File No. 2-17531
File No. 811-1018
As filed on October 7, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. -- [ ]
Post-Effective Amendment No. 65 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 36 [X]
FOUNDERS FUNDS, INC.
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(Exact Name of Registrant as Specified in Charter)
Founders Financial Center
2930 East Third Avenue
Denver, Colorado 80206
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(Address of Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, including Area Code: (303) 394-4404
Kenneth R. Christoffersen, Esq.
Founders Financial Center
2930 East Third Avenue
Denver, Colorado 80206
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[X] on December 31, 1999 pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has previously elected to register an indefinite number of shares
of its common stock pursuant to Rule 24f-2 under the Investment Company Act
of 1940. Registrant's Rule 24f-2 Notice for the fiscal year ended December
31, 1998 was filed on March 26, 1999.
Page 1 of 523
Exhibit index is located at page 396
<PAGE> 2
DREYFUS FOUNDERS FUNDS, INC.
P R O S P E C T U S
CLASS F SHARES
December 31, 1999
Dreyfus Founders Balanced Fund
Dreyfus Founders Discovery Fund
Dreyfus Founders Focus Fund
Dreyfus Founders Government Securities Fund
Dreyfus Founders Growth Fund
Dreyfus Founders Growth and Income Fund
Dreyfus Founders International Equity Fund
Dreyfus Founders Mid-Cap Growth Fund
Dreyfus Founders Money Market Fund
Dreyfus Founders Passport Fund
Dreyfus Founders Worldwide Growth Fund
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of these Funds' shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a criminal offense.
<PAGE> 3
TABLE OF CONTENTS
OUR INVESTMENT APPROACH......................................................4
ABOUT THE FUNDS..............................................................5
FUND BY FUND SUMMARIES.......................................................6
DREYFUS FOUNDERS BALANCED FUND.............................................7
DREYFUS FOUNDERS DISCOVERY FUND............................................9
DREYFUS FOUNDERS FOCUS FUND...............................................11
DREYFUS FOUNDERS GOVERNMENT SECURITIES FUND...............................12
DREYFUS FOUNDERS GROWTH FUND..............................................14
DREYFUS FOUNDERS GROWTH AND INCOME FUND...................................16
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND................................18
DREYFUS FOUNDERS MID-CAP GROWTH FUND......................................21
DREYFUS FOUNDERS MONEY MARKET FUND........................................23
DREYFUS FOUNDERS PASSPORT FUND............................................25
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND....................................27
FEES AND EXPENSES...........................................................29
MORE ABOUT INVESTMENT OBJECTIVES, STRATEGIES, AND RISKS.....................32
WHO MANAGES THE FUNDS.......................................................36
ABOUT YOUR INVESTMENT.......................................................39
YOUR SHARE PRICE..........................................................39
INVESTING IN THE FUNDS....................................................39
DOING BUSINESS WITH DREYFUS FOUNDERS FUNDS................................42
SELLING SHARES............................................................44
TRANSACTION POLICIES......................................................46
FOR MORE INFORMATION ON YOUR ACCOUNT......................................48
DIVIDENDS AND DISTRIBUTIONS.................................................50
TAXES.......................................................................50
BROKERAGE ALLOCATION........................................................52
FINANCIAL HIGHLIGHTS........................................................53
<PAGE> 4
OUR INVESTMENT APPROACH
Colorado-based Founders Asset Management LLC ("Founders") manages the Dreyfus
Founders Funds using a "growth style" of investing. We use a consistent,
bottom-up approach to build equity portfolios, searching one-by-one for
companies whose fundamental strengths suggest the potential to provide superior
earnings growth over time. When a company's fundamentals are strong, we believe
earnings growth will follow. Using this disciplined approach, we look for
companies having some or all of the following characteristics:
o growth that is faster than a company's peers
o growth that is faster than the market as a whole and sustainable over
the long term
o strong management team
o leading market positions and growing brand identities
o financial, marketing, and operating strength
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face-to-face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of the company before we invest.
Founders is the GROWTH SPECIALIST affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based financial services company.
[On side panel: KEY CONCEPTS: BOTTOM-UP APPROACH means analyzing the
fundamentals of individual companies rather than focusing on broader market
or sector themes.]
[On side panel: KEY CONCEPTS: What the Funds are - and aren't. These Funds
are mutual funds: a pooled investment that is professionally managed and
gives you the opportunity to participate in financial markets. They strive
to meet their stated goals, although as with all mutual funds, they cannot
offer guaranteed results. You could lose money in these Funds, but you also
have the potential to make money.
An investment in the Funds is not a bank deposit, and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.]
<PAGE> 5
ABOUT THE FUNDS
AGGRESSIVE GROWTH FUNDS
o Dreyfus Founders Discovery Fund
o Dreyfus Founders Focus Fund
o Dreyfus Founders Mid-Cap Growth Fund
o Dreyfus Founders Passport Fund
The aggressive growth funds, other than Focus Fund, generally invest in
faster-growing and more volatile stocks. Focus Fund generally invests in a core
group of only 20-30 mostly large-cap common stocks, and this concentrated
portfolio increases its volatility. These aggressive growth funds may be
suitable for your investment plan if you have a long time horizon and are
comfortable with short-term volatility.
GROWTH FUNDS
o Dreyfus Founders Growth Fund
o Dreyfus Founders International Equity Fund
o Dreyfus Founders Worldwide Growth Fund
Investors may use growth funds to form the core of their long-term investment
plan because they may be less volatile over time than aggressive growth funds,
while still maintaining the potential for growth. Growth funds may be suitable
for your investment plan if you have a long time horizon.
GROWTH AND INCOME FUNDS
o Dreyfus Founders Balanced Fund
o Dreyfus Founders Growth and Income Fund
These Funds invest in companies that tend to be larger and more established and
that may pay dividends. The Balanced Fund invests at least 25% of its total
assets in investment grade fixed-income securities. While these Funds still
carry risks, they generally present less risk than aggressive growth or pure
growth funds.
INCOME FUNDS
o Dreyfus Founders Government Securities Fund
o Dreyfus Founders Money Market Fund
These Funds are our lowest-risk funds. They may be suitable for you if you have
a short-term investment horizon, desire more safety and liquidity than may be
available with equity funds, seek a modest level of income, or consider yourself
a "saver" rather than an investor.
<PAGE> 6
Each Fund, other than Government Securities and Money Market Funds, offers
multiple classes of shares. This Prospectus describes Class F shares. As
described in more detail on page ___, Class F shares are generally offered only
to existing shareholders of the Dreyfus Founders Funds who have held shares
continuously since December 30, 1999. The other classes of shares, with their
own fee structures, are offered by a separate prospectus which is available from
your financial services representative. All share classes of a Fund invest in
the same underlying portfolio of securities and have the same management team.
However, because of different fees and expenses, the performance of share
classes will vary.
FUND BY FUND SUMMARIES
The following descriptions provide an overview of each Fund's investment
objective and principal investment strategies, list the main risks of investing
in the Funds, and show historical investment performance. More detailed
information about the Funds' investment strategies and associated risks begins
on page ___. Please keep in mind that no Fund can guarantee that it will meet
its investment objective and that, as with any investment, you can lose money by
investing in the Funds.
A Fund's Morningstar category is subject to change.
[On side panel: KEY CONCEPTS: Comparative indexes provide a basis for
comparing a Fund's historical performance against a comparable securities
market index. The indexes used in this Prospectus account for both change in
security price and reinvestment of dividends and, except as noted, do not
reflect the costs of managing a mutual fund. You may not invest directly in
these indexes.]
<PAGE> 7
DREYFUS FOUNDERS BALANCED FUND [in margin: Class F Ticker Symbol: FRINX;
Morningstar Category: Domestic Hybrid]
INVESTMENT OBJECTIVE
Current income and capital appreciation
PRINCIPAL INVESTMENT STRATEGY
Balanced Fund normally invests in a balanced portfolio of common stocks, U.S.
and foreign government securities, and a variety of corporate fixed-income
obligations.
o For the equity portion of its portfolio, the Fund emphasizes investments in
common stocks with the potential for capital appreciation. These stocks
generally pay regular dividends, although the Fund also may invest in
non-dividend-paying companies if, in our opinion, they offer better prospects
for capital appreciation. Normally, the Fund will invest a significant
percentage (up to 75%) of its total assets in equity securities.
o The Fund will maintain a minimum of 25% of its total assets in fixed-income,
investment-grade securities rated Baa or higher by Moody's Investors Service,
Inc. ("Moody's") or BBB or higher by Standard & Poor's ("S&P"). There is no
maximum limit on the amount of straight debt securities in which the Fund may
invest, and the Fund may invest up to 100% of its assets in such securities
for temporary defensive purposes.
o The Fund also may invest up to 30% of its total assets in foreign securities,
with no more than 25% of its total assets invested in the securities of any
one foreign country.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o STOCK MARKET RISK. The value of the stocks and other securities owned by
Balanced Fund will fluctuate depending on the performance of the companies
that issued them, general market and economic conditions, and investor
confidence. In addition, if our assessment of a company's potential to
increase earnings faster than the rest of the market is not correct, the
securities in the portfolio may not increase in value, and could even
decrease in value.
o INTEREST RATE RISK. When interest rates change, the value of the fixed-income
portion of the Fund will be affected. An increase in interest rates tends to
reduce the market value of debt securities, while a decline in interest rates
tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates
with the credit quality of the issuers of those securities. Credit risk
relates to the ability of the issuer to make payments of principal and
interest when due, including default risk.
<PAGE> 8
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments, including fluctuations in currency exchange
rates, potential unstable political and economic structures, reduced
availability of public information and lack of uniform financial reporting
and regulatory practices similar to those that apply to U.S.
issuers.
[On side panel: KEY CONCEPTS: A DEBT SECURITY represents money borrowed that
must be repaid to the lender at a future date. Bonds, notes, bills, and
money market instruments are all debt securities.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
25.30% -5.00% 22.90% 6.00% 21.90% -1.90% 29.40% 18.76% 16.90% 13.96%
Best quarter: Q2 1997 10.06% Worst quarter: Q3 1990 -7.33%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years 10 Years
------------- ------------- -------------
Balanced Fund* - Class F 13.96% 14.96% 14.26%
S&P 500 Index 28.57% 24.05% 19.19%
Lipper Balanced Fund Index 15.09% 13.87% 13.32%
* Inception date 2/19/63
The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, a
widely recognized unmanaged index of common stocks. The Lipper Balanced Fund
Index is an average of the performance of the 30 largest balanced funds tracked
by Lipper, Inc. and reflects the expenses of managing the mutual funds included
in the index.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was -3.13%.
<PAGE> 9
DREYFUS FOUNDERS DISCOVERY FUND [in margin: Class F Ticker Symbol: FDISX;
Morningstar Category: Small Growth]
INVESTMENT OBJECTIVE
Capital appreciation
PRINCIPAL INVESTMENT STRATEGY
Discovery Fund seeks to apply our growth approach by targeting small and
relatively unknown companies with high growth potential. Discovery Fund will
normally invest at least 65% of its total assets in common stocks of small,
rapidly growing U.S.-based companies with market capitalizations or annual
revenues between $10 million and $1.5 billion. Typically, these companies are
not listed on a national securities exchange, but trade on the over-the-counter
market. The Fund also may invest in larger companies if, in our opinion, they
represent better prospects for capital appreciation. Although the Fund normally
will invest in common stocks of U.S.-based companies, it may invest up to 30% of
its total assets in foreign securities.
MAIN RISKS OF INVESTING
The primary risk of investing in this Fund is:
o SMALL COMPANY RISK. While small companies may offer greater
-----------------------
opportunity for capital appreciation than larger and more established
companies, they also involve substantially greater risks of loss and price
fluctuations. Small companies may be in the early stages of development;
have limited product lines, markets or financial resources; and may lack
management depth. These companies may be more impacted by intense
competition from larger companies, and the trading markets for their
securities may be less liquid and more volatile. This means that the Fund
could have greater difficulty selling a security of a small-cap issuer at
an acceptable price, especially in periods of market volatility. Also, it
may take a substantial period of time before the Fund realizes a gain on
an investment in a small-cap company, if it realizes any gain at all.
[On side panel: KEY CONCEPTS: We consider SMALL-CAP companies to be those
companies with market capitalizations of $1.5 billion or less. This range may
fluctuate depending on changes in the value of the stock market as a whole.
MARKET CAPITALIZATION is the value of a corporation calculated by multiplying
the number of its outstanding shares of common stock by the current market
price of a share.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
<PAGE> 10
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
13.20% 62.50% 15.20% 10.80% -7.80% 31.30% 21.20% 12.00% 14.19%
Best quarter: Q4 1998 36.55% Worst quarter: Q3 1998
- -22.73%
Average Annual Total Returns
as of 12/31/98
Past One Year Past 5 Years Life of
Fund*
--------------- ------------- -------------
Discovery Fund - Class F 14.19% 13.42% 17.91%
Russell 2000 Index -2.55% 11.87% 12.50%
* Inception date 12/31/89
The Russell 2000 Index is a widely recognized unmanaged small-cap index
comprising common stocks of the 2,000 U.S. public companies next in size after
the largest 1,000 publicly traded U.S. companies.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 37.18%.
<PAGE> 11
DREYFUS FOUNDERS FOCUS FUND [in margin: Class F Ticker Symbol: _____;
Morningstar Category: Large Growth]
INVESTMENT OBJECTIVE
Long-term growth of capital
PRINCIPAL INVESTMENT STRATEGY
Focus Fund seeks long-term growth by normally investing in a concentrated
portfolio of 20-30 common stocks that are selected for their long-term growth
potential. Although the Fund can invest in any size company, it generally
invests in larger, more established companies. The Fund may invest up to 30% of
its total assets in foreign securities, with no more than 25% in any one foreign
country.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o CONCENTRATED PORTFOLIO RISK. Focus Fund is a "non-diversified" mutual fund
fund, which means that it may own larger positions in a smaller number of
securities than portfolios that are "diversified." This means that an
increase or decrease in the value of a single security likely will have a
greater impact on the Fund's NAV and total return than in a diversified
portfolio. As a result, while Focus Fund may offer greater opportunity for
higher investment returns, it also involves substantially greater risk of
loss. Focus Fund's share prices may also be more volatile than those of a
diversified fund, including the other Dreyfus Founders Funds.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence. In
addition, if our assessment of a company's potential to increase earnings
faster than the rest of the market is not correct, the securities in the
portfolio may not increase in value, and could even decrease in value.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other equity
funds using different investment styles.
PAST PERFORMANCE
Focus Fund is a newly organized Fund and has no historical performance as of the
date of this Prospectus.
[On side panel: KEY CONCEPTS: We generally consider LARGE COMPANIES to be
companies that have market capitalizations of more than $8 billion. This
range may, however, fluctuate depending on changes in the value of the stock
market as a whole.]
<PAGE> 12
DREYFUS FOUNDERS GOVERNMENT SECURITIES FUND [in margin: Class F Ticker
Symbol: FGVSX; Morningstar Category: Intermediate Government]
INVESTMENT OBJECTIVE
Current income
PRINCIPAL INVESTMENT STRATEGY
Government Securities Fund normally invests at least 65% of its total assets in
obligations of the U.S. government. These include Treasury bills, notes, and
bonds and Government National Mortgage Association (GNMA) pass-through
securities, which are supported by the full faith and credit of the U.S.
Treasury, as well as obligations of other agencies and instrumentalities of the
U.S. government. Additionally, the Fund may invest in securities issued by
foreign governments and/or their agencies. However, the Fund will not invest
more than 25% of its total assets in the securities of any one foreign country.
The maturity of the Fund's investments will be long (10 or more years),
intermediate (three to 10 years), or short (three years or less). The proportion
invested by the Fund in each category can be expected to vary depending upon our
evaluation of market patterns and trends.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o INTEREST RATE RISK. When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to reduce the
market value of debt securities, while a decline in interest rates tends to
increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates
with the credit quality of the issuers of those securities. Credit risk
relates to the ability of the issuer to make payments of principal and
interest when due, including default risk.
o PREPAYMENT RISK is present primarily with mortgage-backed securities. During
a period of declining interest rates, homeowners may refinance their
high-rate mortgages and prepay the principal. Cash from these prepayments
flows through to prepay the mortgage-backed securities, necessitating
reinvestment in bonds with lower interest rates, which may lower the return
of the Fund.
[On side panel: KEY CONCEPTS: BOND is an IOU (debt security) issued by a
government or corporation that pays a stated rate of interest and returns the
face value on the maturity date.
MATURITY is the length of time until a bond or other debt instrument
"matures" or becomes due and payable.]
<PAGE> 13
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
13.30% 4.40% 14.90% 5.30% 9.30% -7.50% 11.10% 2.34% 7.90% 9.76%
Best quarter: Q2 1989 7.95% Worst quarter: Q1 1994 -4.40%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years 10 Years
------------ ------------ ------------
Government Securities Fund* - 9.76% 4.49% 6.90%
Class F
Lehman Brothers U.S. Treasury 10.03% 7.19% 9.18%
Composite Index
* Inception date 3/1/88
The Lehman Brothers U.S. Treasury Composite Index is composed of all public
obligations of the U.S. Treasury, excluding certain securities, that have at
least one year to maturity and an outstanding par value of at least $100
million.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was -2.83%.
<PAGE> 14
DREYFUS FOUNDERS GROWTH FUND [in margin: Class F Ticker Symbol: FRGRX;
Morningstar Category: Large Growth]
INVESTMENT OBJECTIVE
Long-term growth of capital
PRINCIPAL INVESTMENT STRATEGY
Growth Fund pursues long-term growth by normally investing at least 65% of its
total assets in common stocks of well-established, high-quality growth
companies. These companies tend to have strong performance records, solid market
positions, reasonable financial strength, and continuous operating records of
three years or more. The Fund may also invest up to 30% of its total assets in
foreign securities, with no more than 25% invested in any one foreign country.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o STOCK MARKET RISK. The value of the stocks and other securities owned by
Growth Fund will fluctuate depending on the performance of the companies that
issued them, general market and economic conditions, and investor confidence.
In addition, if our assessment of a company's potential to increase earnings
faster than the rest of the market is not correct, the securities in the
portfolio may not increase in value, and could even decrease in value.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other equity
funds using different investment styles.
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
41.70% -10.60% 47.40% 4.30% 25.50% -3.40% 45.59% 16.57% 26.60% 25.04%
Best quarter: Q4 1998 21.11% Worst quarter: Q3 1990 -14.83%
<PAGE> 15
Average Annual Total Returns
as of 12/31/98
One Year 5 Years 10 Years
-------------- -------------- ------------
Growth Fund* - Class F 25.04% 21.02% 20.30%
S&P 500 Index 28.57% 24.05% 19.19%
* Inception date 1/5/62
The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, a
widely recognized unmanaged index of common stocks.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 5.54%.
<PAGE> 16
DREYFUS FOUNDERS GROWTH AND INCOME FUND [in margin: Class F Ticker Symbol:
FRMUX; Morningstar Category: Large Blend]
INVESTMENT OBJECTIVE
Long-term growth of capital and income
PRINCIPAL INVESTMENT STRATEGY
Growth and Income Fund, a large-company fund, seeks long-term growth of capital
and income by primarily investing in common stocks of large, well-established,
stable and mature companies of great financial strength, commonly known as "blue
chip" companies. These companies generally have long records of profitability
and dividend payments and a reputation for high-quality management, products,
and services. The Fund normally invests at least 65% of its total assets in
"blue chip" stocks that:
o are included in a widely recognized index of stock market performance, such
as the Dow Jones Industrial Average or the Standard & Poor's 500 Index
o generally pay regular dividends
o have a market capitalization of at least $1 billion
The Fund may invest in non-dividend-paying companies if, in our opinion, they
offer better prospects for capital appreciation. The Fund may also invest up to
30% of its total assets in foreign securities.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o STOCK MARKET RISK. The value of the stocks and other securities owned by
Growth and Income Fund will fluctuate depending on the performance of the
companies that issued them, general market and economic conditions, and
investor confidence. In addition, if our assessment of a company's potential
to increase earnings faster than the rest of the market is not correct, the
securities in the portfolio may not increase in value, and could even
decrease in value.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other equity
funds using different investment styles
[On side panel: KEY CONCEPTS: DIVIDEND is a payment of stock or cash from a
company's profits to its stockholders.]
<PAGE> 17
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
35.60% 0.40% 28.30% -0.30% 14.50% 0.50% 29.06% 24.37% 19.40% 17.78%
Best quarter: Q1 1991 12.68% Worst quarter: Q3 1990 -11.26%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years 10 Years
------------- ------------ ------------
Growth and Income Fund* - 17.78% 17.81% 16.31%
Class F
S&P 500 Index 28.57% 24.05% 19.19%
* Inception date 7/5/38
The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, a
widely recognized unmanaged index of common stocks.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was -2.32%.
DREYFUS FOUNDERS GROWTH AND INCOME FUND WAS FORMERLY KNOWN AS FOUNDERS BLUE CHIP
FUND.
<PAGE> 18
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND [in margin: Class F Ticker Symbol
FOIEX; Morningstar Category: Foreign Stock]
INVESTMENT OBJECTIVE
Long-term growth of capital
PRINCIPAL INVESTMENT STRATEGY
International Equity Fund pursues long-term growth by normally investing at
least 65% of its total assets in foreign equity securities from a minimum of
three countries outside the United States, including both established and
emerging economies. The Fund will not invest more than 50% of its assets in the
securities of any one foreign country. Although the Fund intends to invest
substantially all of its assets in issuers located outside the United States, it
may at times invest in U.S.-based companies.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o CURRENCY EXCHANGE RISK. Since the Fund's assets are invested primarily in
foreign securities, and since substantially all of the Fund's revenues are
received in foreign currencies, the Fund's net asset value will be affected
by changes in currency exchange rates to a greater extent than other funds.
The Fund pays dividends in dollars and incurs currency conversion costs.
o EMERGING MARKETS RISK. A country that is in the initial stages of its
industrial cycle is considered to be an emerging markets country. Such
countries are subject to more economic, political, and business risk than
major industrialized nations, and the securities issued by companies located
there may be more volatile, less liquid, and more uncertain.
<PAGE> 19
[On side panel: KEY CONCEPTS: FOREIGN SECURITIES refers to securities of
issuers, wherever organized, that have their principal business activities
outside of the United States. We consider where the issuer's assets are located,
whether the majority of the issuer's gross income is earned outside of the
United States, or whether the issuer's principal stock exchange listing is
outside of the United States.]
<PAGE> 20
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Returns
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
18.60% 16.10% 17.01%
Best quarter: Q1 1998 14.69% Worst quarter: Q3 1998 -14.58%
Average Annual Total Returns
as of 12/31/98
One Year Life of Fund*
-------------- --------------
International Equity Fund - Class F 17.01% 17.18%
Morgan Stanley Capital International 18.77% 9.06%
World ex. U.S. Index
* Inception date 12/29/95
The Morgan Stanley Capital International World ex. U.S. Index is an average of
the performance of selected securities listed on the stock exchanges of Europe,
Canada, Australia, New Zealand and the Far East. The Life of Fund performance
data for the Index is from December 31, 1995 through December 31, 1998.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 13.54%.
<PAGE> 21
DREYFUS FOUNDERS MID-CAP GROWTH FUND [in margin: Class F Ticker Symbol:
FRSPX; Morningstar Category: Mid-Cap Growth]
INVESTMENT OBJECTIVE
Capital appreciation
PRINCIPAL INVESTMENT STRATEGY
Mid-Cap Growth Fund seeks capital appreciation by emphasizing investments in
equity securities of medium-sized companies that we believe have favorable
growth prospects. Mid-Cap Growth Fund will normally invest at least 65% of its
total assets in equity securities of companies within the market capitalization
range of companies comprising the Standard & Poor's Mid-Cap 400 Index. The Fund
also may invest in larger or smaller companies if, in our opinion, they
represent better prospects for capital appreciation. The Fund may invest up to
30% of its total assets in foreign securities, with no more than 25% of its
total assets invested in the securities of any one foreign country.
MAIN RISKS OF INVESTING
The primary risk of investing in this Fund is:
o SMALL AND MEDIUM-SIZED COMPANY RISK. While small and medium-sized
companies may offer greater opportunity for capital appreciation than
larger and more established companies, they also involve greater risks of
loss and price fluctuations. Small companies, and to an extent
medium-sized companies, may be in the early stages of development; have
limited product lines, markets or financial resources; and may lack
management depth. These companies may be more impacted by intense
competition from larger companies, and the trading markets for their
securities may be less liquid and more volatile. This means that the Fund
could have greater difficulty selling a security of a small or
medium-sized issuer at an acceptable price, especially in periods of
market volatility. Also, it may take a substantial period of time before
the Fund realizes a gain on an investment in a small or medium-sized
company, if it realizes any gain at all.
[On side panel: KEY CONCEPTS: We generally consider MEDIUM-SIZED COMPANIES to
be companies that have market capitalizations between $1.5 billion and $8
billion. This range may fluctuate depending on changes in the value of the
stock market as a whole.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
<PAGE> 22
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
39.20% -10.40% 63.70% 8.30% 16.00% -4.90% 25.70% 15.33% 16.40% -1.73%
Best quarter: Q1 1991 28.83% Worst quarter: Q3 1998 -29.87%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years 10 Years
------------ ------------ ------------
Mid-Cap Growth Fund* - Class F -1.73% 9.54% 15.00%
S&P MidCap 400 Index 19.11% 18.84% 19.29%
* Inception date 9/8/61
The Standard & Poor's (S&P) MidCap 400 Index is an unmanaged group of 400
domestic stocks chosen for their market size, liquidity, and industry group
representations.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 6.18%.
DREYFUS FOUNDERS MID-CAP GROWTH FUND WAS FORMERLY KNOWN AS FOUNDERS SPECIAL
FUND.
<PAGE> 23
DREYFUS FOUNDERS MONEY MARKET FUND [in margin: Class F Ticker Symbol: FMMXX]
INVESTMENT OBJECTIVE
Maximum current income consistent with the preservation of capital and
liquidity
PRINCIPAL INVESTMENT STRATEGY
Money Market Fund invests in high-quality money market instruments with minimal
credit risks and remaining maturities of 397 calendar days or less, including
those issued by:
o Corporate issuers
o U.S. government and its agencies and instrumentalities
o U.S. and foreign banks
Money market funds are subject to strict federal requirements and must maintain
an average dollar-weighted portfolio maturity of 90 days or less.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o INTEREST RATE RISK. When interest rates change, the Fund's yield will be
affected. An increase in interest rates tends to increase the Fund's yield,
while a decline in interest rates tend to reduce its yield.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates
with the credit quality of the issuers of those securities. Credit risk
relates to the ability of the issuer to meet interest or principal payments,
or both, as they become due.
o INFLATION RISK is the risk that your investment will not provide enough
income to keep pace with inflation.
An investment in Money Market Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
[On side panel: KEY CONCEPTS: MONEY MARKET is the economic market that
exists to provide very short-term funding to corporations, municipalities,
and the U.S. government.]
<PAGE> 24
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year.
Past performance is no guarantee of future results.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.10% 7.30% 5.10% 2.80% 2.20% 3.40% 5.10% 4.51% 4.70% 4.67%
Best quarter: Q2 1989 2.19% Worst quarter: Q2 1993 0.50%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years 10 Years
------------ ------------ ------------
Money Market Fund* - Class F 4.67% 4.47% 4.77%
* Inception date 6/23/81
Money Market Fund's most current seven-day yield is available by calling
1-800-232-8088.
<PAGE> 25
DREYFUS FOUNDERS PASSPORT FUND [in margin: Class F Ticker Symbol: FPSSX;
Morningstar Category: Foreign Stock]
INVESTMENT OBJECTIVE
Capital appreciation
PRINCIPAL INVESTMENT STRATEGY
Passport Fund seeks aggressive growth through investments in equity securities
of small companies outside the United States with market capitalizations or
annual revenues of $1 billion or less. Passport Fund mainly invests in
securities issued by foreign companies based in both developed and emerging
economies overseas. At least 65% of the Fund's total assets normally will be
invested in foreign securities from a minimum of three countries. The Fund may
invest in larger foreign companies or in U.S.-based companies if, in our
opinion, they represent better prospects for capital appreciation.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o CURRENCY EXCHANGE RISK. Since the Fund's assets are invested primarily in
foreign securities, and since substantially all of the Fund's revenues are
received in foreign currencies, the Fund's net asset value will be affected
by changes in currency exchange rates to a greater extent than other funds.
The Fund pays dividends in dollars and incurs currency conversion costs.
o EMERGING MARKETS RISK. A country that is in the initial stages of its
industrial cycle is considered to be an emerging markets country. Such
countries are subject to more economic, political, and business risk than
major industrialized nations, and the
<PAGE> 26
securities issued by companies located there may be more volatile, less
liquid, and more uncertain.
o SMALL COMPANY RISK. While small companies may offer greater opportunity for
capital appreciation than larger and more established companies, they also
involve substantially greater risks of loss and price fluctuations. Small
companies may be in the early stages of development; have limited product
lines, markets or financial resources; and may lack management depth. These
companies may be more impacted by intense competition from larger
companies, and the trading markets for their securities may be less liquid
and more volatile. This means that the Fund could have greater difficulty
selling a security of a small-cap issuer at an acceptable price, especially
in periods of market volatility. Also, it may take a substantial period of
time before the Fund realizes a gain on an investment in a small-cap
company, if it realizes any gain at all.
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
-10.40% 24.39% 20.05% 1.70% 12.50%
Best quarter: Q1 1998 14.30% Worst quarter: Q3 1998 -19.32%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years Life of Fund*
-------------- ------------ --------------
Passport Fund - Class F 12.50% 8.89% 9.77%
Morgan Stanley Capital
International World ex. U.S. 18.77% 9.19% 10.50%
Index
* Inception date 11/16/93
The Morgan Stanley Capital International World ex. U.S. Index is an average of
the performance of selected securities listed on the stock exchanges of Europe,
Canada, Australia, New Zealand and the Far East. The Life of Fund performance
data for the Index is from November 30, 1993 through December 31, 1998.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 16.88%.
<PAGE> 27
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND [in margin: Class F Ticker Symbol:
FWWGX; Morningstar Category: World Stock]
INVESTMENT OBJECTIVE
Long-term growth of capital
PRINCIPAL INVESTMENT STRATEGY
Worldwide Growth Fund, a global fund, seeks long-term growth of capital by
normally investing at least 65% of its total assets in equity securities of
growth companies in a variety of markets throughout the world. The Fund may
purchase securities in any foreign country, as well as in the United States,
emphasizing common stocks of both emerging and established growth companies that
generally have proven performance records and strong market positions. The
Fund's portfolio will always invest at least 65% of its total assets in three or
more countries. The Fund will not invest more than 50% of its total assets in
the securities of any one foreign country.
MAIN RISKS OF INVESTING
The primary risks of investing in this Fund are:
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o CURRENCY EXCHANGE RISK. Since the Fund's assets are invested primarily in
foreign securities, and since substantially all of the Fund's revenues are
received in foreign currencies, the Fund's net asset value will be affected
by changes in currency exchange rates to a greater extent than other funds.
The Fund pays dividends in dollars and incurs currency conversion costs.
o EMERGING MARKETS RISK. A country that is in the initial stages of its
industrial cycle is considered to be an emerging markets country. Such
countries are subject to more economic, political, and business risk than
major industrialized nations, and the securities issued by companies located
there may be more volatile, less liquid, and more uncertain.
<PAGE> 28
[On side panel: KEY CONCEPTS: A GLOBAL FUND is a type of mutual fund that may
invest in securities traded anywhere in the world, including the United
States.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns compare with those of a broad
measure of market performance. Past performance is no guarantee of future
results.
Year-by-Year Total Returns
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
6.70% 34.80% 1.50% 29.90% -2.20% 20.63% 13.95% 10.60% 9.63%
Best quarter: Q4 1993 15.28% Worst quarter: Q3 1998 -16.75%
Average Annual Total Returns
as of 12/31/98
One Year 5 Years Life of Fund*
------------- ----------- --------------
Worldwide Growth Fund - Class F 9.63% 10.26% 13.36%
Morgan Stanley Capital 24.33% 15.68% 10.00%
International World Index
* Inception date 12/31/89
The Morgan Stanley Capital International World Index is an average of the
performance of selected securities listed on the stock exchanges of the United
States, Europe, Canada, Australia, New Zealand and the Far East.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 7.43%.
<PAGE> 29
FEES AND EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Class F shares of the
Funds. We do not charge you any fees to buy, sell, or exchange Class F shares
(although a $6 fee will be assessed for wire redemptions).
Fund operating expenses are paid out of Fund assets and are reflected in each
Fund's share price and dividend. Except as noted, the following figures show
actual expenses of Class F shares during the year ended December 31, 1998, and
are calculated as a percentage of average net assets.
<PAGE> 30
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------------------------------------
TOTAL ANNUAL
FUND
OPERATING
OTHER EXPENSES TOTAL ANNUAL
DISTRIBUTION EXPENSES(1) (WITHOUT FUND OPERATING
(12B-1) (WITHOUT REIMBURSE- EXPENSES (WITH
FEES REIMBURSE- MENTS/ REIMBURSEMENTS/
MANAGEMENT WITHOUT MENTS/ WAIVERS OR WAIVERS OR
FUND FEE WAIVERS WAIVERS) CREDITS) CREDITS)(2)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced Fund 0.57% 0.25% 0.18% 1.00% 0.99%
- -----------------------------------------------------------------------------------------
Discovery Fund 1.00% 0.25% 0.32% 1.57% 1.55%
- -----------------------------------------------------------------------------------------
Focus Fund 3 0.85% 0.25% 0.47% 1.57% 1.50%
- -----------------------------------------------------------------------------------------
Government Securities 0.65% 0.25%(4) 0.59% 1.49% 1.25%
Fund
- -----------------------------------------------------------------------------------------
Growth Fund 0.67% 0.25% 0.18% 1.10% 1.08%
- -----------------------------------------------------------------------------------------
Growth and Income Fund 0.62% 0.25% 0.23% 1.10% 1.08%
- -----------------------------------------------------------------------------------------
International Equity 1.00% 0.25% 0.67% 1.92% 1.80%(5)
Fund
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Fund 0.77% 0.25% 0.33% 1.35% 1.33%
- -----------------------------------------------------------------------------------------
Money Market Fund 0.50% N/A 0.37% 0.87% 0.85%
- -----------------------------------------------------------------------------------------
Passport Fund 1.00% 0.25% 0.29% 1.54% 1.52%
- -----------------------------------------------------------------------------------------
Worldwide Growth Fund 0.96% 0.25% 0.28% 1.49% 1.47%
- -----------------------------------------------------------------------------------------
<FN>
1 These expenses include custodian, transfer agency and accounting agent
fees, and other customary Fund expenses.
2 Expenses after reimbursements, waivers and credits include expense offsets
from credits earned on uninvested cash held overnight at the custodian, and
waivers of certain 12b-1 fees and other expenses by Founders (see below).
3 Focus Fund's "Other Expenses" are estimates since it is newly organized.
Founders has agreed to limit the total expenses of Focus Fund pursuant to a
contractual commitment, so that Total Annual Fund Operating Expenses (With
Reimbursements/Waivers and Credits) for Class F shares will not exceed
1.50%. This limit will extend through at least May 31, 2000, and will not
be terminated without the prior approval of the Funds' Board of Directors.
4 Founders has waived certain 12b-1 fees for the Class F shares of Government
Securities Fund pursuant to a contractual commitment. After the waiver,
Class F 12b-1 fees for that Fund were 0.04%. This waiver will extend
through at least May 31, 2000, and will not be terminated without the prior
approval of the Funds' Board of Directors.
5 Founders has agreed to limit the total expenses of International Equity
Fund pursuant to a contractual commitment, so that Total Annual Fund
Operating Expenses (With Reimbursements/Waivers and Credits) for Class F
shares will not exceed 1.80%. This limit will extend through at least May
31, 2000, and will not be terminated without the prior approval of the
Funds' Board of Directors.
</FN>
</TABLE>
<PAGE> 31
[In margin: KEY CONCEPTS: All of the Funds (except Money Market Fund) have
adopted a Rule 12b-1 Plan which allows the Funds to pay distribution fees of up
to 0.25% for the sale and distribution of Class F shares. The 12b-1 fee is paid
out of a Fund class' assets on an ongoing basis. Over time it will increase the
cost of your investment and may cost you more than paying other types of sales
charges.]
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Funds' Class F shares with the cost of investing in other mutual funds. The
example assumes that:
o you invest $10,000 in a Fund for the time period indicated and redeem
all of your shares at the end of those periods
o your investment earns a 5% return each year and each Fund's operating
expenses remain the same
Although your actual costs, and the Fund's performance, may be higher or lower
based on these assumptions, your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years
--------------------------- ---------- ----------- ------------ ----------
Balanced Fund $103 $320 $555 $1,229
Discovery Fund $161 $499 $861 $1,878
Focus Fund * $153 $474 n/a n/a
Government Securities Fund $153 $474 $819 $1,789
Growth Fund $112 $348 $604 $1,334
Growth and Income Fund $113 $352 $609 $1,346
International Equity Fund $197 $608 $1,046 $2,259
Mid-Cap Growth Fund $138 $430 $744 $1,632
Money Market Fund $89 $279 $484 $1,076
Passport Fund $158 $490 $845 $1,845
Worldwide Growth Fund $152 $471 $813 $1,778
* Since Focus Fund is a new Fund, its one-year and three-year costs are
estimates.
<PAGE> 32
MORE ABOUT INVESTMENT OBJECTIVES, STRATEGIES, AND RISKS
Each of the Funds seeks to achieve its investment objective through its unique
investment strategies. The principal investment strategies and risks of each
Fund have been described in the Fund summaries. This section of the Prospectus
discusses other investment strategies used by the Funds and provides in more
detail the risks associated with those strategies. Although we might not always
use all of the different techniques and investments described below, some of
these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Funds' investment policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
Balanced, Discovery, Focus, International Equity, Growth, Growth and Income,
Mid-Cap Growth, Passport, and Worldwide Growth are the Equity Funds. Government
Securities Fund and Money Market Fund are the Income Funds.
FIXED-INCOME SECURITIES. While the Equity Funds generally emphasize investments
in equity securities, such as common stocks and preferred stocks, they also may
invest in fixed-income securities when we believe that these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Equity Funds might invest include bonds, debentures, and other corporate or
government obligations. For Balanced Fund, we also consider current income in
the selection of these securities.
ADRS. The Equity Funds may invest without limit in American Depositary
Receipts and American Depositary Shares (collectively, "ADRs"). ADRs are
receipts representing shares of a foreign corporation held by a U.S. bank
that entitle the holder to all dividends and capital gains on the underlying
foreign shares. ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. Each Fund may invest up to 15% of
its net assets in securities that are not "readily marketable." This limit is
10% for Money Market Fund. A security is not readily marketable if we cannot
sell it within seven days in the ordinary course of business for approximately
the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule
<PAGE> 33
144A securities that are readily marketable are not subject to the 15%/10%
limits discussed above. We monitor holdings of 144A securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity.
However, it is possible that the market for 144A securities can change and it
may become difficult to sell these securities, or to sell them at a reasonable
price, if institutional purchasers lose interest in the investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that a Fund may be unable to dispose of such
a security at the time desired or at a reasonable price. In addition, in order
to sell a restricted security, a Fund might have to bear the expense and incur
the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. All of the Funds except the Money Market
Fund can enter into futures contracts and forward contracts, and may purchase
and/or write (sell) put and call options on securities, securities indexes,
futures contracts, and foreign currencies. These are sometimes referred to as
"derivative" instruments, since their values are derived from an underlying
security, index or other financial instrument. The Funds may use derivative
instruments to engage in hedging strategies but do not use them for speculative
purposes. The Funds have limits on their use and are not required to use them in
seeking their investment objectives.
Some of these strategies may hedge a Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase a Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on a Fund's
foreign investments. Options trading involves the payment of premiums and has
special tax effects on a Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause a Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Funds invest. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, a Fund may not achieve the desired benefit of these instruments, or may
realize losses and be in a worse position than if the instruments had not been
used. A Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Funds' investments in derivatives are subject to the Funds' internal
Derivatives Policy, which may be changed by the Funds' Board of Directors
without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the assets of the Funds can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital.
<PAGE> 34
Temporary defensive investments generally would include cash, cash equivalents
such as commercial paper, money market instruments, short-term debt securities,
U.S. government securities, or repurchase agreements. The Funds could also hold
these types of securities pending the investment of proceeds from the sale of
Fund shares or portfolio securities, or to meet anticipated redemptions of Fund
shares. To the extent a Fund invests defensively in these securities, it might
not achieve its investment objective.
PORTFOLIO TURNOVER. The Funds do not have any limitations regarding portfolio
turnover. A Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to a Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rates of the Funds may be higher than some other mutual funds with the
same investment objectives. Higher portfolio turnover rates increase the
brokerage costs a Fund pays and may adversely affect its performance. If a Fund
realizes capital gains when it sells portfolio investments, it generally must
pay those gains out to shareholders, increasing their taxable distributions.
This may adversely affect the after-tax performance of the Funds for
shareholders with taxable accounts. The Funds' portfolio turnover rates (other
than the Money Market Fund) for prior years are included in the "Financial
Highlights" section of this Prospectus. The Funds' current and future portfolio
turnover rates may differ significantly from their historical portfolio turnover
rates. In particular, Passport Fund's portfolio turnover rates for 1999 and
future years are expected to be significantly higher than the Fund's historical
portfolio turnover rates due to the current manager's investment style.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Funds. The Funds' investments are subject to changes in their value from a
number of factors.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Funds will fluctuate depending on the performance of the companies that
issued them, general market and economic conditions, and investor confidence.
o COMPANY RISK. The stocks in the Funds' portfolios may not perform as
expected. Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers or management team
members, major litigation against the issuer, or changes in government
regulations affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
<PAGE> 35
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Funds' growth style of investing, a Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
o CURRENCY RISK. Fluctuations in exchange rates of foreign currencies
affect the value of a Fund's assets as measured in U.S. dollars and
the costs of converting between various currencies.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, security brokers, and issuers of securities, and less
public information about foreign companies. Also, accounting, auditing
and financial reporting standards are less uniform than in the United
States. Exchange control regulations or currency restrictions could
prevent cash from being brought back to the United States. The Funds
may be subject to withholding taxes and could experience difficulties
in pursuing legal remedies and collecting judgments.
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o POLITICAL RISK. Foreign investments may be subject to the possibility
of expropriation or confiscatory taxation; limitations on the removal
of funds or other assets of the Fund; and political, economic or
social instability.
o RISK OF FIXED-INCOME INVESTMENTS. The Funds' investments in
fixed-income securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of a Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by a Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Funds could be adversely affected if the computer
systems used by Founders and the Funds' other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Funds invest may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Funds'
investments and the Funds' share prices.
<PAGE> 36
WHO MANAGES THE FUNDS
THE MANAGER. Founders serves as investment adviser to each of the Funds and is
responsible for selecting the Funds' investments and handling their day-to-day
business. Founders' corporate offices are located at 2930 East Third Avenue,
Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser or sub-adviser to a
number of other investment companies and private accounts. Founders is the
growth specialist affililate of The Dreyfus Corporation, a leading mutual fund
complex with more than $___ billion in its mutual fund portfolios as of ____,
1999. Founders and Dreyfus are subsidiaries of Mellon Financial Corporation, a
broad-based global financial services company.
In addition to managing each Fund's investments, Founders also provides certain
related administrative services to each Fund. For these investment and related
administrative services, each Fund pays Founders a management fee. Each Fund's
management fee for the fiscal year ended December 31, 1998 was the following
percentage of the respective Fund's average daily net assets:
Balanced Fund 0.57%
Discovery Fund 1.00%
Government Securities Fund 0.65%
Growth Fund 0.67%
Growth and Income Fund 0.62%
International Equity Fund 1.00%
Mid-Cap Growth Fund 0.77%
Money Market Fund 0.50%
Passport Fund 1.00%
Worldwide Growth Fund 0.96%
Focus Fund began operations December 31, 1999. The management fee schedule for
Focus Fund is 0.85% on the first $250 million of the Fund's average daily net
assets, 0.80% of the next $250 million, and 0.75% on average daily net assets in
excess of $500 million.
FOUNDERS' INVESTMENT MANAGEMENT TEAM
To facilitate day-to-day Fund management, we use a lead manager and team system
for our Funds. There are three teams, each targeted toward a particular area of
the market: small- to mid-capitalization, large-capitalization, and
international investments. Each team is composed of members of our Investment
Department, including lead portfolio managers, portfolio traders, and research
analysts.
<PAGE> 37
Each of these individuals brings ideas, information, knowledge, and expertise to
the table to help in the management of the Funds. Daily decisions on security
selection for each Fund rest with a lead portfolio manager assigned to the Fund.
Through participation in the team process, the manager uses the input, research,
and advice of the rest of the management team in making purchase and sale
decisions.
ROBERT T. AMMANN, VICE PRESIDENT OF INVESTMENTS. Mr. Ammann is a Chartered
Financial Analyst who has been lead portfolio manager of Discovery Fund since
1997. He also served as portfolio manager of Frontier Fund from February
1999 until its merger with Discovery Fund in August 1999. Mr. Ammann joined
Founders in 1993 as a research analyst, and became a senior research analyst
in 1996. Mr. Ammann was formerly a financial statistician for Standard &
Poor's CompuStat Services, Inc. A graduate of Colorado State University, Mr.
Ammann holds a bachelor's degree in finance.
THOMAS M. ARRINGTON, VICE PRESIDENT OF INVESTMENTS. Mr. Arrington is a Chartered
Financial Analyst who has been co-portfolio manager, along with Scott Chapman,
of Growth Fund since December 1998, the domestic portion of Worldwide Growth
Fund since July 1999, and Focus Fund since December 31, 1999. Mr. Arrington has
also been the lead portfolio manager of Growth and Income Fund since February
1999. Mr. Arrington has also served as a portfolio manager for The Dreyfus
Corporation since March 1999. Mr. Arrington was formerly vice president and
director of income equity strategy at HighMark Capital Management, Inc., a
subsidiary of Union BanCal Corporation. He received a bachelor's degree in
economics from the University of California, Los Angeles and an MBA from San
Francisco State University.
SCOTT A. CHAPMAN, VICE PRESIDENT OF INVESTMENTS AND DIRECTOR OF RESEARCH. Mr.
Chapman is a Chartered Financial Analyst who has been the co-portfolio manager,
along with Thomas Arrington, of Growth Fund since December 1998, the domestic
portion of Worldwide Growth Fund since July 1999, and Focus Fund since December
31, 1999. Mr. Chapman has also served as a portfolio manager for The Dreyfus
Corporation since February 1999. Mr. Chapman was formerly vice president and
director of growth strategy for HighMark Capital Management, Inc., a subsidiary
of Union BanCal Corporation. He has more than 10 years' experience in equity
investment management, including security analysis positions with McCullough,
Andrews & Cappiello and Cooper Development Co. Mr. Chapman received a bachelor
of science degree in accounting from Santa Clara University and an MBA in
finance from Golden Gate University.
MARGARET R. DANUSER, FIXED-INCOME MANAGER. Ms. Danuser has been the lead
portfolio manager of Government Securities and Money Market Funds since 1996,
and has served as Founders' fixed-income specialist since 1995. She was an
investment officer with LaSalle Street Capital Management from 1989 to 1994.
Ms. Danuser received a bachelor of arts degree in international affairs from
the University of Colorado, and pursued MBA studies at Loyola University,
Chicago.
<PAGE> 38
BRIAN F. KELLY, VICE PRESIDENT OF INVESTMENTS. Mr. Kelly joined Founders in
1996 as the lead portfolio manager of Balanced Fund. He also served as
portfolio manager of Growth and Income Fund from 1996 through January 1999.
Mr. Kelly formerly served as a portfolio manager for INVESCO Trust Company
from 1993 to 1996, and as a senior equity investment analyst for Sears
Investment Management Company from 1986 to 1993. A graduate of the
University of Notre Dame, Mr. Kelly received an MBA and JD from the
University of Iowa. He is also a Certified Public Accountant.
PAUL A. LAROCCO, VICE PRESIDENT OF INVESTMENTS. Mr. LaRocco is a Chartered
Financial Analyst who became lead portfolio manager for Mid-Cap Growth Fund
in March 1998. Mr. LaRocco was formerly a vice president and portfolio
manager with OppenheimerFunds, Inc. from 1993 to 1998 and a securities
analyst with Columbus Circle Investors from 1990 to1993. Since April 1998,
Mr. LaRocco has also served as a portfolio manager for The Dreyfus
Corporation. A graduate of the University of California at Santa Barbara,
Mr. LaRocco received an MBA with a concentration in finance from the
University of Chicago.
DOUGLAS A. LOEFFLER, VICE PRESIDENT OF INVESTMENTS. Mr. Loeffler is a Chartered
Financial Analyst who has been portfolio manager for International Equity Fund
since 1997 and the foreign portion of Worldwide Growth Fund since July 1999. Mr.
Loeffler also served as co-lead portfolio manager for Mid-Cap Growth Fund from
1997 until March 1998. He joined Founders in 1995 as a senior international
equities analyst and previously served as assistant portfolio manager for
International Equity Fund. Mr. Loeffler has also served as a portfolio manager
for The Dreyfus Corporation since February 1999. Before joining Founders, he
spent seven years with Scudder, Stevens & Clark as an international equities
analyst and quantitative analyst. A graduate of Washington State University, Mr.
Loeffler received an MBA in finance from the University of Chicago.
TRACY P. STOUFFER, VICE PRESIDENT OF INVESTMENTS. Ms. Stouffer is a
Chartered Financial Analyst who has been portfolio manager of Passport Fund
since July 1999. Before joining Founders, Ms. Stouffer was a vice president
and portfolio manager with Federated Global, Incorporated from 1995 to July
1999, and a vice president and portfolio manager with Clariden Asset
Management, Inc. from 1988 to 1995. Prior to 1988, Ms. Stouffer held various
portfolio management and securities analyst positions. A graduate of Cornell
University, Ms. Stouffer received an MBA with a concentration in marketing
from the University of Western Ontario, Canada.
<PAGE> 39
ABOUT YOUR INVESTMENT
YOUR SHARE PRICE
The price you pay for a Class F share of a Fund, and the price you receive upon
selling or redeeming a Class F share of a Fund, is called the Class' net asset
value (NAV). We calculate NAV by dividing the total net assets of Class F of a
Fund by its total number of Class F shares outstanding. We determine the NAV as
of the close of regular trading on the New York Stock Exchange (normally 4 p.m.
Eastern time) on each day that the Exchange is open. NAV is not calculated, and
you may not conduct Fund transactions, on days the NYSE is closed (generally
weekends and New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day). However, the Funds may conduct portfolio transactions on those
days, particularly in foreign markets, which may affect the value of Fund shares
on days when you will not be able to purchase, exchange, or redeem shares.
With the exception of Money Market Fund, the Funds use pricing services to
determine the market value of the securities in the Funds' portfolios. If market
quotations are not readily available, we value the Funds' securities or other
assets at fair value as determined in good faith by the Funds' Board of
Directors, or pursuant to procedures approved by the directors. The securities
held by Money Market Fund are valued using the amortized cost method. The NAV of
your shares when you redeem them may be more or less than the price you
originally paid, depending primarily upon the Fund's investment performance.
We will price your purchase, exchange, or redemption of Fund shares at the next
NAV calculated after your order is received in good order by us or by certain
other agents of the Funds or their distributor.
INVESTING IN THE FUNDS
Class F shares of a Fund can be purchased only by:
o Persons or entities that have held shares of any Fund continuously since
December 30, 1999.
o Any person or entity listed in the account registration for any account that
has held shares of any Fund continuously since December 30, 1999, such as
joint owners, trustees, custodians, and designated beneficiaries.
o Retirement plans (such as 401(k) plans) that have held shares of any Fund
continuously since December 30, 1999. Any such plan may extend the privilege
of purchasing Class F shares to new plan participants, and the plan
participants may purchase Class F shares with rollover retirement funds.
o Customers of certain financial institutions which have had relationships with
Founders and/or any Fund continuously since December 30, 1999.
o Founders employees, Fund directors and their immediate families.
<PAGE> 40
For more detailed information about eligibility, please call 1-800-525-2440. If
you hold Fund shares through a broker-dealer or other financial institution,
your eligibility to purchase Class F shares may differ depending on that
institution's policies.
TYPES OF ACCOUNTS
The following types of account registrations are available:
o INDIVIDUAL OR JOINT TENANT. Individual accounts have a single owner. Joint
accounts have two or more owners. Unless specified otherwise, we set up joint
accounts with rights of survivorship, which means that upon the death of one
account holder, ownership passes to the remaining account holders.
o TRANSFER ON DEATH. A way to designate beneficiaries on an Individual or Joint
Tenant account. We will provide the rules governing this type of account when
the account is established.
o UGMA OR UTMA. (Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act) These accounts are a way to give money to a child or to help a child
invest on his/her own. Depending on state laws, we will set the account up as
a UGMA or UTMA.
o TRUST. The trust needs to be effective before we can establish this kind of
account.
o CORPORATION OR OTHER ENTITY. A corporation or entity owns this account.
Please attach a certified copy of your corporate resolution showing the
person(s) authorized to act on this account.
RETIREMENT ACCOUNTS
You may set up the following retirement accounts by completing an IRA
Application:
o TRADITIONAL IRA. Any adult under age 70 1/2 who has earned income may
contribute up to $2,000 (or 100% of compensation, whichever is less) to an
IRA per tax year. If your spouse is not employed, you can contribute up to
$4,000 annually to two IRAs, as long as no more than $2,000 is contributed to
a single account.
o ROLLOVER IRA. Distributions from qualified employer-sponsored retirement
plans (and, in most cases, from any IRA) retain their tax advantages when
rolled over to an IRA within 60 days of receipt. You also need to complete a
Transfer, Direct Rollover and Conversion Form.
o ROTH IRA. Allows for two types of purchases:
o CONTRIBUTIONS. Any adult who has earned income below certain income
limits may contribute up to $2,000 (or 100% of compensation, whichever
is less) to a Roth IRA per tax year. If your spouse is not employed,
you can contribute up to
<PAGE> 41
$4,000 annually to two Roth IRAs, as long as no more than $2,000 is
contributed to a single account. Contributions to a Roth IRA are NOT
tax-deductible, but distributions, including earnings, may be withdrawn
tax-free after five years for qualified events such as retirement.
You may elect to have both traditional IRAs and Roth IRAs, provided that
your combined contributions do not exceed the $2,000 (or 100% of
compensation, whichever is less) annual limitation.
o CONVERSIONS. Conversions/distributions from traditional IRAs to Roth IRAs are
taxable at the time of their conversion, but after five years may then be
distributed tax-free for qualified events such as retirement. Only
individuals with incomes below certain thresholds may convert their
traditional IRAs to Roth IRAs.
o SEP-IRA. Allows self-employed persons or small business owners to make direct
contributions to employees' IRAs with minimal reporting and disclosure
requirements.
Each year you will be charged a single $10.00 custodial fee for all IRA accounts
maintained under your Social Security number. This fee will be waived if the
aggregate value of your IRA accounts is $5,000 or more. This fee may be changed
upon 30 days' notice.
o PROFIT-SHARING AND MONEY PURCHASE PENSION PLAN. A retirement plan that allows
self-employed persons or small business owners and their employees to make
tax-deductible contributions for themselves and any eligible employees.
o 401(K) PLAN. A retirement plan that allows employees of corporations of any
size to contribute a percentage of their wages on a tax-deferred basis.
Call 1-800-934-GOLD (4653) for additional information about these retirement
accounts.
WE RECOMMEND THAT YOU CONSULT YOUR TAX ADVISER REGARDING THE PARTICULAR TAX
CONSEQUENCES OF THESE RETIREMENT PLAN OPTIONS.
MINIMUM INITIAL INVESTMENTS
To open a Fund account, please enclose a check payable to "Dreyfus Founders
Funds, Inc." for one of the following amounts:
o $1,000 minimum for most regular accounts
o $500 minimum for IRA and UGMA/UTMA accounts
o No minimum if you begin an Automatic Investment Plan or Payroll
Deduction of $50 or more per month or per pay period
<PAGE> 42
MINIMUM ADDITIONAL INVESTMENTS
o $100 for payments made by mail, TeleTransfer, wire, and online
o $50 for Automatic Investment Plan payments
o $50 for payroll deduction
DOING BUSINESS WITH DREYFUS FOUNDERS FUNDS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY PHONE If your TeleTransfer We can send If you have
account with allows you to proceeds only telephone
1-800-525-2440 us has make to the exchange
telephone electronic address or privileges,
[Graphic: exchange purchases bank of you may
Telephone] privileges, directly from record. exchange from
you can call a checking or Minimum one Fund to
to open an savings redemption - another. The
account in account at $100; $1,000 names and
another Fund your request. minimum for a registrations
by exchange. You may redemption by need to be
The names and establish wire. Phone identical on
registrations TeleTransfer redemption is both accounts.
need to be when your not available
identical on account is on retirement
both accounts. opened, or add accounts and
it later by certain other
Otherwise, you completing an accounts. You
must complete Account may add phone
a New Account Changes Form. redemption
Application We charge no privileges by
and send it in fee for completing an
with your TeleTransfer Account
investment transactions. Changes
check. Form.
- --------------------------------------------------------------------------------
BY MAIL Complete the Make your In a letter, In a letter,
proper check payable please tell include the
Dreyfus Founders application. to "Dreyfus us the number name(s) of
Funds Make your Founders of shares or the account
P.O. Box 173655 check payable Funds, Inc." dollars you owner(s), the
Denver, CO to "Dreyfus Enclose the wish to Fund and
80217-3655 Founders purchase stub redeem, the account
Funds, Inc." (from your name(s) of number you
If you are using We cannot most recent the account wish to
certified or establish new confirmation owner(s), the exchange
registered mail accounts with or quarterly Fund and from, your
or an overnight third-party statement); if account Social
delivery service, checks. you do not number, and Security or
send your have one, your Social tax
correspondence to: write the Fund Security or identification
Dreyfus Founders name and your tax number, the
Funds account number identification dollar or
2930 East Third on the check. number. All share amount,
Avenue, Denver, For IRAs, account and the
CO 80206-5002 please state owners need account you
the to sign the wish to
contribution request exchange
year. exactly as into. All
<PAGE> 43
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
[Graphic: Mailbox] The Funds do their names account
not normally appear on the owners need
accept account. We to sign the
third-party can send request
checks. proceeds only exactly as
to the their names
address or appear on the
bank of account.
record. Exchange
requests may
be faxed to
us at (303)
394-4021.
- --------------------------------------------------------------------------------
IN PERSON Visit the Visit the Visit the Visit the
Founders Founders Founders Founders
Founders Investor Investor Investors Investor Investor
Center Center. Call Center. Call Center. Call Center. Call
2930 East Third us at us at us at us at
Avenue (at 1-800-525-2440 1-800-525-2440 1-800-525-2440 1-800-525-2440
Milwaukee) to make an to make an to make an to make an
Denver, CO appointment appointment appointment, appointment,
and for and for for for
[Graphic: Two directions. directions. directions, directions,
hands shaking] and to ask and to ask
whether all whether all
account account
owners need owners need
to be present. to be present.
- --------------------------------------------------------------------------------
BY WIRE Complete and Wire funds to: $6 fee; Not
mail the Investors $1,000 applicable.
[Graphic: Tower proper Fiduciary minimum.
with dollar sign application. Trust Company Monies are
above] Wire funds to: ABA # 101003621 usually
Investors For Credit to received the
Fiduciary Account # business day
Trust Company 890751-842-0 after the
ABA # 101003621 Please date you
For Credit to indicate the sell. Unless
Account # Fund name and otherwise
890751-842-0 your account specified, we
Please number, and will deduct
indicate the indicate the the fee from
Fund name and name(s) of the your
your account account redemption
number, and owner(s). proceeds.
indicate the
name(s) of the
account
owner(s).
- --------------------------------------------------------------------------------
THROUGH OUR Download, You may You may You may
WEBSITE complete and purchase redeem shares exchange
www.dreyfus mail a signed shares using using our shares using
founders.com copy of the our website if website if our website
[Graphic: Person proper you have you have if you have
at computer application. TeleTransfer. TeleTransfer. telephone
terminal] We can only exchange
send proceeds privileges.
to your bank
of record.
Online
redemptions
are not
available on
retirement
accounts and
certain other
accounts.
- --------------------------------------------------------------------------------
<PAGE> 44
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
THROUGH AUTOMATIC Automatic Automatic Systematic Fund to Fund
TRANSACTION PLANS Investment Investment Withdrawal Investment
Plan (AIP) Plan (AIP) Plan permits Plan allows
[Graphic: A allows you to allows you to you to you to
calendar] make make receive a automatically
electronic electronic fixed sum on exchange a
purchases purchases a monthly, fixed dollar
directly from directly from quarterly or amount from
a checking or a checking or annual basis one Fund to
savings savings from accounts purchase
account. The account. The with a value shares in
minimum to minimum to of $5,000 or another Fund.
open an open an more.
account is $50 account is $50 Payments may
per month. per month. be sent
Once Once electronically
established, established, to your bank
AIP purchases AIP purchases or to you in
take place take place check form.
automatically automatically
on on
approximately approximately
the 5th and/or the 5th and/or
20th of the 20th of the
month. month.
We charge no We charge no
fee for AIP. fee for AIP.
- --------------------------------------------------------------------------------
FASTLINE(TM) Follow Follow We can send Follow
instructions instructions proceeds only instructions
1-800-947-FAST provided when provided when to the bank provided when
(3278) you call to you call to of record. you call.
Automated open an add to your Minimum $100 minimum.
telephone account account in a account via redemption -
access service new Fund. TeleTransfer. $100. Phone
redemption is
[Graphic: not available
Telephone] on retirement
accounts and
certain other
accounts. You
may add phone
redemption
privileges by
completing an
Account
Changes Form.
- --------------------------------------------------------------------------------
SELLING SHARES
o SHARES RECENTLY PURCHASED BY CHECK OR TELETRANSFER. Redemptions of shares
purchased by check (other than purchases by cashier's check) or TeleTransfer
will be placed on hold until your check has cleared (which may take up to 15
days). During this time, you may make exchanges to another Fund but may not
receive the proceeds of redemption. Although payment may be delayed, the
price you receive for your redeemed shares will not be affected.
<PAGE> 45
o INDIVIDUAL, JOINT TENANT, TRANSFER ON DEATH, AND UGMA/UTMA ACCOUNTS. If
requesting a redemption in writing, a letter of instruction needs to be
signed by all account owners as their names appear on the account.
o RETIREMENT ACCOUNTS. Please call 1-800-525-2440 for the appropriate form.
o TRUST ACCOUNTS. The trustee needs to sign a letter indicating his/her
capacity as trustee. If the trustee's name is not in the account
registration, you will need to provide a certificate of incumbency dated
within the past 60 days.
o CORPORATION OR OTHER ENTITY. A certified corporate resolution complete with a
corporate seal or signature guarantee needs to be provided. At least one
person authorized to act on the account needs to sign the letter.
BUYING OR SELLING SHARES THROUGH A BROKER
Be sure to read the broker's program materials for disclosures on fees and
service features that may differ from those in this Prospectus. A broker may
charge a commission or transaction fee, or have different account minimums.
SIGNATURE GUARANTEE
For your protection, we require a guaranteed signature if you request:
o a redemption check made payable to anyone other than the shareholder(s)
of record
o a redemption check mailed to an address other than the address of record
o a redemption check or wire sent to a bank other than the bank we have on file
o a redemption check mailed to an address that has been changed within 30 days
of your request
o a redemption for $50,000 or more from an account that does not have telephone
redemption privileges (excluding accounts held by a corporation)
You can have your signature guaranteed at a:
o bank
o broker/dealer
o credit union (if authorized under state law)
o securities exchange/association
o clearing agency
o savings association
Please note that a notary public cannot provide a signature guarantee.
REDEMPTION PROCEEDS
We can deliver redemption proceeds to you:
o BY CHECK. Checks are sent to the address of record. If you request that a
check be sent to another address, we require a signature guarantee. (See
"Signature
<PAGE> 46
Guarantee.") If you don't specify, we will deliver proceeds via check. No
interest will accrue on amounts represented by uncashed redemption checks.
o BY WIRE. $6 fee; $1,000 minimum. Monies are usually received the business
day after the date you sell. Unless otherwise specified, we will deduct the
fee from your redemption proceeds
o BY TELETRANSFER. No fee. Monies are usually transferred to your bank two
business days after you sell. Call your bank to find out when monies are
accessible.
The Funds (other than Money Market Fund) also reserve the right to make a
"redemption in kind" - payment in portfolio securities rather than cash - if the
amount you are redeeming is large enough to affect Fund operations. This right
may be exercised only if the amount of your redemptions exceeds the lesser of
$250,000 or 1% of a Fund's net assets in any 90-day period.
TRANSACTION POLICIES
We can execute transaction requests only if they are in good order. You will be
contacted in writing if we encounter processing problems. Call 1-800-525-2440 if
you have any questions about these procedures.
We cannot accept conditional transactions requesting that a transaction occur on
a specific date or at a specific share price. However, we reserve the right to
allow shareholders to exchange from Money Market Fund to another Fund of their
choice on a predetermined date, such as the day after distributions are paid.
TRANSACTIONS CONDUCTED BY PHONE, FAX, FASTLINE(TM), OR THROUGH FOUNDERS'
WEBSITE.
The Funds, Founders, and their agents are not responsible for the authenticity
of purchase, exchange, or redemption instructions received by phone, fax,
FASTLINE, or through Founders' website.
By signing a New Account Application or an IRA Application (unless specifically
declined on the Application), by providing other written (for redemptions),
verbal (for exchanges), or electronic authorization, or by requesting Automatic
Investment Plan or payroll deduction privileges, you agree to release the Funds,
Founders, and their agents from any and all liability for acts or omissions done
in good faith under the authorizations contained in the application or provided
through Founders' website, including their possibly effecting unauthorized or
fraudulent transactions.
As a result of your executing such a release, you bear the risk of loss from an
unauthorized or fraudulent transaction. However, if the Fund fails to employ
reasonable procedures to attempt to confirm that telephone or Internet
instructions are genuine, the Fund may be liable for any resulting losses. These
procedures include, but are not necessarily limited to, one or more of the
following:
o requiring personal identification prior to acting upon instructions
o providing written confirmation of such transactions
<PAGE> 47
o tape-recording telephone instructions
EXCESSIVE TRADING. To maintain competitive expense ratios and to avoid
disrupting the management of each Fund's portfolio, we reserve the right, with
or without notice, to suspend or terminate the exchange privilege for any
shareholder (including a shareholder whose account is managed by an adviser)
when the total exchanges out of any one of the Funds exceed four in any 12-month
period.
EFFECTIVE DATE OF TRANSACTIONS. Transaction requests received in good order
prior to the close of the New York Stock Exchange on a given date will be
effective that date. We consider investments to be received in good order when
all required documents and your check or wired funds are received by us or by
certain other agents of the Funds or their distributor. Under certain
circumstances, payment of redemption proceeds may be delayed for up to seven
calendar days to allow for the orderly liquidation of securities. Also, when the
New York Stock Exchange is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any emergency
circumstances, as determined by the Securities and Exchange Commission, we may
suspend redemptions or postpone payments. If you are unable to reach us by
phone, consider sending your order by overnight delivery service.
FAX TRANSMISSIONS. Exchange instructions may be faxed, but we cannot process
redemption requests received by fax.
CERTIFICATES. The Funds do not issue share certificates. If you are selling
shares previously issued in certificate form, you need to include the
certificates along with your redemption/exchange request. If you have lost your
certificates, please call us.
U.S. DOLLARS. Purchases need to be made in U.S. dollars, and checks need to
be drawn on U.S. banks. We cannot accept cash.
RETURNED CHECKS. If your check is returned due to insufficient funds, we will
cancel your purchase, and you will be liable for any losses or fees incurred by
the Fund or its agents. If you are a current shareholder, shares will be
redeemed from other accounts, if needed, to reimburse the Fund.
CONFIRMATION STATEMENTS. We will send you a confirmation after each transaction,
except in certain retirement accounts and where the only transaction is a
dividend or capital gain reinvestment or an Automatic Investment Plan purchase.
In those cases, your quarterly account statement serves as your confirmation.
TAX IDENTIFICATION NUMBER. If you do not provide your Social Security or tax
identification number when you open your account, federal law requires the Fund
to withhold 31% of all dividends, capital gain distributions, redemption and
exchange proceeds. We also may refuse to sell shares to anyone not furnishing
these numbers, or may take such other action as deemed necessary, including
redeeming some or all
<PAGE> 48
of the shareholder's shares. In addition, a shareholder's account may be reduced
by $50 to reimburse the Fund for the penalty imposed by the Internal Revenue
Service for failure to report the investor's taxpayer identification number on
information reports.
ACCOUNT MINIMUMS. The Funds require you to maintain a minimum of $1,000 per
account ($500 for IRAs and UGMAs/UTMAs), unless you are investing under an
Automatic Investment Plan or payroll deduction. If at any time, due to
redemptions or exchanges, or upon the discontinuance of an Automatic Investment
Plan or payroll deduction, the total value of your account falls below this
minimum, we may either charge a fee of $10, which will be automatically deducted
from your account, or close your account and mail the proceeds to the address of
record.
We will base the decision to levy the fee or close the account on our
determination of what is best for the Fund. We will give you at least 60 days'
written notice informing you that your account will be closed or that the $10
fee will be charged, so that you may make an additional investment to bring the
account up to the required minimum balance.
WE RESERVE THE RIGHT TO:
o reject any investment or application
o cancel any purchase due to nonpayment
o modify the conditions of purchase at any time
o waive or lower investment minimums
o limit the amount that may be purchased
o perform a credit check on shareholders establishing a new account or
requesting checkwriting privileges
FOR MORE INFORMATION ABOUT YOUR ACCOUNT
INVESTOR SERVICES. Our Investor Services Representatives are available to
assist you. For your protection, we record calls to Investor Services. Call
1-800-525-2440.
24-HOUR ACCOUNT INFORMATION
o BY PHONE: 1-800-947-FAST (3278) FASTLINE(TM), our automated telephonE
service, enables you to access account information, conduct exchanges and
purchases and request duplicate statements and tax forms 24 hours a day with
a Touch-tone phone.
o BY ONLINE COMPUTER SERVICES: By visiting Founders InvestorSITE(R) at
WWW.DREYFUSFOUNDERS.COM, you can access the latest Fund performance returns,
daily prices, portfolio manager commentaries, news articles about the Funds,
and much more. Shareholders may access account transaction histories and
account balances, and conduct purchase, exchange, and redemption
transactions. Our address is www.dreyfusfounders.com.
<PAGE> 49
DAILY CLOSING PRICES
Founders QUOTELINE features the latest closing prices for the Funds, updated
each business day. Call 1-800-232-8088 24 hours a day, or reach us on the
Internet at www.dreyfusfounders.com.
Fund prices for the prior business day are listed in the business section of
most major daily newspapers. Look in the Mutual Funds section under "Dreyfus
Founders."
FUND AND MARKET NEWS UPDATES
For the latest news on each of the Funds and commentary on market conditions,
call Founders INSIGHT. Recorded by our portfolio managers, it is available 24
hours a day. Call 1-800-525-2440, or access MANAGER INSIGHTS on the Internet at
www.dreyfusfounders.com.
ESTABLISHING ADDITIONAL SERVICES
Many convenient service options are available for accounts. You may call
1-800-525-2440 to request a form to establish the following services:
o AUTOMATIC INVESTMENT PLAN (AIP). Allows you to make automatic purchases
of at least $50 from a bank account once or twice a month. See "How to Add
to an Account Through Automatic Transaction Plans."
o TELETRANSFER PROGRAM. Allows you to purchase or redeem Fund shares with a
phone call or on our website at any time. Purchase or redemption amounts are
automatically transferred to/from your bank account. If you select an
Automatic Investment Plan, you are automatically authorized to participate in
the TeleTransfer program.
o TELEPHONE/ONLINE REDEMPTIONS. Available for regular (non-retirement) accounts
only.
o TELEPHONE/ONLINE EXCHANGES. Allows you to exchange money between identically
registered accounts.
o CHECKWRITING
o Available on Government Securities and Money Market Funds
o May be established with a minimum account balance of $1,000
o No fee for this service
o Minimum amount per check: $500
o Maximum amount per check: $250,000
o DIVIDEND AND LONG-TERM CAPITAL GAIN DISTRIBUTION OPTIONS. Either or both may
be paid in cash or reinvested. The payment method for short-term capital gain
distributions is the same as for dividends.
<PAGE> 50
o SYSTEMATIC WITHDRAWAL PLAN. Permits you to receive a fixed sum on a monthly,
quarterly or annual basis from accounts with a value of $5,000 or more.
Payments may be sent electronically to your bank or to you in check form.
o FUND-TO-FUND INVESTMENT PLAN. Allows you to automatically exchange a fixed
dollar amount each month from one Fund to purchase shares in another Fund.
o DISTRIBUTION PURCHASE PROGRAM. Permits you to have capital gain distributions
and/or dividends from one Fund automatically reinvested in another Fund
account having a balance of at least $1,000 ($500 for IRAs or UGMA/UTMAs).
o PAYROLL DEDUCTION. Allows you to make automatic purchases of at least $50
per pay period through payroll deduction.
DIVIDENDS AND DISTRIBUTIONS
Discovery, Focus, Growth, Growth and Income, International Equity, Mid-Cap
Growth, Passport and Worldwide Growth Funds intend to distribute net realized
investment income on an annual basis each December. Balanced Fund intends to
distribute net realized investment income on a quarterly basis every March,
June, September, and December. Government Securities Fund intends to declare
dividends daily and distribute net realized investment income on the last
business day of every month. Money Market Fund declares dividends daily, which
are paid on the last business day of every month. Shares of Government
Securities and Money Market Funds begin receiving dividends no later than the
next business day following the day when funds are received by us.
All Funds intend to distribute any net realized capital gains each December. The
Government Securities and Money Market Funds are not likely to distribute
capital gains. From time to time, the Funds may make distributions in addition
to those described above.
You have the option of reinvesting income dividends and capital gain
distributions in shares of the Funds or receiving these distributions in cash.
Dividends and any distributions from the Funds are automatically reinvested in
additional shares unless you elect to receive these distributions in cash. If
you have elected to receive your dividends or capital gains in cash and the
Postal Service cannot deliver your checks, or if your checks remain uncashed for
six months, we reserve the right to reinvest your distribution checks in your
account at the then-current net asset value and to reinvest all the account's
subsequent distributions in shares of that Fund. No interest will accrue on
amounts represented by uncashed distribution checks.
TAXES
The Funds distribute to their shareholders any net investment income and net
realized capital gains they receive. Fund dividends and capital gain
distributions are taxable to
<PAGE> 51
most investors (unless your investment is an IRA or other tax-advantaged
account). The tax status of any distribution is the same regardless of how long
you have been in the Fund and whether you reinvest your distributions or take
them in cash.
All dividends of net investment income from the Funds, such as dividends and
interest on investments, will be taxable to you as ordinary income. A portion of
the dividends may qualify for dividends-received deduction for corporations,
although distributions from the Government Securities and Money Market Funds
generally are not expected to qualify.
In addition, the Funds realize capital gains and losses when they sell
securities for more or less than they paid. If total gains on sales exceed total
losses (including losses carried forward from prior years), the Fund has a net
realized capital gain. Net realized capital gains are divided into short-term
and long-term capital gains depending on how long the Fund held the security
that gave rise to the gains. The Funds' capital gain distributions consist of
long-term capital gains that are taxable at the applicable capital gains rates.
All distributions of short-term capital gains will be taxable to you as ordinary
income and included in your dividends.
You may also realize capital gains or losses when you sell or exchange a Fund's
shares at more or less than you originally paid. Because everyone's tax
situation is unique, we encourage you to consult your tax professional about
federal, state and local tax consequences.
SHAREHOLDER AND TRANSFER AGENCY SERVICES
The Funds have entered into shareholder services agreements with Founders
pursuant to which Founders provides certain shareholder-related and transfer
agency services to the Funds. The Funds pay Founders a monthly fee for these
services. Out of this fee, Founders pays the fees charged by the Funds' transfer
agent, Investors Fiduciary Trust Company (IFTC).
Registered broker/dealers, third-party administrators of tax-qualified
retirement plans, and other entities which establish omnibus accounts with the
Funds may provide sub-transfer agency, recordkeeping, or similar services to
participants in the omnibus accounts. This reduces or eliminates the need for
those services to be provided by Founders and/or IFTC. In such cases, Founders
is authorized to pay the entity a sub-transfer agency or recordkeeping fee based
on the number of participants in the entity's omnibus account, and to be
reimbursed for such payments by the Fund. Entities receiving such fees may also
receive 12b-1 fees.
In addition, Founders may from time to time make additional payments from its
revenues to securities dealers and other financial institutions that provide
shareholder services, recordkeeping, and/or other administrative services to the
Funds.
<PAGE> 52
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
Statement of Additional Information further explains the selection of brokerage
firms.
<PAGE> 53
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each Fund's
financial performance for the five years ended December 31, 1998 (or for the
period of a Fund's operations, if less than five years) and the six months ended
June 30, 1999. Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in Class F shares of the Fund, assuming
reinvestment of all dividends and distributions. Since Focus Fund is new,
financial information is not available for that Fund as of the date of this
Prospectus.
The financial highlights information for the six months ended June 30, 1999 is
unaudited. The information for the three years ended December 31, 1998 has been
audited by PricewaterhouseCoopers LLP, independent accountants. Another
independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Funds' financial statements,
are included in the Funds' 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 54
DREYFUS FOUNDERS BALANCED FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.19 $11.35 $10.61 $9.58 $8.56 $8.93
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.15 0.30 0.29 0.28 0.28 0.20
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) (0.03) 1.27 1.48 1.50 2.21 (0.37)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.12 1.57 1.77 1.78 2.49 (0.17)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income # (0.14) (0.30) (0.30) (0.27) (0.28) (0.20)
From Net Realized Gains 0.00 (0.43) (0.73) (0.48) (1.19) 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS (0.14) (0.73) (1.03) (0.75) (1.47) (0.20)
------- -------- ------- ------- ------- --------
Net Asset Value -
End of Period $12.17 $12.19 $11.35 $10.61 $9.58 $8.56
======= ======== ======= ======= ======= ========
TOTAL RETURN 1.01% 13.96% 16.90% 18.76% 29.40% (1.90%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period $1,287,041 $1,244,221 $942,690 $394,896 $130,346 $95,226
(000s Omitted)
Net Expenses to Average
Net Assets 0.97%* 0.99% 0.99% 1.10% 1.19% 1.26%
Gross Expenses to
Average Net Assets 0.98%* 1.00% 1.01% 1.12% 1.23% n/a
Ratio of Net Investment
Income to Average Net Assets 2.47%* 2.51% 2.77% 3.09% 2.92% 2.37%
Portfolio Turnover Rate @ 223% 211% 203% 146% 286% 258%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 55
DREYFUS FOUNDERS DISCOVERY FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $24.37 $23.45 $24.22 $21.70 $19.88 $21.55
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.16) (0.07) 0.07 (0.20) (0.12) (0.12)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 6.60 3.15 2.69 4.72 6.29 (1.55)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 6.44 3.08 2.76 4.52 6.17 (1.67)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 0.00 0.00 0.00 0.00 0.00
From Net Realized Gains 0.00 (2.16) (3.53) (2.00) (4.35) 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (2.16) (3.53) (2.00) (4.35) 0.00
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $30.81 $24.37 $23.45 $24.22 $21.70 $19.88
======= ======== ======= ======= ======= ========
TOTAL RETURN 26.43% 14.19% 12.00% 21.20% 31.30% (7.80%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $288,185 $241,124 $246,281 $247,494 $216,623 $185,310
Net Expenses to Average
Net Assets 1.58%* 1.55% 1.52% 1.58% 1.58% 1.67%
Gross
Expenses to
Average Net Assets 1.59%* 1.57% 1.54% 1.59% 1.63% n/a
Ratio of Net
Investment Income (Loss) to
Average Net Assets (1.19%)* (0.91%) (0.55%) (0.85%) (0.60%) (0.62%)
Portfolio Turnover Rate @ 146% 121% 90% 106% 118% 72%
<FN>
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 56
DREYFUS FOUNDERS GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $9.74 $9.28 $9.04 $9.29 $8.78 $10.02
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.20 0.43 0.45 0.46 0.45 0.52
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) (0.50) 0.46 0.24 (0.25) 0.51 (1.26)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS (0.30) 0.89 0.69 0.21 0.96 (0.74)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income (0.20) (0.43) (0.45) (0.46) (0.45) (0.50)
From Net Realized Gains 0.00 0.00 0.00 0.00 0.00 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS (0.20) (0.43) (0.45) (0.46) (0.45) (0.50)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $9.24 $9.74 $9.28 $9.04 $9.29 $8.78
======= ======== ======= ======= ======= ========
TOTAL RETURN (3.10%) 9.76% 7.90% 2.34% 11.10% (7.50%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $15,610 $15,220 $13,259 $15,190 $20,263 $21,323
Net Expenses to Average
Net Assets* 1.31%** 1.25% 1.26% 1.26% 1.30% 1.34%
Gross Expenses to
Average Net Assets* 1.35%** 1.28% 1.31% 1.29% 1.30% n/a
Ratio of Net Investment
Income to Average Net Assets* 4.29%** 4.46% 4.99% 5.06% 4.92% 5.52%
Portfolio Turnover Rate @ 106% 90% 147% 166% 141% 379%
<FN>
* In the absence of voluntary expense waivers from Founders, the Ratios of
Net Expenses to Average Net Assets would have been 1.49% (1999), 1.46%
(1998), 1.44% (1997), and 1.46% (1996), the Ratios of Gross Expenses to
Average Net Assets would have been 1.53% (1999), 1.49% (1998), 1.49%
(1997), and 1.49% (1996), and the Ratios of Net Investment Income to
Average Net Assets would have been 4.11% (1999), 4.25% (1998), 4.81%
(1997), and 4.86% (1996).
** Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 57
DREYFUS FOUNDERS GROWTH FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 ---------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $20.41 $17.28 $15.87 $14.77 $11.63 $12.38
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.05) 0.01 0.07 0.02 0.02 (0.02)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 2.30 4.26 4.09 2.40 5.27 (0.39)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 2.25 4.27 4.16 2.42 5.29 (0.41)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income # 0.00 (0.01) (0.07) (0.02) (0.02) 0.00
From Net Realized Gains 0.00 (1.13) (2.68) (1.30) (2.13) (0.34)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (1.14) (2.75) (1.32) (2.15) (0.34)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $22.66 $20.41 $17.28 $15.87 $14.77 $11.63
======= ======== ======= ======= ======= ========
TOTAL RETURN 11.02% 25.04% 26.60% 16.57% 45.59% (3.40%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $2,821,366 $2,360,180 $1,757,449 $1,118,323 $655,927 $307,988
Net Expenses to Average
Net Assets 1.09%* 1.08% 1.10% 1.19% 1.24% 1.33%
Gross Expenses to
Average Net Assets 1.10%* 1.10% 1.12% 1.20% 1.28% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.44%)* 0.05% 0.48% 0.15% 0.12% (0.17%)
Portfolio Turnover Rate @ 124% 143% 189% 134% 130% 172%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 58
DREYFUS FOUNDERS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $7.32 $6.92 $7.23 $6.69 $6.16 $6.49
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.00 0.71 0.13 0.09 0.09 0.06
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 0.23 0.51 1.25 1.52 1.70 (0.02)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.23 1.22 1.38 1.61 1.79 0.04
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income # 0.00 (0.11) (0.13) (0.09) (0.09) (0.06)
From Net Realized Gains 0.00 (0.71) (1.56) (0.98) (1.17) (0.31)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (0.82) (1.69) (1.07) (1.26) (0.37)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $7.55 $7.32 $6.92 $7.23 $6.69 $6.16
======= ======== ======= ======= ======= ========
TOTAL RETURN 3.14% 17.78% 19.40% 24.37% 29.06% 0.50%
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $523,123 $542,307 $543,168 $535,866 $375,200 $311,051
Net Expenses to Average
Net Assets 1.15%* 1.08% 1.09% 1.15% 1.17% 1.21%
Gross
Expenses to
Average Net Assets 1.16%* 1.10% 1.11% 1.16% 1.22% n/a
Ratio of Net
Investment Income (Loss) to
Average Net Assets * (0.08%) 1.38% 1.84% 1.40% 1.19% 0.88%
Portfolio Turnover Rate @ 238% 259% 256% 195% 235% 239%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 59
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Years Ended December 31 Period of
------------------------------------
Six months ended 12/29/95
June 30, 1999 (inception) -
(unaudited) 1998 1997 1996 12/31/95
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.03 $12.05 $11.86 $10.00 $10.00
------- -------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) 0.04 0.03 (0.01) (0.01) 0.00
Net Gains on Securities
(Both Realized and
Unrealized) 1.02 2.02 1.89 1.87 0.00
------- -------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 1.06 2.05 1.88 1.86 0.00
------- -------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 0.00 0.00 0.00 0.00
From Net Realized Gains 0.00 (0.07) (1.69) 0.00 0.00
------- -------- ------- ------- -------
TOTAL DISTRIBUTIONS 0.00 (0.07) (1.69) 0.00 0.00
------- -------- ------- ------- -------
Net Asset Value - End of
Period $15.09 $14.03 $12.05 $11.86 $10.00
======= ======== ======= ======= =======
TOTAL RETURN 7.56% 17.01% 16.10% 18.60% 0.00%
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $23,742 $18,938 $15,740 $10,119 $767
Net Expenses to Average
Net Assets* 1.80%** 1.80% 1.85% 1.94% n/a
Gross Expenses to
Average Net Assets* 1.83%** 1.83% 1.89% 2.00% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets* 0.66%** 0.02% (0.21%) (0.15%) n/a
Portfolio Turnover Rate @ 173% 148% 164% 71% n/a
<FN>
* In the absence of voluntary expense reimbursements from Founders, the
Ratios of Net Expenses to Average Net Assets would have been 1.91% (1999),
1.89% (1998), 2.01% (1997) and 2.46% (1996), the Ratios of Gross Expenses
to Average Net Assets would have been 1.94% (1999), 1.92% (1998), 2.05%
(1997) and 2.52% (1996), and the Ratios of Net Investment Income to Average
Net Assets would have been 0.55% (1999), (0.07%) (1998), (0.37%) (1997) and
(0.67%) (1996).
** Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 60
DREYFUS FOUNDERS MID-CAP GROWTH FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $7.44 $7.72 $7.66 $7.05 $7.01 $7.67
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.05) (0.03) 0.01 (0.02) 0.00 (0.02)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 0.84 (0.11) 1.21 1.09 1.79 (0.36)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.79 (0.14) 1.22 1.07 1.79 (0.38)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 0.00 0.00 0.00 0.00 0.00
From Net Realized Gains 0.00 (0.14) (1.16) (0.46) (1.75) (0.28)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (0.14) (1.16) (0.46) (1.75) (0.28)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $8.23 $7.44 $7.72 $7.66 $7.05 $7.01
======= ======== ======= ======= ======= ========
TOTAL RETURN 10.62% (1.73%) 16.40% 15.33% 25.70% (4.90%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $219,273 $252,855 $320,186 $363,835 $388,754 $299,190
Net Expenses to Average
Net Assets 1.40%* 1.33% 1.30% 1.34% 1.29% 1.36%
Gross Expenses to
Average Net Assets 1.42%* 1.35% 1.32% 1.36% 1.35% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets (1.09%)* (0.39%) (0.05%) (0.28%) 0.00% (0.27%)
Portfolio Turnover Rate @ 169% 152% 110% 186% 263% 272%
<FN>
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 61
DREYFUS FOUNDERS MONEY MARKET FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
Net Gains or (Losses) on 0.02 0.05 0.05 0.05 0.05 0.03
Securities (Both
Realized and Unrealized) 0.00 0.00 0.00 0.00 0.00 0.00
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.02 0.05 0.05 0.05 0.05 0.03
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income (0.02) (0.05) (0.05) (0.05) (0.05) (0.03)
From Net Realized Gains 0.00 0.00 0.00 0.00 0.00 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS (0.02) (0.05) (0.05) (0.05) (0.05) (0.03)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======== ======= ======= ======= ========
TOTAL RETURN 2.04% 4.67% 4.70% 4.51% 5.10% 3.40%
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $90,154 $91,415 $106,073 $109,866 $125,646 $201,342
Net Expenses to Average
Net Assets 0.88%* 0.85% 0.82% 0.86% 0.89% 0.91%
Gross Expenses to
Average Net Assets 0.91%* 0.87% 0.84% 0.88% 0.89% n/a
Ratio of Net Investment
Income to Average Net
Assets 4.06%* 4.67% 4.77% 4.58% 5.11% 3.49%
<FN>
* Annualized.
</FN>
</TABLE>
<PAGE> 62
DREYFUS FOUNDERS PASSPORT FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.93 $13.64 $13.91 $11.68 $9.42 $10.53
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.04) 0.00 0.02 0.04 0.04 0.02
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 1.43 1.68 0.22 2.30 2.26 (1.11)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.39 1.68 0.24 2.34 2.30 (1.09)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 (0.01) (0.03) (0.02) (0.04) (0.02)
From Net Realized Gains 0.00 (0.38) (0.48) (0.09) 0.00 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (0.39) (0.51) (0.11) (0.04) (0.02)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $16.32 $14.93 $13.64 $13.91 $11.68 $9.42
======= ======== ======= ======= ======= ========
TOTAL RETURN 9.31% 12.50% 1.70% 20.05% 24.39% (10.40%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $116,783 $124,572 $122,646 $177,921 $49,922 $16,443
Net Expenses to Average
Net Assets 1.58%* 1.52% 1.53% 1.57% 1.76% 1.88%
Gross Expenses to
Average Net Assets 1.60%* 1.54% 1.55% 1.59% 1.84% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.45%)* 0.09% 0.20% 0.40% 0.60% 0.12%
Portfolio Turnover Rate @ 33% 34% 51% 58% 37% 78%
<FN>
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 63
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.06 $21.11 $21.79 $19.87 $17.09 $17.94
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) 0.03 0.08 0.02 0.10 0.09 (0.02)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 1.25 1.90 2.22 2.64 3.43 (0.37)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.28 1.98 2.24 2.74 3.52 (0.39)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 (0.09) (0.04) (0.07) (0.09) 0.00
From Net Realized Gains 0.00 (0.94) (2.88) (0.75) (0.65) (0.46)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (1.03) (2.92) (0.82) (0.74) (0.46)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $23.34 $22.06 $21.11 $21.79 $19.87 $17.09
======= ======== ======= ======= ======= ========
TOTAL RETURN 5.80% 9.63% 10.60% 13.95% 20.63% (2.20%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $248,937 $272,053 $308,877 $342,079 $228,595 $104,044
Net Expenses to Average
Net Assets 1.53%* 1.47% 1.45% 1.53% 1.56% 1.66%
Gross Expenses to
Average Net Assets 1.55%* 1.49% 1.47% 1.55% 1.65% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.25%* 0.33% 0.18% 0.50% 0.61% (0.14%)
Portfolio Turnover Rate @ 72% 86% 82% 72% 54% 87%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 64
[Logo]
DREYFUS FOUNDERS FUNDS
FOR FURTHER INFORMATION
More information about the Funds is available to you free of charge. The Funds'
Annual and Semiannual Reports contain the Funds' financial statements, portfolio
holdings, and historical performance. You will also find a discussion of the
market conditions and investment strategies that significantly affected the
Funds' performance in these reports. In addition, a current Statement of
Additional Information (SAI) containing more detailed information about the
Funds and their policies has been filed with the Securities and Exchange
Commission and is incorporated by reference as part of this Prospectus. You can
request copies of the Annual and Semiannual Reports and the SAI, or obtain other
information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
Dreyfus Founders Funds' SEC File No. 811-01018
<PAGE> 65
DREYFUS FOUNDERS BALANCED FUND
Pursuing capital appreciation and
current income through investments
in stocks and bonds
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 66
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach.......................................................67
Main Risks................................................................68
Past Performance..........................................................69
Expenses..................................................................70
More About Investment Objective, Strategies, and Risks....................71
Management................................................................74
Financial Highlights......................................................75
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class..................................76
Services for Fund Shareholders............................................81
Instructions for Regular Accounts.........................................83
Instructions for IRAs.....................................................85
Distributions and Taxes...................................................86
Brokerage Allocation......................................................87
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 67
THE FUND
[in margin: DREYFUS FOUNDERS BALANCED FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks current income and capital appreciation. To pursue this goal, it
normally invests in a balanced portfolio of common stocks, U.S. and foreign
government securities, and a variety of corporate fixed-income obligations.
o For the equity portion of its portfolio, the Fund emphasizes investments
in common stocks with the potential for capital appreciation. These stocks
generally pay regular dividends, although the Fund may also invest in
non-dividend-paying companies if, in our opinion, they offer better prospects
for capital appreciation. Normally, the Fund will invest a significant
percentage (up to 75%) of its total assets in equity securities.
o The Fund will maintain a minimum of 25% of its total assets in
fixed-income, investment-grade securities rated Baa or higher by Moody's
Investors Service, Inc. ("Moody's") or BBB or higher by Standard & Poor's
("S&P"). Fixed-income securities in which the Fund might invest include
bonds, debentures, and other corporate or government obligations. We
consider current income and the potential for capital appreciation in the
selection of these securities. There is no maximum limit on the amount of
straight debt securities in which the Fund may invest, and the Fund may
invest up to 100% of its assets in such securities for temporary defensive
purposes.
o The Fund also may invest up to 30% of its total assets in foreign securities,
with no more than 25% of its total assets invested in the securities of any
one foreign country.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and
<PAGE> 68
competitors, and tour corporate facilities and manufacturing plants to get a
complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
MAIN RISKS
The primary risks of investing in this Fund are:
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence. In
addition, if our assessment of a company's potential to increase earnings
faster than the rest of the market is not correct, the securities in the
portfolio may not increase in value, and could even decrease in value.
o INTEREST RATE RISK. When interest rates change, the value of the fixed-income
portion of the Fund will be affected. An increase in interest rates tends to
reduce the market value of debt securities, while a decline in interest rates
tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates
with the credit quality of the issuers of those securities. Credit risk
relates to the ability of the issuer to make payments of principal and
interest when due, including default risk.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments, including fluctuations in currency
exchange rates, potential unstable political and economic structures,
reduced availability of public information and lack of uniform financial
reporting and regulatory practices similar to those that apply to U.S.
issuers. Foreign markets also have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the U.S. Brokerage commissions and other transaction costs
are also generally higher than in the U.S., and settlement periods are
longer.
[On side panel: KEY CONCEPTS: A DIVIDEND is a payment of stock or cash from a
company's profits to its stockholders.
A DEBT SECURITY represents money borrowed that must be repaid to the lender at a
future date. Bonds, notes, bills, and money market instruments are all debt
securities.
A BOND is an IOU issued by a government or corporation that pays a stated rate
of interest and returns the face value on the maturity date.]
<PAGE> 69
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
25.30% -5.00% 22.90% 6.00% 21.90% -1.90% 29.40% 18.76% 16.90% 13.96%
Best quarter: Q2 1997 10.06% Worst quarter: Q3 1990 -7.33%
Average Annual Total Returns
as of 12/31/98
1 Year 5 Years 10 Years
------------ ------------ ------------
Balanced Fund* - Class F 13.96% 14.96% 14.26%
S&P 500 Index 28.57% 24.05% 19.19%
Lipper Balanced Fund Index 15.09% 13.87% 13.32%
* Inception date 2/19/63
The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, a
widely recognized unmanaged index of common stocks. The Lipper Balanced Fund
Index is an average of the performance of the 30 largest balanced funds tracked
by Lipper Analytical Services and reflects the expenses of managing the mutual
funds included in the index.
<PAGE> 70
The year to date total return for the Fund's Class F shares as of September 30,
1999 was -3.13%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- ------------------------- ---------- ---------- --------- --------- -------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum none* 4.00% 1.00% none none*
contingent deferred
sales charge (CDSC)
as a % of purchase
or sale price,
whichever is less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 0.57% 0.57% 0.57% 0.57% 0.57%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.17% 0.17% 0.17% 0.17% 0.17%
Total Annual Fund 0.99% 1.74% 1.74% 0.74% 1.24%
Operating Expenses
(Without Credits)
Total Annual Fund 0.98% 1.73% 1.73% 0.73% 1.23%
Operating Expenses
(With Credits)***
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
<PAGE> 71
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and
redeem all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------------ ------------ ------------ ------------
Class A $670 $872 $1,091 $1,718
Class B
with redemption $577 $848 $1,144 $1,671*
without redemption $177 $548 $944 $1,671*
Class C
with redemption $277 $548 $944 $2,052
without redemption $177 $548 $944 $2,052
Class R $76 $237 $411 $918
Class T $571 $826 $1,100 $1,882
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are
<PAGE> 72
designed to help reduce investment or market risks. The Statement of Additional
Information contains more detailed information about the Fund's investment
policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for
<PAGE> 73
speculative purposes. The Fund has limits on the use of derivatives and is not
required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current
<PAGE> 74
and future portfolio turnover rates may differ significantly from its historical
portfolio turnover rates.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Fund's
investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to other series funds of
Dreyfus Founders Funds, Inc. (the "Company"), as well serving as adviser or
sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are investment subsidiaries
of Mellon Financial Corporation, a broad-based global financial services
company.
<PAGE> 75
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 0.57% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Brian F. Kelly, Vice President of Investments, has been the Fund's lead
portfolio manager since 1996. He also served as portfolio manager of Dreyfus
Founders Growth and Income Fund from 1996 through January 1999. Mr. Kelly
formerly served as a portfolio manager for INVESCO Trust Company from 1993 to
1996, and as a senior equity investment analyst for Sears Investment Management
Company from 1986 to 1993. A graduate of the University of Notre Dame, Mr. Kelly
received an MBA and JD from the University of Iowa. He is also a Certified
Public Accountant.
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 76
DREYFUS FOUNDERS BALANCED FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.19 $11.35 $10.61 $9.58 $8.56 $8.93
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.15 0.30 0.29 0.28 0.28 0.20
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) (0.03) 1.27 1.48 1.50 2.21 (0.37)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.12 1.57 1.77 1.78 2.49 (0.17)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income # (0.14) (0.30) (0.30) (0.27) (0.28) (0.20)
From Net Realized Gains 0.00 (0.43) (0.73) (0.48) (1.19) 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS (0.14) (0.73) (1.03) (0.75) (1.47) (0.20)
------- -------- ------- ------- ------- --------
Net Asset Value -
End of Period $12.17 $12.19 $11.35 $10.61 $9.58 $8.56
======= ======== ======= ======= ======= ========
TOTAL RETURN 1.01% 13.96% 16.90% 18.76% 29.40% (1.90%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period $1,287,041 $1,244,221 $942,690 $394,896 $130,346 $95,226
(000s Omitted)
Net Expenses to Average
Net Assets 0.97%* 0.99% 0.99% 1.10% 1.19% 1.26%
Gross Expenses to
Average Net Assets 0.98%* 1.00% 1.01% 1.12% 1.23% n/a
Ratio of Net Investment
Income to Average Net Assets 2.47%* 2.51% 2.77% 3.09% 2.92% 2.37%
Portfolio Turnover Rate @ 223% 211% 203% 146% 286% 258%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments,
<PAGE> 77
and/or if you have a longer-term investment horizon. Class A shares have no
Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
<PAGE> 78
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 79
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 80
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 81
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 82
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 83
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 84
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic checks
<PAGE> 85
usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 86
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 87
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 88
FOR MORE INFORMATION
Dreyfus Founders Balanced Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 89
DREYFUS FOUNDERS DISCOVERY FUND
Pursuing capital appreciation through
investments in stocks of small growth companies
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 90
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach.......................................................91
Main Risks................................................................92
Past Performance..........................................................92
Expenses..................................................................93
More About Investment Objective, Strategies, and Risks....................95
Management................................................................99
Financial Highlights.....................................................100
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................101
Services for Fund Shareholders...........................................106
Instructions for Regular Accounts........................................108
Instructions for IRAs....................................................110
Distributions and Taxes..................................................111
Brokerage Allocation.....................................................112
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 91
THE FUND
[in margin: DREYFUS FOUNDERS DISCOVERY FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks capital appreciation. To pursue this goal, the Fund targets small
and relatively unknown companies with high growth potential. The Fund will
normally invest at least 65% of its total assets in common stocks of small,
rapidly growing U.S.-based companies with market capitalizations or annual
revenues between $10 million and $1.5 billion. Typically, these companies are
not listed on a national securities exchange, but trade on the over-the-counter
market. The Fund also may invest in larger companies if, in our opinion, they
represent better prospects for capital appreciation. Although the Fund normally
will invest in common stocks of U.S.-based companies, it may invest up to 30% of
its total assets in foreign securities.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
<PAGE> 92
MAIN RISKS
The primary risk of investing in this Fund is:
o SMALL COMPANY RISK. While small companies may offer greater opportunity
for capital appreciation than larger and more established companies, they
also involve substantially greater risks of loss and price fluctuations.
Small companies may be in the early stages of development; have limited
product lines, markets or financial resources; and may lack management depth.
These companies may be more impacted by intense competition from larger
companies, and the trading markets for their securities may be less liquid
and more volatile. This means that the Fund could have greater difficulty
selling a security of a small-cap issuer at an acceptable price, especially
in periods of market volatility. Also, it may take a substantial period of
time before the Fund realizes a gain on an investment in a small-cap company,
if it realizes any gain at all.
[On side panel: KEY CONCEPTS: We consider SMALL-CAP companies to be those
companies with market capitalizations of $1.5 billion or less. This range
may fluctuate depending on changes in the value of the stock market as a
whole.
MARKET CAPITALIZATION is the value of a corporation calculated by multiplying
the number of its outstanding shares of common stock by the current market
price of a share.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
<PAGE> 93
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
13.20% 62.50% 15.20% 10.80% -7.80% 31.30% 21.20% 12.00% 14.19%
Best quarter: Q4 1998 36.55% Worst quarter: Q3 1998 -22.73%
Average Annual Total Returns
as of 12/31/98
1 Year 5 Years Life of
Fund*
--------------- ------------- -------------
Discovery Fund - Class F 14.19% 13.42% 17.91%
Russell 2000 Index -2.55% 11.87% 12.50%
* Inception date 12/31/89
The Russell 2000 Index is a widely recognized unmanaged small-cap index
comprising common stocks of the 2,000 U.S. public companies next in size after
the largest 1,000 publicly traded U.S. companies.
The year to date total return for the Fund's Class F shares as of September 30,
1999 was 37.18%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
<PAGE> 94
FEE TABLE Class A Class B Class C Class R Class T
- --------------------------- --------- --------- --------- --------- -------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 1.00% 1.00% 1.00% 1.00% 1.00%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.24% 0.24% 0.24% 0.24% 0.24%
Total Annual Fund 1.49% 2.24% 2.24% 1.24% 1.74%
Operating Expenses
(Without Credits)
Total Annual Fund 1.47% 2.22% 2.22% 1.22% 1.72%
Operating Expenses (With
Credits)***
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
<PAGE> 95
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and
redeem all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------------ ------------ ------------ ------------
Class A $718 $1,019 $1,341 $2,252
Class B
With redemption $627 $1,000 $1,400 $2,213*
Without redemption $227 $700 $1,200 $2,213*
Class C
With redemption $327 $700 $1,200 $2,575
Without redemption $227 $700 $1,200 $2,575
Class R $126 $393 $681 $1,500
Class T $619 $973 $1,351 $2,409
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
<PAGE> 96
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index, or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for speculative purposes. The Fund has limits on the use of
derivatives and is not required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used
<PAGE> 97
to try to manage foreign currency risks on the Fund's foreign investments.
Option trading involves the payment of premiums and has special tax effects on
the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current and future portfolio turnover rates may differ
significantly from its historical portfolio turnover rates.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
<PAGE> 98
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments. These risks include:
o CURRENCY RISK. Fluctuations in exchange rates of foreign currencies
affect the value of the Fund's assets as measured in U.S. dollars and
the costs of converting between various currencies.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce
<PAGE> 99
the market value of debt securities, while a decline in interest rates
tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Fund's
investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 1.00% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
<PAGE> 100
Robert T. Ammann, Vice President of Investments and Chartered Financial Analyst,
has been the Fund's lead portfolio manager since 1997. He also served as
portfolio manager of Dreyfus Founders Frontier Fund from February 1999 until its
merger with Discovery Fund in August 1999. Mr. Ammann joined Founders in 1993 as
a research analyst, and became a senior research analyst in 1996. Mr. Ammann was
formerly a financial statistician for Standard & Poor's CompuStat Services, Inc.
A graduate of Colorado State University, Mr.
Ammann holds a bachelor's degree in finance.
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 101
DREYFUS FOUNDERS DISCOVERY FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $24.37 $23.45 $24.22 $21.70 $19.88 $21.55
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.16) (0.07) 0.07 (0.20) (0.12) (0.12)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 6.60 3.15 2.69 4.72 6.29 (1.55)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 6.44 3.08 2.76 4.52 6.17 (1.67)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 0.00 0.00 0.00 0.00 0.00
From Net Realized Gains 0.00 (2.16) (3.53) (2.00) (4.35) 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (2.16) (3.53) (2.00) (4.35) 0.00
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $30.81 $24.37 $23.45 $24.22 $21.70 $19.88
======= ======== ======= ======= ======= ========
TOTAL RETURN 26.43% 14.19% 12.00% 21.20% 31.30% (7.80%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $288,185 $241,124 $246,281 $247,494 $216,623 $185,310
Net Expenses to Average
Net Assets 1.58%* 1.55% 1.52% 1.58% 1.58% 1.67%
Gross
Expenses to
Average Net Assets 1.59%* 1.57% 1.54% 1.59% 1.63% n/a
Ratio of Net
Investment Income (Loss) to
Average Net Assets (1.19%)* (0.91%) (0.55%) (0.85%) (0.60%) (0.62%)
Portfolio Turnover Rate @ 146% 121% 90% 106% 118% 72%
<FN>
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments,
<PAGE> 102
and/or if you have a longer-term investment horizon. Class A shares have no
Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
<PAGE> 103
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted Sales charge as a % of
Your investment as a % of offering price your net investment
------------------------------------------------------------------------
Class A Class T Class A Class T
-------------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
---------------------------- -------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 104
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 105
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ----------- ---------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 106
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 107
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 108
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
Founders Funds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
ttn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 109
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund Amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic
<PAGE> 110
usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 111
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 112
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 113
FOR MORE INFORMATION
Dreyfus Founders Discovery Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 114
DREYFUS FOUNDERS FOCUS FUND
Pursuing long-term growth of capital
by investing in a concentrated
portfolio of growth companies
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 115
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................116
Main Risks...............................................................116
Past Performance.........................................................117
Expenses.................................................................117
More About Investment Objective, Strategies, and Risks...................119
Management...............................................................123
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................124
Services for Fund Shareholders...........................................129
Instructions for Regular Accounts........................................131
Instructions for IRAs....................................................133
Distributions and Taxes..................................................134
Brokerage Allocation.....................................................135
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 116
THE FUND
[in margin: DREYFUS FOUNDERS FOCUS FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks long-term growth of capital. To pursue this goal, the Fund
normally invests in a concentrated portfolio of 20-30 companies that are
selected for their long-term growth potential. Although the Fund can invest in
any size company, it generally invests in larger, more established companies.
The Fund may invest up to 30% of its total assets in foreign securities, with no
more than 25% in any one foreign country.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
MAIN RISKS
The primary risks of investing in this Fund are:
o CONCENTRATED PORTFOLIO RISK. Focus Fund is a "non-diversified" mutual
fund, which means that it may own larger positions in a smaller number of
securities than portfolios that are "diversified." This means that an
increase or decrease in the
<PAGE> 117
value of a single security will likely have a greater impact on the Fund's
NAV and total return than in a diversified portfolio. As a result, while the
Fund may offer greater opportunity for higher investment returns, it also
involves substantially greater risk of loss. The Fund's share prices may
also be more volatile than those of a diversified fund.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence. In
addition, if our assessment of a company's potential to increase earnings
faster than the rest of the market is not correct, the securities in the
portfolio may not increase in value, and could even decrease in value.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other equity
funds using different investment styles.
[On side panel: KEY CONCEPTS: We generally consider LARGE COMPANIES to be
companies that have market capitalizations of more than $8 billion. This
range may, however, fluctuate depending on changes in the value of the stock
market as a whole.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
Focus Fund is a newly organized fund and has no historical performance as of the
date of this Prospectus.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
<PAGE> 118
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- --------------------------- --------- --------- --------- --------- -------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 0.85% 0.85% 0.85% 0.85% 0.85%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.45% 0.45% 0.45% 0.45% 0.45%
Total Annual Fund 1.55% 2.30% 2.30% 1.30% 1.80%
Operating Expenses
(Without Reimburse-ments/
Waivers or Credits)***
Total Annual Fund 1.50% 2.25% 2.25% 1.25% 1.75%
Operating Expenses (With
Reimburse-ments/ Waivers or Credits)***
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR. THESE EXPENSES
INCLUDE CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER
CUSTOMARY FUND EXPENSES.
*** EXPENSES AFTER REIMBURSEMENTS, WAIVERS AND CREDITS INCLUDE EXPENSE OFFSETS
FROM CREDITS EARNED ON UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN. FURTHER,
FOUNDERS HAS AGREED TO LIMIT THE TOTAL EXPENSES OF THE FUND PURSUANT TO A
CONTRACTUAL COMMITMENT SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES (WITH
REIMBURSEMENTS/WAIVERS OR CREDITS) WILL NOT EXCEED 1.50% FOR CLASS A, 2.25% FOR
CLASSES B AND C, 1.25% FOR CLASS R AND 1.75% FOR CLASS T. THIS LIMIT WILL EXTEND
THROUGH AT LEAST MAY 31, 2000 AND WILL NOT BE TERMINATED WITHOUT THE PRIOR
APPROVAL OF THE FUNDS' BOARD OF DIRECTORS.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time
<PAGE> 119
it will increase the cost of your investment and may cost you more than paying
other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years
------------ -------------
Class A $724 $1,036
Class B
with redemption $633 $1,018
without redemption $233 $718
Class C
with redemption $333 $718
without redemption $233 $718
Class R $132 $412
Class T $625 $991
Since Focus Fund is a new Fund, its one-year and three-year costs are estimates.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
<PAGE> 120
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from
<PAGE> 121
an underlying security, index, or other financial instrument. The Fund may use
derivative instruments to engage in hedging strategies but does not use them for
speculative purposes. The Fund has limits on the use of derivatives and is not
required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
<PAGE> 122
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in
fixed-income securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
o CURRENCY RISK. Fluctuations in exchange rates of foreign currencies
affect the value of a Fund's assets as measured in U.S. dollars and
the costs of converting between various currencies.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Funds may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
<PAGE> 123
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Fund's
investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. Focus Fund
began operations December 31, 1999. The management fee schedule for Focus Fund
is 0.85% on the first $250 million of the Fund's average daily net assets, 0.80%
of the next $250 million, and 0.75% on average daily net assets in excess of
$500 million.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
<PAGE> 124
Thomas M. Arrington, Vice President of Investments and Chartered Financial
Analyst, and Scott A. Chapman, Vice President of Investments, Chartered
Financial Analyst and Founders' Director of Research, have been co-portfolio
managers of the Fund since December 1999. Mr. Arrington and Mr. Chapman also
have been co-portfolio managers of Dreyfus Founders Growth Fund since
December 1998, and the domestic portion of Dreyfus Founders Worldwide Growth
Fund since July 1999. Mr. Arrington also has been the lead portfolio manager
of Dreyfus Founders Growth and Income Fund since February 1999. Mr.
Arrington and Mr. Chapman also serve as portfolio managers for The Dreyfus
Corporation.
Mr. Arrington was formerly vice president and director of income equity strategy
at HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation.
He received a bachelor's degree in economics from the University of California,
Los Angeles and an MBA from San Francisco State University.
Mr. Chapman was formerly vice president and director of growth strategy for
HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation. He
has more than 10 years' experience in equity investment management, including
security analysis positions with McCullough, Andrews & Cappiello and Cooper
Development Co. Mr. Chapman received a bachelor of science degree in accounting
from Santa Clara University and an MBA in finance from Golden Gate University.
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and/or if you have a longer-term investment horizon.
Class A shares have no Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you
<PAGE> 125
have a longer-term investment horizon. Class B shares convert automatically
to Class A shares after the Class B shares are held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
<PAGE> 126
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted Sales charge as a % of
Your investment as a % of offering price your net investment
---------------------------------------------------------------------
Class A Class T Class A Class T
-------------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
---------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 127
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 128
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ------------ ---------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 129
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 130
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 131
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 132
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic checks
<PAGE> 133
usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 134
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 135
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 136
FOR MORE INFORMATION
Dreyfus Founders Focus Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 137
DREYFUS FOUNDERS GROWTH FUND
Pursuing long-term growth of capital
through investments in growth companies
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 138
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................139
Main Risks...............................................................139
Past Performance.........................................................140
Expenses.................................................................141
More About Investment Objective, Strategies, and Risks...................143
Management...............................................................146
Financial Highlights.....................................................148
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................149
Services for Fund Shareholders...........................................154
Instructions for Regular Accounts........................................156
Instructions for IRAs....................................................158
Distributions and Taxes..................................................159
Brokerage Allocation.....................................................160
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 139
THE FUND
[in margin: DREYFUS FOUNDERS GROWTH FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks long-term growth of capital. To pursue this goal, the Fund
normally invests at least 65% of its total assets in common stocks of
well-established, high-quality growth companies. These companies tend to have
strong performance records, solid market positions, reasonable financial
strength, and continuous operating records of three years or more. The Fund may
also invest up to 30% of its total assets in foreign securities, with no more
than 25% invested in any one foreign country.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
MAIN RISKS
The primary risks of investing in this Fund are:
o STOCK MARKET RISK. The value of the stocks and other securities owned by
the Fund will fluctuate depending on the performance of the companies that
issued them,
<PAGE> 140
general market and economic conditions, and investor confidence. In
addition, if our assessment of a company's potential to increase earnings
faster than the rest of the market is not correct, the securities in the
portfolio may not increase in value, and could even decrease in value.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other equity
funds using different investment styles.
[On side panel: KEY CONCEPTS: A GROWTH STOCK is stock of a corporation that
has exhibited faster-than-average gains in earnings over the last few years
and is expected to continue to show high levels of profit growth.
BOTTOM-UP APPROACH means analyzing the fundamentals of individual companies
rather than focusing on broader market or sector themes.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
41.70% -10.60% 47.40% 4.30% 25.50% -3.40% 45.59% 16.57% 26.60% 25.04%
<PAGE> 141
Best quarter: Q4 1998 21.11% Worst quarter: Q3 1990 -14.83%
Average Annual Total Returns
as of 12/31/98
1 Year 5 Years 10 Years
------------- ------------- --------------
Growth Fund* - Class F 25.04% 21.02% 20.30%
S&P 500 Index 28.57% 24.05% 19.19%
* Inception date 1/5/62
The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, a
widely recognized unmanaged index of common stocks.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 5.54%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- --------------------------- --------- --------- -------- -------- --------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
<PAGE> 142
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 0.67% 0.67% 0.67% 0.67% 0.67%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.16% 0.16% 0.16% 0.16% 0.16%
Total Annual Fund 1.08% 1.83% 1.83% 0.83% 1.33%
Operating Expenses
(Without Credits)
Total Annual Fund 1.07% 1.82% 1.82% 0.82% 1.32%
Operating Expenses (With
Credits)***
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
<PAGE> 143
1 Year 3 Years 5 Years 10 Years
----------- ---------- ----------- ------------
Class A $679 $899 $1,136 $1,816
Class B
with redemption $586 $876 $1,190 $1,771*
without redemption $186 $576 $990 $1,771*
Class C
with redemption $286 $576 $990 $2,148
without redemption $186 $576 $990 $2,148
Class R $85 $265 $460 $1,025
Class T $579 $852 $1,146 $1,979
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily
<PAGE> 144
marketable if we cannot sell it within seven days in the ordinary course of
business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index, or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for speculative purposes. The Fund has limits on the use of
derivatives and is not required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
<PAGE> 145
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current and future portfolio turnover rates may differ
significantly from its historical portfolio turnover rates.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments. These risks include:
<PAGE> 146
o CURRENCY RISK. Fluctuations in exchange rates of foreign currencies
affect the value of the Fund's assets as measured in U.S. dollars and
the costs of converting between various currencies.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Fund's
investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
<PAGE> 147
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 0.67% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Thomas M. Arrington, Vice President of Investments and Chartered Financial
Analyst, and Scott A. Chapman, Vice President of Investments, Chartered
Financial Analyst and Founders' Director of Research, have been co-portfolio
managers of the Fund since December 1998. Mr. Arrington and Mr. Chapman also
have been co-portfolio managers of Dreyfus Founders Focus Fund since December
1999, and the domestic portion of Dreyfus Founders Worldwide Growth Fund
since July 1999. Mr. Arrington has also been the lead portfolio manager of
Dreyfus Founders Growth and Income Fund since February 1999. Mr. Arrington
and Mr. Chapman also serve as portfolio managers for The Dreyfus Corporation.
Mr. Arrington was formerly vice president and director of income equity strategy
at HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation.
He received a bachelor's degree in economics from the University of California,
Los Angeles and an MBA from San Francisco State University.
Mr. Chapman was formerly vice president and director of growth strategy for
HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation. He
has more than 10 years' experience in equity investment management, including
security analysis positions with McCullough, Andrews & Cappiello and Cooper
Development Co. Mr. Chapman received a bachelor of science degree in accounting
from Santa Clara University and an MBA in finance from Golden Gate University.
<PAGE> 148
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 149
DREYFUS FOUNDERS GROWTH FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 ---------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $20.41 $17.28 $15.87 $14.77 $11.63 $12.38
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.05) 0.01 0.07 0.02 0.02 (0.02)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 2.30 4.26 4.09 2.40 5.27 (0.39)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 2.25 4.27 4.16 2.42 5.29 (0.41)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income # 0.00 (0.01) (0.07) (0.02) (0.02) 0.00
From Net Realized Gains 0.00 (1.13) (2.68) (1.30) (2.13) (0.34)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (1.14) (2.75) (1.32) (2.15) (0.34)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $22.66 $20.41 $17.28 $15.87 $14.77 $11.63
======= ======== ======= ======= ======= ========
TOTAL RETURN 11.02% 25.04% 26.60% 16.57% 45.59% (3.40%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $2,821,366 $2,360,180 $1,757,449 $1,118,323 $655,927 $307,988
Net Expenses to Average
Net Assets 1.09%* 1.08% 1.10% 1.19% 1.24% 1.33%
Gross Expenses to
Average Net Assets 1.10%* 1.10% 1.12% 1.20% 1.28% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.44%)* 0.05% 0.48% 0.15% 0.12% (0.17%)
Portfolio Turnover Rate @ 124% 143% 189% 134% 130% 172%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments,
<PAGE> 150
and/or if you have a longer-term investment horizon. Class A shares have no
Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
<PAGE> 151
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 152
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 153
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 154
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 155
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 156
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 157
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic checks
<PAGE> 158
usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 159
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 160
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 161
FOR MORE INFORMATION
Dreyfus Founders Growth Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 162
DREYFUS FOUNDERS
GROWTH AND INCOME FUND
Pursuing long-term growth of capital and income
through investments in growth companies
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 163
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................164
Main Risks...............................................................165
Past Performance.........................................................165
Expenses.................................................................166
More About Investment Objective, Strategies, and Risks...................168
Management...............................................................172
Financial Highlights.....................................................173
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................174
Services for Fund Shareholders...........................................179
Instructions for Regular Accounts........................................181
Instructions for IRAs....................................................183
Distributions and Taxes..................................................184
Brokerage Allocation.....................................................185
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 164
THE FUND
[in margin: DREYFUS FOUNDERS GROWTH AND INCOME FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks long-term growth of capital and income. To pursue this goal, the
Fund primarily invests in common stocks of large, well-established, stable and
mature companies of great financial strength, commonly known as "blue chip"
companies. These companies generally have long records of profitability and
dividend payments and a reputation for high-quality management, products, and
services. The Fund normally invests at least 65% of its total assets in "blue
chip" stocks that:
o are included in a widely recognized index of stock market performance, such
as the Dow Jones Industrial Average or the Standard & Poor's 500 Index
o generally pay regular dividends
o have a market capitalization of at least $1 billion
The Fund may invest in non-dividend-paying companies if, in our opinion, they
offer better prospects for capital appreciation. The Fund may also invest up to
30% of its total assets in foreign securities.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of
<PAGE> 165
the Fund invest in the same underlying portfolio of securities and have the same
management team. However, because of different charges, fees and expenses, the
performance of the Fund's share classes will vary.]
MAIN RISKS
The primary risks of investing in this Fund are:
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence. In
addition, if our assessment of a company's potential to increase earnings
faster than the rest of the market is not correct, the securities in the
portfolio may not increase in value, and could even decrease in value.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other equity
funds using different investment styles
[On side panel: KEY CONCEPTS: DIVIDEND is a payment of stock or cash from a
company's profits to its stockholders.
We generally consider LARGE COMPANIES to be companies that have market
capitalizations of more than $8 billion. This range may, however, fluctuate
depending on changes in the value of the stock market as a whole.
MARKET CAPITALIZATION is the value of a corporation calculated by multiplying
the number of its outstanding shares of common stock by the current market price
of a share.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
<PAGE> 166
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
35.60% 0.40% 28.30% -0.30% 14.50% 0.50% 29.06% 24.37% 19.40% 17.78%
Best quarter: Q1 1991 12.68% Worst quarter: Q3 1990 -11.26%
Average Annual Total Returns
as of 12/31/98
1 Year 5 Years 10 Years
------------- ------------- -------------
Growth and Income Fund - Class 17.78% 17.81% 16.31%
F*
S&P 500 Index 28.57% 24.05% 19.19%
* Inception date 7/5/38
The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, a
widely recognized unmanaged index of common stocks.
The year to date total return for the Fund's Class F shares as of September 30,
1999 was -2.32%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
<PAGE> 167
FEE TABLE Class A Class B Class C Class R Class T
- -------------------------- ---------- --------- -------- --------- --------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 0.62% 0.62% 0.62% 0.62% 0.62%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.18% 0.18% 0.18% 0.18% 0.18%
Total Annual Fund 1.05% 1.80% 1.80% 0.80% 1.30%
Operating Expenses
(Without Credits)
Total Annual Fund 1.03% 1.78% 1.78% 0.78% 1.28%
Operating Expenses (With
Credits)
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
<PAGE> 168
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------------ ------------ ------------ ------------
Class A $676 $890 $1,121 $1,784
Class B
With redemption $583 $866 $1,175 $1,738*
Without redemption $183 $566 $975 $1,738*
Class C
With redemption $283 $566 $975 $2,116
Without redemption $183 $566 $975 $2,116
Class R $82 $255 $444 $990
Class T $576 $844 $1,131 $1,947
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
<PAGE> 169
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index, or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for speculative purposes. The Fund has limits on the use of
derivatives and is not required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to
<PAGE> 170
increase the Fund's exposure to the securities market. Forward contracts may be
used to try to manage foreign currency risks on the Fund's foreign investments.
Option trading involves the payment of premiums and has special tax effects on
the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current and future portfolio turnover rates may differ
significantly from its historical portfolio turnover rates.
<PAGE> 171
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments. These risks include:
o CURRENCY RISK. Fluctuations in exchange rates of foreign currencies
affect the value of the Fund's assets as measured in U.S. dollars and
the costs of converting between various currencies.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
<PAGE> 172
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Fund's
investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 0.62% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Thomas M. Arrington, Vice President of Investments and a Chartered Financial
Analyst, has been portfolio manager of the Fund since February 1999. Mr.
Arrington also has served as co-portfolio manager of Dreyfus Founders Growth
Fund since December 1998, of the domestic portion of Dreyfus Founders Worldwide
Growth Fund since July 1999, and Dreyfus Founders Focus Fund since December 31,
1999. Mr. Arrington also serves as portfolio manager for The Dreyfus
Corporation.
<PAGE> 173
Mr. Arrington was formerly vice president and director of income equity strategy
at HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation.
He received a bachelor's degree in economics from the University of California,
Los Angeles and an MBA from San Francisco State University.
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 174
DREYFUS FOUNDERS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $7.32 $6.92 $7.23 $6.69 $6.16 $6.49
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.00 0.71 0.13 0.09 0.09 0.06
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 0.23 0.51 1.25 1.52 1.70 (0.02)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.23 1.22 1.38 1.61 1.79 0.04
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income # 0.00 (0.11) (0.13) (0.09) (0.09) (0.06)
From Net Realized Gains 0.00 (0.71) (1.56) (0.98) (1.17) (0.31)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (0.82) (1.69) (1.07) (1.26) (0.37)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $7.55 $7.32 $6.92 $7.23 $6.69 $6.16
======= ======== ======= ======= ======= ========
TOTAL RETURN 3.14% 17.78% 19.40% 24.37% 29.06% 0.50%
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $523,123 $542,307 $543,168 $535,866 $375,200 $311,051
Net Expenses to Average
Net Assets 1.15%* 1.08% 1.09% 1.15% 1.17% 1.21%
Gross
Expenses to
Average Net Assets 1.16%* 1.10% 1.11% 1.16% 1.22% n/a
Ratio of Net
Investment Income (Loss) to
Average Net Assets * (0.08%) 1.38% 1.84% 1.40% 1.19% 0.88%
Portfolio Turnover Rate @ 238% 259% 256% 195% 235% 239%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
<PAGE> 175
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and/or if you have a longer-term investment horizon. Class A
shares have no Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T,
<PAGE> 176
you should consider buying Class A shares if you plan to invest $1 million or
more in the Fund.
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 177
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 178
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 179
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 180
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 181
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 182
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic checks
<PAGE> 183
usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 184
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 185
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 186
FOR MORE INFORMATION
Dreyfus Founders Growth and Income Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 187
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
Pursuing long-term growth of capital
through investments in foreign securities
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 188
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................189
Main Risks...............................................................189
Past Performance.........................................................191
Expenses.................................................................191
More About Investment Objective, Strategies, and Risks...................193
Management...............................................................197
Financial Highlights.....................................................198
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................199
Services for Fund Shareholders...........................................204
Instructions for Regular Accounts........................................206
Instructions for IRAs....................................................208
Distributions and Taxes..................................................209
Brokerage Allocation.....................................................210
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus
<PAGE> 189
THE FUND
[in margin: DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks long-term growth of capital. To pursue this goal, the Fund
normally invests at least 65% of its total assets in foreign equity securities
from a minimum of three countries outside the United States, including both
established and emerging economies. The Fund will not invest more than 50% of
its assets in the securities of any one foreign country. Although the Fund
intends to invest substantially all of its assets in issuers located outside the
United States, it may at times invest in U.S.-based companies.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
MAIN RISKS
The primary risks of investing in this Fund are:
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments. These risks include:
<PAGE> 190
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o CURRENCY EXCHANGE RISK. Since the Fund's assets are invested primarily in
foreign securities, and since substantially all of the Fund's revenues are
received in foreign currencies, the Fund's net asset value will be affected
by changes in currency exchange rates to a greater extent than other funds.
The Fund pays dividends in dollars and incurs currency conversion costs.
o EMERGING MARKETS RISK. A country that is in the initial stages of its
industrial cycle is considered to be an emerging markets country. Such
countries are subject to more economic, political, and business risk than
major industrialized nations, and the securities issued by companies located
there may be more volatile, less liquid, and more uncertain.
[On side panel: KEY CONCEPTS: FOREIGN SECURITIES are securities of issuers,
wherever organized, that have their principal business activities outside of the
United States. We consider where the issuer's assets are located, whether the
majority of the issuer's gross income is earned outside of the United States, or
whether the issuer's principal stock exchange listing is outside of the United
States.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
<PAGE> 191
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
Year-by-Year Total Returns
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
18.60% 16.10% 17.01%
Best quarter: Q1 1998 14.69% Worst quarter: Q3 1998 -14.58%
Average Annual Total Returns
as of 12/31/98
Life of
1 Year Fund*
------------ -------------
International Equity Fund - Class F 17.01% 17.18%
Morgan Stanley Capital International 18.77% 9.06%
World ex. U.S. Index
* Inception date 12/29/95
The Morgan Stanley Capital International World ex. U.S. Index is an average of
the performance of selected securities listed on the stock exchanges of Europe,
Canada, Australia, New Zealand and the Far East. The Life of Fund performance
data for the Index is from December 31, 1995 through December 31, 1998.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 13.54%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
<PAGE> 192
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- --------------------------- --------- ---------- --------- --------- -------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 1.00% 1.00% 1.00% 1.00% 1.00%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.67% 0.67% 0.67% 0.67% 0.67%
Total Annual Fund 1.92% 2.67% 2.67% 1.67% 2.17%
Operating Expenses
(Without Reimburse-ments/
Waivers or Credits)***
Total Annual Fund 1.80% 2.55% 2.55% 1.55% 2.05%
Operating Expenses (With
Reimbursements/Waivers
or Credits)***
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER REIMBURSEMENTS, WAIVERS AND CREDITS INCLUDE EXPENSE OFFSETS
FROM CREDITS EARNED ON UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN. FURTHER,
FOUNDERS HAS AGREED TO LIMIT THE TOTAL EXPENSES OF THE FUND PURSUANT TO A
CONTRACTUAL COMMITMENT SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES (WITH
REIMBURSEMENTS/WAIVERS OR CREDITS) WILL NOT EXCEED 1.80% FOR CLASS A, 2.55% FOR
CLASSES B AND C,
<PAGE> 193
1.55% FOR CLASS R AND 2.05% FOR CLASS T. THIS LIMIT WILL EXTEND THROUGH AT LEAST
MAY 31, 2000 AND WILL NOT BE TERMINATED WITHOUT THE PRIOR APPROVAL OF THE FUNDS'
BOARD OF DIRECTORS.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
---------- ----------- ----------- -----------
Class A $759 $1,143 $1,552 $2,689
Class B
With redemption $670 $1,129 $1,615 $2,656*
Without redemption $270 $829 $1,415 $2,656*
Class C
With redemption $370 $829 $1,415 $3,003
Without redemption $270 $829 $1,415 $3,003
Class R $170 $526 $907 $1,976
Class T $660 $1,099 $1,562 $2,841
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are
<PAGE> 194
designed to help reduce investment or market risks. The Statement of Additional
Information contains more detailed information about the Fund's investment
policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
<PAGE> 195
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for speculative purposes. The Fund has limits on the use of
derivatives and is not required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover
<PAGE> 196
rates increase the brokerage costs the Fund pays and may adversely affect its
performance. If the Fund realizes capital gains when it sells portfolio
investments, it generally must pay those gains out to shareholders, increasing
their taxable distributions. This may adversely affect the after-tax performance
of the Fund for shareholders with taxable accounts. The Fund's portfolio
turnover rates for prior years are included in the "Financial Highlights"
section of this Prospectus. The Fund's current and future portfolio turnover
rates may differ significantly from its historical portfolio turnover rates.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate
<PAGE> 197
date-related information on or after January 1, 2000. We are working to
avoid Year 2000-related problems in our systems and to obtain assurances from
other service providers that they are taking similar steps. In addition,
issuers of securities in which the Fund invests may be adversely affected
by Year 2000-related problems. This could have an impact on the value
of the Fund's investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing each Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 1.00% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Douglas A. Loeffler, Vice President of Investments and Chartered Financial
Analyst, has been the Fund's portfolio manager since 1997. Mr. Loeffler has also
managed the foreign portion of Dreyfus Founders Worldwide Growth Fund since July
1999 and served as co-lead portfolio manager for Dreyfus Founders Mid-Cap Growth
Fund from 1997 until March 1998. He joined Founders in 1995 as a senior
international equities analyst and previously served as assistant portfolio
manager for the Fund. Mr. Loeffler has also served as a portfolio manager for
The Dreyfus Corporation since February 1999. Before joining Founders, he spent
seven years with Scudder, Stevens & Clark as an international
<PAGE> 198
equities analyst and quantitative analyst. A graduate of Washington State
University, Mr. Loeffler received an MBA in finance from the University of
Chicago.
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 199
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Years Ended December 31 Period of
------------------------------------
Six months ended 12/29/95
June 30, 1999 (inception) -
(unaudited) 1998 1997 1996 12/31/95
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.03 $12.05 $11.86 $10.00 $10.00
------- -------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) 0.04 0.03 (0.01) (0.01) 0.00
Net Gains on Securities
(Both Realized and
Unrealized) 1.02 2.02 1.89 1.87 0.00
------- -------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 1.06 2.05 1.88 1.86 0.00
------- -------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 0.00 0.00 0.00 0.00
From Net Realized Gains 0.00 (0.07) (1.69) 0.00 0.00
------- -------- ------- ------- -------
TOTAL DISTRIBUTIONS 0.00 (0.07) (1.69) 0.00 0.00
------- -------- ------- ------- -------
Net Asset Value - End of
Period $15.09 $14.03 $12.05 $11.86 $10.00
======= ======== ======= ======= =======
TOTAL RETURN 7.56% 17.01% 16.10% 18.60% 0.00%
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $23,742 $18,938 $15,740 $10,119 $767
Net Expenses to Average
Net Assets* 1.80%** 1.80% 1.85% 1.94% n/a
Gross Expenses to
Average Net Assets* 1.83%** 1.83% 1.89% 2.00% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets* 0.66%** 0.02% (0.21%) (0.15%) n/a
Portfolio Turnover Rate @ 173% 148% 164% 71% n/a
<FN>
* In the absence of voluntary expense reimbursements from Founders, the
Ratios of Net Expenses to Average Net Assets would have been 1.91% (1999),
1.89% (1998), 2.01% (1997) and 2.46% (1996), the Ratios of Gross Expenses
to Average Net Assets would have been 1.94% (1999), 1.92% (1998), 2.05%
(1997) and 2.52% (1996), and the Ratios of Net Investment Income to Average
Net Assets would have been 0.55% (1999), (0.07%) (1998), (0.37%) (1997) and
(0.67%) (1996).
** Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
<PAGE> 200
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and/or if you have a longer-term investment horizon. Class A
shares have no Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T,
<PAGE> 201
you should consider buying Class A shares if you plan to invest $1 million or
more in the Fund.
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 202
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 203
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 204
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 205
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 206
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 207
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic checks
<PAGE> 208
usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 209
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 210
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 211
FOR MORE INFORMATION
Dreyfus Founders International Equity Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 212
DREYFUS FOUNDERS MID-CAP GROWTH FUND
Pursuing capital appreciation through
investments in mid-cap growth companies
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 213
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................214
Main Risks...............................................................215
Past Performance.........................................................215
Expenses.................................................................216
More About Investment Objective, Strategies, and Risks...................218
Management...............................................................222
Financial Highlights.....................................................223
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................224
Services for Fund Shareholders...........................................229
Instructions for Regular Accounts........................................230
Instructions for IRAs....................................................232
Distributions and Taxes..................................................234
Brokerage Allocation.....................................................234
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 214
THE FUND
[in margin: DREYFUS FOUNDERS MID-CAP GROWTH FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks capital appreciation by emphasizing investments in equity
securities of medium-sized companies that we believe have favorable growth
prospects. The Fund normally invests at least 65% of its total assets in equity
securities of companies having a market capitalization within the capitalization
range of companies comprising the Standard & Poor's Mid-Cap 400 Index. The Fund
also may invest in larger or smaller companies if, in our opinion, they
represent better prospects for capital appreciation. The Fund may invest up to
30% of its total assets in foreign securities, with no more than 25% of its
total assets invested in the securities of any one foreign country.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
<PAGE> 215
MAIN RISKS
The primary risk of investing in this Fund is:
o SMALL AND MEDIUM-SIZED COMPANY RISK. While small and medium-sized companies
may offer greater opportunity for capital appreciation than larger and more
established companies, they also involve greater risks of loss and price
fluctuations. Small companies, and to an extent medium-sized companies, may
be in the early stages of development; have limited product lines, markets
or financial resources; and may lack management depth. These companies may
be more impacted by intense competition from larger companies, and the
trading markets for their securities may be less liquid and more volatile.
This means that the Fund could have greater difficulty selling a security
of a small or medium-sized issuer at an acceptable price, especially in
periods of market volatility. Also, it may take a substantial period of
time before the Fund realizes a gain on an investment in a small or
medium-sized company, if it realizes any gain at all.
[On side panel: KEY CONCEPTS: We generally consider MEDIUM-SIZED COMPANIES to be
companies that have market capitalizations between $1.5 billion and $8 billion.
This range may fluctuate depending on changes in the value of the stock market
as a whole.] MARKET CAPITALIZATION is the value of a corporation calculated by
multiplying the number of its outstanding shares of common stock by the current
market price of a share.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
<PAGE> 216
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
39.20% -10.40% 63.70% 8.30% 16.00% -4.90% 25.70% 15.33% 16.40% -1.73%
Best quarter: Q1 1991 28.83% Worst quarter: Q3 1998 -29.87%
Average Annual Total Returns
as of 12/31/98
1 Year 5 Years 10 Years
------------- ------------ -------------
Mid-Cap Growth Fund* - Class 1.73% 9.54% 15.00%
F
S&P MidCap 400 Index 19.11% 18.84% 19.29%
* Inception date 9/8/61
The Standard & Poor's (S&P) MidCap 400 Index is an unmanaged group of 400
domestic stocks chosen for their market size, liquidity, and industry group
representations.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 6.18%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- -------------------------- --------- -------- --------- -------- --------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
<PAGE> 217
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 0.77% 0.77% 0.77% 0.77% 0.77%
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.26% 0.26% 0.26% 0.26% 0.26%
Total Annual Fund 1.28% 2.03% 2.03% 1.03% 1.53%
Operating Expenses
(Without Credits)
Total Annual Fund 1.26% 2.01% 2.01% 1.01% 1.51%
Operating Expenses (With
Credits)***
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
<PAGE> 218
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
---------- ----------- ---------- -----------
Class A $698 $958 $1,237 $2,031
Class B
with redemption $606 $937 $1,293 $1,989*
without redemption $206 $637 $1,093 $1,989*
Class C
with redemption $306 $637 $1,093 $2,358
without redemption $206 $637 $1,093 $2,358
Class R $105 $328 $569 $1,259
Class T $599 $912 $1,247 $2,191
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in
<PAGE> 219
the United States and the risk that currency fluctuations may adversely affect
the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index, or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for speculative purposes. The Fund has limits on the use of
derivatives and is not required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes
<PAGE> 220
move in an unexpected manner, the Fund may not achieve the desired benefit of
these instruments, or may realize losses and be in a worse position than if the
instruments had not been used. The Fund could also experience losses if the
prices of its derivative positions were not correlated with its other
investments or if it could not close out a position because of an illiquid
market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current and future portfolio turnover rates may differ
significantly from its historical portfolio turnover rates.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation
<PAGE> 221
against the issuer, or changes in government regulations affecting the issuer
or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
o CURRENCY RISK. Fluctuations in exchange rates of foreign currencies
affect the value of the Fund's assets as measured in U.S. dollars and
the costs of converting between various currencies.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate
<PAGE> 222
date-related information on or after January 1, 2000. We are working to
avoid Year 2000-related problems in our systems and to obtain assurances
from other service providers that they are taking similar steps. In addition,
issuers of securities in which the Fund invests may be adversely affected
by Year 2000-related problems. This could have an impact on the value
of the Fund's investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 0.77% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Paul A. LaRocco, Vice President of Investments and Chartered Financial Analyst,
has been the Fund's lead portfolio manager since March 1998. Mr. LaRocco was
formerly a vice president and portfolio manager with OppenheimerFunds, Inc. from
1993 to 1998 and a securities analyst with Columbus Circle Investors from 1990
to1993. Since April 1998, Mr. LaRocco has also served as a portfolio manager for
The Dreyfus Corporation. A graduate of the University of California at Santa
Barbara, Mr. LaRocco received an MBA with a concentration in finance from the
University of Chicago.
<PAGE> 223
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
DREYFUS FOUNDERS MID-CAP GROWTH FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $7.44 $7.72 $7.66 $7.05 $7.01 $7.67
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.05) (0.03) 0.01 (0.02) 0.00 (0.02)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 0.84 (0.11) 1.21 1.09 1.79 (0.36)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.79 (0.14) 1.22 1.07 1.79 (0.38)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 0.00 0.00 0.00 0.00 0.00
From Net Realized Gains 0.00 (0.14) (1.16) (0.46) (1.75) (0.28)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (0.14) (1.16) (0.46) (1.75) (0.28)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $8.23 $7.44 $7.72 $7.66 $7.05 $7.01
======= ======== ======= ======= ======= ========
TOTAL RETURN 10.62% (1.73%) 16.40% 15.33% 25.70% (4.90%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $219,273 $252,855 $320,186 $363,835 $388,754 $299,190
Net Expenses to Average
Net Assets 1.40%* 1.33% 1.30% 1.34% 1.29% 1.36%
Gross Expenses to
Average Net Assets 1.42%* 1.35% 1.32% 1.36% 1.35% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets (1.09%)* (0.39%) (0.05%) (0.28%) 0.00% (0.27%)
Portfolio Turnover Rate @ 169% 152% 110% 186% 263% 272%
<FN>
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
<PAGE> 224
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and/or if you have a longer-term investment horizon. Class A
shares have no Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
<PAGE> 225
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
<PAGE> 226
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
<PAGE> 227
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
<PAGE> 228
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
<PAGE> 229
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions. You can set up most of these services with your
application, or by calling your financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of
<PAGE> 230
certain Dreyfus Premier fixed-income funds. You can request your exchange in
writing or by phone, or by contacting your financial representative. Be sure to
read the current prospectus for any fund into which you are exchanging before
investing. Any new account established through an exchange generally has the
same privileges as your original account (as long as they are available). There
is currently no fee for exchanges, although you may have to pay an additional
sales charge when exchanging into any fund that has a higher sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS.
Please contact your financial representative or call 1-800-554-4611 to request a
copy of the current Dreyfus Worldwide Dollar Money Market Fund Prospectus.
Please be sure to read that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
- --------------------------------------------------------------------------------
<PAGE> 231
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
<PAGE> 232
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically and may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
- --------------------------------------------------------------------------------
<PAGE> 233
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
<PAGE> 234
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 235
FOR MORE INFORMATION
Dreyfus Founders Mid-Cap Growth Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 236
DREYFUS FOUNDERS PASSPORT FUND
Pursuing capital appreciation through investments
in small foreign growth companies
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 237
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................238
Main Risks...............................................................239
Past Performance.........................................................240
Expenses.................................................................241
More About Investment Objective, Strategies, and Risks...................243
Management...............................................................246
Financial Highlights.....................................................248
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................248
Services for Fund Shareholders...........................................253
Instructions for Regular Accounts........................................255
Instructions for IRAs....................................................257
Distributions and Taxes..................................................258
Brokerage Allocation.....................................................259
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 238
THE FUND
[in margin: DREYFUS FOUNDERS PASSPORT FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks capital appreciation. To pursue this goal, the Fund seeks
aggressive growth through investments in equity securities of small companies
outside the United States with market capitalizations or annual revenues of $1
billion or less. The Fund mainly invests in securities issued by foreign
companies based in both developed and emerging economies overseas. At least 65%
of the Fund's total assets normally will be invested in foreign securities from
a minimum of three countries. The Fund may invest in larger foreign companies or
in U.S.-based companies if, in our opinion, they represent better prospects for
capital appreciation.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
<PAGE> 239
MAIN RISKS
The primary risks of investing in this Fund are:
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments. These risks include:
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o CURRENCY EXCHANGE RISK. Since the Fund's assets are invested primarily in
foreign securities, and since substantially all of the Fund's revenues are
received in foreign currencies, the Fund's net asset value will be affected
by changes in currency exchange rates to a greater extent than other funds.
The Fund pays dividends in dollars and incurs currency conversion costs.
o EMERGING MARKETS RISK. A country that is in the initial stages of its
industrial cycle is considered to be an emerging markets country. Such
countries are subject to more economic, political, and business risk than
major industrialized nations, and the securities issued by companies located
there may be more volatile, less liquid, and more uncertain.
o SMALL COMPANY RISK. While small companies may offer greater opportunity
for capital appreciation than larger and more established companies, they
also involve substantially greater risks of loss and price fluctuations.
Small companies may be in the early stages of development; have limited
product lines, markets or financial resources; and may lack management depth.
These companies may be more impacted by intense competition from larger
companies, and the trading markets for their securities may be less liquid
and more volatile. This means that the Fund could have greater difficulty
selling a security of a small-cap issuer at an acceptable price, especially
in periods of market volatility. Also, it may take a substantial period of
time before the Fund realizes a gain on an investment in a small-cap company,
if it realizes any gain at all.
<PAGE> 240
[On side panel: KEY CONCEPTS: MARKET CAPITALIZATION is the value of a
corporation calculated by multiplying the number of its outstanding shares of
common stock by the current market price of a share.
FOREIGN SECURITIES are securities of issuers, wherever organized, that have
their principal business activities outside of the United States. We consider
where the issuer's assets are located, whether the majority of the issuer's
gross income is earned outside of the United States, or whether the issuer's
principal stock exchange listing is outside of the United States.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
Year-by-Year Total Return
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
-10.40% 24.39% 20.05% 1.70% 12.50%
Best quarter: Q1 1998 14.30% Worst quarter: Q3 1998 -19.32%
<PAGE> 241
Average Annual Total Returns
as of 12/31/98
1 Year 5 Years Life of Fund*
----------- ------------- --------------
Passport Fund - Class F 12.50% 8.89% 9.77%
Morgan Stanley Capital
International World ex. U.S. 18.77% 9.19% 10.50%
Index
* Inception date 11/16/93
The Morgan Stanley Capital International World ex. U.S. Index is an average of
the performance of selected securities listed on the stock exchanges of Europe,
Canada, Australia, New Zealand and the Far East. The Life of Fund performance
data for the Index is from November 30, 1993 through December 31, 1998.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 16.88%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- -------------------------- --------- --------- --------- --------- --------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none none 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% none none*
deferred sales charge
(CDSC) as a % of
purchase or sale
price, whichever is
less
o Maximum sales none none none none none
charge on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 1.00% 1.00% 1.00% 1.00% 1.00%
<PAGE> 242
o Rule 12b-1 fee none 0.75% 0.75% none 0.25%
o Shareholder 0.25% 0.25% 0.25% none 0.25%
services fee
o Other expenses** 0.25% 0.25% 0.25% 0.25% 0.25%
Total Annual Fund 1.50% 2.25% 2.25% 1.25% 1.75%
Operating Expenses
(Without Credits)
Total Annual Fund 1.48% 2.23% 2.23% 1.23% 1.73%
Operating Expenses (With
Credits)
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
<PAGE> 243
1 Year 3 Years 5 Years 10 Years
----------- ----------- --------- -------------
Class A $719 $1,022 $1,346 $2,263
Class B
with redemption $628 $1,003 $1,405 $2,223*
without redemption $228 $703 $1,205 $2,223*
Class C
with redemption $328 $703 $1,205 $2,585
without redemption $228 $703 $1,205 $2,585
Class R $127 $397 $686 $1,511
Class T $620 $976 $1,356 $2,420
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily
<PAGE> 244
marketable if we cannot sell it within seven days in the ordinary course of
business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from an underlying security, index, or other financial instrument.
The Fund may use derivative instruments to engage in hedging strategies but does
not use them for speculative purposes. The Fund has limits on the use of
derivatives and is not required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
<PAGE> 245
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current and future portfolio turnover rates may differ
significantly from its historical portfolio turnover rates. Specifically, the
Fund's portfolio turnover rates for 1999 and future years are expected to be
significantly higher than the Fund's historical portfolio turnover rates due to
the current manager's investment style.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
<PAGE> 246
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This could have an impact on the value of the Fund's
investments and the Fund's share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
<PAGE> 247
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 1.00% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Tracy P. Stouffer, Vice President of Investments and Chartered Financial
Analyst, has been the Fund's portfolio manager since July 1999. Before joining
Founders, Ms. Stouffer was a vice president and portfolio manager with Federated
Global, Incorporated from 1995 to July 1999, and a vice president and portfolio
manager with Clariden Asset Management, Inc. from 1988 to 1995. Prior to 1988,
Ms. Stouffer held various portfolio management and securities analyst positions.
A graduate of Cornell University, Ms. Stouffer received an MBA with a
concentration in marketing from the University of Western Ontario, Canada.
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 248
DREYFUS FOUNDERS PASSPORT FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.93 $13.64 $13.91 $11.68 $9.42 $10.53
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) (0.04) 0.00 0.02 0.04 0.04 0.02
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 1.43 1.68 0.22 2.30 2.26 (1.11)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.39 1.68 0.24 2.34 2.30 (1.09)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 (0.01) (0.03) (0.02) (0.04) (0.02)
From Net Realized Gains 0.00 (0.38) (0.48) (0.09) 0.00 0.00
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (0.39) (0.51) (0.11) (0.04) (0.02)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $16.32 $14.93 $13.64 $13.91 $11.68 $9.42
======= ======== ======= ======= ======= ========
TOTAL RETURN 9.31% 12.50% 1.70% 20.05% 24.39% (10.40%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $116,783 $124,572 $122,646 $177,921 $49,922 $16,443
Net Expenses to Average
Net Assets 1.58%* 1.52% 1.53% 1.57% 1.76% 1.88%
Gross Expenses to
Average Net Assets 1.60%* 1.54% 1.55% 1.59% 1.84% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.45%)* 0.09% 0.20% 0.40% 0.60% 0.12%
Portfolio Turnover Rate @ 33% 34% 51% 58% 37% 78%
<FN>
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments,
<PAGE> 249
and/or if you have a longer-term investment horizon. Class A shares have no
Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
<PAGE> 250
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 251
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 252
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 253
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 254
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 255
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 256
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic
<PAGE> 257
checks usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 258
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
<PAGE> 259
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 260
FOR MORE INFORMATION
Dreyfus Founders Passport Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 261
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
Pursuing long-term growth of capital through
investments in foreign and domestic securities
P R O S P E C T U S
December 31, 1999
CLASSES A, B, C, R, AND T
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of this Fund's shares or determined whether the
information in this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
<PAGE> 262
CONTENTS
THE FUND
- ------------------------------------------------------------------------------
Investment Approach......................................................263
Main Risks...............................................................264
Past Performance.........................................................265
Expenses.................................................................265
More About Investment Objective, Strategies, and Risks...................267
Management...............................................................271
Financial Highlights.....................................................272
YOUR INVESTMENT
- ------------------------------------------------------------------------------
Buying Shares and Choosing a Share Class.................................273
Services for Fund Shareholders...........................................278
Instructions for Regular Accounts........................................280
Instructions for IRAs....................................................282
Distributions and Taxes..................................................283
Brokerage Allocation.....................................................284
FOR MORE INFORMATION
- ------------------------------------------------------------------------------
Information on the Fund's recent strategies and holdings can be found in the
current annual/semiannual report. See the back cover of this Prospectus.
<PAGE> 263
THE FUND
[in margin: DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
Ticker Symbols: Class A: xxxxx
Class B: xxxxx
Class C: xxxxx
Class R: xxxxx
Class T: xxxxx]
INVESTMENT APPROACH
The Fund seeks long-term growth of capital. To pursue this goal, the Fund
normally invests at least 65% of its total assets in equity securities of growth
companies in a variety of markets throughout the world. The Fund may purchase
securities in any foreign country, as well as in the United States, emphasizing
common stocks of both emerging and established growth companies that generally
have proven performance records and strong market positions. The Fund's
portfolio will always invest at least 65% of its total assets in three or more
countries. The Fund will not invest more than 50% of its total assets in the
securities of any one foreign country.
Founders Asset Management LLC ("Founders") manages the Fund using a "growth
style" of investing. We use a consistent, bottom-up approach to build equity
portfolios, searching one by one for companies whose fundamental strengths
suggest the potential to provide superior earnings growth over time. When a
company's fundamentals are strong, we believe earnings growth will follow.
We go beyond Wall Street analysis and perform our own intensive in-house
research to determine whether companies meet our growth criteria. We often meet
company management teams and other key staff face to face, talk to suppliers,
customers and competitors, and tour corporate facilities and manufacturing
plants to get a complete picture of a company before we invest.
[On side panel: The Fund offers multiple classes of shares. This Prospectus
describes shares of Class A, B, C, R and T. The Fund's other class of shares,
Class F, is offered by separate prospectus and is generally available only to
shareholders who held shares of any Dreyfus Founders Fund continuously since
December 30, 1999. All share classes of the Fund invest in the same underlying
portfolio of securities and have the same management team. However, because of
different charges, fees and expenses, the performance of the Fund's share
classes will vary.]
<PAGE> 264
MAIN RISKS
The primary risks of investing in this Fund are:
o FOREIGN INVESTMENT RISK. Investments in foreign securities involve different
risks than U.S. investments. These risks include:
o MARKET RISK. Foreign markets have substantially less volume than U.S.
markets, and are not generally as liquid as, and may be more volatile
than, those in the United States. Brokerage commissions and other
transaction costs are generally higher than in the United States, and
settlement periods are longer.
o REGULATORY RISK. There may be less governmental supervision of foreign
stock exchanges, securities brokers, and issuers of securities, and
less public information about foreign companies. Also, accounting,
auditing, and financial reporting standards are less uniform than in
the United States. Exchange control regulations or currency
restrictions could prevent cash from being brought back to the United
States. The Fund may be subject to withholding taxes and could
experience difficulties in pursuing legal remedies and collecting
judgments.
o POLITICAL RISK. Foreign investments may be subject to expropriation or
confiscatory taxation; limitations on the removal of funds or other
assets of the Fund; and political, economic or social instability.
o CURRENCY EXCHANGE RISK. Since the Fund's assets are invested primarily in
foreign securities, and since substantially all of the Fund's revenues are
received in foreign currencies, the Fund's net asset value will be affected
by changes in currency exchange rates to a greater extent than other funds.
The Fund pays dividends in dollars and incurs currency conversion costs.
o EMERGING MARKETS RISK. A country that is in the initial stages of its
industrial cycle is considered to be an emerging markets country. Such
countries are subject to more economic, political, and business risk than
major industrialized nations, and the securities issued by companies located
there may be more volatile, less liquid, and more uncertain.
[On side panel: KEY CONCEPTS: A GLOBAL FUND is a type of mutual fund that may
invest in securities traded anywhere in the world, including the United States.
FOREIGN SECURITIES are securities of issuers, wherever organized, that have
their principal business activities outside of the United States. We consider
where the issuer's assets are located, whether the majority of the issuer's
gross income is earned outside of the United States, or whether the issuer's
principal stock exchange listing is outside of the United States.]
[On side panel: What the Fund is - and isn't. This Fund is a mutual fund: a
pooled investment that is professionally managed and gives you the opportunity
to participate in financial markets. It strives to reach its stated goal,
although as with all mutual funds, it cannot offer guaranteed results.
<PAGE> 265
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money in this Fund, but you also have the potential to make money.]
PAST PERFORMANCE
The following information provides an indication of the risks of investing in
the Fund by showing how the performance of the Fund's Class F shares has varied
from year to year and by comparing this information to a broad measure of market
performance. Performance figures reflect the reinvestment of dividends. Past
performance is no guarantee of future results.
Class A, B, C, R and T shares are new, and past performance is not available for
those classes as of the date of this Prospectus. Performance for these share
classes will vary from, and may be lower than, the performance of Class F shares
due to differences in sales charges and expenses.
Year-by-Year Total Returns
as of 12/31 of each year
CLASS F SHARES
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
6.70% 34.80% 1.50% 29.90% -2.20% 20.63% 13.95% 10.60% 9.63%
Best quarter: Q4 1993 15.28% Worst quarter: Q3 1998 -16.75%
Average Annual Total Returns
as of 12/31/98
Life of
1 Year 5 Years Fund*
------------- ------------ -------------
Worldwide Growth Fund - Class F 9.63% 10.26% 13.36%
Morgan Stanley Capital 24.33% 15.68% 10.00%
International World Index
* Inception date 12/31/89
The Morgan Stanley Capital International World Index is an average of the
performance of selected securities listed on the stock exchanges of the United
States, Europe, Canada, Australia, New Zealand and the Far East.
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 7.43%.
EXPENSES
The following table will help you understand the various costs and expenses you
will incur directly or indirectly as an investor in the Fund.
<PAGE> 266
o Each class of shares, other than Class R, has transaction fees. These
transaction fees vary by class and also vary based on the length of time you
hold shares in the Fund and the amount of your investment.
o You will find details about reduced sales charges in the "Buying Shares and
Choosing a Share Class" section of this Prospectus.
FEE TABLE Class A Class B Class C Class R Class T
- --------------------------- --------- --------- --------- --------- -------
SHAREHOLDER TRANSACTION
FEES
(fees paid from your
account)
o Maximum front-end 5.75% none none None 4.50%
sales charge on
purchases as a % of
offering price
o Maximum contingent none* 4.00% 1.00% None none*
deferred sales charge
(CDSC) as a % of
purchase or sale price,
whichever is less
o Maximum sales charge none none none None none
on reinvested
dividends/distributions
ANNUAL FUND OPERATING
EXPENSES (EXPENSES PAID
FROM FUND ASSETS)
% of average daily net assets
o Management fees 0.96% 0.96% 0.96% 0.96% 0.96%
o Rule 12b-1 fee none 0.75% 0.75% None 0.25%
o Shareholder services 0.25% 0.25% 0.25% None 0.25%
fee
o Other expenses** 0.23% 0.23% 0.23% 0.23% 0.23%
Total Annual Fund 1.44% 2.19% 2.19% 1.19% 1.69%
Operating Expenses
(Without Credits)
Total Annual Fund 1.42% 2.17% 2.17% 1.17% 1.67%
Operating Expenses (With
Credits)
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
** "OTHER EXPENSES" ARE ESTIMATED FOR THE CURRENT FISCAL YEAR BASED ON EXPENSES
FOR CLASS F SHARES FOR THE FUND'S LAST FISCAL YEAR. THESE EXPENSES INCLUDE
CUSTODIAN, TRANSFER AGENCY AND ACCOUNTING AGENT FEES, AND OTHER CUSTOMARY FUND
EXPENSES.
*** EXPENSES AFTER CREDITS INCLUDE EXPENSE OFFSETS FROM CREDITS EARNED ON
UNINVESTED CASH HELD OVERNIGHT AT THE CUSTODIAN.
[In margin: Concepts to Understand: MANAGEMENT FEE: a fee paid to Founders
for managing the Fund's portfolio.
<PAGE> 267
RULE 12B-1 FEE: the fee paid to finance the sale and distribution of Class B,
C, and T shares. Because this fee is paid out of the Fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: the fee paid to the Fund's distributor for
providing shareholder services to the holders of Class A, B, C, and T shares.
CONTINGENT DEFERRED SALES CHARGE is a back-end sales charge payable if shares
are redeemed within a certain time period.]
EXPENSE EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that:
o you invest $10,000 in the Fund for the time period indicated and redeem
all of your shares at the end of the period
o your investment earns a 5% return each year and the Fund's operating
expenses remain the same
Although your actual costs and the Fund's performance may be higher or lower,
based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
----------- ----------- ------------ ------------
Class A $713 $1,004 $1,317 $2,200
Class B
With redemption $622 $985 $1,375 $2,160*
Without redemption $222 $685 $1,175 $2,160*
Class C
With redemption $322 $685 $1,175 $2,524
Without redemption $222 $685 $1,175 $2,524
Class R $121 $378 $654 $1,443
Class T $614 $959 $1,326 $2,358
* ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
This section discusses other investment strategies used by the Fund and provides
in more detail the risks associated with those strategies. Although we might not
always use all of the different techniques and investments described below, some
of these techniques are designed to help reduce investment or market risks. The
Statement of Additional Information contains more detailed information about the
Fund's investment policies and risks.
<PAGE> 268
OTHER PORTFOLIO INVESTMENTS AND STRATEGIES
FIXED-INCOME SECURITIES. While the Fund generally emphasizes investments in
equity securities, such as common stocks and preferred stocks, it may also
invest in fixed-income securities when we believe these investments offer
opportunities for capital appreciation. Fixed-income securities in which the
Fund might invest include bonds, debentures, and other corporate or government
obligations.
ADRS. The Fund may invest without limit in American Depositary Receipts and
American Depositary Shares (collectively, "ADRs"). ADRs are receipts
representing shares of a foreign corporation held by a U.S. bank that entitle
the holder to all dividends and capital gains on the underlying foreign shares.
ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.
SECURITIES THAT ARE NOT READILY MARKETABLE. The Fund may invest up to 15% of its
net assets in securities that are not "readily marketable." A security is not
readily marketable if we cannot sell it within seven days in the ordinary course
of business for approximately the amount it is valued.
A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered with the Securities and
Exchange Commission ("SEC"). Certain restricted securities are eligible for
resale to qualified institutional purchasers (Rule 144A securities) and may be
readily marketable. Rule 144A securities that are readily marketable are not
subject to the 15% limit discussed above. We monitor holdings of 144A securities
on an ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. However, it is possible that the market for 144A securities
can change and it may become difficult to sell these securities, or to sell them
at a reasonable price, if institutional purchasers lose interest in the
investment.
Investments in illiquid securities, which may include restricted securities,
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to sell a restricted security, the Fund might have to bear the expense and
incur the delays associated with registering the shares with the SEC.
HEDGING AND DERIVATIVE INSTRUMENTS. The Fund can enter into futures contracts
and forward contracts, and may purchase and/or write (sell) put and call options
on securities, securities indexes, futures contracts, and foreign currencies.
These are sometimes referred to as "derivative" instruments, since their values
are derived from
<PAGE> 269
an underlying security, index or other financial instrument. The Fund may use
derivative instruments to engage in hedging strategies but does not use them for
speculative purposes. The Fund has limits on the use of derivatives and is not
required to use them in seeking its investment objective.
Some of these strategies may hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on the Fund's
foreign investments. Option trading involves the payment of premiums and has
special tax effects on the Fund.
There are special risks in using particular hedging strategies. Using
derivatives can cause the Fund to lose money on its investments and/or increase
the volatility of its share prices. In addition, the successful use of
derivatives draws upon skills and experience that are different from those
needed to select the other securities in which the Fund invests. Should interest
rates or the prices of securities or financial indexes move in an unexpected
manner, the Fund may not achieve the desired benefit of these instruments, or
may realize losses and be in a worse position than if the instruments had not
been used. The Fund could also experience losses if the prices of its derivative
positions were not correlated with its other investments or if it could not
close out a position because of an illiquid market.
The Fund's investments in derivatives are subject to the Fund's Internal
Derivatives Policy, which may be changed without shareholder approval.
TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable or adverse market or
economic conditions, up to 100% of the Fund's assets can be invested in
temporary defensive instruments in an effort to enhance liquidity or preserve
capital. Temporary defensive investments generally would include cash, cash
equivalents such as commercial paper, money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Fund also
could hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities, or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective.
PORTFOLIO TURNOVER. The Fund does not have any limitations regarding portfolio
turnover. The Fund may engage in short-term trading to try to achieve its
objective and may have portfolio turnover rates in excess of 100%. A portfolio
turnover rate of 100% is equivalent to the Fund buying and selling all of the
securities in its portfolio once during the course of a year. The portfolio
turnover rate of the Fund may be higher than some other mutual funds with the
same investment objective. Higher portfolio turnover rates increase the
brokerage costs the Fund pays and may adversely affect its performance. If the
Fund realizes capital gains when it sells portfolio investments, it generally
must pay those gains out to shareholders, increasing their taxable
distributions. This may adversely affect the after-tax performance of the Fund
for
<PAGE> 270
shareholders with taxable accounts. The Fund's portfolio turnover rates for
prior years are included in the "Financial Highlights" section of this
Prospectus. The Fund's current and future portfolio turnover rates may differ
significantly from its historical portfolio turnover rates.
MORE ABOUT RISK
Like all investments in securities, you risk losing money by investing in the
Fund. The Fund's investments are subject to changes in their value from a number
of factors.
o STOCK MARKET RISK. The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence.
o COMPANY RISK. The stocks in the Fund's portfolio may not perform as expected.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers or management team members,
major litigation against the issuer, or changes in government regulations
affecting the issuer or its industry.
o OPPORTUNITY RISK. There is the risk of missing out on an investment
opportunity because the assets necessary to take advantage of the opportunity
are held in other investments.
o INVESTMENT STYLE RISK. Market performance tends to be cyclical, and during
various cycles, certain investment styles may fall in and out of favor. If
the market is not favoring the Fund's growth style of investing, the Fund's
gains may not be as big as, or its losses may be bigger than, other funds
using different investment styles.
o RISK OF FIXED-INCOME INVESTMENTS. The Fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
o INTEREST RATE RISK. When interest rates change, the value of the
fixed-income portion of the Fund will be affected. An increase in
interest rates tends to reduce the market value of debt securities,
while a decline in interest rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of those securities.
Credit risk relates to the ability of the issuer to make payments of
principal and interest when due, including default risk.
o YEAR 2000 RISK. The Fund could be adversely affected if the computer
systems used by Founders and the Fund's other service providers do not
properly process and calculate date-related information on or after
January 1, 2000. We are working to avoid Year 2000-related problems in
our systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in
which the Fund invests may be adversely affected by Year 2000-related
problems. This
<PAGE> 271
could have an impact on the value of the Fund's investments and the Fund's
share prices.
MANAGEMENT
Founders serves as investment adviser to the Fund and is responsible for
selecting the Fund's investments and handling its day-to-day business. Founders'
corporate offices are located at 2930 East Third Avenue, Denver, Colorado 80206.
Founders and its predecessor companies have operated as investment advisers
since 1938. Founders also serves as investment adviser to the other series funds
of Dreyfus Founders Funds, Inc. (the "Company"), as well as serving as adviser
or sub-adviser to a number of other investment companies and private accounts.
Founders is the growth specialist affiliate of The Dreyfus Corporation, a
leading mutual fund complex with more than $___ billion in its mutual fund
portfolios as of _______, 1999. Founders and Dreyfus are subsidiaries of Mellon
Financial Corporation, a broad-based global financial services company.
In addition to managing the Fund's investments, Founders also provides certain
related administrative services to the Fund. For these investment and
administrative services, the Fund pays Founders a management fee. The Fund's
management fee for the fiscal year ended December 31, 1998 was 0.96% of the
Fund's average daily net assets.
To facilitate day-to-day Fund management, we use a lead manager and team system.
Each team is composed of members of our Investment Department, including lead
portfolio managers, portfolio traders, and research analysts. Each individual
offers ideas, information, knowledge, and expertise to assist in the management
of the Fund. Daily decisions on security selection for the Fund are made by the
lead portfolio manager. Through participation in the team process, the manager
uses the input, research, and advice of the rest of the management team in
making purchase and sale decisions.
Douglas A. Loeffler, Vice President of Investments and a Chartered Financial
Analyst, has been the portfolio manager of the foreign portion of the Fund since
July 1999. Mr. Loeffler has also managed the Dreyfus Founders International
Equity Fund since 1997 and served as co-lead portfolio manager for Dreyfus
Founders Mid-Cap Growth Fund from 1997 until March 1998. He joined Founders in
1995 as a senior international equities analyst and previously served as
assistant portfolio manager for the International Equity Fund. Mr. Loeffler has
also served as a portfolio manager for The Dreyfus Corporation since February
1999. Before joining Founders, he spent seven years with Scudder, Stevens &
Clark as an international equities analyst and quantitative analyst. A graduate
of Washington State University, Mr. Loeffler received an MBA in finance from the
University of Chicago.
Thomas M. Arrington, Vice President of Investments and Chartered Financial
Analyst, and Scott A. Chapman, Vice President of Investments, Chartered
Financial Analyst and
<PAGE> 272
Founders' Director of Research, have been co-portfolio managers of the domestic
portion of the Fund since July 1999. Mr. Arrington and Mr. Chapman also have
been co-portfolio managers of Dreyfus Founders Growth Fund since December 1998,
and the Dreyfus Founders Focus Fund since December 1999. Mr. Arrington has also
been the lead portfolio manager of Dreyfus Founders Growth and Income Fund since
February 1999. Mr. Arrington and Mr. Chapman also serve as portfolio managers
for The Dreyfus Corporation.
Mr. Arrington was formerly vice president and director of income equity strategy
at HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation.
He received a bachelor's degree in economics from the University of California,
Los Angeles and an MBA from San Francisco State University.
Mr. Chapman was formerly vice president and director of growth strategy for
HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation. He
has more than 10 years' experience in equity investment management, including
security analysis positions with McCullough, Andrews & Cappiello and Cooper
Development Co. Mr. Chapman received a bachelor of science degree in accounting
from Santa Clara University and an MBA in finance from Golden Gate University.
FINANCIAL HIGHLIGHTS
This table describes the performance of Class F shares of the Fund for the five
years ended December 31, 1998 and the six months ended June 30, 1999. Certain
information reflects financial results for a single Fund share. Since Class A,
B, C, R and T shares are new, financial information is not available for those
classes as of the date of this Prospectus.
"Total return" shows how much your investment in the Fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. The financial information for the six months ended June 30, 1999
is unaudited. The financial information for the three years ended December 31,
1998 has been audited by PricewaterhouseCoopers LLP, independent accountants.
Another independent accounting firm audited the prior years' information.
PricewaterhouseCoopers LLP's report, along with the Fund's financial statements,
are included in the Company's 1998 Annual Report to Shareholders, which is
available upon request.
<PAGE> 273
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
Six months ended Years Ended December 31
June 30, 1999 -----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.06 $21.11 $21.79 $19.87 $17.09 $17.94
------- -------- ------- ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income or
(Loss) 0.03 0.08 0.02 0.10 0.09 (0.02)
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 1.25 1.90 2.22 2.64 3.43 (0.37)
------- -------- ------- ------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.28 1.98 2.24 2.74 3.52 (0.39)
------- -------- ------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
From Net Investment
Income 0.00 (0.09) (0.04) (0.07) (0.09) 0.00
From Net Realized Gains 0.00 (0.94) (2.88) (0.75) (0.65) (0.46)
------- -------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS 0.00 (1.03) (2.92) (0.82) (0.74) (0.46)
------- -------- ------- ------- ------- --------
Net Asset Value - End of
Period $23.34 $22.06 $21.11 $21.79 $19.87 $17.09
======= ======== ======= ======= ======= ========
TOTAL RETURN 5.80% 9.63% 10.60% 13.95% 20.63% (2.20%)
RATIOS/SUPPLEMENTAL DATA
Net Assets--End of Period
(000s Omitted) $248,937 $272,053 $308,877 $342,079 $228,595 $104,044
Net Expenses to Average
Net Assets 1.53%* 1.47% 1.45% 1.53% 1.56% 1.66%
Gross Expenses to
Average Net Assets 1.55%* 1.49% 1.47% 1.55% 1.65% n/a
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.25%* 0.33% 0.18% 0.50% 0.61% (0.14%)
Portfolio Turnover Rate @ 72% 86% 82% 72% 54% 87%
<FN>
# Distributions in excess of net investment income for the year ended
December 31, 1998 aggregated less than $0.01 on a per share basis.
* Annualized.
@ Portfolio Turnover Rate is a measure of portfolio activity that is
calculated by dividing the lesser of purchases or sales of securities,
excluding securities having maturity dates at acquisition of one year or
less, by the average value of the portfolio securities held during the
period, which is a rolling twelve month period. Accordingly, the portfolio
turnover rate for the period ended June 30, 1999 is from July 1, 1998 to
June 30, 1999.
</FN>
</TABLE>
YOUR INVESTMENT
BUYING SHARES AND CHOOSING A SHARE CLASS
Before making an initial investment, you will need to choose a share class.
Selecting a class in which to invest in depends on a number of factors,
including the amount and intended length of your investment. In making your
choice, you should weigh the impact of all potential costs over the length of
your investment, including sales charges and annual fees. For example, in some
instances, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but with higher annual fees and a
contingent deferred sales charge (CDSC). In selecting a class, consider the
following:
o CLASS A SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments,
<PAGE> 274
and/or if you have a longer-term investment horizon. Class A shares have no
Rule 12b-1 fee.
o CLASS B SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a longer-term investment horizon. Class B
shares convert automatically to Class A shares after the Class B shares are
held for six years.
o CLASS C SHARES may be appropriate if you wish to avoid a front-end sales
charge, if you want to put 100% of your investment dollars to work
immediately, and/or if you have a shorter-term investment horizon.
o CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
o CLASS T SHARES may be appropriate if you prefer to pay the Fund's sales
charge when you purchase shares rather than upon the sale of your shares, if
you want to take advantage of the reduced sales charges available on larger
investments, and if you have a shorter-term investment horizon.
[On side panel: KEY CONCEPTS: Two Ways to Reduce Sales Charges. LETTER OF
INTENT: If you agree to purchase at least $50,000 of the Fund's shares (or any
other Dreyfus Founders and Dreyfus Premier Fund sold with a sales charge) over a
13-month period, you pay a reduced sales charge as if you had invested the full
amount all at once.
RIGHT OF ACCUMULATION allows you to combine your investment in this Fund with
all your existing investments in any other Dreyfus Founders and Dreyfus Premier
Fund sold with a sales charge to determine whether you meet the threshold for
reduced sales charges.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.]
[On side panel: The classes of the Fund offered by this Prospectus are designed
primarily for investors who are investing through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
When you open a Fund account with these third parties, they may impose policies,
limitations, and fees which are different from, or in addition to, those
described in this Prospectus.]
SHARE CLASS CHARGES
Each share class has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see whether this may apply to you. Because Class A has lower
expenses than Class T, you should consider buying Class A shares if you plan to
invest $1 million or more in the Fund.
<PAGE> 275
SALES CHARGES
CLASS A AND CLASS T - Charged When You Buy Shares
Sales charge deducted
as a % of offering Sales charge as a %
Your investment price of your net investment
----------------------------------------------------------------------
Class A Class T Class A Class T
-----------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% CONTINGENT DEFERRED SALES CHARGE MAY BE CHARGED ON ANY SHARES SOLD
WITHIN ONE YEAR OF PURCHASE (EXCEPT SHARES BOUGHT THROUGH REINVESTMENT OF
DIVIDENDS).
o Class A shares also carry an annual Shareholder Services fee of 0.25% of the
class' average net assets.
o Class T shares also carry an annual Rule 12b-1 fee of 0.25% and a Shareholder
Services fee of 0.25% of the class' average net assets.
CLASS B - Charged When You Sell Shares
Contingent deferred sales
charge as a % of your initial
Time since your initial investment or your redemption
purchase (whichever is less)
--------------------------- --------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
0%
Shares will automatically
More than 6 years convert to Class A, which has
no CDSC
o Class B shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
<PAGE> 276
CLASS C - Charged When You Sell Shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% and a Shareholder
Services fee of 0.25% of the class' average daily net assets.
CLASS R - No sales charge, Rule 12b-1 fee, or Shareholder Services fee.
BUYING SHARES
You may purchase shares of the Fund by contacting the financial representative
from whom you received this Prospectus.
The net asset value (NAV) of each class is generally calculated as of the close
of regular trading on the New York Stock Exchange ("NYSE") (usually 4 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the NAV
next calculated after your order is accepted by the Fund's transfer agent or
other authorized entity. NAV is not calculated, and you may not conduct Fund
transactions, on days the NYSE is closed (generally weekends and New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). However, the
Fund may conduct portfolio transactions on those days, particularly in foreign
markets, which may affect the value of Fund shares on days when you are not able
to purchase, exchange, or redeem shares.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, on fair value as determined in good faith
by the Company's Board of Directors ("Board"), or pursuant to procedures
approved by the Board.
Orders to buy and sell shares received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
[On side panel: KEY CONCEPTS: NET ASSET VALUE (NAV) is the market value of one
Fund share, computed by dividing the total net assets of a Fund Class by its
shares outstanding. The Fund's Class A and Class T shares are offered to the
public at NAV plus a sales charge. Classes B, C, and R are offered at NAV but
Classes B and C are subject to higher annual operating expenses and a CDSC.]
<PAGE> 277
MINIMUM INVESTMENTS
Account Type Initial Additional
------------------------ ---------- ----------------
$100; $500 for
Regular Accounts $1,000 TeleTransfer
Investments
Traditional IRAs $750 No minimum
Spousal IRAs $750 No minimum
Roth IRAs $750 No minimum
No minimum
Education IRAs $500 after the
first year
Automatic Investment $100 $100
Plans
All investments must be in U.S. dollars. Third-party checks are not
accepted. You may be charged a fee for any check that does not clear.
Maximum TeleTransfer purchase is $150,000 per day.
SELLING SHARES
You may sell shares at any time. Your shares will be sold at the NAV next
calculated after your order is accepted by the Company's transfer agent or other
authorized entity. Your order will be processed promptly, and you will generally
receive the proceeds within a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then sell those
subject to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is not
charged on shares you acquired by reinvesting your dividends. There are certain
instances when you may qualify to have the CDSC waived. Consult the SAI for
details.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment.
WRITTEN SELL ORDERS
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each owner's signature must be guaranteed. Please call us if you have questions
about obtaining a signature guarantee.
Some circumstances require written sell orders accompanied by signature
guarantees. These include:
<PAGE> 278
o amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
o requests to send redemption proceeds to a different payee or address
o written sell orders of $100,000 or more
GENERAL POLICIES
If your account falls below $500, you may be asked to increase your balance. If
it is still below $500 after 30 days, the Fund may close your account and send
you the proceeds to the address on record.
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone orders as long as we take reasonable
measures to verify the order.
The Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect the Fund
or its operations, including those from any individual or group that, in the
Fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the Fund within a calendar year).
o refuse any purchase or exchange request in excess of 1% of the Fund's total
assets.
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
o change its minimum investment amounts.
o delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions).
The Fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect Fund operations. This right may be exercised only if the
amount of your redemptions exceeds the lesser of $250,000 or 1% of the Fund's
net assets in any 90-day period.
SERVICES FOR FUND SHAREHOLDERS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you may select a schedule and amount, subject to
certain restrictions.
<PAGE> 279
You can set up most of these services with your application, or by calling your
financial representative or 1-800-554-4611.
For investing
Automatic Asset Builder For making automatic investments from a
designated bank account.
Payroll Savings Plan For making automatic investments through
payroll deduction.
Government Direct Deposit Privilege For making automatic investments from
your federal employment, Social Security
or other regular federal government check.
Dividend Sweep For automatically reinvesting the
dividends and distributions from one fund
into another (not available for IRAs).
For exchanging shares
Auto-Exchange Privilege For making regular exchanges from one
fund into another.
For selling shares
Automatic Withdrawal Plan For making regular withdrawals from most
funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn
do not exceed annually 12% of the
account value at the time the
shareholder elects to participate
in the plan.
EXCHANGE PRIVILEGE
You can exchange shares worth $500 or more (no minimum for retirement accounts)
from one class of the Fund into the same class of another Dreyfus Founders Fund
or Dreyfus Premier Fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. You can request your
exchange in writing or by phone, or by contacting your financial representative.
Be sure to read the current prospectus for any fund into which you are
exchanging before investing. Any new account established through an exchange
generally has the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may have to
pay an additional sales charge when exchanging into any fund that has a higher
sales charge.
MONEY MARKET EXCHANGE PRIVILEGE
As a convenience, the Fund's shareholders may exchange all or part of their
investment in the Fund for shares of Dreyfus Worldwide Dollar Money Market Fund,
Inc., without paying a CDSC. The Dreyfus Worldwide Dollar Money Market Fund is a
money market fund advised by The Dreyfus Corporation that invests in a
diversified portfolio of high-quality money market instruments. THE SHARES OF
DREYFUS WORLDWIDE
<PAGE> 280
DOLLAR MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. Please contact your
financial representative or call 1-800-554-4611 to request a copy of the current
Dreyfus Worldwide Dollar Money Market Fund Prospectus. Please be sure to read
that Prospectus carefully before investing in that fund.
TELETRANSFER PRIVILEGE
To move money between your bank account and your mutual fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and by following the instructions
on your application, or by contacting your financial representative.
REINVESTMENT PRIVILEGE
Upon written request, you can reinvest up to the number of Class A, B or T
shares you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to your
account. This privilege may be used only once.
ACCOUNT STATEMENTS
Every Fund shareholder automatically receives regular account statements. You
will also be sent an annual statement detailing the tax characteristics of any
dividends and distributions you have received.
INSTRUCTIONS FOR REGULAR ACCOUNTS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete the Fill out an Write a letter of
application. Mail investment slip, and instruction that
[Graphic: xxxx] your application and write your account includes:
a check to: number on your check. o your name(s)
Dreyfus Founders Mail the slip and and signature(s)
Funds, Inc./Name of the check to: o your account
Fund Dreyfus Founders number
P.O. Box 6587 Funds, Inc. o the Fund name
Providence, RI P.O. Box 6587 o the dollar
02940-6587 Providence, RI amount you want
Attn: Institutional 02940-6587 to sell
Processing Attn: Institutional o how and where
Processing to send the
proceeds Obtain
a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: Dreyfus
FoundersFunds, Inc.
P.O. Box 6587
Providence, RI
02940-6587
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
<PAGE> 281
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
BY TELEPHONE o WIRE. Have o WIRE. Have TELETRANSFER. Call
your bank send your bank send us or your financial
[Graphic: your investment your investment representative to
Telephone] to Boston Safe to Boston Safe request your
Deposit & Trust Deposit & Trust transaction. Be
Co., with these Co., with these sure the Fund has
instructions: instructions: your bank account
o ABA #011001234 o ABA #011001234 information on
o DDA #046590 o DDA #046590 file. Proceeds will
o the Fund name o the Fund name be sent to your bank
o the share class o the share class by electronic check.
o your Social o your account
Security or tax number
ID number o name(s) of
o name(s) of investor(s)
investor(s) o dealer number,
o dealer number, if applicable
if applicable ELECTRONIC CHECK.
Same as wire, but
Call us to obtain an before your account
account number. number insert "____"
Return your for Class A, "____"
application with the for Class B, "____"
account number on for Class C, "____"
the application. for Class R, or
"____" for Class T.
TELETRANSFER.
Request TeleTransfer
on your
application. Call
us to request your
transaction.
- --------------------------------------------------------------------------------
AUTOMATICALLY With an initial ALL SERVICES. Call AUTOMATIC WITHDRAWAL
investment. us at 1-800-554-4611 PLAN. Call us or
[Graphic: xxx] Indicate on your or your financial your financial
application which representative to representative to
automatic service(s) request a form to request a form to
you want. Return add any automatic add the plan.
your application investing service Complete the form,
with your investment. (see "Services for specifying the
Fund amount and frequency
Shareholders"). of withdrawals you
Complete and return would like.
the form along with
any other required Be sure to maintain
materials. an account balance
of $5,000 or more.
- --------------------------------------------------------------------------------
[On side panel: To open an account, make subsequent investments or sell shares,
please contact your financial representative or call toll free 1-800-554-4611.
Make checks payable to Dreyfus Founders Funds, Inc./Name of Fund]
[On side panel: KEY CONCEPTS: WIRE TRANSFER: for transferring money from one
financial institution to another. Wiring is the fastest way to move money,
although your bank may charge a fee to send or receive wire transfers. Wire
transfers from the Fund are subject to a $1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your
transaction is entered electronically and may take up to eight business days
to clear. Electronic
<PAGE> 282
checks usually are available without a fee at all Automated Clearing House (ACH)
banks.]
INSTRUCTIONS FOR IRAS
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
IN WRITING Complete an IRA Fill out an Write a letter of
application, making investment slip, and instruction that
[Graphic: xxxx] sure to specify the write your account includes:
Fund name and to number on your o your name and
indicate the year check. Indicate the signature
the contribution is year the o your account
for. contribution is for. number
Mail your Mail the slip and o the Fund name
application and a the check to: o the dollar
check to: The Dreyfus Trust amount you want
The Dreyfus Trust Company, Custodian to sell
Company, Custodian P.O. Box 6427 o how and where
P.O. Box 6427 Providence, RI to send the
Providence, RI 02940-6427 proceeds
02940-6427 Attn: Institutional o whether the
Attn: Institutional Processing distribution is
Processing qualified or
premature
o whether the
10% TEFRA should
be withheld
Obtain a signature
guarantee or other
documentation, if
required (see page
___).
Mail your request
to: The Dreyfus
Trust Company
P.O. Box 6427
Providence, RI
02940-6427
Attn: Institutional
Processing
- --------------------------------------------------------------------------------
BY TELEPHONE WIRE. Have your
bank send your
[Graphic: investment to Boston
Telephone] Not available Safe Deposit & Trust Not available
Co., with these
instructions:
o ABA # 011001234
o DDA #046590
o the Fund name
o the share class
o your account
number
o name(s) of
investor(s)
o dealer number,
if applicable
ELECTRONIC CHECK. Same
as wire, but before your
account number insert
"____" for Class A,
"____" for Class B,
- --------------------------------------------------------------------------------
<PAGE> 283
- --------------------------------------------------------------------------------
HOW TO OPEN AN HOW TO ADD TO HOW TO SELL HOW TO
ACCOUNT AN ACCOUNT SHARES EXCHANGE
SHARES
- --------------------------------------------------------------------------------
"____" for Class C,
"____" for Class R,
or "____" for Class T.
- --------------------------------------------------------------------------------
AUTOMATICALLY ALL SERVICES. Call SYSTEMATIC
us or your financial WITHDRAWAL PLAN.
[Graphic: xxx] representative to Call us to request
request a form to add instructions to
Not available any automatic establish the
investing service (see plan.
"Services for Fund
Shareholders"). Complete
and return the form along
with any other required
materials. All contributions
will count as current year
contributions.
- --------------------------------------------------------------------------------
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to The Dreyfus
Trust Company, Custodian.
DISTRIBUTIONS AND TAXES
The Fund intends to distribute net realized investment income and any net
realized capital gains on an annual basis each December. From time to time, the
Fund may make distributions in addition to those described above.
Each share class will generate a different distribution because each has
different expenses. Your distributions will be reinvested in the Fund unless you
instruct the Fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and distributions are taxable to most investors (unless your
investment is an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the Fund and
whether you reinvest your distributions or receive them in cash. In general,
distributions are federally taxable as follows:
Type of Distribution Tax rate for 15% bracket Tax rate for 28% bracket
----------------------- ------------------------- -------------------------
Income dividends Ordinary Income Rate Ordinary Income Rate
Short-term capital gains Ordinary Income Rate Ordinary Income Rate
Long-term capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
<PAGE> 284
[On side panel: TAXES ON TRANSACTIONS. Except for tax-advantaged accounts, any
sale or exchange of Fund shares may generate a tax liability. Withdrawals or
distributions from tax-deferred accounts are taxable when received.
The table above can provide a guide for potential tax liability when selling or
exchanging Fund shares. "Short-term capital gains" applies to Fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
BROKERAGE ALLOCATION
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of Fund shares may be considered as a factor in the
selection of brokerage firms to execute Fund portfolio transactions. The
SAI further explains the selection of brokerage firms.
<PAGE> 285
FOR MORE INFORMATION
Dreyfus Founders Worldwide Growth Fund
A SERIES OF DREYFUS FOUNDERS FUNDS, INC.
SEC File No. 811-01018
More information about the Fund is available to you free of charge.
o Annual and Semiannual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance in these reports.
o A current Statement of Additional Information (SAI) containing more detailed
information about the Fund and its policies has been filed with the
Securities and Exchange Commission and is incorporated by reference and
legally considered a part of this Prospectus.
You can request copies of the Annual and Semiannual Reports and the SAI, and
obtain other information:
-----------------------------------------------------------------------------
By Telephone Call 1-800-525-2440
-----------------------------------------------------------------------------
In Person 2930 East Third Avenue
Denver, Colorado 80206
-----------------------------------------------------------------------------
By Mail P.O. Box 173655
Denver, Colorado 80217-3655
-----------------------------------------------------------------------------
By E-Mail Send your request or inquiry to
[email protected]
-----------------------------------------------------------------------------
On the Internet www.dreyfusfounders.com or
text-only versions of fund documents can
be viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
-----------------------------------------------------------------------------
By Mail or in Person from the Visit or write:
Securities and Exchange Commission SEC's Public Reference Section
(you will pay a copying fee) Washington, D.C. 20549-6009
1-800-SEC-0330
-----------------------------------------------------------------------------
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
<PAGE> 286
DREYFUS FOUNDERS FUNDS, INC.
CLASS A, CLASS B, CLASS C, CLASS F, CLASS R AND CLASS T SHARES
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
December 31, 1999
- --------------------------------------------------------------------------------
This Statement of Additional Information ("SAI") relates to the eleven
investment portfolios (the "Funds") of Dreyfus Founders Funds, Inc. (the
"Company"):
Dreyfus Founders Balanced Fund
Dreyfus Founders Discovery Fund
Dreyfus Founders Focus Fund
Dreyfus Founders Government Securities Fund
Dreyfus Founders Growth Fund
Dreyfus Founders Growth and Income Fund
Dreyfus Founders International Equity Fund
Dreyfus Founders Mid-Cap Growth Fund
Dreyfus Founders Money Market Fund
Dreyfus Founders Passport Fund
Dreyfus Founders Worldwide Growth Fund
This SAI, which is not a prospectus, supplements and should be read in
conjunction with the Company's current Prospectuses, each dated December 31,
1999, as they may be revised from time to time. To obtain a copy of the
Company's Prospectuses for its Class A, Class B, Class C, Class R and Class T
shares of any one or more of the Funds, please write to the Company at 144 Glenn
Curtiss Boulevard, Uniondale, New York, 11556-0144 or call one of the following
numbers:
Call Toll Free 1-800-554-4611
In New York City -- Call 718-895-1206
Outside the U.S. -- Call 516-794-5452
To obtain a copy of the Company's Prospectus for its Class F shares of any one
or more of the Funds, please write to the Company at P.O. Box 173655, Denver,
Colorado 80217-3655 or call 1-800-525-2440.
<PAGE> 287
The Funds' audited financial statements and accompanying notes for the fiscal
year ended December 31, 1998, and the report of PricewaterhouseCoopers LLP with
respect to such financial statements, appear in the Funds' 1998 annual report
and are incorporated by reference in this SAI. In addition, the Funds' unaudited
financial statements for the six months ended June 30, 1999 appear in the Funds'
1999 semi-annual report and are incorporated by reference in this SAI The Funds'
annual and semi-annual reports contain additional performance information and
are available without charge by calling any of the telephone numbers shown
above.
<PAGE> 288
TABLE OF CONTENTS
DREYFUS FOUNDERS FUNDS, INC................................................291
INVESTMENT OBJECTIVES AND RESTRICTIONS.....................................291
FUNDAMENTAL INVESTMENT RESTRICTIONS......................................292
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS..................................293
INVESTMENT STRATEGIES AND RISKS............................................294
TEMPORARY DEFENSIVE INVESTMENTS..........................................294
PORTFOLIO TURNOVER.......................................................295
HEDGING TECHNIQUES.......................................................295
Options on Securities Indices and Securities...........................295
Futures Contracts......................................................298
Options on Futures Contracts...........................................302
Options on Foreign Currencies..........................................303
Risk Factors of Investing in Futures and Options.......................304
FOREIGN SECURITIES AND ADRS..............................................305
FORWARD CONTRACTS FOR PURCHASE OR SALE OF FOREIGN CURRENCIES.............306
SECURITIES THAT ARE NOT READILY MARKETABLE...............................309
RULE 144A SECURITIES.....................................................309
FIXED-INCOME SECURITIES..................................................310
FOREIGN BANK OBLIGATIONS.................................................312
REPURCHASE AGREEMENTS....................................................312
CONVERTIBLE SECURITIES...................................................313
GOVERNMENT SECURITIES....................................................313
MORTGAGE-RELATED SECURITIES..............................................314
Mortgage Pass-Through Securities.......................................315
Collateralized Mortgage Obligations....................................316
Risks of Mortgage-Related Securities...................................316
COMMERCIAL PAPER AND OTHER CASH SECURITIES...............................317
WHEN-ISSUED SECURITIES...................................................318
BORROWING................................................................318
SECURITIES OF OTHER INVESTMENT COMPANIES.................................318
CERTAIN INVESTMENTS......................................................319
DIRECTORS AND OFFICERS.....................................................319
DIRECTORS................................................................319
COMMITTEES...............................................................321
DIRECTOR COMPENSATION....................................................322
OFFICERS.................................................................323
INVESTMENT ADVISER, DISTRIBUTOR AND OTHER SERVICE PROVIDERS................325
INVESTMENT ADVISER.......................................................325
<PAGE> 289
DISTRIBUTOR..............................................................329
TRANSFER AGENTS AND CUSTODIAN............................................330
PURCHASE OF SHARES.........................................................331
General................................................................331
Class A Shares.........................................................333
Class B Shares.........................................................335
Class C Shares.........................................................335
Class B and C Shares...................................................336
Class F and Class R Shares.............................................336
Class T Shares.........................................................336
Dealer Reallowance -Class A and Class T Shares.........................337
Sales Loads -- Class A and Class T Shares..............................337
Right of Accumulation -- Class A and Class T Shares....................339
TeleTransfer Privilege.................................................339
Reopening an Account...................................................340
DISTRIBUTION PLANS AND SHAREHOLDER SERVICES PLAN...........................340
DISTRIBUTION PLANS.......................................................340
Class B, Class C and Class T Shares....................................340
Class F Shares.........................................................340
Provisions Applicable to All Classes...................................342
SHAREHOLDER SERVICES PLAN................................................343
REDEMPTION OF SHARES.......................................................344
General................................................................344
Contingent Deferred Sales Charge -- Class B Shares.....................344
Contingent Deferred Sales Charge -- Class C Shares.....................345
Waiver of CDSC.........................................................345
Redemption Through a Selected Dealer...................................346
Reinvestment Privilege.................................................346
TeleTransfer Privilege.................................................347
Redemption Commitment..................................................347
Redemption Payments; Suspension of Redemptions.........................347
Transactions through Third Parties.....................................347
SHAREHOLDER SERVICES.......................................................348
Fund Exchanges for Classes A, B, C, R and T............................348
Dreyfus Auto-Exchange Privilege........................................350
Dreyfus-Automatic Asset Builder(R).....................................350
Dreyfus Government Direct Deposit Privilege............................350
Dreyfus Dividend Options...............................................351
Automatic Withdrawal Plan..............................................351
Letter of Intent -- Class A and Class T Shares.........................352
Dreyfus Payroll Savings Plan...........................................352
<PAGE> 290
Corporate Pension/Profit-Sharing and Personal Retirement Plans.........353
Class F Shareholder Services...........................................353
Company Policy Regarding Market Timing Activities......................353
OTHER SERVICES.............................................................354
FUND ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT....................354
SHAREHOLDER SERVICES AGREEMENT...........................................355
BROKERAGE ALLOCATION.......................................................356
CAPITAL STOCK..............................................................361
PRICING OF SHARES..........................................................364
Foreign Securities.....................................................364
All Funds Except Money Market Fund.....................................364
Money Market Fund......................................................365
Options................................................................366
DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................366
YIELD AND PERFORMANCE INFORMATION..........................................371
ADDITIONAL INFORMATION.....................................................375
CODE OF ETHICS...........................................................375
INDEPENDENT ACCOUNTANTS..................................................376
REGISTRATION STATEMENT...................................................376
APPENDIX...................................................................377
RATINGS OF CORPORATE BONDS...............................................377
RATINGS OF COMMERCIAL PAPER..............................................379
RATINGS OF PREFERRED STOCK...............................................380
<PAGE> 291
- --------------------------------------------------------------------------------
DREYFUS FOUNDERS FUNDS, INC.
- --------------------------------------------------------------------------------
Dreyfus Founders Funds, Inc. is a mutual fund, registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company. The Company was incorporated on June 19, 1987 under the laws of
Maryland as "Founders Funds, Inc." On December 31, 1999, its name was changed to
"Dreyfus Founders Funds, Inc."
All of the Company's series Funds, with the exception of Focus Fund, are
diversified portfolios. This means that, with respect to at least 75% of a
Fund's total assets, the Fund will not invest more than 5% of its total assets
in the securities of any single issuer (other than U.S. government securities),
and will not purchase more than 10% of the outstanding voting securities of any
single issuer. Focus Fund is a non-diversified portfolio, which means that it
can invest up to 100% of its total assets in excess of these limitations. A Fund
may not change its status from a diversified portfolio to a non-diversified
portfolio without approval by the holders of a majority, as defined in the
Investment Company Act of 1940 (the "1940 Act"), of such Fund's outstanding
voting shares.
On April 30, 1999, Founders Blue Chip Fund changed its name to Founders
Growth and Income Fund, and Founders Special Fund changed its name to Founders
Mid-Cap Growth Fund. On August 13, 1999, Founders Frontier Fund was merged with
and into Founders Discovery Fund. On December 31, 1999, Focus Fund commenced
operations, and the Funds changed their respective names from "Founders" to
"Dreyfus Founders."
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND RESTRICTIONS
- --------------------------------------------------------------------------------
The investment objective of each Fund is fundamental and may not be
changed, as to a Fund, without approval by the holders of a majority, as
defined in the 1940 Act, of such Fund's outstanding voting shares. The
investment objective of each Fund is set forth below:
Fund Investment Objective
------------------------------- ----------------------------------------
Balanced Fund Current income and capital appreciation
Discovery Fund Capital appreciation
Focus Fund Long-term growth of capital
<PAGE> 292
Fund Investment Objective
------------------------------- ----------------------------------------
Government Securities Fund Current income
Growth Fund Long-term growth of capital
Growth and Income Fund Long-term growth of capital and income
International Equity Fund Long-term growth of capital
Mid-Cap Growth Fund Capital appreciation
Money Market Fund Maximum current income consistent with
the preservation of capital and liquidity
Passport Fund Capital appreciation
Worldwide Growth Fund Long-term growth of capital
In addition, each Fund has adopted investment restrictions numbered 1
through 7 below as fundamental policies. These restrictions cannot be changed,
as to a Fund, without approval by the holders of a majority, as defined in the
1940 Act, of such Fund's outstanding voting shares. Investment restrictions
number 8 through 14 below are non-fundamental policies and may be changed, as to
a Fund, by vote of a majority of the members of the Company's Board of Directors
(the "Board") at any time. If a percentage restriction is adhered to at the time
of investment, a later increase or decrease in percentage beyond the specified
limits that results from a change in values or net assets will not be considered
a violation.
FUNDAMENTAL INVESTMENT RESTRICTIONS
No Fund may:
1.....Invest 25% or more of the value of its total assets in the
securities of issuers having their principal business activities in the same
industry, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and, with respect to Money Market Fund, the limitation shall
not apply to obligations of domestic commercial banks.
2.....Invest in physical commodities, except that a Fund may purchase and
sell foreign currency, options, forward contracts, futures contracts (including
those relating to indices), options on futures contracts or indices, and other
financial instruments, and may invest in securities of issuers which invest in
physical commodities or such instruments.
3.....Invest in real estate, real estate mortgage loans or other illiquid
interests in real estate, including limited partnership interests therein,
except that a Fund may invest in securities of issuers which invest in real
estate, real estate mortgage loans, or other illiquid interests in real estate.
A Fund may also invest in readily marketable interests in real estate investment
trusts.
<PAGE> 293
4.....Borrow money, except to the extent permitted under the 1940 Act,
which currently limits borrowing to no more than 33 1/3% of the value of the
Fund's total assets. For purposes of this investment restriction, investments in
options, forward contracts, futures contracts (including those relating to
indices), options on futures contracts or indices, and other financial
instruments or transactions for which assets are required to be segregated
including, without limitation, reverse repurchase agreements, shall not
constitute borrowing.
5.....Lend any security or make any loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limitation
does not apply to the purchase of debt securities or to repurchase agreements.
6.....Act as an underwriter of securities of other issuers, except to the
extent a Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, in connection with disposing of portfolio securities.
7.....Issue any senior security, except as permitted under the 1940 Act
and except to the extent that the activities permitted by the Fund's other
investment restrictions may be deemed to give rise to a senior security.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
No Fund may:
8.....With the exception of Focus Fund, purchase the securities of any
issuer if, as a result, more than 5% of its total assets would be invested in
the securities of that issuer, except that obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities may be purchased
without regard to any such limitation.
9.....With the exception of Focus Fund, purchase the securities of any
issuer if such purchase would cause the Fund to hold more than 10% of the
outstanding voting securities of such issuer.
10....Purchase securities on margin, except to obtain such short-term
credits as may be necessary for the clearance of transactions, and except that a
Fund may make margin deposits in connection with transactions in forward
contracts, futures contracts (including those relating to indices), options on
futures contracts or indices, and other financial instruments, and to the extent
necessary to effect transactions in foreign jurisdictions.
11....Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial
<PAGE> 294
or variation margin arrangements with respect to options, forward contracts,
futures contracts (including those relating to indices) and options on futures
contracts or indices.
12....Enter into repurchase agreements providing for settlement in more
than seven days or purchase securities which are not readily marketable if, in
the aggregate, more than 15% of the value of its net assets would be so invested
(10% in the case of Money Market Fund).
13....Sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short; provided,
however, that this restriction shall not prevent a Fund from entering into short
positions in foreign currency, futures contracts, options, forward contracts,
and other financial instruments.
14....Government Securities Fund may not invest more than 5% of the
value of its net assets in equity securities.
In applying the limitations on investments in any one industry set forth
in restriction 1, above, the Funds use industry classifications based, where
applicable, on BASELINE, BRIDGE INFORMATION SYSTEMS, REUTERS, the S&P STOCK
GUIDE published by Standard & Poor's, information obtained from Bloomberg L.P.
and Moody's International, and/or the prospectus of the issuing company.
Selection of an appropriate industry classification resource will be made by
Founders in the exercise of its reasonable discretion.
Except for the Funds' fundamental investment objectives and the
fundamental restrictions numbered 1 through 7 above, the strategies and policies
used by the Funds in pursuing their objectives may be changed by the Board
without shareholder approval.
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INVESTMENT STRATEGIES AND RISKS
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The Prospectus discusses the principal investment strategies and risks of
the Funds. This section of the SAI explains certain of these strategies and
their associated risks in more detail. This section also explains other
strategies used in managing the Funds that may not be considered "principal
investment strategies" and discusses the risks associated with these strategies.
TEMPORARY DEFENSIVE INVESTMENTS
In times of unstable or adverse market or economic conditions, up to 100%
of the assets of the Funds can be invested in temporary defensive instruments in
an effort to
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enhance liquidity or preserve capital. Temporary defensive investments generally
would include cash, cash equivalents such as commercial paper, money market
instruments, short-term debt securities, U.S. government securities, or
repurchase agreements. The Funds could also hold these types of securities
pending the investment of proceeds from the sale of Fund shares or portfolio
securities, or to meet anticipated redemptions of Fund shares. To the extent a
Fund invests defensively in these securities, it might not achieve its
investment objective.
PORTFOLIO TURNOVER
During the fiscal years ended 1998 and 1997, respectively, the portfolio
turnover rate for each of the Funds was as follows: Balanced Fund - 211% and
203%; Discovery Fund - 121% and 90%; Government Securities Fund - 90% and 147%;
Growth Fund - 143% and 189%; Growth and Income Fund - 259% and 256%;
International Equity Fund - 148% and 164%; Mid-Cap Growth Fund - 152% and 110%;
Passport Fund - 34% and 51%; and Worldwide Growth Fund - 86% and 82%. The
sustained performance of holdings in Government Securities Fund in 1998 resulted
in lower portfolio turnover for that Fund in 1998 as compared to 1997. The
portfolio turnover rates of Passport Fund in 1999 and future years are expected
to be significantly higher than the Fund's 1998 portfolio turnover rate due to
the portfolio management style of the portfolio manager who assumed
responsibility for managing the Fund in July 1999.
A 100% portfolio turnover rate would occur if all of the securities in the
portfolio were replaced during the period. Portfolio turnover rates for certain
of the Funds are higher than those of other mutual funds. Although each Fund
purchases and holds securities with the goal of meeting its investment
objectives, portfolio changes are made whenever Founders believes they are
advisable, usually without reference to the length of time that a security has
been held. The Funds may, therefore, engage in a significant number of
short-term transactions. Portfolio turnover rates may also increase as a result
of the need for a Fund to effect significant amounts of purchases or redemptions
of portfolio securities due to economic, market, or other factors that are not
within Founders' control. Balanced Fund does not anticipate any significant
differences between the portfolio turnover rates of the common stock portion of
its investment portfolios and the rate of turnover of the remainder of its
securities holdings.
HEDGING TECHNIQUES
In order to hedge their portfolios, the Funds may enter into futures
contracts (including those related to indices) and forward contracts, and may
purchase and/or write (sell) options on securities, securities indices, futures
contracts and foreign currencies. Each of these instruments is sometimes
referred to as a "derivative," since its value is derived from an underlying
security, index or other financial instrument.
OPTIONS ON SECURITIES INDICES AND SECURITIES. An option is a right to buy
or sell a security or securities index at a specified price within a limited
period of time. For the
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right to buy or sell the underlying instrument (e.g., individual securities or
securities indices), the buyer pays a premium to the seller (the "writer" of the
option). Options have standardized terms, including the exercise price and
expiration time. The current market value of a traded option is the last sales
price or, in the absence of a sale, the last offering price. The market value of
an option will usually reflect, among other factors, the market price of the
underlying security. When the market value of an option appreciates, the
purchaser may realize a gain by exercising the option and selling the underlying
security, or by selling the option on an exchange (provided that a liquid
secondary market is available). If the underlying security does not reach a
price level that would make exercise profitable, the option generally will
expire without being exercised and the writer will realize a gain in the amount
of the premium. However, the gain may be offset by a decline in the market value
of the underlying security. If an option is exercised, the proceeds of the sale
of the underlying security by the writer are increased by the amount of the
premium and the writer realizes a gain or loss from the sale of the security.
So long as a secondary market remains available on an exchange, the writer
of an option traded on that exchange ordinarily may terminate his obligation
prior to the assignment of an exercise notice by entering into a closing
purchase transaction. The cost of a closing purchase transaction, plus
transaction costs, may be greater than the premium received upon writing the
original option, in which event the writer will incur a loss on the transaction.
However, because an increase in the market price of an option generally reflects
an increase in the market price of the underlying security, any loss resulting
from a closing purchase transaction is likely to be offset in whole or in part
by appreciation of the underlying security that the writer continues to own.
All of the Funds (except Money Market Fund) may write (sell) options on
their portfolio securities. The Funds retain the freedom to write options on any
or all of their portfolio securities and at such time and from time to time as
Founders shall determine to be appropriate. The extent of a Fund's option
writing activities will vary from time to time depending upon Founders'
evaluation of market, economic and monetary conditions.
When a Fund purchases a security with respect to which it intends to write
an option, it is likely that the option will be written concurrently with or
shortly after purchase. The Fund will write an option on a particular security
only if Founders believes that a liquid secondary market will exist on an
exchange for options of the same series, which will permit the Fund to enter
into a closing purchase transaction and close out its position. If the Fund
desires to sell a particular security on which it has written an option, it will
effect a closing purchase transaction prior to or concurrently with the sale of
the security.
A Fund may enter into closing purchase transactions to reduce the
percentage of its assets against which options are written, to realize a profit
on a previously written
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option, or to enable it to write another option on the underlying security with
either a different exercise price or expiration time or both.
Options written by a Fund will normally have expiration dates between
three and nine months from the date written. The exercise prices of options may
be below, equal to or above the current market values of the underlying
securities at the times the options are written. From time to time for tax and
other reasons, the Fund may purchase an underlying security for delivery in
accordance with an exercise notice assigned to it, rather than delivering such
security from its portfolio.
All of the Funds (except Money Market Fund) may purchase options on
securities indices. A securities index measures the movement of a certain group
of securities by assigning relative values to the stocks included in the index.
Options on securities indices are similar to options on securities. However,
because options on securities indices do not involve the delivery of an
underlying security, the option represents the holder's right to obtain from the
writer in cash a fixed multiple of the amount by which the exercise price
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the exercise date. The Funds purchase
put options on stock indices to protect the Funds' portfolios against decline in
value. The Funds purchase call options on stock indices to establish a position
in equities as a temporary substitute for purchasing individual stocks that then
may be acquired over the option period in a manner designed to minimize adverse
price movements. Purchasing put and call options on securities indices also
permits greater time for evaluation of investment alternatives. When Founders
believes that the trend of stock prices may be downward, particularly for a
short period of time, the purchase of put options on securities indices may
eliminate the need to sell less liquid securities and possibly repurchase them
later. The purpose of these transactions is not to generate gain, but to "hedge"
against possible loss. Therefore, successful hedging activity will not produce
net gain to the Funds. Any gain in the price of a call option is likely to be
offset by higher prices a Fund must pay in rising markets, as cash reserves are
invested. In declining markets, any increase in the price of a put option is
likely to be offset by lower prices of stocks owned by a Fund.
Upon purchase by a Fund of a call on a securities index, the Fund pays a
premium and has the right during the call period to require the seller of such a
call, upon exercise of the call, to deliver to the Fund an amount of cash if the
closing level of the securities index upon which the call is based is above the
exercise price of the call. This amount of cash is equal to the difference
between the closing price of the index and the lesser exercise price of the
call. Upon purchase by the Fund of a put on a securities index, the Fund pays a
premium and has the right during the put period to require the seller of such a
put, upon exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the securities index upon which the put is based is below the
exercise price of the put. This amount of cash is equal to the difference
between the exercise price of the put and the lesser closing level of the
securities index. Buying securities index options permits the Funds, if cash is
deliverable to them
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during the option period, either to sell the option or to require delivery of
the cash. If such cash is not so deliverable, and as a result the option is not
exercised or sold, the option becomes worthless at its expiration date.
The Funds may purchase only those put and call options that are listed on
a domestic exchange or quoted on the automatic quotation system of the National
Association of Securities Dealers, Inc. ("NASDAQ"). Options traded on stock
exchanges are either broadly based, such as the Standard & Poor's 500 Stock
Index and 100 Stock Index, or involve stocks in a designated industry or group
of industries. The Funds may utilize either broadly based or market segment
indices in seeking a better correlation between the indices and the Funds'
portfolios.
Transactions in options are subject to limitations, established by each of
the exchanges upon which options are traded, governing the maximum number of
options that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options are held in one or more
accounts. Thus, the number of options a Fund may hold may be affected by options
held by other advisory clients of Founders. As of the date of this SAI, Founders
believes that these limitations will not affect the purchase of securities index
options by the Funds.
The value of a securities index option depends upon movements in the level
of the securities index rather than the price of particular securities. Whether
a Fund will realize a gain or a loss from its option activities depends upon
movements in the level of securities prices generally or in an industry or
market segment, rather than movements in the price of a particular security.
Purchasing call and put options on securities indices involves the risk that
Founders may be incorrect in its expectations as to the extent of the various
securities market movements or the time within which the options are based. To
compensate for this imperfect correlation, a Fund may enter into options
transactions in a greater dollar amount than the securities being hedged if the
historical volatility of the prices of the securities being hedged is different
from the historical volatility of the securities index.
One risk of holding a put or a call option is that if the option is not
sold or exercised prior to its expiration, it becomes worthless. However, this
risk is limited to the premium paid by the Fund. Other risks of purchasing
options include the possibility that a liquid secondary market may not exist at
a time when the Fund may wish to close out an option position. It is also
possible that trading in options on securities indices might be halted at a time
when the securities markets generally remain open. In cases where the market
value of an issue supporting a covered call option exceeds the strike price plus
the premium on the call, the portfolio will lose the right to appreciation of
the stock for the duration of the option.
FUTURES CONTRACTS. All of the Funds (except Money Market Fund) may enter
into futures contracts for hedging purposes. U.S. futures contracts are traded
on exchanges that have been designated "contract markets" by the Commodity
Futures
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Trading Commission ("CFTC") and must be executed through a futures commission
merchant (an "FCM") or brokerage firm that is a member of the relevant contract
market. Although futures contracts by their terms call for the delivery or
acquisition of the underlying commodities or a cash payment based on the value
of the underlying commodities, in most cases the contractual obligation is
offset before the delivery date of the contract by buying, in the case of a
contractual obligation to sell, or selling, in the case of a contractual
obligation to buy, an identical futures contract on a commodities exchange. Such
a transaction cancels the obligation to make or take delivery of the
commodities.
The acquisition or sale of a futures contract could occur, for example, if
a Fund held or considered purchasing equity securities and sought to protect
itself from fluctuations in prices without buying or selling those securities.
For example, if prices were expected to decrease, a Fund could sell equity index
futures contracts, thereby hoping to offset a potential decline in the value of
equity securities in the portfolio by a corresponding increase in the value of
the futures contract position held by the Fund and thereby prevent the Fund's
net asset value from declining as much as it otherwise would have. A Fund also
could protect against potential price declines by selling portfolio securities
and investing in money market instruments. However, since the futures market is
more liquid than the cash market, the use of futures contracts as an investment
technique would allow the Fund to maintain a defensive position without having
to sell portfolio securities.
Similarly, when prices of equity securities are expected to increase,
futures contracts could be bought to attempt to hedge against the possibility of
having to buy equity securities at higher prices. This technique is sometimes
known as an anticipatory hedge. Since the fluctuations in the value of futures
contracts should be similar to those of equity securities, a Fund could take
advantage of the potential rise in the value of equity securities without buying
them until the market had stabilized. At that time, the futures contracts could
be liquidated and the Fund could buy equity securities on the cash market.
The Funds also may enter into interest rate and foreign currency futures
contracts. Interest rate futures contracts currently are traded on a variety of
fixed-income securities, including long-term U.S. Treasury bonds, Treasury
notes, Government National Mortgage Association modified pass-through
mortgage-backed securities, U.S. Treasury bills, bank certificates of deposit
and commercial paper. Foreign currency futures contracts currently are traded on
the British pound, Canadian dollar, Japanese yen, Swiss franc, Eurodollar
deposits, Mexican peso, Australian dollar and the Brazilian real.
Futures contracts entail risks. Although Founders believes that use of
such contracts could benefit the Funds, if Founders' investment judgment were
incorrect, a Fund's overall performance could be worse than if the Fund had not
entered into futures contracts. For example, if a Fund hedged against the
effects of a possible decrease in
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prices of securities held in the Fund's portfolio and prices increased instead,
the Fund would lose part or all of the benefit of the increased value of these
securities because of offsetting losses in the Fund's futures positions. In
addition, if the Fund had insufficient cash, it might have to sell securities
from its portfolio to meet margin requirements. Those sales could be at
increased prices that reflect the rising market and could occur at a time when
the sales would be disadvantageous to the Fund.
The ordinary spreads between prices in the cash and futures markets, due
to differences in the nature of those markets, are subject to distortions.
First, the ability of investors to close out futures contracts through
offsetting transactions could distort the normal price relationship between the
cash and futures markets. Second, to the extent participants decide to make or
take delivery, liquidity in the futures markets could be reduced and prices in
the futures markets distorted. Third, from the point of view of speculators, the
margin deposit requirements in the futures markets are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures markets may cause temporary price distortions. Due to
the possibility of the foregoing distortions, a correct forecast of general
price trends still may not result in a successful use of futures.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to
the Funds would not match exactly a Fund's current or potential investments. A
Fund might buy or sell futures contracts based on underlying instruments with
different characteristics from the securities in which it would typically invest
- -- for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities -- which involves a risk that the
futures position might not correlate precisely with the performance of the
Fund's investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a Fund's
investments. Futures prices are affected by such factors as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments, and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions could also
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts. A
Fund would be able to buy or sell futures contracts with a greater or lesser
value than the securities it wished to hedge or was considering purchasing in
order to attempt to compensate for differences in historical volatility between
the futures contract and the securities, although this might not be successful
in all cases. If price changes in the Fund's futures positions were poorly
correlated with its other investments, its futures positions could fail to
produce desired gains or result in losses that would not be offset by the gains
in the Fund's other investments.
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A Fund will not, as to any positions, whether long, short or a combination
thereof, enter into futures and options thereon for which the aggregate initial
margins and premiums exceed 5% of the fair market value of its total assets
after taking into account unrealized profits and losses on options entered into.
In the case of an option that is "in-the-money," the in-the-money amount may be
excluded in computing such 5%. In general a call option on a future is
"in-the-money" if the value of the future exceeds the exercise ("strike") price
of the call; a put option on a future is "in-the-money" if the value of the
future that is the subject of the put is exceeded by the strike price of the
put. The Funds may use futures and options thereon solely for bona fide hedging
or for other non-speculative purposes. As to long positions that are used as
part of a Fund's portfolio strategies and are incidental to its activities in
the underlying cash market, the "underlying commodity value" of the Fund's
futures and options thereon must not exceed the sum of (i) cash set aside in an
identifiable manner, or short-term U.S. debt obligations or other
dollar-denominated high-quality, short-term money instruments so set aside, plus
sums deposited on margin; (ii) cash proceeds from existing investments due in 30
days; and (iii) accrued profits held at the futures commission merchant. The
"underlying commodity value" of a future is computed by multiplying the size of
the future by the daily settlement price of the future. For an option on a
future, that value is the underlying commodity value of the future underlying
the option.
Unlike the situation in which a Fund purchases or sells a security, no
price is paid or received by a Fund upon the purchase or sale of a futures
contract. Instead, the Fund is required to deposit in a segregated asset account
an amount of cash or qualifying securities (currently U.S. Treasury bills),
currently in a minimum amount of $15,000. This is called "initial margin." Such
initial margin is in the nature of a performance bond or good faith deposit on
the contract. However, since losses on open contracts are required to be
reflected in cash in the form of variation margin payments, the Fund may be
required to make additional payments during the term of a contract to its
broker. Such payments would be required, for example, when, during the term of
an interest rate futures contract purchased by the Fund, there was a general
increase in interest rates, thereby making the Fund's portfolio securities less
valuable. In all instances involving the purchase of financial futures contracts
by a Fund, an amount of cash together with such other securities as permitted by
applicable regulatory authorities to be utilized for such purpose, at least
equal to the market value of the futures contracts, will be deposited in a
segregated account with the Fund's custodian to collateralize the position. At
any time prior to the expiration of a futures contract, the Fund may elect to
close its position by taking an opposite position that will operate to terminate
the Fund's position in the futures contract.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three business days
for most types of securities, the futures markets can provide superior liquidity
to the securities markets. Nevertheless, there is no assurance a liquid
secondary market will exist for any particular futures contract at any
particular time. In addition, futures exchanges
<PAGE> 302
may establish daily price fluctuation limits for futures contracts and may halt
trading if a contract's price moves upward or downward more than the limit in a
given day. On volatile trading days when the price fluctuation limit is reached,
it would be impossible for a Fund to enter into new positions or close out
existing positions. If the secondary market for a futures contract were not
liquid because of price fluctuation limits or otherwise, a Fund would not
promptly be able to liquidate unfavorable futures positions and potentially
could be required to continue to hold a futures position until the delivery
date, regardless of changes in its value. As a result, a Fund's access to other
assets held to cover its futures positions also could be impaired.
OPTIONS ON FUTURES CONTRACTS. All of the Funds (except Money Market Fund)
may purchase put and call options on futures contracts. An option on a futures
contract provides the holder with the right to enter into a "long" position in
the underlying futures contract, in the case of a call option, or a "short"
position in the underlying futures contract, in the case of a put option, at a
fixed exercise price to a stated expiration date. Upon exercise of the option by
the holder, a contract market clearinghouse establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position, in the case of a put option. In the event that an
option is exercised, the parties will be subject to all the risks associated
with the trading of futures contracts, such as payment of variation margin
deposits.
A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a futures contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearinghouse assigns exercise notices
on a random basis to those of its members that have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers that have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security. See
"Options on Securities and Securities Indices," above. Depending on the pricing
of the option compared to either the price of the futures contract upon which it
is based or the price of the underlying instrument, ownership of the option may
or may not be less risky than ownership of the futures contract or the
underlying instrument. As with the purchase of futures contracts, when a Fund is
not fully invested it could buy a call option on a futures contract to hedge
against a market advance.
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The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund would be able to buy a put option on a futures contract to hedge
the Fund's portfolio against the risk of falling prices.
The amount of risk a Fund would assume, if it bought an option on a
futures contract, would be the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above, the
purchase of an option also entails the risk that changes in the value of the
underlying futures contract will not fully be reflected in the value of the
options bought.
OPTIONS ON FOREIGN CURRENCIES. All of the Funds (except Money Market Fund)
may buy and sell options on foreign currencies for hedging purposes in a manner
similar to that in which futures on foreign currencies would be utilized. For
example, a decline in the U.S. dollar value of a foreign currency in which
portfolio securities are denominated would reduce the U.S. dollar value of such
securities, even if their value in the foreign currency remained constant. In
order to protect against such diminutions in the value of portfolio securities,
a Fund could buy put options on the foreign currency. If the value of the
currency declines, the Fund would have the right to sell such currency for a
fixed amount in U.S. dollars and would thereby offset, in whole or in part, the
adverse effect on its portfolio that otherwise would have resulted. Conversely,
when a rise is projected in the U.S. dollar value of a currency in which
securities to be acquired are denominated, thereby increasing the cost of such
securities, the Fund could buy call options thereon. The purchase of such
options could offset, at least partially, the effects of the adverse movements
in exchange rates.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting a Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities, and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options
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must be made exclusively through the OCC, which has established banking
relationships in applicable foreign countries for this purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose special
procedures on exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices, or
prohibitions on exercise.
RISK FACTORS OF INVESTING IN FUTURES AND OPTIONS. The successful use of
the investment practices described above with respect to futures contracts,
options on futures contracts, and options on securities indices, securities, and
foreign currencies draws upon skills and experience that are different from
those needed to select the other instruments in which the Funds invest. All such
practices entail risks and can be highly volatile. Should interest or exchange
rates or the prices of securities or financial indices move in an unexpected
manner, the Funds may not achieve the desired benefits of futures and options or
may realize losses and thus be in a worse position than if such strategies had
not been used. Unlike many exchange-traded futures contracts and options on
futures contracts, there are no daily price fluctuation limits with respect to
options on currencies and negotiated or over-the-counter instruments, and
adverse market movements could therefore continue to an unlimited extent over a
period of time. In addition, the correlation between movements in the price of
the securities and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses.
A Fund's ability to dispose of its positions in the foregoing instruments
will depend on the availability of liquid markets in the instruments. Markets in
a number of the instruments are relatively new and still developing and it is
impossible to predict the amount of trading interest that may exist in those
instruments in the future. Particular risks exist with respect to the use of
each of the foregoing instruments and could result in such adverse consequences
to the Funds as the possible loss of the entire premium paid for an option
bought by a Fund, the inability of a Fund, as the writer of a covered call
option, to benefit from the appreciation of the underlying securities above the
exercise price of the option, and the possible need to defer closing out
positions in certain instruments to avoid adverse tax consequences. As a result,
no assurance can be given that the Funds will be able to use those instruments
effectively for the purposes set forth above.
In addition, options on U.S. Government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be affected adversely by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in a
Fund's ability to act upon economic events occurring in foreign markets during
non-business
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hours in the United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in the United
States, and (v) low trading volume.
FOREIGN SECURITIES AND ADRS
The term "foreign securities" refers to securities of issuers, wherever
organized, that, in the judgment of Founders, have their principal business
activities outside of the United States. The determination of whether an
issuer's principal activities are outside of the United States will be based on
the location of the issuer's assets, personnel, sales, and earnings, and
specifically on whether more than 50% of the issuer's assets are located, or
more than 50% of the issuer's gross income is earned, outside of the United
States, or on whether the issuer's sole or principal stock exchange listing is
outside of the United States. Foreign securities typically will be traded on the
applicable country's principal stock exchange but may also be traded on regional
exchanges or over-the-counter. In addition, foreign securities may trade in the
U.S. securities markets.
Investments in foreign countries involve certain risks that are not
typically associated with U.S. investments. There may be less publicly available
information about foreign companies comparable to reports and ratings published
about U.S. companies. Foreign companies are not generally subject to uniform
accounting, auditing, and financial reporting standards and requirements
comparable to those applicable to U.S. companies. There also may be less
government supervision and regulation of foreign stock exchanges, brokers and
listed companies than in the United States.
Foreign stock markets may have substantially less volume than the New York
Stock Exchange, and securities of some foreign companies may be less liquid and
may be more volatile than securities of comparable U.S. companies. Brokerage
commissions and other transaction costs on foreign securities exchanges
generally are higher than in the United States.
Because investment in foreign companies will usually involve currencies of
foreign countries, and because a Fund may temporarily hold funds in bank
deposits in foreign currencies during the course of investment programs, the
value of the assets of the Fund as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversion between various currencies. A change in the value of any foreign
currency relative to the U.S. dollar, when the Fund holds that foreign currency
or a security denominated in that foreign currency, will cause a corresponding
change in the dollar value of the Fund assets denominated or traded in that
country. Moreover, there is the possibility of expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of the Fund,
political, economic or social instability or diplomatic developments that could
affect U.S. investments in foreign countries.
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Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes, thus reducing the net return on such
investments compared with U.S. investments. The operating expense ratio of a
Fund that invests in foreign securities can be expected to be higher than that
of a Fund which invests exclusively in domestic securities, since the expenses
of the Fund, such as foreign custodial costs, are higher. In addition, the Fund
incurs costs in converting assets from one currency to another.
In addition, Passport, Worldwide Growth, and International Equity Funds
may invest in securities issued by companies located in countries not considered
to be major industrialized nations. Such countries are subject to more economic,
political and business risk than major industrialized nations, and the
securities issued by companies located there are expected to be more volatile,
less liquid and more uncertain as to payments of dividends, interest and
principal. Such countries may include (but are not limited to) Argentina,
Australia, Austria, Belgium, Bolivia, Brazil, Chile, China, Colombia, Costa
Rica, Croatia, Czech Republic, Denmark, Ecuador, Egypt, Finland, Greece, Hong
Kong, Hungary, India, Indonesia, Ireland, Italy, Israel, Jordan, Malaysia,
Mexico, Netherlands, New Zealand, Nigeria, North Korea, Norway, Pakistan,
Paraguay, Peru, Philippines, Poland, Portugal, Romania, Singapore, Slovak
Republic, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland,
Taiwan, Thailand, Turkey, Uruguay, Venezuela, Vietnam and the countries of the
former Soviet Union.
American Depositary Receipts and American Depositary Shares (collectively,
"ADRs") are receipts representing shares of a foreign corporation held by a U.S.
bank that entitle the holder to all dividends and capital gains on the
underlying foreign shares. ADRs are denominated in U.S. dollars and trade in the
U.S. securities markets. ADRs may be issued in sponsored or unsponsored
programs. In sponsored programs, the issuer makes arrangements to have its
securities traded in the form of ADRs; in unsponsored programs, the issuer may
not be directly involved in the creation of the program. Although the regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, the issuers of unsponsored ADRs are not obligated to disclose material
information in the United States and, therefore, such information may not be
reflected in the market value of the ADRs.
The percentage limitations on a Fund's ability to invest in foreign
securities do not apply to dollar-denominated ADRs that are traded in the U.S.
on exchanges or over-the-counter.
FORWARD CONTRACTS FOR PURCHASE OR SALE OF FOREIGN CURRENCIES
The Funds generally conduct their foreign currency exchange transactions
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange
currency market. When a Fund purchases or sells a security denominated in a
foreign currency, it may enter into a forward foreign currency contract
("forward contract") for the
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purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying security transaction. A forward contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. In this manner, a
Fund may obtain protection against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the foreign currency
during the period between the date the security is purchased or sold and the
date upon which payment is made or received. Although such contracts tend to
minimize the risk of loss due to the decline in the value of the hedged
currency, at the same time they tend to limit any potential gain that might
result should the value of such currency increase. The Funds will not speculate
in forward contracts.
Forward contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers.
Generally a forward contract has no deposit requirement, and no commissions are
charged at any stage for trades. Although foreign exchange dealers do not charge
a fee for conversion, they do realize a profit based on the difference between
the prices at which they buy and sell various currencies. When Founders believes
that the currency of a particular foreign country may suffer a substantial
decline against the U.S. dollar (or sometimes against another currency), the
Funds may each enter into forward contracts to sell, for a fixed-dollar or other
currency amount, foreign currency approximating the value of some or all of the
Funds' portfolio securities denominated in that currency. In addition, these
Funds may engage in "proxy hedging" (i.e., entering into forward contracts to
sell a different foreign currency than the one in which the underlying
investments are denominated), with the expectation that the value of the hedged
currency will correlate with the value of the underlying currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible. The future value of such securities in
foreign currencies changes as a consequence of market movements in the value of
those securities between the date on which the contract is entered into and the
date it expires. The Funds generally will not enter into forward contracts with
a term greater than one year. In addition, the Funds generally will not enter
into such forward contracts or maintain a net exposure to such contracts where
the fulfillment of the contracts would require the Funds to deliver an amount of
foreign currency or a proxy currency in excess of the value of the Funds'
portfolio securities or other assets denominated in the currency being hedged.
Under normal circumstances, consideration of the possibility of changes in
currency exchange rates will be incorporated into the Funds' long-term
investment strategies. Forward contracts may, from time to time, be considered
illiquid, in which case they would be subject to the respective Funds'
limitation on investing in illiquid securities, as discussed below.
At the consummation of a forward contract for delivery by a Fund of a
foreign currency which has been used as a position hedge, the Fund may either
make delivery of the foreign currency or terminate its contractual obligation to
deliver the foreign
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currency by purchasing an offsetting contract obligating it to purchase, at the
same maturity date, the same amount of the foreign currency. If the Fund chooses
to make delivery of the foreign currency, it may be required to obtain such
currency through the sale of portfolio securities denominated in such currency
or through conversion of other Fund assets into such currency. It is impossible
to forecast the market value of portfolio securities at the expiration of the
forward contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver, and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or loss to the extent that there has been
movement in spot or forward contract prices. If any one of the Funds engages in
an offsetting transaction, it may subsequently enter into a new forward contract
to sell the foreign currency. Should forward prices decline during the period
between the Fund's entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the purchase of
the foreign currency, the Fund will realize a gain to the extent the price of
the currency it has agreed to sell exceeds the price of the currency it has
agreed to purchase. Should forward prices increase, the Fund will suffer a loss
to the extent the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.
While forward contracts may be traded to reduce certain risks, trading in
forward contracts itself entails certain other risks. Thus, while the Funds may
benefit from the use of such contracts, if Founders is incorrect in its forecast
of currency prices, a poorer overall performance may result than if a Fund had
not entered into any forward contracts. Some forward contracts may not have a
broad and liquid market, in which case the contracts may not be able to be
closed at a favorable price. Moreover, in the event of an imperfect correlation
between the forward contract and the portfolio position that it is intended to
protect, the desired protection may not be obtained.
Dealings in forward contracts will be limited to the transactions
described above. Of course, the Funds are not required to enter into such
transactions with regard to their foreign currency-denominated securities, and
will not do so unless deemed appropriate by Founders. It also should be realized
that this method of protecting the value of the Funds' portfolio securities
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. It simply establishes a rate of
exchange that can be achieved at some future point in time. Additionally,
although such contracts tend to minimize the risk of loss due to the decline in
the value of the hedged currency, at the same time they tend to limit any
potential gain that might result should the value of such currency increase.
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SECURITIES THAT ARE NOT READILY MARKETABLE
As discussed in the Prospectus, the Funds may invest up to 15% of the
value of their net assets, measured at the time of investment, in investments
that are not readily marketable (10% in the case of Money Market Fund). A
security which is not "readily marketable" is generally considered to be a
security that cannot be disposed of within seven days in the ordinary course of
business at approximately the amount at which it is valued. Subject to the
foregoing 15% and 10% limitations, the Funds may invest in restricted
securities. "Restricted" securities generally include securities that are not
registered under the Securities Act of 1933 (the "1933 Act") and are subject to
legal or contractual restrictions upon resale. Restricted securities
nevertheless may be "readily marketable" and can often be sold in privately
negotiated transactions or in a registered public offering. There are an
increasing number of securities being issued without registration under the 1933
Act for which a liquid secondary market exists among institutional investors
such as the Funds. These securities are often called "Rule 144A" securities (see
discussion below).
A Fund may not be able to dispose of a security that is not "readily
marketable" at the time desired or at a reasonable price. In addition, in order
to resell such a security, a Fund might have to bear the expense and incur the
delays associated with effecting registration. In purchasing such securities, no
Fund intends to engage in underwriting activities, except to the extent a Fund
may be deemed to be a statutory underwriter under the 1933 Act in disposing of
such securities.
RULE 144A SECURITIES
In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act. Institutional investors
generally will not seek to sell these instruments to the general public, but
instead will often depend on an efficient institutional market in which such
unregistered securities can readily be resold or on an issuer's ability to honor
a demand for repayment. Therefore, the fact that there are contractual or legal
restrictions on resale to the general public or certain institutions is not
dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. The Funds may invest in Rule 144A securities
that may or may not be readily marketable. Rule 144A securities are readily
marketable if institutional markets for the securities develop pursuant to Rule
144A that provide both readily ascertainable values for the securities and the
ability to liquidate the securities when liquidation is deemed necessary or
advisable. However, an insufficient number of qualified institutional buyers
interested in purchasing a Rule 144A security held by one of the Funds could
affect adversely the marketability of the security. In such an instance, the
Fund might be unable to dispose of the security promptly or at reasonable
prices.
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The Board of Directors of the Company has delegated to Founders the
authority to determine that a liquid market exists for securities eligible for
resale pursuant to Rule 144A under the 1933 Act, or any successor to such rule,
and that such securities are not subject to the Funds' limitations on investing
in securities that are not readily marketable. Under guidelines established by
the directors, Founders will consider the following factors, among others, in
making this determination: (1) the unregistered nature of a Rule 144A security;
(2) the frequency of trades and quotes for the security; (3) the number of
dealers willing to purchase or sell the security and the number of additional
potential purchasers; (4) dealer undertakings to make a market in the security;
and (5) the nature of the security and the nature of market place trades (e.g.,
the time needed to dispose of the security, the method of soliciting offers and
the mechanics of transfers). Founders is required to monitor the readily
marketable nature of each Rule 144A security on a basis no less frequently than
quarterly. The Funds' directors monitor the determinations of Founders
quarterly.
FIXED-INCOME SECURITIES
Balanced, Discovery, Focus, Growth, Growth and Income, International
Equity, Mid-Cap Growth, Passport, and Worldwide Growth are the "Equity Funds."
The Equity Funds may purchase convertible securities and preferred stocks rated
in medium and lower categories by Moody's or S&P (Ba or lower by Moody's and BB
or lower by S&P), but none rated lower than B. The Equity Funds also may invest
in unrated convertible securities and preferred stocks if Founders believes they
are equivalent in quality to the rated securities that the Funds may buy.
The Equity Funds will invest in bonds, debentures, and corporate
obligations - other than convertible securities and preferred stock - only if
they are rated investment grade (Baa, BBB or higher) at the time of purchase,
although the Balanced Fund may invest up to 5% of its total assets in
lower-grade debt securities. Founders will not invest more than 5% of a Fund's
total assets in bonds, debentures, convertible securities, and corporate
obligations rated below investment grade, either at the time of purchase or as a
result of a rating reduction after purchase, or in unrated securities believed
by Founders to be equivalent in quality to securities rated below investment
grade. This 5% limitation does not apply to preferred stocks. Government
Securities and Money Market Funds do not invest in such lower-grade securities.
Investments in lower rated or unrated securities are generally considered
to be of high risk. Lower rated debt securities, commonly referred to as junk
bonds, are generally subject to two kinds of risk, credit risk and interest rate
risk. Credit risk relates to the ability of the issuer to meet interest or
principal payments, or both, as they come due. The ratings given a security by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's ("S&P")
provide a generally useful guide as to such credit risk. The Appendix to this
Statement of Additional Information provides a description of such debt security
ratings. The lower the rating given a security by a rating service, the greater
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the credit risk such rating service perceives to exist with respect to the
security. Increasing the amount of a Fund's assets invested in unrated or lower
grade securities, while intended to increase the yield produced by those assets,
will also increase the risk to which those assets are subject.
Interest rate risk relates to the fact that the market values of debt
securities in which a Fund invests generally will be affected by changes in the
level of interest rates. An increase in interest rates will tend to reduce the
market values of such securities, whereas a decline in interest rates will tend
to increase their values. Medium and lower rated securities (Baa or BBB and
lower) and non-rated securities of comparable quality tend to be subject to
wider fluctuations in yields and market values than higher rated securities and
may have speculative characteristics. The Funds are not required to dispose of
debt securities whose ratings are downgraded below these ratings subsequent to a
Fund's purchase of the securities, unless such a disposition is necessary to
reduce a Fund's holdings of such securities to less than 5% of its total assets.
In order to decrease the risk in investing in debt securities, in no event will
a Fund ever invest in a debt security rated below B by Moody's or by S&P. Of
course, relying in part on ratings assigned by credit agencies in making
investments will not protect the Funds from the risk that the securities in
which they invest will decline in value, since credit ratings represent
evaluations of the safety of principal, dividend, and interest payments on
preferred stocks and debt securities, and not the market values of such
securities, and such ratings may not be changed on a timely basis to reflect
subsequent events.
Because investment in medium and lower rated securities involves both
greater credit risk and interest rate risk, achievement of the Funds' investment
objectives may be more dependent on the investment adviser's own credit analysis
than is the case for funds that do not invest in such securities. In addition,
the share price and yield of the Equity Funds may fluctuate more than in the
case of funds investing in higher quality, shorter term securities. Moreover, a
significant economic downturn or major increase in interest rates may result in
issuers of lower rated securities experiencing increased financial stress, that
would adversely affect their ability to service their principal, dividend, and
interest obligations, meet projected business goals, and obtain additional
financing. In this regard, it should be noted that while the market for high
yield debt securities has been in existence for many years and from time to time
has experienced economic downturns in recent years, this market has involved a
significant increase in the use of high yield debt securities to fund highly
leveraged corporate acquisitions and restructurings. Past experience may not,
therefore, provide an accurate indication of future performance of the high
yield debt securities market, particularly during periods of economic recession.
Furthermore, expenses incurred in recovering an investment in a defaulted
security may adversely affect a Fund's net asset value. Finally, while Founders
attempts to limit purchases of medium and lower rated securities to securities
having an established secondary market, the secondary market for such securities
may be less liquid than the market for higher quality securities. The reduced
liquidity of the secondary market for such securities may adversely affect the
market price of, and ability of a Fund to value, particular securities at
certain times, thereby making it difficult
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to make specific valuation determinations. The Funds do not invest in any medium
and lower rated securities that present special tax consequences, such as zero
coupon bonds or pay-in-kind bonds.
Founders seeks to reduce the overall risks associated with the Funds'
investments through diversification and consideration of factors affecting the
value of securities it considers relevant. No assurance can be given, however,
regarding the degree of success that will be achieved in this regard or that the
Funds will achieve their investment objectives.
FOREIGN BANK OBLIGATIONS
The Money Market Fund's foreign investments are limited to
dollar-denominated obligations of foreign depository institutions or their U.S.
branches, or foreign branches of U.S. depository institutions. The foreign
investments of Money Market Fund will be limited primarily to securities of
issuers from the major industrialized nations. The other Funds also may invest
in obligations of foreign depository institutions or their U.S. branches, or
foreign branches of U.S. depository institutions.
The obligations of foreign branches of U.S. depository institutions
purchased by the Funds may be general obligations of the parent depository
institution in addition to being an obligation of the issuing branch. These
obligations, and those of foreign depository institutions, may be limited by the
terms of the specific obligation and by governmental regulation. The payment of
these obligations, both interest and principal, also may be affected by
governmental action in the country of domicile of the institution or branch,
such as imposition of currency controls and interest limitations. In connection
with these investments, a Fund will be subject to the risks associated with the
holding of portfolio securities overseas, such as possible changes in investment
or exchange control regulations, expropriation, confiscatory taxation, or
political or financial instability.
Obligations of U.S. branches of foreign depository institutions may be
general obligations of the parent depository institution in addition to being an
obligation of the issuing branch, or may be limited by the terms of a specific
foreign regulation applicable to the depository institutions and by government
regulation (both domestic and foreign).
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction under which a Fund acquires a
security and simultaneously promises to sell that same security back to the
seller at a higher price, usually within a seven-day period. The Funds may enter
into repurchase agreements with banks or well-established securities dealers
meeting criteria established by the Funds' Board of Directors. A repurchase
agreement may be considered a loan collateralized by securities. The resale
price reflects an agreed upon interest rate effective for the period the
instrument is held by a Fund and is unrelated to the interest rate on the
underlying instrument. In these transactions, the collateral
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securities acquired by a Fund (including accrued interest earned thereon) must
have a total value at least equal to the value of the repurchase agreement, and
are held as collateral by the Funds' custodian bank until the repurchase
agreement is completed. All repurchase agreements entered into by the Funds are
marked to market daily. In the event of default by the seller under a repurchase
agreement, the Fund may experience difficulties in exercising its rights to the
underlying security and may incur costs in connection with the disposition of
that security.
Repurchase agreements maturing in more than seven days are considered
illiquid and will be subject to each Fund's limitation with respect to illiquid
securities. For a further explanation, see "Investment Strategies and Risks -
Illiquid Securities."
None of the Funds has adopted any limits on the amounts of its total
assets that may be invested in repurchase agreements that mature in less than
seven days. Each of the Funds except Money Market Fund may invest up to 15% of
the market value of its net assets, measured at the time of purchase, in
securities that are not readily marketable, including repurchase agreements
maturing in more than seven days. Money Market Fund may enter into repurchase
agreements if, as a result thereof, no more than 10% of the market value of its
net assets would be subject to repurchase agreements maturing in more than seven
days.
CONVERTIBLE SECURITIES
All Funds except Government Securities and Money Market Funds may buy
securities convertible into common stock if, for example, Founders believes that
a company's convertible securities are undervalued in the market. Convertible
securities eligible for purchase include convertible bonds, convertible
preferred stocks, and warrants. A warrant is an instrument issued by a
corporation that gives the holder the right to subscribe to a specific amount of
the corporation's capital stock at a set price for a specified period of time.
Warrants do not represent ownership of the securities, but only the right to buy
the securities. The prices of warrants do not necessarily move parallel to the
prices of underlying securities. Warrants may be considered speculative in that
they have no voting rights, pay no dividends, and have no rights with respect to
the assets of a corporation issuing them. Warrant positions will not be used to
increase the leverage of a Fund; consequently, warrant positions are generally
accompanied by cash positions equivalent to the required exercise amount.
GOVERNMENT SECURITIES
U.S. government obligations include Treasury bills, notes and bonds;
Government National Mortgage Association ("Ginnie Mae") pass-through securities;
and issues of U.S. agencies, authorities, and instrumentalities. Obligations of
other agencies and instrumentalities of the U.S. government include securities
issued by the Federal Farm Credit Bank System ("FFCB"), the Federal Agricultural
Mortgage Corporation ("Farmer Mac"), the Federal Home Loan Bank System ("FHLB"),
the Financing Corporation
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("FICO"), Federal Home Loan Mortgage Corporation ("Freddie Mac"), Federal
National Mortgage Association ("Fannie Mae"), the Student Loan Marketing
Association ("Sallie Mae"), and the U.S. Small Business Administration ("SBA").
Some government obligations, such as Ginnie Mae pass-through certificates, are
supported by the full faith and credit of the United States Treasury. Other
obligations, such as securities of the FHLB, are supported by the right of the
issuer to borrow from the United States Treasury; and others, such as bonds
issued by Fannie Mae (a private corporation), are supported only by the credit
of the agency, authority or instrumentality. The Funds also may invest in
obligations issued by the International Bank for Reconstruction and Development
("IBRD" or "World Bank").
All of the Funds with the exception of Money Market Fund may also purchase
U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of
Securities). STRIPS essentially are zero-coupon bonds that are direct
obligations of the U.S. Treasury. These bonds do not make regular interest
payments; rather, they are sold at a discount from face value, and principal and
accrued interest are paid at maturity. STRIPS may experience greater
fluctuations in market value due to changes in interest rates and other factors
than debt securities that make regular interest payments. A Fund will accrue
income on STRIPS for tax and accounting purposes which must be distributed to
Fund shareholders even though no cash is received at the time of accrual.
Therefore, the Fund may be required to liquidate other portfolio securities in
order to meet the Fund's distribution obligations.
The Funds also may invest in securities issued by foreign governments
and/or their agencies, and these are the only types of foreign securities in
which the Government Securities Fund may invest. The foreign investments of
Government Securities Fund will be limited primarily to securities of issuers
from the major industrialized nations. Investments in foreign government
securities are subject to many of the same risks that apply to investments in
foreign securities generally. See "Investment Strategies and Risks - Foreign
Securities and ADRs" above.
MORTGAGE-RELATED SECURITIES
Government Securities and Balanced Funds may invest in mortgage-related
securities, which are interests in pools of mortgage loans made to residential
home buyers, including mortgage loans made by savings and loan institutions,
mortgage bankers, commercial banks and others. Pools of mortgage loans are
assembled as securities for sale to investors by various governmental and
government-related organizations (see "Mortgage Pass-Through Securities"). Other
Funds also may invest in such securities for temporary defensive purposes.
Government Securities Fund also may invest in debt securities that are secured
with collateral consisting of mortgage-related securities (see "Collateralized
Mortgage Obligations"), and in other types of mortgage-related securities.
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MORTGAGE PASS-THROUGH SECURITIES. Interests in pools of mortgage-related
securities differ from other forms of debt securities that normally provide for
periodic payment of interest in fixed amounts with principal payments at
maturity or at specified call dates. Instead, these securities provide a monthly
payment that consists of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the individual
borrowers on their residential or commercial mortgage loans, net of any fees
paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying
property, refinancing or foreclosure, net of fees or costs that may be incurred.
Some mortgage-related securities (such as securities issued by Ginnie Mae) are
described as "modified pass-through." These securities entitle the holder to
receive all interest and principal payments owed on the mortgage pool, net of
certain fees, at the scheduled payment dates regardless of whether or not the
mortgagor actually makes the payment.
Ginnie Mae is the principal governmental guarantor of mortgage-related
securities. Ginnie Mae is a wholly owned U.S. government corporation within the
Department of Housing and Urban Development. Ginnie Mae is authorized to
guarantee, with the full faith and credit of the U.S. government, the timely
payment of principal and interest on securities issued by institutions approved
by Ginnie Mae (such as savings and loan institutions, commercial banks and
mortgage bankers) and backed by pools of FHA-insured or VA-guaranteed mortgages.
Government-related guarantors (i.e., not backed by the full faith and
credit of the U.S. government) include Fannie Mae and Freddie Mac. Fannie Mae is
a government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
Fannie Mae purchases conventional (i.e., not insured or guaranteed by any
government agency) residential mortgages from a list of approved
seller/servicers that include state and federally chartered savings and loan
associations, mutual savings banks, commercial banks and credit unions and
mortgage bankers. Pass-through securities issued by Fannie Mae are guaranteed as
to timely payment of principal and interest by Fannie Mae but are not backed by
the full faith and credit of the U.S. government.
Freddie Mac was created by Congress in 1970 for the purpose of increasing
the availability of mortgage credit for residential housing. It is a
government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. Freddie Mac issues
Participation Certificates ("PCs") that represent interests in conventional
mortgages from Freddie Mac's national portfolio. Freddie Mac guarantees the
timely payment of interest and ultimate collection of principal, but PCs are not
backed by the full faith and credit of the U.S.
government.
Mortgage-backed securities that are issued or guaranteed by the U.S.
government, its agencies or instrumentalities, are not subject to a Fund's
industry concentration restrictions, by virtue of the exclusion from that test
available to all U.S.
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government securities. The assets underlying such securities may be represented
by a portfolio of first lien residential mortgages (including both whole
mortgage loans and mortgage participation interests) or portfolios of mortgage
pass-through securities issued or guaranteed by Ginnie Mae, Fannie Mae or
Freddie Mac. Mortgage loans underlying a mortgage-related security may in turn
be insured or guaranteed by the Federal Housing Administration or the Department
of Veterans Affairs.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). A CMO is a hybrid between a
mortgage-backed bond and a mortgage pass-through security. Interest and prepaid
principal is paid, in most cases, monthly. CMOs may be collateralized by whole
mortgage loans, but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac,
and their income streams.
CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering
are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds
all bear current interest. Interest on the Series Z Bond is accrued and added to
principal and a like amount is paid as principal on the Series A, B, or C Bond
currently being paid off. When the Series A, B, and C Bonds are paid in full,
interest and principal on the Series Z Bond begin to be paid currently. With
some CMOs, the issuer serves as a conduit to allow loan originators (primarily
builders or savings and loan associations) to borrow against their loan
portfolios.
RISKS OF MORTGAGE-RELATED SECURITIES. Investment in mortgage-backed
securities poses several risks, including prepayment, market, and credit risk.
Prepayment risk reflects the risk that borrowers may prepay their mortgages
faster than expected, which may adversely affect the investment's average life
and yield. Whether or not a mortgage loan is prepaid is almost entirely
controlled by the borrower. Borrowers are most likely to exercise prepayment
options at the time when it is least advantageous to investors, generally
prepaying mortgages as interest rates fall, and slowing payments as interest
rates rise. Accordingly, amounts available for reinvestment by a Fund are likely
to be greater during a period of declining interest rates and, as a result,
likely to
<PAGE> 317
be reinvested at lower interest rates than during a period of rising interest
rates. Besides the effect of prevailing interest rates, the rate of prepayment
and refinancing of mortgages may also be affected by home value appreciation,
ease of the refinancing process and local economic conditions.
Market risk reflects the risk that the price of the security may fluctuate
over time. The price of mortgage-backed securities may be particularly sensitive
to prevailing interest rates, the length of time the security is expected to be
outstanding, and the liquidity of the issue. In a period of unstable interest
rates, there may be decreased demand for certain types of mortgage-backed
securities, and a fund invested in such securities wishing to sell them may find
it difficult to find a buyer, which may in turn decrease the price at which they
may be sold. In addition, as a result of the uncertainty of cash flows of lower
tranche CMOs, the market prices of and yield on those tranches generally are
more volatile.
Credit risk reflects the risk that a Fund may not receive all or part of
its principal because the issuer or credit enhancer has defaulted on its
obligations. Obligations issued by U.S. government-related entities are
guaranteed as to the payment of principal and interest, but are not backed by
the full faith and credit of the U.S. government. With respect to GNMA
certificates, although GNMA guarantees timely payment even if homeowners delay
or default, tracking the "pass-through" payments may, at times, be difficult.
The average life of CMOs is determined using mathematical models that
incorporate prepayment assumptions and other factors that involve estimates of
future economic and market conditions. These estimates may vary from actual
future results, particularly during periods of extreme market volatility. In
addition, under certain market conditions, such of those that developed in 1994,
the average weighted life of mortgage derivative securities may not accurately
reflect the price volatility of such securities. For example, in periods of
supply and demand imbalances in the market for such securities and/or in periods
of sharp interest rate movements, the prices of mortgage derivative securities
may fluctuate to a greater extent than would be expected from interest rate
movements alone.
A Fund's investments in CMOs also are subject to extension risk. Extension
risk is the possibility that rising interest rates may cause prepayments to
occur at a slower than expected rate. This particular risk may effectively
change a security that was considered short or intermediate-term at the time of
purchase into a long-term security. Long-term securities generally fluctuate
more widely in response to changes in interest rates than short or
intermediate-term securities.
COMMERCIAL PAPER AND OTHER CASH SECURITIES
Commercial paper purchased by Money Market Fund must be rated by any two
nationally recognized statistical rating organizations (NRSROs), or by the only
NRSRO
<PAGE> 318
that has rated the security, in one of the two highest short-term rating
categories, or be comparable unrated securities. However, the Fund may not
invest more than 5% of its total assets in securities rated in the second
highest rating category. For a list of NRSROs and a description of their
ratings, see the Appendix to this SAI.
A Fund may also acquire certificates of deposit and bankers' acceptances
of banks which meet criteria established by the Funds' Board of Directors. A
certificate of deposit is a short-term obligation of a bank. A banker's
acceptance is a time draft drawn by a borrower on a bank, usually relating to an
international commercial transaction.
WHEN-ISSUED SECURITIES
The Funds (other than Money Market Fund) may purchase securities on a
when-issued or delayed-delivery basis; i.e., the securities are purchased with
settlement taking place at some point in the future beyond a customary
settlement date. The payment obligation and, in the case of debt securities, the
interest rate that will be received on the securities are generally fixed at the
time a Fund enters into the purchase commitment. During the period between
purchase and settlement, no payment is made by the Fund and, in the case of debt
securities, no interest accrues to the Fund. At the time of settlement, the
market value of the security may be more or less than the purchase price, and
the Fund bears the risk of such market value fluctuations. The Fund will
maintain liquid assets, such as cash, U.S. government securities or other liquid
equity or debt securities, having an aggregate value equal to the purchase
price, in a segregated account with its custodian until payment is made. A Fund
also will segregate assets in this manner in situations where additional
installments of the original issue price are payable in the future.
BORROWING
If a Fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is repaid. Each Fund will attempt to minimize
such fluctuations by not purchasing securities when borrowings are greater than
5% of the value of the Fund's total assets. Interest on borrowings will reduce a
Fund's income. See "Investment Restrictions" above for each Fund's limitation on
borrowing.
SECURITIES OF OTHER INVESTMENT COMPANIES
Each of the Funds may acquire securities of other investment companies,
subject to the limitations of the 1940 Act. As of the date of this Statement of
Additional Information, no Fund intends to purchase such securities during the
coming year in excess of the following limitations: (a) no more than 3% of the
voting securities of any one investment company may be owned in the aggregate by
the Fund and all other Funds, (b) no more than 5% of the value of the total
assets of the Fund may be invested in any one investment company, and (c) no
more than 10% of the value of the total assets of the Fund and all other Funds
may be invested in the securities of all such
<PAGE> 319
investment companies. Should a Fund purchase securities of other investment
companies, shareholders may incur additional management, advisory, and
distribution fees.
CERTAIN INVESTMENTS
From time to time, to the extent consistent with their investment
objectives, policies and restrictions, the Funds may invest in securities of
companies with which Mellon Bank, N.A., an affiliate of Founders, has a lending
relationship.
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
The business and affairs of the Funds are subject to the supervision and
general oversight of the Company's Board of Directors. The Directors and
officers of the Company, and their principal occupations for the last five years
and their affiliations, if any, with Founders, are as follows:
DIRECTORS
JAY A. PRECOURT 1,2
328 Mill Creek Circle
Vail, CO 81657
Chairman of the Board and Director of the Company
Retired. Formerly (1988 to 1999), President, Chief Executive Officer,
Vice Chairman and Director, Tejas Energy, L.L.C., Houston, Texas.
Director, Halliburton Company, Dallas, Texas; Director, The Timken
Company, Canton, Ohio. Until 1988, President of the Energy Related
Group and Director, Hamilton Oil Corporation, Denver, Colorado. Born:
July 12, 1937.
EUGENE H. VAUGHAN, JR., CFA 1,3
6300 Texas Commerce Tower
Houston, Texas
Vice Chairman of the Board and Director of the Company
President and Chief Executive Officer, Vaughan, Nelson, Scarborough &
McCullough, L.P., an investment counseling firm, Houston, Texas. Founding
Chairman and Governor, Association for Investment Management and Research;
Past Chairman and Trustee, Institute of Chartered Financial Analysts; Past
Chairman and Director, Financial Analysts Federation; Trustee, Vanderbilt
University. Born: October 5, 1933.
<PAGE> 320
ALAN S. DANSON 3,4
3005A Booth Falls Road
Vail, Colorado
Director of the Company
Director and Senior Vice President, OptiMark Technologies, Inc.
(computerized securities trading services), and President, D.H.
Management, Inc. (general partner of limited partnership with
technology company holdings). Between March 1, 1992, and June 30,
1993, Mr. Danson was President and Chief Executive Officer of ACCI
Securities, Inc., a wholly-owned subsidiary of Acciones y Valores de
Mexico, S.A. de C.V., a Mexican brokerage firm. Mr. Danson was
Director of International Relations of Acciones y Valores between March
1, 1990, and February 28, 1992. Prior to joining Acciones y Valores,
Mr. Danson was President of Integrated Medical Systems, Inc., a
privately held company based in Golden, Colorado. Born: June 15, 1939.
JOAN D. MANLEY 2
0031 Wild Irishman Lane
Keystone, Colorado
Director of the Company
Retired. Formerly (1960 to 1984), Ms. Manley served in several
executive capacities with Time Incorporated, most recently as Group
Vice President, Director, and Chairman of Time-Life Books, Inc. and
Book of the Month Club, Inc. Director, Sara Lee Corporation, Chicago,
Illinois. Director, Big Flower Holdings, Inc., New York, New York.
Born: September 23, 1932.
ROBERT P. MASTROVITA *3,4
88 Upland Road
Duxbury, Massachusetts
Director of the Company
Private investor; Chairman of private foundation. Formerly (1982 to
1997), Chairman and Director, Hagler, Mastrovita & Hewitt, Inc.,
Boston, Massachusetts, a registered investment adviser. Member, Boston
Society of Security Analysts. Overseer and Investment Committee
Member, Boston Children's Hospital. Born: November 6, 1944.
TRYGVE E. MYHREN 1,2,4
2280 Detroit Street, Suite 200
Denver, Colorado
Director of the Company
President, Myhren Media, Inc., Denver, Colorado, a firm that invests in
and advises media, telecommunications, internet and software companies.
Director, Advanced Marketing Services, Inc., LaJolla, California;
Director, Peapod, Ltd., Evanston, Illinois; Director, J.D. Edwards,
Denver, Colorado; and Director, Verio Inc., Englewood, Colorado. Formerly,
President of The Providence Journal
<PAGE> 321
Company, a diversified media and communications company, Providence, Rhode
Island, from 1990 to 1996; Chairman and Chief Executive Officer of American
Television and Communications Corporation, a cable television company,
Denver, Colorado, from 1981 to 1988; and Chairman, National Cable
Television Association, from 1986 to 1987. Mr. Myhren also serves on the
boards of the University of Denver and National Jewish Medical Center, both
of which are in Denver, Colorado. Born: January 3, 1937.
GEORGE W. PHILLIPS 2
101 Chestnut Street
Boston, Massachusetts
Director of the Company
Retired. Director and Chairman, Strategic Planning Committee, Warren
Bancorp, Inc., Peabody, Massachusetts, a state-chartered bank holding
company. Formerly (1991 to 1997), Mr. Phillips was President and Chief
Executive Officer of Warren Bancorp, Inc. and Warren Five Cents Savings
Bank. Trustee and Chairman of the Finance and Investment Committees,
Children's Medical Center of Boston, Boston, Massachusetts. Born:
April 5, 1938.
* Mr. Mastrovita served as a non-employee director of The Boston Company,
Inc. and Boston Safe Deposit and Trust Company until March 15, 1998.
During 1998, Mr. Mastrovita received $10,250 for his service in these
capacities. In addition, since July 1998, he has received directors'
retirement benefits from these companies at a rate of $15,000 per year.
Since both of these companies are indirect subsidiaries of Mellon Bank
Corporation, Founders' ultimate parent company, it is possible that Mr.
Mastrovita might be determined to be an interested director as defined in
the 1940 Act. However, the Company does not concede that these prior
directorships or Mr. Mastrovita's receipt of directors' retirement
benefits would make him an interested director of the Funds.
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Investment Integrity Committee
4 Member of Valuation Committee
COMMITTEES
The committees of the Board are the Executive Committee, Audit Committee,
Investment Integrity Committee and Valuation Committee. The Company also has a
Committee on Directors, composed of all of the non-interested ("independent")
directors and chaired by Mr. Precourt, which serves as a nominating committee.
For at least so long as the plans of distribution pursuant to Rule 12b-1 under
the 1940 Act of certain of the Company's Funds remain in effect, the selection
and nomination of the Company's independent directors will be a matter left to
the discretion of such independent
<PAGE> 322
directors. Except for certain powers that, under applicable law, may only be
exercised by the full Board of Directors, the Executive Committee may exercise
all powers and authority of the Board of Directors in the management of the
business of the Company.
The Audit Committee meets periodically with the Company's independent
accountants and the executive officers of Founders. This Committee reviews the
accounting principles being applied by the Company in financial reporting, the
scope and adequacy of internal controls, the responsibilities and fees of the
Company's independent accountants and other matters. The Investment Integrity
Committee monitors compliance with several Fund policies, including those
governing brokerage, trade allocations, proxy voting, cross trades, and the
Funds' Code of Ethics. The Valuation Committee is responsible for determining
the methods used to value Fund securities for which market quotations are not
readily available, subject to the approval of the Board.
DIRECTOR COMPENSATION
The following table sets forth, for the fiscal year ended December 31,
1998, the compensation paid by the Company to its directors for services
rendered in their capacities as directors of the Company. The Company has no
plan or other arrangement pursuant to which any of the Company's directors
receive pension or retirement benefits. Therefore, none of the Company's
directors has estimated annual benefits to be paid by the Company upon
retirement.
Compensation Table
Total compensation
from Company (11
Funds total) paid to
Name of Person, Position 1 directors 1
----------------------------------------------- ----------------------
Jay A. Precourt, Chairman and Director $47,500
Eugene H. Vaughan, Jr., Vice Chairman and $31,250
Director
William H. Baughn, Director 2 $37,750
Bjorn K. Borgen, Director 3 $26,000
Alan S. Danson, Director $34,500
Robert P. Mastrovita, Director 4 $25,000
Trygve E. Myhren, Director $35,000
George W. Phillips, Director 4 $27,500
----------------------------------------------- ----------------------
TOTAL 5 $264,500
1 The Chairman of the Board, the Chairmen of the Company's Audit and Investment
Integrity Committees, and the members of the Audit and Investment Integrity
Committees each received compensation for serving in such capacities in
addition to the compensation paid to all directors.
2 Mr. Baughn retired as a director of the Company effective December 31, 1998.
<PAGE> 323
3 Mr. Borgen began receiving compensation for his service as a director of the
Company in April 1998. His term as director expired March 2, 1999.
4 Messrs. Mastrovita and Phillips were elected to the Board of Directors in May
1998.
5 Joan D. Manley was elected to the Board of Directors in mid-December 1998,
and began receiving director's compensation in 1999.
OFFICERS
The officers of the Company and their principal occupations for the last
five years appear below. All of the Company's officers are affiliated with its
principal underwriter, Premier Mutual Fund Services, Inc. ("Premier"), or
Premier's affiliate, Funds Distributor, Inc. ("FDI"). None of these individuals
is affiliated with Founders.
MARIE E. CONNOLLY
60 State Street
Boston, Massachusetts 02109
President and Treasurer
President (since January 1992); Chief Executive Officer (since April
1995); Treasurer (July 1993 to April 1994); Chief Operating Officer (April
1994 to April 1995); Chief Compliance Officer (April 1994 to September
1998); and Director (since June 1992) of FDI; President, Chief Operating
Officer and Director of Premier (since April 1994); Chief Executive
Officer of Premier (since July 1995); Chief Compliance Officer of Premier
(June 1995 to September 1998). Born: August 1, 1957.
MARGARET W. CHAMBERS
60 State Street
Boston, Massachusetts 02109
Vice President and Secretary
Senior Vice President, General Counsel, Secretary and Clerk of FDI (since
April 1998); Senior Vice President, General Counsel and Secretary of
Premier (since April 1998); Chief Compliance Officer of FDI and Premier
(since September 1998). Formerly, Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. (August 1996 to March 1998) and
associate with the law firm of Ropes & Gray (January 1986 to July 1996).
Born: October 12, 1959.
CHRISTOPHER J. KELLEY
60 State Street
Boston, Massachusetts 02109
Vice President and Assistant Secretary
Vice President and Senior Associate General Counsel of FDI (since August
1996). Formerly, Assistant Counsel at Forum Financial Group (April 1994 to
July 1996) and employed by Putnam Investments in legal and compliance
capacities (October 1992 to March 1994). Born:
December 24, 1964.
<PAGE> 324
KATHLEEN K. MORRISEY
60 State Street
Boston, Massachusetts 02109
Vice President and Assistant Secretary
Assistant Vice President of FDI (since November 1998); Manager of
Treasury Operations of FDI (since December 1995). Formerly (July 1994
to November 1995), Fund Accountant II for Investors Bank & Trust
Company. Born: July 5, 1972.
MARY A. NELSON
60 State Street
Boston, Massachusetts 02109
Vice President and Assistant Treasurer
Vice President and Manager of Treasury Services and Administration of
FDI and Premier (since March 1996); Assistant Treasurer of FDI (August
1994 to March 1996). Formerly (September 1989 to July 1994), Assistant
Vice President and Client Manager for The Boston Company. Born: April
22, 1964.
STEPHANIE D. PIERCE
200 Park Avenue
New York, NY 10166
Vice President, Assistant Treasurer and Assistant Secretary Vice President
(since June 1998) and Client Development Manager (since April 1998) of
FDI. Formerly, Relationship Manager on the Business and Professional
Banking team at Citibank, NA (April 1997 to March 1998); Assistant Vice
President for Hudson Valley Bank (August 1995 to April 1997); and Second
Vice President for Chase Manhattan Bank (September 1990 to August 1995).
Born: August 18, 1968.
GEORGE A. RIO
60 State Street
Boston, MA 02109
Vice President and Assistant Treasurer
Executive Vice President and Client Service Director of FDI and Premier
(since April 1998). Formerly, Senior Vice President, Senior Key Account
Manager for Putnam Mutual Funds (June 1995 to March 1998), Director of
Business Development for First Data Corporation (May 1994 to June 1995),
and Senior Vice President and Manager of Client Services and Director of
Internal Audit at The Boston Company (September 1983 to May 1994). Born:
January 2, 1955.
<PAGE> 325
JOSEPH F. TOWER, III
60 State Street
Boston, Massachusetts 02109
Vice President and Assistant Treasurer
Senior Vice President (since November 1994), Treasurer and Chief Financial
Officer (since April 1994) and Director (since January 1997) of FDI; Vice
President of FDI (November 1993 to November 1994); Senior Vice President
(since June 1995), Treasurer and Chief Financial Officer (since April
1994) and Director (since January 1997) of Premier; Vice President of
Premier (April 1994 to June 1995). Formerly (July 1988 to August 1994),
employed by The Boston Company, Inc. in various management positions in
the Corporate Finance and Treasury areas.
Born: June 13, 1962.
ELBA VASQUEZ
200 Park Avenue
New York, New York 10166
Vice President and Assistant Secretary
Assistant Vice President (since June 1997) and Sales Associate (since
May 1996) of FDI. Formerly (March 1990 to May 1996), employed in
various mutual fund sales and marketing positions by U.S. Trust Company
of New York. Born: December 14, 1961.
As of September 10, 1999, the Company's directors and officers as a group
owned less than 1% of the outstanding shares of each Fund, with the exception of
the Money Market Funds, in which the ownership interests of the group totaled
5.31%.
- --------------------------------------------------------------------------------
INVESTMENT ADVISER, DISTRIBUTOR AND OTHER SERVICE PROVIDERS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Founders serves as investment adviser to the Funds. Founders is a
90%-owned subsidiary of Mellon Bank, N. A. ("Mellon"), which is a wholly-owned
subsidiary of Mellon Financial Corporation ("MFC"), a publicly owned multibank
holding company incorporated under Pennsylvania law in 1971 and registered under
the Federal Bank Holding Company Act of 1956, as amended. Mellon and MFC are
located at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258. MFC provides
a comprehensive range of financial products and services in domestic and
selected international markets. MFC's banking subsidiaries are located in
Pennsylvania, Massachusetts, Delaware, Maryland, New Jersey, and Florida, while
other subsidiaries are located in key business centers throughout the United
States and abroad. MFC currently ranks among the nation's largest bank holding
companies based on market capitalization.
<PAGE> 326
MFC's principal wholly-owned subsidiaries are Mellon, The Boston Company,
Inc., Mellon Bank (DE) National Association, Mellon Bank (MD) National
Association, and a number of companies known as Mellon Financial Services
Corporation. MFC also owns a federal savings bank headquartered in Pennsylvania,
Mellon Bank, F.S.B. The Dreyfus Corporation ("Dreyfus"), one of the nation's
largest mutual fund companies, is a wholly-owned subsidiary of Mellon. MFC's
banking subsidiaries engage in retail financial services, commercial banking,
trust and investment management services, residential real estate loan
financing, mortgage servicing, equipment leasing, mutual fund activities and
various securities-related activities. Through its subsidiaries, MFC managed
more than $389 billion in assets as of December 31, 1998. As of that date,
various subsidiaries of MFC provided non-investment services, such as custodial
or administration services, for approximately $1.9 trillion in assets.
Under the investment advisory agreement between the Company, on behalf of
each Fund, and Founders, Founders furnishes investment management and
administrative services to the Funds, subject to the overall supervision of the
Board of Directors of the Company. In addition, Founders provides office space
and facilities for the Funds and pays the salaries, fees and expenses of all
Founders officers and other employees connected with the operation of the
Company. In addition, Founders pays the fees charged by the Company's
distributor, Premier Mutual Fund Services, Inc. The Funds compensate Founders
for its services by the payment of fees computed daily and paid monthly as
follows:
MID-CAP GROWTH AND GROWTH FUNDS
On Assets in But Not
EXCESS OF EXCEEDING ANNUAL FEE
------------- ------------ ----------
$0 $30,000,000 1.00%
30,000,000 300,000,000 0.75%
300,000,000 500,000,000 0.70%
500,000,000 --- 0.65%
GROWTH AND INCOME AND BALANCED FUNDS
On Assets in But Not
EXCESS OF EXCEEDING ANNUAL FEE
------------- ------------ ----------
$0 $250,000,000 0.65%
250,000,000 500,000,000 0.60%
500,000,000 750,000,000 0.55%
750,000,000 --- 0.50%
<PAGE> 327
MONEY MARKET FUND
On Assets in But Not
EXCESS OF EXCEEDING ANNUAL FEE
------------- ------------ ----------
$0 $250,000,000 0.50%
250,000,000 500,000,000 0.45%
500,000,000 750,000,000 0.40%
750,000,000 --- 0.35%
GOVERNMENT SECURITIES FUND
On Assets in But Not
EXCESS OF EXCEEDING ANNUAL FEE
------------- ------------ ----------
$0 $250,000,000 0.65%
250,000,000 --- 0.50%
DISCOVERY, PASSPORT, INTERNATIONAL EQUITY, AND WORLDWIDE GROWTH FUNDS
On Assets in But Not
EXCESS OF EXCEEDING ANNUAL FEE
------------- ------------ ----------
$0 $250,000,000 1.00%
250,000,000 500,000,000 0.80%
500,000,000 --- 0.70%
FOCUS FUND
On Assets in But Not
EXCESS OF EXCEEDING ANNUAL FEE
------------- ------------ ----------
$0 $250,000,000 0.85%
250,000,000 500,000,000 0.80%
500,000,000 --- 0.75%
The investment advisory fees are calculated based on each Fund's net
assets as a whole, and are then allocated among each Fund's respective Classes
based on their relative net assets.
The net assets of the Funds at the end of fiscal year 1998 were as
follows: Balanced Fund - $1,244,221,142; Discovery Fund - $241,123,717;
Government Securities Fund - $15,220,129; Growth Fund - $2,360,179,531; Growth
and Income Fund - $542,306,718; International Equity Fund - $18,937,507; Mid-Cap
Growth Fund - $252,854,647; Money Market Fund - $91,414,543; Passport Fund -
$124,572,151; and Worldwide Growth Fund - $272,053,390. Focus Fund did not
commence operations until December 31, 1999.
<PAGE> 328
The Funds pay all of their expenses not assumed by Founders, including
fees and expenses of all members of the Board of Directors, of advisory boards
or of committees of the Board of Directors; compensation of the Company's
custodian, transfer agent and other agents; an allocated portion of premiums for
insurance required or permitted to be maintained under the 1940 Act; expenses of
computing the Funds' daily per share net asset value; legal and accounting
expenses; brokerage commissions and other transaction costs; interest; all
federal, state and local taxes (including stamp, excise, income and franchise
taxes); fees payable under federal and state law to register or qualify the
Funds' shares for sale; an allocated portion of fees and expenses incurred in
connection with membership in investment company organizations and trade
associations; preparation of prospectuses (including typesetting) and printing
and distribution thereof to existing shareholders; expenses of local
representation in Maryland; and expenses of shareholder and directors meetings
and of preparing, printing and distributing reports to shareholders. The Company
also has the obligation for expenses, if any, incurred by it in connection with
litigation, proceedings or claims, and the legal obligation it may have to
indemnify its officers and directors with respect thereto. In addition, Class B,
Class C, Class F and Class T shares are subject to an annual distribution fee
and Class A, Class B, Class C, and Class T shares are subject to an annual
service fee. See "Distribution Plans and Shareholder Services Plans."
As described in the applicable Prospectuses, certain expenses of Focus,
International Equity and Government Securities Funds are being reimbursed or
waived voluntarily by Founders pursuant to a commitment to the Funds.
During the fiscal years ended in 1998, 1997, and 1996 the gross investment
advisory fees paid by the Funds were as follows:
Fund 1998 1997 1996
---------------------- ------------- -------------- --------------
Balanced $6,446,156 $4,489,769 $1,538,236
Discovery $2,169,358 $2,426,658 $2,405,895
Government Securities $91,928 $90,247 $116,875
Growth $14,121,732 $10,050,831 $5,728,768
Growth and Income $3,423,449 $3,383,816 $2,891,784
International Equity $190,413 $142,381 $68,791
Mid-Cap Growth $2,241,440 $2,576,530 $2,839,655
Money Market $568,719 $610,538 $757,666
Passport $1,317,075 $1,808,142 $1,343,963
Worldwide Growth $2,935,009 $3,177,452 $3,022,945
The advisory agreement between Founders and the Company on behalf of each
of the Funds other than Focus Fund was approved by the shareholders of each Fund
at a shareholders' meeting of the Company held on February 17, 1998. The
advisory
<PAGE> 329
agreement was approved for an initial term ending May 31, 1999, and was renewed
on May 14, 1999 by the Company's Board of Directors, including all of the
Independent Directors (as defined below), for a period ending May 31, 2000. The
Advisory Agreement may be continued from year to year thereafter either by the
vote of a majority of the entire Board of Directors or by the vote of a majority
of the outstanding voting securities of each Fund, and in either case, after
review, by the vote of a majority of the Company's directors who are not
"interested persons" (as defined in the 1940 Act) (the "Independent Directors")
of the Company or Founders, cast in person at a meeting called for the purpose
of voting on such approval. The advisory agreement between Founders and the
Company on behalf of Focus Fund was approved by the initial shareholder of the
Fund on December 30, 1999 for an initial term ending May 31, 2001, and may be
continued from year to year thereafter in the manner described above.
With respect to each Fund, the advisory agreement may be terminated
without penalty at any time by the Board of Directors of the Company or by vote
of a majority of the outstanding securities of the Fund on 60 days' written
notice to Founders or by Founders on 60 days' written notice to the Company. The
agreement will terminate automatically if it is assigned, as that term is
defined in the 1940 Act. The agreement provides that each Fund may use the word
"Founders" in its name and business only as long as the agreement remains in
effect. Finally, the agreement provides that Founders shall not be subject to
any liability in connection with matters to which the agreement relates in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
Founders and its predecessor companies have been providing investment
management services since 1938. In addition to serving as adviser to the
Funds, Founders serves as investment adviser or sub-adviser to various other
mutual funds and private accounts. The officers of Founders include
Christopher M. Condron, Chairman, Richard W. Sabo, President and Chief
Executive Officer; Robert T. Ammann, Vice President; Thomas M. Arrington,
Vice President; Marissa A. Banuelos, Vice President; Angelo Barr, Senior Vice
President and National Sales Manager; Scott A. Chapman, Vice President;
Kenneth R. Christoffersen, Senior Vice President, General Counsel and
Secretary; Gregory P. Contillo, Executive Vice President and Chief Marketing
Officer; Francis P. Gaffney, Senior Vice President; Laurine Garrity, Senior
Vice President; Brian F. Kelly, Vice President; Paul A. LaRocco, Vice
President; Douglas A. Loeffler, Vice President; David L. Ray, Senior Vice
President and Treasurer; Linda M. Ripley, Vice President, and Tracy P.
Stouffer, Vice President.
DISTRIBUTOR
Premier Mutual Fund Services, Inc., located at 60 State Street, Boston,
Massachusetts 02109, serves as the Funds' distributor on a best efforts basis.
Premier became the Funds' distributor on April 1, 1998. Prior to that date,
Founders Asset Management, Inc., Founders' predecessor corporation ("Old
Founders"), acted as the
<PAGE> 330
Funds' distributor at no charge to the Funds. Since the Funds did not begin
offering Classes of shares with sales charges until December 31, 1999, Premier
did not receive any sales charges from Fund investors prior to that date. The
provisions for the continuation, termination and assignment of the Funds'
agreement with Premier are identical to those described above with regard to the
investment advisory agreement, except that termination other than upon
assignment or mutual agreement requires six months notice by either party. As
discussed above under "Directors and Officers," all of the Funds' officers are
affiliated with Premier or with affiliates of Premier.
Premier may pay dealers a fee based on the amount invested through such
dealers in Class A, Class B, Class C, Class R or Class T shares by employees
participating in qualified or non-qualified employee benefit plans or other
programs where (i) the employers or affiliated employers maintaining such plans
or programs have a minimum of 250 employees eligible for participation in such
plans or programs or (ii) such plan's or program's aggregate investment in the
Funds, the Dreyfus Family of Funds, the Dreyfus Premier Family of Funds, or
certain other products made available by Premier to such plans or programs
exceeds $1,000,000 ("Eligible Benefit Plans"). Generally, the fee paid to
dealers will not exceed 0.50% of the amount invested through such dealers.
Premier, however, may pay dealers a higher fee and reserves the right to cease
paying these fees at any time. Premier will pay such fees from its own funds,
other than amounts received from a Fund, including past profits or any other
source available to it.
Premier, at its expense, may provide promotional incentives to dealers
that sell shares of the Funds which are sold with a sales load. In some
instances, those incentives may be offered only to certain dealers who have sold
or may sell significant amounts of shares.
TRANSFER AGENTS AND CUSTODIAN
Dreyfus Transfer, Inc. ("DTI"), a wholly-owned subsidiary of The Dreyfus
Corporation (an affiliate of Founders), is the transfer and dividend disbursing
agent for Classes A, B, C, R and T of the Funds. DTI is located at P.O. Box
9671, Providence, Rhode Island 02940-9671. Under a transfer agency agreement
with the Company, DTI arranges for the maintenance of shareholder account
records for the Class A, B, C, R and T shares of the Funds, the handling of
certain communications between shareholders and the Funds, and the payment of
dividends and distributions payable by the Funds with respect to these Classes
of shares. For these services, DTI receives a monthly fee computed on the basis
of the number of Class A, B, C, R and T shareholder accounts it maintains for
the Funds during the month, and is reimbursed for certain out-of-pocket
expenses.
Investors Fiduciary Trust Corporation ("IFTC") is the transfer and
dividend disbursing agent for Class F shares. IFTC is located at 801
Pennsylvania, Kansas City, Missouri 64105. IFTC provides transfer agent services
to the Class F shares of the
<PAGE> 331
Funds similar to those described above to the extent such services are not
provided by Founders, as described under "Other Services - Shareholder Services
Agreement."
DTI and IFTC are each individually referred to as a "Transfer Agent"
and collectively as the "Transfer Agents."
IFTC also acts as custodian of the Funds' investments. Under a custody
agreement with the Funds, IFTC holds the Funds' securities and keeps all
necessary accounts and records.
- --------------------------------------------------------------------------------
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
GENERAL. Balanced, Discovery, Focus, Growth, Growth and Income,
International Equity, Mid-Cap Growth, Passport, and Worldwide Growth Funds are
referred to as the Equity Funds. Government Securities and Money Market Funds
are referred to as the Income Funds. The Equity Funds offer multiple classes of
shares. Class A, Class B, Class C, Class F, Class R and Class T shares are
available for the Equity Funds. The Income Funds offer Class F shares.
Class A, Class B, Class C and Class T may be purchased only by clients of
certain financial institutions (which may include banks), securities dealers
("Selected Dealers") and other industry professionals (collectively, "Agents"),
except that full-time or part-time employees of Founders or any of its
affiliates or subsidiaries, members of Founders' Board of Managers, members of
the Company's Board, or the spouse or minor child of any of the foregoing may
purchase Class A shares directly through Premier. Subsequent purchases may be
sent directly to the Transfer Agent, or your Agent.
Class R shares are offered only to bank trust departments and other
financial service providers (including Mellon Bank, N.A. and its affiliates)
acting on behalf of customers having a qualified trust or investment account or
relationship at such institution or to customers who received and hold shares of
a Fund distributed to them by virtue of such an account or relationship. Class R
shares may be purchased for qualified or non-qualified employee benefit plans,
including pension, profit-sharing, IRAs set up under a Simplified Employee
Pension Plan ("SEP-IRAs") and other deferred compensation plans, whether
established by corporations, partnerships, non-profit entities or state and
local governments ("Retirement Plans"), only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Retirement Plan.
Institutions effecting transactions in Class R shares for the accounts of their
clients may charge their clients direct fees in connection with such
transactions.
<PAGE> 332
Class F shares generally are offered only to persons or entities who have
held shares of any Fund continuously since December 30, 1999. See the Class F
Prospectus for more detailed information regarding eligibility to purchase Class
F shares.
When purchasing Fund shares, you must specify which Class is being
purchased. The Company does not issue stock certificates. The Company
reserves the right to reject any purchase order.
Agents may receive different levels of compensation for selling different
Classes of shares. Agents may impose certain conditions on their clients which
are different from those described in the Company's Prospectuses and this
Statement of Additional Information, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees. You should consult
your Agent in this regard.
Except as stated below, the minimum initial investment for all Classes is
$1,000, and the minimum subsequent investment is $100. However, with respect to
Class F, the minimum initial investment for IRA and UGMA/UTMA accounts is $500,
and there is no minimum required if you begin an automatic investment plan or
payroll deduction program of $50 or more per month or per pay period. With
respect to Classes A, B, C and T, the minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans
with only one participant and $500 for Dreyfus-sponsored Education IRAs, with no
minimum for subsequent purchases. The initial investment must be accompanied by
the Account Application. The Company reserves the right to offer Fund shares
without regard to minimum purchase requirements to employees participating in
certain qualified or non-qualified employee benefit plans or other programs
where contributions or account information can be transmitted in a manner and
form acceptable to the Company. The Company reserves the right to vary further
the initial and subsequent investment minimum requirements at any time.
Founders' employees and their household family members may open accounts
in Class F shares of a Fund with a minimum initial investment of $250. The
minimum additional investment by such persons is $25.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to certain Retirement
Plans. These limitations apply with respect to participants at the plan level
and, therefore, do not directly affect the amount that may be invested in a Fund
by a Retirement Plan. Participants and plan sponsors should consult their tax
advisers for details.
Fund shares (other than Class F shares) also may be purchased through
Dreyfus-AUTOMATIC Asset Builder(R), Dreyfus Payroll Savings Plan and Dreyfus
Government Direct Deposit Privilege described under "Shareholder Services."
These services enable you to make regularly scheduled investments and may
provide you with
<PAGE> 333
a convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will not
protect an investor against loss in a declining market.
Fund shares are sold on a continuous basis. Net asset value per share
is determined as described under "Pricing of Shares."
If an order is received in proper form by the Transfer Agents or any
entity authorized to receive orders on behalf of the Company by the close of
regular trading on the floor of the New York Stock Exchange (currently 4:00
p.m., Eastern time) on a business day, Fund shares will be purchased at the
public offering price determined as of the close of trading on the floor of the
New York Stock Exchange on that day. Otherwise, Fund shares will be purchased at
the public offering price determined as of the close of regular trading on the
floor of the New York Stock Exchange on the next business day, except where
shares are purchased through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by the close of
regular trading on the floor of the New York Stock Exchange on any business day
and transmitted to Premier or its designee by the close of its business day
(normally 5:15 p.m., Eastern time) will be based on the public offering price
per share determined as of the close of regular trading on the floor of the New
York Stock Exchange on that day. Otherwise, the orders will be based on the next
determined public offering price. It is the dealer's responsibility to transmit
orders so that they will be received by Premier or its designee before the close
of its business day. For certain institutions that have entered into agreements
with Premier, payment for the purchase of Fund shares may be transmitted, and
must be received by the applicable Transfer Agent, within three business days
after the order is placed. If such payment is not received within three business
days after the order is placed, the order may be canceled and the institution
could be held liable for resulting fees and/or losses.
Federal regulations require that you provide a certified taxpayer
identification number ("TIN") upon opening or reopening an account. See the
Account Application for further information concerning this requirement. Failure
to furnish a certified TIN to the Company could subject you to a $50 penalty
imposed by the Internal Revenue Service.
CLASS A SHARES. The public offering price for Class A shares of the Equity
Funds is the net asset value per share of that Class plus a sales load as shown
below:
<PAGE> 334
Total Sales Load
------------------------------------------------
As a % of As a % of Dealers'
offering net asset Reallowance as
price per value per a % of offering
Amount of Transaction share share price
- ---------------------- ------------- ------------- -----------------
Less than $50,000 5.75 6.10 5.00
$50,000 to less than 4.50 4.70 3.75
$100,000
$100,000 to less 3.50 3.60 2.75
than $250,000
$250,000 to less 2.50 2.60 2.25
than $500,000
$500,000 to less 2.00 2.00 1.75
than $1,000,000
$1,000,000 or more -0- -0- -0-
A contingent deferred sales charge ("CDSC") of 1% will be assessed at the
time of redemption of Class A shares purchased without an initial sales charge
as part of an investment of at least $1,000,000 and redeemed within one year of
purchase. Pursuant to an agreement with Premier, Dreyfus Service Corporation, a
wholly-owned subsidiary of the Dreyfus Corporation, may pay Agents an amount up
to 1% of the net asset value of Class A shares purchased by their clients that
are subject to a CDSC.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with Premier
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to the sale of such shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children, at net asset value, provided
they have furnished Premier with such information as it may request from time to
time in order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose full-time employees are eligible to purchase Class A shares
at net asset value. In addition, Class A shares are offered at net asset value
to full-time or part-time employees of Founders or any of its affiliates or
subsidiaries, members of Founders' Board of Managers, members of the Company's
Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also may be
purchased (including by exchange) at net asset value without a sales load for
Dreyfus-sponsored IRA "Rollover Accounts" with the distribution proceeds from a
qualified retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided, at
the time of such distribution, such
<PAGE> 335
qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan (a) met the
requirements of an Eligible Benefit Plan and all or a portion of such plan's
assets were invested in the Dreyfus Founders Funds, the Dreyfus Premier Family
of Funds, the Dreyfus Family of Funds or certain other products made available
by Premier to such plans, or (b) invested all of its assets in the Dreyfus
Founders Funds, funds in the Dreyfus Premier Family of Funds, certain funds in
the Dreyfus Family of Funds or certain other products made available by Premier
to such plans.
Class A shares may be purchased at net asset value through certain
broker-dealers and other financial institutions which have entered into an
agreement with Premier, which includes a requirement that such shares be sold
for the benefit of clients participating in a "wrap account" or a similar
program under which such clients pay a fee to such broker-dealer or other
financial institution.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a registered
open-end management investment company not managed by Founders or its
affiliates. The purchase of Class A shares must be made within 60 days of such
redemption and the shares redeemed must have been subject to an initial sales
charge or a CDSC.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, by (i) qualified separate accounts maintained by an
insurance company pursuant to the laws of any State or territory of the United
States, (ii) a State, county or city or instrumentality thereof, (iii) a
charitable organization (as defined in Section 501(c)(3) of the Code) investing
$50,000 or more in Fund shares, and (iv) a charitable remainder trust (as
defined in Section 501(c)(3) of the Code).
CLASS B SHARES. The public offering price for Class B shares is the net
asset value per share of that Class. No initial sales charge is imposed at the
time of purchase. A CDSC is imposed, however, on certain redemptions of Class B
shares as described in the Company's Prospectus covering the Class B shares and
in this Statement of Additional Information under "Redemption of
Shares--Contingent Deferred Sales Charge--Class B Shares."
Approximately six years after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative net asset
values for shares of each such Class. Class B shares that have been acquired
through the reinvestment of dividends and distributions will be converted on a
pro rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
CLASS C SHARES. The public offering price for Class C shares is the net
asset value per share of that Class. No initial sales charge is imposed at the
time of
<PAGE> 336
purchase. A CDSC is imposed, however, on redemptions of Class C shares made
within the first year of purchase. See "Class B Shares" above and "Redemption of
Shares."
CLASS B AND C SHARES. Pursuant to an agreement with Premier, Dreyfus
Service Corporation compensates certain Agents for selling Class B and Class C
shares at the time of purchase from its own assets. The proceeds of the CDSC and
the distribution fee, in part, are used to defray these expenses.
CLASS F AND CLASS R SHARES. The public offering price for Class F and
Class R shares is the net asset value per share of the respective Class.
CLASS T SHARES. The public offering price for Class T shares is the net
asset value per share of that class plus a sales load as shown below:
Total Sales Load
------------------------------------------------
As a % of As a % of Dealers'
offering net asset Reallowance as
price per value per a % of offering
Amount of Transaction share share price
- ---------------------- ------------- ------------- -----------------
Less than $50,000 4.50 4.70 4.00
$50,000 to less than 4.00 4.20 3.50
$100,000
$100,000 to less 3.00 3.10 2.50
than $250,000
$250,000 to less 2.00 2.00 1.75
than $500,000
$500,000 to less 1.50 1.50 1.25
than $1,000,000
$1,000,000 or more -0- -0- -0-
A CDSC of 1.00% will be assessed at the time of redemption of Class T
shares purchased without an initial sales charge as part of an investment of at
least $1,000,000 and redeemed within one year of purchase. Pursuant to an
agreement with Premier, Dreyfus Service Corporation may pay Agents an amount up
to 1% of the net asset value of Class T shares purchased by their clients that
are subject to a CDSC. Because the expenses associated with Class A shares will
be lower than those associated with Class T shares, purchasers investing
$1,000,000 or more in the Fund will generally find it beneficial to purchase
Class A shares rather than Class T shares.
Class T shares are offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans. Class T shares also may be
purchased (including by exchange) at net asset value without a sales load for
Dreyfus-sponsored IRA
<PAGE> 337
"Rollover Accounts" with the distribution proceeds from a qualified retirement
plan or a Dreyfus-sponsored 403(b)(7) plan, provided, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan
(a) met the requirements of an Eligible Benefit Plan and all or a portion of
such plan's assets were invested in the Dreyfus Founders Funds, the Dreyfus
Premier Family of Funds, the Dreyfus Family of Funds or certain other products
made available by Premier to such plans, or (b) invested all of its assets in
the Dreyfus Founders Funds, funds in the Dreyfus Premier Family of Funds,
certain funds in the Dreyfus Family of Funds or certain other products made
available by Premier to such plans.
DEALER REALLOWANCE - CLASS A AND CLASS T SHARES. The dealer reallowance
provided with respect to Class A and Class T shares may be changed from time to
time but will remain the same for all dealers. Premier, at its own expense, may
provide additional promotional incentives to dealers that sell shares of funds
advised by Founders which are sold with a sales load, such as Class A and Class
T shares. In some instances, these incentives may be offered only to certain
dealers who have sold or may sell significant amounts of such shares.
SALES LOADS -- CLASS A AND CLASS T SHARES. The scale of sales loads
applies to purchases of Class A and Class T shares made by any "purchaser,"
which term includes an individual and/or spouse purchasing securities for his,
her or their own account or for the account of any minor children, or a trustee
or other fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee benefit
trust created pursuant to a plan qualified under Section 401 of the Code)
although more than one beneficiary is involved; or a group of accounts
established by or on behalf of the employees of an employer or affiliated
employers pursuant to an employee benefit plan or other program (including
accounts established pursuant to Sections 403(b), 408(k) and 457 of the Code);
or an organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of each Equity Fund's Class A shares. Each example assumes a purchase of
Class A shares aggregating less than $50,000 subject to the schedule of sales
charges set forth above at a price based upon the Fund's net asset value on June
30, 1999:
<PAGE> 338
Per Share Sales
Charge - 5.75%
of offering Per Share
price (6.10% of Offering
net asset value Price to
Fund NAV per Share per share) the Public
- -------------------- --------------- ------------------ -------------
Balanced $12.17 $0.74 $12.91
Discovery $30.81 $1.88 $32.69
Focus* $12.50 $0.76 $13.26
Growth $22.66 $1.38 $24.04
Growth and Income $ 7.55 $0.46 $ 8.01
International Equity $15.09 $0.92 $16.01
Mid-Cap Growth $ 8.23 $0.50 $ 8.73
Passport $16.32 $1.00 $17.32
Worldwide Growth $23.34 $1.42 $24.76
* Since Focus Fund was not in existence on June 30, 1999, this example is
based on an initial net asset value of $12.50 per share.
Set forth below is an example of the method of computing the offering
price of each Equity Fund's Class T shares. Each example assumes a purchase of
Class T shares aggregating less than $50,000 subject to the schedule of sales
charges set forth above at a price based upon the Fund's net asset value on June
30, 1999:
Per Share Sales
Charge - 4.50%
of offering Per Share
price (4.71% of Offering
net asset value Price to
Fund NAV per Share per share) the Public
- -------------------- --------------- ------------------ -------------
Balanced $12.17 $0.57 $12.74
Discovery $30.81 $1.45 $32.26
Focus* $12.50 $0.59 $13.09
Growth $22.66 $1.07 $23.73
Growth and Income $ 7.55 $0.36 $ 7.91
International Equity $15.09 $0.71 $15.80
Mid-Cap Growth $ 8.23 $0.39 $ 8.62
Passport $16.32 $0.77 $17.09
Worldwide Growth $23.34 $1.10 $24.44
* Since Focus Fund was not in existence on June 30, 1999, this example is
based on an initial net asset value of $12.50 per share.
<PAGE> 339
RIGHT OF ACCUMULATION -- CLASS A AND CLASS T SHARES. Reduced sales loads
apply to any purchase of Class A and Class T shares, shares of other funds in
the Dreyfus Premier Family of Funds which are sold with a sales load, shares of
certain other funds advised by The Dreyfus Corporation, shares of other Funds
advised by Founders which are sold with a sales load and shares acquired by a
previous exchange of such shares (hereinafter referred to as "Eligible Funds"),
by you and any related "purchaser" as defined above, where the aggregate
investment, including such purchase, is $50,000 or more. If, for example, you
previously purchased and still hold Class A or Class T shares of a Fund, or
shares of any other Eligible Fund or combination thereof, with an aggregate
current market value of $40,000 and subsequently purchase Class A or Class T
shares of the Fund, or shares of an Eligible Fund having a current value of
$20,000, the sales load applicable to the subsequent purchase would be reduced
to 4.5% of the offering price in the case of Class A shares, or 4.00% of the
offering price in the case of Class T shares. All present holdings of Eligible
Funds may be combined to determine the current offering price of the aggregate
investment in ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of purchase you or your
Agent must notify Premier if orders are made by wire, or DTI if orders are made
by mail. The reduced sales load is subject to confirmation of your holdings
through a check of appropriate records.
TELETRANSFER PRIVILEGE. You may purchase shares by telephone if you have
checked the appropriate box and supplied the necessary information on the
Account Application or have filed a Shareholder Services Form with the
applicable Transfer Agent. The proceeds will be transferred between the bank
account designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an Automated
Clearing House member may be so designated.
TELETRANSFER purchase orders may be made at any time. Purchase orders
received by 4:00 p.m., New York time, on any business day that the applicable
Transfer Agent and the New York Stock Exchange are open for business will be
credited to the shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00 p.m., New York
time, on any business day the applicable Transfer Agent and the New York Stock
Exchange are open for business, or orders made on Saturday, Sunday or any Fund
holiday (e.g., when the New York Stock Exchange is not open for business), will
be credited to the shareholder's Fund account on the second bank business day
following such purchase order. To qualify to use TELETRANSFER Privilege, the
initial payment for purchase of shares must be drawn on, and redemption proceeds
paid to, the same bank and account as are designated on the Account Application
or Shareholder Services Form on file. If the proceeds of a particular redemption
are to be wired to an account at any other bank, the request must be in writing
and signature-guaranteed. See "Redemption of Shares -- TELETRANSFER
<PAGE> 340
Privilege." The Company may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
REOPENING AN ACCOUNT. You may reopen an account with a minimum investment
of $100 without filing a new Account Application during the calendar year the
account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
- --------------------------------------------------------------------------------
DISTRIBUTION PLANS AND SHAREHOLDER SERVICES PLAN
- --------------------------------------------------------------------------------
Class B, Class C, Class F and Class T shares are each subject to a
Distribution Plan and Class A, Class B, Class C, and Class T shares are each
subject to a Shareholder Services Plan.
DISTRIBUTION PLANS
CLASS B, CLASS C AND CLASS T SHARES. Rule 12b-1 (the "Rule") adopted by
the Securities and Exchange Commission under the Act provides, among other
things, that an investment company may bear expenses of distributing its shares
only pursuant to a plan adopted in accordance with the Rule. The Company's Board
has adopted such a plan with respect to the Equity Funds' Class B, Class C and
Class T shares (the "Class B, C and T Distribution Plan") pursuant to which each
such Fund pays Premier for distributing its Class B and Class C shares a fee at
the annual rate of 0.75% of the value of the average daily net assets of Class B
and Class C shares of such Fund, respectively, and pays Premier for distributing
its Class T shares a fee at the annual rate of 0.25% of the value of the average
daily net assets of Class T shares of such Fund. Premier may pay one or more
Agents in respect of advertising, marketing and other distribution services for
Class B, Class C and Class T shares, and determines the amounts, if any, to be
paid to Agents and the basis on which such payments are made. The Company's
Board believes that there is a reasonable likelihood that the Class B, C and T
Distribution Plan will benefit the Company and holders of its Class B, Class C
and Class T shares, respectively.
The Class B, C and T Distribution Plan was not in effect during the fiscal
year ended December 31, 1998, and accordingly, no fees were paid pursuant to
that Distribution Plan during that period.
CLASS F SHARES. The Company also has adopted a plan pursuant to the Rule
with respect to the Class F shares (the "Class F Distribution Plan") of all
Funds other than the Money Market Fund (the "12b-1 Funds"). Pursuant to the
Class F Distribution Plan, each 12b-1 Fund pays for distribution and related
services at an annual rate that may be less than, but that may not exceed, 0.25%
of the average daily net assets of
<PAGE> 341
Class F shares of that Fund. These fees may be used to pay directly, or to
reimburse Premier for paying, expenses in connection with distribution of the
12b-1 Funds' Class F shares and related activities including: preparation,
printing and mailing of prospectuses, reports to shareholders (such as
semiannual and annual reports, performance reports and newsletters), sales
literature and other promotional material to prospective investors; direct mail
solicitation; advertising; public relations; compensation of sales personnel,
brokers, financial planners, or others for their assistance with respect to the
distribution of the Funds' Class F shares, including compensation for such
services to personnel of Founders or of affiliates of Founders; providing
payments to any financial intermediary for shareholder support, administrative,
and accounting services with respect to the Class F shareholders of the Fund;
and such other expenses as may be approved from time to time by the Company's
Board of Directors and as may be permitted by applicable statute, rule or
regulation.
Payments under the Class F Distribution Plan may be made only to reimburse
expenses paid during a rolling twelve-month period, subject to the annual
limitation of 0.25% of average daily net assets. Any reimbursable expenses paid
in excess of this limitation are not reimbursable and will be borne by Founders.
As of December 31, 1998, Founders had paid the following distribution-related
expenses on behalf of the 12b-1 Funds, which had not been reimbursed pursuant to
the Class F Distribution Plan:
% of Average
Fund Amount Net Assets
----------------------- -------------- --------------
Balanced $562,015 0.05%
Discovery $198,166 0.09%
Government Securities $0 0.00%
Growth $3,453,651 0.16%
Growth and Income $1,080,851 0.19%
International Equity $53,658 0.28%
Mid-Cap Growth $513,553 0.18%
Passport $289,740 0.22%
Worldwide Growth $190,979 0.06%
----------------------- --------------
TOTAL $6,342,613
During the fiscal year ended December 31, 1998, Premier expended the
following amounts in marketing the shares of the 12b-1 Funds: advertising,
$3,949,893; printing and mailing of prospectuses to persons other than current
shareholders, $3,030,197; payment of compensation to third parties for
distribution and shareholder support services, $7,635,679; and public relations
and trade shows, $632,822.*
- --------
* These amounts include amounts paid by Old Founders which acted as the Funds'
distributor during the first quarter of 1998.
<PAGE> 342
PROVISIONS APPLICABLE TO ALL CLASSES. The benefits that the Board believes
are reasonably likely to flow to the Funds (other than the Money Market Fund)
and their shareholders under the Distribution Plans include, but are not limited
to: (1) enhanced marketing efforts which, if successful, may result in an
increase in net assets through the sale of additional shares, thereby providing
greater resources to pursue the Funds' investment objectives; (2) increased name
recognition for the Funds within the mutual fund industry, which may help
instill and maintain investor confidence; (3) positive cash flow into the Funds,
which assists in portfolio management; (4) the positive effect which increased
Fund assets could have on Founders' revenues could allow Founders to have
greater resources to make the financial commitments necessary to continue to
improve the quality and level of shareholder services, and acquire and retain
talented employees who desire to be associated with a growing organization; and
(5) increased Fund assets may result in reducing each shareholder's share of
certain expenses through economies of scale, such as by exceeding breakpoints in
the advisory fee schedules and allocating fixed expenses over a larger asset
base.
Payments made by a particular Fund Class under a Distribution Plan may not
be used to finance the distribution of shares of any other Fund Class. In the
event that an expenditure may benefit more than one Fund Class, it is allocated
among the applicable Fund Classes on an equitable basis.
A quarterly report of the amounts expended under each Distribution Plan,
and the purposes for which such expenditures were incurred, must be made to the
Board for its review. In addition, each Distribution Plan provides that it may
not be amended to increase materially the costs which holders of the Company's
Class B, Class C, Class F or Class T shares of any Fund may bear pursuant to the
respective Distribution Plan without the approval of the holders of such shares
and that all amendments of the Distribution Plans must be approved by the
Company's Board, and by the Board members who are not "interested persons" (as
defined in the Act) of the Company and have no direct or indirect financial
interest in the operation of the Distribution Plans or in any agreements entered
into in connection with the Distribution Plans, by vote cast in person at a
meeting called for the purpose of considering such amendments. Each Distribution
Plan is subject to annual approval by such vote cast in person at a meeting
called for the purpose of voting on the Distribution Plan. The Class F
Distribution Plan was last approved by the Board at a meeting held on May 14,
1999, and was amended and restated by the Board at a meeting held on August 13,
1999, effective December 31, 1999. The Class B, C and T Distribution Plan was
initially approved by the Board at a meeting held on August 13, 1999. As to the
relevant Class of shares of any Fund, the Distribution Plan may be terminated at
any time by vote of a majority of the Board members who are not "interested
persons" and have no direct or indirect financial interest in the operation of
the Distribution Plan or in any agreements entered into in connection with the
Distribution Plan or by vote of the holders of a majority of such Class of
shares of such Fund.
<PAGE> 343
So long as any Distribution Plan is in effect for any Class of shares of
any Fund, the selection and nomination of persons to serve as independent
directors of the Company shall be committed to the independent directors then in
office at the time of such selection or nomination.
SHAREHOLDER SERVICES PLAN
The Company has adopted a Shareholder Services Plan with respect to the
Equity Funds' Class A, Class B, Class C and Class T shares (the "Shareholder
Services Plan"). Under the Shareholder Services Plan, each Equity Fund's Class
A, Class B, Class C and Class T shares pays Premier a fee at the annual rate of
0.25% of the value of the average daily net assets of the respective Class for
the provision of certain services to the holders of shares of that Class. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the maintenance
of such shareholder accounts. Under the Shareholder Services Plan, Premier may
make payments to Agents in respect of these services.
A quarterly report of the amounts expended under the Shareholder Services
Plan, and the purposes for which such expenditures were incurred, must be made
to the Board for its review. In addition, the Shareholder Services Plan provides
that amendments must be approved by the Company's Board, and by the Board
members who are not "interested persons" (as defined in the Act) of the Company
and have no direct or indirect financial interest in the operation of the
Shareholder Services Plan or in any agreements entered into in connection with
the Shareholder Services Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Shareholder Services Plan is
subject to annual approval by such vote cast in person at a meeting called for
the purpose of voting on the Shareholder Services Plan. The Shareholder Services
Plan was initially approved by the Board at a meeting held on August 13, 1999.
As to the relevant Class of shares of any Fund, the Shareholder Services Plan is
terminable at any time by vote of a majority of the Board members who are not
"interested persons" and who have no direct or indirect financial interest in
the operation of the Shareholder Services Plan or in any agreements entered into
in connection with the Shareholder Services Plan.
The Shareholder Services Plan was not in effect during the fiscal year
ended December 31, 1998 and, accordingly, no fees were paid pursuant to that
Plan during that period.
<PAGE> 344
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REDEMPTION OF SHARES
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GENERAL. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail to
specify the Class of shares to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you or your
Agent.
The Funds impose no charges (other than any applicable CDSC) when shares
are redeemed, although a $6 fee will be assessed for wire redemptions of Class F
shares. Agents may charge their clients a fee for effecting redemptions of Fund
shares. The value of the shares redeemed may be more or less than their original
cost, depending upon the applicable Fund's then-current net asset value.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES. A CDSC is paid to
Dreyfus Service Corporation on any redemption of Class B shares which reduces
the current net asset value of your Class B shares to an amount which is lower
than the dollar amount of all payments by you for the purchase of Class B shares
of the applicable Fund held by you at the time of redemption. No CDSC will be
imposed to the extent that the net asset value of the Class B shares redeemed
does not exceed (i) the current net asset value of Class B shares of the
applicable Fund acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of your Class B shares
of that Fund above the dollar amount of all your payments for the purchase of
Class B shares of that Fund held by you at the time of redemption.
If the aggregate value of the Class B shares of a Fund that are redeemed
has declined below their original cost as a result of the Fund's performance,
any CDSC which is applicable will be applied to the then-current net asset value
rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
<PAGE> 345
The following table sets forth the rates of the CDSC for Class B shares:
CDSC as a % of
Amount Invested
Year Since Purchase or Redemption
Payment Was Made Proceeds
--------------------- -----------------
First............... 4.00
Second.............. 4.00
Third............... 3.00
Fourth.............. 3.00
Fifth............... 2.00
Sixth............... 1.00
In determining whether a CDSC is applicable to a redemption from a Fund,
the calculation will be made in a manner that results in the lowest possible
rate. It will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the increase in net asset value of
Class B shares above the total amount of payments for the purchase of Class B
shares made during the preceding six years; then of amounts representing the
cost of shares purchased six years prior to the redemption; and finally, of
amounts representing the cost of shares held for the longest period of time
within the applicable six-year period.
For example, assume an investor purchased 100 shares of a Fund at $10 per
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment. During the second year after
the purchase the investor decided to redeem $500 of the investment. Assuming at
the time of the redemption the Fund's net asset value had appreciated to $12 per
share, the value of the investor's shares would be $1,260 (105 shares at $12 per
share). The CDSC would not be applied to the value of the reinvested dividend
shares and the amount which represents appreciation ($260). Therefore, $240 of
the $500 redemption proceeds ($500 minus $260) would be charged at a rate of 4%
(the applicable rate in the second year after purchase) for a total CDSC of
$9.60.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C SHARES. A CDSC of 1% is paid
to Dreyfus Service Corporation on any redemption of Class C shares within one
year of the date of purchase. The basis for calculating the payment of any such
CDSC will be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge--Class B Shares" above.
WAIVER OF CDSC. The CDSC may be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit
<PAGE> 346
Plans, (c) redemptions as a result of a combination of any investment company
with a Fund by merger, acquisition of assets or otherwise, (d) a distribution
following retirement under a tax-deferred retirement plan or upon attaining age
70 1/2 in the case of an IRA or Keogh plan or custodial account pursuant to
Section 403(b) of the Code, and (e) redemptions pursuant to the Automatic
Withdrawal Plan, as described below. If the Company's Board determines to
discontinue the waiver of the CDSC, the disclosure herein will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased prior to
the termination of such waiver will have the CDSC waived as provided in the
applicable Prospectus or this Statement of Additional Information at the time of
the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify DTI or your Agent must notify Premier. Any such qualification is subject
to confirmation of your entitlement.
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by DTI
prior to the close of regular trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., Eastern time), the redemption request will be
effective on that day. If a redemption request is received by DTI after the
close of regular trading on the floor of the New York Stock Exchange, the
redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited to your
account with the Selected Dealer.
In addition, Premier or its designee will accept orders from Selected
Dealers with which Premier has sales agreements for the repurchase of shares
held by shareholders. Repurchase orders received by dealers by the close of
regular trading on the floor of the New York Stock Exchange on any business day
and transmitted to Premier or its designee prior to the close of its business
day (normally 5:15 p.m., Eastern time) are effected at the price determined as
of the close of regular trading on the floor of the New York Stock Exchange on
that day. Otherwise, the shares will be redeemed at the next determined net
asset value. It is the responsibility of the Selected Dealer to transmit orders
on a timely basis. The Selected Dealer may charge the shareholder a fee for
executing the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE. Upon written request, you may reinvest up to the
number of Class A, Class B or Class T shares you have redeemed, within 45 days
of redemption, at the then-prevailing net asset value without a sales load, or
reinstate your account for the purpose of exercising Fund Exchanges. Upon
reinstatement your account will be credited with an amount equal to the CDSC
previously paid upon redemption of the shares reinvested. The Reinvestment
Privilege may be exercised only once.
<PAGE> 347
TELETRANSFER PRIVILEGE. You may request by telephone that redemption
proceeds (minimum $100 for Class F; $500 for Classes of shares other than F) be
transferred between your Fund account and your bank account. Only a bank account
maintained in a domestic financial institution which is an Automated Clearing
House member may be designated. Redemption proceeds will be on deposit in your
account at an Automated Clearing House member bank ordinarily two business days
after receipt of the redemption request or, at your request, paid by check and
mailed to your address. Holders of jointly registered Fund or bank accounts may
redeem through the TELETRANSFER Privilege for transfer to their bank account not
more than $250,000 within any 30-day period from accounts in Fund Classes other
than Class F. See "Purchase of Shares -- TELETRANSFER Privilege."
REDEMPTION COMMITMENT. Each Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount from any Fund other than Money
Market Fund, the Board of Directors reserves the right to make payments in whole
or in part in securities or other assets of the Fund in case of an emergency or
any time a cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In such event, the securities would be
valued in the same manner as the portfolio of the Fund. If the recipient sold
such securities, brokerage charges would be incurred.
REDEMPTION PAYMENTS; SUSPENSION OF REDEMPTIONS. Proceeds of redemptions
normally will be forwarded within three business days after receipt by the
applicable Transfer Agent of the request for redemption in good order, although
the Company may delay payment of redemption proceeds under certain circumstances
for up to seven calendar days after receipt of the redemption request. (We
consider redemptions to be received in good order upon receipt of the required
documents as described in the applicable Prospectus.) In addition, net asset
value determination for purposes of redemption may be suspended or the date of
payment postponed during periods when (1) trading on the New York Stock Exchange
is restricted, as determined by the SEC, or the Exchange is closed (except for
holidays or weekends), (2) the SEC permits such suspension and so orders, or (3)
an emergency exists as defined by the SEC so that disposal of securities or
determination of net asset value is not reasonably practicable. In such a case,
a shareholder seeking to redeem shares may withdraw his request or leave it
standing for execution at the per share net asset value next computed after the
suspension has been terminated.
TRANSACTIONS THROUGH THIRD PARTIES. The Company has authorized a number of
brokers and other financial services companies to accept orders for the purchase
and redemption of Fund shares. Certain of such companies are authorized to
designate other intermediaries to accept purchase and redemption orders on the
Company's
<PAGE> 348
behalf. In certain of these arrangements, the Company will be deemed to have
received a purchase or redemption order when an authorized company or, if
applicable, its authorized designee, accepts the order. In such cases, the
customer's order will be priced at the public offering price of the applicable
Fund next determined after the order is accepted by the company or its
authorized designee.
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SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
FUND EXCHANGES FOR CLASSES A, B, C, R AND T. Shares of Classes A, B, C, R
and T of any Equity Fund may be exchanged for shares of the same Class of any
other Equity Fund or Dreyfus Premier fund. Shares of each Class of an Equity
Fund also may be exchanged for shares of certain other funds managed or
administered by The Dreyfus Corporation and, with respect to Class T shares of a
Fund, Class A shares of certain Dreyfus Premier fixed-income funds, to the
extent such shares are offered for sale in your state of residence. Shares of
other funds purchased by exchange will be purchased on the basis of relative net
asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales load
will be made without a sales load.
B. Shares of Funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of Funds purchased with a sales load may be exchanged without
a sales load for shares of other funds sold without a sales load.
D. Shares of Funds purchased with a sales load, shares of Funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such Funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect
to any reduced loads, the difference will be deducted.
E. Shares of Funds subject to a CDSC that are exchanged for shares of
another Fund will be subject to the higher applicable CDSC of the
two Funds and, for purposes of calculating CDSC rates and conversion
<PAGE> 349
periods, if any, will be deemed to have been held since the date the
shares being exchanged were initially purchased.
To accomplish an exchange under Item D above, you or your Agent must
notify DTI of your prior ownership of shares with a sales load and your account
number. Any such exchange is subject to confirmation of your holdings through a
check of appropriate records.
You also may exchange your Fund shares that are subject to a CDSC for
shares of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so
purchased will be held in a special account created solely for this purpose
("Exchange Account"). Exchanges of shares from an Exchange Account only can be
made into the other Funds or certain other funds managed or administered by The
Dreyfus Corporation. No CDSC is charged when an investor exchanges into an
Exchange Account; however, the applicable CDSC will be imposed when shares are
redeemed from an Exchange Account or other applicable Fund account. Upon
redemption, the applicable CDSC will be calculated without regard to the time
such shares were held in an Exchange Account. See "Redemption of Shares."
Redemption proceeds for Exchange Account shares are paid by Federal wire or
check only. Exchange Account shares also are eligible for the Auto-Exchange
Privilege, Dividend Sweep and the Automatic Withdrawal Plan.
To request an exchange of Class A, B, C, R or T shares, you or your Agent
acting on your behalf must give exchange instructions to DTI in writing or by
telephone. The ability to issue exchange instructions by telephone is given to
all Fund shareholders automatically, unless you check the applicable "No" box on
the Account Application, indicating that you specifically refuse this privilege.
By using the Telephone Exchange Privilege, you authorize Transfer Agent to act
on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone systeM) from any person representing himself or herself to be you or a
representative of your Agent, and reasonably believed by Transfer Agent to be
genuine. Telephone exchanges may be subject to limitations as to amount involved
or the number of telephone exchanges permitted. No fees currently are charged
shareholders directly in connection with exchanges, although the Company
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules promulgated
by the Securities and Exchange Commission.
Shares of the Fund being exchanged must have a value of at least the
minimum initial investment required for the Fund into which the exchange is
being made.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one Fund and such investor's
Retirement Plan account in another Fund.
<PAGE> 350
DREYFUS AUTO-EXCHANGE PRIVILEGE. The Auto-Exchange Privilege permits you
to purchase (on a semi-monthly, monthly, quarterly, or annual basis), in
exchange for Class A, B, C, R or T shares of a Fund, shares of the same Class of
another Fund, shares of the same Class of another fund in the Dreyfus Premier
Family of Funds or shares of certain other funds in the Dreyfus Family of Funds
and, with respect to Class T shares of a Fund, Class A shares of certain Dreyfus
Premier fixed-income funds, of which you are a shareholder. This Privilege is
available only for existing accounts. With respect to Class R shares held by a
Retirement Plan, exchanges may be made only between the investor's Retirement
Plan account in one fund and such investor's Retirement Plan account in another
fund. Shares will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by the investor. You will be notified if your account falls below
the amount designated to be exchanged under this Privilege. In this case, your
account will fall to zero unless additional investments are made in excess of
the designated amount prior to the next Auto-Exchange transaction. Shares held
under IRA and other retirement plans are eligible for this Privilege. Exchanges
of IRA shares may be made between IRA accounts and from regular accounts to IRA
accounts if eligible, but not from IRA accounts to regular accounts. With
respect to all other retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and Auto-Exchange Privilege are available to shareholders
resident in any state in which the fund being acquired may legally be sold.
Shares may be exchanged only between fund accounts having identical names and
other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611 (holders of Class F shares should call
1-800-525-2440). The Company reserves the right to reject any exchange request
in whole or in part. The Fund Exchanges service or Auto-Exchange Privilege may
be modified or terminated at any time upon notice to shareholders.
DREYFUS-AUTOMATIC ASSET BUILDER(R). DreyfuS-AUTOMATic Asset Builder
permits you to purchase Class A, B, C, R or T shares (minimum of $100 and
maximum of $150,000 per transaction) at regular intervals selected by you. Fund
shares are purchased by transferring funds from the bank account designated by
you.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE. Dreyfus Government Direct
Deposit Privilege enables you to purchase Class A, B, C, R or T shares (minimum
of $100 and maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the U.S.
Government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect.
<PAGE> 351
DREYFUS DIVIDEND OPTIONS. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and any capital gain distributions
from Class A, B, C, R or T shares of a Fund in shares of the same Class of
another Fund, shares of the same Class of another fund in the Dreyfus Premier
Family of Funds or shares of certain other funds in the Dreyfus Family of Funds
and, with respect to Class T shares of a Fund, in Class A shares of certain
Dreyfus Premier fixed-income funds, of which you are a shareholder. Shares of
other funds purchased pursuant to Dreyfus Dividend Sweep will be purchased on
the basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of the sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum
sales load charged by the fund from which dividends or distributions
are being swept, without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in shares
of other funds that impose a CDSC and the applicable CDSC, if any,
will be imposed upon redemption of such shares.
Dreyfus Dividend ACH permits you to transfer electronically dividends or
dividends and capital gain distributions, if any, from the Class A, B, C, R or T
shares of a Fund to a designated bank account. Only an account maintained at a
domestic financial institution which is an Automated Clearing House member may
be so designated. Banks may charge a fee for this service.
AUTOMATIC WITHDRAWAL PLAN. The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50 for Class A, B,
C, R or T shares) on either a monthly or quarterly basis if you have a $5,000
minimum account. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, your shares will be reduced and eventually may be depleted.
Automatic Withdrawal may be terminated at any time by you, the Fund or the
applicable Transfer Agent.
No CDSC with respect to Class B shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 12% of the account value at the time
the
<PAGE> 352
shareholder elects to participate in the Automatic Withdrawal Plan. Withdrawals
with respect to Class B shares under the Automatic Withdrawal Plan that exceed
on an annual basis 12% of the value of the shareholder's account will be subject
to a CDSC on the amounts exceeding 12% of the initial account value. Withdrawals
of Class A and Class T shares subject to a CDSC and Class C shares under the
Automatic Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A and Class T shares where the sales load is imposed
concurrently with withdrawals of Class A and Class T shares generally are
undesirable.
Certain Retirement Plans, including Dreyfus-sponsored retirement plans,
may permit certain participants to establish an automatic withdrawal plan from
such Retirement Plans. Participants should consult their Retirement Plan sponsor
and tax adviser for details. Such a withdrawal plan is different from the
Automatic Withdrawal Plan.
LETTER OF INTENT -- CLASS A AND CLASS T SHARES. By signing a Letter of
Intent form, which can be obtained by calling 1-800-554-4611, you become
eligible for the reduced sales load applicable to the total number of Eligible
Fund shares purchased in a 13-month period pursuant to the terms and conditions
set forth in the Letter of Intent. A minimum initial purchase of $5,000 is
required. To compute the applicable sales load, the offering price of shares you
hold (on the date of submission of the Letter of Intent) in any Eligible Fund
that may be used toward "Right of Accumulation" benefits described above may be
used as a credit toward completion of the Letter of Intent. However, the reduced
sales load will be applied only to new purchases.
DTI will hold in escrow 5% of the amount indicated in the Letter of Intent
for payment of a higher sales load if you do not purchase the full amount
indicated in the Letter of Intent. The escrow will be released when you fulfill
the terms of the Letter of Intent by purchasing the specified amount. If your
purchases qualify for a further sales load reduction, the sales load will be
adjusted to reflect your total purchase at the end of 13 months. If total
purchases are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and the
sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, DTI, as attorney-in-fact pursuant to
the terms of the Letter of Intent, will redeem an appropriate number of Class A
or Class T shares of the Fund, as applicable, held in escrow to realize the
difference. Signing a Letter of Intent does not bind you to purchase, or a Fund
to sell, the full amount indicated at the sales load in effect at the time of
signing, but you must complete the intended purchase to obtain the reduced sales
load. At the time you purchase Class A or Class T shares, you must indicate your
intention to do so under a Letter of Intent. Purchases pursuant to a Letter of
Intent will be made at the then-current net asset value plus the applicable
sales load in effect at the time such Letter of Intent was executed.
DREYFUS PAYROLL SAVINGS PLAN. Dreyfus Payroll Savings Plan permits you to
purchase Class A, B, C, R or T shares (minimum $100 per transaction)
automatically on
<PAGE> 353
a regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing account
electronically through the Automated Clearing House system at each pay period.
CORPORATE PENSION/PROFIT-SHARING AND PERSONAL RETIREMENT PLANS. The
Company makes available to corporations a variety of prototype pension and
profit-sharing plans, including a 401(k) Salary Reduction Plan. In addition, the
Company makes available Keogh Plans, IRAs (including regular IRAs, spousal IRAs
for a non-working spouse, Roth IRAs, Education IRAs, SEP-IRAs and rollover IRAs)
and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Class A, B, C, R or T shares in conjunction
with a Keogh Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request
from Premier forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares. All
fees charged are described in the appropriate form.
SHARES MAY BE PURCHASED IN CONNECTION WITH THESE PLANS ONLY BY DIRECT
REMITTANCE TO THE ENTITY ACTING AS CUSTODIAN. PURCHASES FOR THESE PLANS MAY NOT
BE MADE IN ADVANCE OF RECEIPT OF FUNDS.
The minimum initial investment in Class A, B, C, R or T shares for
corporate plans, Salary Reduction Plans, 403(b)(7) Plans, and SEP-IRAs with more
than one participant is $1,000 with no minimum on subsequent purchases. The
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant is normally $750,
with no minimum on subsequent purchases. The minimum initial investment for
Education IRAs is $500, with no minimum on subsequent purchases.
The investor should read the Prototype Retirement Plan and the Bank
Custodial Agreement for further details on eligibility, service fees and tax
implications, and should consult a tax adviser.
CLASS F SHAREHOLDER SERVICES. The services provided to holders of Class F
shares are described in detail in the Prospectus for Class F shares.
COMPANY POLICY REGARDING MARKET TIMING ACTIVITIES
The Funds are intended to be long-term investment vehicles and are not
designed to provide investors with a means of speculating on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to a Fund's
<PAGE> 354
performance and its shareholders. Accordingly, if a Fund's management determines
that an investor is following a market-timing strategy or is otherwise engaging
in excessive trading, the Fund, with or without prior notice, may temporarily or
permanently terminate the availability of Fund Exchanges, or reject in whole or
part any purchase or exchange request, with respect to such investor's account.
Such investors also may be barred from purchasing other Funds or other funds in
the Dreyfus Family of Funds. Generally, an investor who makes more than four
exchanges out of a Fund during any calendar year (or, in the case of Class F,
during any 12-month period) or who makes exchanges that appear to coincide with
a market-timing strategy may be deemed to be engaged in excessive trading.
Accounts under common ownership or control will be considered as one account for
purposes of determining a pattern of excessive trading. In addition, a Fund may
refuse or restrict purchase or exchange requests for Fund shares by any person
or group if, in the judgment of the Fund's management, the Fund would be unable
to invest the money effectively in accordance with its investment objectives and
policies or could otherwise be adversely affected or if the Fund receives or
anticipates receiving simultaneous orders that may significantly affect the Fund
(e.g., amounts equal to 1% or more of the Fund's total assets). If an exchange
request is refused, the Fund will take no other action with respect to the Fund
shares until it receives further instructions from the investor. A Fund may
delay forwarding redemption proceeds for up to seven days if the investor
redeeming shares is engaged in excessive trading or if the amount of the
redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Funds' policy on excessive
trading applies to investors who invest in a Fund directly or through financial
intermediaries, but does not apply to the Auto-Exchange Privilege or to any
automatic investment or withdrawal privilege described herein.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange requests
based on their separate components -- redemption orders with a simultaneous
request to purchase the other fund's shares. In such a case, the redemption
request would be processed at the Fund's next determined net asset value but the
purchase order would be effective only at the net asset value next determined
after the fund being purchased receives the proceeds of the redemption, which
may result in the purchase being delayed.
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OTHER SERVICES
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FUND ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT
Founders performs administrative, accounting, and recordkeeping services
for the Funds pursuant to an Amended and Restated Fund Accounting and
Administrative Services Agreement that was initially approved on August 13, 1999
by a vote cast in person by all of the directors of the Company, including all
of the directors who are not
<PAGE> 355
"interested persons" of the Company or of Founders at a meeting called for such
purpose, for an initial term ending May 31, 2000. The Agreement may be continued
from year to year thereafter as long as each such continuance is specifically
approved by the Board of Directors of the Company, including a majority of the
directors who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person at a meeting for the purpose
of voting on such continuance. The Agreement may be terminated at any time
without penalty by the Company upon ninety (90) days' written notice, or by
Founders upon ninety (90) days' written notice, and terminates automatically in
the event of its assignment unless the Company's Board of Directors approves
such assignment.
Pursuant to the Agreement, Founders maintains the portfolios, general
ledgers, and financial statements of the Funds; accumulates data from the Funds'
shareholder servicing and transfer agents, custodian, and manager and calculates
daily the net asset value of each Class of the Funds; monitors the data and
transactions of the custodian, transfer agents, shareholder servicing agent, and
manager of the Funds; monitors compliance with tax and federal securities rules
and regulations; provides reports and analyses of portfolio, transfer agent,
shareholder servicing agent, and custodial operations, performance and costs;
and reports on regulatory and other shareholder matters. The Funds pay a fee for
this service which is computed at an annual rate of 0.06 percent of the daily
net assets of the Funds from $0 to $500 million and at an annual rate of 0.02
percent of the daily net assets of the Funds in excess of $500 million, plus
reasonable out-of-pocket expenses. During the fiscal years ended December 31,
1998, 1997 and 1996, the Company paid Fund accounting and administrative
services fees of $1,213,611, $1,056,132, and $823,632, respectively.
SHAREHOLDER SERVICES AGREEMENT
Pursuant to an Amended and Restated Shareholder Services Agreement,
Founders performs certain telephone, retirement plan, quality control, personnel
training, shareholder inquiry, shareholder account, and other
shareholder-related and transfer agent services for the Class F shareholders of
the Funds. The Agreement was approved on August 13, 1999 by a vote cast in
person by all of the directors of the Company, including all of the directors
who are not "interested persons" of the Company or Founders at a meeting called
for such purpose, for an initial term ending May 31, 2000. The Agreement may be
continued from year to year thereafter as long as such continuance is
specifically approved by the Board of Directors of the Company, including a
majority of the directors who are not parties to the Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Agreement may
be terminated at any time without penalty by the Company upon ninety (90) days'
written notice to Founders or by Founders upon one hundred eighty (180) days'
written notice to the Company, and terminates automatically in the event of an
assignment unless the Company's Board of Directors approves such assignment. The
Funds pay to Founders a prorated monthly fee for such services equal on an
annual basis to $26 for each
<PAGE> 356
Class F shareholder account of the Funds considered to be an open account at any
time during the applicable month (the "shareholder servicing fee"). The fee
provides for the payment not only for services rendered and facilities furnished
by Founders pursuant to the Agreement, but also for services rendered and
facilities furnished by IFTC and DST Systems, Inc. ("DST") in performing
transfer agent services for Class F shareholders and in providing hardware and
software system capabilities on behalf of the Funds. In addition to the per
account fee, Founders, IFTC, and DST are reimbursed for all reasonable
out-of-pocket expenses incurred in the performance of their respective services.
During the fiscal years ended December 31, 1998, 1997 and 1996, the Company paid
shareholder servicing fees of $3,147,345, $3,353,527, and $3,374,390,
respectively.
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BROKERAGE ALLOCATION
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It is the policy of the Company, in effecting transactions in portfolio
securities, to seek the best execution of orders at the most favorable prices.
The determination of what may constitute best execution in a securities
transaction involves a number of judgmental considerations, including, without
limitation, the overall direct net economic result to a Fund (involving both
price paid or received and any commissions and other costs), the efficiency with
which the transaction is effected, the ability to effect the transaction at all
where a large block is involved, the availability of the broker to stand ready
to execute possibly difficult transactions for the Fund in the future, and the
financial strength and stability of the broker.
Because selection of executing brokers is not based solely on net
commissions, a Fund may pay an executing broker a commission higher than that
which might have been charged by another broker for that transaction. While it
is not practicable for the Company to solicit competitive bids for commissions
on each portfolio transaction, consideration is regularly given to available
information concerning the level of commissions charged in comparable
transactions by various brokers. Transactions in over the counter securities are
normally placed with principal market makers, except in circumstances where, in
the opinion of Founders, better prices and execution are available elsewhere.
Subject to the policy of seeking the best execution of orders at the most
favorable prices, a Fund may execute transactions with brokerage firms that
provide, along with brokerage services, research services and products, as
defined in Section 28(e) of the Securities Exchange Act of 1934. Section 28(e)
provides a "safe harbor" to investment managers who use commission dollars of
their advised accounts to obtain investment research and brokerage services and
products. These arrangements are often called soft dollar arrangements. Research
and brokerage services and products
<PAGE> 357
that provide lawful and appropriate assistance to the manager in performing
investment decision-making responsibilities fall within the safe harbor.
The types of research services and products provided by brokerage firms to
Founders include, without limitation:
o research reports about issuers, industries, securities, economic
factors and trends
o earnings information and estimates
o reports of issuer regulatory filings
o performance measurement systems
o stock quote systems
o trading systems
o trading measurement services
o data feeds from stock exchanges
o third party publications
o computer and electronic access equipment
o software programs
These services and products permit Founders to supplement its own research
and analysis activities, and provide it with information from individuals and
research staffs of many securities firms.
Some of the research products or services received by Founders may have
both a research function and a non-research administrative function (a "mixed
use"). If Founders determines that any research product or service has a mixed
use, Founders will allocate in good faith the cost of such service or product
accordingly. The portion of the product or service that Founders determines will
assist it in the investment decision-making process may be paid for in soft
dollars. The non-research portion is paid for by Founders in hard dollars. Any
such allocation may create a conflict of interest for Founders.
Certain clients of an affiliated entity in the Mellon organization are
managed by Founders employees acting in a "dual employee" capacity. Founders
effects trades for accounts managed by these dual employees. Because those
clients may benefit from the research products and services Founders receives
from brokers, commissions generated by those clients may be used to help pay for
research products and services.
Founders generally considers the amount and nature of research, execution
and other services provided by brokerage firms, as well as the extent to which
such services are relied on, and attempts to allocate a portion of the brokerage
business of its clients on the basis of that consideration. Neither the research
services nor the amount of brokerage given to a particular brokerage firm are
made pursuant to any agreement or commitment with any of the selected firms that
would bind Founders to compensate the selected brokerage firm for research
provided. Founders endeavors to direct sufficient
<PAGE> 358
commissions to broker/dealers that have provided it with research to ensure
continued receipt of research Founders believes is useful. Actual brokerage
commissions received by a broker/dealer may be more or less than the suggested
allocations.
Founders may receive a benefit from the research services and products
that is not passed on to a Fund in the form of a direct monetary benefit.
Further, research services and products may be useful to Founders in providing
investment advice to any of the Funds or clients it advises. Likewise,
information made available to Founders from brokerage firms effecting securities
transactions for a Fund or client may be utilized on behalf of another Fund or
client. Thus, there may be no correlation between the amount of brokerage
commissions generated by a particular Fund or client and the indirect benefits
received by that Fund or client.
As described in greater detail below, a significant proportion of the
total commissions paid by the Funds for portfolio transactions during the year
ended December 31, 1998 was paid to brokers that provided research services to
Founders, and it is expected that, in the future, a substantial portion of each
Fund's brokerage business will be placed with firms that provide such services.
Subject to the policy of seeking the best execution of orders at the most
favorable prices, sales of shares of the Funds may also be considered as a
factor in the selection of brokerage firms to execute Fund portfolio
transactions.
A Fund and one or more of the other Funds or clients to which Founders
serves as investment adviser may own the same securities from time to time. If
purchases or sales of securities for a Fund and other Funds or clients arise for
consideration at or about the same time, transactions in such securities will be
made, insofar as feasible, for the respective Funds and clients in a manner
deemed equitable to all by the investment adviser. To the extent that
transactions on behalf of more than one client during the same period may
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on the price and amount of the
security being purchased or sold for the Fund. However, the ability of the Fund
to participate in volume transactions may possibly produce better executions for
the Fund in some cases.
The staff of the Securities and Exchange Commission has been conducting an
investigation concerning possible violations of the federal securities laws in
connection with brokerage transactions Old Founders (Founders' predecessor)
effected for certain private account clients during the period 1992 through
mid-1995. No determination has been made as to whether any violations have
occurred. Founders is currently engaged in discussions with the staff concerning
the staff's recommendations to the Commission. Founders believes that this
matter is not likely to have a material adverse effect on the Funds or on the
ability of Founders to perform services for the Funds.
<PAGE> 359
Premier has been authorized by the directors of the 12b-1 Funds to apply
dollars generated from each Fund's Rule 12b-1 distribution plan to pay to
brokers and to other entities a fee for distribution, recordkeeping, accounting,
and shareholder-related services provided to investors purchasing shares of a
12b-1 Fund through various sales and/or shareholder servicing programs. These
fees are computed based on the average daily account balances of investments in
each 12b-1 Fund made by the entity on behalf of its customers. The directors of
the 12b-1 Funds have further authorized Founders to place a portion of the
Funds' brokerage transactions with certain of these entities which are
broker-dealers if Founders reasonably believes that the entity is able to
provide the best execution of orders at the most favorable prices. Commissions
earned by the entity from executing portfolio transactions on behalf of a
specific 12b-1 Fund may be credited against the fee charged to that Fund, on a
basis that has resulted from negotiations between Founders and the entity. Any
12b-1 fees that are not expended as a result of the application of any such
credit will not be used either to pay or to reimburse Premier for other
distribution expenses. These directed brokerage arrangements have no adverse
effect either on the level of brokerage commissions paid by the Funds or on any
Fund's expenses.
In addition, registered broker-dealers, third-party administrators of
tax-qualified retirement plans, and other entities that establish omnibus
investor accounts in the Class F shares of the Funds may provide sub-transfer
agency, recordkeeping, or similar services to participants in the omnibus
accounts. These services reduce or eliminate the need for identical services to
be provided on behalf of the participants by Founders, the Funds' shareholder
servicing agent, and/or by IFTC, the Funds' transfer agent. In such instances,
Founders is authorized to pay the entity a sub-transfer agency or recordkeeping
fee based on the number of participants in the entity's omnibus account, from
the shareholder servicing fees applicable to each participant's account that are
paid to Founders by the Funds. If commissions are earned by a registered
broker-dealer from executing portfolio transactions on behalf of a specific
Fund, the commissions may be credited by the broker-dealer against the
sub-transfer agency or recordkeeping fee payable with respect to that Fund, on a
basis that will have been negotiated between the broker-dealer and Founders. In
such instances, Founders will apply any such credits to the shareholder
servicing fee that it receives from the applicable Fund. Thus, the Fund will pay
a shareholder servicing fee to Founders, and Founders will pay a sub-transfer
agency or recordkeeping fee to the broker-dealer only to the extent that the fee
is not off-set by brokerage credits. In the event that the shareholder servicing
fee paid by a Fund to Founders with respect to participants in omnibus Class F
share accounts in that Fund exceeds the sub-transfer agent or recordkeeping fee
applicable to that Fund, Founders may carry forward the excess and apply it to
future sub-transfer agent or recordkeeping fees applicable to that Fund that are
charged by the broker-dealer. Such a carry-forward may not go beyond a calendar
year.
Decisions relating to purchases and sales of securities for a Fund,
selection of broker-dealers to execute transactions, and negotiation of
commission rates are made
<PAGE> 360
by Founders, subject to the general supervision of the Board of Directors of the
Company.
For the fiscal years ended 1998, 1997 and 1996, respectively, total
brokerage commissions paid by the Funds amounted to the following:
Fund 1998 1997 1996
-------------------- -------------- --------------- --------------
Balanced $3,728,558 $2,721,066 $943,355
Discovery $289,154 $232,098 $444,760
Growth $5,620,455 $4,504,003 $2,090,847
Growth and Income $2,843,698 $2,577,069 $2,186,810
International Equity $114,163 $115,405 $48,594
Mid-Cap Growth $856,067 $1,018,305 $1,669,994
Passport $220,558 $603,752 $648,019
Worldwide Growth $927,388 $1,147,649 $1,031,931
The differences in the amounts of brokerage commissions paid by the Funds
during 1998 as compared to prior years are primarily attributable to changes in
the size of the Funds and differences in portfolio turnover rates.
During the fiscal year ended December 31, 1998, brokers providing research
services received the following commissions on the following amounts of
portfolio transactions in which the provision of research was a factor in the
selection of the broker to execute the transaction:
Aggregate Amount of
Portfolio
Fund Commissions Paid Transactions
-------------------- ------------------ ---------------------
Balanced $1,190,221 $966,378,761
Discovery $59,889 $21,176,625
Growth $1,559,563 $1,312,835,483
Growth and Income $894,968 $702,260,914
International Equity $86,644 $35,688,288
Mid-Cap Growth $333,360 $169,218,824
Passport $194,587 $65,536,145
Worldwide Growth $697,309 $317,852,745
During the last three years no officer, director or affiliated person of
the Company or Founders executed any portfolio transactions for a Fund, or
received any commission arising out of such portfolio transactions.
<PAGE> 361
At December 31, 1998, certain of the funds held securities of their
regular brokers or dealers as follows:
Fund Broker Value
----------------- ------------------------- ---------------
Discovery Prudential Funding Corp. $10,991,291
Passport Prudential Funding Corp. $3,697,657
Money Market Prudential Funding Corp. $4,192,160
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CAPITAL STOCK
- --------------------------------------------------------------------------------
The Company's capital stock, par value $0.01 per share, is divided into
eleven series: Dreyfus Founders Balanced Fund, Dreyfus Founders Discovery Fund,
Dreyfus Founders Focus Fund, Dreyfus Founders Government Securities Fund,
Dreyfus Founders Growth Fund, Dreyfus Founders Growth and Income Fund, Dreyfus
Founders International Equity Fund, Dreyfus Founders Mid-Cap Growth Fund,
Dreyfus Founders Money Market Fund, Dreyfus Founders Passport Fund and Dreyfus
Founders Worldwide Growth Fund. Each series other than the Government Securities
and Money Market Funds is divided into multiple classes of shares: Class A,
Class B, Class C, Class F, Class R and Class T. All shares of the Government
Securities and Money Market Funds have been designated as Class F shares. The
Board of Directors is authorized to create additional series or classes of
shares, each with its own investment objectives and policies.
As of September 10, 1999, no person owned of record or, to the knowledge
of the Company, beneficially, more than 5% of the capital stock of any Fund then
outstanding except:
Fund Amount owned
----------------------- ----------------
Charles Schwab & Co., Inc., Balanced 15.56%
101 Montgomery Street Discovery 28.11%
San Francisco, CA 94104 Government Securities 5.73%
(record owner) Growth 13.59%
Growth and Income 7.98%
International Equity 20.10%
Passport 44.64%
Mid-Cap Growth 20.82%
Worldwide Growth 30.91%
<PAGE> 362
National Financial Services Corp. Growth 9.68%
P.O. Box 3908 International Equity 5.79%
Church Street Station Passport 14.35%
New York, NY 10008 Worldwide Growth 12.07%
(record owner)
Donaldson, Lufkin & Jenrette Discovery 6.84%
Securities Corp. Passport 5.22%
P.O. Box 2052 Worldwide Growth 5.35%
Jersey City, NJ 07303
(record owner)
Salomon Smith Barney Inc. Discovery 8.06%
388 Greenwich Street
New York, NY 10013
(record owner)
Mac & Co. Worldwide Growth 7.59%
(Mellon Retirement Services Plan)
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230
(record and beneficial owner)
The Variable Annuity Life Insurance Growth 24.07%
Company (VALIC)
2929 Allen Parkway L7-01
Houston, TX 77019
(record and beneficial owner)
American Express Trust Company Balanced 18.74%
733 Marquette Avenue
Minneapolis, MN 55402
(record owner)
State of Michigan Plan 2 Balanced 6.62%
State Street Bank & Trust Company
200 Newport Avenue
Quincy, MA 02170
(record and beneficial owner)
Fidelity Investments Institutional Balanced 7.80%
Operations Company Growth 7.01%
100 Magellan Way
Covington, KY 41015
(record owner)
<PAGE> 363
Eugene H. Vaughan, Jr. Money Market 5.31%
6300 Texas Commerce Tower
Houston, TX 77002
(record and beneficial owner)
Cigna Retirement & Investment Serv. Balanced 17.73%
One Commercial Plaza Growth 6.41%
280 Trumbull Street
Hartford, CT 06103
(record and beneficial owner)
Balsa & Co. Government Securities 7.54%
P.O. Box 1768
New York, NY 10163
(record owner)
Shares of each Class of each Fund are fully paid and nonassessable when
issued. All shares of each Class of a Fund participate equally in dividends and
other distributions by that Class, and participate in proportion to their
relative net asset values in the residual assets of a Fund in the event of its
liquidation. Shares of each Class of each Fund are redeemable as described
herein under "Redemption of Shares" and under "About Your Investment" in the
Prospectuses. Fractional shares have the same rights proportionately as full
shares. The Company does not issue share certificates. Shares of the Company
have no conversion, subscription or preemptive rights.
Each full share of the Company has one vote and fractional shares have
proportionate fractional votes. Shares of the Funds are generally voted in the
aggregate except where separate voting by each Class and/or each Fund is
required by law. The Company is not required to hold regular annual meetings of
shareholders and does not intend to do so; however, the Board of Directors will
call special meetings of shareholders if requested in writing generally by the
holders of 10% or more of the outstanding shares of each Fund or as may be
required by applicable law or the Company's Articles of Incorporation. Each Fund
will assist shareholders in communicating with other shareholders as required by
the 1940 Act. Directors may be removed by action of the holders of a majority or
more of the outstanding shares of all of the Funds. Shares of the Company have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect 100% of the directors
if they choose to do so and, in such an event, the holders of the remaining less
than 50% of the shares voting for the election of directors will not be able to
elect any person or persons to the Board of Directors.
<PAGE> 364
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PRICING OF SHARES
- --------------------------------------------------------------------------------
The Company calculates net asset value per share, and therefore effects
sales, redemptions, and repurchases of its shares, once daily as of the close of
the New York Stock Exchange (the "Exchange") on each day the Exchange is open
for trading. The Exchange is not open for trading on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
FOREIGN SECURITIES. Since regular trading in most foreign securities
markets is completed simultaneously with, or prior to, the close of regular
trading on the Exchange, closing prices for foreign securities usually are
available for purposes of computing each Fund's net asset value. However, in the
event that the closing price of a foreign security is not available in time to
calculate a Fund's net asset value on a particular day, the Company's Board of
Directors has authorized the use of the market price for the security obtained
from an approved pricing service at an established time during the day which may
be prior to the close of regular trading in the security. If events occur that
are known to Founders to have materially affected the value of foreign
securities that are not reflected in the value obtained through regular
procedures, the securities may be valued at fair market value as determined in
good faith by the Board of Directors. All foreign currencies are converted into
U.S. dollars by utilizing exchange rate closing quotations obtained from the
London Stock Exchange.
ALL FUNDS EXCEPT MONEY MARKET FUND. The net asset value per share of each
Class of each Fund is calculated by dividing the value of all securities held by
that Fund and its other assets (including dividends and interest accrued but not
collected) attributable to that Class, less the Fund's liabilities (including
accrued expenses) attributable to that Class, by the number of outstanding
shares of that Class. Expenses and fees, including the advisory fees and fees
pursuant to the Distribution Plans and Shareholder Services Plan, are accrued
daily and taken into account for the purpose of determining the net asset value
of each Class of each Fund's shares. Because of the differences in the operating
expenses incurred by each Class of a Fund, the per share net asset value of each
Class will differ.
Securities traded on national securities exchanges and foreign markets are
valued at their last sale prices on the exchanges or markets where such
securities are primarily traded (except as described in the preceding
paragraph). Securities traded in the over-the counter market (including those
traded on the NASDAQ National Market System and the NASDAQ Small Cap Market),
and listed securities for which no sales were reported on a particular date, are
valued at their last current bid prices or, in the case of foreign securities,
on the basis of the average of at least two market maker quotes and/or the
PORTAL system. If market quotations are not readily available,
<PAGE> 365
securities will be valued at their fair values as determined in good faith by
the Company's Board of Directors or pursuant to procedures approved by the Board
of Directors. The above procedures may include the use of valuations furnished
by pricing services, including services that employ a matrix to determine
valuations for normal institutional-size trading units of debt securities. The
Company's Board of Directors periodically reviews and approves the pricing
services used to value the Funds' securities. Commercial paper with remaining
maturities of sixty days or less at the time of purchase will be valued at
amortized cost, absent unusual circumstances.
MONEY MARKET FUND. The Board of Directors has adopted a policy that
requires that the Fund use its best efforts, under normal circumstances, to
maintain a constant net asset value of $1.00 per share using the amortized cost
method. The amortized cost method involves valuing a security at its cost and
thereafter accruing any discount or premium at a constant rate to maturity. By
declaring these accruals to the Fund's shareholders in the daily dividend, the
value of the Fund's assets, and thus its net asset value per share, generally
will remain constant. No assurances can be provided that the Fund will be able
to maintain a stable $1.00 per share net asset value. This method may result in
periods during which the value of the Fund's securities, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the securities. During periods of declining interest rates, the daily yield
on shares of the Fund computed as described above may tend to be higher than a
like computation made by a similar fund with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices for
all of its portfolio securities. Thus, if the use of amortized cost by the Fund
resulted in a lower aggregate portfolio value on a particular day, a prospective
investor in the Fund would be able to obtain a somewhat higher yield than would
result from investment in a similar fund utilizing market values, and existing
investors in the Fund would receive less investment income. The converse would
apply in a period of rising interest rates.
In connection with its use of the amortized cost method, Money Market Fund
must maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only portfolio securities having remaining maturities of 397 calendar
days or less, and invest only in securities, whether rated or unrated,
determined by the Board of Directors to be of high quality with minimal credit
risks. The Board of Directors also has established procedures designed to
stabilize, to the extent reasonably possible, the Fund's net asset value per
share, as computed for the purpose of sales and redemptions, at $1.00. Such
procedures include review of the Fund's portfolio holdings by the Board of
Directors at such intervals as it may deem appropriate to determine whether the
Fund's net asset value calculated by using available market quotations deviates
from $1.00 per share, and, if so, whether such deviation may result in material
dilution or may otherwise be unfair to existing shareholders. In the event the
Board of Directors determines that such a deviation exists, the Board will take
such corrective action as it deems necessary and appropriate, which action might
include selling portfolio securities prior to maturity to realize capital gains
or losses or to shorten
<PAGE> 366
average portfolio maturity, withholding dividends, or establishing a net asset
value per share by using available market quotations.
OPTIONS. When a Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and Liabilities as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option written.
When the Funds purchase a put or call option on a stock index, the premium
paid is included in the asset section of the Fund's Statement of Assets and
Liabilities and subsequently adjusted to the current market value of the option.
Thus, if the current market value of the option exceeds the premium paid, the
excess is unrealized appreciation and, conversely, if the premium exceeds the
current market value, such excess is unrealized depreciation.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
Each of the Funds intends to qualify annually as a regulated investment
company. Generally, regulated investment companies are relieved of federal
income tax on the net investment income and net capital gains that they earn and
distribute to their shareholders. Unless an account is not subject to income
taxes, shareholders must include all dividends and capital gains distributions
in taxable income for federal, state and local income tax purposes.
Distributions paid from a Fund's investment company taxable income (which
includes, among other items, dividends, interest, and the excess of net
short-term capital gains over net long-term capital losses) are taxable as
ordinary income whether received in cash or additional shares. Distributions of
net capital gain (the excess of net long-term capital gain over net short-term
capital loss) designated by a Fund as capital gain dividends are taxable as
long-term capital gain, regardless of the length of time the shareholder has
held his Fund shares at the time of the distribution, whether received in cash
or additional shares. Shareholders receiving distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share received equal to the net asset value of a share of that Fund on the
reinvestment date.
Any loss realized by a shareholder upon the disposition of shares held for
six months or less from the date of his or her purchase will be treated as a
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gain during such six-month period. Further, a loss realized on
a disposition will be disallowed to the extent the shares disposed of are
replaced (whether by reinvestment of distributions or otherwise) within a period
of 61 days beginning 30 days before and
<PAGE> 367
ending 30 days after the shares are disposed of. In such a case, the basis of
the shares acquired will be adjusted to reflect the disallowed loss.
A portion of a Fund's dividends may qualify for the corporate
dividends-received deduction; however, the revised alternative minimum tax
applicable to corporations may reduce the value of the dividends-received
deduction.
All dividends and distributions are regarded as taxable to the investor,
whether or not such dividends and distributions are reinvested in additional
shares. If the net asset value of Fund shares should be reduced below a
shareholder's cost as a result of a distribution of such realized capital gains,
such distribution would be taxable to the shareholder although a portion would
be, in effect, a return of invested capital. The net asset value of each Fund's
shares reflects accrued net investment income and undistributed realized capital
gains; therefore, when a distribution is made, the net asset value is reduced by
the amount of the distribution. Distributions generally are taxable in the year
in which they are received, regardless of whether received in cash or reinvested
in additional shares. However, dividends declared in October, November, or
December of a calendar year to shareholders of record on a date in such a month
and paid by a Fund during January of the following calendar year will be taxable
as though received by shareholders on December 31 of the calendar year in which
the dividends were declared.
While the Funds intend to make distributions at the times set forth in the
Prospectuses, those times may be changed at each Fund's discretion. The Funds
intend to distribute substantially all investment company taxable income and net
realized capital gains. Through such distributions, and by meeting certain other
requirements, each Fund intends to continue to qualify for the tax treatment
accorded to regulated investment companies under Subchapter M of the Internal
Revenue Code (the "Code"). In each year in which a Fund so qualifies, it will
not be subject to federal income tax upon the amounts so distributed to
investors. The Code contains a number of complex tests to determine whether a
Fund will so qualify, and a Fund might not meet those tests in a particular
year. If it did not so qualify, the Fund would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made to
shareholders. Qualification as a regulated investment company does not involve
supervision by any governmental authority either of the Company's management or
of the Funds' investment policies and practices.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent application of the excise tax, the Funds intend to continue to make
distributions in accordance with this requirement. However, the Company's Board
of Directors and Founders could determine in a particular year that it would be
in the best interests of shareholders for a Fund not to make such distributions
at the required levels and to pay the excise tax on the undistributed amounts.
That would reduce the amount of income or capital gains available for
distribution to shareholders.
<PAGE> 368
Certain options and forward contracts in which the Funds may invest are
"section 1256 contracts." Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses (as discussed below) arising from
certain section 1256 contracts may be treated as ordinary income or loss. Also,
section 1256 contracts held by the Funds at the end of each taxable year (and,
with some exceptions, for purposes of the 4% excise tax, on October 31 of each
year) are "marked-to-market," with the result that unrealized gains or losses
are treated as though they were realized.
Generally, the hedging transactions undertaken by the Funds may result in
"straddles" for federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Funds. In addition, losses
realized by the Funds on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Funds of hedging transactions are not
entirely clear. The hedging transactions may increase the amount of short-term
capital gain realized by the Funds, which is taxed as ordinary income when
distributed to shareholders.
The Funds may make one or more of the elections available under the Code
that are applicable to straddles. If any of the elections are made, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of
gains or losses by deferring losses and/or accelerating the recognition of gains
from the affected straddle positions, the amount that must be distributed to
shareholders and that will be taxed to shareholders as ordinary income or
long-term capital gain may be increased or decreased as compared to a fund that
did not engage in such hedging transactions.
Requirements related to the Funds' status as regulated investment
companies may limit the extent to which any particular Fund will be able to
engage in transactions in options and forward contracts.
The Funds intend to accrue dividend income for Federal income tax purposes
in accordance with Code rules applicable to regulated investment companies. In
some cases, these rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the dividend is taken into
account by a Fund as income.
<PAGE> 369
Gains or losses attributable to fluctuations in foreign currency exchange
rates that occur between the time a Fund accrues interest or other receivables
or accrues expenses or other liabilities denominated in a foreign currency and
the time a Fund actually collects such receivables or pays such liabilities are
treated as ordinary income or ordinary loss. Similarly, on disposition of debt
securities denominated in a foreign currency and on disposition of certain
options and forward contracts, gains or losses attributable to fluctuations in
the value of the foreign currency between the date of acquisition of the
position and the date of disposition also are treated as ordinary gain or loss.
These gains and losses, referred to under the Code as "section 988" gains or
losses, may increase or decrease the amount of a Fund's investment company
taxable income available to be distributed to its shareholders as ordinary
income, rather than increasing or decreasing the amount of the Fund's net
capital gain. If section 988 losses exceed other investment company taxable
income during a taxable year, a Fund generally would not be able to make any
ordinary income dividend distributions. Such distributions made before the
losses were realized generally would be recharacterized as a return of capital
to shareholders, rather than as an ordinary dividend, reducing each
shareholder's basis in his or her Fund shares.
A Fund may be required to withhold federal income tax at the rate of 31%
of all taxable distributions and gross proceeds from the disposition of Fund
shares payable to shareholders who fail to provide the Fund with their correct
taxpayer identification numbers or to make required certifications, or where a
Fund or a shareholder has been notified by the Internal Revenue Service (the
"IRS") that a shareholder is subject to backup withholding. Corporate
shareholders and certain other shareholders specified in the Code generally are
exempt from such backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.
Income received by a Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine in advance the amount of
foreign taxes that will be imposed on a Fund. If more than 50% of the value of a
Fund's total assets at the close of any taxable year consists of securities of
foreign corporations, the Fund will be eligible to, and may, file an election
with the IRS that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign and U.S.
possessions' income taxes paid by it. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries and U.S. possessions
if it makes this election.
Certain Funds may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain
<PAGE> 370
circumstances, a Fund will be subject to federal income tax on a portion of any
"excess distribution" received on the stock of a PFIC or of any gain on
disposition of the stock (collectively "PFIC income"), plus interest thereon,
even if the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders.
Money Market Fund will declare a dividend of its investment company
taxable income on a daily basis, and shareholders of record begin receiving
dividends no later than the next day following the day when the purchase is
effected. The dividend declared at 4:00 p.m. Eastern time will be deducted
immediately before the net asset value calculation is made. Shareholders will
receive dividends in additional shares, unless they elect to receive cash by
notifying the Transfer Agent in writing. Dividends will be reinvested monthly on
the last business day of each month at the per share net asset value on that
date. If cash payment is requested, checks will be mailed as soon as possible
after the end of the month. If a shareholder redeems his entire account, all
dividends declared to the effective date of redemption will be paid at that
time. Shareholders will receive quarterly statements of account activity,
including information on dividends paid or reinvested. Shareholders also will
receive confirmations after each transaction, except as stated in the applicable
Prospectus. Tax information will be provided annually.
Money Market Fund's net income consists of all interest income accrued
(including accrued discount earned and premium amortized), plus or minus all
short-term realized gains and losses on portfolio assets, less accrued expenses.
The amount of the daily dividend will fluctuate. To the extent necessary to
attempt to maintain a net asset value of $1.00 per share, the Board of Directors
may consider the advisability of temporarily reducing or suspending payment of
daily dividends.
Founders may provide the Funds' Class F shareholders with information
concerning the average cost basis of their shares to assist them in preparing
their tax returns. This information is intended as a convenience to the Funds'
Class F shareholders and will not be reported to the IRS. The IRS permits the
use of several methods in determining the cost basis of mutual fund shares. Cost
basis information provided by Founders will be computed using the
single-category average cost method, although neither Founders nor the Company
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a Fund's shareholder has reported gains
or losses from investments in the Fund in past years, the shareholder must
continue to use the method previously used, unless the shareholder applies to
the IRS for permission to change methods.
The treatment of any ordinary dividends and capital gains distributions to
shareholders from a Fund under the various state and local income tax laws may
not parallel that under federal law. In addition, distributions from a Fund may
be subject to additional state, local, and foreign taxes, depending upon each
shareholder's particular
<PAGE> 371
situation. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund.
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YIELD AND PERFORMANCE INFORMATION
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The Company may, from time to time, include the yield or total return of
the Funds in advertisements or reports to shareholders or prospective investors.
Quotations of yield for the Government Securities and Balanced Funds will be
based on all investment income per share earned during a particular 30-day
period (including dividends and interest), less expenses accrued during the
period ("net investment income"), and are computed by dividing net investment
income by the maximum offering price per share on the last day of the period,
according to the following formula:
YIELD = 2[(1 + A-B)6 - 1]
cd
where a = dividends and interest earned during the period,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
The yields of the Balanced and Government Securities Funds for the 30 days
ended June 30, 1999 were 6.35% and 5.20%, respectively.
For the seven day period ended June 30, 1999, the Money Market Fund's
yield was 4.07% and effective yield was 4.16%. The Money Market Fund's yield is
computed in accordance with a standardized method which involves determining the
net change in the value of a hypothetical pre-existing Fund account having a
balance of one share at the beginning of a seven day calendar period for which
yield is to be quoted, dividing the net change by the value of the account at
the beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net change
in the value of the account reflects the value of additional shares purchased
with dividends declared on the original share and any such additional shares and
fees that may be charged to shareholder accounts, in proportion to the length of
the base period and the Fund's average account size, but does not include
realized gains and losses or unrealized appreciation and depreciation. Effective
yield is computed by adding 1 to the base period return, calculated as described
above, raising that sum to a power equal to 365/7, and subtracting 1 from the
result, according to the following formula:
<PAGE> 372
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7] -1
Quotations of average annual total return for each Fund will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in the Fund over periods of 1, 5, and 10 years (up to the life of the
Fund). These are the annual total rates of return that would equate the initial
amount invested to the ending redeemable value. These rates of return are
calculated pursuant to the following formula: P (1 + T)n = ERV (where P = a
hypothetical initial payment of $1,000, T = the average annual total return, n =
the number of years, and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of Fund expenses on an annual
basis, and assume that all dividends and distributions are reinvested when paid.
A Class's average annual total return figures calculated in accordance with this
formula assume that in the case of Class A or Class T, the maximum sales load
has been deducted from the hypothetical initial investment at the time of
purchase or, in the case of Class B or Class C, the maximum applicable CDSC has
been paid upon redemption at the end of the period.
Prior to December 31, 1999, the Company offered a single Class of shares
of each Fund without a separate designation. The average annual total returns of
each Fund's single Class of shares, which were redesignated as Class F shares on
December 31, 1999, for the 1, 5, and 10 year (or Life of Fund) periods ended
June 30, 1999 were:
10 year or
Fund 1 year 5 year Life of Fund
---------------------- ----------- -------------- --------------
Balanced 5.26% 15.53% 12.77%
Discovery 33.39% 23.21% 19.81%*
Government Securities 2.19% 5.31% 5.67%
Growth 16.16% 26.49% 18.71%
Growth and Income 6.68% 19.39% 14.56%
International Equity 2.81% 17.01%*** n/a
Mid-Cap Growth -4.31% 14.60% 13.65%
Money Market 5.06% 4.60% 4.60%
Passport 0.02% 12.73% 10.60%**
Worldwide Growth 0.76% 13.06% 13.28%*
* From inception on 12/31/89 to 06/30/99.
** From inception on 11/16/93 to 06/30/99.
*** From inception on 12/29/95 to 06/30/99.
No performance information is provided for Class A, Class B, Class C,
Class R and Class T shares since they were not offered as of June 30, 1999.
<PAGE> 373
Performance information for a Fund may be compared in reports and
promotional literature to: (i) the Standard & Poor's 500 Stock Index ("S & P
500"), Dow Jones Industrial Average ("DJIA"), or other unmanaged indices so that
investors may compare a Fund's results with those of a group of unmanaged
securities widely regarded by investors as representative of the securities
markets in general; (ii) other groups of mutual funds tracked by independent
research firms that rank mutual funds by overall performance, investment
objectives and assets, or tracked by other services, companies, publications, or
persons, that rank mutual funds on overall performance or other criteria, such
as Lipper Analytical Services, MONEY, MORNINGSTAR, KIPLINGER'S PERSONAL FINANCE,
CDA WEISENBERGER, FINANCIAL WORLD, WALL STREET JOURNAL, U.S. NEWS, BARRON'S, USA
TODAY, BUSINESS WEEK, INVESTOR'S BUSINESS DAILY, FORTUNE, MUTUAL FUNDS MAGAZINE
and FORBES; and (iii) the Consumer Price Index (a measure for inflation), to
assess the real rate of return from an investment in the Funds. Unmanaged
indices may assume the reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
Other unmanaged indices that may be used by the Funds in providing
comparison data of performance and shareholder service include Lehman Brothers,
National Association of Securities Dealers Automated Quotations, Frank Russell
Company, Value Line Investment Survey, American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, Financial Times Stock Exchange, New
York Stock Exchange, the Nikkei Stock Average, and the Deutscher Aktienindex.
Performance information for any Fund reflects only the performance of a
hypothetical investment in the Fund during the particular time period on which
the calculations are based. Performance information should be considered in
light of the Fund's investment objectives and policies, characteristics and
quality of the portfolios and the market conditions during the given time
period, and should not be considered as a representation of what may be achieved
in the future.
In conjunction with performance reports, comparative data between the
Funds' performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
Rankings, ratings, and comparisons of investment performance and/or
assessments of the quality of shareholder service made by independent sources
may be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources of Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
<PAGE> 374
CNBC
CNN
Consumer Digest
Fabian Investor Resource
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Individual Investor
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis
Louis Rukeyser's Mutual Funds
Money
Morningstar
Mutual Fund Forecaster
Mutual Funds Magazine
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Weisenberger Investment Companies Service
Working Woman
Worth
From time to time, advertising materials for the Funds may include
biographical information relating to their portfolio managers and may refer to,
or include commentary by, the portfolio managers relating to investment
strategy, asset growth, current or past business, political, economic, or
financial conditions and other matters of general interest to investors.
Materials also may discuss or portray the principles of dollar-cost-averaging.
<PAGE> 375
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
CODE OF ETHICS
The Company and Founders have adopted a strict code of ethics that limits
directors, officers, investment personnel and other Founders employees in
investing in securities for their own accounts. The code of ethics complies in
all material respects with the recommendations set forth in the Report of the
Advisory Group on Personal Investing of the Investment Company Institute. With
certain exceptions, the code of ethics requires pre-clearance of personal
securities transactions and imposes restrictions and reporting requirements upon
such transactions. The code of ethics provides an exemption from the
pre-approval requirement for "de minimis" transactions. In order to qualify as a
de minimis transaction, the purchase or sale must meet two tests: (1) the
security must be issued by a company with a market capitalization of at least $1
billion and an average daily trading volume of at least 100,000 shares; and (2)
the transaction must involve no more than 100 shares or $5,000, whichever is
greater. In addition, the employee cannot rely on this exemption for a
particular security if the employee is involved in buying or selling the same
security for a Fund or other client of Founders. An employee must complete and
submit a notification form prior to effecting a de minimis transaction. The
Company and Founders carefully monitor compliance with the code of ethics by
their respective personnel.
Violations or apparent violations of the code of ethics by an officer,
director or employee of the Company are reported to the president of the Company
or to the Company's legal counsel, and thereafter to the Company's Board of
Directors. The Company's Board of Directors determines whether a violation of
the code of ethics has occurred and, if so, the sanctions, if any, deemed
appropriate.
Violations or apparent violations of the code of ethics by an officer,
director or employee of Founders who is not also an officer, director or
employee of the Company are reported to the president of Founders, Founders'
Legal Department or to Founders' legal counsel. Founders' president, in
conjunction with the Legal Department, shall determine whether a violation has
occurred and, if so, will impose such sanctions, if any, as he or she may deem
appropriate. These determinations are reviewed by the Company's Board of
Directors.
Sanctions may include verbal or written warnings, a letter of censure,
suspension, termination of employment, disgorgement of profits from improper
transactions, or other sanctions. The code of ethics requires maintenance of the
highest standards of integrity and conduct. In engaging in personal business
activities, personnel of the Company and of Founders must act in the best
interests of the
<PAGE> 376
Company and its shareholders. The Company's shareholders may obtain a copy of
the code of ethics without charge by calling Founders at 1-800-525-2440.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 17th Street, Denver, Colorado, acts as
independent accountants for the Company. The independent accountants are
responsible for auditing the financial statements of each Fund and meeting with
the Audit Committee of the Board of Directors.
REGISTRATION STATEMENT
A Registration Statement (Form N-1A) under the 1933 Act has been filed
with the Securities and Exchange Commission, Washington, D.C., with respect to
the securities to which this Statement of Additional Information relates. If
further information is desired with respect to the Company or such securities,
reference should be made to the Registration Statement and the exhibits filed as
a part thereof.
<PAGE> 377
APPENDIX
RATINGS OF CORPORATE BONDS
An NRSRO is a nationally recognized statistical rating organization.
The Division of Market Regulation of the Securities and Exchange Commission
currently recognizes six NRSROs: Duff & Phelps, Inc. ("D&P"), Fitch Investors
Services, Inc. ("Fitch"), Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Ratings Services ("S&P"), Thompson Bankwatch, Inc. ("TBW"),
and IBCA Limited and its affiliate, IBCA Inc. ("IBCA").
Guidelines for Moody's and S&P ratings are described below. For D&P,
ratings correspond exactly to S&P's format from AAA through B-. For Fitch,
ratings correspond exactly to S&P's format from AAA through CCC-. For both TBW
and IBCA, ratings correspond exactly to S&P's format in all ratings categories.
Because the Funds cannot purchase securities rated below B, ratings from D&P,
Fitch, TBW, and IBCA can be compared directly to the S&P ratings scale to
determine the suitability of a particular investment for a given Fund. For
corporate bonds, a security must be rated in the appropriate category by one or
more of these six agencies to be considered a suitable investment.
The four highest ratings of Moody's and S&P for corporate bonds are Aaa,
Aa, A and Baa and AAA, AA, A and BBB, respectively.
MOODY'S. The characteristics of these debt obligations rated by Moody's are
generally as follows:
Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities. Moody's
applies the numerical modifiers 1, 2 and 3 to the Aa rating classification. The
modifier 1 indicates a ranking for the security in the higher end of this rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of this rating category.
<PAGE> 378
A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
maintenance of other terms of the contract over any long period of time may be
small.
STANDARD & POOR'S. The characteristics of these debt obligations rated by
S&P are generally as follows:
AAA -- This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB -- Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to
<PAGE> 379
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B -- Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, and economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
RATINGS OF COMMERCIAL PAPER
The SEC recognizes the same six nationally recognized statistical rating
organizations (NRSROs) for commercial paper that it does for corporate bonds:
D&P, Fitch, Moody's, S&P, TBW, and IBCA. The ratings that would constitute the
highest short-term rating category are Duff 1 (D&P), F-1 (Fitch), P-1 (Moody's),
A-1 or A-1+ (S&P), TBW-1 (TBW), and A1 (IBCA).
Description of Moody's commercial paper ratings. Among the factors
considered by Moody's in assigning commercial paper ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of the risks which may be
inherent in certain areas; (3) evaluation of the issuer's products in relation
to competition and customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations. Relative differences in strength and weakness in respect to these
criteria would establish a rating of one of three classifications; P-1 (Highest
Quality), P-2 (Higher Quality) or P-3 (High Quality).
Description of S&P's commercial paper ratings. An S&P commercial paper
rating is a current assessment of the likelihood of timely payment of debt
having an original maturity of no more than 365 days. Ratings are graded into
four categories, ranging from "A" for the highest quality obligations to "D" for
the lowest. The "A" categories are as follows:
A -- Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety.
A-1 -- This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong.
A-2 -- Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
<PAGE> 380
A-3 -- Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
RATINGS OF PREFERRED STOCK
MOODY'S. The characteristics of these securities rated by Moody's are
generally as follows:
"aaa" -- An issue that is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
"aa" -- An issue that is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance that earnings
and asset protection will remain relatively well maintained in the foreseeable
future.
"a" -- An issue that is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classification, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
"baa" -- An issue that is rated "baa" is considered to be a medium-grade
preferred stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time.
"ba" -- An issue that is rated "ba" is considered to have speculative
elements and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
"b" -- An issue that is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
NOTE: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range ranking
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
<PAGE> 381
STANDARD & POOR'S. The characteristics of these securities rated by S&P are
generally as follows:
AAA -- This is the highest rating that may be assigned by S&P to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA -- A preferred stock issue rated AA also qualifies as a high-quality
fixed-income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A -- An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
BBB -- An issue rated BBB is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB, B -- Preferred stocks rated BB and B are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and B a higher
degree of speculation. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
PLUS (+) OR MINUS (-): To provide more detailed indications of preferred
stock quality, the ratings from AA to B may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
<PAGE> 382
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS
(a) (1) Articles of Incorporation of Founders Funds, Inc.,
dated June 19, 1987.1
(2) Articles Supplementary to the Articles of Incorporation,
filed November 25, 1987.1
(3) Articles Supplementary to the Articles of Incorporation, filed
February 25, 1988.1
(4) Articles Supplementary to the Articles of Incorporation, filed
December 12, 1989.1
(5) Articles Supplementary to the Articles of Incorporation, filed
May 3, 1990.1
(6) Articles Supplementary to the Articles of Incorporation, filed
September 22, 1993.1
(7) Articles Supplementary to the Articles of Incorporation, filed
December 27, 1995.1
(8) Articles Supplementary to the Articles of Incorporation,
filed May 20,1996.2
(9) Articles Supplementary to the Articles of Incorporation, filed
October 21, 1996.2
(10) Articles Supplementary to the Articles of Incorporation, filed
April 9, 1997.3
(11) Articles of Amendment to Articles of Incorporation, filed
April 22, 1999.
(12) Form of Articles Supplementary to Articles of
Incorporation.
(13) Form of Articles of Amendment to Articles of Incorporation.
(b) By-Laws of Founders Funds, Inc.,
as amended November 18, 1997.4
(c) Not applicable.
<PAGE> 383
(d) (1) Investment Advisory Agreement between Founders
Funds, Inc. and Founders Asset Management LLC,
dated April 1, 1998.4
(2) Form of Amended and Restated Appendix 1 to Founders
Funds, Inc. Investment Advisory Agreement,
dated December 31, 1999.
(e) (1) Form of Amended and Restated Underwriting Agreement
between Founders Funds, Inc. and Premier Mutual Fund Services,
Inc., dated December 31, 1999.
(2) Form of Distribution and Shareholder Support Agreement
for Founders Funds, Inc.4
(3) Form of Distribution and Shareholder Support Agreement
for Founders Funds, Inc. (For use with Recordkeeping and
Other Services Agreements).4
(4) Form of Broker-Dealer Agreement for Dreyfus Founders
Funds, Inc.
(5) Form of Bank Affiliated Broker-Dealer Agreement for
Dreyfus Founders Funds, Inc.
(6) Form of Bank Agreement for Dreyfus Founders Funds, Inc.
(f) Not applicable.
(g) (1) Custody Agreement between Investors Fiduciary Trust
Company and Founders Funds, Inc., dated January 3, 1994.2
(2) Proposed Fee Schedule effective August 1996.2
(h) (1) Form of Amended and Restated Shareholder Services
Agreement between Dreyfus Founders Funds, Inc. and Founders
Asset Management LLC, dated December 31,1999.
(2) Form of Amended and Restated Fund Accounting and
Administrative Services Agreement between Dreyfus
Founders Funds, Inc. and Founders Asset Management LLC,
dated December 31,1999.
(3) Shareholder Services Plan, dated December 31, 1999.
<PAGE> 384
(i) Opinion and consent of Moye, Giles, O'Keefe, Vermeire &
Gorrell.
(j) Consent of Independent Accountants.
(k) Not applicable.
(l) Not applicable.
(m) (1) Amended and Restated Dreyfus Founders Funds, Inc. Rule
12b-1 Distribution Plan (For Class F Shares Only),
dated December 31, 1999.
(2) Dreyfus Founders Funds, Inc. Distribution Plan for
Classes B, C And T, dated December 31, 1999.
(n) Dreyfus Founders Funds, Inc. Rule 18f-3 Plan, dated December
31, 1999.
(o) Code of Ethics for Founders Funds, Inc. and Founders
Asset Management LLC, as amended August 14, 1998.4
- --------------
1 Filed previously on EDGAR with Post-Effective Amendment No. 60 to the
Registration Statement on April 29, 1996 and incorporated herein by
reference.
2 Filed previously on EDGAR with Post-Effective Amendment No. 62 to the
Registration Statement on February 24, 1997 and incorporated herein by
reference.
3 Filed previously on EDGAR with Post-Effective Amendment No. 63 to the
Registration Statement on February 27, 1998 and incorporated herein by
reference.
4 Filed previously on EDGAR with Post-Effective Amendment No. 64 to the
Registration Statement on February 22, 1999 and incorporated herein by
reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
Registrant knows of no person or group of persons directly or indirectly
controlled by or under common control with the Registrant within the
meaning of this item.
<PAGE> 385
ITEM 25. INDEMNIFICATION
Indemnification provisions for officers, directors, employees, and agents
of the Registrant are set forth in Article XII of the Bylaws of the
Registrant, which Bylaws were filed on EDGAR as Exhibit 2 to the
Registrant's Post-Effective Amendment No. 63. Section 12.01 of Article XII
of the Bylaws provides that the Registrant shall indemnify each person who
is or was a director, officer, employee or agent of the Registrant against
expenses, judgments, fines and amounts paid in settlement to the full
extent permitted by Section 2-418 of the General Corporation Law of
Maryland or any other applicable law. However, notwithstanding any
provisions in Article XII to the contrary, no officer, director, employee,
and/or agent of the Registrant shall be indemnified by the Registrant in
violation of sections 17(h) and (i) of the Investment Company Act of 1940,
as amended.
Pursuant to the Underwriting Agreement between the Registrant and Premier
Mutual Fund Services, Inc. ("Premier"), with certain exceptions, the
Registrant has agreed to indemnify Premier against any liabilities and
expenses arising out of any omissions of material facts or untrue
statements made by the Registrant in its prospectus or registration
statement.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
The management board of Founders Asset Management LLC ("Founders"),
investment adviser to the Registrant, consists of:
<TABLE>
<CAPTION>
NAME OTHER BUSINESSES POSITION HELD DATES
- ---- ---------------- ------------- -----
<S> <C>
CHRISTOPHER M. CONDRON Franklin Portfolio Director 01/97 - Present
Chairman Associates, LLC1
TBCAM Holdings, Inc.1 Director 10/97 - Present
President 10/97 - 06/98
Chairman 10/97 - 06/98
The Boston Company Asset Director 01/98 - Present
Management, LLC1 President 01/98 - 06/98
Chairman 01/98 - 06/98
The Boston Company Asset President 09/95 - 01/98
Management, Inc.1 Chairman 04/95 - 01/98
Franklin Portfolio Director 01/97 - Present
Holdings, Inc.1
Certus Asset Advisors Director 06/95 - Present
Corp.2
Mellon Capital Management Director 05/95 - Present
Corporation3
Mellon Bond Associates, Executive 01/98 - Present
LLP4 Committee Member
<PAGE> 386
Mellon Bond Associates4 Trustee 05/95 - 01/98
Mellon Equity Associates, Executive 01/98 - Present
LLP4 Committee Member
Mellon Equity Associates4 Trustee 05/95 - 01/98
Boston Safe Advisors, President 05/95 - Present
Inc.1 Director 05/95 - Present
Mellon Bank, N.A.4 Director 01/99 - Present
Chief Operating
Officer 03/98 - Present
President 03/98 - Present
Vice Chairman 11/94 - 03/98
Mellon Bank Corporation4 Chief Operating 01/99 - Present
Officer
President 01/99 - Present
Director 01/98 - Present
Vice Chairman 11/94 - 01/99
The Boston Company, Inc.1 Vice Chairman 01/94 - Present
Director 05/93 - Present
Laurel Capital Advisors, Executive 01/98 - 08/98
LLP4 Committee Member
Laurel Capital Advisors4 Trustee 10/93 - 01/98
Boston Safe Deposit and Director 05/93 - Present
Trust Company1
The Boston Company President 06/89 - Present
Financial Strategies, Director 06/89 - Present
Inc.1
The Dreyfus Corporation5 Chairman 01/99 - Present
Chief Executive 08/96 - Present
Officer
Chief Operating 11/95 - 01/99
Officer
President 11/95 - 01/99
Director 11/95 - Present
STEPHEN E. CANTER Dreyfus Investment Chairman of the 01/97 - Present
Advisors, Inc. 5 Board
Director 05/95 - Present
President 05/95 - Present
Newton Management Limited Director 02/99 - Present
London, England
Mellon Bond Associates, Executive 01/99 - Present
LLP4 Committee Member
Mellon Equity Associates, Executive 01/99 - Present
LLP4 Committee Member
Franklin Portfolio Director 02/99 - Present
Associates, LLC1
Franklin Portfolio Director 02/99 - Present
Holdings, Inc.1
The Boston Company Asset Director 02/99 - Present
Management, LLC1
<PAGE> 387
TBCAM Holdings, Inc. 1 Director 02/99 - Present
Mellon Capital Management Director 01/99 - Present
Corporation3
The Dreyfus Trust Company Director 06/95 - Present
Chairman 01/99 - Present
President 01/99 - Present
Chief Executive 01/99 - Present
Officer
Founders Asset Management Acting Chief 07/98 - 12/98
LLC8 Executive Officer
The Dreyfus Corporation5 President 01/99 - Present
Chief Operating 01/99 - Present
Officer
Chief Investment 05/95 - Present
Officer
Vice Chairman 05/95 - Present
Director 05/95 - Present
SCOTT A. CHAPMAN Founders Asset Management Vice President - 12/98 - Present
LLC8 Investments
Research Director 02/99 - Present
HighMark Capital Vice President and 12/93 - 11/98
Management, Inc. Director of Growth
San Francisco, CA Strategy
GREGORY P. CONTILLO Founders Asset Management Executive V.P. 09/99 - Present
LLC8 Senior V.P. 04/98 - 09/99
Chief Marketing 04/98 - Present
Officer
Acting Head of 07/98 - Present
Brokerage
Operations
Senior Vice 12/97 - 04/98
President -
Institutional
Marketing
Founders Asset Senior Vice 05/96 - 04/98
Management, Inc.8 President -
Institutional
Marketing
THOMAS F. EGGERS Dreyfus Service Executive Vice 04/96 - Present
Corporation5 President
Director 09/96 - Present
Dreyfus Service Director 03/99 - Present
Dreyfus Insurance Agency Director 03/99 - Present
of Massachusetts, Inc.6
Dreyfus Brokerage Director 11/97 - 06/98
Services, Inc.
401 North Maple Avenue
Beverly Hills, CA
The Dreyfus Corporation5 Vice Chairman - 01/99 - Present
Institutional
Director 01/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 04/97 - Present
Advisors, Inc.5
Dreyfus Brokerage Chairman 11/97 - 02/99
Services, Inc. Chief Executive 11/97 - 02/98
401 North Maple Ave. Officer
Beverly Hills, CA
<PAGE> 388
Dreyfus Service Director 01/95 - 02/99
Corporation5 President 09/96 - 03/99
Dreyfus Precious Metals, Director 03/96 - 12/98
Inc.6 President 10/96 - 12/98
Dreyfus Service Director 12/94 - 03/99
Organization, Inc.5 President 01/97 - 03/99
Seven Six Seven Agency, Director 01/97 - 04/99
Inc.5
Dreyfus Insurance Agency Chairman 05/97 - 03/99
of Massachusetts, Inc.7 President 05/97 - 03/99
Director 05/97 - 03/99
The Dreyfus Trust Company6 Chairman 01/97 - 01/99
President 02/97 - 01/99
Chief Executive 02/97 - 01/99
Officer
Director 12/94 - Present
The Dreyfus Consumer Chairman 05/97 - 06/99
Credit Corporation5 President 05/97 - 06/99
Director 12/94 - 06/99
The Boston Company Chairman 12/95 - Present
Advisors, Inc. Chief Executive 12/95 - Present
Wilmington, DE Officer
President 12/95 - Present
The Boston Company, Inc.1 Director 05/93 - Present
President 05/93 - Present
Mellon Bank, N.A.4 Executive Vice 06/92 - Present
President
Laurel Capital Advisors, Chairman 01/98 - 08/98
LLP4 Executive
Committee Member 01/98 - 08/98
Chief Executive 01/98 - 08/98
Officer 01/98 - 08/98
President
Laurel Capital Advisors, Trustee 12/91 - 01/98
Inc4 Chairman 09/93 - 01/98
President and CEO 12/91 - 01/98
Boston Group Holdings, Director 05/93 - Present
Inc.1 President 05/93 - Present
The Dreyfus Corporation5 Vice Chairman 09/94 - Present
Director 01/95 - Present
RICHARD W. SABO Founders Asset Management President and 12/98 - Present
LLC8 Chief Executive
Officer
The Dreyfus Corporation5 Director 12/98 - Present
Prudential Securities Senior Vice 07/91 - 11/98
New York, NY President 07/91 - 11/98
Regional Director
<FN>
---------------------------
The address of the businesses so indicated are:
1 One Boston Place, Boston, Massachusetts 02108
2 One Bush Street, Suite 450, San Francisco, California 94104
<PAGE> 389
3 595 Market Street, Suite 3000, San Francisco, California 94105
4 One Mellon Bank Center, Pittsburgh, Pennsylvania 15258
5 200 Park Avenue, New York, New York 10166
6 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144
7 53 State Street, Boston, Massachusetts 02109
8 2930 East Third Avenue, Denver, Colorado 80206
</FN>
</TABLE>
Information concerning Founders and its officers can be found under "Who
Manages the Funds" in the Prospectuses and "Investment Adviser,
Distributor and Other Service Providers" in the Statement of Additional
Information.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Premier Mutual Fund Services, Inc., the Registrant's principal
underwriter, also serves as principal underwriter for the following
investment companies:
1. Comstock Partners Funds, Inc.
2. Dreyfus A Bonds Plus, Inc.
3. Dreyfus Appreciation Fund, Inc.
4. Dreyfus Asset Allocation Fund, Inc.
5. Dreyfus Balanced Fund, Inc.
6. Dreyfus BASIC GNMA Fund
7. Dreyfus BASIC Money Market Fund, Inc.
8. Dreyfus BASIC Municipal Fund, Inc.
9. Dreyfus BASIC U.S. Government Money Market Fund
10. Dreyfus California Intermediate Municipal Bond Fund
11. Dreyfus California Tax Exempt Bond Fund, Inc.
12. Dreyfus California Tax Exempt Money Market Fund
13. Dreyfus Cash Management
14. Dreyfus Cash Management Plus, Inc.
15. Dreyfus Connecticut Intermediate Municipal Bond Fund
16. Dreyfus Connecticut Municipal Money Market Fund, Inc.
17. Dreyfus Florida Intermediate Municipal Bond Fund
18. Dreyfus Florida Municipal Money Market Fund
19. The Dreyfus Fund Incorporated
20. Dreyfus Global Bond Fund, Inc.
21. Dreyfus Global Growth Fund
22. Dreyfus GNMA Fund, Inc.
23. Dreyfus Government Cash Management Funds
24. Dreyfus Growth and Income Fund, Inc.
25. Dreyfus Growth and Value Funds, Inc.
26. Dreyfus Growth Opportunity Fund, Inc.
27. Dreyfus Debt and Equity Funds
<PAGE> 390
28. Dreyfus Index Funds, Inc.
29. Dreyfus Institutional Money Market Fund
30. Dreyfus Institutional Preferred Money Market Fund
31. Dreyfus Institutional Short Term Treasury Fund
32. Dreyfus Insured Municipal Bond Fund, Inc.
33. Dreyfus Intermediate Municipal Bond Fund, Inc.
34. Dreyfus International Funds, Inc.
35. Dreyfus Investment Grade Bond Funds, Inc.
36. Dreyfus Investment Portfolios
37. The Dreyfus/Laurel Funds, Inc.
38. The Dreyfus/Laurel Funds Trust
39. The Dreyfus/Laurel Tax-Free Municipal Funds
40. Dreyfus LifeTime Portfolios, Inc.
41. Dreyfus Liquid Assets, Inc.
42. Dreyfus Massachusetts Intermediate Municipal Bond Fund
43. Dreyfus Massachusetts Municipal Money Market Fund
44. Dreyfus Massachusetts Tax Exempt Bond Fund
45. Dreyfus MidCap Index Fund
46. Dreyfus Money Market Instruments, Inc.
47. Dreyfus Municipal Bond Fund, Inc.
48. Dreyfus Municipal Cash Management Plus
49. Dreyfus Municipal Money Market Fund, Inc.
50. Dreyfus New Jersey Intermediate Municipal Bond Fund
51. Dreyfus New Jersey Municipal Bond Fund, Inc.
52. Dreyfus New Jersey Municipal Money Market Fund, Inc.
53. Dreyfus New Leaders Fund, Inc.
54. Dreyfus New York Insured Tax Exempt Bond Fund
55. Dreyfus New York Municipal Cash Management
56. Dreyfus New York Tax Exempt Bond Fund, Inc.
57. Dreyfus New York Tax Exempt Intermediate Bond Fund
58. Dreyfus New York Tax Exempt Money Market Fund
59. Dreyfus U.S. Treasury Intermediate Term Fund
60. Dreyfus U.S. Treasury Long Term Fund
61. Dreyfus 100% U.S. Treasury Money Market Fund
62. Dreyfus U.S. Treasury Short Term Fund
63. Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64. Dreyfus Pennsylvania Municipal Money Market Fund
65. Dreyfus Premier California Municipal Bond Fund
66. Dreyfus Premier Equity Funds, Inc.
67. Dreyfus Premier International Funds, Inc.
68. Dreyfus Premier GNMA Fund
69. Dreyfus Premier Worldwide Growth Fund, Inc.
70. Dreyfus Premier Municipal Bond Fund
71. Dreyfus Premier New York Municipal Bond Fund
72. Dreyfus Premier State Municipal Bond Fund
<PAGE> 391
73. Dreyfus Premier Value Equity Funds
74. Dreyfus Short-Intermediate Government Fund
75. Dreyfus Short-Intermediate Municipal Bond Fund
76. The Dreyfus Socially Responsible Growth Fund, Inc.
77. Dreyfus Stock Index Fund, Inc.
78. Dreyfus Tax Exempt Cash Management
79. The Dreyfus Third Century Fund, Inc.
80. Dreyfus Treasury Cash Management
81. Dreyfus Treasury Prime Cash Management
82. Dreyfus Variable Investment Fund
83. Dreyfus Worldwide Dollar Money Market Fund, Inc.
84. General California Municipal Bond Fund, Inc.
85. General California Municipal Money Market Fund
86. General Government Securities Money Market Fund, Inc.
87. General Money Market Fund, Inc.
88. General Municipal Bond Fund, Inc.
89. General Municipal Money Market Funds, Inc.
90. General New York Municipal Bond Fund, Inc.
91. General New York Municipal Money Market Fund
(b) The directors and officers of Premier Mutual Fund Services, Inc.,
located at 60 State Street, Suite 1300, Boston, Massachusetts,
02109, are as follows:
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
- ------------------------ ----------------------- -----------------------
Marie E. Connolly President, Chief President and
Executive Officer, Treasurer
Chief Operating
Officer and Director
Margaret W. Chambers Senior Vice President, Vice President and
General Counsel, Chief Secretary
Compliance Officer and
Secretary
Christopher J. Kelley None Vice President and
Assistant Secretary
Kathleen K. Morrisey None Vice President and
Assistant Secretary
<PAGE> 392
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
- ------------------------ ----------------------- -----------------------
Mary A. Nelson Vice President and Vice President and
Manager of Treasury Assistant Treasurer
Services and
Administration
Stephanie D. Pierce None Vice President,
Assistant Treasurer
and Assistant
Secretary
Joseph F. Tower, III Senior Vice President, Vice President and
Treasurer, Chief Assistant Treasurer
Financial Officer and
Director
George A. Rio Executive Vice Vice President and
President and Client Assistant Treasurer
Service Director
Elba Vasquez None Vice President and
Assistant Secretary
Jean M. O'Leary Assistant Vice None
President, Assistant
Secretary and
Assistant Clerk
William J. Nutt Chairman of the Board None
and Director
Patrick W. McKeon Vice President None
Joseph A. Vignone Vice President None
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Principal executive office of the Registrant, Founders Financial Center,
2930 East Third Avenue, Denver, Colorado 80206 (David L. Ray), except
records described in Rule 31a-1(b)(2)(iv) under the Investment Company Act
of 1940, which are in the possession of Investors Fiduciary Trust Company,
801 Pennsylvania, Kansas City, Missouri 64105 with respect to Class F
shares, and of Dreyfus Transfer, Inc., P.O. Box 9671, Providence, Rhode
Island 02940-9671 with respect to shares of all other classes.
<PAGE> 393
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
The Registrant hereby undertakes that the board of directors will call
such meetings of shareholders for action by shareholder vote, including
acting on the question of removal of a director or directors and to assist
in communications with other shareholders as required by Section 16(c) of
the Investment Company Act of 1940, as may be requested in writing by the
holders of at least 10% of the outstanding shares of the Registrant or any
of its portfolios, or as may be required by applicable law or the Fund's
Articles of Incorporation.
The Registrant shall furnish each person to whom a prospectus is delivered
with a copy of the Registrant's latest annual report to shareholders, upon
request and without charge.
<PAGE> 394
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment to its Registration Statement (File No. 2-17531) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Suffolk,
State of Massachusetts, on the 7th day of October, 1999.
FOUNDERS FUNDS, INC.
ATTEST:
By: /S/ MARIE E. CONNOLLY
/S/ CHRISTOPHER J. KELLEY Marie E. Connolly, President
Christopher J. Kelley, Vice President
and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
/S/ MARIE E. CONNOLLY President and Treasurer October 7, 1999
Marie E. Connolly (Principal Executive,
Financial and
Accounting Officer)
/S/ JAY A. PRECOURT * Chairman October 7, 1999
- -------------------------
Jay A. Precourt
/S/ EUGENE H. VAUGHAN, JR.* Vice Chairman October 7, 1999
- ---------------------------
Eugene H. Vaughan, Jr.
/S/ ALAN S. DANSON * Director October 7, 1999
- -------------------------
Alan S. Danson
/S/ JOAN D. MANLEY * Director October 7, 1999
- -------------------------
Joan D. Manley
/S/ ROBERT P. MASTROVITA* Director October 7, 1999
- -------------------------
Robert P. Mastrovita
/S/ TRYGVE E. MYHREN * Director October 7, 1999
- -------------------------
Trygve E. Myhren
<PAGE> 395
/S/ GEORGE W. PHILLIPS * Director October 7, 1999
- -------------------------
George W. Phillips
/S/ KENNETH R. CHRISTOFFERSEN October 7, 1999
- -----------------------------
By Kenneth R. Christoffersen
Attorney-in-Fact
*Original Powers of Attorney authorizing Kenneth R. Christoffersen, David L.
Ray, Richard W. Sabo, and Edward F. O'Keefe and each of them, to execute this
Post-Effective Amendment to the Registration Statement of the Registrant on
behalf of the above-named directors and officers of the Registrant were filed
on February 22, 1999 with Post-Effective Amendment No. 64.
<PAGE> 396
EXHIBIT INDEX
EXHIBIT DESCRIPTION
a(11) Articles of Amendment to Articles of Incorporation, filed April
22, 1999
a(12) Form of Articles Supplementary to Articles of Incorporation
a(13) Form of Articles of Amendment to Articles of Incorporation
d(2) Form of Amended and Restated Appendix 1 to Founders Funds, Inc.
Investment Advisory Agreement, dated December 31, 1999
e(1) Form of Amended and Restated Underwriting Agreement between
Founders Funds, Inc. and Premier Mutual Fund Services, Inc.,
dated December 31, 1999.
e(4) Form of Broker-Dealer Agreement for Dreyfus Founders Funds, Inc.
e(5) Form of Bank Affiliated Broker-Dealer Agreement for Dreyfus
Founders Funds, Inc.
e(6) Form of Bank Agreement for Dreyfus Founders Funds, Inc.
h(1) Form of Amended and Restated Shareholder Services Agreement
between Dreyfus Founders Funds, Inc. and Founders Asset
Management LLC, dated December 31,1999
h(2) Form of Amended and Restated Fund Accounting and Administrative
Services Agreement between Dreyfus Founders Funds, Inc. and
Founders Asset Management LLC, dated December 31,1999
h(3) Shareholder Services Plan, dated December 31, 1999
i Opinion and consent of Moye, Giles, O'Keefe, Vermeire & Gorrell
j Consent of Independent Accountants, dated September 30, 1999
m(1) Amended and Restated Dreyfus Founders Funds, Inc. Rule 12b-1
Distribution Plan (For Class F Shares Only), dated December 31,
1999
m(2) Dreyfus Founders Funds, Inc. Distribution Plan for Classes B, C
And T, dated December 31, 1999
n Dreyfus Founders Funds, Inc. Rule 18f-3 Plan, dated December 31,
1999
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
FOUNDERS FUNDS, INC.
Founders Funds, Inc., a corporation organized and existing under the
General Corporation Law of the State of Maryland (the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland (the
"Department") that:
FIRST: Article SECOND of the Articles Supplementary of the Company received
and approved by the Department on April 9, 1997 is hereby amended by changing
the name of the Company's series of stock presently designated as Special to
Mid-Cap Growth and by changing the name of the Company's series of stock
presently designated as Blue Chip to Growth and Income.
SECOND: The foregoing amendment is limited to a change expressly permitted
by Section 2-605 of the General Corporation Law of the State of Maryland to be
made without action by the Company's stockholders and, in accordance with the
requirements of Section 2-605(a), was unanimously approved by the board of
directors of the Company on March 12, 1999.
THIRD: In accordance with the requirements of Section 2-605(a)(4) of the
aforesaid General Corporation Law, the Company is registered as an open-end
management investment company under the Investment Company Act of 1940.
FOURTH: In accordance with Section 1-302 of the aforesaid General
Corporation Law, the undersigned, a vice president of the Company, who is
executing these Articles of Amendment on behalf of the Company, of which this
paragraph is made a part, hereby acknowledges, in the name and on behalf of the
Company, these Articles of Amendment to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information, and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties for perjury.
FIFTH: In accordance with Section 2-610.1(2) of the aforesaid General
Corporation Law, these Articles of Amendment shall be effective at 5:00 p.m.
Eastern Time, on April 30, 1999.
IN WITNESS WHEREOF, Founders Funds, Inc. has caused these Articles of
Amendment to be signed in its name and on its behalf by its vice president and
witnessed by its assistant secretary on this 22nd day of April, 1999.
FOUNDERS FUNDS, INC.
[SEAL] By: /s/ Christopher J. Kelley
Title: Vice President
<PAGE>
WITNESSED:
By: /s/ Margaret W. Chambers
Secretary
CERTIFICATION
I, Judith K. Benson, a notary public in and for the City of Boston, County
of Suffolk, and Commonwealth of Massachusetts, do hereby certify that
Christopher J. Kelley, personally known to me to be the person whose name is
subscribed to the foregoing Articles of Amendment, appeared before me this date
in person and acknowledged that he signed, sealed, and delivered said instrument
as his full and voluntary act and deed for the uses and purposes therein set
forth.
Given my hand and official seal this 22nd day of April, 1999
/s/ Judith K. Benson [SEAL]
Notary Public
My commission expires: May 17, 2002
2
FORM OF
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
FOUNDERS FUNDS, INC.
Pursuant to Sections 2-105, 2-208, and 2-208.1 of the Maryland General
Corporation Law, Founders Funds, Inc. (the "Corporation"), a Maryland
corporation, registered as an open-end investment company under the Investment
Company Act of 1940 and having its registered office in Baltimore, Maryland,
hereby adopts the following Articles Supplementary to the Corporation's Articles
of Incorporation:
FIRST: The aggregate number of shares of all Classes which the Corporation
shall have the authority to issue is hereby increased to ten billion
(10,000,000,000) shares of the Corporation's Common Stock ("Common Stock").
Prior to this increase in the Corporation's authorized number of shares of
Common Stock, the Corporation was authorized to issue three billion
(3,000,000,000) shares of Common Stock of all Classes. Before and after this
increase in the Corporation's authorized number of shares of Common Stock, the
Corporation's shares of Common Stock had and will have a par value of $0.01 per
share. The aggregate par value of the Corporation's three billion authorized
shares was thirty million dollars ($30,000,000) and after the increase in the
authorized number of shares of Common Stock the aggregate par value is one
hundred million dollars ($100,000,000).
SECOND: Pursuant to authority expressly vested in the Board of Directors
of the Corporation ("Board") by Article FIFTH of the Articles of Incorporation,
the Board, in accordance with Sections 2-105 and 2-208 of the Maryland General
Corporation Law, establishes and designates the following Classes effective
October ___, 1999:
ESTABLISHMENT OF FOCUS FUND
Dreyfus Founders Focus Fund, Class A
Dreyfus Founders Focus Fund, Class B
Dreyfus Founders Focus Fund, Class C
Dreyfus Founders Focus Fund, Class F
Dreyfus Founders Focus Fund, Class R
Dreyfus Founders Focus Fund, Class T
ADDITIONAL CLASSES OF BALANCED FUND
Dreyfus Founders Balanced Fund, Class A
Dreyfus Founders Balanced Fund, Class B
Dreyfus Founders Balanced Fund, Class C
Dreyfus Founders Balanced Fund, Class R
Dreyfus Founders Balanced Fund, Class T
<PAGE>
ADDITIONAL CLASSES OF DISCOVERY FUND
Dreyfus Founders Discovery Fund, Class A
Dreyfus Founders Discovery Fund, Class B
Dreyfus Founders Discovery Fund, Class C
Dreyfus Founders Discovery Fund, Class R
Dreyfus Founders Discovery Fund, Class T
ADDITIONAL CLASSES OF GROWTH AND INCOME FUND
Dreyfus Founders Growth and Income Fund, Class A
Dreyfus Founders Growth and Income Fund, Class B
Dreyfus Founders Growth and Income Fund, Class C
Dreyfus Founders Growth and Income Fund, Class R
Dreyfus Founders Growth and Income Fund, Class T
ADDITIONAL CLASSES OF GROWTH FUND
Dreyfus Founders Growth Fund, Class A
Dreyfus Founders Growth Fund, Class B
Dreyfus Founders Growth Fund, Class C
Dreyfus Founders Growth Fund, Class R
Dreyfus Founders Growth Fund, Class T
ADDITIONAL CLASSES OF INTERNATIONAL EQUITY FUND
Dreyfus Founders International Equity Fund, Class A
Dreyfus Founders International Equity Fund, Class B
Dreyfus Founders International Equity Fund, Class C
Dreyfus Founders International Equity Fund, Class R
Dreyfus Founders International Equity Fund, Class T
ADDITIONAL CLASSES OF MID-CAP GROWTH FUND
Dreyfus Founders Mid-Cap Growth Fund, Class A
Dreyfus Founders Mid-Cap Growth Fund, Class B
Dreyfus Founders Mid-Cap Growth Fund, Class C
Dreyfus Founders Mid-Cap Growth Fund, Class R
Dreyfus Founders Mid-Cap Growth Fund, Class T
2
<PAGE>
ADDITIONAL CLASSES OF PASSPORT FUND
Dreyfus Founders Passport Fund, Class A
Dreyfus Founders Passport Fund, Class B
Dreyfus Founders Passport Fund, Class C
Dreyfus Founders Passport Fund, Class R
Dreyfus Founders Passport Fund, Class T
ADDITIONAL CLASSES OF WORLDWIDE GROWTH FUND
Dreyfus Founders Worldwide Growth Fund, Class A
Dreyfus Founders Worldwide Growth Fund, Class B
Dreyfus Founders Worldwide Growth Fund, Class C
Dreyfus Founders Worldwide Growth Fund, Class R
Dreyfus Founders Worldwide Growth Fund, Class T
THIRD: A description of the shares of Common Stock so heretofore
classified with the powers, preferences, and participating, voting or other
special rights, and the qualifications, restrictions and limitations thereof
shall be as follows:
(1) All shares of Common Stock shall have the following powers,
preferences, and participating, voting, or other special rights and the
qualifications, restrictions, and limitations thereof shall be as follows:
(a) All consideration received by the Corporation for the issue of
the shares of Common Stock, together with all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably belong to the
Class of shares of that Series with respect to which such assets, payments or
funds were received by the Corporation for all purposes, subject only to the
rights of creditors, and shall be so handled in the records of the Corporation.
Such assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and any assets
derived from any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets belonging to" the Class of each Series of
shares.
(b) The assets belonging to the Class of each Series of shares shall
be charged with the liabilities, including the redemption of shares, in respect
of such Class and shall also be charged with its share of the general
liabilities of the Corporation, in proportion to the net asset value of the
Class of such Series determined as hereinafter provided. The determination of
the Board shall be conclusive as to the amount of liabilities, including accrued
expenses and reserves, as to the allocation of the same to a given Class, and as
to whether the same or general assets of the Corporation are allocable to one or
more Classes.
3
<PAGE>
(c) The net asset value per share of the Class of each Series shall
be determined in accordance with Article FIFTH, Paragraph (5) of the
Corporation's Articles of Incorporation, as amended, by separately computing the
assets belonging to such Class less the liabilities applicable to that Class,
allocating any general assets and general liabilities to that Class, and
dividing the net result by the number of shares of Common Stock of that Class
outstanding.
(d) Dividends or distributions on the Class of each Series of
shares, whether payable in stock or cash, shall be paid only out of earnings,
surplus or other lawfully available assets belonging to such Class.
(e) In the event of the liquidation or dissolution of the
Corporation, stockholders of shares of each Series shall be entitled to receive,
as a Class, out of the assets of the Corporation available for distribution to
stockholders, but other than general assets, the assets belonging to such Class.
The assets so distributable to the stockholders of any Class shall be
distributed among such stockholders in proportion to the number of shares of
such Class held by them and recorded in the records of the Corporation.
(f) The provisions of Article FIFTH, Paragraphs (1) through (5) of
the Corporation's Articles of Incorporation, as amended, shall apply to the
holders of shares of each Class as may be issued from time to time and the
assets belonging to such Class.
(2) The proceeds of the redemption of a share of Class B or Class C (or,
where applicable, Class A or Class T) Common Stock (including a fractional
share) to be paid to the holder thereof shall be reduced by the amount of any
contingent deferred sales charge payable on such redemption pursuant to the
terms of issuance of such share, and such contingent deferred sales charge shall
be paid as provided pursuant to such terms of issuance.
(3)(a)(i) Each share of Class B Common Stock of a given Series of the
Corporation, other than shares described in subparagraph (3)(a)(ii), shall be
converted automatically, and without any action or choice on the part of the
holder thereof, into shares of the Class A Common Stock of such Series on the
date that is the first business day of the month in which the sixth anniversary
date of the date of original issuance of the share falls or such other date as
determined by the Board (the "Conversion Date"). With respect to shares of Class
B Common Stock issued in an exchange or series of exchanges for shares of
capital stock of another investment company pursuant to an exchange privilege
granted by the Corporation (an "Eligible Fund"), other than for shares of such
capital stock purchased through the automatic reinvestment of a dividend or a
distribution with respect to such capital stock, the date of original issuance
of the shares of Class B Common Stock for purposes of the first sentence of this
subparagraph (3)(a)(i) shall, if the terms of the exchange privilege granted by
the Corporation so provide, be the date of issuance of the original shares of
capital stock of such Eligible Fund, or the first Eligible Fund in the event of
a series of exchanges.
(ii) Each share of Class B Common Stock (A) purchased through the
automatic reinvestment of a dividend or a distribution with respect to the Class
B Common
4
<PAGE>
Stock, or (B) issued pursuant to an exchange privilege granted by the
Corporation in an exchange or series of exchanges for shares originally
purchased through the automatic reinvestment of a dividend or distribution with
respect to shares of capital stock of an Eligible Fund shall be segregated in a
separate subaccount on the stock records of the Corporation for each of the
holders of record thereof. On any Conversion Date, a number of the shares held
in the subaccount of the holder of record of the share or shares being
converted, calculated in accordance with the next following sentence, shall be
converted automatically, and without any action or choice on the part of the
holder, into shares of the Class A Common Stock. The number of shares in the
holder's subaccount so converted shall bear the same relation to the total
number of shares maintained in the subaccount on the Conversion Date
(immediately prior to conversion) as the number of shares of the holder
converted on the Conversion Date pursuant to subparagraph (3)(a)(i) hereof bears
to the total number of shares on the Conversion Date (immediately prior to
conversion) of the Class B Common Stock of the holder after subtracting the
shares then maintained in the holder's subaccount.
(b) The number of shares of Class A Common Stock into which a share
of Class B Common Stock is converted pursuant to subparagraph (3)(a)(i) hereof
shall equal the number (including for this purpose fractions of a share)
obtained by dividing the net asset value per share of the Class B Common Stock
for purposes of sales and redemption thereof on the Conversion Date by the net
asset value per share of the Class A Common Stock for purposes of sales and
redemption thereof on the Conversion Date.
(c) On the Conversion Date, the shares of Class B Common Stock
converted into shares of Class A Common Stock will cease to accrue dividends and
will no longer be deemed outstanding and the rights of the holders thereof
(except the right to receive the number of shares of Class A Common Stock into
which the shares of Class B Common Stock have been converted and any declared
but unpaid dividends to the Conversion Date) will cease.
(d) The automatic conversion of the Class B Common Stock into Class
A Common Stock as set forth in subparagraphs (3)(a) and (b) hereof may be
suspended by action of the Board at any time that the Board determines (a) that
there is not available a reasonably satisfactory ruling of the Internal Revenue
Service and/or opinion of counsel to the effect that (x) the payment of
different dividends with respect to the Class A Common Stock and the Class B
Common Stock does not result in the Corporation's dividends or distributions
constituting a "preferential dividend" under the Internal Revenue Code of 1986,
as amended, and (y) the conversion of the Class B Common Stock does not
constitute a taxable event under federal income tax law, or (b) that any other
condition to conversion set forth in the Corporation's prospectus, as such
prospectus may be amended from time to time, is not satisfied.
(e) The automatic conversion of shares of Class B Common Stock into
shares of Class A Common Stock as set forth in subparagraphs (3)(a) and (b)
hereof may also be suspended by action of the Board at any time that the Board
determines such suspension to be appropriate in order to comply with, or satisfy
the requirements of, the Investment Company Act of 1940, as amended, or any
rule, regulation or order issued thereunder and in effect from time to time, and
in connection with, or in lieu of, any such suspension, the Board may provide
holders
5
<PAGE>
of the Class B Common Stock with alternative conversion or exchange rights into
other Classes of stock of the Corporation in a manner consistent with the law,
rule, regulation or order giving rise to the possible suspension of the
conversion right.
FOURTH: The Board, by a meeting duly convened and held on August 13, 1999,
classified and reallocated shares of the Corporation's Common Stock among each
of its Series and Classes of Series effective October ___, 1999, heretofore as
follows:
Previous Adjusted
Fund Share Allocation Share Allocation
- ---- ---------------- ----------------
Balanced Fund 500,000,000 600,000,000
(to be redesignated Dreyfus Founders Balanced
Fund, Class F, effective December 31, 1999)
Dreyfus Founders Balanced Fund, Class A 0 50,000,000
Dreyfus Founders Balanced Fund, Class B 0 50,000,000
Dreyfus Founders Balanced Fund, Class C 0 50,000,000
Dreyfus Founders Balanced Fund, Class R 0 50,000,000
Dreyfus Founders Balanced Fund, Class T 0 50,000,000
Discovery Fund 100,000,000 200,000,000
(to be redesignated Dreyfus Founders Discovery
Fund, Class F, effective December 31, 1999)
Dreyfus Founders Discovery Fund, Class A 0 50,000,000
Dreyfus Founders Discovery Fund, Class B 0 50,000,000
Dreyfus Founders Discovery Fund, Class C 0 50,000,000
Dreyfus Founders Discovery Fund, Class R 0 50,000,000
Dreyfus Founders Discovery Fund, Class T 0 50,000,000
Dreyfus Founders Focus Fund, Class A 0 50,000,000
Dreyfus Founders Focus Fund, Class B 0 50,000,000
Dreyfus Founders Focus Fund, Class C 0 50,000,000
Dreyfus Founders Focus Fund, Class R 0 50,000,000
Dreyfus Founders Focus Fund, Class T 0 50,000,000
Frontier Fund 100,000,000 0
Founders Growth and Income Fund 400,000,000 500,000,000
(to be redesignated Dreyfus Founders Growth and
Income Fund, Class F, effective December 31,
1999)
Dreyfus Founders Growth and Income Fund, Class A 0 50,000,000
Dreyfus Founders Growth and Income Fund, Class B 0 50,000,000
Dreyfus Founders Growth and Income Fund, Class C 0 50,000,000
Dreyfus Founders Growth and Income Fund, Class R 0 50,000,000
Dreyfus Founders Growth and Income Fund, Class T 0 50,000,000
6
<PAGE>
Growth Fund 400,000,000 500,000,000
(to be redesignated Dr eyfus Founders Growth
Fund, Class F, effective December 31, 1999)
Dreyfus Founders Growth Fund, Class A 0 50,000,000
Dreyfus Founders Growth Fund, Class B 0 50,000,000
Dreyfus Founders Growth Fund, Class C 0 50,000,000
Dreyfus Founders Growth Fund, Class R 0 50,000,000
Dreyfus Founders Growth Fund, Class T 0 50,000,000
Passport Fund 100,000,000 150,000,000
(to be redesignated Dreyfus Founders Passport
Fund, Class F, effective December 31, 1999)
Dreyfus Founders Passport Fund, Class A 0 50,000,000
Dreyfus Founders Passport Fund, Class B 0 50,000,000
Dreyfus Founders Passport Fund, Class C 0 50,000,000
Dreyfus Founders Passport Fund, Class R 0 50,000,000
Dreyfus Founders Passport Fund, Class T 0 50,000,000
Mid-Cap Growth Fund 180,000,000 250,000,000
(to be redesignated Dreyfus Founders Mid-Cap
Growth Fund, Class F, effective December 31,
1999)
Dreyfus Founders Mid-Cap Growth Fund, Class A 0 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class B 0 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class C 0 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class R 0 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class T 0 50,000,000
International Equity Fund 100,000,000 200,000,000
(to be redesignated Dreyfus Founders
International Equity Fund, Class F, effective
December 31, 1999)
Dreyfus Founders International Equity Fund, Class A 0 50,000,000
Dreyfus Founders International Equity Fund, Class B 0 50,000,000
Dreyfus Founders International Equity Fund, Class C 0 50,000,000
Dreyfus Founders International Equity Fund, Class R 0 50,000,000
Dreyfus Founders International Equity Fund, Class T 0 50,000,000
Worldwide Growth Fund 100,000,000 200,000,000
(to be redesignated Dreyfus Founders Worldwide
Growth Fund, Class F, effective December 31,
1999)
Dreyfus Founders Worldwide Growth Fund, Class A 0 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class B 0 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class C 0 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class R 0 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class T 0 50,000,000
7
<PAGE>
Government Securities Fund 20,000,000 100,000,000
(to be redesignated Dreyfus Founders Government
Securities Fund, Class F, effective December 31,
1999)
Money Market Fund 1,000,000,000 2,000,000,000
(to be redesignated Dreyfus Founders Money
Market Fund, Class F, effective December 31,
1999)
Unallocated 0 3,000,000,000
------------- --------------
TOTAL 3,000,000,000 10,000,000,000
FIFTH: The Classes of each respective Series of Common Stock were
classified and reclassified by the Board of Directors pursuant to powers granted
under Article FIFTH of the Articles of Incorporation.
SIXTH: The total number of shares of Common Stock that the Corporation has
authority to issue has been increased by the Board in accordance with Section
2-105(c) of the Maryland General Corporation Law.
SEVENTH: The Corporation is registered as an open-end investment
management company under the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned hereby executes these Articles
Supplementary to the Corporation's Articles of Incorporation on behalf of the
Corporation, acknowledging it to be the act of the Corporation, and further
states under the penalties of perjury that, to the best of his or her knowledge,
information and belief, the matters and facts set forth herein are true in all
material respects.
FOUNDERS FUNDS, INC.
By: _____________________________
Name:
Title:
ATTEST:
_____________________________
Name:
Title:
8
FORM OF
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
FOUNDERS FUNDS, INC.
Pursuant to Sections 2-105, 2-605, and 2-607 of the Maryland General
Corporation Law, Founders Funds, Inc. (the "Corporation"), a Maryland
corporation, registered as an open-end investment company under the Investment
Company Act of 1940 and having its registered office in Baltimore, Maryland,
hereby adopts the following Articles of Amendment to the Corporation's Articles
of Incorporation:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation (the "Board") by Article FIFTH of the Articles of Incorporation,
the Board, in accordance with Sections 2-105, 2-605(a)(4) and 2-607(a)(2) of the
Maryland General Corporation Law, hereby amends Article SECOND of the Articles
of Incorporation to read as follows, effective December 31, 1999:
"SECOND: The name of the Corporation is Dreyfus Founders Funds, Inc."
SECOND: Pursuant to authority expressly vested in the Board by Article
FIFTH of the Articles of Incorporation, the Board, in accordance with Sections
2-105, 2-605(a)(4) and 2-607(a)(2) of the Maryland General Corporation Law,
hereby redesignates all authorized shares without class designation of each
respective Series of the Corporation, as of December 30, 1999, as Class F shares
of such respective Series, as follows, effective December 31, 1999:
Balanced Fund TO Dreyfus Founders Balanced Fund, Class F
Discovery Fund TO Dreyfus Founders Discovery Fund, Class F
Government Securities Fund TO Dreyfus Founders Government Securities Fund,
Class F
Growth and Income Fund TO Dreyfus Founders Growth and Income Fund, Class F
Growth Fund TO Dreyfus Founders Growth Fund, Class F
International Equity Fund TO Dreyfus Founders International Equity Fund,
Class F
Mid-Cap Growth Fund TO Dreyfus Founders Mid-Cap Growth Fund, Class F
Money Market Fund TO Dreyfus Founders Money Market Fund, Class F
Passport Fund TO Dreyfus Founders Passport Fund, Class F
Worldwide Growth Fund TO Dreyfus Founders Worldwide Growth Fund, Class F
<PAGE>
THIRD: The amendments contained herein are expressly limited to changes
permitted by Section 2-605(a)(4) of the Maryland General Corporation Law, to be
made without action by the shareholders of the Corporation, and were approved
unanimously by the Board on August 13, 1999.
IN WITNESS WHEREOF, the undersigned hereby executes these Articles of
Amendment to the Corporation's Articles of Incorporation on behalf of the
Corporation, acknowledging it to be the act of the Corporation, and further
states under the penalties of perjury that, to the best of his or her knowledge,
information and belief, the matters and facts set forth herein are true in all
material respects.
FOUNDERS FUNDS, INC.
By: _____________________________
Name:
Title:
ATTEST:
_____________________________
Name:
Title:
-2-
FORM OF
AMENDED AND RESTATED
APPENDIX 1
TO
FOUNDERS FUNDS, INC. INVESTMENT ADVISORY AGREEMENT
This Amended and Restated Appendix 1 to the Investment Advisory Agreement
("Agreement") executed as of the 1st day of April, 1998, between Founders Funds,
Inc. (the "Company") and Founders Asset Management LLC is effective as of the
31st day of December, 1999.
RECITALS
WHEREAS, the names of Founders Special Fund and Founders Blue Chip Fund were
changed to Founders Mid-Cap Growth Fund and Founders Growth and Income Fund,
effective April 30, 1999; and
WHEREAS, Founders Frontier Fund was merged with and into Founders Discovery Fund
effective August 13, 1999, and thereafter was terminated; and
WHEREAS, on August 13, 1999, the Board of Directors of the Company approved the
Agreement as the investment advisory agreement of Dreyfus Founders Focus Fund
with the fee schedule set forth below, and the Agreement, including such fee
schedule, was approved by the initial shareholder of Dreyfus Founders Focus Fund
on ____________, 1999; and
WHEREAS, effective December 31, 1999, the Company's corporate name was changed
to Dreyfus Founders Funds, Inc., and the name "Dreyfus" was added as the initial
word in the name of each of its series portfolios; and
WHEREAS, the parties desire to amend and restate Appendix 1 to the Agreement to
add Dreyfus Founders Focus Fund as a party to the Agreement and to reflect each
of the other changes set forth above;
AGREEMENT
NOW, THEREFORE, the parties hereby amend and restate Appendix 1 to the Agreement
to read as follows:
The following series Funds of Dreyfus Founders Funds, Inc. are parties to the
Agreement and, pursuant to paragraph 4 of the Agreement, shall pay to Founders
Asset Management LLC, as compensation for its services to each series Fund, the
management fees disclosed in the following table:
-1-
<PAGE>
Fund Advisory Fee Schedule
- ---- ---------------------
Dreyfus Founders Balanced Fund 0.650% to $250 million
0.600% next $250 million
0.550% next $250 million
0.500% thereafter
Dreyfus Founders Discovery Fund 1.000% to $250 million
0.800% next $250 million
0.700% thereafter
Dreyfus Founders Focus Fund 0.850% to $250 million
0.800% next $250 million
0.750% thereafter
Dreyfus Founders Government 0.650% to $250 million
Securities Fund 0.500% thereafter
Dreyfus Founders Growth Fund 1.000% to $30 million
0.750% next $270 million
0.700% next $200 million
0.650% thereafter
Dreyfus Founders Growth and 0.650% to $250 million
Income Fund 0.600% next $250 million
0.550% next $250 million
0.500% thereafter
Dreyfus Founders International 1.000% to $250 million
Equity Fund 0.800% next $250 million
0.700% thereafter
Dreyfus Founders Mid-Cap 1.000% to $30 million
Growth Fund 0.750% next $270 million
0.700% next $200 million
0.650% thereafter
Dreyfus Founders Money Market Fund 0.500% to $250 million
0.450% next $250 million
0.400% next $250 million
0.350% thereafter
Dreyfus Founders Passport Fund 1.000% to $250 million
0.800% next $250 million
0.700% thereafter
-2-
<PAGE>
Dreyfus Founders Worldwide 1.000% to $250 million
Growth Fund 0.800% next $250 million
0.700% thereafter
DREYFUS FOUNDERS FUNDS, INC.
on behalf of each of the series Funds listed
on this Appendix 1
ATTEST: By: ____________________________
Marie E. Connolly, President
______________________
Christopher J. Kelley,
Assistant Secretary
FOUNDERS ASSET MANAGEMENT LLC
ATTEST: By: __________________________
Richard W. Sabo, President
__________________________
Kenneth R. Christoffersen,
Secretary
-3-
DREYFUS FOUNDERS FUNDS, INC.
FORM OF
AMENDED AND RESTATED UNDERWRITING AGREEMENT
This Agreement made as of the 31st day of December, 1999, by and between
Premier Mutual Fund Services, Inc., a Delaware corporation (the "Underwriter"),
and Dreyfus Founders Funds, Inc., a Maryland corporation (the "Company"), on
behalf of any series of its shares, or classes thereof, which may now exist or
hereafter be created (the "Funds").
WITNESSETH:
That in consideration of the mutual covenants herein contained and for
other good and valuable consideration the parties hereto, intending to be
legally bound hereby, agree as follows:
1. APPOINTMENT OF UNDERWRITER. Except as otherwise provided herein, the
Company hereby appoints the Underwriter its exclusive agent to sell and
distribute shares of the Funds without compensation at the public offering price
thereof, calculated as described in Section 3. The Company agrees that it will
deliver such shares as the Underwriter may sell. The Underwriter agrees to use
its best efforts to promote the sale of shares of the Funds, but is not
obligated to sell any specific number of shares.
2. INDEPENDENT CONTRACTOR. The Underwriter will undertake and discharge
its obligations hereunder as an independent contractor and shall have no
authority or power to obligate or bind the Company by its actions, conduct or
contracts except that it may be authorized to accept orders for the sale or
repurchase of shares of the Funds as the Company's agent. The Underwriter may
appoint subagents or distribute shares of the Funds through dealers or otherwise
as it may determine from time to time including, without limitation, appointing
subagents for the purpose of accepting orders for the sale or repurchase of Fund
shares, provided that no such appointment shall relieve the
1
<PAGE>
Underwriter of its responsibility for the proper performance of this Agreement
by the Underwriter or, where applicable, its subagents.
3. OFFERING PRICE. Shares of any class of a Fund offered for sale by the
Underwriter shall be offered at a price per share (the "public offering price")
approximately equal to (a) the net asset value (determined in the manner set
forth in the Funds' charter documents and then current prospectus) plus (b) a
sales charge, if any, and except to those persons set forth in the then current
prospectus, which shall be the percentage of the public offering price of such
shares as set forth in the Funds' then current prospectus. The public offering
price, if not an exact multiple of one cent, shall be adjusted to the nearest
cent. In addition, shares of any class of the Funds offered for sale by the
Underwriter may be subject to a contingent deferred sales charge ("CDSC") as set
forth in the Funds' then current prospectus. The Underwriter shall be entitled
to receive any sales charge or CDSC in respect of the shares. Any payments to
dealers shall be governed by a separate agreement between the Underwriter and
such dealer and the Funds' then current prospectus. The Underwriter also shall
be entitled to compensation for the Underwriter's services as provided in any
Distribution Plan adopted as to any class of a Fund's shares pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
4. PAYMENT FOR SHARES AND SHARE REGISTRATION. The Underwriter shall notify
the Company or cause the Company to be notified by the Company's Transfer Agent,
at the end of each business day, or as soon thereafter as orders placed during
such day have been compiled, of the number of shares and the prices thereof
which the Underwriter shall have sold on behalf of each Fund. The Underwriter
shall use its best efforts to cause the sums due for shares ordered from a Fund
to be collected or to be advanced to that Fund by the Company's Transfer Agent
on behalf of purchasers on or before the third business day after the shares
have been so ordered. The Underwriter shall issue and deliver on behalf of the
Company or cause to be issued and delivered by the Company's Transfer Agent all
confirmations of transactions effected hereunder for the
2
<PAGE>
account of a Fund. The Company will provide for the recording of share purchases
in "book accounts;" provided, however, that upon receipt of a written request
from a purchaser, the Company's Transfer Agent may, but is not required to,
deliver a certificate of shares in such names and amount as the purchaser shall
specify in writing, such delivery to be made as soon as practicable after
payment therefor and their registration on the books of the Company.
5. SUSPENSION OF SALES. The sale of shares of the Funds may be suspended
with or without prior notice whenever in the judgment of the Company it is in
its best interests to do so.
6. REPURCHASE OF SHARES. As the Company's agent, the Underwriter may buy
shares of a Fund offered for repurchase at the next effective net asset value
per share calculated and effective as set forth in Paragraphs 1 and 3 above,
minus any applicable CDSC as set forth in the Funds' then current prospectus.
Whenever the officers of the Company deem it advisable, for the protection of
the shareholders of a Fund, they may suspend or cancel such authority. The
Underwriter will pay all expenses in connection with the repurchase of shares.
7. CONDUCT OF BUSINESS. Neither the Underwriter nor any other person is
authorized by the Company or any Fund to give any information or make any
representation relative to the Company or any Fund's shares other than those
contained in the registration statement or prospectus filed with the Securities
and Exchange Commission as the same may be amended from time to time or in any
supplemental information to said prospectus approved by the Company. The
Underwriter agrees that any information or representation other than that
specified above which it or any dealer or other person who purchases shares
through the Underwriter may make in connection with the offer or sale of shares
shall be made entirely without liability on the part of the Company or any Fund.
The Underwriter agrees that in offering or selling shares as agent of the
Company, it will in all respects duly conform to all applicable state and
federal
3
<PAGE>
laws. The Underwriter will submit to the Company copies of all sales literature
before using the same and will not use such literature if disapproved by the
Company.
8. ALLOCATION OF EXPENSES. In connection with the sale and distribution of
shares pursuant to this Agreement, the Underwriter shall pay all of its own
expenses and such other expenses as are not specifically assumed by the Company
as hereinafter provided.
The Company specifically assumes and shall pay all fees and
expenses, including legal fees, incurred in (a) the preparation of audited
financial statements to the Company; (b) the preparation and initial printing of
all post-effective amendments, supplements and revisions of its registration
statements; (c) printing and distributing copies of any prospectus to its
shareholders; (d) the preparation and initial printing of shareholder reports
and communications and distributing copies thereof to its shareholders; (e) the
registration of the Company and its shares with the Securities and Exchange
Commission; and (f) the qualification of the Company and its shares in each
state in which its shares will be qualified for sale. Nothing contained herein
shall be deemed to require the Company to pay any of the costs of advertising
the sale of Company shares.
9. PROVISION OF INFORMATION. The Company shall furnish the Underwriter
from time to time, for use in connection with the sale of shares of the Funds,
such information with respect to the Company or any relevant Fund and the shares
as the Underwriter may reasonably request, all of which shall be signed by one
or more of the Company's duly authorized officers; and the Company warrants that
the statements contained in any such information, when so signed by the
Company's officers, shall be true and correct. The Company also shall furnish
the Underwriter upon request with: (a) semi-annual reports and annual audited
reports of the Company's books and accounts made by independent public
accountants regularly retained by the Company, (b) a monthly itemized list of
the securities in the Company's or, if applicable, each
4
<PAGE>
Fund's portfolio, and (c) from time to time such additional information
regarding the Company's financial condition as the Underwriter may reasonably
request.
10. REGISTRATIONS AND QUALIFICATIONS; REPRESENTATIONS AND WARRANTIES. (a)
The Company agrees to execute any and all documents and to furnish any and all
information and otherwise to take all actions which may be reasonably necessary
in the discretion of the Company's officers in connection with the qualification
of shares of the Funds for sale in such states as the Underwriter may designate
to the Company and the Company may approve. The Underwriter shall pay all
expenses connected with its own qualification as a dealer under state or Federal
laws and, except as otherwise specifically provided in this Agreement, all other
expenses incurred by it in connection with the sale of Shares as contemplated in
this Agreement.
(b) The Company represents to the Underwriter that all registration
statements and prospectuses filed by the Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and under the
1940 Act with respect to the shares have been carefully prepared in conformity
with the requirements of said Acts and rules and regulations of the Securities
and Exchange Commission thereunder. As used in this agreement the terms
"registration statement" and "prospectus" shall mean any registration statement
and prospectus, including the statement of additional information incorporated
by reference therein, filed with the Securities and Exchange Commission and any
amendments and supplements thereto which at any time shall have been filed with
said Commission. The Company represents and warrants to the Underwriter that any
registration statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes
5
<PAGE>
effective will include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Company may, but shall not be obligated to, propose
from time to time such amendment or amendments to any registration statement and
such supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Company's counsel, be necessary or
advisable. If the Company shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Company of a
written request from the Underwriter to do so, the Underwriter may, at its
option, terminate this agreement or decline to make offers of the Company's
securities until such amendments are made if, in the Underwriter's reasonable
opinion, the failure to make such amendments could have a material adverse
effect upon the Underwriter. The Company shall not file any amendment to any
registration statement or supplement to any prospectus without giving the
Underwriter reasonable notice thereof in advance, if possible; provided,
however, that nothing contained in this agreement shall in any way limit the
Company's right to file at any time such amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Company may deem advisable, such right being in all respects absolute and
unconditional.
(c) The Underwriter shall comply with all applicable federal and state
laws, rules and regulations, the rules and regulations of any self-regulatory
organization with jurisdiction over the Underwriter and/or the Company, and the
provisions of the Company's prospectus and statement of additional information
(the foregoing laws, rules, regulations and provisions are collectively referred
to herein as "Applicable Law") relating to the services the Underwriter provides
pursuant to this Agreement. The Underwriter hereby represents and warrants to
the Company that:
(i) It has the corporate power and the authority to enter into
and perform all of its duties and obligations under this Agreement;
6
<PAGE>
(ii) This Agreement constitutes its legal, valid and binding
obligation and is enforceable against it in accordance with its terms;
(iii) No consent or authorization of, filing with, or other
act by or in respect of any governmental authority is required in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement;
(iv) The execution, performance and delivery of this Agreement
by the Underwriter will not result in its violating any Applicable Law or
breaching or otherwise impairing any of its contractual obligations; and
(v) The Underwriter has obtained, and will maintain in effect,
all registrations under Applicable Law that are necessary to enable it to
perform its obligations under this Agreement.
11. INDEMNIFICATION. (a) The Company authorizes the Underwriter to use any
current prospectus in the form furnished by the Company to the Underwriter from
time to time, in connection with the sale of shares of the Funds. The Company
agrees to indemnify, defend and hold the Underwriter, its several officers and
directors, and any person who controls the Underwriter within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Underwriter, its
officers and directors, or any such controlling persons, may incur under the
Securities Act of 1933, as amended, or under common law or otherwise, arising
out of or based upon any omission, or alleged omission, to state a material fact
required to be stated in either any registration statement or any prospectus or
necessary to make the statements in either thereof not misleading; provided,
however, that the Company's agreement to indemnify the Underwriter, its officers
or directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any
7
<PAGE>
untrue statement or alleged untrue statement or omission or alleged omission
made in any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof. The Company's agreement to
indemnify the Underwriter, its officers and directors, and any such controlling
person, as aforesaid, is expressly conditioned upon the Company's being notified
of any action brought against the Underwriter, its officers or directors, or any
such controlling person, such notification to be given by letter or by telegram
addressed to the Company at its address set forth above within ten days after
the summons or other first legal process shall have been served. The failure so
to notify the Company of any such action shall not relieve the Company from any
liability which the Company may have to the person against whom such action is
brought by reason of any such untrue, or alleged untrue, statement or omission,
or alleged omission, otherwise than on account of the Company's indemnity
agreement contained in this paragraph 11(a). The Company will be entitled to
assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by the Company and approved by the Underwriter, acting in good
faith. In the event the Company elects to assume the defense of any such suit
and retain counsel of good standing approved by the Underwriter, the defendant
or defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Company does not elect to
assume the defense of any such suit, or in case the Underwriter does not approve
of counsel chosen by the Company, the Company will reimburse the Underwriter,
its officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the reasonable fees and expenses of
any counsel retained by the Underwriter or them. The Company's indemnification
agreement contained in this paragraph 11(a) and the Company's representations
and warranties in this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the
8
<PAGE>
Underwriter, its officers and directors, or any controlling person, and shall
survive the delivery of any shares of the Funds. This agreement of indemnity
will inure exclusively to the Underwriter's benefit, to the benefit of its
several officers and directors, and their respective estates, and to the benefit
of any controlling persons and their successors. The Company agrees promptly to
notify the Underwriter of the commencement of any litigation or proceedings
against the Company or any of its officers or Board members in connection with
the issue and sale of shares of the Funds.
(b) The Underwriter agrees to indemnify, defend and hold the Company, its
several officers and Board members, and any person who controls the Company
within the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which the
Company, its officers or Board members, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon: (i) the Underwriter's negligence or
willful misconduct in the performance of its duties and obligations under this
Agreement; (ii) the Underwriter's violation of Applicable Law in connection with
the performance of its duties and obligations under this Agreement; (iii) any
breach by the Underwriter of any provision of this Agreement, including any
representation, warranty or covenant made in the Agreement; and (iv) any untrue,
or alleged untrue, statement of a material fact contained in information
furnished in writing by the Underwriter to the Company specifically for use in
the Company's registration statement and used in the answers to any of the items
of the registration statement or in the corresponding statements made in the
prospectus, or any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by the Underwriter to the
Company and required to be stated in such answers or necessary to make such
information not misleading. The Underwriter's
9
<PAGE>
agreement to indemnify the Company, its officers and Board members, and any such
controlling person, as aforesaid, is expressly conditioned upon its being
notified of any action brought against the Company, its officers or Board
members, or any such controlling person, such notification to be given by letter
or telegram addressed to the Underwriter at its address set forth above within
ten days after the summons or other first legal process shall have been served.
The failure so to notify the Underwriter of any such action shall not relieve
the Underwriter from any liability which the Underwriter may have to the
Company, its officers or Board members, or to such controlling person by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of its indemnity agreement contained in this
paragraph 11(b). The Underwriter will be entitled to assume the defense of any
suit brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by the
Underwriter and approved by the Company, acting in good faith. In the event the
Underwriter elects to assume the defense of any such suit and retain counsel of
good standing approved by the Company, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any of
them; but in case the Underwriter does not elect to assume the defense of any
such suit, or in case the Company does not approve of counsel chosen by the
Underwriter, the Underwriter will reimburse the Company, its officers and Board
members, or the controlling person or persons named as defendant or defendants
in such suit, for the reasonable fees and expenses of any counsel retained by
the Company or them. The Underwriter's indemnification agreement contained in
this paragraph 11(b) and the Underwriter's representations and warranties in
this Agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, its officers and Board
members, or any controlling person, and shall survive the delivery of any shares
of the Funds. This agreement of indemnity will inure exclusively to the
Company's benefit, to the benefit of the Company's officers and Board
10
<PAGE>
members, and their respective estates, and to the benefit of any controlling
persons and their successors. The Underwriter agrees promptly to notify the
Company of the commencement of any litigation or proceedings against the
Underwriter or any of its officers or directors in connection with the issue and
sale of shares of the Funds.
12. SUSPENSION OF REGISTRATION. No shares of the Funds shall be offered by
either the Underwriter or the Company under any of the provisions of this
Agreement, and no orders for the purchase or sale of such shares hereunder shall
be accepted by the Company, if and so long as the effectiveness of the
registration statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the Securities Act of 1933, as
amended, or if and so long as a current prospectus as required by Section 10 of
said Act, as amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this paragraph 12 shall
in any way restrict or have any application to or bearing upon the Company's
obligation to repurchase any shares of the Funds from any shareholder in
accordance with the provisions of the Company's prospectus or charter documents.
13. REQUIRED NOTIFICATIONS. The Company agrees to advise the Underwriter
promptly in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation of any proceeding for
that purpose;
(c) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
11
<PAGE>
statement or prospectus in order to make the statements therein not misleading;
and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus which may
from time to time be filed with the Securities and Exchange Commission.
14. OTHER ACTIVITIES. So long as the Underwriter acts as the distributor
of Company shares, the Underwriter shall not perform any services for any entity
other than a "Mellon Entity," such term being defined as any entity that is
advised or administered by a direct or indirect subsidiary of the Mellon Bank
Corporation. The Company acknowledges that the persons employed by the
Underwriter to assist in the performance of its duties under this Agreement may
not devote their full time to such service and, subject to the preceding
sentence, nothing contained in this Agreement shall be deemed to limit or
restrict the Underwriter's right or any of its affiliates' right to engage in
and devote time and attention to other businesses or to render services of
whatever kind or nature.
15. TERM OF AGREEMENT. This Agreement shall become effective upon the date
first above written. This Agreement shall continue in effect through May 31,
2000, and thereafter for successive annual periods, provided that its
continuance is specifically approved at least annually by the Company's
directors or, with respect to any Fund, by vote of a majority of that Fund's
outstanding voting securities and, in any event, by a majority of those
directors who are not parties to this Agreement or interested persons of any
party to this Agreement (other than as directors of the Company) at a meeting
called for the purpose of voting on such approval.
This Agreement shall automatically terminate in the event of its
assignment (within the meaning of the 1940 Act): provided, however, that the
Underwriter may employ such other person, persons, corporation or corporations,
as it shall determine, in order to assist it in carrying out the provisions of
this Agreement.
12
<PAGE>
This Agreement may be terminated at any time by either party hereto
by giving six months' written notice to the other party, or at any time by
mutual consent of the parties hereto. Such notice shall be sent by certified
mail. Until further notice, the mailing address of Company shall be:
Founders Financial Center
2930 East Third Avenue
Denver, Colorado 80206
Until further notice, the mailing address of Underwriter shall be:
200 Park Avenue
45th Floor
New York, NY 10166
16. MISCELLANEOUS. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Colorado and shall be
interpreted and construed to further and promote the operation of the Company as
an open-end investment company. As used herein, the terms "Net Asset Value,"
"Offering Price," "Investment Company," and "Interested Persons" shall have the
meanings set forth in the 1940 Act and the Rules, Regulations, Orders, and Forms
thereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the Underwriter
and the Company as of the day and year first above written.
DREYFUS FOUNDERS FUNDS, INC.
ATTEST: By: __________________________________
Marie E. Connolly, President
______________________________
Christopher J. Kelley,
Assistant Secretary
13
<PAGE>
PREMIER MUTUAL FUND SERVICES, INC.
ATTEST: By: __________________________________
Richard W. Ingram,
Executive Vice President
______________________________
Jean M. O'Leary,
Secretary
14
FORM OF
BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
beneficial interest or common stock of open-end registered investment companies
managed, advised or administered by The Dreyfus Corporation or its subsidiaries
or affiliates (hereinafter referred to individually as a "Fund" and collectively
as the "Funds"), for which you are the principal underwriter, as such term is
defined in the Investment Company Act of 1940, as amended, and for which you are
the exclusive agent for the continuous distribution of shares pursuant to the
terms of a Distribution Agreement between you and each Fund. Unless the context
otherwise requires, as used herein the term "Prospectus" shall mean the
prospectus and related statement of additional information (the "Statement of
Additional Information") incorporated therein by reference (as amended or
supplemented) of each of the respective Funds included in the then currently
effective registration statement (or post-effective amendment thereto) of each
such Fund, as filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby agreed
that our respective rights and obligations shall be as follows:
1. In all sales of Fund shares to the public, we shall act as dealer for
our own account and in no transaction shall we have any authority to act as
agent for any Fund, for you or for any other dealer.
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (i.e., the net asset value per
share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share, less the applicable deferred sales charge, redemption fee, or similar
charge or fee, if any, in each case as described in the Prospectus of such Fund.
The minimum initial purchase order and minimum subsequent purchase order shall
be as set forth in the Prospectus of such Fund. All orders are subject to
acceptance or rejection by you at your sole discretion. Unless otherwise
mutually agreed in writing, each transaction shall be promptly confirmed in
writing directly to the customer on a fully disclosed basis and a copy of each
confirmation shall be sent simultaneously to us. You reserve the right, at your
discretion and without notice, to suspend the sale of shares or withdraw
entirely the sale of shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree that
we shall not offer or sell
<PAGE>
shares of any Fund except in compliance with all applicable federal and state
securities laws, and the rules, regulations, requirements and conditions of all
applicable regulatory and self-regulatory agencies or authorities. In connection
with offers to sell and sales of shares of each Fund, we agree to deliver or
cause to be delivered to each person to whom any such offer or sale is made, at
or prior to the time of such offer or sale, a copy of the Prospectus and, upon
request, the Statement of Additional Information of such Fund. We further agree
to obtain from each customer to whom we sell Fund shares any taxpayer
identification number certification and such other information as may be
required from time to time under the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations promulgated thereunder, and to provide you or
your designee with timely written notice of any failure to obtain such taxpayer
identification number certification or other information in order to enable the
implementation of any required withholding. We will be responsible for the
proper instruction and training of all sales personnel employed by us. Unless
otherwise mutually agreed in writing, you shall deliver or cause to be delivered
to each of the customers who purchases shares of any of the Funds from or
through us pursuant to this Agreement copies of all annual and interim reports,
proxy solicitation materials and any other information and materials relating to
such Funds and prepared by or on behalf of you, the Fund or its investment
adviser, custodian, transfer agent or dividend disbursing agent for distribution
to each such customer. You agree to supply us with copies of the Prospectus,
Statement of Additional Information, annual reports, interim reports, proxy
solicitation materials and any such other information and materials relating to
each Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares other
than those contained in the Prospectus of such Fund or in any promotional
materials or sales literature furnished to us by you or the Fund. We shall not
furnish or cause to be furnished to any person or display or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials and sales literature, advertisements, press releases,
announcements, statements, posters, signs or other similar materials), except
such information and materials as may be furnished to us by you or the Fund, and
such other information and materials as may be approved in writing by you.
5. In determining the amount of any dealer reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable Fund
Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge, customers
may be entitled to a reduction in the sales charge on purchases made under a
letter of intent ("Letter of Intent") in accordance with the Fund Prospectus. In
such a case, our dealer reallowance will be paid based upon the reduced sales
charge, but an adjustment to the dealer reallowance will be made in accordance
with the Prospectus of the applicable Fund to reflect actual purchases of the
customer if such customer's Letter of Intent is not fulfilled. The sales charge
and/or dealer reallowance may be changed at any time in your sole discretion
upon written notice to us.
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<PAGE>
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be applicable
with respect to customer accounts through a right of accumulation under which
customers are permitted to purchase shares of a Fund at the then current public
offering price per share applicable to the total of (i) the dollar amount of
shares then being purchased plus (ii) an amount equal to the then current net
asset value or public offering price originally paid per share, whichever is
higher, of the customer's combined holdings of the shares of such Fund and of
any other open-end registered investment company as may be permitted by the
applicable Fund Prospectus. In such case, we agree to furnish to you or the
transfer agent, as such term is defined in the Prospectus of each Fund (the
"Transfer Agent"), sufficient information to permit your confirmation of
qualification for a reduced sales charge, and acceptance of the purchase order
is subject to such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree
to advise you promptly at your request as to amounts of any and all sales by us
to the public qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates in the shares of another open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its subsidiaries
or affiliates) shall, where available, be made subject to and in accordance with
the terms of each relevant Fund's Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be the
total holdings of the specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus and
Service Plan, Shareholder Services Plan, Distribution Plan or similar plan, if
any, we understand that you may pay to certain financial institutions,
securities dealers and other industry professionals with which you have entered
into an agreement in substantially the form annexed hereto as Appendix A, B or C
(or such other form as may be approved from time to time by the board of
directors, trustees or managing general partners of the Fund) such fees as may
be determined by you in accordance with such agreement for shareholder,
administrative or distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will be
subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be accepted. We
agree to place orders with you immediately for the same number of shares and at
the same price as any orders we receive from our customers. We shall not
withhold placing orders received from customers so as to profit ourselves as a
result of such withholding by a change in the net asset value from that used in
determining the offering
-3-
<PAGE>
price to such customers, or otherwise. We agree that: (a) we shall not effect
any transactions (including, without limitation, any purchases, exchanges and
redemptions) in any Fund shares registered in the name of, or beneficially owned
by, any customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b) you,
each Fund, the Transfer Agent and your and their respective officers, directors,
trustees, managing general partners, agents, employees and affiliates shall not
be liable for, and shall be fully indemnified and held harmless by us from and
against, any and all claims, demands, liabilities and expenses (including,
without limitation, reasonable attorneys' fees) which may be incurred by you or
any of the foregoing persons entitled to indemnification from us hereunder
arising out of or in connection with the execution of any transactions in Fund
shares registered in the name of, or beneficially owned by, any customer in
reliance upon any oral or written instructions reasonably believed to be genuine
and to have been given by or on behalf of us.
9. (a) We agree to pay for purchase orders for Fund shares placed by us in
accordance with the terms of the Prospectus of the applicable Fund. On or before
the settlement date of each purchase order for shares of any Fund, we shall
either (i) remit to an account designated by you with the Transfer Agent an
amount equal to the then current public offering price of the shares of such
Fund being purchased less our dealer reallowance, if any, with respect to such
purchase order as determined by you in accordance with the terms of the
applicable Fund Prospectus, or (ii) remit to an account designated by you with
the Transfer Agent an amount equal to the then current public offering price of
the shares of such Fund being purchased without deduction for our dealer
reallowance, if any, with respect to such purchase order as determined by you in
accordance with the terms of the applicable Fund Prospectus, in which case our
dealer reallowance, if any, shall be payable to us on at least a monthly basis.
If payment for any purchase order is not received in accordance with the terms
of the applicable Fund Prospectus, you reserve the right, without notice, to
cancel the sale and to hold us responsible for any loss sustained as a result
thereof.
(b) If any shares sold to us under the terms of this Agreement are
sold with a sales charge and are redeemed for the account of the Fund or are
tendered for redemption within seven (7) business days after the date of
purchase: (i) we shall forthwith refund to you the full dealer reallowance
received by us on the sale; and (ii) you shall forthwith pay to the Fund your
portion of the sales charge on the sale which had been retained by you and shall
also pay to the Fund the amount refunded by us.
10. Certificates for shares sold to us hereunder shall only be issued in
accordance with the terms of each Fund's Prospectus upon our customer's specific
request and, upon such request, shall be promptly delivered to us by the
Transfer Agent unless other arrangements are made by us. However, in making
delivery of such share certificates to us, the Transfer Agent shall have
adequate time to clear any checks drawn for the payment of Fund shares.
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<PAGE>
11. Each party hereby represents and warrants to the other party that: (a)
it is a corporation, partnership or other entity duly organized and validly
existing in good standing under the laws of the jurisdiction in which it was
organized; (b) it is duly registered as a broker-dealer with the Securities and
Exchange Commission and, to the extent required, with applicable state agencies
or authorities having jurisdiction over securities matters, and it is a member
of the National Association of Securities Dealers, Inc. (the "NASD"); (c) it
will comply with all applicable federal and state laws, and the rules,
regulations, requirements and conditions of all applicable regulatory and
self-regulatory agencies or authorities in the performance of its duties and
responsibilities hereunder; (d) the execution and delivery of this Agreement and
the performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and approvals
(if any) required for its lawful execution and delivery of this Agreement and
its performance hereunder have been obtained; and (e) upon execution and
delivery by it, and assuming due and valid execution and delivery by the other
party, this Agreement will constitute a valid and binding agreement, enforceable
in accordance with its terms. Each party agrees to provide the other party with
such information and access to appropriate records as may be reasonably required
to verify its compliance with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such states,
but you shall have no obligation or responsibility as to our right to sell
shares in any jurisdiction. We agree to notify you immediately in the event of
(a) our expulsion or suspension from the NASD, or (b) our violation of any
applicable federal or state law, rule, regulation, requirement or condition
arising out of or in connection with this Agreement, or which may otherwise
affect in any material way our ability to act as a dealer in accordance with the
terms of this Agreement. Our expulsion from the NASD will automatically
terminate this Agreement immediately without notice. Our suspension from the
NASD for violation of any applicable federal or state law, rule, regulation,
requirement or condition will terminate this Agreement effective immediately
upon your written notice of termination to us.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of Section 15
of the Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which we, our officers and directors, or
any such controlling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or based upon (i) any
breach of any representation, warranty or covenant made by you herein, or (ii)
any failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact contained in
any Registration Statement or any Prospectus, or arising out of or based upon
any omission, or alleged omission, to state a material fact required to be
stated in either any Registration Statement or any Prospectus, or necessary to
make the statements in any thereof not misleading; provided, however, that your
agreement to indemnify us, our officers and directors,
-5-
<PAGE>
and any such controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any untrue statement or alleged
untrue statement or omission or alleged omission made in any Registration
Statement or Prospectus in reliance upon and in conformity with written
information furnished to you or the Fund by us specifically for use in the
preparation thereof. Your agreement to indemnify us, our officers and directors,
and any such controlling person, as aforesaid, is expressly conditioned upon
your being notified of any action brought against our officers or directors, or
any such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received by
you at your address as specified in Paragraph 18 of this Agreement within seven
(7) days after the summons or other first legal process shall have been served.
The failure so to notify you of any such action shall not relieve you from any
liability which you may have to the person against whom such action is brought
by reason of any such breach, failure or untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of your indemnity
agreement contained in this Paragraph 13(a). You will be entitled to assume the
defense of any suit brought to enforce any such claim, demand, liability or
expense. In the event that you elect to assume the defense of any such suit and
retain counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you do
not elect to assume the defense of any such suit, you will reimburse us, our
officers and directors, and any controlling persons named as defendants in such
suit, for the fees and expenses of any counsel retained by us and/or them. Your
indemnification agreement contained in this Paragraph 13(a) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any person entitled to indemnification pursuant to this
Paragraph 13(a), and shall survive the delivery of any Fund shares and
termination of this Agreement. This agreement of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification from you
pursuant to this Agreement and their respective estates, successors and assigns.
(c) We agree to indemnify, defend and hold you and your several officers
and directors, and each Fund and its several officers and directors or trustees
or managing general partners, and any person who controls you and/or each Fund
within the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which you
and your several officers and directors, or the Fund and its officers and
directors or trustees or managing general partners, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under common
law or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure by
us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to any of
the items of the Registration Statement or in the corresponding statements made
in the Prospectus, or arising out of or based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by us to you or the Fund and required to be stated in
-6-
<PAGE>
such answers or necessary to make such information not misleading. Our agreement
to indemnify you and your officers and directors, and the Fund and its officers
and directors or trustees or managing general partners, and any such controlling
person, as aforesaid, is expressly conditioned upon our being notified of any
action brought against any person or entity entitled to indemnification
hereunder, such notification to be given by letter or by telecopier, telex,
telegram or similar means of same day delivery received by us at our address as
specified in Paragraph 18 of this Agreement within seven (7) days after the
summons or other first legal process shall have been served. The failure so to
notify us of any such action shall not relieve us from any liability which we
may have to you or your officers and directors, or to the Fund or its officers
and directors or trustees or managing general partners, or to any such
controlling person, by reason or any such breach, failure or untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
our indemnity agreement contained in this Paragraph 13(b). We shall be entitled
to assume the defense of any suit brought to enforce any such claim, demand,
liability or expense. In the event that we elect to assume the defense of any
such suit and retain counsel, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them;
but in case we do not elect to assume the defense of any such suit, we will
reimburse you and your officers and directors, and the Fund and its officers and
directors or trustees or managing general partners, and any controlling persons
named as defendants in such suit, for the fees and expenses of any counsel
retained by you and/or them. Our indemnification agreements contained in
Paragraph 8 above, Paragraph 16 below and this Paragraph 13(b) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any person entitled to indemnification pursuant to Paragraph 8
above, Paragraph 16 below or this Paragraph 13(b), and shall survive the
delivery of any Fund shares and termination of this Agreement. Such agreements
of indemnity will inure exclusively to the benefit of the persons entitled to
indemnification hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our customers
are and shall remain our sole property, and neither you nor your affiliates
shall use such names, addresses or other information for any purpose except in
connection with the performance of your duties and responsibilities hereunder
and except for servicing and informational mailings relating to the Funds.
Notwithstanding the foregoing, this Paragraph 14 shall not prohibit you or any
of your affiliates from utilizing for any purpose the names, addresses or other
information concerning any of our customers if such names, addresses or other
information are obtained in any manner other than from us pursuant to this
Agreement. The provisions of this Paragraph 14 shall survive the termination of
this Agreement.
15. We agree to serve as a service agent or to provide distribution
assistance, in accordance with the terms of the Form of Service Agreement
annexed hereto as Appendix A, Form of Shareholder Services Agreement annexed
hereto as Appendix B, and/or Form of Distribution Plan Agreement annexed hereto
as Appendix C, as applicable, for all of our customers who purchase shares of
any and all Funds whose Prospectuses provide therefor. By executing this
Agreement, each of the parties hereto agrees to be bound by all terms,
conditions,
-7-
<PAGE>
rights and obligations set forth in the forms of agreement annexed hereto and
further agrees that such forms of agreement supersede any and all prior service
agreements or other similar agreements between the parties hereto relating to
any Fund or Funds. It is recognized that certain parties may not be permitted to
collect distribution fees under the Form of Distribution Plan Agreement annexed
hereto, and if we are such a party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed hereto
as Appendix D, we agree that you, each Fund with respect to which you permit us
to exercise an expedited redemption privilege, the Transfer Agent of each such
Fund, and your and their respective officers, directors or trustees or managing
general partners, agents, employees and affiliates shall not be liable for and
shall be fully indemnified and held harmless by us from and against any and all
claims, demands, liabilities and expenses (including, without limitation,
reasonable attorneys' fees) arising out of or in connection with any expedited
redemption payments made in reliance upon the information set forth in such
Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture between
you and us. Neither party hereto shall be, act as, or represent itself as, the
agent or representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of, or on behalf of, the other
party. This Agreement is not intended to, and shall not, create any rights
against either party hereto by any third party solely on account of this
Agreement. Neither party hereto shall use the name of the other party in any
manner without the other party's prior written consent, except as required by
any applicable federal or state law, rule, regulation, requirement or condition,
and except pursuant to any promotional programs mutually agreed upon in writing
by the parties hereto.
18. Except as otherwise specifically provided herein, all notices required
or permitted to be given pursuant to this Agreement shall be given in writing
and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, or by
telecopier, telex, telegram or similar means of same day delivery (with a
confirming copy by mail as provided herein). Unless otherwise notified in
writing, all notices to you shall be given or sent to you at your offices,
located at 60 State Street, Boston, MA 02109, Attn: President (with a copy to
the same address, Attention: General Counsel), and all notices to us shall be
given or sent to us at our address shown below.
19. This Agreement shall become effective only when accepted and signed by
you, and may be terminated at any time by either party hereto upon 15 days'
prior written notice to the other party. This Agreement, including the
Appendices hereto, may be amended by you upon 15 days' prior written notice to
us, and such amendment shall be deemed accepted by us upon the placement of any
order for the purchase of Fund shares or the acceptance of a fee payable under
this Agreement, including the Appendices hereto, after the effective date of any
such amendment. This Agreement may not be assigned by us without your prior
written consent. This
-8-
<PAGE>
Agreement constitutes the entire agreement and understanding between the parties
hereto relating to the subject matter hereof and supersedes any and all prior
agreements between the parties hereto relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York, without giving effect to principles
of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Name of Broker or Dealer (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: __________________ By:_______________________________________
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier Mutual
Fund Services, Inc. Upon acceptance one countersigned copy will be returned
to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date:______________________ By:_______________________________________
Authorized Signature
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<PAGE>
APPENDIX B
TO BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Ladies and Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders of,
and administering shareholder accounts in, certain mutual fund(s) managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as the "Fund" and collectively
as the "Funds"). You are the principal underwriter as defined in the Investment
Company Act of 1940, as amended (the "Act"), and the exclusive agent for the
continuous distribution of shares of the Funds. The terms and conditions of this
Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may include,
without limitation: assisting clients in changing dividend options, account
designations and addresses; performing sub-accounting; establishing and
maintaining shareholder accounts and records; processing purchase and redemption
transactions; providing periodic statements and/or reports showing a client's
account balance and integrating such statements with those of other transactions
and balances in the client's other accounts serviced by us; arranging for bank
wires; and providing such other information and services as you reasonably may
request, to the extent we are permitted by applicable statute, rule or
regulation. We represent and warrant to, and agree with you, that the
compensation payable to us hereunder, together with any other compensation
payable to us by clients in connection with the investment of their assets in
shares of the Funds, will be properly disclosed by us to our clients, will be
authorized by our clients and will not result in an excessive or unauthorized
fee to us. We will act solely as agent for, upon the order of, and for the
account of, our clients.
2. We shall provide such office space and equipment, telephone facilities
and personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel employed by
us) as is necessary or beneficial for providing information and services to each
Fund's shareholders, and to assist you in servicing accounts of clients. We
shall transmit promptly to clients all communications sent to us for transmittal
to clients by or on behalf of you, any Fund, or any Fund's investment adviser,
custodian or transfer or dividend disbursing agent. We agree that in the event
an issue pertaining to a Fund's Shareholder Services Plan is submitted for
shareholder approval, we will vote any Fund shares held for our own account in
the same proportion as the vote of those shares held for our client's accounts.
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<PAGE>
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund, except
those contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. We shall
have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund
only when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct or
indirect financial interest in this Agreement, cast in person at a meeting
called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least annually
by a vote of a majority of (i) the Fund's Board of Directors and (ii) Directors
who are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This Agreement
is terminable without penalty, at any time, by a majority of the Fund's
Directors who are not "interested persons" (as defined in the Act) and have no
direct or indirect financial interest in this Agreement. This Agreement is
terminable without penalty upon 15 days' notice by either party. In addition,
you may terminate this Agreement as to any or all Funds immediately, without
penalty, if the present investment adviser of such Fund(s) ceases to serve the
Fund(s) in such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the shareholder
servicing and administrative functions contemplated herein by you as to any or
all of the Funds, this Agreement shall be terminable effective upon receipt of
notice thereof by us. This Agreement also shall terminate automatically in the
event of its assignment (as defined in the Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We understand that
any payments pursuant to this Agreement shall be paid only so long as this
Agreement and such Plan are in effect. We agree that no Director, officer or
shareholder of the Fund shall be liable individually for the performance of the
obligations hereunder or for any such payments.
B-2
<PAGE>
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by you
and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or authority
to assume, create or incur any liability or any obligation of any kind, express
or implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or by
postage prepaid, registered or certified United States first class mail, return
receipt requested, or by telex, telecopier, telegram or similar means of same
day delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to you
at 60 State Street, Boston, MA 02109, Attention: President (with a copy to the
same address, Attention: General Counsel), and all notices to us shall be given
or sent to us at our address which shall be furnished to you in writing on or
before the effective date of this Agreement.
11. This Agreement shall be construed in accordance with the internal laws
of the State of New York, without giving effect to principles of conflict of
laws.
B-3
<PAGE>
APPENDIX C
TO BROKER-DEALER AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Ladies and Gentlemen:
We wish to enter into an Agreement with you with respect to our providing
distribution assistance relating to shares of certain mutual fund(s) managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as the "Fund" and collectively
as the "Funds"). You are the principal underwriter as defined in the Investment
Company Act of 1940, as amended (the "Act"), and the exclusive agent for the
continuous distribution of shares of the Funds. The terms and conditions of this
Agreement are as follows:
1. We agree to provide distribution assistance in connection with the sale
of shares of the Funds. We represent and warrant to, and agree with you, that
the compensation payable to us hereunder, together with any other compensation
payable to us by clients in connection with the investment of their assets in
shares of the Funds, will be properly disclosed by us to our clients.
2. We shall provide such office space and equipment, telephone facilities
and personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel employed by
us) as is necessary or beneficial for providing services hereunder. We shall
transmit promptly to clients all communications sent to us for transmittal to
clients by or on behalf of you, any Fund, or any Fund's investment adviser,
custodian or transfer or dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund, except
those contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. We shall
have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund
only when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually
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<PAGE>
"Director"), and (ii) Directors who are not "interested persons" (as defined in
the Act) of the Fund and have no direct or indirect financial interest in this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least annually
by a vote of a majority of (i) the Fund's Board of Directors and (ii) Directors
who are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This Agreement
is terminable without penalty, at any time, by a majority of the Fund's
Directors who are not "interested persons" (as defined in the Act) and have no
direct or indirect financial interest in this Agreement, or upon not more than
60 days' written notice, by vote of holders of a majority of the Fund's shares.
This Agreement is terminable without penalty upon 15 days' notice by either
party. In addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such Fund(s)
ceases to serve the Fund(s) in such capacity, or if you cease to act as
distributor of such Fund(s). Notwithstanding anything contained herein, if we
fail to perform the distribution functions contemplated herein by you as to any
or all of the Funds, this Agreement shall be terminable effective upon receipt
of notice thereof by us. This Agreement also shall terminate automatically in
the event of its assignment (as defined in the Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Distribution Plan adopted pursuant to
Rule 12b-1 under the Act, and Prospectus and related Statement of Additional
Information. We understand that any payments pursuant to this Agreement shall be
paid only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually for
the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by you
and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or authority
to assume, create or incur any liability or any obligation of any kind, express
or implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or by
postage prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar
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<PAGE>
means of same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or sent
to you at 60 State Street, Boston, MA 02109, Attention: President (with a copy
to the same address, Attention: General Counsel), and all notices to us shall be
given or sent to us at our address which shall be furnished to you in writing on
or before the effective date of this Agreement.
11. This Agreement shall be construed in accordance with the internal laws
of the State of New York, without giving effect to principles of conflict of
laws.
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<PAGE>
APPENDIX D
TO BROKER-DEALER AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Firm identified below which desires
to exercise expedited redemption privileges with respect to shares of certain
mutual funds managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates, which shares are registered in the name of, or
beneficially owned by, the customers of such Firm.
(PLEASE PRINT OR TYPE)
- ------------------------------------------------------------------------------
NAME OF FIRM
- ------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Firm.
- ------------------------------------------------------------------------------
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
- ------------------------------------------------------------------------------
ACCOUNT NAME ACCOUNT
NUMBER
- ------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
D-1
FORM OF
BANK AFFILIATED BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Gentlemen:
We are a broker-dealer registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We
desire to make available to our customers shares of beneficial interest or
common stock of open-end registered investment companies managed, advised or
administered by The Dreyfus Corporation or its subsidiaries or affiliates
(hereinafter referred to individually as a "Fund" and collectively as the
"Funds"). You are the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) of the offering of shares of the
Funds and the exclusive agent for the continuous distribution of such shares
pursuant to the terms of a Distribution Agreement between you and each Fund.
Unless the context otherwise requires, as used herein the term "Prospectus"
shall mean the prospectus and related statement of additional information (the
"Statement of Additional Information") incorporated therein by reference (as
amended or supplemented) of each of the respective Funds included in the then
currently effective registration statement (or post-effective amendment thereto)
of each such Fund, as filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby agreed
that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund pursuant
to this Agreement, it is understood and agreed in each case that: (a) we
shall be acting solely as agent for the account of our customer; (b) each
transaction shall be initiated solely upon the order of our customer; (c)
you shall execute transactions only upon receiving instructions from us
acting as agent for our customer; (d) as between us and our customer, our
customer will have full beneficial ownership of all Fund shares; and (e)
each transaction shall be for the account of our customer and not for our
account. We represent and warrant to you that we will have full right,
power and authority to effect transactions (including, without limitation,
any purchases, exchanges and redemptions) in Fund shares on behalf of all
customer accounts provided by us to you or to any transfer agent as such
term is defined in the Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (i.e., the net asset value per
share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share less the applicable deferred sales charge, redemption fee or similar
charge or fee, if any, in each case as described in the Prospectus of such
Fund. The minimum initial purchase order and minimum subsequent purchase
order shall be as set
<PAGE>
forth in the Prospectus of such Fund. All orders are subject to acceptance
or rejection by you at your sole discretion. Unless otherwise mutually
agreed in writing, each transaction shall be promptly confirmed in writing
directly to the customer on a fully disclosed basis and a copy of each
confirmation shall be sent simultaneously to us. You reserve the right, at
your discretion and without notice, to suspend the sale of shares or
withdraw entirely the sale of shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively on
the representations contained in the Prospectus of such Fund. We agree that
we shall not make shares of any Fund available to our customers except in
compliance with all applicable federal and state laws, and the rules,
regulations, requirements and conditions of all applicable regulatory and
self-regulatory agencies or authorities. We agree that we shall not
purchase any Fund shares, as agent for any customer, unless we deliver or
cause to be delivered to such customer, at or prior to the time of such
purchase, a copy of the Prospectus of such Fund, or unless such customer
has acknowledged receipt of the Prospectus of such Fund. We further agree
to obtain from each customer for whom we act as agent for the purchase of
Fund shares any taxpayer identification number certification and such other
information as may be required from time to time under the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder, and to provide you or your designee with timely written notice
of any failure to obtain such taxpayer identification number certification
or other information in order to enable the implementation of any required
withholding. We will be responsible for the proper instruction and training
of all sales personnel employed by us. Unless otherwise mutually agreed in
writing, you shall deliver or cause to be delivered to each of the
customers who purchases shares of any of the Funds through us pursuant to
this Agreement copies of all annual and interim reports, proxy solicitation
materials and any other information and materials relating to such Funds
and prepared by or on behalf of you, the Fund or its investment adviser,
custodian, Transfer Agent or dividend disbursing agent for distribution to
each such customer. You agree to supply us with copies of the Prospectus,
Statement of Additional Information, annual reports, interim reports, proxy
solicitation materials and any such other information and materials
relating to each Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares other than
those contained in the Prospectus of such Fund or in any promotional
materials or sales literature furnished to us by you or the Fund. We shall
not furnish or cause to be furnished to any person or display or publish
any information or materials relating to any Fund (including, without
limitation, promotional materials and sales literature, advertisements,
press releases, announcements, statements, posters, signs or other similar
materials), except such information and materials as may be furnished to us
by you or the Fund, and such other information and materials as may be
approved in writing by you. In making Fund shares available to our
customers hereunder, or in providing investment advice regarding such
shares to our customers, we shall at all times act in compliance
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<PAGE>
with the Interagency Statement on Retail Sales of Nondeposit Investment
Products issued by The Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, the Office of the Comptroller of
the Currency, and the Office of Thrift Supervision (February 15, 1994) or
any successor interagency requirements as in force at the time such
services are provided.
5. In determining the amount of any reallowance payable to us hereunder, you
reserve the right to exclude any sales which you reasonably determine are
not made in accordance with the terms of the applicable Fund Prospectuses
or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge, customers may
be entitled to a reduction in the sales charge on purchases made under a
letter of intent ("Letter of Intent") in accordance with the Fund
Prospectus. In such a case, our reallowance will be paid based upon the
reduced sales charge, but an adjustment to the reallowance will be made in
accordance with the Prospectus of the applicable Fund to reflect actual
purchases of the customer if such customer's Letter of Intent is not
fulfilled. The sales charge and/or reallowance may be changed at any time
in your sole discretion upon written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of each
Fund sold with a sales charge, a reduced sales charge may be applicable
with respect to customer accounts through a right of accumulation under
which customers are permitted to purchase shares of a Fund at the then
current public offering price per share applicable to the total of (i) the
dollar amount of shares then being purchased plus (ii) an amount equal to
the then current net asset value or public offering price originally paid
per share, whichever is higher, of the customer's combined holdings of the
shares of such Fund and of any other open-end registered investment company
as may be permitted by the applicable Fund Prospectus. In such case, we
agree to furnish to you or the Transfer Agent sufficient information to
permit your confirmation of qualification for a reduced sales charge, and
acceptance of the purchase order is subject to such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all purchases
of Fund shares made by us, as agent for our customers, qualifying for a
reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the liquidation of
shares of one open-end registered investment company managed, advised or
administered by The Dreyfus Corporation or its subsidiaries or affiliates
in the shares of another open-end registered investment company managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates) shall, where available, be made subject to and in accordance
with the terms of each relevant Fund's Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be the
total holdings of the specified customer.
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<PAGE>
7. Subject to and in accordance with the terms of each Fund Prospectus and
Service Plan, Shareholder Services Plan, Distribution Plan or other similar
plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form annexed
hereto as Appendix A, B or C (or such other form as may be approved from
time to time by the board of directors, or trustees or managing general
partners of the Fund) such fees as may be determined by you in accordance
with such agreement for shareholder, administrative or distribution-related
services as described therein.
8. The procedures relating to all orders and the handling thereof will be
subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same number
of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers so
as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation, any purchases, exchanges and redemptions)
in any Fund shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b)
you, each Fund, the Transfer Agent and your and their respective officers,
directors, trustees, managing general partners, agents, employees and
affiliates shall not be liable for, and shall be fully indemnified and held
harmless by us from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
which may be incurred by you or any of the foregoing persons entitled to
indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions reasonably believed to be genuine and to have been given by or
on behalf of us.
9. (a) We agree to remit on behalf of our customers the purchase price for
purchase orders of any Fund shares placed by us in accordance with the
terms of the Prospectus of the applicable Fund. On or before the settlement
date of each purchase order for shares of any Fund, we shall either (i)
remit to an account designated by you with the Transfer Agent an amount
equal to the then current public offering price of the shares of such Fund
being purchased less our reallowance, if any, with respect to such purchase
order as determined by you in accordance with the terms of the applicable
Fund Prospectus, or (ii) remit to an account designated by you with the
Transfer Agent an amount equal to the then current public offering price of
the shares of such Fund being purchased without deduction for our
reallowance, if any, with respect to such purchase order as determined by
you in accordance with the terms of the applicable Fund Prospectus, in
which case our
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<PAGE>
reallowance, if any, shall be payable to us by you on at least a monthly
basis. If payment for any purchase order is not received in accordance with
the terms of the applicable Fund Prospectus, you reserve the right, without
notice, to cancel the sale and to hold us responsible for any loss
sustained as a result thereof.
(b) If any shares sold to us as agent for our customers under the terms of
this Agreement are sold with a sales charge and are redeemed for the
account of the Fund or are tendered for redemption within seven (7)
business days after the date of purchase: (i) we shall forthwith refund to
you the full reallowance received by us on the sale; and (ii) you shall
forthwith pay to the Fund your portion of the sales charge on the sale
which had been retained by you and shall also pay to the Fund the amount
refunded by us.
10. Certificates for shares sold to us as agent for our customers hereunder
shall only be issued in accordance with the terms of each Fund's Prospectus
upon our customers' specific request and, upon such request, shall be
promptly delivered to our customers by the Transfer Agent unless other
arrangements are made by us. However, in making delivery of such share
certificates to our customers, the Transfer Agent shall have adequate time
to clear any checks drawn for the payment of Fund shares.
11. Each party hereby represents and warrants to the other party that: (a) it
is a corporation, partnership or other entity duly organized and validly
existing in good standing under the laws of the jurisdiction in which it
was organized; (b) it is duly registered as a broker-dealer with the
Securities and Exchange Commission and, to the extent required, with
applicable state agencies or authorities having jurisdiction over
securities matters, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); (c) it will comply with all
applicable federal and state laws, and the rules, regulations, requirements
and conditions of all applicable regulatory and self-regulatory agencies or
authorities in the performance of its duties and responsibilities
hereunder; (d) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and
approvals (if any) required for its lawful execution and delivery of this
Agreement and its performance hereunder have been obtained; and (e) upon
execution and delivery by it, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and
binding agreement, enforceable in accordance with its terms. Each party
agrees to provide the other party with such information and access to
appropriate records as may be reasonably required to verify its compliance
with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which you
believe the shares of the Funds have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such
states, but you shall have no obligation or responsibility as to our right
to make shares of any Funds available to our customers in any jurisdiction.
We agree to notify you immediately in the event of (a) our expulsion or
suspension from the NASD, or (b) our violation of any applicable federal or
state law,
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<PAGE>
rule, regulation, requirement or condition arising out of or in connection
with this Agreement, or which may otherwise affect in any material way our
ability to act in accordance with the terms of this Agreement. Our
expulsion from the NASD will automatically terminate this Agreement
immediately without notice. Our suspension from the NASD for violation of
any applicable federal or state law, rule, regulation, requirement or
condition will terminate this Agreement effective immediately upon your
written notice of termination to us.
13. (a) You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15
of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which we, our
officers and directors, or any such controlling person, may incur under the
Securities Act of 1933, as amended, or under common law or otherwise,
arising out of or based upon (i) any breach of any representation, warranty
or covenant made by you herein, or (ii) any failure by you to perform your
obligations as set forth herein, or (iii) any untrue statement, or alleged
untrue statement, of a material fact contained in any Registration
Statement or any Prospectus, or arising out of or based upon any omission,
or alleged omission, to state a material fact required to be stated in
either any Registration Statement or any Prospectus, or necessary to make
the statements in any thereof not misleading; provided, however, that your
agreement to indemnify us, our officers and directors, and any such
controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or alleged
untrue statement or omission or alleged omission made in any Registration
Statement or Prospectus in reliance upon and in conformity with written
information furnished to you or the Fund by us specifically for use in the
preparation thereof. Your agreement to indemnify us, our officers and
directors, and any such controlling person, as aforesaid, is expressly
conditioned upon your being notified of any action brought against our
officers or directors, or any such controlling person, such notification to
be given by letter or by telecopier, telex, telegram or similar means of
same day delivery received by you at your address as specified in Paragraph
18 of this Agreement within seven (7) days after the summons or other first
legal process shall have been served. The failure so to notify you of any
such action shall not relieve you from any liability which you may have to
the person against whom such action is brought by reason of any such
breach, failure or untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of your indemnity agreement
contained in this Paragraph 13(a). You will be entitled to assume the
defense of any suit brought to enforce any such claim, demand, liability or
expense. In the event that you elect to assume the defense of any such suit
and retain counsel, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but in
case you do not elect to assume the defense of any such suit, you will
reimburse us, our officers and directors, and any controlling persons named
as defendants in such suit, for the fees and expenses of any counsel
retained by us and/or
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<PAGE>
them. Your indemnification agreement contained in this Paragraph 13(a)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the persons
entitled to indemnification from you pursuant to this Agreement and their
respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several officers
and directors, and each Fund and its several officers and directors or
trustees or managing general partners, and any person who controls you
and/or each Fund within the meaning of Section 15 of the Securities Act of
1933, as amended, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which you and your several officers and directors,
or the Fund and its officers and directors or trustees or managing general
partners, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, arising out of
or based upon (i) any breach of any representation, warranty or covenant
made by us herein, or (ii) any failure by us to perform our obligations as
set forth herein, or (iii) any untrue, or alleged untrue, statement of a
material fact contained in the information furnished in writing by us to
you or any Fund specifically for use in such Fund's Registration Statement
or Prospectus, or used in the answers to any of the items of the
Registration Statement or in the corresponding statements made in the
Prospectus, or arising out of or based upon any omission, or alleged
omission, to state a material fact in connection with such information
furnished in writing by us to you or the Fund and required to be stated in
such answers or necessary to make such information not misleading. Our
agreement to indemnify you and your officers and directors, and the Fund
and its officers and directors or trustees or managing general partners,
and any such controlling person, as aforesaid, is expressly conditioned
upon our being notified of any action brought against any person or entity
entitled to indemnification hereunder, such notification to be given by
letter or by telecopier, telex, telegram or similar means of same day
delivery received by us at our address as specified in Paragraph 18 of this
Agreement within seven (7) days after the summons or other first legal
process shall have been served. The failure so to notify us of any such
action shall not relieve us from any liability which we may have to you or
your officers and directors, or to the Fund or its officers and directors
or trustees or managing general partners, or to any such controlling
person, by reason of any such breach, failure or untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on account of
our indemnity agreement contained in this Paragraph 13(b). We will be
entitled to assume the defense of any suit brought to enforce any such
claim, demand, liability or expense. In the event that we elect to assume
the defense of any such suit and retain counsel, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case we do not elect to assume the
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<PAGE>
defense of any such suit, we will reimburse you and your officers and
directors, and the Fund and its officers and directors or trustees or
managing general partners, and any controlling persons named as defendants
in such suit, for the fees and expenses of any counsel retained by you
and/or them. Our indemnification agreements contained in Paragraph 8 above,
Paragraph 16 below and this Paragraph 13(b) shall remain operative and in
full force and effect regardless of any investigation made by or on behalf
of any person entitled to indemnification pursuant to Paragraph 8 above,
Paragraph 16 below or this Paragraph 13(b), and shall survive the delivery
of any Fund shares and termination of this Agreement. Such agreements of
indemnity will inure exclusively to the benefit of the persons entitled to
indemnification hereunder and their respective estates, successors and
assigns.
14. The names and addresses and other information concerning our customers are
and shall remain our sole property, and neither you nor your affiliates
shall use such names, addresses or other information for any purpose except
in connection with the performance of your duties and responsibilities
hereunder and except for servicing and informational mailings relating to
the Funds. Notwithstanding the foregoing, this Paragraph 14 shall not
prohibit you or any of your affiliates from utilizing for any purpose the
names, addresses or other information concerning any of our customers if
such names, addresses or other information are obtained in any manner other
than from us pursuant to this Agreement. The provisions of this Paragraph
14 shall survive the termination of this Agreement.
15. We agree to serve as a service agent or to provide distribution assistance,
in accordance with the terms of the Form of Service Agreement annexed
hereto as Appendix A, Form of Shareholder Services Agreement annexed hereto
as Appendix B, and/or Form of Distribution Plan Agreement annexed hereto as
Appendix C, as applicable, for all of our customers who purchase shares of
any and all Funds whose Prospectuses provide therefor. By executing this
Agreement, each of the parties hereto agrees to be bound by all terms,
conditions, rights and obligations set forth in the forms of agreement
annexed hereto and further agrees that such forms of agreement supersede
any and all prior service agreements or other similar agreements between
the parties hereto relating to any Fund or Funds. It is recognized that
certain parties may not be permitted to collect distribution fees under the
Form of Distribution Plan Agreement annexed hereto, and if we are such a
party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed hereto as
Appendix D, we agree that you, each Fund with respect to which you permit
us to exercise an expedited redemption privilege, the transfer agent of
each such Fund, and your and their respective officers, directors or
trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
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<PAGE>
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture
between you and us. Neither party hereto shall be, act as, or represent
itself as, the agent or representative of the other, nor shall either party
have the right or authority to assume, create or incur any liability or any
obligation of any kind, express or implied, against or in the name of, or
on behalf of, the other party. This Agreement is not intended to, and shall
not, create any rights against either party hereto by any third party
solely on account of this Agreement. Neither party hereto shall use the
name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation, requirement or condition, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties hereto.
18. Except as otherwise specifically provided herein, all notices required or
permitted to be given pursuant to this Agreement shall be given in writing
and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, or by
telecopier, telex, telegram or similar means of same day delivery (with a
confirming copy by mail as provided herein). Unless otherwise notified in
writing, all notices to you shall be given or sent to you at your offices
located at 60 State Street, Boston, MA 02109, Attention: President (with a
copy to the same address, Attention: General Counsel), and all notices to
us shall be given or sent to us at our address shown below.
19. This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon 15 days'
prior written notice to the other party. This Agreement, including the
Appendices hereto, may be amended by you upon 15 days' prior written notice
to us, and such amendment shall be deemed accepted by us upon the placement
of any order for the purchase of Fund shares or the acceptance of a fee
payable under this Agreement, including the Appendices hereto, after the
effective date of any such amendment. This Agreement may not be assigned by
us without your prior written consent. This Agreement constitutes the
entire agreement and understanding between the parties hereto relating to
the subject matter hereof and supersedes any and all prior agreements
between the parties hereto relating to the subject matter hereof.
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<PAGE>
20. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to principles
of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Bank Name (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: ________________ By: ________________________________
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy
will be returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: ________________ By: ________________________________
Authorized Signature
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<PAGE>
APPENDIX B
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Ladies and Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders of, and
administering shareholder accounts in, certain mutual fund(s) managed, advised
or administered by The Dreyfus Corporation or its subsidiaries or affiliates
(hereinafter referred to individually as the "Fund" and collectively as the
"Funds"). You are the principal underwriter as defined in the Investment Company
Act of 1940, as amended (the "Act"), and the exclusive agent for the continuous
distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our clients
who own shares of the Funds ("clients"), which services may include,
without limitation: assisting clients in changing dividend options, account
designations and addresses; performing sub-accounting; establishing and
maintaining shareholder accounts and records; processing purchase and
redemption transactions; providing periodic statements and/or reports
showing a client's account balance and integrating such statements with
those of other transactions and balances in the client's other accounts
serviced by us; arranging for bank wires; and providing such other
information and services as you reasonably may request, to the extent we
are permitted by applicable statute, rule or regulation. In this regard, if
we are a subsidiary or affiliate of a federally chartered and supervised
bank or other banking organization, you recognize that we may be subject to
the provisions of the Glass-Steagall Act and other laws, rules, regulations
or requirements governing, among other things, the conduct of our
activities. As such, we are restricted in the activities we may undertake
and for which we may be paid and, therefore, intend to perform only those
activities as are consistent with our statutory and regulatory obligations.
We represent and warrant to, and agree with you, that the compensation
payable to us hereunder, together with any other compensation payable to us
by clients in connection with the investment of their assets in shares of
the Funds, will be properly disclosed by us to our clients, will be
authorized by our clients and will not result in an excessive or
unauthorized fee to us.
2. We shall provide such office space and equipment, telephone facilities and
personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel employed
by us) as is necessary or beneficial for providing information and services
to each Fund's shareholders, and to assist you in
B-1
<PAGE>
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the same
proportion as the vote of those shares held for our clients' accounts.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. If we
are a subsidiary or an affiliate of a federally supervised bank or thrift
institution, we agree that in providing services hereunder we shall at all
times act in compliance with the Interagency Statement on Retail Sales of
Nondeposit Investment Products issued by The Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, and the Office of Thrift
Supervision (February 15, 1994) or any successor interagency requirements
as in force at the time such services are provided. We shall have no
authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year next
following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein by
you as to any or all of the
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Funds, this Agreement shall be terminable effective upon receipt of notice
thereof by us. This Agreement also shall terminate automatically in the
event of its assignment (as defined in the Act).
7. In consideration of the services and facilities described herein, we shall
be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We understand
that any payments pursuant to this Agreement shall be paid only so long as
this Agreement and such Plan are in effect. We agree that no Director,
officer or shareholder of the Fund shall be liable individually for the
performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or
implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 60 State Street, Boston, MA 02109 Attention: President (with
a copy to the same address, Attention: General Counsel), and all notices to
us shall be given or sent to us at our address which shall be furnished to
you in writing on or before the effective date of this Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
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<PAGE>
APPENDIX C
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Ladies and Gentlemen:
We wish to enter into an Agreement with you with respect to our providing
distribution assistance relating to shares of certain mutual fund(s) managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as the "Fund" and collectively
as the "Funds"). You are the principal underwriter as defined in the Investment
Company Act of 1940, as amended (the "Act"), and the exclusive agent for the
continuous distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide distribution assistance in connection with the sale of
shares of the Funds. In this regard, if we are a subsidiary or affiliate of
a federally chartered and supervised bank or other banking organization,
you recognize that we may be subject to the provisions of the
Glass-Steagall Act and other laws, rules, regulations or requirements
governing, among other things, the conduct of our activities. As such, we
are restricted in the activities we may undertake and for which we may be
paid and, therefore, intend to perform only those activities as are
consistent with our statutory and regulatory obligations. We represent and
warrant to, and agree with you, that the compensation payable to us
hereunder, together with any other compensation payable to us by clients in
connection with the investment of their assets in shares of the Funds, will
be properly disclosed by us to our clients.
2. We shall provide such office space and equipment, telephone facilities and
personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel employed
by us) as is necessary or beneficial for providing services hereunder. We
shall transmit promptly to clients all communications sent to us for
transmittal to clients by or on behalf of you, any Fund, or any Fund's
investment adviser, custodian or transfer or dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. If we
are a subsidiary or an affiliate of a federally supervised bank or thrift
institution, we agree that in providing services hereunder we shall at all
C-1
<PAGE>
times act in compliance with the Interagency Statement on Retail Sales of
Nondeposit Investment Products issued by The Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, and the Office of Thrift
Supervision (February 15, 1994) or any successor interagency requirements
as in force at the time such services are provided. We shall have no
authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year next
following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement or, upon not more than 60 days' written notice,
by vote of holders of a majority of the Fund's shares. This Agreement is
terminable without penalty upon 15 days' notice by either party. In
addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such
Fund(s) ceases to serve the Fund(s) in such capacity, or if you cease to
act as distributor of such Fund(s). Notwithstanding anything contained
herein, if we fail to perform the distribution functions contemplated
herein by you as to any or all of the Funds, this Agreement shall be
terminable effective upon receipt of notice thereof by us. This Agreement
also shall terminate automatically in the event of its assignment (as
defined in the Act).
7. In consideration of the services and facilities described herein, we shall
be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related Statement
of Additional Information. We understand that any payments pursuant to this
Agreement shall be paid only so long as this Agreement and such Plan are in
effect. We agree that no Director, officer or shareholder of the Fund shall
be liable individually for the performance of the obligations hereunder or
for any such payments.
C-2
<PAGE>
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or
implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 60 State Street, Boston, MA 02109, Attention: President
(with a copy to the same address, Attention: General Counsel), and all
notices to us shall be given or sent to us at our address which shall be
furnished to you in writing on or before the effective date of this
Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
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<PAGE>
APPENDIX D
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Firm identified below which desires
to exercise expedited redemption privileges with respect to shares of certain
mutual funds managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates, which shares are registered in the name of, or
beneficially owned by, the customers of such Firm.
(PLEASE PRINT OR TYPE)
- ------------------------------------------------------------------------------
NAME OF BANK
- ------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Firm.
- ------------------------------------------------------------------------------
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
- ------------------------------------------------------------------------------
ACCOUNT NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
D-1
FORM OF
BANK AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Gentlemen:
We are a "bank" (as such term is defined in Section 3(a)(6) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")). We desire to make
available to our customers shares of beneficial interest or common stock of
open-end registered investment companies managed, advised or administered by The
Dreyfus Corporation or its subsidiaries or affiliates (hereinafter referred to
individually as a "Fund" and collectively as the "Funds"). You are the principal
underwriter (as such term is defined in the Investment Company Act of 1940, as
amended) of the offering of shares of the Funds and the exclusive agent for the
continuous distribution of such shares pursuant to the terms of a Distribution
Agreement between you and each Fund. Unless the context otherwise requires, as
used herein the term "Prospectus" shall mean the prospectus and related
statement of additional information ("Statement of Additional Information")
incorporated therein by reference (as amended and supplemented) of each of the
respective Funds included in the then currently effective registration statement
(or post-effective amendment thereto) of each such Fund, as filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby agreed
that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund pursuant
to this Agreement, it is understood and agreed in each case that: (a) we
shall be acting solely as agent for the account of our customer; (b) each
transaction shall be initiated solely upon the order of our customer; (c)
you shall execute transactions only upon receiving instructions from us
acting as agent for our customer; (d) as between us and our customer, our
customer will have full beneficial ownership of all Fund shares; and (e)
each transaction shall be for the account of our customer and not for our
account. Each transaction shall be without recourse to us provided that we
act in accordance with the terms of this Agreement. We represent and
warrant to you that we will have full right, power and authority to effect
transactions (including, without limitation, any purchases, exchanges and
redemptions) in Fund shares on behalf of all customer accounts provided by
us to you or to any transfer agent as such term is defined in the
Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (i.e., the net asset value per
share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share less the applicable deferred sales charge, redemption fee or similar
<PAGE>
charge or fee, if any, in each case as described in the Prospectus of such
Fund. The minimum initial purchase order and minimum subsequent purchase
order shall be as set forth in the Prospectus of such Fund. All orders are
subject to acceptance or rejection by you at your sole discretion. Unless
otherwise mutually agreed in writing, each transaction shall be promptly
confirmed in writing directly to the customer on a fully disclosed basis
and a copy of each confirmation shall be sent simultaneously to us. You
reserve the right, at your discretion and without notice, to suspend the
sale of shares or withdraw entirely the sale of shares of any or all of the
Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively on
the representations contained in the Prospectus of such Fund. We agree that
we shall not make shares of any Fund available to our customers except in
compliance with all applicable federal and state laws, and the rules,
regulations and requirements of applicable regulatory agencies or
authorities. We agree that we shall not purchase any Fund shares, as agent
for any customer, unless we deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy of the
Prospectus of such Fund, or unless such customer has acknowledged receipt
of the Prospectus of such Fund. We further agree to obtain from each
customer for whom we act as agent for the purchase of Fund shares any
taxpayer identification number certification and such other information as
may be required from time to time under the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations promulgated thereunder, and to
provide you or your designee with timely written notice of any failure to
obtain such taxpayer identification number certification or other
information in order to enable the implementation of any required
withholding. We will be responsible for the proper instruction and training
of all sales personnel employed by us. Unless otherwise mutually agreed in
writing, you shall deliver or cause to be delivered to each of the
customers who purchases shares of any of the Funds through us pursuant to
this Agreement copies of all annual and interim reports, proxy solicitation
materials and any other information and materials relating to such Funds
and prepared by or on behalf of you, the Fund or its investment adviser,
custodian, Transfer Agent or dividend disbursing agent for distribution to
each such customer. You agree to supply us with copies of the Prospectus,
Statement of Additional Information, annual reports, interim reports, proxy
solicitation materials and any such other information and materials
relating to each Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares other than
those contained in the Prospectus of such Fund or in any promotional
materials or sales literature furnished to us by you or the Fund. We shall
not furnish or cause to be furnished to any person or display or publish
any information or materials relating to any Fund (including, without
limitation, promotional materials and sales literature, advertisements,
press releases, announcements, statements, posters, signs or other similar
materials), except such information and materials as may be furnished to us
by you or the Fund, and such other information and materials as may be
approved in writing by you. In making Fund shares available to our
customers hereunder, or in providing investment advice regarding such
shares to our customers, we shall at all times act in compliance
-2-
<PAGE>
with the Interagency Statement on Retail Sales of Nondeposit Investment
Products issued by The Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, the Office of the Comptroller of
the Currency, and the Office of Thrift Supervision (February 15, 1994) or
any successor interagency requirements as in force at the time such
services are provided.
5. In determining the amount of any reallowance payable to us hereunder, you
reserve the right to exclude any sales which you reasonably determine are
not made in accordance with the terms of the applicable Fund Prospectuses
or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge, customers may
be entitled to a reduction in sales charge on purchases made under a letter
of intent ("Letter of Intent") in accordance with the Fund Prospectus. In
such case, our reallowance will be paid based upon the reduced sales
charge, but an adjustment will be made as described in the Prospectus of
the applicable Fund to reflect actual purchases of the customer if he
should fail to fulfill his Letter of Intent. The sales charge and/or
reallowance may be changed at any time in your sole discretion upon written
notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of each
Fund sold with a sales charge, a reduced sales charge may be applicable
with respect to customer accounts through a right of accumulation under
which customers are permitted to purchase shares of a Fund at the then
current public offering price per share applicable to the total of (i) the
dollar amount of shares then being purchased plus (ii) an amount equal to
the then current net asset value or public offering price originally paid
per share, whichever is higher, of the customer's combined holdings of the
shares of such Fund and of any other open-end registered investment company
as may be permitted by the applicable Fund Prospectus. In such case, we
agree to furnish to you or the Transfer Agent sufficient information to
permit your confirmation of qualification for a reduced sales charge, and
acceptance of the purchase order is subject to such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all purchases
of Fund shares made by us, as agent for our customers, qualifying for a
reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the liquidation of
shares of one open-end registered investment company managed, advised or
administered by The Dreyfus Corporation or its subsidiaries or affiliates
in the shares of another open-end registered investment company managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates) shall, where available, be made subject to and in accordance
with the terms of each Fund's Prospectus.
(e) Unless at the time of transmitting an order we advise you to the
contrary, the shares ordered will be deemed to be the total holdings of the
specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus and
Service Plan, Shareholder Services Plan, Distribution Plan or other similar
plan, if any, we understand
-3-
<PAGE>
that you may pay to certain financial institutions, securities dealers and
other industry professionals with which you have entered into an agreement
in substantially the form annexed hereto as Appendix A, B, or C (or such
other form as may be approved from time to time by the board of directors
or trustees or managing general partners of the Fund) such fees as may be
determined by you in accordance with such agreement for shareholder,
administrative or distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will be
subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same number
of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers so
as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation, any purchases, exchanges and redemptions)
in any Fund shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b)
you, each Fund, the Transfer Agent and your and their respective officers,
directors, trustees, managing general partners, agents, employees and
affiliates shall not be liable for, and shall be fully indemnified and held
harmless by us from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
which may be incurred by you or any of the foregoing persons entitled to
indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions reasonably believed to be genuine and to have been given by or
on behalf of us.
9. We agree to pay for purchase orders of any Fund shares placed by us in
accordance with the terms of the Prospectus of the applicable Fund. On or
before the settlement date of each purchase order for shares of any Fund,
we shall either (i) remit to an account designated by you with the Transfer
Agent an amount equal to the then current public offering price of the
shares of such Fund being purchased less our reallowance, if any, with
respect to such purchase order as determined by you in accordance with the
terms of the applicable Fund Prospectus, or (ii) remit to an account
designated by you with the Transfer Agent an amount equal to the then
current public offering price of the shares of such Fund being purchased
without deduction for our reallowance, if any, with respect to such
purchase order as determined by you in accordance with the terms of the
applicable Fund Prospectus, in which case our reallowance, if any, shall be
payable to us by you on at least a monthly basis. If payment for any
purchase order is not received in accordance with the terms of the
applicable Fund Prospectus, you reserve the right, without notice, to
cancel the sale and to hold us responsible for any loss sustained as a
result thereof.
-4-
<PAGE>
(b) If any shares sold to us as agent for our customers under the terms of
this Agreement are sold with a sales charge and are redeemed for the
account of the Fund or are tendered for redemption within seven (7) days
after the date of purchase: (i) we shall forthwith refund to you the full
reallowance received by us on the sale; and (ii) you shall forthwith pay to
the Fund your portion of the sales charge on the sale which had been
retained by you and shall also pay to the Fund the amount refunded by us.
10. Certificates for shares sold to us as agent for our customers hereunder
shall only be issued in accordance with the terms of each Fund's Prospectus
upon our customers' specific request and, upon such request, shall be
promptly delivered to our customers by the Transfer Agent unless other
arrangements are made by us. However, in making delivery of such share
certificates to our customers, the Transfer Agent shall have adequate time
to clear any checks drawn for the payment of Fund shares.
11. We hereby represent and warrant to you that: (a) we are a "bank" as such
term is defined in Section 3(a)(6) of the Exchange Act; (b) we are a duly
organized and validly existing "bank" in good standing under the laws of
the jurisdiction in which we were organized; (c) all authorizations (if
any) required for our lawful execution of this Agreement and our
performance hereunder have been obtained; and (d) upon execution and
delivery by us, and assuming due and valid execution and delivery by you,
this Agreement will constitute a valid and binding agreement, enforceable
against us in accordance with its terms. We agree to give written notice to
you promptly in the event that we shall cease to be a "bank" as such term
is defined in Section 3(a)(6) of the Exchange Act. In such event, this
Agreement shall be automatically terminated upon such written notice.
12. You agree to inform us, upon our request, as to the states in which you
believe the shares of the Funds have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such
states, but you shall have no obligation or responsibility as to our right
to make shares of any Funds available to our customers in any jurisdiction.
We agree to comply with all applicable federal and state laws, rules,
regulations and requirements relating to the performance of our duties and
responsibilities hereunder.
13. (a) You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15
of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which we, our
officers and directors, or any such controlling person, may incur under the
Securities Act of 1933, as amended, or under common law or otherwise,
arising out of or based upon (i) any breach of any representation, warranty
or covenant made by you herein, or (ii) any failure by you to perform your
obligations as set forth herein, or (iii) any untrue statement, or alleged
untrue statement, of a material fact contained in any Registration
Statement or any Prospectus, or arising out of or based upon any omission,
or alleged omission, to state a material fact required to be stated in
either any Registration Statement
-5-
<PAGE>
or any Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be deemed
to cover any claims, demands, liabilities or expenses arising out of any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Registration Statement or Prospectus in reliance upon
and in conformity with written information furnished to you or the Fund by
us specifically for use in the preparation thereof. Your agreement to
indemnify us, our officers and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon your being notified of any
action brought against our officers or directors, or any such controlling
person, such notification to be given by letter or by telecopier, telex,
telegram or similar means of same day delivery received by you at your
address as specified in Paragraph 18 of this Agreement within seven (7)
days after the summons or other first legal process shall have been served.
The failure so to notify you of any such action shall not relieve you from
any liability which you may have to the person against whom such action is
brought by reason of any such breach, failure or untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this Paragraph 13(a). You will be
entitled to assume the defense of any suit brought to enforce any such
claim, demand, liability or expense. In the event that you elect to assume
the defense of any such suit and retain counsel, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case you do not elect to assume the
defense of any such suit, you will reimburse us, our officers and
directors, or any controlling persons named as defendants in such suit, for
the fees and expenses of any counsel retained by us or them. Your
indemnification agreement contained in this Paragraph 13(a) shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any person entitled to indemnification pursuant to this
Paragraph 13(a), and shall survive the delivery of any Fund shares and
termination of this Agreement. This agreement of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification from
you pursuant to this Agreement and their respective estates, successors and
assigns.
(b) We agree to indemnify, defend and hold you and your several officers
and directors, and each Fund and its several officers and directors or
trustees or managing general partners, and any person who controls you
and/or each Fund within the meaning of Section 15 of the Securities Act of
1933, as amended, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which you and your several officers and directors,
or the Fund and its officers and directors or trustees or managing general
partners, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, arising out of
or based upon (i) any breach of any representation, warranty or covenant
made by us herein, or (ii) any failure by us to perform our obligations as
set forth herein, or (iii) any untrue, or alleged untrue, statement of a
material fact contained in the information furnished in writing by us to
you or any Fund specifically for use in such Fund's Registration Statement
or Prospectus, or used in the answers to any of the items of the
Registration Statement or in the
-6-
<PAGE>
corresponding statements made in the Prospectus, or arising out of or based
upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by us to you or the
Fund and required to be stated in such answers or necessary to make such
information not misleading. Our agreement to indemnify you and your
officers and directors, and the Fund and its officers and directors or
trustees, and any such controlling person, as aforesaid, is expressly
conditioned upon our being notified of any action brought against any
person or entity entitled to indemnification hereunder, such notification
to be given by letter or by telecopier, telex, telegram or similar means of
same day delivery received by us at our address as specified in Paragraph
18 of this Agreement within seven (7) days after the summons or other first
legal process shall have been served. The failure so to notify us of any
such action shall not relieve us from any liability which we may have to
you or your officers and directors, or the Fund or its officers and
directors or trustees or managing general partners, or to any such
controlling person, by reason of any such breach, failure or untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than
on account of our indemnity agreement contained in this Paragraph 13(b).
Our indemnification agreements contained in Paragraph 8 above, Paragraph 16
below and this Paragraph 13(b) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any person
entitled to indemnification pursuant to Paragraph 8 above, Paragraph 16
below or this Paragraph 13(b), and shall survive the delivery of any Fund
shares and termination of this Agreement. Such agreements of indemnity will
inure exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our customers are
and shall remain our sole property, and neither you nor your affiliates
shall use such names, addresses or other information for any purpose except
in connection with the performance of your duties and responsibilities
hereunder and except for servicing and informational mailings relating to
the Funds. Notwithstanding the foregoing, this Paragraph 14 shall not
prohibit you or any of your affiliates from utilizing for any purpose the
names, addresses or other information concerning any of our customers if
such names, addresses or other information are obtained in any manner other
than from us pursuant to this Agreement. The provisions of this Paragraph
14 shall survive the termination of this Agreement.
15. We agree to serve as a service agent, in accordance with the terms of the
Form of Service Agreement annexed hereto as Appendix A, Form of Shareholder
Services Agreement annexed hereto as Appendix B, and/or Form of
Distribution Plan Agreement annexed hereto as Appendix C, as applicable,
for all of our customers who purchase shares of any and all Funds whose
Prospectuses provide therefor. By executing this Agreement, each of the
parties hereto agrees to be bound by all terms, conditions, rights and
obligations set forth in the forms of agreements annexed hereto and further
agrees that such forms of agreement supersede any and all prior service
agreements or other similar agreements between the parties hereto, relating
to any Fund or Funds. It is recognized that certain parties may not be
permitted to collect distribution fees under the Form of Distribution Plan
Agreement annexed hereto, and if we are such a party, we will not collect
such fees.
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<PAGE>
16. By completing the Expedited Redemption Information Form annexed hereto as
Appendix D, we agree that you, each Fund with respect to which you permit
us to exercise an expedited redemption privilege, the Transfer Agent of
each such Fund, and your and their respective officers, directors or
trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture
between you and us. Neither party hereto shall be, act as, or represent
itself as, the agent or representative of the other, nor shall either party
have the right or authority to assume, create or incur any liability or any
obligation of any kind, express or implied, against or in the name of, or
on behalf of, the other party. This Agreement is not intended to, and shall
not, create any rights against either party hereto by any third party
solely on account of this Agreement. Neither party hereto shall use the
name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation or requirement, and except pursuant to any promotional
programs mutually agreed upon in writing by the parties hereto.
18. Except as otherwise specifically provided herein, all notices required or
permitted to be given pursuant to this Agreement shall be given in writing
and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, or by
telecopier, telex, telegram or similar means of same day delivery (with a
confirming copy by mail as provided herein). Unless otherwise notified in
writing, all notices to you shall be given or sent to you at your offices,
located at 60 State Street, Boston, MA 02109, Attn: President (with a copy
to the same address, Attention: General Counsel), and all notices to us
shall be given or sent to us at our address shown below.
19. This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon 15 days'
prior written notice to the other party. This Agreement may be amended by
you upon 15 days' prior written notice to us, and such amendment shall be
deemed accepted by us upon the placement of any order for the purchase of
Fund shares or the acceptance of a fee payable under this Agreement,
including the Appendices hereto, after the effective date of any such
amendment. This Agreement may not be assigned by us without your prior
written consent. This Agreement constitutes the entire agreement and
understanding between the parties hereto relating to the subject matter
hereof and supersedes any and all prior agreements between the parties
hereto relating to the subject matter hereof.
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<PAGE>
20. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to principles
of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Bank Name (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: ________________ By: ________________________________
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy
will be returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: ________________ By: ________________________________
Authorized Signature
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<PAGE>
APPENDIX B
TO BANK AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Ladies and Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders of, and
administering shareholder accounts in, certain mutual fund(s) managed, advised
or administered by The Dreyfus Corporation or its subsidiaries or affiliates
(hereinafter referred to individually as the "Fund" and collectively as the
"Funds"). You are the principal underwriter as defined in the Investment Company
Act of 1940, as amended (the "Act"), and the exclusive agent for the continuous
distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our clients
who own shares of the Funds ("clients"), which services may include,
without limitation: assisting clients in changing dividend options, account
designations and addresses; performing sub-accounting; establishing and
maintaining shareholder accounts and records; processing purchase and
redemption transactions; providing periodic statements and/or reports
showing a client's account balance and integrating such statements with
those of other transactions and balances in the client's other accounts
serviced by us; arranging for bank wires; and providing such other
information and services as you reasonably may request, to the extent we
are permitted by applicable statute, rule or regulation. In this regard, if
we are a federally chartered and supervised bank or other banking
organization, you recognize that we may be subject to the provisions of the
Glass-Steagall Act and other laws, rules, regulations, or requirements
governing, among other things, the conduct of our activities. As such, we
are restricted in the activities we may undertake and for which we may be
paid and, therefore, intend to perform only those activities as are
consistent with our statutory and regulatory obligations. We represent and
warrant to, and agree with you, that the compensation payable to us
hereunder, together with any other compensation payable to us by clients in
connection with the investment of their assets in shares of the Funds, will
be properly disclosed by us to our clients, will be authorized by our
clients and will not result in an excessive or unauthorized fee to us.
2. We shall provide such office space and equipment, telephone facilities and
personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel employed
by us) as is necessary or beneficial for providing information and services
to each Fund's shareholders, and to assist you in servicing accounts of
clients. We shall transmit promptly to clients all communications sent to
us for transmittal to clients by or on behalf of you, any Fund, or any
Fund's
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<PAGE>
investment adviser, custodian or transfer or dividend disbursing agent. We
agree that in the event an issue pertaining to a Fund's Shareholder
Services Plan is submitted for shareholder approval, we will vote any Fund
shares held for our own account in the same proportion as the vote of those
shares held for our clients' accounts.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. If we
are a federally supervised bank or thrift institution, we agree that, in
providing services hereunder, we shall at all times act in compliance with
the Interagency Statement on Retail Sales of Nondeposit Investment Products
issued by The Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision (February 15, 1994) or any
successor interagency requirements as in force at the time such services
are provided. We shall have no authority to act as agent for the Funds or
for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year next
following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein by
you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
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<PAGE>
7. In consideration of the services and facilities described herein, we shall
be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We understand
that any payments pursuant to this Agreement shall be paid only so long as
this Agreement and such Plan are in effect. We agree that no Director,
officer or shareholder of the Fund shall be liable individually for the
performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or
implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 60 State Street, Boston, MA 02109, Attention: President
(with a copy to the same address, Attention: General Counsel), and all
notices to us shall be given or sent to us at our address which shall be
furnished to you in writing on or before the effective date of this
Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
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<PAGE>
APPENDIX C
TO BANK AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
Ladies and Gentlemen:
We wish to enter into an Agreement with you with respect to our providing
distribution assistance relating to shares of certain mutual fund(s) managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as the "Fund" and collectively
as the "Funds"). You are the principal underwriter as defined in the Investment
Company Act of 1940, as amended (the "Act"), and the exclusive agent for the
continuous distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide distribution assistance in connection with the sale of
the shares of the Funds. In this regard, if we are a federally chartered
and supervised bank or other banking organization, you recognize that we
may be subject to the provisions of the Glass-Steagall Act and other laws,
rules, regulations or requirements governing, among other things, the
conduct of our activities. As such, we are restricted in the activities we
may undertake and for which we may be paid and, therefore, intend to
perform only those activities as are consistent with our statutory and
regulatory obligations. We represent and warrant to, and agree with you,
that the compensation payable to us hereunder, together with any other
compensation payable to us by clients in connection with the investment of
their assets in shares of the Funds, will be properly disclosed by us to
our clients.
2. We shall provide such office space and equipment, telephone facilities and
personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel employed
by us) as is necessary or beneficial for providing services hereunder. We
shall transmit promptly to clients all communications sent to us for
transmittal to clients by or on behalf of you, any Fund, or any Fund's
investment adviser, custodian or transfer or dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. If we
are a federally supervised bank or thrift institution, we agree that, in
providing services hereunder, we shall at all times act in compliance with
the Interagency Statement on Retail Sales of Nondeposit Investment Products
issued by The Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Office of the Comptroller of the
Currency, and the Office of Thrift
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<PAGE>
Supervision (February 15, 1994) or any successor interagency requirements
as in force at the time such services are provided. We shall have no
authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year next
following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement or, upon not more than 60 days' written notice,
by vote of holders of a majority of the Fund's shares. This Agreement is
terminable without penalty upon 15 days' notice by either party. In
addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such
Fund(s) ceases to serve the Fund(s) in such capacity, or if you cease to
act as distributor of such Fund(s). Notwithstanding anything contained
herein, if we fail to perform the distribution functions contemplated
herein by you as to any or all of the Funds, this Agreement shall be
terminable effective upon receipt of notice thereof by us. This Agreement
also shall terminate automatically in the event of its assignment (as
defined in the Act).
7. In consideration of the services and facilities described herein, we shall
be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related Statement
of Additional Information. We understand that any payments pursuant to this
Agreement shall be paid only so long as this Agreement and such Plan are in
effect. We agree that no Director, officer or shareholder of the Fund shall
be liable individually for the performance of the obligations hereunder or
for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
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<PAGE>
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to
assume, create or incur any liability or any obligation of any kind,
express or implied, against or in the name of or on behalf of the other
party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 60 State Street, Boston, MA 02109, Attention: President
(with a copy to the same address, Attention: General Counsel), and all
notices to us shall be given or sent to us at our address which shall be
furnished to you in writing on or before the effective date of this
Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
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<PAGE>
APPENDIX D
TO BANK AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Bank identified below which desires
to exercise expedited redemption privileges with respect to shares of certain
mutual funds managed, advised or administered by The Dreyfus Corporation or its
affiliates, which shares are registered in the name of, or beneficially owned
by, the customers of such Bank.
(PLEASE PRINT OR TYPE)
- ------------------------------------------------------------------------------
NAME OF BANK
- ------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Bank.
- ------------------------------------------------------------------------------
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
- ------------------------------------------------------------------------------
ACCOUNT NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
-16-
FORM OF
AMENDED AND RESTATED
SHAREHOLDER SERVICES AGREEMENT
BETWEEN
DREYFUS FOUNDERS FUNDS, INC. AND
FOUNDERS ASSET MANAGEMENT LLC
AGREEMENT made as of the 31st day of December, 1999, in Denver, Colorado,
by and between Dreyfus Founders Funds, Inc., a Maryland corporation (the
"Fund"), and Founders Asset Management LLC, a Delaware limited liability company
(hereinafter referred to as "Founders").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, Founders is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser and providing certain other administrative, accounting, and
recordkeeping services to the Fund; and
WHEREAS, Founders is registered as a transfer agent under the
Securities Exchange Act of 1934; and
WHEREAS, pursuant to this Shareholder Services Agreement (the
"Agreement"), Founders will render certain transfer agent and related services
to the Fund and to the holders of the Fund's Class F shares (the "Services") in
the manner and on the terms and conditions hereinafter set forth; and
WHEREAS, the Fund has entered into a Transfer Agent Agreement with
Investors Fiduciary Trust Company ("IFTC"), as amended (the "TA Agreement"),
pursuant to which IFTC provides certain other transfer agent services to the
Fund and the holders of the Fund's Class F shares; and
WHEREAS, Founders has entered into a service agreement with IFTC (the
"Service Agreement"), pursuant to which a computerized data processing
recordkeeping system for securityholder accounting (the "TA2000(TM) System")
using IFTC owned or licensed software developed by DST Technologies, Inc., an
affiliate of IFTC ("DST") is available to Founders in providing transfer agent
services to the Fund and the holders of the Fund's Class F shares; and
WHEREAS, the Fund has entered into a Software Remote Access and License
Agreement with DST (the "Remote Access Agreement"), pursuant to which image
based application software and related user documentation to be operated in
conjunction with the TA2000(TM) System (the "Auxiliary Software") is
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<PAGE>
available to Founders in providing other transfer agent services to the holders
of the Fund's Class F shares; and
WHEREAS, Founders has entered into a Telephone and CRT Input Equipment
Recovery Services Agreement with DST (the "Back-Up Agreement"), pursuant to
which certain computer and backup capabilities will be made available to
Founders for use in providing transfer agent services to the Fund and the
holders of the Fund's Class F shares in the event of a disaster to Founders'
telephone and cathode-ray tube input equipment; and
WHEREAS, the Fund has entered into an Agreement for Handling Drafts with
IFTC and DST (the "Drafts Agreement"), pursuant to which the Fund has
established a special account with IFTC to which all drafts drawn by the Fund's
Class F shareholders which are payable through IFTC will be charged; and
WHEREAS, the TA Agreement, the Service Agreement, the Remote Access
Agreement, the Back-Up Agreement, and the Drafts Agreement are collectively
referred to herein as the "Collective Agreements"; and
WHEREAS, the Fund, Founders, IFTC, and DST anticipate that in the next few
years Founders will, on a service-by-service basis and over time, assume the
responsibility for performance of those transfer agent services currently being
provided to the Fund and the holders of the Fund's Class F shares by IFTC; and
WHEREAS, the Fund desires to retain Founders to perform these additional
transfer agent services and Founders desires to perform such services on the
terms and conditions hereinafter set forth; and
WHEREAS, Founders has entered into arrangements with third parties which
provide sub-transfer agency, recordkeeping, investor services, and/or other
administrative services (the "Third Party Services") to participants in 401(k)
and other tax-qualified retirement programs and to participants in other
arrangements (the "Participants"), pursuant to which the third party establishes
one or more omnibus accounts with the Fund, into which investments of the
Participants are pooled in the Fund's Class F shares; and
WHEREAS, in establishing such omnibus accounts and providing the Third
Party Services, the third parties effectively reduce or eliminate the need for
Services to be provided on behalf of the Participants by Founders; and
WHEREAS, a third party may charge a basis point fee method or other fee
method to Founders or the Funds to compensate it for providing the Third Party
Services to Participants (the "Third Party Fee"); and
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<PAGE>
WHEREAS, certain of the third parties may be broker-dealers who, in
accordance with applicable federal rules and regulations, may be selected by
Founders to execute portfolio securities transactions on behalf of the Fund; and
WHEREAS, commissions earned by the broker-dealer third party from
executing portfolio transactions on behalf of a specific series fund of the Fund
("Series") may be credited by the broker-dealer against the Third Party Fee
charged to that Series, on a basis which has resulted from negotiations between
Founders and the third party;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and Founders agree as follows:
1. SERVICES. The Fund hereby retains Founders to provide the Services
outlined on Exhibit A hereto with respect to the Fund's Class F shares, which
exhibit is incorporated herein by this reference. Founders shall at all times
use reasonable care, due diligence, and act in good faith in performing its
duties under this Agreement.
2. COLLECTIVE AGREEMENT OBLIGATIONS. To the extent that the TA Agreement
and any other Collective Agreement (a) may impose obligations upon the Fund to
ensure that Founders provides services, conforms to a standard of conduct,
adheres to a stipulated process or procedure, or otherwise undertakes to perform
a defined duty or responsibility or (b) provides that Founders performs the
foregoing (collectively, the "Obligations"), Founders shall perform the
Obligations and shall at all times use reasonable care, due diligence, and act
in good faith in performing the Obligations.
3. STAFF MAINTENANCE. Founders shall, at its own expense, maintain such
staff and employ or retain such personnel as it shall from time to time
determine to be necessary or useful to the performance of its obligations under
this Agreement. Without limiting the generality of the foregoing, such staff and
personnel may include officers of Founders and persons employed or otherwise
retained by Founders to provide or assist in providing services to the Fund
other than those Services to be provided pursuant to this Agreement.
4. FACILITIES. Founders shall, at its own expense, provide such office
space, facilities, equipment, and other property or resources as shall be
necessary to provide the Services to the Fund.
5. FUND INFORMATION. The Fund will, from time to time, furnish or
otherwise make available to Founders such information relating to the business
and affairs of the Fund as Founders may reasonably require in order to discharge
its duties and obligations hereunder.
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<PAGE>
6. FEES. The Fund shall pay to Founders a prorated monthly fee equal on an
annual basis to $26.00 for each shareholder account in the Class F shares of the
Fund considered to be an open account at any time during the month. This fee
shall provide for the payment of the following:
a. The services rendered and facilities furnished by Founders
under this Agreement; and
b. The services rendered and facilities furnished by IFTC and DST
with respect to the holders of the Fund's Class F shares pursuant to the
Collective Agreements.
In addition to the $26.00 per account fee, Founders, IFTC, and DST will
also be entitled to reimbursement from the Fund for all reasonable out-of-pocket
expenses incurred by Founders, IFTC, and DST in connection with the performance
of Services under the Agreement and services under the Collective Agreements.
Out-of-pocket expenses with respect to the Agreement shall include, but
are not limited to, expenditures for postage, envelopes, banking fees, courier
fees, overnight mail fees, computer hardware and software licensing fees, voice
response unit fees, checks, continuous forms, reports and statements, telephone
line charges, telegraph, stationery, supplies, costs of outside mailing firms,
record storage costs and media for storage of records (e.g., microfilm and
computer tapes). Out-of-pocket expenses incurred by Founders, IFTC, and/or DST
in connection with the performance of services under the Collective Agreements
shall include those out-of-pocket expenses to which each Collective Agreement
makes reference.
Any other expenses incurred by Founders at the request or with the consent
of the Fund will be reimbursed promptly by the Fund.
As provided herein, Founders will use a portion of the $26.00 account fee
to pay IFTC and DST for services which are performed by each entity pursuant to
the Collective Agreements. Upon assumption by Founders in the future of certain
duties currently performed by IFTC and/or DST pursuant to the terms of the
Collective Agreements, Founders will retain an amount equal to the amount
previously paid to IFTC and/or DST for performing such duties.
In the event any termination fee is appropriately charged to Founders or
to the Fund pursuant to Section 2.02 of the Service Agreement, the fee shall be
paid by the Fund unless circumstances would dictate payment of the fee by
Founders.
In the event any late charges or interest charges are incurred pursuant to
Section 2.03 of the TA Agreement, such charges are the responsibility of
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<PAGE>
Founders and the Fund will reduce the amount of its next payment to Founders
pursuant to this Agreement by such amount.
The monthly fee described in this Section 6. and any out-of-pocket
reimbursements due to Founders pursuant to this Section shall be payable to
Founders on the first business day of the calendar month next succeeding the
month in which the services are rendered, or as soon thereafter as such
reimbursements can be determined.
In instances in which third parties establish omnibus accounts with the
Class F shares of one or more of the Series which represent pooled accounts of
Participants whose transfer agency, recordkeeping, or similar services are being
provided by the third party or its agent and not by Founders and/or IFTC and/or
DST, Class F of the Series will reimburse Founders for an amount which shall not
be in excess of the $26.00 account fee for each Participant account, which
amount Founders will have previously paid to the third party.
In instances in which commissions are earned by a broker-dealer
third-party from executing portfolio transactions on behalf of a Series,
Founders is authorized to enter into arrangements pursuant to which the
commissions may be credited by the broker-dealer against the Third Party Fee
otherwise payable by that Series to the broker-dealer, on a basis which will
have been negotiated between the broker-dealer and Founders.
Any fees paid by the Fund to Founders as reimbursement for payment by
Founders to a third party in consideration of its providing Third Party Services
shall be paid monthly at the rate of 1/12th of an annual fee not to exceed
$26.00 per Participant account. Such payments shall be made for a Participant
account in the month that it opens or closes, as well as in each month in which
the Participant account remains open, regardless of its account balance.
In the event that the aggregate of the monthly fees per Participant may on
occasion exceed the aggregate monthly Third Party Fees due to the third party,
the applicable Series will accrue the excess through the applicable calendar
year-end, which excess will be available to reimburse Founders if, during any
remaining month in the calendar year, the aggregate monthly Third Party Fees
applicable to that Series paid by Founders exceed the aggregate monthly fees per
Participant. Any accrual remaining at year-end will be credited to the
respective Series' general ledger expense account.
7. ACCESS TO FOUNDERS' RECORDS. Founders will permit representatives of
the Fund, including the Fund's independent auditors, to have reasonable access
to the personnel and records of Founders in order to enable such representatives
to monitor the quality of services being provided and the level of fees and
reimbursements due Founders pursuant to this Agreement. In addition, Founders
shall promptly deliver to the Board of Directors of the Fund
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<PAGE>
such information as may reasonably be requested from time to time to permit the
Board of Directors to make an informed determination regarding the rendering of
the Services, the continuation of this Agreement, and the payments contemplated
to be made hereunder.
8. LIABILITY AND INDEMNIFICATION. So long as Founders shall use reasonable
care, due diligence, and act in good faith in performing its duties under this
Agreement, Founders shall not be responsible for, and the Fund shall indemnify
and hold Founders harmless from and against, any and all losses, liabilities,
claims, demands, suits, costs, and expenses (including reasonable attorneys'
fees) which may be asserted against Founders or for which Founders may be held
to be liable, which arise out of, or are attributable to, Founders' discharge of
its responsibilities and obligations imposed by this Agreement.
The Fund shall not be responsible for, and Founders shall indemnify and
hold the Fund harmless from and against, any and all losses, liabilities,
claims, demands, suits, costs, and expenses (including reasonable attorneys'
fees) which may be asserted against the Fund or for which the Fund may be held
to be liable, which arise out of, or are attributable to, any negligence,
willful misconduct, or lack of due care of Founders in discharging the
responsibilities and obligations imposed upon Founders by this Agreement.
Founders and the Fund agree that each shall promptly notify the other in
writing of any situation which represents or appears to involve a claim which
may be the subject of indemnification hereunder, although the failure to provide
such notification shall not relieve the indemnifying party of its liability
pursuant to this Section 8. The indemnifying party shall have the option to
defend against any such claim. In the event the indemnifying party so elects, it
will notify the indemnified party and shall assume the defense of such claim,
and the indemnified party shall cooperate fully with the indemnifying party, at
the indemnifying party's expense, in the defense of such claim. Notwithstanding
the foregoing, the indemnified party shall be entitled to participate in the
defense of such claim at its own expense through counsel of its own choosing.
The indemnified party shall not enter into any settlement of such matter without
the written consent of the indemnifying party, which consent shall not
unreasonably be withheld. The indemnifying party shall not be obligated to
indemnify the indemnified party for any settlement entered into without the
written consent of the indemnifying party. If the consent of the indemnified
party is required to effectuate any settlement and the indemnified party refuses
to consent to any settlement negotiated by the indemnifying party, the liability
of the indemnifying party for losses arising out of or due to such matter shall
be limited to the amount of the rejected proposed settlement.
The obligations of Founders and the Fund pursuant to this Section 8 shall
survive the termination of this Agreement.
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<PAGE>
9. EFFECT OF AGREEMENT. Nothing herein contained shall be deemed to require the
Fund to take any action contrary to its Articles of Incorporation or its By-Laws
or any applicable law, regulation or order to which it is subject or by which it
is bound, or to relieve or deprive the directors of the Fund and the Fund of
their overall responsibility for and control of the conduct of the business and
affairs of the Fund.
10. TERM AND TERMINATION. This Agreement shall remain in effect until no later
than May 31, 2000, and shall remain in effect from year to year thereafter
provided such continuance is approved at least annually by the vote of a
majority of the directors of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon 90 days' written notice to
Founders; (b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rule thereunder) unless the
Board of Directors of the Fund approves such assignment; and (c) Founders may
terminate this Agreement without payment of penalty on 180 days' written notice
to the Fund. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at the principal
office of such party.
11. APPLICATION OF LAW. This Agreement shall be construed in accordance
with the laws of the State of Colorado and the applicable provisions of the Act.
To the extent the applicable law of the State of Colorado or any of the
provisions herein conflict with the applicable provision of the Act and other
applicable laws, the latter shall control.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the day and year first above written.
DREYFUS FOUNDERS FUNDS, INC.
By: ___________________________________
Marie E. Connolly, President
FOUNDERS ASSET MANAGEMENT LLC
By: ___________________________________
Richard W. Sabo, President
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<PAGE>
EXHIBIT A
TO
AMENDED AND RESTATED
SHAREHOLDER SERVICES AGREEMENT
BETWEEN
DREYFUS FOUNDERS FUNDS, INC. AND
FOUNDERS ASSET MANAGEMENT LLC
The following Services will be provided by Founders to the holders of the Fund's
Class F shares:
1. TELEPHONE SERVICES
Founders' personnel will receive and process all telephone requests
received by Founders to: purchase, redeem or exchange shares; open an
account, add or delete services for an account, explain Fund or market
conditions and/or performance, perform research into account problems and
correct such problems, and other matters related to account servicing;
change an account address or distribution option; correct a registration
or account error; or send an additional account statement. Founders will
also make available to shareholders a Voice Response Unit to provide
routine account and Fund information.
2. TRANSFER AGENCY SERVICES
Founders' personnel will discharge the following duties:
Pick up all incoming mail and scan documents into the DST image system
(the DST image system is that system used by IFTC in performing transfer
agent services on behalf of the holders of the Fund's Class F shares).
Open new accounts, purchase shares, and establish services requested by
new shareholders. Contact shareholders in writing or via the phone if
incomplete or inaccurate information is contained in the application.
Make subsequent purchases on behalf of shareholders and 401(k) plans.
Deliver checks to bank, monitor bank account(s), wire funds to appropriate
custodial account.
Receive returned (bounced) checks, cancel purchases, and contact
shareholders regarding any potential losses.
Research all mail returned to Founders by the Post Office and forward such
mail if possible.
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<PAGE>
Retrieve information from microfilm, microfiche, paper files, and/or the
DST image system needed to respond to inquiries and/or to resolve
research.
Store previously scanned items as required by the SEC and NASD.
Other routine partial transfer agency functions needed to complete the
duties typically expected of a transfer agent performing the services
outlined in this item 2.
3. RETIREMENT SERVICES
a. RETIREMENT PLAN TRANSFERS. Founders' personnel will ensure that
retirement plan transfers are accomplished on a timely basis. Applications
to request transfers will be reviewed to ensure that the application is in
proper order before it is sent to the shareholders' custodian. A Founders
representative will contact the shareholder with a personal note once the
transfer arrives at Founders. Founders will maintain an updated list of
the transfer requirements imposed by transfer agents. A Founders
representative will contact the appropriate custodian to ensure that the
custodian has received the transfer application and that the transfer
occurs on a timely basis.
b. PROTOTYPE RETIREMENT PLANS. Founders' personnel will provide the
following services on prototype non-TRAC2000 retirement plans (TRAC2000
retirement plans are serviced on behalf of the Fund by a third party,
pursuant to separate contract):
(1) Review previous Adoption Agreements (if applicable) and assist
investors in completing the Founders Adoption Agreement.
(2) Review the Founders Adoption Agreement to ensure compliance with
ERISA and IRS regulations.
(3) Complete the Summary Plan Description for the Founders
Adoption Agreement.
(4) Ensure that employers have all the necessary forms to administer
their plans.
(5) Review employee enrollment forms.
(6) Create documentation which consolidates the information from the
enrollment forms and forward such documentation to the employer.
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<PAGE>
(7) Create and maintain documentation reflecting contributions,
loans, terminations and other types of plan transactions.
(8) Handle all money movements including purchases, exchanges,
redemptions (due to terminations or hardship withdrawals, or loans),
and similar functions.
c. REVIEW OF RETIREMENT ACCOUNTS. Founders' personnel will periodically
review retirement account information and advise investors before reaching
age 70-1/2 that a distribution may be required.
4. QUALITY CONTROL
Founders' personnel will periodically conduct a quality control audit on
telephone purchase, redemption and exchange requests, account changes and
applications received by Founders. Founders will provide quality control
with respect to other aspects of the transfer agent's operations, such as
the transfer agent's resolution of shareholder inquiries. Founders will
perform quality control on retirement plans.
5. TRAINING
Founders will periodically train personnel of IFTC on Founders' products
and services using its own training materials and training workshops
conducted at the offices of IFTC by Founders' customer service
representatives. Founders will continually provide training to its
investor services representatives with regard to processing exchanges and
redemptions, maintaining accounts, liquidating accounts, transferring
accounts, providing "B" notices, and servicing mutual fund accounts.
6. CORRESPONDENCE
a. SHAREHOLDER INQUIRIES. Founders' personnel will respond to shareholder
inquiries received by Founders and to the extent feasible will resolve
such inquiries.
b. GERMAN SHAREHOLDERS. Founders' personnel will provide
specialized service to German shareholders as may be necessary and
appropriate.
c. DUE DILIGENCE. Founders will arrange for the mailing of W-8 and W-9
forms to shareholders to ensure that the Fund is complying with IRS
regulations.
-10-
<PAGE>
d. REQUESTS FOR INFORMATION. Founders will respond to requests it receives
from shareholders for additional prospectuses and account statements.
7. MONITORING CUSTOMER ACCOUNTS
a. TELEPHONE PURCHASES. Founders' personnel will contact shareholders who
have purchased shares by phone but have not paid for such shares within
the allowable settlement period.
b. CANCELLED CHECKS. Founders' personnel will contact shareholders who
have cancelled their checks.
c. DORMANT ACCOUNTS. Founders' personnel will assist in locating
shareholders with dormant accounts.
d. ANNUAL REVIEW. Annually, Founders will review open and closed accounts
and arrange for the purging of certain of these accounts.
e. SHORT-TERM TRADERS. Founders will monitor shareholder accounts
to uncover abuses of the telephone exchange privilege described in the
prospectus.
8. LARGE MONEY MANAGERS
Founders will assign a contact person to communicate with large money
managers and to ensure that their transactions are timely and properly
conducted and their accounts are set up correctly and continually updated.
9. USE OF IFTC'S SYSTEM AND FACILITIES
Founders hereby accepts responsibility for compliance with the
requirements of Section 6.06 of the TA Agreement.
10. OTHER SERVICES
Founders will provide all other customary and reasonable transfer agent
and prototype non-TRAC2000 retirement plan services which are not being
provided to the Fund pursuant to the provisions of this Agreement, the
Collective Agreements, or other agreements to which the Fund is a party.
-11-
FORM OF
AMENDED AND RESTATED
FUND ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of December 31, 1999, in Denver, Colorado, by and
between Dreyfus Founders Funds, Inc., a Maryland corporation (the "Fund"), and
Founders Asset Management LLC, a Delaware limited liability company (hereinafter
referred to as "Founders").
WHEREAS, the Fund is engaged in business as an open-end management
investment company, is registered as such under the Investment Company Act of
1940, as amended (the "Act"), and is authorized to issue shares representing
interests in the separate portfolios of investments listed on Appendix 1 to this
Agreement, which Appendix 1 is incorporated into this Agreement by this
reference (the "Portfolios"); and
WHEREAS, Founders is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser and providing certain other administrative, shareholder
servicing, accounting, and record keeping services to the Fund; and
WHEREAS, the Fund desires to retain Founders to render certain additional
administrative, accounting, and recordkeeping services (the "Services") in the
manner and on the terms and conditions hereinafter set forth; and
WHEREAS, Founders desires to be retained to perform such services on said
terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and Founders agree as follows:
1. SERVICES. The Fund hereby retains Founders to provide the following
Services to the Portfolios:
A. ACCOUNTING SERVICES.
(1) Prepare and maintain, according to generally accepted accounting
principles, general ledgers and financial statements of the Fund and the
Portfolios, including the following:
(a) DAILY PREPARATION AND MAINTENANCE:
(i) Detailed transaction ledgers listing all transactions
affecting the Fund;
-1-
<PAGE>
(ii) Trial balance listing by account the beginning balance,
all debits and credits, and the ending balance;
(iii) Balance sheet, income statement and a portfolio listing
summarizing net assets, net income, capitalization, and realized and
unrealized gains and losses.
(b) MONTHLY PREPARATION AND MAINTENANCE:
Statements of assets and liabilities, operations and changes
in net assets, statements of gains and losses and statements of
sales and redemptions.
(c) SEMI-ANNUAL PREPARATION AND MAINTENANCE:
The same ledgers as are prepared monthly, plus per share
statements, appreciation/ depreciation statements, and fund share
activity statements.
(2) Obtain such data from the Fund's transfer agent(s), custodian, and
investment adviser as is necessary to calculate the net asset value of each
class of shares of each Portfolio in the manner, and at such times and
frequencies, as is required by the Act and by the Fund's prospectus and
statement of additional information.
B. CONTROL AND COMPLIANCE.
(1) Audit certain data and transactions of the Fund's custodian,
transfer agent(s) and investment adviser by engaging in the following:
(a) DAILY AUDIT/RECONCILIATION PROCEDURES:
(i) Reconciliation of the custodian's trust account activity
including cash movement, cash balances, settlement of security
purchases and sales, and settlement of Fund share purchases and
sales;
(ii) Reconciliation of the transfer agents' activity in regard
to Fund share movements and "as of" transactions;
(iii) Monitoring of the investment adviser's trading activity,
including compliance and brokerage allocations.
(b) MONTHLY AUDIT/RECONCILIATION PROCEDURES:
-2-
<PAGE>
(i) Audit of the custodian's holding of Fund assets and assets
in transit, audit of the custodian's fees charged to the Fund, and
audit of credits for the Fund's compensating balances;
(ii) Audit of the transfer agents' activity concerning
dividend and redemption payouts and of the transfer agents' fees
charged to the Fund;
(iii) Audit of the investment adviser's fees charged to the
Funds, including servicing and accounting fees.
(c) MONITOR COMPLIANCE WITH THE ACT:
(i) Daily monitoring of the investment adviser's trading activity,
including compliance and brokerage allocation and commissions;
(ii) Periodic monitoring of disclosures and record keeping.
C. REPORTING AND ANALYSIS.
(1) Provide regulatory (Securities and Exchange Commission),
shareholder and other miscellaneous reporting and, in particular, prepare
and maintain the following required books, records, and other documents:
(a) journals containing daily itemized records of all
Portfolio securities purchases and sales, receipts and deliveries of
securities, receipts and disbursements of cash, and all other debits
and credits, in the form required by Rule 31a-1(b)(1) under the Act;
(b) general and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts, in the
form required by Rules 31a-1(b)(1)(i) - (iii) under the Act;
(c) a securities record or ledger reflecting separately for
each portfolio security as of trade date all "long" and "short"
positions, if any, carried by the Portfolios for the accounts of the
Portfolios, and showing the location of all securities long and the
off-setting positions of all securities short, in the form required
by Rule 31a-1(b)(3) under the Act;
(d) a record of all Portfolio purchases or sales, in the form
required by Rule 31a-1(b)(6) under the Act;
(e) a record of all puts, calls, spreads, straddles and other
options, if any, in which the Portfolios have any direct or indirect
interest or which the Portfolios have granted or guaranteed, in the
form required by Rule 31a-1(b)(7) under the Act;
-3-
<PAGE>
(f) a record of the proof of money balances in all ledger
accounts maintained pursuant to this Agreement, in the form required
by Rule 31a-1(b)(8) under the Act;
(g) price make-up sheets and such records as are necessary to
reflect the determination of the net asset values of each class of
the Portfolios;
(h) Regulatory: semi-annual and annual Form N-SARs and
quarterly Form 13-Fs.
(i) Shareholder: semi-annual and annual statements of
assets and liabilities, operations, changes in net assets, per
share data, appreciation/depreciation, and share activity; and
(j) Media: weekly, monthly, quarterly, semi- annual and annual
statistical data of the Funds, to be provided to newsletters and
other investment industry publications such as ICI, Donahue, Lipper
and the NASD.
The foregoing books and records shall be maintained and preserved by
Founders in accordance with and for the time periods specified by applicable
rules and regulations, including Rule 31a-2 under the Act. All such books and
records shall be the property of the Fund and, upon request therefor, Founders
shall surrender to the Fund such of the books and records so requested.
2. STAFF MAINTENANCE. Founders shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the performance
of its obligations under this Agreement. Without limiting the generality of the
foregoing, such staff and personnel may include officers of Founders and persons
employed or otherwise retained by Founders to provide or assist in providing
services to the Fund other than those Services to be provided pursuant to this
Agreement.
3. FACILITIES. Founders shall, at its own expense, provide such office space,
facilities and equipment (including, but not limited to, computer equipment,
communication lines, and supplies) and such clerical help and other services as
shall be necessary to provide the Services to the Portfolios. In addition,
Founders may arrange on behalf of the Fund to obtain pricing information
regarding the Portfolios' investment securities from such company or companies
as are approved by a majority of the Fund's board of directors. The Fund shall
be financially responsible to such company or companies for the reasonable cost
of providing such pricing information.
-4-
<PAGE>
4. FUND INFORMATION. The Fund will, from time to time, furnish or otherwise make
available to Founders such information relating to the business and affairs of
the Portfolios as Founders may reasonably require in order to discharge its
duties and obligations hereunder.
5. FEES. For the services rendered and facilities furnished by Founders under
this Agreement, the Fund shall pay to Founders a fee computed on a daily basis
and paid on a monthly basis. The fee shall be computed at the annual rate of
0.06% of the daily net assets of the Fund from $0 to $500 million and at the
annual rate of 0.02% of the daily net assets of the Fund in excess of $500
million. Founders shall also be reimbursed for all out-of-pocket expenses
incurred by it in performing its services pursuant to the Agreement. For
purposes of each daily calculation of this fee, the most recently calculated net
asset value of the Fund, as determined by a valuation made in accordance with
the Fund's procedure for calculating the net asset value of each class of each
Portfolio as described in the Fund's prospectus and/or statement of additional
information, shall be used. During any period when the determination of the
Fund's net asset value is suspended by the directors of the Fund, the net asset
value of the Fund as of the last business day prior to such suspension shall,
for the purpose of this Paragraph 5, be deemed to be the net asset value at the
close of each succeeding business day until it is again determined.
6. ACCESS TO FOUNDERS' RECORDS. Founders will permit representatives of the
Fund, including the Fund's independent auditors, to have reasonable access to
the personnel and records of Founders in order to enable such representatives to
monitor the quality of services being provided and the level of fees due
Founders pursuant to this Agreement. In addition, Founders shall promptly
deliver to the board of directors of the Fund such information as may reasonably
be requested from time to time to permit the board of directors to make an
informed determination regarding continuation of this Agreement and the payments
contemplated to be made hereunder.
7. LIABILITY. Founders shall not be liable to the Fund for any action taken or
omitted to be taken by Founders or its employees, agents or contractors in
carrying out the provisions of this Agreement if such action was taken or
omitted in good faith and without gross negligence or willful misconduct on the
part of Founders or its employees, agents or contractors.
8. INDEMNIFICATION BY THE FUND. The Fund shall indemnify Founders and hold it
harmless from and against any and all losses, damages, and expenses, including
reasonable attorneys' fees and expenses, incurred by Founders which result from:
(i) any claim, action, suit or proceeding in connection with Founders' entry
into or performance of this Agreement; (ii) any action taken or omission to act
committed by Founders in the performance of its obligations hereunder; or (iii)
any action of Founders upon instructions reasonably believed in good faith by
-5-
<PAGE>
it to have been executed by a duly authorized officer or representative of the
Fund; PROVIDED, HOWEVER, that Founders shall not be entitled to such
indemnification in respect of actions or omissions constituting gross negligence
or willful misconduct on the part of Founders or its employees, agents or
contractors. Before confessing any claim against it which may be subject to
indemnification by the Fund hereunder, Founders shall give the Fund reasonable
opportunity to defend against such claim in its own name or in the name of
Founders.
9. INDEMNIFICATION BY FOUNDERS. Founders shall indemnify the Fund and hold it
harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees and expenses, incurred by the Fund which result from:
(i) Founders' lack of good faith in performing its obligations hereunder; or
(ii) the gross negligence or willful misconduct of Founders or its employees,
agents or contractors in connection herewith. The Fund shall not be entitled to
such indemnification in respect of actions or omissions constituting gross
negligence or willful misconduct on the part of the Fund or its employees,
agents or contractors other than Founders, unless such gross negligence or
willful misconduct results from or is accompanied by gross negligence or willful
misconduct on the part of Founders, any affiliated person of Founders, or any
affiliated person of an affiliated person of Founders. Before confessing any
claim against it which may be subject to indemnification hereunder, the Fund
shall give Founders reasonable opportunity to defend against such claim in its
own name or in the name of the Fund.
10. EFFECT OF AGREEMENT. Nothing herein contained shall be deemed to require the
Fund to take any action contrary to its Articles of Incorporation or its By-Laws
or any applicable law, regulation or order to which it is subject or by which it
is bound, or to relieve or deprive the directors of the Fund and the Fund of
their overall responsibility for and control of the conduct of the business and
affairs of the Fund.
11. TERM AND TERMINATION. This Agreement shall remain in effect until May 31,
2000 and from year to year thereafter provided such continuance is approved at
least annually by the vote of a majority of the directors of the Fund who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that (a) the Fund may, at
any time and without the payment of any penalty, terminate this Agreement upon
ninety days written notice to Founders; (b) the Agreement shall immediately
terminate in the event of its assignment (within the meaning of the Act and the
Rules thereunder) unless the board of directors of the Fund approves such
assignment; and (c) Founders may terminate this Agreement without payment of
penalty on ninety days written notice to the Fund. Any notice
-6-
<PAGE>
under this Agreement shall be given in writing, addressed and delivered, or
mailed post-paid, to the other party at the principal office of such party.
12. APPLICATION OF LAW. This Agreement shall be construed in accordance with the
laws of the State of Colorado and the applicable provisions of the Act. To the
extent the applicable law of the State of Colorado or any of the provisions
herein conflict with the applicable provisions of the Act, the latter shall
control.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the day and year first above written.
DREYFUS FOUNDERS FUNDS, INC.
By: _______________________________
Marie E. Connolly, President
FOUNDERS ASSET MANAGEMENT LLC
By: _______________________________
Richard W. Sabo, President
-7-
<PAGE>
APPENDIX 1
TO
AMENDED AND RESTATED
FUND ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT
Dreyfus Founders Balanced Fund
Dreyfus Founders Discovery Fund
Dreyfus Founders Focus Fund
Dreyfus Founders Government Securities Fund
Dreyfus Founders Growth Fund
Dreyfus Founders Growth and Income Fund
Dreyfus Founders International Equity Fund
Dreyfus Founders Mid-Cap Growth Fund
Dreyfus Founders Money Market Fund
Dreyfus Founders Passport Fund
Dreyfus Founders Worldwide Growth Fund
-8-
DREYFUS FOUNDERS FUNDS, INC.
SHAREHOLDER SERVICES PLAN
INTRODUCTION: Dreyfus Founders Funds, Inc. (the "Fund") is registered as
an open-end management investment company under the Investment Company Act of
1940 (the "Act") and is authorized to issue shares of capital stock in separate
series, with each series representing interests in a separate portfolio of
securities and other assets. The Fund has adopted this Shareholder Services Plan
(the "Plan") under which the Fund will pay the Fund's distributor (the
"Distributor") for providing services to shareholders of each series of the
Fund, and each class of shares of each series, set forth on Exhibit A hereto, as
such Exhibit may be revised from time to time (each, a "Class"). The Distributor
is permitted to pay certain financial institutions, securities dealers and other
industry professionals (collectively, "Service Agents") in respect of these
services. The Plan is not to be adopted pursuant to Rule 12b-1 under the Act,
and the fee under the Plan is intended to be a "service fee" as defined under
the Conduct Rules of the National Association of Securities Dealers, Inc.
THE PLAN: The Plan is as follows:
1. The Fund shall pay to the Distributor a fee at the annual rate set
forth on Exhibit A in respect of the provision of personal services to
shareholders and/or the maintenance of shareholder accounts. The Distributor
shall determine the amounts to be paid to Service Agents and the basis on which
such payments will be made. Payments to a Service Agent are subject to
compliance by the Service Agent with the terms of any related Plan agreement
between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable under this Plan, the
value of the Fund's net assets attributable to each Class shall be computed in
the manner specified in the Fund's charter documents, prospectus and statement
of additional information as then in effect for the computation of the Fund's
net assets attributable to such Class.
3. The Board shall be provided, at least quarterly, with a written report
of all amounts expended pursuant to this Plan. The report shall state the
purpose for which the amounts were expended.
4. As to each Class, this Plan will become effective at such time as is
specified by the Fund's Board, provided that the Plan is approved with respect
to such Class by a majority of the Board members, including a majority of the
Board members who are not "interested persons" (as defined in the Act) of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this Plan, pursuant to
a vote cast in person at a meeting called for the purpose of voting on the
approval of this Plan.
5. As to each Class, this Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance with its terms,
and thereafter shall continue automatically for successive annual periods,
provided such continuance is approved at least annually in the manner provided
in paragraph 4 hereof.
<PAGE>
6. As to each Class, this Plan may be amended at any time by the Board,
provided that any material amendments of the terms of this Plan shall become
effective only upon approval as provided in paragraph 4 hereof.
7. As to each Class, this Plan is terminable without penalty at any time
by vote of a majority of the Board members who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into in
connection with this Plan.
Dated: December 31, 1999
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<PAGE>
EXHIBIT A
Fee as a
percentage of
average daily
Names of Series and Classes net assets
- --------------------------- -------------
Dreyfus Founders Balanced Fund
- ------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders Discovery Fund
- -------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders Focus Fund
- ---------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders Growth Fund
- ----------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders Growth and Income Fund
- ---------------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders International Equity Fund
- ------------------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
A-1
<PAGE>
Dreyfus Founders Mid-Cap Growth Fund
- ------------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders Passport Fund
- ------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
Dreyfus Founders Worldwide Growth Fund
- --------------------------------------
Class A Shares 0.25%
Class B Shares 0.25%
Class C Shares 0.25%
Class T Shares 0.25%
A-2
[LOGO] MOYE, GILES, O'KEEFE,
VERMEIRE & GORRELL LLP
ATTORNEYS
29TH FLOOR
1225 SEVENTEENTH STREET EDWARD F. O'KEEFE, P.C.
DENVER, COLORADO 80202-5529 DIRECT DIAL (303) 292-7912
(303) 292-2900 FAX (303) 292-4510
HTTP://WWW.MGOVG.COM
September 27, 1999
Founders Funds, Inc.
2930 East Third Avenue
Denver, Colorado 80206
Gentlemen:
This is in response to your request for our opinion as to the legality
of the registration of an indefinite number of shares of capital stock ($0.01
par value per share) of Founders Funds, Inc. having been registered with the
Securities and Exchange Commission under the Investment Company Act of 1940
and the Securities Act of 1933, as amended (Form N-1A). This share
registration has been effected pursuant to the provisions of Rule 24f-2 under
Section 24(f) of the Investment Company Act of 1940.
We have examined the articles of incorporation of Founders Funds, Inc.
as filed for record with the State Department of Assessments and Taxation of
the State of Maryland on June 19, 1987; articles of amendment and articles
supplementary to the articles of incorporation as filed from time to time;
the bylaws; the minute book setting forth, among other things, the actions
taken by the board of directors authorizing the issuance and sale of the
corporation's capital stock and related acts and procedures; the registration
statement including all exhibits thereto; and have made such other
examination as deemed necessary in the premises.
Based upon our examination, we are of the opinion that Founders Funds,
Inc. is a corporation duly organized and existing under and by virtue of the
laws of the State of Maryland, with full power to issue its shares of capital
stock. Said shares, up to the maximum amount hereinafter indicated, when
issued and sold in the manner and on the terms set forth in the registration
statement, will be legally and validly issued, fully paid and non-assessable
shares of the corporation of the par value of $0.01 per share. The maximum
number of shares which has been authorized by the corporation, and thus the
maximum number which may legally and validly be issued, is ten billion shares
of such capital stock.
<PAGE>
MOYE, GILES, O'KEEFE,
VERMEIRE & GORRELL LLP
Founders Funds, Inc.
September 27, 1999
Page 2
We hereby consent to the use of this opinion in the registration
statement and further consent to the reference to our name therein.
Very truly yours,
MOYE, GILES, O'KEEFE,
VERMEIRE & GORRELL LLP
By: Edward F. O'Keefe, P.C.
By: /S/ Edward F. O'Keefe
------------------------------
Edward F. O'Keefe, President
EFO/ljm
F:\f\FOUNDERS\LETTERS\share-opinion.wpd
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 65 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 8, 1999, relating to the financial
statements and financial highlights appearing in the December 31, 1998 Annual
Report to Shareholders of Founders Funds, Inc. (now known as Dreyfus Founders
Funds, Inc.), which is also incorporated by reference into the Registration
Statement. We also consent to the references to us under the heading "Financial
Highlights" in the Prospectuses and under the headings "Independent Accountants"
and "Financial Statements" in the Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
September 30, 1999
AMENDED AND RESTATED
DREYFUS FOUNDERS FUNDS, INC.
RULE 12B-1 DISTRIBUTION PLAN
(FOR CLASS F SHARES ONLY)
1. THE PLAN. Dreyfus Founders Funds, Inc. (the "Fund") is registered as an
open-end management investment company under the Investment Company Act of 1940
(the "Act") and is authorized to issue shares of capital stock in separate
series, with each series representing interests in a separate portfolio of
securities and other assets. Pursuant to Section 12(b) of the Act and the rules
and regulations thereunder as the same may be issued or amended from time to
time, and specifically pursuant to Rule 12b-1 (the "Rule"), the Fund has adopted
this Distribution Plan (the "Plan"). The Plan is designed to comply with the
requirements of the Rule. The Plan pertains to the Class F shares of each series
of the Fund set forth on Exhibit A attached hereto, as such Exhibit may be
revised from time to time (each, a "Series").
2. AUTHORIZED PAYMENTS. In addition to the expenses described in Section 8
below, while the Plan is in effect, each Series is authorized to reimburse the
Fund's distributor (the "Distributor") for out-of-pocket costs and expenses
actually paid by the Distributor for the distribution of the Class F shares of
that Series issued by the Fund, but only to the extent such payments do not
exceed an annual rate of 0.25 of 1 percent of the average daily net assets of
Class F of such Series, or such lesser amount as a majority of the Board of
Directors of the Fund (the "Board of Directors"), including a majority of the
Independent Directors (as defined herein), may determine. Such reimbursements
shall be allocated in their entirety to Class F of the applicable Series. A
majority of the Board of Directors who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
("Independent Directors") may from time to time reduce the amount of such
reimbursements or may suspend the operation of this Section 2 for such period or
periods as they may determine. Reimbursement contemplated under this Section
shall be made at any time within twelve months after the date on which the
payments were made or, in the case of the payments described in subsection (a)
below, at any time within twelve months after the end of the month for which the
payments are being made. Reimbursements shall be made upon receipt by the Fund
of a written expense report detailing the payments qualifying for such
reimbursement and the purposes thereof. Payments and expenses permitted to be
reimbursed by each Series pursuant to this Section shall include and be limited
to the following:
(a) payments to any securities dealer, financial institution or other
person (other than the Distributor) for their assistance with
respect to the distribution of the Class F shares of that Series,
-1-
<PAGE>
and payments to any financial intermediary for providing
administrative and accounting services with respect to the
holders of Class F shares of that Series, provided each recipient
of such payment has entered into a written agreement with the
Distributor, the form of which in the opinion of legal counsel to
the Distributor (and, if the Fund is a party to such agreement,
legal counsel to the Fund), complies with, and is not in
contravention of, the Plan; and
(b) expenses of promoting the sale of Class F shares of that Series,
including preparation, printing and mailing of prospectuses,
reports to holders of the Class F shares of that Series, sales
literature and other promotional material to prospective
investors; direct mail solicitation; television, radio,
newspaper, magazine and other advertising; public relations;
compensation of sales personnel and persons who render
shareholder support services; and such other expenses as may be
approved from time to time by the Board of Directors, including a
majority of the Independent Directors, and as may be permitted by
applicable statute, rule or regulation.
3. APPROVAL AND CONTINUANCE. This Plan previously was approved with respect
to the Dreyfus Founders Balanced Fund, Dreyfus Founders Discovery Fund, Dreyfus
Founders Focus Fund, Dreyfus Founders Government Securities Fund, Dreyfus
Founders Growth Fund, Dreyfus Founders Growth and Income Fund, Dreyfus Founders
International Equity Fund, Dreyfus Founders Mid-Cap Growth Fund, Dreyfus
Founders Passport Fund, and Dreyfus Founders Worldwide Growth Fund by a majority
of the Board of Directors and by a majority of the Independent Directors, by
votes cast in person at meetings called for the purpose of voting on the Plan
and by votes of at least a majority of the then-outstanding voting securities of
each such Series. This Plan shall not take effect with respect to a new Series
until it has been approved by a majority of the Board of Directors and by a
majority of the Independent Directors, by votes cast in person at a meeting
called for the purpose of voting on the Plan and by votes of at least a majority
of the outstanding voting securities of the Series. The Plan shall continue in
effect with respect to each Series for so long as such continuance is
specifically approved at least annually by a majority of the Board of Directors
and a majority of the Independent Directors, by votes cast at a meeting called
for the purpose of voting on such continuance.
4. REPORTS. Any person authorized to direct the disposition of moneys paid
or payable pursuant to the Plan shall furnish at least quarterly to the Board of
Directors, and the Board of Directors shall review, a written report as to the
amounts paid during each quarter and the purposes for which such amounts were
paid, and such other information as the Board of Directors or the Independent
Directors may reasonably request from time to time.
-2-
<PAGE>
5. RECORDS. The Fund shall preserve copies of the Plan and all reports
made pursuant to Section 4 above for a period of not less than six years from
the date of the Plan and reports and shall preserve the Plan and reports for the
first two years in an easily accessible place.
6. SELECTION AND NOMINATION OF DIRECTORS. While the Plan is in effect, the
selection and nomination of those Directors who are not interested persons of
the Fund shall be committed to the discretion of the Independent Directors.
7. EXPENSE LIMITATION. Whether or not any expenditure under the Plan is
subject to a state expense limitation shall depend upon the nature of the
expenditure and the terms of the state law or regulation imposing the
limitation. Any expenditure subject to such limitation shall be included in the
total expenses of Class F of the applicable Series for purposes of determining
compliance with such limitation.
8. OTHER EXPENSES OF THE FUND AND THE FUND'S INVESTMENT ADVISER. To the
extent that any payments made by the Fund on behalf of a Series pursuant to its
investment advisory agreement with Founders Asset Management LLC ("Founders")
are considered to be "primarily intended to result in the sale of shares" of
Class F of that Series within the meaning of the Rule, such payments when made
by the Fund pursuant to the investment advisory agreement are authorized under
the Plan. Any distribution expenses relating to the sale of shares of any Series
incurred by Founders are in addition to distribution expenses incurred by the
Fund pursuant to Section 2 above. To the extent that any management fee paid by
the Fund pursuant to its investment advisory agreement with Founders might be
considered to be indirectly financing any activity which is "primarily intended
to result in the sale of shares" of Class F of any Series within the meaning of
the Rule, the payment of such management fee is authorized under the Plan.
Adoption of the Plan shall not be deemed to mean that any payments made by the
Fund and authorized by the Plan pursuant to this Section 8 constitute
distribution expenses within the meaning of the Rule, or that payment of
distribution expenses by Founders constitutes the indirect payment of
distribution expenses by the Fund.
9. AMENDMENT AND TERMINATION. The Plan may not be amended to increase
materially the amount of distribution expenses to be paid by a Series with
respect to its Class F shares as described in Section 2 above without the
approval of a majority of the outstanding voting securities of Class F of that
Series. All material amendments to the Plan must be approved by a majority of
the Board of Directors and a majority of the Independent Directors, by votes
cast in person at a meeting called for the purpose of voting on such amendment.
Amendments required to conform the Plan to changes in the Rule shall not be
deemed to be material amendments.
-3-
<PAGE>
The Plan may be terminated by a Series at any time by the vote of a
majority of the Independent Directors or by the vote of a majority of the
outstanding voting securities of Class F of that Series. Upon termination, the
Series will not reimburse the Distributor for any expenses incurred by the
Distributor subsequent to the date of termination which otherwise would have
been reimbursed under the Plan. The Series will, however, reimburse the
Distributor for any such expenses incurred prior to the date of termination, but
only to the extent that such expenses do not exceed 0.25 of 1 percent of the
average daily net assets of Class F of that Series in the calendar year of
termination (or such lesser amount as may have been determined prior to
termination by the Board of Directors, including the Independent Directors, in
accordance with Section 2 of the Plan).
10. DEFINITIONS. As used in the Plan, the terms "interested person" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings specified in the Act and the rules and regulations
thereunder.
Effective December 31, 1999.
-4-
<PAGE>
EXHIBIT A
TO
DREYFUS FOUNDERS FUNDS, INC.
RULE 12B-1 DISTRIBUTION PLAN
(FOR CLASS F SHARES ONLY)
Dreyfus Founders Balanced Fund
Dreyfus Founders Discovery Fund
Dreyfus Founders Focus Fund
Dreyfus Founders Government Securities Fund
Dreyfus Founders Growth Fund
Dreyfus Founders Growth and Income Fund
Dreyfus Founders International Equity Fund
Dreyfus Founders Mid-Cap Growth Fund
Dreyfus Founders Passport Fund
Dreyfus Founders Worldwide Growth Fund
-5-
DREYFUS FOUNDERS FUNDS, INC.
DISTRIBUTION PLAN FOR CLASSES B, C AND T
1. Dreyfus Founders Funds, Inc. (the "Fund") is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"Act") and is authorized to issue shares of capital stock in separate series,
with each series representing interests in a separate portfolio of securities
and other assets. Pursuant to Section 12(b) of the Act and the rules and
regulations thereunder as the same may be issued or amended from time to time,
and specifically pursuant to Rule 12b-1 (the "Rule"), the Company has adopted
this Distribution Plan (the "Plan"). The Plan is designed to comply with the
requirements of the Rule. The Plan pertains to each series of the Fund, and each
class of shares of each series, set forth on Exhibit A hereto, as such Exhibit
may be revised from time to time (each, a "Class"). Under the Plan, the Fund
pays the Fund's distributor (the "Distributor") for distributing shares of each
Class. The Plan is as follows:
2. The Fund shall pay to the Distributor a fee for distribution services
in respect of each Class at the applicable annual rate set forth on Exhibit A.
Such services may include payments by the Distributor to compensate banks,
broker/dealers and other financial institutions that have entered into written
agreements with the Distributor with respect to advertising, marketing and other
distribution services for the applicable Class of shares.
3. For the purposes of determining the fees payable under this Plan, the
value of the Fund's net assets attributable to each Class shall be computed in
the manner specified in the Fund's charter documents, prospectus and statement
of additional information as then in effect for the computation of the value of
the Fund's net assets attributable to such Class.
4. The Fund's Board shall be provided, at least quarterly, with a written
report of all amounts expended pursuant to this Plan. The report shall state the
purpose for which the amounts were expended.
5. As to each Class, this Plan will become effective at such time as is
specified by the Fund's Board, provided that the Plan is approved with respect
to such Class by a majority of the Board members, including a majority of the
Board members who are not "interested persons" (as defined in the Act) of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this Plan (the
"Independent Directors"), pursuant to a vote cast in person at a meeting called
for the purpose of voting on the approval of this Plan.
6. As to each Class, this Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance with its terms,
and thereafter shall continue automatically for successive annual periods,
provided such continuance is approved at least annually in the manner provided
in paragraph 5 hereof.
<PAGE>
7. As to each Class, this Plan may be amended at any time by the Fund's
Board, provided that (a) any amendment to increase materially the costs which
such Class may bear pursuant to this Plan shall be effective only upon approval
by a vote of the holders of a majority of the outstanding shares of such Class,
and (b) any material amendments of the terms of this Plan shall become effective
only upon approval as provided in paragraph 5 hereof.
8. As to each Class, this Plan is terminable without penalty at any time
by (a) vote of a majority of the Independent Directors, or (b) vote of the
holders of a majority of the outstanding shares of such Class.
9. While the Plan is in effect, the selection and nomination of those
Board members who are Independent Directors shall be committed to the discretion
of the Independent Directors.
10. To the extent that any payments made by the Fund on behalf of a Class
pursuant to its investment advisory agreement with Founders Asset Management LLC
("Founders") are considered to be "primarily intended to result in the sale of
shares" of the Class within the meaning of the Rule, such payments, when made by
the Fund pursuant to the investment advisory agreement, are authorized under the
Plan. Any distribution expenses relating to the sale of shares of any Class
incurred by Founders are in addition to distribution fee paid by the Fund
pursuant to paragraph 2 above. To the extent that any management fee paid by the
Fund pursuant to its investment advisory agreement with Founders might be
considered to be indirectly financing any activity which is "primarily intended
to result in the sale of shares" of any Class within the meaning of the Rule,
the payment of such management fee is authorized under the Plan. Adoption of the
Plan shall not be deemed to mean that any payments made by the Fund and
authorized by the Plan pursuant to this paragraph 10 constitute distribution
expenses within the meaning of the Rule, or that payment of distribution
expenses by Founders constitutes the indirect payment of distribution expenses
by the Fund.
11. The Fund shall preserve copies of the Plan and all reports made
pursuant to paragraph 4 above for a period of not less than six years from the
date of the Plan and such reports, respectively, and shall preserve the Plan and
such reports for the first two years in an easily accessible place.
Dated: December 31, 1999
2
<PAGE>
EXHIBIT A
Fee as a Percentage of
Names of Series and Classes Average Daily Net Assets
- --------------------------- ------------------------
Dreyfus Founders Balanced Fund
- ------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders Discovery Fund
- -------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders Focus Fund
- ---------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders Growth Fund
- ----------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders Growth and Income Fund
- ---------------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders International Equity Fund
- ------------------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders Mid-Cap Growth Fund
- ------------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
Dreyfus Founders Passport Fund
- ------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
A-1
<PAGE>
Dreyfus Founders Worldwide Growth Fund
- --------------------------------------
Class B 0.75%
Class C 0.75%
Class T 0.25%
A-2
DREYFUS FOUNDERS FUNDS, INC.
RULE 18F-3 PLAN
Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940
Act"), requires that the Board of Directors of an investment company desiring to
offer multiple classes pursuant to said Rule adopt a plan setting forth the
separate arrangements and expense allocations of each class, and any related
conversion features or exchange privileges.
Dreyfus Founders Funds, Inc. (the "Company") desires to offer multiple
classes of shares (each, a "Class") of the Company's series portfolios set forth
on Schedule A hereto (each, a "Fund"), as such Schedule may be amended from time
to time, in accordance with Rule 18f-3. The Board, including a majority of the
non-interested Board members of the Company, has determined that the following
plan is in the best interests of each Class individually and each Fund as a
whole:
1. CLASS DESIGNATION: The shares of each Fund, other than the Dreyfus
Founders Money Market Fund and the Dreyfus Founders Government Securities Fund,
shall be divided into the respective Classes listed on Schedule A. As indicated
on Schedule A, the Dreyfus Founders Money Market Fund and the Dreyfus Founders
Government Securities Fund each shall consist of one class, Class F.
2. DIFFERENCES IN SERVICES: The services offered to shareholders of each
Class shall be substantially the same, except that Right of Accumulation and
Letter of Intent shall be available only to holders of Class A and Class T
shares and
-1-
<PAGE>
Reinvestment Privilege shall be available only to holders of Class A, Class B
and Class T shares.
RIGHT OF ACCUMULATION shall mean the right of an investor to add the value
of any Class A, Class B, Class C or Class T shares in a Fund or certain other
products made available by the Funds' distributor that the investor already owns
to the amount of the investor's next purchase of Class A or Class T shares for
purposes of calculating the sales charge, as more fully explained in the Funds'
prospectus and statement of additional information.
LETTER OF INTENT shall mean the ability of an investor to purchase Class A
or Class T shares over a 13-month period and receive the same sales charge as if
all shares had been purchased at once, as more fully explained in the Funds'
prospectus and statement of additional information.
REINVESTMENT PRIVILEGE shall mean the ability of a holder of Class A,
Class B or Class T shares to redeem shares and, within 45 days after the date of
redemption, purchase up to the number of shares redeemed at the current share
price without any sales charge (or, if a CDSC (as defined below) was paid, with
the CDSC credited back to the shareholder's account), as more fully explained in
the Funds' prospectus and statement of additional information.. This privilege
may be used by a shareholder only once.
3. DIFFERENCES IN DISTRIBUTION ARRANGEMENTS: Class A shares shall be
offered with a front-end sales charge, as such term is defined under the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD Conduct
Rules"). A contingent deferred sales charge (a "CDSC"), as such term is defined
under the
-2-
<PAGE>
NASD Conduct Rules, may be assessed on certain redemptions of Class A
shares purchased without an initial sales charge as part of an investment of $1
million or more. The amount of the sales charge, and the amount of and
provisions relating to the CDSC pertaining to the Class A shares, are set forth
on Schedule B hereto.
Class B shares shall not be subject to a front-end sales charge, but shall
be subject to a CDSC and shall be charged an annual distribution fee under a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the fees under the
Distribution Plan pertaining to the Class B shares, are set forth on Schedule C
hereto.
Class C shares shall not be subject to a front-end sales charge, but shall
be subject to a CDSC and shall be charged an annual distribution fee under a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the fees under the
Distribution Plan pertaining to the Class C shares, are set forth on Schedule D
hereto.
Class F shares shall be charged an annual distribution fee under a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of the fees under the Distribution Plan pertaining to the Class F shares is set
forth on Schedule E hereto. Class F shares shall be offered at net asset value
only to persons or entities who have held shares of any Fund continuously since
December 31, 1999.
Class R shares shall be offered at net asset value only to bank trust
departments and other financial service providers acting on behalf of customers
having a qualified trust or investment account or relationship at such
institution, or to customers who have
-3-
<PAGE>
received and hold shares of the Fund distributed to them by virtue of such an
account or relationship.
Class T shares shall be offered with a front-end sales charge, and a CDSC
may be assessed on certain redemptions of Class T shares purchased without an
initial sales charge as part of an investment of $1 million or more. Class T
shares also shall be charged an annual distribution fee under a Distribution
Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The amount of the sales
charge, the amount of and provisions relating to the CDSC and the amount of the
fees under the Distribution Plan pertaining to the Class T shares are set forth
on Schedule F hereto.
Class A, Class B, Class C and Class T shares shall be available only to
clients of banks, brokers, dealers and other financial institutions, except that
full-time or part-time employees or members of the Board of Managers of Founders
Asset Management LLC ("Founders") or any of its affiliates or subsidiaries,
Board members of a fund advised by Founders, including members of the Company's
Board, or the spouse or minor child of any of the foregoing may purchase Class A
shares directly through the Funds' Distributor.
Class A, Class B, Class C and Class T shares shall be subject to an annual
service fee at the rate of 0.25% of the value of the average daily net assets of
such Class pursuant to a Shareholder Services Plan.
4. EXPENSE ALLOCATION: The following expenses shall be allocated, to the
extent practicable, on a Class-by-Class basis: (a) fees under a Distribution
Plan and Shareholder Services Plan; (b) printing and postage expenses related to
preparing and distributing materials, such as shareholder reports, prospectuses
and proxies, to current
-4-
<PAGE>
shareholders of a specific Class; (c) Securities and Exchange Commission and
Blue Sky registration fees incurred by a specific Class; (d) the expense of
administrative personnel and services as required to support the shareholders of
a specific Class; (e) litigation or other legal expenses relating solely to a
specific Class; (f) transfer agent fees identified by the Fund's transfer agent
as being attributable to a specific Class; (g) Board members' fees incurred as a
result of issues relating to a specific Class; and (h) any other expenses that
the Board determines shall be allocated on a Class-by-Class basis.
5. CONVERSION FEATURES: Class B shares shall automatically convert to
Class A shares after a specified period of time after the date of purchase as
set forth on Schedule G hereto, without the imposition of any sales charge, fee
or other charge, based on the relative net asset value of each such Class. No
other Class shall be subject to any automatic conversion feature.
6. EXCHANGE PRIVILEGES: Shares of a Class shall be exchangeable only for
(a) shares of the same Class of other Funds or other investment companies
managed or administered by Founders and (b) shares of certain other investment
companies specified from time to time by the Company's Board.
DATED: DECEMBER 31, 1999
-5-
<PAGE>
SCHEDULE A
Names of Funds and Classes Date Plan Adopted
- -------------------------- -----------------
Dreyfus Founders Balanced Fund August 13, 1999
- ------------------------------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Discovery Fund August 13, 1999
- -------------------------------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Focus Fund August 13, 1999
- ---------------------------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Government August 13, 1999
- ---------------------------
Securities Fund
- ---------------
Class F Shares
Dreyfus Founders Growth Fund August 13, 1999
- ----------------------------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Growth August 13, 1999
- -----------------------
and Income Fund
- ---------------
Class A Shares
Class B Shares
A-1
<PAGE>
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders International August 13, 1999
- -------------------------------
Equity Fund
- -----------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Mid-Cap August 13, 1999
- -------------------------
Growth Fund
- -----------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Money Market Fund August 13, 1999
- ----------------------------------
Class F Shares
Dreyfus Founders Passport Fund August 13, 1999
- ------------------------------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
Dreyfus Founders Worldwide August 13, 1999
- ---------------------------
Growth Fund
- -----------
Class A Shares
Class B Shares
Class C Shares
Class F Shares
Class R Shares
Class T Shares
A-2
<PAGE>
SCHEDULE B
FRONT-END SALES CHARGE--CLASS A SHARES --The public offering price for Class A
shares for all Funds shall be the net asset value per share of Class A plus a
sales load as shown below:
-------------------------
TOTAL SALES LOAD
-------------------------
AS A % OF AS A % OF
OFFERING NET ASSET
PRICE PER VALUE PER
AMOUNT OF TRANSACTION SHARE SHARE
--------------------- -------------------------
Less than $50,000....................... 5.75 6.10
$50,000 to less than $100,000........... 4.50 4.70
$100,000 to less than $250,000.......... 3.50 3.60
$250,000 to less than $500,000.......... 2.50 2.60
$500,000 to less than $1,000,000........ 2.00 2.00
$1,000,000 or more...................... 0 0
CONTINGENT DEFERRED SALES CHARGE--CLASS A SHARES--A CDSC of 1.00% shall be
assessed at the time of redemption of Class A shares purchased without an
initial sales charge as part of an investment of at least $1 million and
redeemed within one year of purchase. The terms contained in Schedule C
pertaining to the CDSC assessed on redemptions of Class B shares (other than the
amount of the CDSC and its time periods), including the provisions for waiving
the CDSC, shall be applicable to the Class A shares subject to a CDSC. Letter of
Intent and Right of Accumulation shall apply to purchases of Class A shares
subject to a CDSC.
REINVESTMENT PRIVILEGE--Class A shares shall have the benefit of the
reinvestment privilege as set forth in the Fund's prospectus which offers Class
A shares.
B-1
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SCHEDULE C
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES--A CDSC payable to the Fund's
Distributor shall be imposed on any redemption of Class B shares which reduces
the current net asset value of such Class B shares to an amount which is lower
than the dollar amount of all payments by the redeeming shareholder for the
purchase of Class B shares of the Fund held by such shareholder at the time of
redemption. No CDSC shall be imposed to the extent that the net asset value of
the Class B shares redeemed does not exceed (i) the current net asset value of
Class B shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of the shareholder's
Class B shares above the dollar amount of all payments for the purchase of Class
B shares of the Fund held by such shareholder at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, any CDSC which is
applicable will be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the charge shall
depend on the number of years from the time the shareholder purchased the Class
B shares until the time of redemption of such shares. Solely for purposes of
determining the number of years from the time of any payment for the purchase of
Class B shares, all payments during a month shall be aggregated and deemed to
have been made on the first day of the month. The following table sets forth the
rates of the CDSC:
CDSC AS A % OF
YEAR SINCE AMOUNT INVESTED OR
PURCHASE PAYMENT REDEMPTION
WAS MADE PROCEEDS
---------------- ------------------
First............................ 4.00
Second........................... 4.00
Third............................ 3.00
Fourth........................... 3.00
Fifth............................ 2.00
Sixth............................ 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible rate.
Therefore, it shall be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the increase in net asset value of
Class B shares above the total amount of payments for the purchase of Class B
shares made during the preceding six years; then of amounts representing the
cost of shares
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purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time within the
applicable six-year period.
WAIVER OF CDSC--The CDSC shall be waived in connection with (a) redemptions made
within one year after the death or disability, as defined in Section 72(m)(7) of
the Internal Revenue Code of 1986, as amended (the "Code"), of the shareholder,
(b) redemptions by employees participating in qualified or non-qualified
employee benefit plans or other programs where (i) the employers or affiliated
employers maintaining such plans or programs have a minimum of 250 employees
eligible for participation in such plans or programs, or (ii) such plan's or
program's aggregate investment in the Dreyfus Founders Family of Funds or
certain other products made available by the Fund's Distributor exceeds $1
million, (c) redemptions as a result of a combination of any investment company
with the Fund by merger, acquisition of assets or otherwise, (d) a distribution
following retirement under a tax-deferred retirement plan or upon attaining age
70-1/2 in the case of an IRA or Keogh plan or custodial account pursuant to
Section 403(b) of the Code, and (e) redemptions pursuant to any systematic
withdrawal plan as described in the Fund's prospectus. Any Fund shares subject
to a CDSC which were purchased prior to any termination of such waiver shall
have the CDSC waived as provided in the Fund's prospectus at the time of the
purchase of such shares.
AMOUNT OF DISTRIBUTION PLAN FEES--CLASS B SHARES--.75 of 1% of the value of the
average daily net assets of Class B for all Funds.
REINVESTMENT PRIVILEGE--Class B shares shall have the benefit of the
reinvestment privilege as set forth in the Fund's prospectus which offers Class
B shares.
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SCHEDULE D
CONTINGENT DEFERRED SALES CHARGE--CLASS C SHARES--A CDSC of 1.00% payable to the
Fund's Distributor shall be imposed on any redemption of Class C shares within
one year of the date of purchase. The basis for calculating the payment of any
such CDSC shall be the method used in calculating the CDSC for Class B shares.
In addition, the provisions for waiving the CDSC shall be those set forth for
Class B shares.
AMOUNT OF DISTRIBUTION PLAN FEES--CLASS C SHARES--.75 of 1% of the value of the
average daily net assets of Class C.
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SCHEDULE E
AMOUNT OF DISTRIBUTION PLAN FEES--CLASS F SHARES--.25 of 1% of the value of the
average daily net assets of Class F.
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SCHEDULE F
FRONT-END SALES CHARGE--CLASS T SHARES--The public offering price for Class T
shares shall be the net asset value per share of that Class plus a sales load as
shown below:
-------------------------
TOTAL SALES LOAD
-------------------------
AS A % OF AS A % OF
OFFERING NET ASSET
PRICE PER VALUE PER
AMOUNT OF TRANSACTION SHARE SHARE
--------------------- -------------------------
Less than $50,000....................... 4.50 4.70
$50,000 to less than $100,000........... 4.00 4.20
$100,000 to less than $250,000.......... 3.00 3.10
$250,000 to less than $500,000.......... 2.00 2.00
$500,000 to less than $1,000,000........ 1.50 1.50
$1,000,000 or more...................... 0 0
CONTINGENT DEFERRED SALES CHARGE--CLASS T SHARES--A CDSC of 1% shall be assessed
at the time of redemption of Class T shares purchased without an initial sales
charge as part of an investment of at least $1,000,000 and redeemed within one
year after purchase. The terms contained in Schedule C pertaining to the CDSC
assessed on redemptions of Class B shares (other than the amount of the CDSC and
its time periods), including the provisions for waiving the CDSC, shall be
applicable to the Class T shares subject to a CDSC. Letter of Intent and Right
of Accumulation shall apply to purchases of Class T shares subject to a CDSC.
AMOUNT OF DISTRIBUTION PLAN FEES--CLASS T SHARES--.25 of 1% of the value of the
average daily net assets of Class T.
REINVESTMENT PRIVILEGE--Class T shares shall have the benefit of the
reinvestment privilege as set forth in the Fund's prospectus which offers Class
T shares.
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SCHEDULE G
CONVERSION OF CLASS B SHARES--Class B shares shall automatically convert to
Class A shares on the first Company business day of the month in which the sixth
anniversary of the date of purchase occurs (unless otherwise specified by the
Board), based on the relative net asset values for shares of each such Class,
and shall no longer be subject to the distribution fee for Class B shares. (Such
conversion is subject to suspension by the Board members if adverse tax
consequences might result.) At that time, Class B shares that have been acquired
through the reinvestment of dividends and distributions ("Dividend Shares")
shall be converted in the proportion that a shareholder's Class B shares (other
than Dividend Shares) converting to Class A shares bears to the total Class B
shares then held by the shareholder which were not acquired through the
reinvestment of dividends and distributions.
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