select the best-performing midcap stocks in each economic sector.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT
THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. THE RETURN
FIGURE PROVIDED REFLECTS THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH DECEMBER 31, 2000, AT
WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT
BEEN ABSORBED, THE PORTFOLIO'S RETURN WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S MIDCAP 400 INDEX IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX OF
MEDIUM-CAP STOCK MARKET PERFORMANCE.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Investment
Portfolios, MidCap Stock Portfolio and the Standard & Poor's MidCap 400 Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 12/31/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 5/1/98 10.82% 4.72%
</TABLE>
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS INVESTMENT
PORTFOLIOS, MIDCAP STOCK PORTFOLIO ON 5/1/98 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE IN THE STANDARD & POOR'S MIDCAP 400 INDEX ON THAT DATE. ALL
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE STANDARD & POOR'S MIDCAP 400
INDEX IS A BROAD-BASED INDEX OF 400 COMPANIES WITH MARKET CAPITALIZATIONS
GENERALLY RANGING FROM $50 MILLION TO $10 BILLION AND IS A WIDELY ACCEPTED,
UNMANAGED INDEX OF OVERALL MIDCAP STOCK MARKET PERFORMANCE, WHICH DOES NOT TAKE
INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION RELATING TO
PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS
CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN
THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--95.5% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL--10.5%
<S> <C> <C>
Abercrombie & Fitch, Cl. A 3,550 (a) 94,741
Alaska Air Group 1,950 (a) 68,494
BJ's Wholesale Club 2,900 (a) 105,850
Blyth Industries 2,900 (a) 71,231
Bob Evans Farms 2,750 42,453
Brinker International 2,750 (a) 66,000
Brunswick 2,550 56,737
Dollar Tree Stores 2,950 (a) 142,891
Furniture Brands International 3,750 (a) 82,500
Harley-Davidson 1,000 64,062
Leggett & Platt 3,350 71,816
MGM Grand 2,000 100,625
Miller (Herman) 2,750 63,250
Nautica Enterprises 2,500 (a) 28,281
Navistar International 1,400 (a) 66,325
Park Place Entertainment 4,800 (a) 60,000
Ross Stores 7,250 130,047
TJX Cos. 6,250 127,734
V.F. 1,750 52,500
Zale 2,850 (a) 137,869
1,633,406
CONSUMER STAPLES--3.3%
Dial 2,800 68,075
Hormel Foods 2,150 87,344
Lancaster Colony 2,000 66,250
Lauder (Estee), Cl. A 1,650 83,222
SUPERVALU 3,350 67,000
U.S. Foodservice 2,550 (a) 42,712
Universal Foods 5,150 104,931
519,534
ELECTRONIC EQUIPMENT--4.3%
Jabil Circuit 2,300 (a) 167,900
Johnson Controls 1,400 79,625
Sanmina 2,150 (a) 214,731
Sawtek 1,700 (a) 113,156
Waters 1,750 (a) 92,750
668,162
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY--6.7%
Diamond Offshore Drilling 3,300 100,856
KeySpan 4,100 95,069
LG&E Energy 2,650 46,209
Murphy Oil 1,550 88,931
NICOR 2,250 73,125
Peoples Energy 3,250 108,875
Questar 3,800 57,000
Santa Fe International 2,250 58,219
Tidewater 2,650 95,400
Transocean Sedco Forex 4,100 138,119
Ultramar Diamond Shamrock 4,050 91,884
Vastar Resources 1,400 82,600
1,036,287
HEALTH CARE--10.2%
Allergan 3,550 176,613
BioChem Pharma 3,450 (a) 75,037
Biogen 4,100 (a) 346,450
Biomet 3,500 140,000
Chiron 3,800 (a) 161,025
Health Management Associates, Cl. A 9,450 (a) 126,394
Lincare Holdings 2,300 (a) 79,781
MedImmune 1,800 (a) 298,575
Patterson Dental 450 (a) 19,181
Universal Health Services, Cl. B 2,350 (a) 84,600
VISX 1,450 (a) 75,038
1,582,694
INTEREST SENSITIVE--12.3%
Associated Banc-Corp 2,400 82,200
Block (H&R) 1,700 74,375
City National 3,850 126,809
Cullen/Frost Bankers 2,850 73,387
Dime Bancorp 4,350 65,794
Edwards (A.G.) 3,350 107,409
First Tennessee National 3,900 111,150
Golden West Financial 3,100 103,850
Mercantile Bankshares 3,250 103,797
Metris Cos. 2,200 78,513
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Mutual Risk Management 2,850 47,916
Nationwide Financial Services, Cl. A 2,350 65,653
North Fork Bancorp 6,650 116,375
PMI Group 2,800 136,675
Pacific Century Financial 4,050 75,684
Paine Webber Group 850 32,991
Radian Group 1,550 74,013
RenaissanceRe Holdings 600 24,525
T. Rowe Price Associates 3,400 125,588
Travelers Property Casualty, Cl. A 2,350 80,488
UnionBanCal 1,750 69,016
Union Planters 3,450 136,059
1,912,267
PRODUCER GOODS--9.0%
AK Steel Holding 1,750 33,031
American Power Conversion 2,800 (a) 73,850
Briggs & Stratton 1,400 75,075
CNF Transportation 1,250 43,125
Caraustar Industries 3,250 78,000
Centex 2,550 62,953
Centex Construction Products 1,750 68,250
Cleveland-Cliffs 400 12,450
Cordant Technologies 2,050 67,650
Cytec Industries 3,700 (a) 85,562
Dexter 1,150 45,713
Engelhard 3,800 71,725
Georgia-Pacific (Timber Group) 1,650 40,631
Helix Technology 1,650 73,941
Kansas City Southern Industries 1,400 104,475
Louisiana-Pacific 5,300 75,525
Parker-Hannifin 1,500 76,969
Sealed Air 1,650 (a) 85,491
Sherwin-Williams 3,050 64,050
Trinity Industries 3,350 95,266
USFreightways 1,350 64,631
1,398,363
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
SERVICES--11.6%
Belo (A.H.), Cl. A 3,750 71,484
Convergys 6,350 (a) 195,262
DST Systems 1,050 (a) 80,128
DeVry 4,000 (a) 74,500
Hertz, Cl. A 4,100 205,513
Hispanic Broadcasting 850 (a) 78,386
Knight-Ridder 1,100 65,450
McClatchy, Cl. A 1,500 64,875
Proxicom 1,050 130,528
Pulitzer 900 36,281
Quintiles Transnational 3,850 (a) 71,947
Telephone & Data Systems 750 94,500
United States Cellular 850 (a) 85,797
Univision Communications, Cl. A 1,150 (a) 117,516
VeriSign 1,000 (a) 190,937
Washington Post, Cl. B 200 111,175
Young & Rubicam 1,950 137,962
1,812,241
TECHNOLOGY--21.5%
Altera 5,100 (a) 252,769
Check Point Software Technologies 1,050 (a) 208,688
Compuware 4,800 (a) 178,800
Extreme Networks 1,450 121,075
iXL Enterprises 2,300 127,650
Legato Systems 1,550 (a) 106,659
Lexmark International Group, Cl. A 1,150 (a) 104,075
Linear Technology 2,400 171,750
Maxim Integrated Products 8,200 (a) 386,937
RF Micro Devices 2,000 (a) 136,875
Rational Software 1,650 (a) 81,056
Razorfish 1,050 99,881
Redback Networks 900 159,750
Sabre Holdings 3,850 (a) 197,313
Symantec 1,700 (a) 99,663
Synopsys 1,150 (a) 76,762
USWeb 2,300 (a) 102,206
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
VERITAS Software 2,875 (a) 411,484
Vignette 800 130,400
Vitesse Semiconductor 3,750 (a) 196,641
3,350,434
UTILITIES--6.1%
Allegheny Energy 4,050 109,097
CenturyTel 1,450 68,694
Constellation Energy Group 2,400 69,600
DTE Energy 3,550 111,381
Energy East 4,800 99,900
GPU 2,850 85,322
NSTAR 2,700 109,350
Northern States Power 2,650 51,675
OGE Energy 5,200 98,800
Pinnacle West Capital 1,950 59,597
Sierra Pacific Resources 2,802 48,510
TECO Energy 2,350 43,622
955,548
TOTAL COMMON STOCKS
(cost $12,973,603) 14,868,936
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--3.4% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Greenwich Capital Markets, Tri-Party
Repurchase Agreement, 2.8%, dated
12/31/1999, due 1/3/2000, in the amount
of $525,123 (fully collateralized by
$555,000 U.S. Treasury Inflation Protected
Securities, 3.875%, 4/15/2029, value $535,760)
(cost $525,000) 525,000 525,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $13,498,603) 98.9% 15,393,936
CASH AND RECEIVABLES (NET) 1.1% 168,939
NET ASSETS 100.0% 15,562,875
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
--Note 1(b) 13,498,603 15,393,936
Cash 177,873
Dividends and interest receivable 13,476
Prepaid expenses 20,834
15,606,119
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 7,415
Accrued expenses and other liabilities 35,829
43,244
- --------------------------------------------------------------------------------
NET ASSETS ($) 15,562,875
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 13,948,747
Accumulated undistributed investment income--net 300
Accumulated net realized gain (loss) on investments (281,505)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 1,895,333
- --------------------------------------------------------------------------------
NET ASSETS ($) 15,562,875
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
1,157,576
NET ASSET VALUE, offering and redemption price per share ($) 13.44
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $134 foreign taxes withheld at source) 135,057
Interest 17,894
TOTAL INCOME 152,951
EXPENSES:
Investment advisory fee--Note 3(a) 92,701
Legal fees 25,804
Auditing fees 18,401
Prospectus and shareholders' reports 16,069
Custodian fees--Note 3(a) 13,212
Organization expenses 6,206
Trustees' fees and expenses--Note 3(b) 5,442
Registration fees 942
Shareholder servicing costs 583
Miscellaneous 988
TOTAL EXPENSES 180,348
Less--reduction in investment advisory fee due to
undertaking--Note 3(a) (59,994)
NET EXPENSES 120,354
INVESTMENT INCOME--NET 32,597
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4($):
Net realized gain (loss) on investments 455,052
Net unrealized appreciation (depreciation) on investments 1,039,391
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,494,443
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,527,040
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
------------------------------
1999 1998(a)
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 32,597 14,763
Net realized gain (loss) on investments 455,052 (736,557)
Net unrealized appreciation (depreciation)
on investments 1,039,391 855,942
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,527,040 134,148
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (38,834) (18,543)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 6,399,007 11,816,688
Dividends reinvested 38,834 18,543
Cost of shares redeemed (2,869,302) (1,494,706)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 3,568,539 10,340,525
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,056,745 10,456,130
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 10,506,130 50,000
END OF PERIOD 15,562,875 10,506,130
Undistributed investment income--net 300 331
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 527,232 996,748
Shares issued for dividends reinvested 2,989 1,611
Shares redeemed (236,335) (138,669)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 293,886 859,690
(A) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Year Ended December 31,
------------------------
1999 1998(a)
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.16 12.50
Investment Operations:
Investment income--net .03(b) .02
Net realized and unrealized
gain (loss) on investments 1.28 (.34)
Total from Investment Operations 1.31 (.32)
Distributions:
Dividends from investment income--net (.03) (.02)
Net asset value, end of period 13.44 12.16
- --------------------------------------------------------------------------------
TOTAL RETURN (%) 10.82 (2.53)(c)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .97 .67(c)
Ratio of net investment income
to average net assets .26 .18(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation .49 .60(c)
Portfolio Turnover Rate 77.73 75.74(c)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 15,563 10,506
(A) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering eleven
series, including the MidCap Stock Portfolio (the "portfolio"). The portfolio is
only offered to separate accounts established by insurance companies to fund
variable annuity contracts and variable life insurance policies. The portfolio
is a diversified series. The portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly-traded common stocks of medium-size domestic companies in the
aggregate, as represented by the Standard & Poor's MidCap 400 Index. The Dreyfus
Corporation ("Dreyfus") serves as the portfolio's investment adviser. Dreyfus is
a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Financial Corporation. Premier Mutual Fund Services, Inc. is the
distributor of the portfolio's shares, which are sold without a sales charge.
As of December 31, 1999, MBC Investments Corp., an indirect subsidiary of Mellon
Financial Corporation, held 309,485 shares of the portfolio.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $536 during the period ended December 31, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
The portfolio may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the portfolio's Manager, subject to the seller's
agreement to repurchase and the portfolio's agreement to resell such securities
at a mutually agreed upon price. Securities purchased subject to repurchase
agreements are deposited with the portfolio's custodian and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value greater
than or equal to the terms of the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the portfolio will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the portfolio maintains its right to sell the underlying securities
at market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually,
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
but the portfolio may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code of 1986, as amended
(the "Code" ). To the extent that net realized capital gain can be offset by
capital loss carryovers, it is the policy of the portfolio not to distribute
such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The portfolio has an unused capital loss carryover of approximately $188,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. If not
applied, the carryover expires in fiscal 2006.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $6,206 and decreased paid-in capital by
$6,206. Net assets were not affected by this reclassification.
NOTE 2-Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
portfolio at rates which are related to the Federal Funds rate in effect at the
time of borrowings. During the period ended December 31, 1999, the portfolio did
not borrow under the line of credit.
NOTE 3--Investment Advisory Fee and Other Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the
investment advisory fee is computed at the annual rate of .75 of 1% of the value
of the portfolio's average daily net assets and is payable monthly. Dreyfus has
undertaken from January 1, 1999 through December 31, 2000, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio's aggregate annual expenses,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed an annual rate of 1% of the value of the portfolio's average
daily net assets. The reduction in investment advisory fee, pursuant to the
undertaking, amounted to $59,994 during the period ended December 31, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $71 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $13,212 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$12,444,356 and $9,331,600, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$1,895,333, consisting of $3,034,385 gross unrealized appreciation and
$1,139,052 gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees Dreyfus Investment Portfolios, MidCap Stock
Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, MidCap Stock
Portfolio (one of the series constituting Dreyfus Investment Portfolios) as of
December 31, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, MidCap Stock Portfolio at December 31, 1999, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with accounting principles
generally accepted in the United States.
New York, New York
February 7, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes the portfolio hereby designates 100% of the ordinary
dividends paid during the fiscal year ended December 31, 1999 as qualifying for
the corporate dividends received deduction.
The Portfolio
For More Information
Dreyfus
Investment Portfolios,
MidCap Stock Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 174AR9912
================================================================================
Dreyfus
Investment Portfolios, Technology Growth Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
17 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Investment Portfolios,
Technology Growth Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Investment Portfolios,
Technology Growth Portfolio, covering the period from the portfolio's inception
on August 31, 1999 through December 31, 1999. Inside, you'll find valuable
information about how the portfolio was managed, including a discussion with the
primary portfolio manager, Mark Herskovitz.
The reporting period has been highly rewarding for investors in technology
stocks. On December 31, the last trading day of 1999, most major stock market
indices hit new highs, including the technology-heavy Nasdaq 100, which rose
more than 85% in 1999. Investors have evidently believed that the Internet,
biotechnology and other leading-edge technologies are transforming the ways we
communicate and do businesses, and they have been flocking to these fast-growing
companies to participate in the "information revolution."
We appreciate your confidence and we look forward to your continued
participation in Dreyfus Investment Portfolios, Technology Growth Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Mark Herskovitz, Primary Portfolio Manager
How did Dreyfus Investment Portfolios, Technology Growth Portfolio perform
relative to its benchmark?
For the period from the Dreyfus Investment Portfolios, Technology Growth
Portfolio' s inception on August 31, 1999 to December 31, 1999, the portfolio
produced a total return of 55.60%.(1) In comparison, the Morgan Stanley High
Technology 35 Index provided a total return of 54.24%(2) and the Standard &
Poor' s 500((reg.tm) ) Composite Stock Price Index ("S&P 500 Index") provided a
total return of 11.72%(3) for the same period.
We attribute the portfolio's good performance to the strength of the technology
sector and the portfolio's investment strategy, which emphasizes diversification
among 10 different technology-related market sectors. By maintaining a broadly
diversified portfolio, we held a variety of companies that enjoyed growing
demand for their products and services. At the same time, our diversification
strategy helped cushion the effects of individual disappointments on the
portfolio.
Investors should note, however, that returns such as these should not be
expected over the long term. Technology companies involve greater risk because
their earnings tend to be less predictable and their share prices tend to be
more volatile than companies in other sectors.
What is the portfolio's investment approach?
The portfolio seeks capital appreciation by investing primarily in growth
companies of any size that we believe are leading producers or beneficiaries of
technological innovation. These investments may include companies in the
computer, semiconductor, electronics, communications, health care,
biotechnology, computer software and hardware, electronic components and
systems, networking and cable broadcasting, telecommunications, defense and
aerospace, and environmental sectors.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
When evaluating investment opportunities, we first assess economic and market
conditions in an attempt to identify trends that we believe are likely to drive
demand within the various technology-related sectors. Second, we strive to
identify the companies that are most likely to benefit from these overall
trends. Typically, these companies are leaders in their market segments,
characterized by rapid earnings growth and dominant market shares. We conduct
extensive fundamental research to understand these companies' competitive
advantages and to evaluate their ability to maintain their leadership positions
over time.
This process enables us to select leading technology companies for the
portfolio. Many of those stocks are considered core holdings that we believe
will lead their industry segments over the long term. We complement these
positions with non-core holdings that we believe will provide above-average
gains over a shorter time frame.
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.
What other factors influenced the portfolio's performance?
At the time of the portfolio's inception, the U.S. economy was growing more
strongly than most analysts and economists had previously anticipated. While
faster than expected domestic growth affected some stocks negatively because of
the adverse effects of higher interest rates on borrowing costs, many technology
stocks benefited from greater demand for their products and services. In
addition, positive economic growth in Europe and Asia helped provide an outlet
for many technology products, including some of the older product lines such as
PC software, semiconductors and data networking. Finally, the rapid growth of
communication-related companies has continued in such areas as local and
long-distance telephone networks, Internet services and cable television.
From August through year-end, technology stocks rallied strongly, making
the technology area the top-performing market sector by a wide margin. While the
portfolio participated strongly in this rally through core holdings such as CMGI
and Yahoo!, we tended to avoid more speculative stocks that did not meet our
fundamental investment criteria.
What is the portfolio's current strategy?
We have strived to prepare the portfolio for both opportunities and risks in the
months ahead. Regarding risk, we believe that the technology sector is likely to
continue to experience high levels of volatility. Investors should therefore not
be surprised to see periodic declines in technology stocks, especially if
inflation fears persist and interest rates rise. Our strategy in seeking to
weather such volatility is to maintain a broadly diversified portfolio and to
focus on companies that our research indicates are fundamentally sound and in
good positions to prosper from technological advances.
Over the longer term, we believe that the economic and business fundamentals
that have driven technology stocks higher have remained largely intact. Our
strategy in seeking to capture the growth potential of these companies is to buy
and hold stocks of companies that we believe have innovative products, exciting
technologies and experienced management teams. By focusing on the long-term
potential of such companies, we believe that the portfolio can continue to
benefit from rising demand for the products and services they produce.
January 14, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION PORTFOLIO SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE
DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. RETURN
FIGURES PROVIDED REFLECT THE ABSORPTION OF PORTFOLIO EXPENSES BY THE DREYFUS
CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THAT MAY BE EXTENDED,
TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE
PORTFOLIO'S RETURNS WOULD HAVE BEEN LOWER.
(2) SOURCE: BLOOMBERG L.P. -- REFLECTS THE REINVESTMENT OF INCOME DIVIDENDS
AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MORGAN STANLEY HIGH
TECHNOLOGY 35 INDEX IS AN UNMANAGED EQUAL DOLLAR-WEIGHTED INDEX OF 35 STOCKS
FROM THE ELECTRONICS-BASED SUBSECTORS.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE S&P 500
INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Portfolio
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS--98.9% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES--1.7%
<S> <C> <C>
Automatic Data Processing 20,500 1,104,438
DATA STORAGE--6.6%
Brocade Communications Systems 8,000 (a) 1,416,000
EMC 14,200 (a) 1,551,350
Network Appliance 16,500 (a) 1,370,531
4,337,881
HARDWARE--9.7%
Apple Computer 11,000 (a) 1,130,938
Dell Computer 23,700 (a) 1,208,700
Flextronics International 23,200 (a) 1,067,200
Jabil Circuit 3,900 (a) 284,700
Lexmark International Group, Cl. A 15,900 (a) 1,438,950
Sun Microsystems 16,000 (a) 1,239,000
6,369,488
INTERNET--11.9%
America Online 15,000 (a) 1,131,563
CMGI 5,400 (a) 1,495,125
eBay 9,500 (a) 1,189,281
eToys 17,000 (a) 446,250
VeriSign 11,500 (a) 2,195,781
Yahoo 3,200 (a) 1,384,600
7,842,600
NETWORKING--6.4%
Cisco Systems 15,200 (a) 1,628,300
Finisar 14,200 (a) 1,276,225
Sycamore Networks 4,200 (a) 1,293,600
4,198,125
SEMICONDUCTORS--14.5%
Intel 15,000 1,234,687
Micrel 22,600 (a) 1,286,788
PMC-Sierra 9,300 (a) 1,490,906
RF Micro Devices 18,000 (a) 1,231,875
Sawtek 21,700 (a) 1,444,406
Taiwan Semiconductor Manufacturing, ADR 28,500 (a) 1,282,500
Vitesse Semiconductor 30,200 (a) 1,583,612
9,554,774
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT--8.7%
Applied Materials 10,300 (a) 1,304,881
KLA-Tencor 11,500 (a) 1,280,812
PRI Automation 23,500 (a) 1,577,437
Teradyne 23,700 (a) 1,564,200
5,727,330
SOFTWARE--15.2%
BroadVision 7,500 (a) 1,275,469
Clarify 10,500 (a) 1,323,000
Legato Systems 20,200 (a) 1,390,013
Microsoft 11,800 (a) 1,377,650
Oracle 11,800 (a) 1,322,338
Rational Software 20,000 (a) 982,500
Siebel Systems 11,500 (a) 966,000
Synopsys 19,700 (a) 1,314,975
9,951,945
TELECOMMUNICATION EQUIPMENT--15.6%
Internap Network Services 12,800 (a) 2,214,400
JDS Uniphase 13,600 (a) 2,193,850
Lucent Technologies 16,500 1,234,406
Nokia Oyj, ADR 7,700 1,463,000
SDL 8,500 1,853,000
Tellabs 20,000 (a) 1,283,750
10,242,406
TELECOMMUNICATION SERVICES--8.6%
MCI WorldCom 29,400 (a) 1,560,038
Metromedia Fiber Network, Cl. A 27,300 (a) 1,308,694
NEXTLINK Communications, Cl. A 17,700 (a) 1,470,206
Qwest Communications 30,500 (a) 1,311,500
5,650,438
TOTAL COMMON STOCKS
(cost $50,243,970) 64,979,425
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--5.1% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
5.17%, 1/13/2000 1,089,000 1,087,595
5.06%, 2/10/2000 1,160,000 1,154,026
5.26%, 3/23/2000 926,000 915,564
5.13%, 3/30/2000 187,000 184,668
TOTAL SHORT-TERM INVESTMENTS
(cost $3,340,135) 3,341,853
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $53,584,105) 104.0% 68,321,278
LIABILITIES, LESS CASH AND RECEIVABLES (4.0%) (2,614,012)
NET ASSETS 100.0% 65,707,266
A NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 53,584,105 68,321,278
Cash 1,762,511
Receivable for investment securities sold 422,688
Dividends receivable 1,269
70,507,746
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 39,104
Payable for investment securities purchased 4,725,791
Accrued expenses 35,585
4,800,480
- --------------------------------------------------------------------------------
NET ASSETS ($) 65,707,266
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 50,844,658
Accumulated net realized gain (loss) on investments 125,435
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 14,737,173
- --------------------------------------------------------------------------------
NET ASSETS ($) 65,707,266
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
3,378,492
NET ASSET VALUE, offering and redemption price per share ($) 19.45
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
from August 31, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 49,523
Cash dividends 1,845
TOTAL INCOME 51,368
EXPENSES:
Investment advisory fee--Note 2(a) 57,840
Auditing fees 20,156
Registration fees 14,135
Custodian fees--Note 2(a) 8,268
Prospectus and shareholders' reports 675
Shareholder servicing costs 174
Trustee's fees and expenses--Note 2(b) 84
Miscellaneous 626
TOTAL EXPENSES 101,958
Less--expense reimbursement from The Dreyfus Corporation
due to undertaking-Note 2(a) (19,780)
NET EXPENSES 82,178
INVESTMENT (LOSS) (30,810)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 156,245
Net unrealized appreciation (depreciation) on investments 14,737,173
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 14,893,418
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 14,862,608
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
from August 31, 1999 (commencement of operations) to December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (30,810)
Net realized gain (loss) on investments 156,245
Net unrealized appreciation (depreciation) on investments 14,737,173
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 14,862,608
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 55,130,348
Cost of shares redeemed (4,285,690)
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST
TRANSACTIONS 50,844,658
TOTAL INCREASE (DECREASE) IN NET ASSETS 65,707,266
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period --
END OF PERIOD 65,707,266
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 3,639,182
Shares redeemed (260,690)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,378,492
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the period from August 31,
1999 (commencement of operations) to December 31, 1999. Total return shows how
much your investment in the portfolio would have increased (or decreased) during
the period. These figures have been derived from the portfolio financial
statements.
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.50
Investment Operations:
Investment (loss) (.02)(a)
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(b)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .36(b)
Ratio of net investment (loss)
to average net assets (.14)(b)
Decrease reflected in above expense ratio
due to undertaking by The Dreyfus Corporation .09(b)
Portfolio Turnover Rate 20.01(b)
- --------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 65,707
A BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
B NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Investment Portfolios (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company operating as a series company currently offering eleven
series, including the Technology Growth Portfolio (the "portfolio" ). The
portfolio is only offered to separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies.The portfolio is a diversified series. The portfolio's investment
objective is to provide long-term capital growth. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Premier Mutual Fund Services, Inc. is the
distributor of the portfolio's shares, which are sold without a sales charge.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
are translated to U.S. dollars at the prevailing rates of exchange. Forward
currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio received
net earnings credits of $1,254 based on available cash balances left on deposit.
Income earned under this arrangement is included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1999, the portfolio increased accumulated
undistributed investment income-net by $30,810 and decreased accumulated net
realized gain (loss) on investments by $30,810. Net assets were not affected by
this reclassification.
NOTE 2--Investment Advisory Fee and Other Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus had
undertaken from August 31, 1999 through December 31, 1999, to reduce the
investment advisory fee and reimburse such excess expenses paid by the
portfolio, to the extent that the portfolio's aggregate expenses, exclusive of
taxes, brokerage, interest on borrowings and extraordinary expenses, exceed an
annual rate of 1.25% of the value of the portfolio's average daily net assets.
The reduction in investment advisory fee, pursuant to the undertaking, amounted
to $19,780 during the period ended December 31, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended December 31, 1999, the portfolio was charged $15 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $8,268 pursuant to the custody agreement.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$54,804,731 and $4,717,551, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$14,737,173, consisting of $15,030,134 gross unrealized appreciation and
$292,961 gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Investment Portfolios, Technology Growth Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Investment Portfolios, Technology
Growth Portfolio (one of the series constituting the Dreyfus Investment
Portfolios) as of December 31, 1999, and the related statements of operations
and changes in net assets and financial highlights for the period from August
31, 1999 (commencement of operations) to December 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Investment Portfolios, Technology Growth Portfolio at December 31, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from August 31, 1999 to December 31, 1999,
in conformity with accounting principles generally accepted in the United
States.
New York, New York
February 7, 2000
The Portfolio
For More Information
Dreyfus Investment Portfolios,
Technology Growth Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 175AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE
PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX AND THE STANDARD & POOR'S 500 BARRA
VALUE INDEX
EXHIBIT A:
STANDARD STANDARD
& POOR'S 500 & POOR'S 500 DREYFUS
COMPOSITE BARRA INVESTMENT
PERIOD STOCK VALUE PORTFOLIOS, CORE
PRICE INDEX * INDEX* VALUE PORTFOLIO
5/1/98 10,000 10,000 10,000
6/30/98 10,227 9,934 9,632
9/30/98 9,211 8,652 8,224
12/31/98 11,172 10,160 9,441
3/31/99 11,729 10,449 9,965
6/30/99 12,556 11,578 11,149
9/30/99 11,773 10,509 9,989
12/31/99 13,522 11,452 11,304
* Source: Lipper Analytical Services, Inc.
================================================================================
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, EUROPEAN EQUITY
PORTFOLIO AND THE FINANCIAL TIMES EUROTOP 300 INDEX
EXHIBIT A:
DREYFUS
FINANCIAL INVESTMENT
TIMES PORTFOLIOS,
EUROTOP 300 EUROPEAN
PERIOD INDEX * EQUITY PORTFOLIO
4/30/99 10,000 10,000
6/30/99 9,720 9,776
9/30/99 9,901 10,008
12/31/99 11,587 12,920
*Source: Bloomberg L.P.
================================================================================
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS GROWTH
PORTFOLIO WITH THE STANDARD & POOR'S 500 BARRA GROWTH
INDEX AND THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX
EXHIBIT A:
STANDARD
& POOR'S 500 DREYFUS
STANDARD COMPOSITE INVESTMENT
& POOR'S 500 STOCK PORTFOLIOS,
BARRA GROWTH PRICE FOUNDERS
PERIOD INDEX* INDEX* GROWTH PORTFOLIO
9/30/98 10,000 10,000 10,000
12/31/98 12,453 12,128 12,720
3/31/99 13,310 12,732 13,968
6/30/99 13,820 13,630 14,198
9/30/99 13,310 12,779 13,588
12/31/99 15,938 14,678 17,682
*Source: Lipper Analytical Services, Inc.
================================================================================
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS INTER-
NATIONAL EQUITY PORTFOLIO AND THE MORGAN STANLEY
CAPITAL INTERNATIONAL WORLD EX U.S. INDEX
EXHIBIT A:
MORGAN DREYFUS
STANLEY INVESTMENT
CAPITAL PORTFOLIOS,
INTERNATIONAL FOUNDERS
WORLD EX INTERNATIONAL
PERIOD U.S. INDEX * EQUITY PORTFOLIO
9/30/98 10,000 10,000
12/31/98 12,046 11,488
3/31/99 12,235 11,768
6/30/99 12,588 12,496
9/30/99 13,128 13,152
12/31/99 15,409 18,460
*Source: Morgan Stanley Capital International
================================================================================
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, FOUNDERS PASSPORT
PORTFOLIO WITH THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD EX U.S. INDEX AND THE MORGAN STANLEY
CAPITAL INTERNATIONAL WORLD EX U.S.A. SMALLCAP INDEX
EXHIBIT A:
MORGAN
MORGAN STANLEY DREYFUS
STANLEY CAPITAL INVESTMENT
CAPITAL INTERNATIONAL PORTFOLIOS,
INTERNATIONAL WORLD EX FOUNDERS
WORLD EX U.S.A. SMALLCAP PASSPORT
PERIOD U.S. INDEX * INDEX * PORTFOLIO
9/30/98 10,000 10,000 10,000
12/31/98 12,046 11,351 11,579
3/31/99 12,235 11,664 11,990
6/30/99 12,588 12,731 12,663
9/30/99 13,128 13,391 13,313
12/31/99 15,409 13,438 20,385
*Source: Morgan Stanley Capital International
================================================================================
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, MIDCAP STOCK
PORTFOLIO AND THE STANDARD & POOR'S MIDCAP 400
INDEX
EXHIBIT A:
DREYFUS
STANDARD & POOR'S INVESTMENT
PERIOD MIDCAP 400 PORTFOLIOS, MIDCAP
INDEX * STOCK PORTFOLIO
5/1/98 10,000 10,000
6/30/98 9,610 9,560
9/30/98 8,220 7,952
12/31/98 10,537 9,747
3/31/99 9,865 9,114
6/30/99 11,261 10,140
9/30/99 10,315 9,419
12/31/99 12,088 10,801
* Source: Lipper Analytical Services, Inc.
================================================================================
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS INVESTMENT PORTFOLIOS, TECHNOLOGY GROWTH
PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX AND THE MORGAN STANLEY HIGH TECHNOLOGY 35 INDEX
EXHIBIT A:
STANDARD
& POOR'S
500 MORGAN DREYFUS
COMPOSITE STANLEY INVESTMENT
STOCK HIGH PORTFOLIOS,
PRICE TECHNOLOGY TECHNOLOGY
PERIOD INDEX* 35 INDEX ** GROWTH PORTFOLIO
8/31/99 10,000 10,000 10,000
9/30/99 9,726 10,313 10,072
10/31/99 10,342 10,973 11,168
11/30/99 10,552 12,858 12,432
12/31/99 11,172 15,424 15,560
*Source: Lipper Analytical Services, Inc.
**Source: Bloomberg L.P.
