File No. 2-17531
File No. 811-1018
As filed on December 29, 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. 66 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 37 [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)
[X] on December 31, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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 477
Exhibit index is located at page 401
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_______________________
PROSPECTUS
DREYFUS FOUNDERS FUNDS, INC.
DECEMBER 31, 1999
CLASS F SHARES
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| |
| 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 |
| |
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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.
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TABLE OF CONTENTS
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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...............................13
DREYFUS FOUNDERS GROWTH FUND..............................................15
DREYFUS FOUNDERS GROWTH AND INCOME FUND...................................17
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND................................19
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.......................31
WHO MANAGES THE FUNDS.........................................................36
ABOUT YOUR INVESTMENT.........................................................39
YOUR SHARE PRICE..........................................................39
INVESTING IN THE FUNDS....................................................40
DOING BUSINESS WITH DREYFUS FOUNDERS FUNDS................................43
SELLING SHARES............................................................45
TRANSACTION POLICIES......................................................47
FOR MORE INFORMATION ON YOUR ACCOUNT......................................50
DIVIDENDS AND DISTRIBUTIONS...................................................52
TAXES.........................................................................53
SHAREHOLDER AND TRANSFER AGENCY SERVICES......................................54
BROKERAGE ALLOCATION..........................................................54
FINANCIAL HIGHLIGHTS..........................................................55
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OUR INVESTMENT APPROACH
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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 $118 billion in its mutual fund
portfolios as of September 30, 1999. Founders and Dreyfus are subsidiaries of
Mellon Financial Corporation, a broad-based financial services company.
KEY CONCEPTS
WHAT THE FUNDS ARE -- AND AREN'T. These Funds are mutual funds: pooled
investments that are professionally managed and give 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>
ABOUT THE FUNDS
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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.
KEY CONCEPTS
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 37, Class F shares are generally offered only
to existing shareholders of the Dreyfus Founders Funds who have continuously
maintained a Fund account 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.
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FUND BY FUND SUMMARIES
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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 28. 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.
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.
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DREYFUS FOUNDERS BALANCED FUND
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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.
===============================================================================
The following information provides some 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
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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%
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The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was -3.13%.
<PAGE>
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
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.
KEY CONCEPTS
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.
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.
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
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1 YEAR 5 YEARS 10 YEARS
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BALANCED FUND* 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
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THE STANDARD & POOR'S (S&P) 500 INDEX IS 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.
<PAGE>
DREYFUS FOUNDERS DISCOVERY FUND
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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.
===============================================================================
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
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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%
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The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 37.18%.
<PAGE>
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.
KEY CONCEPTS
SMALL-CAP COMPANIES: 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: 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.
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
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1 YEAR 5 YEARS LIFE OF FUND*
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DISCOVERY FUND 14.19% 13.42% 17.91%
RUSSELL 2000 INDEX -2.55% 11.87% 12.50%
* INCEPTION DATE 12/31/89
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THE RUSSELL 2000 INDEX IS A WIDELY RECOGNIZED SMALL-CAP INDEX COMPRISING COMMON
STOCKS ON THE 2,000 U.S. PUBLIC COMPANIES NEXT IN SIZE AFTER THE LARGEST 1,000
PUBLICLY TRADED COMPANIES.
<PAGE>
DREYFUS FOUNDERS FOCUS FUND
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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, 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.
===============================================================================
Focus Fund is newly organized and has no historical performance as of the date
of this Prospectus.
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<PAGE>
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.
KEY CONCEPTS
LARGE COMPANIES: companies that have
market capitalizations of more than
$8 billion. This range may fluctuate
depending on changes in the value of
the stock market as a whole.
<PAGE>
DREYFUS FOUNDERS GOVERNMENT SECURITIES FUND
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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.
===============================================================================
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
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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%
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The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was -2.83%.
<PAGE>
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.
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.
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.
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
===============================================================================
1 YEAR 5 YEARS 10 YEARS
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GOVERNMENT SECURITIES FUND* 9.76% 4.49% 6.90%
LEHMAN BROTHERS U.S. TREASURY 10.03% 7.19% 9.18%
COMPOSITE INDEX
* INCEPTION DATE 3/1/88
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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.
<PAGE>
DREYFUS FOUNDERS GROWTH FUND
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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.
===============================================================================
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
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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%
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The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 5.54%.
<PAGE>
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 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.
KEY CONCEPTS
Founders uses a BOTTOM-UP APPROACH,
meaning we analyze the fundamentals
of individual companies rather than
focusing on broader market or sector
themes.
===============================================================================
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
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1 YEAR 5 YEARS 10 YEARS
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GROWTH FUND* 25.04% 21.02% 20.30%
S&P 500 INDEX 28.57% 24.05% 19.19%
* INCEPTION DATE 1/5/62
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THE STANDARD & POOR'S (S&P) 500 INDEX IS A WIDELY RECOGNIZED UNMANAGED INDEX OF
COMMON STOCKS.
<PAGE>
DREYFUS FOUNDERS GROWTH AND INCOME FUND
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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 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
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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%
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The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was -2.32%.
<PAGE>
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 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.
KEY CONCEPTS
DIVIDEND: a payment of stock or cash
from a company's profits to its
stockholders.
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.
===============================================================================
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
GROWTH AND INCOME FUND* 17.78% 17.81% 16.31%
S&P 500 INDEX 28.57% 24.05% 19.19%
* INCEPTION DATE 7/5/38
- -------------------------------------------------------------------------------
THE STANDARD & POOR'S (S&P) 500 INDEX IS A WIDELY RECOGNIZED UNMANAGED INDEX OF
COMMON STOCKS.
<PAGE>
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
-------------------------------------------------------------------
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.
===============================================================================
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
- -------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 13.54%.
<PAGE>
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, 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.
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.
KEY CONCEPTS
FOREIGN SECURITIES are securities of
issuers, wherever organized, that have
their principal business activities out-
side 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.
===============================================================================
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- -------------------------------------------------------------------------------
1 YEAR LIFE OF FUND*
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 17.01% 17.18%
MORGAN STANLEY CAPITAL 18.77% 9.06%
INTERNATIONAL 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.
<PAGE>
DREYFUS FOUNDERS MID-CAP GROWTH FUND
-------------------------------------------------------------------
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 in 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.
===============================================================================
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
- -------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 6.18%.
<PAGE>
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.
KEY CONCEPTS
MEDIUM-SIZED COMPANIES: 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.
===============================================================================
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
MID-CAP GROWTH FUND* -1.73% 9.54% 15.00%
S&P MID-CAP 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.
<PAGE>
DREYFUS FOUNDERS MONEY MARKET FUND
-------------------------------------------------------------------
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.
===============================================================================
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
- -------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------
<PAGE>
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.
KEY CONCEPTS
MONEY MARKET is the economic market
that exists to provide very short-term
funding to corporations, municipalities,
and the U.S. government.
o INFLATION RISK. 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.
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
===============================================================================
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
MONEY MARKET FUND* 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>
DREYFUS FOUNDERS PASSPORT FUND
-------------------------------------------------------------------
CLASS F TICKER SYMBOL: FPSSX MORNINGSTAR CATEGORY: Foreign Stock
INVESTMENT OBJECTIVE
Capital appreciation
PRINCIPAL INVESTMENT STRATEGY
Passport Fund seeks capital appreciation 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.
===============================================================================
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
- -------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 16.88%.
<PAGE>
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, 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.
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.
===============================================================================
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
===============================================================================
1 YEAR 5 YEARS LIFE OF FUND*
- -------------------------------------------------------------------------------
PASSPORT FUND 12.50% 8.89% 9.77%
MORGAN STANLEY CAPITAL 18.77% 9.19% 10.50%
INTERNATIONAL WORLD EX.
U.S. 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.
<PAGE>
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
-------------------------------------------------------------------
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.
===============================================================================
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
- -------------------------------------------------------------------------------
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%
- -------------------------------------------------------------------------------
The year-to-date total return for the Fund's Class F shares as of September 30,
1999 was 7.43%.
<PAGE>
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, including fluctuations in currency exchange
rates, potential unstable political and economic structures, reduced
availability of public infor- mation and lack of uniform financial reporting
and regulatory practices similar to those that apply to U.S. issuers.
KEY CONCEPTS
GLOBAL FUND: a type of mutual fund
that may invest in securities traded
anywhere in the world, including the
United States.
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.
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
===============================================================================
1 YEAR 5 YEARS LIFE OF FUND*
- -------------------------------------------------------------------------------
WORLDWIDE GROWTH FUND 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.
<PAGE>
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.
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
TOTAL
TOTAL ANNUAL
ANNUAL FUND
FUND OPERATING
OPERATING EXPENSES
OTHER EXPENSES (WITH
EXPENSES 1 (WITHOUT REIMBURSE-
DISTRIBUTION (WITHOUT REIMBURSE- MENTS/
(12B-1) FEES REIMBURSE- MENTS/ WAIVERS
MANAGE- WITHOUT MENTS/ WAIVERS OR
FUND MENT FEE WAIVERS WAIVERS) OR CREDITS) CREDITS) 2
- ------------------------------------- -------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balanced 0.57% 0.25% 0.18% 1.00% 0.99%
Discovery 1.00% 0.25% 0.32% 1.57% 1.55%
Focus 3 0.85% 0.25% 0.47% 1.57% 1.50%
Government Securities 0.65% 0.25%4 0.59% 1.49% 1.25%
Growth 0.67% 0.25% 0.18% 1.10% 1.08%
Growth and Income 0.62% 0.25% 0.23% 1.10% 1.08%
International Equity 1.00% 0.25% 0.67% 1.92% 1.80%5
Mid-Cap Growth 0.77% 0.25% 0.33% 1.35% 1.33%
Money Market 0.50% N/A 0.37% 0.87% 0.85%
Passport 1.00% 0.25% 0.29% 1.54% 1.52%
Worldwide Growth 0.96% 0.25% 0.28% 1.49% 1.47%
</TABLE>
- ------------
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.
<PAGE>
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.
^
EXPENSE EXAMPLE
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------ ------- ------- --------
<S> <C> <C> <C> <C>
Balanced $103 $ 320 $ 555 $1,229
Discovery $161 $ 499 $ 861 $1,878
Focus * $153 $ 474 n/a n/a
Government Securities $153 $ 474 $ 819 $1,789
Growth $112 $ 348 $ 604 $1,334
Growth and Income $113 $ 352 $ 609 $1,346
International Equity $197 $ 608 $1,046 $2,259
Mid-Cap Growth $138 $ 430 $ 744 $1,632
Money Market $ 89 $ 279 $ 484 $1,076
Passport $158 $ 490 $ 845 $1,845
Worldwide Growth $152 $ 471 $ 813 $1,778
</TABLE>
*SINCE FOCUS FUND IS A NEW FUND, ITS ONE-YEAR AND THREE-YEAR COSTS ARE
ESTIMATES.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return and no change in expenses. Because actual return and
expenses will be different, the example is for comparison only.
<PAGE>
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").
<PAGE>
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%/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.
<PAGE>
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. 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.
<PAGE>
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.
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.
<PAGE>
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 INITIAL PUBLIC OFFERINGS. The Equity Funds, particularly the Discovery,
International Equity, Mid-Cap Growth, Passport, and Worldwide Growth Funds,
invest in initial public offerings (IPOs). Part of the historical
performance of these Funds is due to the allocation to the Funds of
securities sold in IPOs. The effect of IPOs on a Fund's performance depends
on a variety of factors, including the number of IPOs a Fund invests in,
whether and to what extent a security purchased in an IPO appreciates in
value, and the asset base of the Fund. There is no guarantee that a Fund's
investments in IPOs, if any, will continue to have a similar impact on the
Fund's performance.
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>
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 $118 billion in its mutual fund portfolios as of
September 30, 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.
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.
<PAGE>
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 business administration with a concentration in finance.
CURTIS J. ANDERSON, VICE PRESIDENT OF INVESTMENTS. Mr. Anderson is a Chartered
Financial Analyst who has been portfolio manager of Balanced Fund since December
1999. Before joining Founders, Mr. Anderson was a senior vice president,
director of research, and a portfolio manager with First Security Investment
Management, Salt Lake City, Utah. Mr. Anderson holds a bachelor's degree in
finance and an MBA from the University of Utah.
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 and the domestic portion of Worldwide Growth
Fund since July 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 and the domestic
portion of Worldwide Growth Fund since July 1999. Mr. Chapman has also been the
lead portfolio manager of the Focus Fund since December 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.
<PAGE>
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.
^
^
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.
KEVIN S. SONNETT, VICE PRESIDENT OF INVESTMENTS. Mr. Sonnett is a Chartered
Financial Analyst who has been portfolio manager of Mid-Cap Growth Fund since
December 1999. He joined Founders in February 1997 as an equity analyst for the
small- and mid-cap investment team, and was promoted to senior equity analyst in
1999. Mr. Sonnett has also served as a portfolio manager for The Dreyfus
Corporation since December 1999. Before joining Founders, Mr. Sonnett was an
equity analyst with the Colorado Public Employees Retirement Association from
1995 to 1997, and an investor services representative with Janus Service
Corporation from 1994 to 1995. Mr. Sonnett holds a bachelor's degree in
marketing from Pennsylvania State University and a master's degree in finance
from the University of Colorado.
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>
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.
<PAGE>
INVESTING IN THE FUNDS
- -------------------------------------------------------------------------------
Class F shares of a Fund can be purchased only by:
o Persons or entities who have continuously maintained a Fund account since
December 30, 1999.
o Any person or entity listed in the account registration for any Fund account
that has been continuously maintained since December 30, 1999, such as joint
owners, trustees, custodians, and designated beneficiaries.
o Retirement plans (such as 401(k) plans) that have continuously maintained a
Fund account 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 offer retirement plan
programs, wrap accounts or other fee-based advisory programs, or insurance
company separate accounts, and which have had relationships with Founders
and/or any Fund continuously since December 30, 1999.
o Founders employees, Fund directors and their immediate families.
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.
<PAGE>
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 $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
<PAGE>
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
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
<PAGE>
DOING BUSINESS WITH DREYFUS FOUNDERS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW TO HOW TO HOW TO
BY PHONE OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- -------------------------------------------------------------------------------------------------------------------
1-800-525-2440 If your account with us has TeleTransfer allows you to We can send proceeds only
telephone exchange make electronic purchases to the address or bank of
privileges, you can call to directly from a checking record. Minimum
open an account in another or savings account at your redemption - $100; $1,000
Fund by exchange. The names request. You may establish minimum for a redemption
and registrations need to TeleTransfer when your by wire. Phone redemption
be identical on both account is opened, or add is not available on
accounts. it later by completing an retirement accounts and
Otherwise, you must Account Changes Form. We certain other accounts.
complete a New Account charge no fee for You may add phone
Application and send it in TeleTransfer transactions. redemption privileges by
with your investment check. completing an Account
Changes Form.
BY MAIL
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Founders Funds Complete the proper Make your check payable to In a letter, please tell
P.O. Box 173655 application. Make your "Dreyfus Founders Funds, us the number of shares or
Denver, CO 80217-3655 check payable to "Dreyfus Inc." Enclose the dollars you wish to
Founders Funds, Inc." We purchase stub (from your redeem, the name(s) of the
If you are using certified or cannot establish new most recent confirmation account owner(s), the Fund
registered mail or an accounts with third-party or quarterly statement); and account number, and
overnight delivery service, checks. if you do not have one, your Social Security or
send your correspondence to: write the Fund name and tax identification number.
Dreyfus Founders Funds your account number on the All account owners need to
2930 East Third Avenue Denver, check. For IRAs, please sign the request exactly
CO 80206-5002 state the contribution as their names appear on
year. the account. We can send
The Funds do not normally proceeds only to the
accept third-party checks. address or bank of record.
IN PERSON
- -------------------------------------------------------------------------------------------------------------------
Founders Investor Center Visit the Founders Investor Visit the Founders Visit the Founders
2930 East Third Avenue Center. Call us at Investors Center. Call us Investor Center. Call us
(at Milwaukee) 1-800-525-2440 to make an at 1-800-525-2440 to make at 1-800-525-2440 to make
Denver, CO appointment and for an appointment and for an appointment, for
directions. directions. directions, and to ask
whether all account owners
need to be present.
HOW TO
BY PHONE EXCHANGE SHARES
- ------------------------------------------------------------------------------------------------------------------
1-800-525-2440 If you have telephone
exchange privileges, you
may exchange from one Fund
to another. The names and
registrations need to be
identical on both
accounts.
BY MAIL
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Founders Funds In a letter, include the
P.O. Box 173655 name(s) of the account
Denver, CO 80217-3655 owner(s), the Fund and
account number you wish to
If you are using certified or exchange from, your Social
registered mail or an Security or tax
overnight delivery service, identification number, the
send your correspondence to: dollar or share amount,
Dreyfus Founders Funds and the account you wish
2930 East Third Avenue Denver, to exchange into. All
CO 80206-5002 account owners need to
sign the request exactly
as their names appear on
the account. Exchange
requests may be faxed to
us at (303) 394-4021.
IN PERSON
- -------------------------------------------------------------------------------------------------------------------
Founders Investor Center Visit the Founders
2930 East Third Avenue Investor Center. Call us
(at Milwaukee) at 1-800-525-2440 to make
Denver, CO an appointment, for
directions, and to ask
whether all account owners
need to be present.
</TABLE>
<PAGE>
DOING BUSINESS WITH DREYFUS FOUNDERS FUNDS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
HOW TO HOW TO HOW TO
BY WIRE OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- -------------------------------------------------------------------------------------------------------------------
Complete and mail the Wire funds to: $6 fee; $1,000 minimum.
proper application. Wire Investors Fiduciary Trust Monies are usually
funds to: Company received the business day
Investors Fiduciary Trust ABA # 101003621 after the date you sell.
Company For Credit to Account Unless otherwise
ABA # 101003621 # 890751-842-0 specified, we will deduct
For Credit to Account Please indicate the Fund the fee from your
# 890751-842-0 name and your account redemption proceeds.
Please indicate the Fund number, and indicate the
name and your account name(s) of the account
number, and indicate the owner(s).
name(s) of the account
owner(s).
THROUGH OUR WEBSITE
- -------------------------------------------------------------------------------------------------------------------
www.founders.com Download, complete and mail You may purchase shares You may redeem shares
a signed copy of the proper using our website if you using our website if you
application. have TeleTransfer. have TeleTransfer. We can
only send proceeds to your
bank of record. Online
redemptions are not
available on retirement
accounts and certain other
accounts.
THROUGH AUTOMATIC
TRANSACTION PLANS
- -------------------------------------------------------------------------------------------------------------------
Automatic Investment Plan Automatic Investment Plan Systematic Withdrawal Plan
(AIP) allows you to make (AIP) allows you to make permits you to receive a
electronic purchases electronic purchases fixed sum on a monthly,
directly from a checking or directly from a checking quarterly or annual basis
savings account. The or savings account. The from accounts with a value
minimum to open an account minimum to open an account of $5,000 or more.
is $50 per month. is $50 per month. Payments may be sent
Once established, AIP Once established, AIP electronically to your
purchases take place purchases take place bank or to you in check
automatically on automatically on form.
approximately the 5th approximately the 5th
and/or 20th of the month. and/or 20th of the month.
We charge no fee for AIP. We charge no fee for AIP.
FASTLINE TM
- -------------------------------------------------------------------------------------------------------------------
1-800-947-FAST (3278) Follow instructions Follow instructions We can send proceeds only
Automated telephone account provided when you call to provided when you call to to the bank of record.
access service open an account in a new add to your account via Minimum redemption - $100.
Fund. TeleTransfer. Phone redemption is not
available on retirement
accounts and certain other
accounts. You may add
phone redemption
privileges by completing
an Account Changes Form.
<CAPTION>
HOW TO
BY WIRE EXCHANGE SHARES
- -------------------------------------------------------------------------------------------------------------------
Not applicable.
THROUGH OUR WEBSITE
- -------------------------------------------------------------------------------------------------------------------
www.founders.com You may exchange shares
using our website if you
have telephone exchange
privileges.
THROUGH AUTOMATIC
TRANSACTION PLANS
- -------------------------------------------------------------------------------------------------------------------
Fund to Fund Investment
Plan allows you to
automatically exchange a
fixed dollar amount from
one Fund to purchase
shares in another Fund.
FASTLINE TM
- -------------------------------------------------------------------------------------------------------------------
1-800-947-FAST (3278) Follow instructions
Automated telephone account provided when you call.
access service $100 minimum.
</TABLE>
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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
o tape-recording telephone instructions
<PAGE>
o 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.
o 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.
o FAX TRANSMISSIONS. Exchange instructions may be faxed, but we cannot
process redemption requests received by fax.
o 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.
o 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.
o 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. Shares will be redeemed from other
accounts, if needed, to reimburse the Fund.
o 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.
o 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
<PAGE>
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 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.
o 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 check-writing privileges
o close an account if a shareholder is deemed to engage in activities which
are illegal or otherwise believed to be detrimental to the Funds
<PAGE>
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 , 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 InvestorSITET at
www.founders.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.founders.com.
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.founders.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, available 24 hours a
day. Call 1-800-525-2440, or access MANAGER INSIGHTS on the Internet at
www.founders.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.
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
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 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.
<PAGE>
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.
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>
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.
- --------------------------------------------------------------------------------
DREYFUS FOUNDERS BALANCED FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(UNAUDITED) 1998 1997 1996 1995 1994
----------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <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 Income1 (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 (000s
Omitted) $ 1,287,041 $ 1,244,221 $ 942,690 $ 394,896 $ 130,346 $ 95,226
Net Expenses to Average Net Assets 0.97%2 0.99% 0.99% 1.10% 1.19% 1.26%
Gross Expenses to Average Net Assets 0.98%2 1.00% 1.01% 1.12% 1.23% n/a
Ratio of Net Investment Income to
Average Net Assets 2.47%2 2.51% 2.77% 3.09% 2.92% 2.37%
Portfolio Turnover Rate 3 223% 211% 203% 146% 286% 258%
1 DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 AGGREGATED LESS THAN $0.01 ON A PER
SHARE BASIS.
2 ANNUALIZED.
3 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS DISCOVERY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 1.55% 1.52% 1.58% 1.58% 1.67%
Gross Expenses to Average Net Assets 1.59%1 1.57% 1.54% 1.59% 1.63% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.19%)1 (0.91%) (0.55%) (0.85%) (0.60%) (0.62%)
---------------- --------- --------- --------- --------- ---------
Portfolio Turnover Rate 2 146% 121% 90% 106% 118% 72%
1 ANNUALIZED.
2 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 1.31%2 1.25% 1.26% 1.26% 1.30% 1.34%
Gross Expenses to Average Net Assets 1 1.35%2 1.28% 1.31% 1.29% 1.30% n/a
Ratio of Net Investment Income to
Average Net Assets 1 4.29% 4.46% 4.99% 5.06% 4.92% 5.52%
Portfolio Turnover Rate 3 106% 90% 147% 166% 141% 379%
1 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).
2 ANNUALIZED.
3 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 Income1 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 %2 1.08% 1.10% 1.19% 1.24% 1.33%
Gross Expenses to Average Net Assets 1.10 %2 1.10% 1.12% 1.20% 1.28% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.44 %)2 0.05% 0.48% 0.15% 0.12% (0.17%)
Portfolio Turnover Rate 3 124 % 143% 189% 134% 130% 172%
1 DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 AGGREGATED LESS THAN $0.01 ON A
PER SHARE BASIS.
2 ANNUALIZED.
3 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 Income1 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 %2 1.08% 1.09% 1.15% 1.17% 1.21%
Gross Expenses to Average Net Assets 1.16 %2 1.10% 1.11% 1.16% 1.22% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.08 %)2 1.38% 1.84% 1.40% 1.19% 0.88%
Portfolio Turnover Rate 3 238 % 259% 256% 195% 235% 239%
1 DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 AGGREGATED LESS THAN $0.01 ON A
PER SHARE BASIS.
2 ANNUALIZED.
3 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
PERIOD OF
SIX MONTHS ENDED 12/29/95
JUNE 30, 1999 YEARS ENDED DECEMBER 31 (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 00.00
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 Assets1 1.80%2 1.80% 1.85% 1.94% n/a
Gross Expenses to Average Net Assets1 1.83%2 1.83% 1.89% 2.00% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets 1 0.66%2 0.02% (0.21%) (0.15%) n/a
Portfolio Turnover Rate 3 173% 148% 164% 71% n/a
1 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).
2 ANNUALIZED.
3 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS MID-CAP GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(UNAUDITED) 1998 1997 1996 1995 1994
---------------- --------- --------- --------- --------- ---------
<S> <C> <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 1.33% 1.30% 1.34% 1.29% 1.36%
Gross Expenses to Average Net Assets 1.42%1 1.35% 1.32% 1.36% 1.35% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.09%)1 (0.39%) (0.05%) (0.28%) 0.00% (0.27%)
Portfolio Turnover Rate 2 169% 152% 110% 186% 263% 272%
1 ANNUALIZED.
2 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS MONEY MARKET FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 0.02 0.05 0.05 0.05 0.05 0.03
Net Gains or (Losses) on 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%1 0.85% 0.82% 0.86% 0.89% 0.91%
Gross Expenses to Average Net Assets 0.91%1 0.87% 0.84% 0.88% 0.89% n/a
Ratio of Net Investment Income to
Average Net Assets 4.06%1 4.67% 4.77% 4.58% 5.11% 3.49%
</TABLE>
1 ANNUALIZED.
<PAGE>
DREYFUS FOUNDERS PASSPORT FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 1.52% 1.53% 1.57% 1.76% 1.88%
Gross Expenses to Average Net Assets 1.60%1 1.54% 1.55% 1.59% 1.84% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.45%)1 0.09% 0.20% 0.40% 0.60% 0.12%
Portfolio Turnover Rate 2 33% 34% 51% 58% 37% 78%
1 ANNUALIZED.
2 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.
</TABLE>
<PAGE>
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEARS ENDED DECEMBER 31
(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 Income1 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%2 1.47% 1.45% 1.53% 1.56% 1.66%
Gross Expenses to Average Net Assets 1.55%2 1.49% 1.47% 1.55% 1.65% n/a
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.25%2 0.33% 0.18% 0.50% 0.61% (0.14%)
Portfolio Turnover Rate 3 72% 86% 82% 72% 54% 87%
1 DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 AGGREGATED LESS THAN $0.01 ON A
PER SHARE BASIS.
2 ANNUALIZED.
3 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.
</TABLE>
<PAGE>
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:
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 to
[email protected]
ON THE INTERNET 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
Dreyfus Founders Funds' SEC File No. 811-01018
<PAGE>
Dreyfus Founders Balanced Fund
Pursuing capital appreciation and current income through investments in stocks
and bonds
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Balanced Fund
-------------------------------------
Ticker Symbols CLASS A: FRIDX
CLASS B: FRIBX
CLASS C: FRICX
CLASS R: FRIRX
CLASS T: FRIUX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 68
Main Risks 69
Past Performance 70
Expenses 71
More About Investment Objective,
Strategies and Risks 73
Management 75
Financial Highlights 76
Your Investment
- --------------------------------------------------------------------------------
Account Policies 77
Distributions and Taxes 81
Services for Fund Investors 82
Brokerage Allocation 83
Instructions for Regular Accounts 84
Instructions for IRAs 86
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
<PAGE>
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.
* 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 they represent better prospects for
capital appreciation. Normally, the fund will invest a significant
percentage (up to 75%) of its total assets in equity securities.
* 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. The fund
considers 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.
* 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. Founders uses 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.
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* 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 Founders' 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.
* 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.
* 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.
* 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 United
States. Brokerage commissions and other transaction costs are also generally
higher than in the United States, and settlement periods are longer.
Key concepts
DIVIDEND: a payment of stock or cash from a company's profits to its
stockholders.
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.
BOND: an IOU issued by a government or corporation that pays a stated rate of
interest and returns the face value on the maturity date.
The Fund
<PAGE>
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 EACH YEAR (%)
[Exhibit A]
CLASS F SHARES
BEST QUARTER: Q2 '97 +10.06%
WORST QUARTER: Q3 '90 -7.33%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS -3.13%.
- --------------------------------------------------------------------------------
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 INC. AND REFLECTS THE EXPENSES OF MANAGING THE MUTUAL FUNDS INCLUDED
IN THE INDEX.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.57 0.57 0.57 0.57 0.57
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.17 0.17 0.17 0.17 0.17
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 0.99 1.74 1.74 0.74 1.24
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 0.98 1.73 1.73 0.73 1.23
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------
CLASS A $690 $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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
The Fund
<PAGE>
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 Founders
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
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 it cannot be sold 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. Founders monitors 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.
<PAGE>
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.
* 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.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
The Fund
<PAGE>
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 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 $118 billion in its mutual fund
portfolios as of September 30, 1999. Founders and Dreyfus are investment
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 0.57% of the
fund's average daily net assets.
To facilitate day-to-day fund management, Founders uses a lead manager and team
system. Each team is composed of members of the 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.
Curtis J. Anderson, vice president of investments and chartered financial
analyst, has been the fund's lead portfolio manager since December 1999. Before
joining Founders, Mr. Anderson was a senior vice president, director of research
and a portfolio manager with First Security Investment Management, Salt Lake
City, Utah. Mr. Anderson holds a bachelor's degree in finance and an MBA from
the University of Utah.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company's 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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)(1) (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 expenses to average net assets (%) 0.97(2) 0.99 0.99 1.10 1.19 1.26
Gross expenses to average net assets (%) 0.98(2) 1.00 1.01 1.12 1.23 --
Ratio of net investment income to average net assets (%) 2.47(2) 2.51 2.77 3.09 2.92 2.37
Portfolio turnover rate (%)(3) 223 211 203 146 286 258
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 1,287,041 1,244,221 942,690 394,896 130,346 95,226
<FN>
(1) DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED
DECEMBER 31, 1998 AGGREGATED LESS THAN $0.01 ON A PER-SHARE BASIS.
(2) ANNUALIZED.
(3) "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>
The Fund
<PAGE>
Your Investment
ACCOUNT POLICIES
YOU WILL NEED TO CHOOSE A SHARE CLASS before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* CLASS R SHARES are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
<PAGE>
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
<TABLE>
<CAPTION>
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase (except shares bought through
reinvestment of dividends).
Class A shares also carry an annual shareholder services
fee of 0.25% of the class's average daily net assets.
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's
average daily net assets.
</FN>
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's 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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
THE FUND RESERVES THE RIGHT TO:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets.
* change or discontinue its exchange privilege,
or temporarily suspend this privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS (CONTINUED)
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 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.
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>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Balanced Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Balanced Fund P.O.
Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Balanced Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Balanced Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "086" for
Class A, "087" for Class B, "088" for Class C, "089" for Class R, or "090" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Balanced Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587 Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Balanced Fund
* the share class
* your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "086" for
Class A, "087" for Class B, "088" for Class C, "089" for Class R, or "090" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Balanced Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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>
[Application p1]
<PAGE>
[Application p2]
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Balanced Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at:
http://www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
086P1299
<PAGE>
Dreyfus Founders Discovery Fund
Pursuing capital appreciation through investments in stocks of small-cap growth
companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Discovery Fund
-------------------------------------
Ticker Symbols CLASS A: FDIDX
CLASS B: FDIEX
CLASS C: FDICX
CLASS R: FDIRX
CLASS T: FDITX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 93
Main Risks 94
Past Performance 94
Expenses 96
More About Investment Objective,
Strategies and Risks 98
Management 101
Financial Highlights 102
Your Investment
- --------------------------------------------------------------------------------
Account Policies 103
Distributions and Taxes 107
Services for Fund Investors 108
Brokerage Allocation 109
Instructions for Regular Accounts 110
Instructions for IRAs 112
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
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 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. Founders uses 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.
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risk of investing in this fund is:
* 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 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 EACH YEAR (%)
CLASS F SHARES
[Exhibit A]
BEST QUARTER: Q4 '98 +36.55%
WORST QUARTER: Q3 '98 -22.73%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS 37.18%.
- --------------------------------------------------------------------------------
Average annual total returns AS OF 12/31/98
Since
1 Year 5 Years inception*
- --------------------------------------------------------------
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 OF THE
COMMON STOCKS OF THE 2,000 U.S. PUBLIC COMPANIES NEXT IN SIZE AFTER THE LARGEST
1,000 PUBLICLY TRADED U.S. COMPANIES.
<PAGE>
Key concepts
SMALL-CAP COMPANIES: 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: 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.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00 1.00 1.00 1.00 1.00
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.24 0.24 0.24 0.24 0.24
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 1.49 2.24 2.24 1.24 1.74
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 1.47 2.22 2.22 1.22 1.72
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR
FOLLOWING THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
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 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.
* 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.
* 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>
* 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.
* 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.
* FOREIGN INVESTMENT RISK. Investments in foreign
securities involve different risks than U.S. investments. These risks
include:
* 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.
* 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.
* 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.
* 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.
* INITIAL PUBLIC OFFERINGS. The fund invests in
initial public offerings ("IPOs"). Part of the historical performance of the
fund is due to the allocation to the fund of securities sold in IPOs. The
effect of IPOs on the fund's performance depends on a variety of factors,
including the number of IPOs the fund invests in, whether and to what extent
a security purchased in an IPO appreciates in value, and the asset base of
the fund. There is no guarantee that the fund's investments in IPOs, if any,
will continue to have a similar impact on the fund's performance.
* RISK OF FIXED-INCOME INVESTMENTS. The fund's
investments in fixed-income securities are subject to interest rate risk and
credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year
2000-related problems in its systems and to obtain assurances from other
service providers that they are taking similar steps. In addition, issuers of
securities in which the fund invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the fund's
investments and the fund's share prices.
The Fund
<PAGE>
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 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 $118 billion in its mutual fund
portfolios as of September 30, 1999. Founders and Dreyfus are investment
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, Founders uses a lead manager and team
system. Each team is composed of members of the 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.
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
business administration with a concentration in finance.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company's 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 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 expenses to average net assets (%) 1.58(1) 1.55 1.52 1.58 1.58 1.67
Gross expenses to average net assets (%) 1.59(1) 1.57 1.54 1.59 1.63 --
Ratio of net investment income (loss)
to average net assets (%) (1.19)(1) (0.91) (0.55) (0.85) (0.60) (0.62)
Portfolio turnover rate (%)(2) 146 121 90 106 118 72
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 288,185 241,124 246,281 247,494 216,623 185,310
<FN>
(1) ANNUALIZED.
(2) "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>
The Fund
<PAGE>
Your Investment
ACCOUNT POLICIES
YOU WILL NEED TO CHOOSE A SHARE CLASS before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* CLASS R SHARES are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
<PAGE>
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
<TABLE>
<CAPTION>
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase (except shares bought through
reinvestment of dividends).
Class A shares also carry an annual shareholder services
fee of 0.25% of the class's average daily net assets.
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's
average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
THE FUND RESERVES THE RIGHT TO:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets.
* change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS (CONTINUED)
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 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.
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>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Discovery Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Discovery Fund P.O.
Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Discovery Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Discovery Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "182" for
Class A, "183" for Class B, "184" for Class C, "185" for Class R, or "186" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Discovery Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587, Providence,
RI 02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Discovery Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "182" for
Class A, "183" for Class B, "184" for Class C, "185" for Class R, or "186" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Discovery Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427, Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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>
[APPLICATION P1]
<PAGE>
[APPLICATION P2]
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Discovery Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
182P1299
<PAGE>
Dreyfus Founders Focus Fund
Pursuing long-term growth of capital by investing in a concentrated portfolio of
growth companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Focus Fund
---------------------------------
Ticker Symbols CLASS A: N/A
CLASS B: N/A
CLASS C: N/A
CLASS R: N/A
CLASS T: N/A
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 119
Main Risks 120
Past Performance 120
Expenses 121
More About Investment Objective,
Strategies and Risks 123
Financial Highlights 125
Management 126
Your Investment
- --------------------------------------------------------------------------------
Account Policies 127
Distributions and Taxes 131
Services for Fund Investors 132
Brokerage Allocation 133
Instructions for Regular Accounts 134
Instructions for IRAs 136
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND' S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
INVESTMENT APPROACH
The fund seeks long-term growth of capital. To pursue this goal, the fund
normally invests in a concentrated portfolio of twenty to thirty 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. Founders uses 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
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* 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 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.
* 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 Founders' 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.
* 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.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
Key concepts
LARGE COMPANIES: 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.
The Fund
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.85 0.85 0.85 0.85 0.85
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.45 0.45 0.45 0.45 0.45
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES
(WITHOUT REIMBURSEMENTS/WAIVERS OR CREDITS) 1.55 2.30 2.30 1.30 1.80
TOTAL ANNUAL FUND OPERATING EXPENSES
(WITH REIMBURSEMENTS/WAIVERS OR CREDITS)*** 1.50 2.25 2.25 1.25 1.75
<FN>
* 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 FUND'S BOARD OF DIRECTORS.
</FN>
</TABLE>
<PAGE>
Expense example
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
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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.
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
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.
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.
* 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.
* 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.
* Risk of fixed-income investments. The fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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>
FINANCIAL HIGHLIGHTS
As a new fund, financial highlights information is not available for the fund as
of the date of this prospectus.
* Foreign investment risk. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
* 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.
* 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.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
The Fund
<PAGE>
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 $118 billion in its mutual fund
portfolios as of September 30, 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, Founders uses a lead manager and team
system. Each team is composed of members of the 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.
Scott A. Chapman, vice president of investments, chartered financial analyst and
Founders' director of research, has been portfolio manager of the fund since
December 1999. Mr. Chapman has also been a co-portfolio manager of Dreyfus
Founders Growth Fund since December 1998, and the domestic portion of Dreyfus
Founders Worldwide Growth Fund since July 1999. Mr. Chapman also serves as
portfolio manager for The Dreyfus Corporation.
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.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
<PAGE>
Your Investment
ACCOUNT POLICIES
You will need to choose a share class before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* Class R shares are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ---------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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>
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.
Selling shares
You may sell (redeem) shares at any time. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
The fund reserves the right to:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets.
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
<PAGE>
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 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.
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.
Your Investment
<PAGE>
REGULAR ACCOUNTS
INSTRUCTIONS FOR REGULAR ACCOUNTS
INSTRUCTIONS FOR TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Focus Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Focus Fund P.O. Box
6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Focus Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Focus Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "201" for
Class A, "202" for Class B, "203" for Class C, "204" for Class R, or "205" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Focus Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 9).
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587 Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427
Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Focus Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "201" for
Class A, "202" for Class B, "203" for Class C, "204" for Class R, or "205" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Focus Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 9).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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.
Your Investment
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Focus Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
201P1299
<PAGE>
Dreyfus Founders Growth Fund
Pursuing long-term growth of capital through investments in growth companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Growth Fund
-------------------------------------
Ticker Symbols CLASS A: FRGDX
CLASS B: FRGEX
CLASS C: FRGFX
CLASS R: FRGYX
CLASS T: FRGZX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 142
Main Risks 143
Past Performance 143
Expenses 144
More About Investment Objective,
Strategies and Risks 146
Management 149
Financial Highlights 150
Your Investment
- --------------------------------------------------------------------------------
Account Policies 151
Distributions and Taxes 155
Services for Fund Investors 156
Brokerage Allocation 157
Instructions for Regular Accounts 158
Instructions for IRAs 160
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
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. Founders uses 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.
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* 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 Founders' 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.
* 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 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 EACH YEAR (%)
CLASS F SHARES
[EXHIBIT A]
BEST QUARTER: Q4 '98 +21.11%
WORST QUARTER: Q3 '90 -14.83%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS 5.54%.
- --------------------------------------------------------------------------------
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.
Key concepts
GROWTH STOCK: 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: analyzing the fundamentals of individual companies rather
than focusing on broader market or sector themes.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.67 0.67 0.67 0.67 0.67
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.16 0.16 0.16 0.16 0.16
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 1.08 1.83 1.83 0.83 1.33
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 1.06 1.81 1.81 0.81 1.31
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
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 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.
* 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.
* 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>
* FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
* 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.
* 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.
* 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.
* 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.
* RISK OF FIXED-INCOME INVESTMENTS. The fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
The Fund
<PAGE>
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 $118 billion in its mutual fund
portfolios as of September 30, 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, Founders uses a lead manager and team
system. Each team is composed of members of the 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 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, and Mr. Chapman has been the lead portfolio manager of Dreyfus Founders
Focus Fund since December 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.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company's 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 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)(1) (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 expenses to average net assets (%) 1.09(2) 1.08 1.10 1.19 1.24 1.33
Gross expenses to average net assets (%) 1.10(2) 1.10 1.12 1.20 1.28 --
Ratio of net investment income (loss)
to average net assets (%) (0.44)(2) 0.05 0.48 0.15 0.12 (0.17)
Portfolio turnover rate (%)(3) 124 143 189 134 130 172
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 2,821,366 2,360,180 1,757,449 1,118,323 655,927 307,988
<FN>
(1) DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER
31, 1998 AGGREGATED LESS THAN $0.01 ON A PER-SHARE BASIS.
(2) ANNUALIZED.
(3) "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>
The Fund
<PAGE>
Your Investment
ACCOUNT POLICIES
YOU WILL NEED TO CHOOSE A SHARE CLASS before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* CLASS R SHARES are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
<PAGE>
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
THE FUND RESERVES THE RIGHT TO:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets.
* change or discontinue its exchange privilege,
or temporarily suspend this privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS (CONTINUED)
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 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.
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>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Growth Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Growth Fund P.O.
Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Growth Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Growth Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "213" for
Class A, "214" for Class B, "215" for Class C, "216" for Class R, or "217" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Growth Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587 Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Growth Fund
* the share class
* your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "213" for
Class A, "214" for Class B, "215" for Class C, "216" for Class R, or "217" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Growth Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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>
[Application p1]
<PAGE>
[Application p2]
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Growth Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
213P1299
<PAGE>
Dreyfus Founders Growth and Income Fund
Pursuing long-term growth of capital and income through investments in growth
companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Growth and Income Fund
--------------------------------------
Ticker Symbols CLASS A: FRMAX
CLASS B: FRMEX
CLASS C: FRMDX
CLASS R: FRMRX
CLASS T: FRMVX
Contents
The Fund
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Investment Approach 168
Main Risks 169
Past Performance 170
Expenses 171
More About Investment Objective,
Strategies and Risks 173
Management 176
Financial Highlights 177
Your Investment
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Account Policies 178
Distributions and Taxes 182
Services for Fund Investors 183
Brokerage Allocation 184
Instructions for Regular Accounts 185
Instructions for IRAs 187
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
<PAGE>
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:
* are included in a widely recognized index of stock market performance,
such as the Dow Jones Industrial Average or the S&P 500 Index
* generally pay regular dividends
* have a market capitalization of at least $1 billion
The fund may invest in non-dividend-paying companies if, in the opinion of the
fund's portfolio manager, 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. Founders uses 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.
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* 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 Founders' 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.
* 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.
Key concepts
DIVIDEND: a payment of stock or cash from a company's profits to its
stockholders.
LARGE COMPANIES: 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: 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.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
<PAGE>
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 EACH YEAR (%)
CLASS F SHARES
[Exhibit A]
BEST QUARTER: Q1 '91 +12.68%
WORST QUARTER: Q3 '90 -11.26%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS -2.32%.
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Average annual total returns AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------
GROWTH AND INCOME
FUND* -- CLASS F 17.78% 17.81% 16.31%
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 Fund
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
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<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
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ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.62 0.62 0.62 0.62 0.62
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.18 0.18 0.18 0.18 0.18
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TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 1.05 1.80 1.80 0.80 1.30
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 1.03 1.78 1.78 0.78 1.28
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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.
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
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 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.
* 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.
* 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>
* FOREIGN INVESTMENT RISK. Investments in foreign
securities involve different risks than U.S. investments. These risks
include:
* 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.
* 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.
* 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.
* 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.
* RISK OF FIXED-INCOME INVESTMENTS. The fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
The Fund
<PAGE>
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 $118 billion in its mutual fund
portfolios as of September 30, 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, Founders uses a lead manager and team
system. Each team is composed of members of the 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 and of the domestic portion of Dreyfus Founders
Worldwide Growth Fund since July 1999. Mr. Arrington also serves as portfolio
manager 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.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company's 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 1998 1997 1996 1995 1994
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<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)(1) (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
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RATIOS/SUPPLEMENTAL DATA
Net expenses to average net assets (%) 1.15(2) 1.08 1.09 1.15 1.17 1.21
Gross expenses to average net assets (%) 1.16(2) 1.10 1.11 1.16 1.22 --
Ratio of net investment income (loss)
to average net assets (%) (0.08)(2) 1.38 1.84 1.40 1.19 0.88
Portfolio turnover rate (%)(3) 238 259 256 195 235 239
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Net assets -- end of period ($ x 1,000) 523,123 542,307 543,168 535,866 375,200 311.051
<FN>
(1) DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER
31, 1998 AGGREGATED LESS THAN $0.01 ON A PER-SHARE BASIS.
(2) ANNUALIZED.
(3) "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>
The Fund
<PAGE>
Your Investment
ACCOUNT POLICIES
YOU WILL NEED TO CHOOSE A SHARE CLASS before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* CLASS R SHARES are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
<PAGE>
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.
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<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
THE FUND RESERVES THE RIGHT TO:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets.
* change or discontinue its exchange privilege,
or temporarily suspend this privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS (CONTINUED)
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 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.
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>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Growth and Income Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Growth and Income
Fund P.O. Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Growth and Income Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Growth and Income Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "275" for
Class A, "276" for Class B, "277" for Class C, "278" for Class R, or "279" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Growth and Income Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587, Providence,
RI 02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Growth and Income Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "275" for
Class A, "276" for Class B, "277" for Class C, "278" for Class R, or "279" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Growth and Income Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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>
[Application p1]
<PAGE>
[Application p2]
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Growth and Income Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
275P1299
<PAGE>
Dreyfus Founders International Equity Fund
Pursuing long-term growth of capital through investments in foreign securities
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders International Equity Fund
------------------------------------------
Ticker Symbols CLASS A: FOIAX
CLASS B: FOIDX
CLASS C: FOICX
CLASS R: FOIRX
CLASS T: FOIUX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 194
Main Risks 195
Past Performance 196
Expenses 197
More About Investment Objective,
Strategies and Risks 199
Management 202
Financial Highlights 203
Your Investment
- --------------------------------------------------------------------------------
Account Policies 204
Distributions and Taxes 208
Services for Fund Investors 209
Brokerage Allocation 210
Instructions for Regular Accounts 211
Instructions for IRAs 213
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
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. Founders uses 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.
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintainted an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
* 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.
* 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.
* 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.
* 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.
* 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.
Key concepts
FOREIGN SECURITIES: securities of issuers, wherever organized, that have their
principal business activities outside of the United States. Founders considers
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.
The Fund
<PAGE>
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 EACH YEAR (%)
CLASS F SHARES
[Exhibit A]
BEST QUARTER: Q1 '98 +14.69%
WORST QUARTER: Q3 '98 -14.58%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS 13.54%.
- --------------------------------------------------------------------------------
Average annual total returns AS OF 12/31/98
Since
1 Year inception*
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY
FUND -- CLASS F 17.01% 17.18%
MORGAN STANLEY CAPITAL INTERNATIONAL
WORLD EX. U.S. INDEX 18.77% 9.06%
* 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. "SINCE INCEPTION" PERFORMANCE
DATA FOR THE INDEX IS FROM DECEMBER 31, 1995 THROUGH DECEMBER 31, 1998.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00 1.00 1.00 1.00 1.00
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.67 0.67 0.67 0.67 0.67
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES
(WITHOUT REIMBURSEMENTS/WAIVERS OR CREDITS) 1.92 2.67 2.67 1.67 2.17
TOTAL ANNUAL FUND OPERATING EXPENSES
(WITH REIMBURSEMENTS/WAIVERS OR CREDITS)*** 1.80 2.55 2.55 1.55 2.05
<FN>
* 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, 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 FUND'S BOARD OF DIRECTORS.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
The Fund
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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.
<PAGE>
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 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.
* 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
* 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.
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
* 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.
* 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.
* INITIAL PUBLIC OFFERINGS. The fund invests in initial public offerings
("IPOs"). Part of the historical performance of the fund is due to the
allocation to the fund of securities sold in IPOs. The effect of IPOs on
the fund's performance depends on a variety of factors, including the
number of IPOs the fund invests in, whether and to what extent a security
purchased in an IPO appreciates in value, and the asset base of the fund.
There is no guarantee that the fund's investments in IPOs, if any, will
continue to have a similar impact on the fund's performance.
* RISK OF FIXED-INCOME INVESTMENTS. The fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
<PAGE>
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 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 $118 billion in its mutual fund
portfolios as of September 30, 1999. Founders and Dreyfus are investment
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, Founders uses a lead manager and team
system. Each team is composed of members of the 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 equities analyst
and quantitative analyst. A graduate of Washington State University, Mr.
Loeffler received an MBA in finance from the University of Chicago.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
The Fund
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company's 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<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 or (losses) 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 expenses to average net assets (%)(2) 1.80(3) 1.80 1.85 1.94 --
Gross expenses to average net assets (%)(2) 1.83(3) 1.83 1.89 2.00 --
Ratio of net investment income (loss)
to average net assets (%)(2) 0.66(3) 0.02 (0.21) (0.15) --
Portfolio turnover rate (%)(4) 173 148 164 71 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 23,742 18,938 15,740 10,119 767
<FN>
(1) FROM DECEMBER 29, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31,
1995.
(2) 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)
(3) ANNUALIZED.
(4) "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>
Your Investment
ACCOUNT POLICIES
YOU WILL NEED TO CHOOSE A SHARE CLASS before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* CLASS R SHARES are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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>
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.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
THE FUND RESERVES THE RIGHT TO:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets.
* change or discontinue its exchange privilege,
or temporarily suspend this privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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.
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 also 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.
<PAGE>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
<PAGE>
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 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.
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.
Your Investment
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
International Equity Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. International
Equity Fund P.O. Box 6587 Providence, RI 02940-6587
Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* International Equity Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* International Equity Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "360" for
Class A, "361" for Class B, "362" for Class C, "363" for Class R, or "364" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* International Equity Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 11)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587 Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* International Equity Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "360" for
Class A, "361" for Class B, "362" for Class C, "363" for Class R, or "364" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* International Equity Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 11).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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.
Your Investment
<PAGE>
[Application p1]
<PAGE>
[Application p2]
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders International Equity Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
360P1299
<PAGE>
Dreyfus Founders Mid-Cap Growth Fund
Pursuing capital appreciation through investments in mid-cap growth companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Mid-Cap Growth Fund
-------------------------------------
Ticker Symbols CLASS A: FRSDX
CLASS B: FRSFX
CLASS C: FRSCX
CLASS R: FRSRX
CLASS T: FRSVX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 220
Main Risks 221
Past Performance 222
Expenses 223
More About Investment Objective,
Strategies and Risks 224
Management 227
Financial Highlights 228
Your Investment
- --------------------------------------------------------------------------------
Account Policies 229
Distributions and Taxes 233
Services for Fund Investors 234
Brokerage Allocation 235
Instructions for Regular Accounts 236
Instructions for IRAs 237
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND' S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
INVESTMENT APPROACH
The fund seeks capital appreciation by emphasizing investments in equity
securities of medium-size companies with 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 MidCap 400 Index. The fund also may
invest in larger or smaller companies if, in the opinion of the fund's portfolio
manager, 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. Founders uses 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
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risk of investing in this fund is:
Small and medium-size company risk. While small and medium-size 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-size 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-size
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-size 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 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 EACH YEAR (%)
[Exhibit A]
CLASS F SHARES
BEST QUARTER: Q1 '91 +28.83%
WORST QUARTER: Q3 '98 -29.87%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS 6.18%.
- --------------------------------------------------------------------------------
Average annual total returns AS OF 12/31/98
1 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.
Key concepts
MEDIUM-SIZE COMPANIES: 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: 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.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account Policies"
section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.77 0.77 0.77 0.77 0.77
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.26 0.26 0.26 0.26 0.26
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 1.28 2.03 2.03 1.03 1.53
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 1.26 2.01 2.01 1.01 1.51
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
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 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.
* 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.
* 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.
* 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>
* 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.
* Foreign investment risk. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
* 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.
* 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.
* 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.
* 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.
* Initial public offerings. The fund invests in initial public offerings
("IPOs"). Part of the historical performance of the fund is due to the
allocation to the fund of securities sold in IPOs. The effect of IPOs on
the fund's performance depends on a variety of factors, including the
number of IPOs the fund invests in, whether and to what extent a security
purchased in an IPO appreciates in value, and the asset base of the fund.
There is no guarantee that the fund's investments in IPOs, if any, will
continue to have a similar impact on the fund' s performance.
* Risk of fixed-income investments. The fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
The Fund
<PAGE>
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 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 $118 billion in its mutual fund
portfolios as of September 30, 1999. Founders and Dreyfus are investment
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, Founders uses a lead manager and team
system. Each team is composed of members of the 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.
Kevin S. Sonnett, vice president of investments and chartered financial analyst,
has been the fund's portfolio manager since December 1999. Mr. Sonnett joined
Founders in February 1997 as an equity analyst for the small- and mid-cap
investment team, and was promoted to senior equity analyst in 1999. Mr. Sonnett
also serves as a portfolio manager for The Dreyfus Corporation. Before joining
Founders, Mr. Sonnett was an equity analyst with the Colorado Public Employees
Retirement Association from 1995 to 1997, and an investor services
representative with Janus Service Corporation from 1994 to 1995. Mr. Sonnett
holds a bachelor's degree in marketing from Pennsylvania State University and a
masters degree in finance from the University of Colorado.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company' s 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 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 expenses to average net assets (%) 1.40(1) 1.33 1.30 1.34 1.29 1.36
Gross expenses to average net assets (%) 1.42(1) 1.35 1.32 1.36 1.35 --
Ratio of net investment income (loss)
to average net assets (%) (1.09)(1) (0.39) (0.05) (0.28) 0.00 (0.27)
Portfolio turnover rate (%)(2) 169 152 110 186 263 272
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 219,273 252,855 320,186 363,835 388,754 299,190
<FN>
(1) ANNUALIZED.
(2) "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>
The Fund
<PAGE>
Your Investment
ACCOUNT POLICIES
You will need to choose a share class before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* Class R shares are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
<PAGE>
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ---------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
Selling shares
You may sell (redeem) shares at any time. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
The fund reserves the right to:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets.
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS (CONTINUED)
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 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.
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>
INSTRUCTIONS FOR REGULAR ACCOUNTS
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Mid-Cap Growth Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Mid-Cap Growth Fund
P.O. Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Mid-Cap Growth Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Mid-Cap Growth Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "291" for
Class A, "292" for Class B, "293" for Class C, "294" for Class R, or "295" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Mid-Cap Growth Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587 Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Mid-Cap Growth Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "291" for
Class A, "292" for Class B, "293" for Class C, "294" for Class R, or "295" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Mid-Cap Growth Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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>
NOTES
<PAGE>
For More Information
Dreyfus Founders Mid-Cap Growth Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
291P1299
<PAGE>
Dreyfus Founders Passport Fund
Pursuing capital appreciation through investments in small foreign growth
companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Passport Fund
-------------------------------------
Ticker Symbols CLASS A: FPSAX
CLASS B: FPSBX
CLASS C: FPSCX
CLASS R: FPSRX
CLASS T: FPSTX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 243
Main Risks 244
Past Performance 245
Expenses 246
More About Investment Objective,
Strategies and Risks 248
Management 251
Financial Highlights 252
Your Investment
- --------------------------------------------------------------------------------
Account Policies 253
Distributions and Taxes 257
Services for Fund Investors 258
Brokerage Allocation 259
Instructions for Regular Accounts 260
Instructions for IRAs 262
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
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 the opinion of the fund's portfolio manager, they
represent better prospects for capital appreciation.
Founders Asset Management LLC ("Founders") manages the fund using a "growth
style" of investing. Founders uses 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.
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* FOREIGN INVESTMENT RISK. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
* 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.
* 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.
* 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.
* 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.
* 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.
* 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.
Key concepts
MARKET CAPITALIZATION: 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: securities of issuers, wherever organized, that have their
principal business activities outside of the United States. Founders considers
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.
The Fund
<PAGE>
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 EACH YEAR (%)
CLASS F SHARES
[Exhibit A]
BEST QUARTER: Q1 '98 +14.30%
WORST QUARTER: Q3 '98 -19.32%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS 16.88%.
- --------------------------------------------------------------------------------
Average annual total returns AS OF 12/31/98
Since
1 Year 5 Years inception*
- -------------------------------------------------------------------
PASSPORT FUND
CLASS F 12.50% 8.89% 9.77%
MORGAN STANLEY
CAPITAL INTERNATIONAL
WORLD EX. U.S. INDEX 18.77% 9.19% 10.50%
* 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. "SINCE INCEPTION" PERFORMANCE DATA FOR THE INDEX IS FROM
NOVEMBER 30, 1993 THROUGH DECEMBER 31, 1998.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account
Policies" section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00 1.00 1.00 1.00 1.00
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.25 0.25 0.25 0.25 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 1.50 2.25 2.25 1.25 1.75
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 1.48 2.23 2.23 1.23 1.73
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
The Fund
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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.
<PAGE>
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 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.
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
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.
* 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
* 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.
* 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.
* 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.
* INITIAL PUBLIC OFFERINGS. The fund invests in initial public offerings
("IPOs"). Part of the historical performance of the fund is due to the
allocation to the fund of securities sold in IPOs. The effect of IPOs on
the fund's performance depends on a variety of factors, including the
number of IPOs the fund invests in, whether and to what extent a security
purchased in an IPO appreciates in value, and the asset base of the fund.
There is no guarantee that the fund's investments in IPOs, if any, will
continue to have a similar impact on the fund's performance.
* RISK OF FIXED-INCOME INVESTMENTS. The fund's investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
<PAGE>
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 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 $118 billion in its mutual fund
portfolios as of September 30, 1999. Founders and Dreyfus are investment
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, Founders uses a lead manager and team
system. Each team is composed of members of the 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.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
The Fund
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company's 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 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 expenses to average net assets (%) 1.58(1) 1.52 1.53 1.57 1.76 1.88
Gross expenses to average net assets (%) 1.60(1) 1.54 1.55 1.59 1.84 --
Ratio of net investment income or (loss)
to average net assets (%) (0.45)(1) 0.09 0.20 0.40 0.60 0.12
Portfolio turnover rate (%)(2) 33 34 51 58 37 78
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 116,783 124,572 122,646 177,921 49,922 16,443
<FN>
(1) ANNUALIZED.
(2) "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>
Your Investment
ACCOUNT POLICIES
YOU WILL NEED TO CHOOSE A SHARE CLASS before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* CLASS R SHARES are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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>
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.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
THE FUND RESERVES THE RIGHT TO:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets.
* change or discontinue its exchange privilege,
or temporarily suspend this privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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.
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 also 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.
<PAGE>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
<PAGE>
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 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.
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.
Your Investment
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Passport Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Passport Fund P.O.
Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Passport Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Passport Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "281" for
Class A, "282" for Class B, "283" for Class C, "284" for Class R, or "285" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Passport Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 11)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587, Providence,
RI 02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046590
* EEC code 5660
* Passport Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "281" for
Class A, "282" for Class B, "283" for Class C, "284" for Class R, or "285" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Passport Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 11).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427, Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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.
Your Investment
<PAGE>
[Application p1]
<PAGE>
[Application p2]
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Passport Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
281P1299
<PAGE>
Dreyfus Founders Worldwide Growth Fund
Pursuing long-term growth of capital through investments in foreign and U.S.
companies
PROSPECTUS December 31, 1999
CLASS A, B, C, R AND T SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Founders Worldwide Growth Fund
--------------------------------------
Ticker Symbols CLASS A: FWWAX
CLASS B: FWWBX
CLASS C: FWWCX
CLASS R: FWWRX
CLASS T: FWWTX
Contents
The Fund
- --------------------------------------------------------------------------------
Investment Approach 269
Main Risks 270
Past Performance 271
Expenses 272
More About Investment Objective,
Strategies and Risks 274
Management 277
Financial Highlights 278
Your Investment
- --------------------------------------------------------------------------------
Account Policies 279
Distributions and Taxes 283
Services for Fund Investors 284
Brokerage Allocation 285
Instructions for Regular Accounts 286
Instructions for IRAs 288
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND' S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
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. Founders uses 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
Key concepts
The fund offers multiple classes of shares. This prospectus describes shares of
Classes A, B, C, R and T. The fund's other class of shares, Class F, is offered
by a separate prospectus and is generally available only to shareholders who
continuously maintained an account with any Dreyfus Founders fund 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>
MAIN RISKS
The primary risks of investing in this fund are:
* Foreign investment risk. Investments in foreign securities involve
different risks than U.S. investments. These risks include:
* 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.
* 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.
* 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.
* 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.
* 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.
Key concepts
GLOBAL FUND: a type of mutual fund that may invest in securities traded anywhere
in the world, including the United States.
FOREIGN SECURITIES: securities of issuers, wherever organized, that have their
principal business activities outside of the United States. Founders considers
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.
The Fund
<PAGE>
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 EACH YEAR (%)
[Exhibit A]
CLASS F SHARES
BEST QUARTER: Q4 '93 +15.28%
WORST QUARTER: Q3 '98 -16.75%
THE YEAR-TO-DATE TOTAL RETURN FOR THE FUND'S CLASS F SHARES AS OF SEPTEMBER 30,
1999 WAS 7.43%.
- --------------------------------------------------------------------------------
Average annual total returns AS OF 12/31/98
Since
1 Year 5 Years inception*
- -------------------------------------------------------------------
WORLDWIDE GROWTH FUND
CLASS F 9.63% 10.26% 13.36%
MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD
INDEX 24.33% 15.68% 10.00%
* 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.
What this 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 this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
<PAGE>
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.
* 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.
* You will find details about reduced sales charges in the "Account Policies"
section of this prospectus.
<TABLE>
<CAPTION>
Fee table
CLASS A CLASS B CLASS C CLASS R CLASS T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE 4.50
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE*
Maximum sales charge on reinvested
dividends/distributions NONE NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.96 0.96 0.96 0.96 0.96
Rule 12b-1 fee NONE 0.75 0.75 NONE 0.25
Shareholder services fee 0.25 0.25 0.25 NONE 0.25
Other expenses** 0.23 0.23 0.23 0.23 0.23
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (WITHOUT CREDITS) 1.44 2.19 2.19 1.19 1.69
TOTAL ANNUAL FUND OPERATING EXPENSES (WITH CREDITS)*** 1.42 2.17 2.17 1.17 1.67
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Expense example
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 THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Key concepts
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 (CDSC): a back-end sales charge payable if
shares are redeemed within a certain time period.
The Fund
<PAGE>
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 Founders
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 Founders believes 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 it cannot be sold 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. Founders monitors 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
<PAGE>
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 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.
* 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
* 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.
The Fund
<PAGE>
MORE ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS (CONTINUED)
* 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.
* Investment style risk. Market performance tends to be cynical, 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.
* Initial public offerings. The fund invests in initial public offerings
("IPOs"). Part of the historical performance of the fund is due to the
allocation to the fund of securities sold in IPOs. The effect of IPOs on
the fund's performance depends on a variety of factors, including the
number of IPOs the fund invests in, whether and to what extent a security
purchased in an IPO appreciates in value, and the asset base of the fund.
There is no guarantee that the fund's investments in IPOs, if any, will
continue to have a similar impact on the fund's performance.
* Risk of fixed-income investments. The fund' s investments in fixed-income
securities are subject to interest rate risk and credit risk.
* 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.
* 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.
* 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. Founders is working to avoid year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by year 2000-related problems. This could
have an impact on the value of the fund's investments and the fund's share
prices.
<PAGE>
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 $118 billion in its mutual fund
portfolios as of September 30, 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, Founders uses a lead manager and team
system. Each team is composed of members of the 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 a 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 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. Mr. Arrington has also been the lead portfolio manager of
Dreyfus Founders Growth and Income Fund since February 1999. Mr. Chapman has
also been the lead portfolio manager of the Dreyfus Founders Focus Fund since
December 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.
Founders has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Founders employees does not disadvantage any
Founders-managed fund. Founders portfolio managers and other investment
personnel who comply with the Policy's preclearance and disclosure procedures
may be permitted to purchase, sell or hold certain types of securities which
also may be or are held in the fund(s) they advise.
The Fund
<PAGE>
FINANCIAL HIGHLIGHTS
The following 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,
is included in the company' s 1998 annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
CLASS F 1999 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)(1) (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 expenses to average net assets (%) 1.53(2) 1.47 1.45 1.53 1.56 1.66
Gross expenses to average net assets (%) 1.55(2) 1.49 1.47 1.55 1.65 --
Ratio of net investment income (loss)
to average net assets (%) 0.25(2) 0.33 0.18 0.50 0.61 (0.14)
Portfolio turnover rate (%)(3) 72 86 82 72 54 87
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets -- end of period ($ x 1,000) 248,937 272,053 308,877 342,079 228,595 104,044
<FN>
(1) DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME FOR THE YEAR ENDED DECEMBER
31, 1998 AGGREGATED LESS THAN $0.01 ON A PER-SHARE BASIS.
(2) ANNUALIZED.
(3) "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>
Your Investment
ACCOUNT POLICIES
You will need to choose a share class before making an initial investment.
Selecting a class in which to invest 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:
* 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.
* 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.
* 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.
* Class R shares are designed for eligible institutions on behalf of their
clients. Individuals may not purchase these shares directly.
* 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.
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.
Third-party investments
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.
Your Investment
<PAGE>
ACCOUNT POLICIES (CONTINUED)
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A AND CLASS T -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ---------------------------------------------------------------------------------------------------------------------------------
Class Class Class Class
A T A T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
<FN>
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through reinvestment of dividends).
Class A shares also carry an annual shareholder services fee of 0.25% of the
class's average daily net assets.
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's average daily net assets.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Time since investment or your redemption
your initial 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%
More than 6 years Shares will automatically convert
to Class A, which has no CDSC
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's average daily net assets.
<PAGE>
- --------------------------------------------------------------------------------
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's average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES CHARGE, RULE 12B-1 FEE OR SHAREHOLDER SERVICES FEE
Buying shares
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 4:00 p.m.
Eastern time) every day the NYSE is open. Your order will be priced at the next
NAV 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.
- --------------------------------------------------------------------------------
Minimum investments
Account type Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
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>
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.
Selling shares
You may sell (redeem) shares at any time. Your shares will be sold at the next
NAV 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, the
fund 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.
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 reasonable measures
were taken to verify the order.
The fund reserves the right to:
* 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).
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets.
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions.
* change its minimum investment amounts.
* 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.
<PAGE>
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
* written sell orders of $100,000 or more
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 signature must be guaranteed. Please call 1-800-554-4611 if you have
questions about obtaining a signature guarantee.
Key concepts
NET ASSET VALUE (NAV): 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.
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 in 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:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE 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>
SERVICES FOR FUND INVESTORS
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 For making automatic investments
ASSET BUILDER(R) from a designated bank account.
PAYROLL For making automatic investments
SAVINGS PLAN through payroll deduction.
GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
AUTO-EXCHANGE For making regular exchanges
PRIVILEGE from one fund into another.
- --------------------------------------------------------------------------------
For selling shares
AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most funds. There is no CDSC on Class B
shares, as long as the amounts withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects to participate in the plan.
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 also 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.
<PAGE>
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 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.
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.
Your Investment
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Dreyfus Founders Funds, Inc.
Worldwide Growth Fund
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Dreyfus Founders Funds, Inc. Worldwide Growth
Fund P.O. Box 6587 Providence, RI 02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Co., with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Worldwide Growth Fund
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Worldwide Growth Fund
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
<PAGE>
ELECTRONIC CHECK Same as wire, but before your account number insert "351" for
Class A, "352" for Class B, "353" for Class C, "354" for Class R, or "355" for
Class T.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us at 1-800-554-4611 or call your financial representative to
request a form to add any automatic investing service (see "Services for Fund
Shareholders"). Complete and return the form along with any other required
materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* Worldwide Growth Fund
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 11)
Mail your request to: Dreyfus Founders Funds, Inc. P.O. Box 6587 Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or sell shares, please contact
your financial representative or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: DREYFUS FOUNDERS FUNDS, INC.
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, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427 Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427 Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 046485
* EEC code 5650
* Worldwide Growth Fund
* the share class * your account number
* name(s) of investor(s)
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "351" for
Class A, "352" for Class B, "353" for Class C, "354" for Class R, or "355" for
Class T.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
<PAGE>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* Worldwide Growth Fund
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 11).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427 Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
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.
Your Investment
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Founders Worldwide Growth Fund
A series of Dreyfus Founders Funds, Inc.
- ---------------------------------------
SEC file number: 811-01018
More information on this fund is available to you free of charge.
Annual/Semiannual Report
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.
Statement of Additional Information (SAI)
A current 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.
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: Dreyfus Founders Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from the Securities and Exchange Commission's Internet site at: http:
//www.sec.gov
BY MAIL OR IN PERSON from the Securities and Exchange Commission (you will pay a
copying fee) Visit or write: SEC's Public Reference Section Washington, DC
20549-6009 1-800-SEC-0330
Dreyfus Founders Funds are managed by Founders Asset Management LLC.
Founders and Founders Funds are registered trademarks of Founders Asset
Management LLC.
(c) 1999 Dreyfus Service Corporation
351P1299
<PAGE>
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>
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>
TABLE OF CONTENTS
DREYFUS FOUNDERS FUNDS, INC..................................................297
INVESTMENT OBJECTIVES AND RESTRICTIONS.......................................297
FUNDAMENTAL INVESTMENT RESTRICTIONS.......................................298
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS...................................299
INVESTMENT STRATEGIES AND RISKS..............................................300
TEMPORARY DEFENSIVE INVESTMENTS...........................................300
PORTFOLIO TURNOVER........................................................301
HEDGING TECHNIQUES........................................................301
Options on Securities Indices and Securities............................301
Futures Contracts.......................................................304
Options on Futures Contracts............................................308
Options on Foreign Currencies...........................................309
Risk Factors of Investing in Futures and Options........................310
FOREIGN SECURITIES AND ADRS...............................................311
FORWARD CONTRACTS FOR PURCHASE OR SALE OF FOREIGN CURRENCIES..............312
SECURITIES THAT ARE NOT READILY MARKETABLE................................315
RULE 144A SECURITIES......................................................315
FIXED-INCOME SECURITIES...................................................316
FOREIGN BANK OBLIGATIONS..................................................318
REPURCHASE AGREEMENTS.....................................................318
CONVERTIBLE SECURITIES....................................................319
GOVERNMENT SECURITIES.....................................................319
MORTGAGE-RELATED SECURITIES...............................................320
Mortgage Pass-Through Securities........................................320
Collateralized Mortgage Obligations.....................................322
Risks of Mortgage-Related Securities....................................322
COMMERCIAL PAPER AND OTHER CASH SECURITIES................................323
WHEN-ISSUED SECURITIES....................................................324
BORROWING.................................................................324
SECURITIES OF OTHER INVESTMENT COMPANIES..................................324
CERTAIN INVESTMENTS.......................................................325
DIRECTORS AND OFFICERS.......................................................325
DIRECTORS.................................................................325
COMMITTEES................................................................327
DIRECTOR COMPENSATION.....................................................328
OFFICERS..................................................................329
INVESTMENT ADVISER, DISTRIBUTOR AND OTHER SERVICE PROVIDERS..................331
INVESTMENT ADVISER........................................................331
<PAGE>
DISTRIBUTOR...............................................................335
TRANSFER AGENTS AND CUSTODIAN.............................................336
PURCHASE OF SHARES...........................................................337
General.................................................................337
Class A Shares..........................................................339
Class B Shares..........................................................341
Class C Shares..........................................................341
Class B and C Shares....................................................342
Class F and Class R Shares..............................................342
Class T Shares..........................................................342
Dealer Reallowance -Class A and Class T Shares..........................343
Sales Loads -- Class A and Class T Shares...............................343
Right of Accumulation -- Class A and Class T Shares.....................344
TeleTransfer Privilege..................................................344
Reopening an Account....................................................345
DISTRIBUTION PLANS AND SHAREHOLDER SERVICES PLAN.............................345
DISTRIBUTION PLANS........................................................345
Class B, Class C and Class T Shares.....................................345
Class F Shares..........................................................345
Provisions Applicable to All Classes....................................347
SHAREHOLDER SERVICES PLAN.................................................348
REDEMPTION OF SHARES.........................................................349
General.................................................................349
Contingent Deferred Sales Charge -- Class B Shares......................349
Contingent Deferred Sales Charge -- Class C Shares......................350
Waiver of CDSC..........................................................350
Redemption Through a Selected Dealer....................................351
Reinvestment Privilege..................................................351
TeleTransfer Privilege..................................................352
Redemption Commitment...................................................352
Redemption Payments; Suspension of Redemptions..........................352
Transactions through Third Parties......................................352
SHAREHOLDER SERVICES.........................................................353
Fund Exchanges for Classes A, B, C, R and T.............................353
Dreyfus Auto-Exchange Privilege.........................................355
Dreyfus-Automatic Asset Builder(R)......................................355
Dreyfus Government Direct Deposit Privilege.............................355
Dreyfus Dividend Options................................................356
Automatic Withdrawal Plan...............................................356
Letter of Intent -- Class A and Class T Shares..........................357
Dreyfus Payroll Savings Plan............................................357
<PAGE>
Corporate Pension/Profit-Sharing and Personal Retirement Plans..........358
Class F Shareholder Services............................................358
Company Policy Regarding Market Timing Activities.......................358
OTHER SERVICES...............................................................359
FUND ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT.....................359
SHAREHOLDER SERVICES AGREEMENT............................................360
BROKERAGE ALLOCATION.........................................................361
CAPITAL STOCK................................................................366
PRICING OF SHARES............................................................369
Foreign Securities......................................................369
All Funds Except Money Market Fund......................................369
Money Market Fund.......................................................370
Options.................................................................371
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................371
YIELD AND PERFORMANCE INFORMATION............................................376
ADDITIONAL INFORMATION.......................................................380
CODE OF ETHICS............................................................380
INDEPENDENT ACCOUNTANTS...................................................381
REGISTRATION STATEMENT....................................................381
APPENDIX.....................................................................382
RATINGS OF CORPORATE BONDS................................................382
RATINGS OF COMMERCIAL PAPER...............................................384
RATINGS OF PREFERRED STOCK................................................385
<PAGE>
- --------------------------------------------------------------------------------
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>
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>
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>
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.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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,
Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Croatia, Czech Republic,
Ecuador, Egypt, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Jordan,
Malaysia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, Poland,
Republic of Korea (South Korea), Romania, Russia and the other countries of the
former Soviet Union, Singapore, Slovak Republic, South Africa, Sri Lanka,
Taiwan, Thailand, Turkey, Uruguay, Venezuela, and Vietnam.
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 purchase or sale, for a fixed amount of dollars, of
the amount of foreign currency
<PAGE>
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 currency by purchasing an offsetting contract obligating it
to purchase, at the same
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 the credit risk such rating service perceives to exist with respect to
the security.
<PAGE>
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 to make specific valuation
determinations. The Funds do not invest in any medium and
<PAGE>
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 securities acquired
by a Fund (including accrued interest earned thereon) must have a
<PAGE>
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 ("FICO"), Federal Home Loan Mortgage Corporation
("Freddie Mac"), Federal National
<PAGE>
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
vawith collateral consisting of mortgage-related securities (see "Collateralized
Mortgage Obligations"), and in other types of mortgage-related securities.
MORTGAGE PASS-THROUGH SECURITIES. Interests in pools of mortgage-related
securities differ from other forms of debt securities that normally provide for
periodic
<PAGE>
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. government securities. The assets underlying such
securities may be represented by a portfolio of first lien residential mortgages
(including both whole mortgage loans and
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 investment companies. Should a
Fund purchase securities of other investment
<PAGE>
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>
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>
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>
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)
Name of Person, Position 1 paid to directors 1
--------------------------------------------------- ----------------------
Jay A. Precourt, Chairman and Director $47,500
Eugene H. Vaughan, Jr., Vice Chairman and Director $31,250
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>
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>
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>
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 December 28, 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 Fund, in which the ownership interests of the group totaled
6.30%.
- --------------------------------------------------------------------------------
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>
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>
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>
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>
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; Curtis J. Anderson, Vice President; Thomas M.
Arrington, Vice President; Marissa A. Banuelos, Vice President; Angelo Barr,
Senior Vice President and National Sales Manager; Scott A. Chapman, Vice
President; Kenneth R. Christoffersen, Senior Vice President, General Counsel and
Secretary; Gregory P. Contillo, Executive Vice President and Chief Marketing
Officer; Francis P. Gaffney, Senior Vice President; Laurine Garrity, Senior Vice
President; Douglas A. Loeffler, Vice President; Andra C. Ozols, Vice President;
David L. Ray, Senior Vice President and Treasurer; Linda M. Ripley, Vice
President; Kevin S. Sonnett, 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
<PAGE>
Management, Inc., Founders' predecessor corporation ("Old Founders"), acted as
the 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,
<PAGE>
Missouri 64105. IFTC provides transfer agent services to the Class F shares of
the 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>
Class F shares generally are offered only to persons or entities who
have continuously maintained an account with any Fund since December 30, 1999.
These include, without limitation, customers of certain financial institutions
which offer Eligible Benefit Plan programs and which have had relationships with
Founders and/or 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
Founders-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 Founders-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 Automatic
Asset Builder(R), Payroll Savings Plan and Government Direct Deposit Privilege
described under "Shareholder Services." These services enable you to make
regularly scheduled investments and may provide you with
<PAGE>
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>
Total Sales Load
--------------------------------------------------------
As a % of As a % of net Dealers'
offering price asset value Reallowance as a %
Amount of Transaction per share per share of offering 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 than 3.50 3.60 2.75
$250,000
$250,000 to less than 2.50 2.60 2.25
$500,000
$500,000 to less than 2.00 2.00 1.75
$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>
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>
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 net Dealers'
offering price asset value Reallowance as a %
Amount of Transaction per share per share of offering 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 than 3.00 3.10 2.50
$250,000
$250,000 to less than 2.00 2.00 1.75
$500,000
$500,000 to less than 1.50 1.50 1.25
$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>
"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:
Per Share Sales
Charge - 5.75% of Per Share
offering price Offering
(6.10% of net asset Price to the
Fund NAV per Share value per share) 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 Per Share
offering price Offering
(4.71% of net asset Price to the
Fund NAV per Share value per share) 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>
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>
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>
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>
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>
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>
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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>
The following table sets forth the rates of the CDSC for Class B shares:
CDSC as a % of
Year Since Purchase Amount Invested or
Payment Was Made Redemption 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>
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>
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>
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.
- --------------------------------------------------------------------------------
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>
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>
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.
AUTOMATIC ASSET BUILDER(R). 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.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE. 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>
DIVIDEND OPTIONS. 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 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.
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>
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.
PAYROLL SAVINGS PLAN. Payroll Savings Plan permits you to purchase Class
A, B, C, R or T shares (minimum $100 per transaction) automatically on
<PAGE>
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 Founders-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>
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>
"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>
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
- --------------------------------------------------------------------------------
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>
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
<PAGE>
selected brokerage firm for research provided. Founders endeavors to direct
sufficient 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>
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>
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
Fund Commissions Paid Portfolio 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>
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
- --------------------------------------------------------------------------------
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 December 28, 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 14.85%
101 Montgomery Street Discovery 27.54%
San Francisco, CA 94104 Government Securities 5.93%
(record owner) Growth 12.67%
Growth and Income 7.43%
International Equity 19.75%
Passport 41.91%
Mid-Cap Growth 19.53%
Worldwide Growth 30.33%
National Financial Services Corp. Growth 10.60%
P.O. Box 3908 International Equity 5.79%
Church Street Station Passport 14.64%
New York, NY 10008 Worldwide Growth 11.69%
(record owner)
<PAGE>
National Investors Services Corp. Passport 6.86%
55 Water Street
New York, NY 10008
(record owner)
Donaldson, Lufkin & Jenrette Securities Discovery 8.44%
Corp. International Equity 5.61%
P.O. Box 2052 Passport 5.15%
Jersey City, NJ 07303
(record owner)
Salomon Smith Barney Inc. Discovery 7.18%
388 Greenwich Street
New York, NY 10013
(record owner)
Mac & Co. Worldwide Growth 8.75%
(Mellon Retirement Services Plan)
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230
(record and beneficial owner)
The Variable Annuity Life Insurance Growth 26.30%*
Company (VALIC)
2929 Allen Parkway L7-01 Houston, TX 77019
(record and beneficial owner)
American Express Trust Company Balanced 19.66%
733 Marquette Avenue
Minneapolis, MN 55402
(record owner)
State of Michigan Plan 2 Balanced 7.06%
State Street Bank & Trust Company
200 Newport Avenue
Quincy, MA 02170
(record and beneficial owner)
Fidelity Investments Institutional Balanced 8.20%
Operations Company Growth 7.35%
100 Magellan Way
Covington, KY 41015
(record owner)
<PAGE>
Eugene H. Vaughan, Jr. Money Market 6.30%
6300 Texas Commerce Tower
Houston, TX 77002
(record and beneficial owner)
Cigna Retirement & Investment Serv. Balanced 18.07%
One Commercial Plaza Growth 6.33%
280 Trumbull Street
Hartford, CT 06103
(record and beneficial owner)
Balsa & Co. Government Securities 8.26%
P.O. Box 1768
New York, NY 10163
(record owner)
- -------------------
* The Variable Annuity Life Insurance Company) is a life insurance company
organized under the laws of the State of Texas. Fund shares are held by a
separate account into which insurance contract values have been allocated,
and are voted in accordance with the insurance contract owners'
instructions. VALIC is a subsidiary of American General Corporation.
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>
- --------------------------------------------------------------------------------
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>
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>
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.
- --------------------------------------------------------------------------------
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>
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>
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>
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>
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>
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.
- --------------------------------------------------------------------------------
YIELD AND PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
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>
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>
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>
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>
- --------------------------------------------------------------------------------
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>
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>
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>
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>
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>
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>
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>
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, 1999.5
(12) Articles Supplementary to Articles of Incorporation,
filed October 25, 1999.
(13) Articles Supplementary to Articles of Incorporation,
filed December 29, 1999.
(14) Articles of Amendment to Articles of Incorporation,
filed December 29, 1999.
<PAGE>
(b) By-Laws of Founders Funds, Inc.,
as amended November 18, 1997.4
(c) Not applicable.
(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, 1999.5
(e) (1) Form of Amended and Restated Underwriting Agreement
between Founders Funds, Inc. and Premier Mutual Fund
Services, Inc., dated December 31, 1999.5
(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
(5) Form of Bank Affiliated Broker-Dealer Agreement
for Dreyfus Founders Funds, Inc.5
(6) Form of Bank Agreement for Dreyfus Founders
Funds, Inc.5
(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 31,1999.5
<PAGE>
(2) Form of Amended and Restated Fund Accounting
and Administrative Services Agreement between
Dreyfus Founders Funds, Inc. and Founders Asset
Management LLC, dated December 31,1999.5
(3) Shareholder Services Plan, dated December 31, 1999.5
(i) Opinion and consent of Moye, Giles, O'Keefe,
Vermeire & Gorrell. 5
(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, 1999.5
(2) Dreyfus Founders Funds, Inc. Distribution Plan
for Classes B, C And T, dated December 31, 1999.5
(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
December 11, 1999, to be effective January 1,
2000.
- --------------
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.
<PAGE>
4 Filed previously on EDGAR with Post-Effective Amendment No. 64 to the
Registration Statement on February 22, 1999 and incorporated herein by
reference.
5 Filed previously on EDGAR with Post-Effective Amendment No. 65 to the
Registration Statement on October 7, 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.
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
<PAGE>
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
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 Financial Chief Operating 01/99 - Present
Corporation4 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
<PAGE>
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
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
<PAGE>
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
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
<PAGE>
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
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.
<PAGE>
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
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
<PAGE>
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
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 Positions and
Business Address Offices Offices
With Underwriter With Registrant
- -------------------- ------------------- --------------------
Marie E. Connolly President, Chief President and
Executive Officer, Treasurer
Chief Operating
Officer and
Director
<PAGE>
Name and Principal Positions and Positions and
Business Address Offices Offices
With Underwriter With Registrant
- -------------------- ------------------- --------------------
Margaret W. Chambers Senior Vice Vice President and
President, General Secretary
Counsel, Chief
Compliance Officer
and Secretary
Christopher J. None Vice President and
Kelley Assistant Secretary
Kathleen K. Morrisey None Vice President and
Assistant Secretary
Mary A. Nelson Vice President and Vice President and
Manager of Assistant Treasurer
Treasury Services
and Administration
Stephanie D. Pierce None Vice President,
Assistant
Treasurer and
Assistant Secretary
Joseph F. Tower, III Senior Vice Vice President and
President, Assistant Treasurer
Treasurer, Chief
Financial Officer
and Director
George A. Rio Executive Vice Vice President and
President and Assistant Treasurer
Client 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 None
Board and Director
Patrick W. McKeon Vice President None
Joseph A. Vignone Vice President None
<PAGE>
(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.
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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement under Rule 485(b)
under the Securities Act and 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 29th day of December, 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 December 29, 1999
- --------------------- (Principal Executive,
Marie E. Connolly Financial and
Accounting Officer)
/S/ JAY A. PRECOURT * Chairman December 29, 1999
- ----------------------
Jay A. Precourt
/S/ EUGENE H. VAUGHAN, JR.* Vice Chairman December 29, 1999
- ---------------------------
Eugene H. Vaughan, Jr.
/S/ ALAN S. DANSON * Director December 29, 1999
- ----------------------
Alan S. Danson
/S/ JOAN D. MANLEY * Director December 29, 1999
- ----------------------
Joan D. Manley
/S/ ROBERT P. MASTROVITA * Director December 29, 1999
- ---------------------------
Robert P. Mastrovita
<PAGE>
/S/ TRYGVE E. MYHREN * Director December 29, 1999
- ----------------------
Trygve E. Myhren
/S/ GEORGE W. PHILLIPS * Director December 29, 1999
- ---------------------------
George W. Phillips
/S/ KENNETH R. CHRISTOFFERSEN December 29, 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>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
a(12) Articles Supplementary to Articles of Incorporation,
filed October 25, 1999
a(13) Articles Supplementary to Articles of Incorporation,
filed December 29, 1999
a(14) Articles of Amendment to Articles of Incorporation,
filed December 29, 1999
j Consent of Independent Accountants, dated December 28, 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 December 11, 1999, to be effective
January 1, 2000.
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 25, 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 25, 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: /s/ Marie E. Connolly
---------------------
Name: Marie E. Connolly
Title: President
ATTEST:
/s/ Christopher J. Kelley
- -------------------------
Name: Christopher J. Kelley
Title: VP and Asst. Sec.
8
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
FOUNDERS FUNDS, INC.
Pursuant to Sections 2-105, 2-208, and 2-208.1of 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 remains ten billion (10,000,000,000) shares of
the Corporation's Common Stock ("Common Stock"). The par value of the
Corporation's shares of Common Stock remains $0.01 per share. The aggregate par
value of the Corporation's authorized shares remains 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 determined to classify and reallocate, and hereby classifies and
reallocates shares of the Corporation's Common Stock among each of its Series
and Classes of Series effective December 29, 1999, heretofore as follows:
Previous Adjusted
Fund Share Allocation Share Allocation
- ---- ---------------- ----------------
Balanced Fund 600,000,000 600,000,000
(to be redesignated Dreyfus Founders
Balanced Fund, Class F, effective December 31, 1999)
Dreyfus Founders Balanced Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Balanced Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Balanced Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Balanced Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Balanced Fund, Class T 50,000,000 50,000,000
Discovery Fund 200,000,000 200,000,000
(to be redesignated Dreyfus Founders
Discovery Fund, Class F, effective December 31, 1999)
Dreyfus Founders Discovery Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Discovery Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Discovery Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Discovery Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Discovery Fund, Class T 50,000,000 50,000,000
<PAGE>
Dreyfus Founders Focus Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Focus Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Focus Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Focus Fund, Class F 0 50,000,000
Dreyfus Founders Focus Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Focus Fund, Class T 50,000,000 50,000,000
Founders Growth and Income Fund 500,000,000 500,000,000
(to be redesignated Dreyfus Founders
Growth and Income Fund, Class F, effective December 31, 1999)
Dreyfus Founders Growth and Income Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Growth and Income Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Growth and Income Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Growth and Income Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Growth and Income Fund, Class T 50,000,000 50,000,000
Growth Fund 500,000,000 500,000,000
(to be redesignated Dreyfus Founders
Growth Fund, Class F, effective December 31, 1999)
Dreyfus Founders Growth Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Growth Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Growth Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Growth Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Growth Fund, Class T 50,000,000 50,000,000
Passport Fund 150,000,000 150,000,000
(to be redesignated Dreyfus Founders
Passport Fund, Class F, effective December 31, 1999)
Dreyfus Founders Passport Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Passport Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Passport Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Passport Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Passport Fund, Class T 50,000,000 50,000,000
Mid-Cap Growth Fund 250,000,000 250,000,000
(to be redesignated Dreyfus Founders
Mid-Cap Growth Fund, Class F, effective December 31, 1999)
Dreyfus Founders Mid-Cap Growth Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Mid-Cap Growth Fund, Class T 50,000,000 50,000,000
2
<PAGE>
International Equity Fund 200,000,000 200,000,000
(to be redesignated Dreyfus Founders
International Equity Fund, Class F, effective December 31, 1999)
Dreyfus Founders International Equity Fund, Class A 50,000,000 50,000,000
Dreyfus Founders International Equity Fund, Class B 50,000,000 50,000,000
Dreyfus Founders International Equity Fund, Class C 50,000,000 50,000,000
Dreyfus Founders International Equity Fund, Class R 50,000,000 50,000,000
Dreyfus Founders International Equity Fund, Class T 50,000,000 50,000,000
Worldwide Growth Fund 200,000,000 200,000,000
(to be redesignated Dreyfus Founders
Worldwide Growth Fund, Class F, effective December 31, 1999)
Dreyfus Founders Worldwide Growth Fund, Class A 50,000,000 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class B 50,000,000 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class C 50,000,000 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class R 50,000,000 50,000,000
Dreyfus Founders Worldwide Growth Fund, Class T 50,000,000 50,000,000
Government Securities Fund 100,000,000 100,000,000
(to be redesignated Dreyfus Founders Government
Securities Fund, Class F, effective December 31, 1999)
Money Market Fund 2,000,000,000 2,000,000,000
(to be redesignated Dreyfus Founders Money Market
Fund, Class F, effective December 31, 1999)
Unallocated 3,050,000,000 3,000,000,000
-------------- --------------
TOTAL 10,000,000,000 10,000,000,000
THIRD: 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.
FOURTH: The Corporation is registered as an open-end investment management
company under the Investment Company Act of 1940.
3
<PAGE>
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: /s/ Margaret W. Chambers
------------------------
Name: Margaret W. Chambers
Title: Secretary
ATTEST:
/s/ Christopher J. Kelley
- -------------------------
Name: Christopher J. Kelley
Title: Vice President and
Assistant Secretary
4
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: /s/ Marie E. Connolly
---------------------
Name: Marie E. Connolly
Title: President
ATTEST:
/s/ Christopher J. Kelley
- -------------------------
Name: Christopher J. Kelley
Title: VP and Asst. Sec.
2
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. 66 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
December 28, 1999
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 maintained share accounts in any Fund
continuously since December 30, 1999, which shall be deemed to have occurred if
the person or entity held shares of any Fund on December 30, 1999, and after
that date there has been no continuous period of more than 120 days during which
such person or entity owned no Class F shares of any Fund.
-3-
<PAGE>
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 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-
<PAGE>
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 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
<PAGE>
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
C-1
<PAGE>
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.
C-2
<PAGE>
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.
D-1
<PAGE>
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.
E-1
<PAGE>
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.
F-1
<PAGE>
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.
G-1
CODE OF ETHICS
FOR
DREYFUS FOUNDERS FUNDS, INC. AND
FOUNDERS ASSET MANAGEMENT LLC
(AS AMENDED DECEMBER 11, 1999,
TO BE EFFECTIVE JANUARY 1, 2000)
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION...................................................................1
ENTITIES SUBJECT TO THIS CODE OF ETHICS...................................1
STATEMENT OF GENERAL PRINCIPLES...........................................1
SECTION 1: DEFINITIONS........................................................2
ACCESS PERSON.............................................................3
AFFILIATE.................................................................3
AFFILIATED PRINCIPAL UNDERWRITER..........................................3
APPROVAL OFFICER..........................................................3
BENEFICIAL OWNERSHIP......................................................4
CLIENT....................................................................4
CONTROL...................................................................4
DE MINIMIS TRANSACTION....................................................4
FOUNDERS EMPLOYEE.........................................................4
INDEPENDENT DIRECTOR......................................................4
FUND AFFILIATED OFFICER...................................................4
LEGAL DEPARTMENT..........................................................4
PREMIER CODE OF ETHICS....................................................5
PURCHASE OR SALE OF A SECURITY............................................5
RESTRICTED SECURITIES.....................................................5
SECURITY..................................................................5
A SECURITY IS BEING CONSIDERED FOR PURCHASE OR SALE.......................5
A SECURITY IS BEING PURCHASED OR SOLD.....................................5
SECTION 2: GENERAL POLICY.....................................................5
SECTION 3: PROHIBITED PURCHASES AND SALES.....................................6
GENERAL PROHIBITION.......................................................6
INITIAL PUBLIC OFFERING...................................................7
SECTION 4: PRE-TRANSACTION APPROVAL...........................................7
SECTION 5: SHORT-TERM TRADING PROFITS.........................................8
- --------------------------------------------------------------------------------
Code of Ethics i
<PAGE>
SECTION 6: POTENTIAL CONFLICTS OF INTEREST....................................8
GIFTS.....................................................................8
TRIPS.....................................................................9
PREFERENTIAL TREATMENT....................................................9
INVESTMENT ADVICE TO OTHERS...............................................9
OUTSIDE AFFILIATIONS......................................................9
SECTION 7: INVESTMENT CLUBS...................................................9
SECTION 8: SERVICE AS A DIRECTOR OF PUBLICLY TRADED COMPANIES................10
SECTION 9: BROKER ACCOUNTS AND BROKER CONFIRMATIONS..........................10
SECTION 10: REPORTING REQUIREMENTS...........................................11
A. INITIAL REPORT BY NEW ACCESS PERSON..................................11
B. PERIODIC REPORTS BY ACCESS PERSONS AND FOUNDERS EMPLOYEES............11
C. ANNUAL REPORTS BY ACCESS PERSONS.....................................13
D. MONITORING OF PERIODIC AND ANNUAL REPORTS BY LEGAL DEPARTMENT........13
E. WRITTEN CERTIFICATION................................................13
F. LEGAL DEPARTMENT REPORT..............................................14
SECTION 11: EXEMPTIONS.......................................................15
A. EXEMPT TRANSACTIONS..................................................15
B. INDEPENDENT DIRECTOR AND FUND AFFILIATED OFFICER EXEMPTIONS..........15
SECTION 12: DISSEMINATION, CORPORATE RECORD RETENTION,
DISCLOSURE, AND CONFIDENTIALITY................................16
SECTION 13: PERSONAL RECORD RETENTION........................................17
SECTION 14: MATERIAL INSIDE (NON-PUBLIC) INFORMATION.........................17
- --------------------------------------------------------------------------------
ii Code of Ethics
<PAGE>
SECTION 15: VIOLATIONS.......................................................17
SECTION 16: REVIEW...........................................................19
APPENDIX 1: LIST OF ACCESS PERSONS AND APPROVAL OFFICERS.....................21
APPENDIX 2: PORTION OF RULE 16A-1 OF SECURITIES EXCHANGE ACT OF 1934
AND PORTIONS OF SECTION 2.(A) OF THE INVESTMENT
COMPANY ACT OF 1940............................................22
APPENDIX 3: POLICY STATEMENT ON INSIDER TRADING..............................27
ADDENDUM......................................................................32
EXHIBIT A: Request for Approval of Security Transaction in Personal Account
EXHIBIT B: Notification of Intention to Engage in De Minimis Transaction
EXHIBIT C: Approval Form for Trips Where a Portion of the Cost is Paid by a
Third Party
EXHIBIT D: Approval Form for Outside Employment or Business Activity
EXHIBIT E: Notification of Possible Security Transaction by Investment Club
or Similar Entity
EXHIBIT F: Initial Report Form
EXHIBIT G: Report of Occurrence of Securities Transactions and Initiation of
Brokerage Accounts Within Last Calendar Quarter
EXHIBIT H: Report of Securities Ownership/Report of Establishment of
Brokerage Accounts
EXHIBIT I: Compliance Certification
- --------------------------------------------------------------------------------
Code of Ethics iii
<PAGE>
INTRODUCTION
ENTITIES SUBJECT TO THIS CODE OF ETHICS.
Dreyfus Founders Funds, Inc. (which, collectively with each of its
series portfolios, is hereinafter referred to as the "Fund") is an open-end,
diversified, externally managed investment company registered under the
Investment Company Act of 1940 (the "Act").
Founders Asset Management LLC ("Founders") serves as the external
investment manager of the Fund pursuant to an investment advisory agreement with
each series portfolio ("Portfolio" or collectively, "Portfolios") of the Fund.
Founders is an investment adviser registered under the Investment Advisers Act
of 1940 (the "Advisers Act").
Premier Mutual Fund Services, Inc. currently serves as the principal
underwriter of the Fund ("Premier"). For the purposes of this Code of Ethics,
Premier is an affiliated principal underwriter since officers of Premier also
serve as officers of the Fund. Premier, which has adopted its own code of
ethics, is subject only to certain reporting and certification provisions of
this Code of Ethics.
STATEMENT OF GENERAL PRINCIPLES.
The directors ("directors"), officers, employees, and other access
persons of the Fund ("Access Persons," as defined in Section 1 of this Code of
Ethics) and the directors, officers, and employees of Founders ("Founders
Employees," as hereinafter more specifically defined) are cognizant of and
committed to the performance of their fiduciary duties under general corporate
law and as more specifically articulated in the Act and the Advisers Act,
including, without limitation, proscriptions against overreaching, self-dealing,
insider trading, and conflicts of interests. Moreover, with respect to certain
legal matters and ethical questions arising in the course of their deliberations
and actions, directors, other Access Persons, and Founders Employees regularly
seek the advice of counsel.
This Code of Ethics is directed to the particular objective of
compliance with the provisions of Rule 17j-1 under the Act as such provisions
are applicable to Access Persons, of compliance with various provisions of the
Advisers Act as such provisions are applicable to Founders Employees, and to the
prevention of engagement in any personal securities transactions by Access
Persons and Founders Employees which might conflict with or adversely affect the
interests and welfare of the Fund and its shareholders and, with respect to
Founders Employees, of other clients of Founders ("Clients," as defined in
Section 1 of this Code of Ethics).
- --------------------------------------------------------------------------------
Code of Ethics 1
<PAGE>
The general principles and procedures which guide the activities of all
Access Persons and Founders Employees are augmented by this Code of Ethics,
which is based upon the fundamental recognition that Access Persons have a
fiduciary relationship with the Fund and its shareholders and Founders Employees
may have such a relationship with other Clients, which requires the maintenance
by all such individuals of the highest standards of integrity and conduct.
Access Persons must at all times recognize, respect, and act in the best
interests of the shareholders of the Fund, and Founders Employees must so act
with respect to the Fund and other Clients. In furtherance of their fiduciary
responsibilities, Access Persons and Founders Employees must ensure that they do
not take any inappropriate advantage of their positions as directors, officers,
employees, or agents of the Fund and of Founders. Access Persons and Founders
Employees must avoid any situations which might compromise their exercise of
fully independent judgment in the interests of or on behalf of the Fund and its
shareholders and other Clients, as applicable.
Professional and legal responsibilities to the Fund and its shareholders
and to other Clients dictate that not only conflicts of interests, but the
appearance of conflicts of interests, be avoided. Although compliance by Access
Persons and Founders Employees with the provisions of this Code of Ethics is
mandatory, codes of ethics cannot define all conflict and potential conflict
situations. Therefore, in addition to assuring that one's conduct comports with
this Code of Ethics, Access Persons and Founders Employees must avoid engaging
in any conduct that may create a conflict of interest or the potential for a
conflict of interest. Access Persons and Founders Employees must adhere not only
to the letter but also to the spirit of the Code of Ethics and the principles
articulated herein.
All activities of an Access Person and a Founders Employee must be
governed by the high fiduciary standard of scrupulous avoidance of serving one's
own personal interests ahead of the interests of the Fund and other Clients, as
applicable. In one's business activities, one must act in all respects in the
best interests of the Fund and its shareholders and of other Clients.
SECTION 1: DEFINITIONS
For the purpose of this Code of Ethics, the following general
definitions shall apply:
- --------------------------------------------------------------------------------
2 Code of Ethics
<PAGE>
1. ACCESS PERSON shall mean:
a. Any director or officer of the Fund or of Founders; and
b. Any employee of the Fund or of Founders who, in connection
with his or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of a security by the
Fund or a Client, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
c. Any natural person in a control relationship to the Fund or to
Founders who obtains information concerning recommendations made to the
Fund or a Client with regard to the purchase or sale of a security.
Access Person shall not include an employee of the Fund or of Founders
who receives no information about current recommendations or trading or an
employee who obtains information in a single instance, infrequently or
inadvertently.
2. AFFILIATE. One is an "Affiliate" of another person or company if
he or she:
a. is a partner, director, officer, or employee of such other
person or company; or
b. directly or indirectly owns, controls or holds with power to
vote 5% or more of the outstanding voting securities of such
company; or
(iii) directly or indirectly controls such company.
3. AFFILIATED PRINCIPAL UNDERWRITER is a principal underwriter which
is affiliated with the Fund or its investment adviser, or is a principal
underwriter, any officer, director, or general partner of which is an officer,
director, or general partner of the Fund or an investment adviser of the Fund.
At present, Premier serves as the principal underwriter of the Fund. Premier is
an affiliated principal underwriter, since officers of the principal underwriter
also serve as officers of the Fund.
4. APPROVAL OFFICER means the person(s) designated by the president
of Founders to provide certain written approvals required by this Code of
Ethics. The Approval Officer(s) is identified on Appendix 1.
5. BENEFICIAL OWNERSHIP shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of
- --------------------------------------------------------------------------------
Code of Ethics 3
<PAGE>
Section 16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person has or acquires.
A copy of the relevant portions of Rule 16a-1, which defines beneficial
ownership in accordance with Section 16, is included on Appendix 2.
6. CLIENT means an investment advisory client of Founders other than
the Fund.
7. CONTROL shall have the meaning set forth in Section 2(a)(9) of the
Act. A copy of Section 2(a)(9) of the Act is included on Appendix 2.
8. DE MINIMIS TRANSACTION means a securities transaction for which
pre-transaction approval is not required, as more fully described and defined in
Section 4.2 of this Code of Ethics.
9. FOUNDERS EMPLOYEE means an officer, director, and/or employee of
Founders.
10. INDEPENDENT DIRECTOR means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19) of the
Act and who, in connection with his or her normal and regular responsibilities,
does not make or participate in decisions with respect to the purchase or sale
of a security by the Fund or make any recommendations with respect to such
purchases or sales. An independent director is further defined as one who does
not normally obtain information regarding the purchase or sale of a security by
the Fund within fifteen days before or after the purchase or sale. A copy of
Section 2(a)(19) of the Act is included on Appendix 2.
11. FUND AFFILIATED OFFICER means an officer of the Fund who is not a
director, officer, or employee of Founders or any affiliate thereof (other than
the officer's being affiliated with Founders as an officer of the Fund) and who,
in connection with his or her normal and regular responsibilities, does not make
or participate in decisions with respect to the purchase or sale of a security
by the Fund or make any recommendations with respect to such purchases or sales.
A Fund Affiliated Officer is further defined as one who does not normally obtain
information regarding the purchase or sale of a security by the Fund within
fifteen days before or after the purchase or sale. A Fund Affiliated Officer may
be an "interested person" of the Fund within the meaning of Section 2(a)(19) of
the Act.
12. LEGAL DEPARTMENT means the Legal Department of Founders of which
the general counsel of Founders has supervision. The general counsel shall
designate in writing the individual responsible for reviewing Reports pursuant
to the provisions of Section 10.D. and shall maintain this written designation.
- --------------------------------------------------------------------------------
4 Code of Ethics
<PAGE>
13. PREMIER CODE OF ETHICS means the code of ethics promulgated in
accordance with Rule 17j-1 of the Act or equivalent document of Premier.
14. PURCHASE OR SALE OF A SECURITY shall include the writing of an
option to purchase or sell the security.
15. RESTRICTED SECURITIES shall include securities which are not
readily marketable and securities which cannot be resold or distributed to the
public or to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"), without an effective
registration statement under the 1933 Act. A security which is not readily
marketable is one which, for whatever reason, cannot be disposed of within seven
days in the ordinary course of business at approximately the amount at which the
security is reasonably valued.
16. SECURITY shall have the meaning set forth in Section 2(a)(36) of
the Act, and shall also include related securities, such as rights and
convertible instruments, and financial instruments such as options, futures,
commodities, and derivative instruments which are related to, but are not the
same as, securities that may be held or acquired by the Fund or a Client, and
which may not be defined as securities in Section 2(a)(36) of the Act. The term
security shall include restricted securities as defined herein. Security shall
not include: government securities as defined in Section 2(a)(16) of the Act;
high quality short-term debt instruments including, but not limited to, bankers'
acceptances, bank certificates of deposit, commercial paper, and repurchase
agreements; and shares of registered open-end investment companies. Copies of
Sections 2(a)(36) and 2(a)(16) of the Act are included on Appendix 2.
17. A SECURITY IS BEING CONSIDERED FOR PURCHASE OR SALE when a
recommendation to purchase or sell a security has been made and communicated or,
with respect to the person making the recommendation, when such person seriously
considers making such a recommendation.
18. A SECURITY IS BEING PURCHASED OR SOLD when, within the most recent
seven-day period, a transaction in such security has been effected for the Fund
or a Client, or when a transaction in such security is pending or in progress
for the Fund or a Client.
SECTION 2: GENERAL POLICY
Directors and other Access Persons are specifically reminded that it is
unlawful for any of them, in connection with the purchase or sale, directly or
indirectly, of a security held or to be acquired by the Fund:
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Code of Ethics 5
<PAGE>
1. To employ any device, scheme or artifice to defraud the Fund;
2. To make any untrue statement of a material fact to the Fund or omit
to state to the Fund a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not misleading;
3. To engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon the Fund; or
4. To engage in any manipulative practice with respect to the Fund.
For purposes of this Section 2, a security held or to be acquired by the
Fund means any security as defined herein which, within the most recent 15-day
period, is or has been held by the Fund or is being or has been considered by
the Fund or by Founders for purchase by the Fund.
These proscriptions apply to Founders Employees not only with respect to
the Fund but also with respect to Clients.
The provisions of this Code of Ethics have been instituted, in part, in
an effort to ensure that directors, other Access Persons, and Founders Employees
do not, inadvertently or otherwise, violate the proscriptions outlined above.
SECTION 3: PROHIBITED PURCHASES AND SALES
GENERAL PROHIBITION.
Except as provided in Section 11 of this Code of Ethics, no Access
Person or Founders Employee shall purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which to his or her actual knowledge
at the time of such purchase or sale:
1. Is being considered for purchase or sale by the Fund or, as to
Founders Employees, a Client; or
2. Is being purchased or sold by the Fund or, as to Founders Employees,
a Client.
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6 Code of Ethics
<PAGE>
INITIAL PUBLIC OFFERING.
Except as provided in Section 11 of this Code of Ethics, no Access
Person and no Founders Employee shall purchase, directly or indirectly, any
securities which are offered in an initial public offering.
SECTION 4: PRE-TRANSACTION APPROVAL
1. Every Access Person and Founders Employee shall obtain written
approval of an Approval Officer prior to effecting any transactions in
securities for his or her direct or indirect personal gain or in which he or she
may have any beneficial interest. Such prior written approval shall also be
required of any such transactions effected by, for, or on behalf of any member
of the Access Person's and Founders Employee's household. Written approval shall
be obtained by use of the form attached hereto as Exhibit A. Such approval shall
be effective for three trading days. The legal department of Founders (the
"Legal Department") shall retain the original copies of all completed approval
forms.
2. The pre-transaction approval requirements of this Section 4 shall
not apply to "de minimis" transactions, defined as any purchase or sale of a
security by an Access Person or Founders Employee who is not also buying or
selling the same security for the Fund or a Client, and which:
a. Is issued by a company with a market capitalization of at
least $1 billion and has an average daily trading volume of at least
100,000 shares; AND
b. Involves no more than 100 shares or units, regardless of the
dollar amount of the transaction, or any number of shares or units
having a value of no more than $5,000.
If, during any two consecutive calendar quarters, aggregate purchase or
sale transactions by the Access Person or Founders Employee in shares or units
of the same issuer exceed 300 shares or units or a cumulative value of $15,000,
whichever is the last to occur, subsequent transactions in the issuer's
securities shall no longer be regarded as "de minimis" transactions. Within
three business days of the transaction which causes a limit of 300 shares or
units or $15,000 to be exceeded, the Access Person or Founders Employee shall
notify the Legal Department of the occurrence of the transaction. Transactions
in the applicable issuer's securities during the next 12 months will be subject
to the pre-clearance provisions of this Section 4.
Any Access Person or Founders Employee who desires to engage in a de
minimis transaction (subject to the limits set forth in the preceding paragraph)
- --------------------------------------------------------------------------------
Code of Ethics 7
<PAGE>
shall complete the form attached hereto as Exhibit B prior to each such
transaction, and return that form to the Legal Department.
3. Any Access Person or Founders Employee who has obtained written
approval to purchase a restricted security and who has purchased and continues
to maintain the security in reliance upon such approval must disclose the
investment to his or her Approval Officer in any instance in which the Access
Person or Founders Employee is involved in consideration by the Fund or a Client
of an investment in the issuer of the restricted security. In any such
circumstance, the decision of a Fund or a Client to purchase an investment in
the issuer of the restricted security must be reviewed independently by one or
more investment personnel of Founders, selected by the Approval Officer, who
have no personal interest in the issuer, who must execute written approval of
the investment in the issuer prior to the investment's being made.
SECTION 5: SHORT-TERM TRADING PROFITS
Every Access Person or Founders Employee who obtains a profit from a
purchase and sale, or a sale and purchase, of the same or equivalent securities
in which the individual has a beneficial ownership interest within sixty (60)
calendar days shall disgorge such profit, with the profit to be allocated in
whole or in part among Portfolios of the Fund as determined equitably by the
Fund's board of directors (any portion of the profit not so allocated shall be
allocated among Clients as determined by Founders' board of directors);
provided, however, that such disgorgement of short-term trading profits shall
not apply to "de minimis" transactions as defined in Section 4 of this Code of
Ethics or to securities transactions of Access Persons or of Founders Employees
under circumstances, determined in the sole discretion of the board of directors
of the Fund, in which disgorgement of profits would be inequitable.
SECTION 6: POTENTIAL CONFLICTS OF INTEREST
GIFTS.
No Access Person or Founders Employee shall give, seek or accept any
gift, favor, or other item of value in excess of $100 to or from any person or
entity having a direct or indirect business and/or professional relationship
with the Fund or Founders or any affiliated entities of the Fund or Founders. No
Access Person or Founders Employee shall participate individually or on behalf
of Founders, a Client or the Fund, directly or indirectly, in any transaction
involving the payment or receipt of any bribe or kickback, or the payment or
receipt of any other amount with an understanding that part or all of such
amount will be
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8 Code of Ethics
<PAGE>
refunded or delivered to a third party in violation of any law applicable to the
transaction.
TRIPS.
Any trip to be taken by an Access Person or a Founders Employee must be
approved in advance, by use of the form attached hereto as Exhibit C, if any
portion of trip related expenses is to be paid by a broker, by a company whose
securities are publicly traded, or by any other person or entity with which
Founders may have a current or anticipated business relationship.
PREFERENTIAL TREATMENT.
No Access Person or Founders Employee shall give, seek or accept any
preferential treatment in dealings with any broker, dealer, portfolio company,
financial institution, supplier or any other organization with which Founders
transacts business or anticipates transacting business.
INVESTMENT ADVICE TO OTHERS.
Access Persons and Founders Employees are strictly prohibited from
acting jointly or individually in an investment advisory capacity for an account
other than a Fund or Client.
OUTSIDE AFFILIATIONS.
Access Persons and Founders Employees are prohibited from receiving
direct or indirect compensation of more than minimal value as a result of
services provided to any outside entity or from otherwise engaging in any
outside for-profit business activities without first receiving the written
approval of the Approval Officer on the form attached hereto as Exhibit D. The
Legal Department shall retain copies of all such approvals.
SECTION 7: INVESTMENT CLUBS
Notwithstanding any other provisions of this Code of Ethics to the
contrary, family members, such as husband, wife, and other dependent relatives
of an Access Person or a Founders Employee may participate in investment clubs
or similar investment groups if, and only if, all of the following conditions
are present and are adhered to:
a. The Access Person or Founders Employee does not provide
investment advice to the family member or to other club participants
- --------------------------------------------------------------------------------
Code of Ethics 9
<PAGE>
with respect to any security which is being considered for purchase or
sale by the Fund or a Client or is being purchased or sold by the Fund
or a Client.
b. The family member immediately notifies the Access Person or
Founders Employee when he or she is aware that the investment club has
purchased or sold or is considering the purchase or sale of a security.
c. Upon being notified by the family member in accordance with
item (b), the Access Person or Founders Employee completes and signs
Exhibit E and submits Exhibit E to the Approval Officer for
acknowledgment. The Legal Department shall retain copies of all such
forms.
SECTION 8: SERVICE AS A DIRECTOR OF PUBLICLY TRADED COMPANIES
No Access Person or Founders Employee shall be permitted to serve on the
board of directors of a publicly traded company unless prior written
authorization has first been obtained from the president of Founders. Approval
of such service by the president shall be based upon a determination that the
service is consistent with the interests of the Fund and its shareholders and
the Clients. In instances in which authorization to serve is granted, the Access
Person or Founders Employee serving as a director shall refrain from any direct
or indirect involvement in the consideration for purchase or sale and in the
purchase or sale by the Fund or a Client (i) of any securities of the company on
the board of directors of which the Access Person or the Founders Employee
serves as a director, or (ii) of any securities of an affiliate of such company.
SECTION 9: BROKER ACCOUNTS AND BROKER CONFIRMATIONS
1. Each Access Person and Founders Employee is required to provide
the Legal Department with the name, address, and telephone number of any
brokerage firm with which the Access Person or Founders Employee establishes or
maintains a brokerage account or in which such Access Person or Founders
Employee or any member of such Access Person's or Founders Employee's household
has any direct or indirect beneficial ownership, and the account number and
registered owner designation of any such account. Such information as to
existing brokerage accounts shall be provided upon filing of the initial written
certification required of an Access Person and Founders Employee by use of the
form attached hereto as Exhibit F. Such information with respect to the
establishment of a new brokerage account not previously reported to the Legal
Department shall be provided by the Access Person or Founders
- --------------------------------------------------------------------------------
10 Code of Ethics
<PAGE>
Employee to the Legal Department within ten days of establishment of the
account.
2. All Access Persons and Founders Employees are required to direct
any broker effecting a transaction in any security in which such Access Person
or Founders Employee or any member of such Access Person's or Founders
Employee's household has any direct or indirect beneficial ownership to provide
the Legal Department with duplicate copies of the applicable trade confirmations
and periodic account statements.
SECTION 10: REPORTING REQUIREMENTS
A. INITIAL REPORT BY NEW ACCESS PERSON.
Within ten (10) days of the date upon which an individual becomes an
Access Person, the new Access Person shall provide the Legal Department with an
initial report containing a list of all securities in which such Access Person
or any member of such Access Person's household has any direct or indirect
beneficial ownership. The list shall include the title and number of shares or
interests of each security owned, each security's ticker symbol, if any, the
date(s) of purchase of the security, and the price(s) paid for the security. The
initial report shall also include all other information required by Rule 17j-1
of the Act. The initial report shall be made by use of a form similar to that
attached hereto as Exhibit F.
B. PERIODIC REPORTS BY ACCESS PERSONS AND FOUNDERS EMPLOYEES.
1. Except as is otherwise provided in Section 10.B.2., every Access
Person and Founders Employee shall report to the Legal Department the
information described in paragraph 3 of this Section 10B with respect to
transactions in any security in which such Access Person or Founders Employee or
any member of such Access Person's or Founders Employee's household has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
in the security. Such report shall be made by use of a form similar to that
attached hereto as Exhibit G not later than ten days after the end of the
calendar quarter in which the transaction occurred.
2. An Independent Director shall be exempt from the reporting
requirements imposed by Section 10.B.1. and need only report a transaction in a
security if such Director, at the time of that transaction knew or, in the
ordinary course of fulfilling his official duties as a director of the Fund
should have known, that during the 15-day period immediately preceding or after
the date of the transaction by the Director, such security was purchased or sold
by the Fund or was being considered by the Fund or Founders for purchase or sale
by the
- --------------------------------------------------------------------------------
Code of Ethics 11
<PAGE>
Fund. Any such transaction should be reported to the Fund's counsel not later
than ten (10) days after the end of the calendar quarter in which the
transaction occurred.
3. At the end of each calendar quarter, the Legal Department will
provide each Access Person and Founders Employee who effected securities
transactions during the quarter with a form similar to that attached as Exhibit
G containing (i) the name of any broker, dealer, or other institution with which
an account was established by the individual during the quarter and the date the
account was established, and (ii) a list of all securities transactions for
which the individual has submitted reports on Exhibits A and B during the
quarter and/or for which broker trade confirmations of the individual's
securities transactions have been received by the Legal Department during the
quarter. The Access Person or Founders Employee is responsible for verifying the
accuracy and completeness of the information on the report provided by the Legal
Department and for adding (i) the identity of any broker, dealer, or other
institution with which an account was established by the individual during the
proceeding quarter which is not included on the report, and (ii) any transaction
which was effected during the preceding quarter which is not included on the
report. All reports shall contain the following information:
a. The title of each security involved in the transaction, each
security's ticker symbol, if any, the amount of each security purchased or
sold, the date of the transaction, and the price at which the transaction
was executed;
b. The nature of the transaction (i.e., purchase, sale, or any other
type of acquisition or disposition);
c. If the transaction was effected through a brokerage firm, a
broker's confirmation of such transaction (unless the Legal Department
already has received a copy of the confirmation);
d. If no brokerage firm was involved in the transaction, an
explanation of the circumstances surrounding the transaction and the manner
in which the transaction was executed; and
e. The name of the broker, dealer, or other institution with which an
account was established and the date the account was established.
4. Such reports and, if applicable, accompanying confirmations shall
be retained by the Fund's counsel or the Legal Department for a period of at
least six years.
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12 Code of Ethics
<PAGE>
5. Any such report may contain a statement that the report shall not
be construed as an admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the security to which the report
relates.
C. ANNUAL REPORTS BY ACCESS PERSONS.
On or before February 1 of each calendar year, each Access Person shall
provide to the Legal Department a report ("Report") which shall include a list
of all securities in which, as of the preceding December 31, the Access Person
had any direct or indirect beneficial ownership interest. The list shall contain
the title and number of shares or interests of each security owned, the date(s)
of purchase of the security, and the price(s) paid for the security. The Report
shall also include all additional information required by Rule 17j-1 of the Act.
The Report shall be provided by use of a form similar to that attached hereto as
Exhibit H.
D. MONITORING OF PERIODIC AND ANNUAL REPORTS BY LEGAL DEPARTMENT.
1. Upon receipt by the Legal Department of each periodic report provided
pursuant to Sections 10.A. and 10.B., the Legal Department will review the
report to determine whether the Access Person or Founders Employee may have
engaged in possible violations of this Code of Ethics, paying particular
attention to trading patterns and activities of the Access Person or Founders
Employee which may identify potential infractions of this Code of Ethics.
2. Upon receipt by the Legal Department of each annual report provided
pursuant to Section 10.C., the Legal Department shall prepare a list of all
securities shown on the reports and shall compare the list with records of
securities purchased or sold by the Fund and by Clients during the prior twelve
months. The Legal Department shall determine, based upon such comparison and
upon any further review of any Access Person's securities transactions deemed
necessary, whether any violations of this Code of Ethics may have occurred.
E. WRITTEN CERTIFICATION.
On a basis no less frequently than annually, each Independent Director
of the Fund shall report to the Fund's counsel, and each other Access Person or
Founders Employee shall be required to provide to the Legal Department, a
written certification that the Access Person or Founders Employee has read and
understands this Code of Ethics and recognizes that he or she is subject to
certain terms and provisions thereof. Each Access Person and Founders Employee
shall further be required annually to certify in writing that he or she has
complied with the requirements of this Code of Ethics and has disclosed or
- --------------------------------------------------------------------------------
Code of Ethics 13
<PAGE>
reported all personal securities transactions required to be disclosed or
reported pursuant to the requirements of this Code of Ethics. Attached hereto as
Exhibit I is the form to be used by Access Persons, other than Independent
Directors, and by Founders Employees to comply with this certification.
F. LEGAL DEPARTMENT REPORT.
On a basis no less frequently than annually, the Legal Department shall
prepare and, as to Premier, arrange to receive from an appropriate
representative of Premier, a written report ("Report") to the board of directors
of the Fund or to a standing committee of the board designated by the
Independent Directors to receive such Reports, which shall provide the following
information:
a. A summary of existing procedures concerning investments in
securities by all Access Persons and Founders Employees who are required to
report their securities transactions to the Legal Department and any
changes in such procedures which were implemented in the past six (6)
months;
b. Any issues arising under this Code of Ethics, the Premier Code of
Ethics, or under the code of ethics of any investment adviser or affiliated
principal underwriter of the Fund, including, but not limited to, material
or recurring violations of this Code of Ethics, the Premier Code of Ethics,
or any other code of ethics of any investment adviser or affiliated
principal underwriter of the Fund committed by any access person or
Founders Employee during the period from the most recent prior Report;
c. Any recommended changes in existing restrictions or procedures to
this Code of Ethics or to the Premier Code of Ethics based upon (i) the
experience of the Fund, Founders, or Premier under their respective Codes
of Ethics, (ii) the experience of any other investment adviser or
affiliated principal underwriter of the Fund which may have a separate code
of ethics, (iii) evolving industry practices, or (iv) developments in
applicable laws or regulations; and
d. A certification that the Fund, Founders, and Premier, and any
other investment adviser or affiliated principal underwriter of the Fund,
have adopted such procedures as are reasonably necessary to prevent any
access person or Founders' Employee from violating any codes of ethics
applicable to the entity.
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14 Code of Ethics
<PAGE>
SECTION 11: EXEMPTIONS
A. EXEMPT TRANSACTIONS.
The prohibitions of Section 3 of this Code of Ethics and the
pre-transaction, short-term trading, and reporting requirements of Sections 4,
5, and 10B of this Code of Ethics shall not apply to:
1. Purchases or sales of securities effected in any account over which
an Access Person or Founders Employee has no direct or indirect influence or
control;
2. Purchases or sales which are non-volitional on the part of an Access
Person or a Founders Employee, including transactions in accounts in which
complete investment discretion has been delegated to a person or entity not an
Access Person or a Founders Employee or a member of such Access Person's or
Founders Employee's household;
3. Purchases which are part of an automatic dividend reinvestment plan;
4. Purchases effected upon the exercise of rights issued by an issuer
PRO RATA to all holders of a class of its securities, to the extent such rights
were acquired from such issuer, and sales of such rights so acquired;
5. Purchases or sales of securities other than restricted securities
which receive the prior approval of the president of Founders or such other
senior officer as any such president may designate to grant such approval in his
absence, because they are only remotely potentially harmful to the Fund or a
Client since they would be very unlikely to affect a highly institutional
market, or because they clearly are not related economically to the securities
to be purchased, sold, or held by the Fund or a Client.
B. INDEPENDENT DIRECTOR AND FUND AFFILIATED OFFICER EXEMPTIONS.
Notwithstanding any language in this Code of Ethics to the contrary, the
initial public offering prohibition of Section 3, the provisions of Section 4.1,
the provisions of Section 5, the provisions of Section 6, the provisions of
Section 7, the provisions of Section 8, and the provisions of Section 9 of this
Code of Ethics shall not apply to Independent Directors or to Fund Affiliated
Officers. The provisions of Section 10.A. and the provisions of Section 10.C. of
this Code of Ethics shall not apply to Independent Directors.
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Code of Ethics 15
<PAGE>
SECTION 12: DISSEMINATION, CORPORATE RECORD RETENTION,
DISCLOSURE, AND CONFIDENTIALITY
1. Founders shall provide a copy of this Code of Ethics to all Access
Persons and to all Founders Employees and shall inform such individuals of their
duties and responsibilities imposed by this Code of Ethics, including their
reporting responsibilities. Founders shall obtain a written certification from
each Founders Employee stating that he/she has read, understands, and will
comply with this Code of Ethics by use of the form attached hereto as Exhibit F.
2. The Fund and Founders shall maintain for a six-year period in an
easily accessible place the following records:
a. A copy of this Code of Ethics;
b. A record of any violation of this Code of Ethics and of any
action taken as a result of such violation;
c. A copy of each report made by an Access Person or Founders
Employee pursuant to this Code of Ethics;
d. A list of all persons who are, or within the past six years
have been, required to make reports pursuant to this Code of Ethics.
Founders shall arrange for a list of all current Access Persons to be
attached to this Code of Ethics as Appendix 1 and to be amended when
necessary to add or delete Access Persons; and
e. A list of Approval Officers. Founders shall arrange for a
list of all current Approval Officers to be included on Appendix 1 and
to be amended when necessary to add or delete Approval Officers.
3. The prospectuses and/or the statements of additional information of
the Fund shall provide disclosure with respect to the general policies and
procedures applicable to Access Persons by this Code of Ethics, including
specific disclosure with regard to the extent to which Access Persons are
permitted to engage in personal securities transactions. Such disclosure shall
further include a brief description of the procedures initiated by the Fund to
address conflicts of interests occurring as a result of violations of this Code
of Ethics, and shall include the manner in which a Fund investor may obtain a
copy of the Code of Ethics, including the availability of the Code of Ethics
from the public files of the Securities and Exchange Commission. Legal counsel
for Founders and for the Fund are to review the disclosure for adequacy and are
further directed to attach a copy of the Code of Ethics, the Premier Code of
Ethics, and any other codes of ethics of the Fund's investment advisers and
affiliated principal underwriters as exhibits to the Fund's registration
statement.
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16 Code of Ethics
<PAGE>
4. The Legal Department, Approval Officers, and other individuals who
may receive (i) reports of securities transactions and/or securities holdings of
Access Persons and (ii) other information with respect to Access Persons' and
other Founders Employees' compliance with or violation of any provisions of this
Code of Ethics shall receive and maintain the information in confidence. Such
information shall only be disclosed to those persons or entities who have either
a need or a legal obligation to receive such information or have the legal
authority to be provided with the information. Persons and entities to whom such
information may appropriately be disclosed include, but are not necessarily
limited to, the directors of the Fund, the president of Founders, compliance,
accounting, and legal personnel of the Fund and of Founders, Approval Officers,
state and federal regulatory agencies, and appropriate representatives of the
National Association of Securities Dealers, Inc.
SECTION 13: PERSONAL RECORD RETENTION
Each Access Person and Founders Employee is encouraged to retain in his
or her personal files for a period of at least six years broker's confirmations,
monthly statements, or other appropriate information covering all personal
securities transactions, and all transactions in securities effected by, for, or
on behalf of any member of the Access Person's and Founders Employee's
household, showing the amount of each security purchased or sold, the date of
the transaction, the price at which it was executed, and the name and address of
the executing broker or dealer, if any.
SECTION 14: MATERIAL INSIDE (NON-PUBLIC) INFORMATION
It is unlawful under the Securities Exchange Act of 1934 and SEC Rule
10b-5 thereunder for any person to trade or recommend trading in securities on
the basis of material, inside (non-public) information. Founders has adopted a
Policy Statement On Insider Trading, a copy of which is included as Appendix 3
and is incorporated herein by this reference. By acknowledging that they have
read, understand and will comply with this Code of Ethics, Access Persons and
Founders Employees are also acknowledging that they have read, understand and
will comply with the attached Policy Statement on Insider Trading.
SECTION 15: VIOLATIONS
1. Any Access Person or Founders Employee who becomes aware of a
violation or apparent violation of this Code of Ethics by an officer, director,
or employee of the Fund shall advise the president of Founders or the Fund's
legal
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Code of Ethics 17
<PAGE>
counsel of the matter. The person to whom the violation or apparent violation is
made known shall thereupon report the matter to the Fund's board of directors.
The board shall determine whether a violation has occurred and, if so, will
impose or, where applicable, recommend such sanctions, if any, as it deems
appropriate, including verbal or written warnings, a letter of censure,
suspension, termination of employment, or other sanctions. Prior to the final
determination by the board of directors, Founders shall provide such
investigation of a reported violation and shall make such recommendations to the
board with respect thereto as Founders and/or the board shall deem advisable.
2. Any Access Person or Founders Employee who becomes aware of a
violation or apparent violation of this Code of Ethics by an officer, director,
employee, or other access person of Founders who is not also an officer,
director, or employee of the Fund shall advise the president, the Legal
Department or Founders' legal counsel of the matter. The person to whom the
violation or apparent violation is made known shall thereupon report the matter
to Founders' president or, if the violation or apparent violation involves
Founders' president, Founders' chairman of the board of directors. Founders'
president or chairman of the board, as appropriate, in consultation with the
Legal Department (if not involved with the violation or apparent violation),
shall determine whether a violation has occurred and, if so, will impose such
sanctions, if any, as he or she may deem appropriate, including verbal or
written warnings, a letter of censure, suspension, termination of employment, or
other sanctions.
3. In addition to any other sanctions which may be imposed upon an
Access Person or a Founders Employee who has violated this Code of Ethics, and
particularly in circumstances in which the violation involves the sale or
purchase of a security, the Access Person or Founders Employee having engaged in
the violation may be required either to unwind the purchase or sale transaction
or, if that is impractical, disgorge all profits from the transaction. Any such
profits are to be allocated in whole or in part among Portfolios of the Fund and
Clients as determined equitably by the Fund's board of directors, if the
sanction is imposed by the Fund's board, and by Founders' president or chairman
of its board of directors, as appropriate, if the sanction is imposed by
Founders.
4. The Legal Department shall notify the Fund's board of directors, or
a standing committee of the board designated by the Independent Directors, of
violations of this Code of Ethics committed by an officer, director, employee,
or other access person of Founders who is not also an officer or director of the
Fund and of the sanctions, if any, which have been imposed by Founders upon the
person having committed the violation. Such a report will be provided at the
next regularly scheduled meeting of the Fund's board of directors following the
determination of the occurrence of the violation.
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18 Code of Ethics
<PAGE>
The Fund's board of directors will review the report and other
presentations concerning the violation and the sanctions imposed with respect
thereto, and may either:
a. Take no further action; or
b. Recommend reconsideration of the determination that a
violation has occurred, the sanctions imposed with respect thereto,
and/or of the allocation of any disgorgement, accompanied by specific
suggestions for change in the actions taken by the chairman of the board
or the president of Founders as the board of directors may deem
appropriate.
5. Upon receipt of a recommendation for reconsideration from the Fund's
board of directors in accordance with item 4.b. above, the chairman of the board
or the president of Founders, as applicable, will consider the directors'
recommendations and will take such final action as he or she deems appropriate
under the circumstances. A report of the action taken will be provided at the
next regularly scheduled meeting of the Fund's board of directors.
SECTION 16: REVIEW
1. The board of directors of the Fund, including a majority of the
Fund's independent directors, shall approve this Code of Ethics, the Premier
Code of Ethics, and the code of ethics of any other investment adviser and
affiliated principal underwriter of the Fund, and any material changes to such
codes of ethics.
2. Approval of codes of ethics and any material changes thereto shall
be based upon a determination that the codes contain provisions reasonably
necessary to prevent access persons from engaging in conduct prohibited by Rule
17j-1 under the Act.
3. Prior to approving a code of ethics, the directors of the Fund must
receive a certification from the Fund and each Fund's investment adviser and
affiliated principal underwriter that each entity has adopted procedures
reasonably necessary to prevent access persons of the respective entity from
violating the entity's code of ethics.
4. Approval by the Fund's directors of the code of ethics of a Fund's
investment adviser or affiliated principal underwriter must occur prior to the
initial
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Code of Ethics 19
<PAGE>
retention of services of the investment adviser or affiliated principal
underwriter.1 Approval of material changes to a code of ethics must occur no
later than six months after adoption of the material change.
5. The general counsel of Founders is directed to advise the Fund's
board of directors at their next regularly scheduled meeting of any material
amendments to the code of ethics of any investment adviser or affiliated
principal underwriter of the Fund.
APPROVED AND AMENDED to be effective as of January 1, 2000, by vote of a
majority of the directors of the Fund, including a majority of the Independent
Directors, and by vote of the board of managers of Founders.
- --------
1 Since the Fund has heretofore retained the services of its investment adviser
and affiliated principal underwriter, this requirement will be satisfied by the
approval by the Fund's directors of the codes of ethics of Founders and Premier
by September 1, 2000.
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20 Code of Ethics
<PAGE>
APPENDIX 1
TO
CODE OF ETHICS
LIST OF ACCESS PERSONS AND APPROVAL OFFICERS
[Please contact Founders' Legal Department to obtain the current list of
Access Persons and Approval Officers. This list can also be found on the
Legal Department section of FNet, Founders' intranet site.]
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Code of Ethics 21
<PAGE>
APPENDIX 2
TO
CODE OF ETHICS
Reg. ss. 240.16a-1.
(a) The term "beneficial owner" shall have the following applications:
(2) ... the term "beneficial owner" shall mean any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares a direct or indirect pecuniary interest in the equity
securities, subject to the following:
(i) The term "pecuniary interest" in any class of equity
securities shall mean the opportunity, directly or indirectly, to profit
or share in any profit derived from a transaction in the subject
securities.
(ii) The term "indirect pecuniary interest" in any class of
equity securities shall include, but not be limited to:
(A) securities held by members of a person's immediate
family sharing the same household; provided, however, that the
presumption of such beneficial ownership may be rebutted; see also ss.
240.16a-1(a)(4); [Amended in Release No. 34-29131 (P. 26,086A),
effective May 1, 1991, 56 F.R.
19925.]
(B) a general partner's proportionate interest in the
portfolio securities held by a general or limited partnership. The
general partner's proportionate interest, as evidenced by the
partnership agreement in effect at the time of the transaction and the
partnership's most recent financial statements, shall be the greater of:
(1) the general partner's share of the partnership's
profits, including profits attributed to any limited partnership
interests held by the general partner and any other interests in
profits that arise from the purchase and sale of the
partnership's portfolio securities; or
(2) the general partner's share of the partnership capital
account, including the share attributable to any limited
partnership interest held by the general partner.
(C) a performance-related fee, other than an asset-based
fee, received by any broker, dealer, bank, insurance company, investment
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22 Code of Ethics
<PAGE>
company, investment adviser, investment manager, trustee or person or
entity performing a similar function; provided, however, that no
pecuniary interest shall be present where:
(1) the performance-related fee, regardless of when
payable, is calculated based upon net capital gains and/or net
capital appreciation generated from the portfolio or from the
fiduciary's overall performance over a period of one year or
more; and
(2) equity securities of the issuer do not account for
more than ten percent of the market value of the portfolio. A
right to a nonperformance-related fee alone shall not represent a
pecuniary interest in the securities;
(D) A person's right to dividends that is separated or
separable from the underlying securities. Otherwise, a right to
dividends alone shall not represent a pecuniary interest in the
securities;
(E) A person's interest in securities held by a trust, as
specified in ss. 240.16a-8(b); and
(F) A person's right to acquire equity securities through
the exercise or conversion of any derivative security, whether or not
presently exercisable.
(iii) A shareholder shall not be deemed to have a pecuniary
interest in the portfolio securities held by a corporation or similar
entity in which the person owns securities if the shareholder is not a
controlling shareholder of the entity and does not have or share
investment control over the entity's portfolio.
(e) The term "immediate family" shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and shall include adoptive relationships.
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Code of Ethics 23
<PAGE>
GENERAL DEFINITIONS
Sec. 2.(a) When used in this title, unless the context other requires --
[Control]
(9) "Control" means the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely the result
of an official position with such company.
[Government Security]
(16) "Government security" means any security issued or guaranteed as to
principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
[Interested Person]
(19) "Interested person" of another person means --
(A) when used with respect to an investment company --
(i) any affiliated person of such company,
(ii) any member of the immediate family of any natural person
who is an affiliated person of such company,
(iii) any interested person of any investment adviser of or
principal underwriter for such company,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal years of such
company has acted as legal counsel for such company,
(v) any broker or dealer registered under the Securities
Exchange Act of 1934 or any affiliated person of such a broker or
dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having had, at any
time since the beginning of the last two completed fiscal years of such
company, a material business or professional relationship with such
company or with the principal executive officer of such company or with
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24 Code of Ethics
<PAGE>
any other investment company having the same investment adviser or
principal underwriter or with the principal executive officer of such
other investment company:
Provided, That no person shall be deemed to be an interested person of an
investment company solely by reason of (aa) his being a member of its board of
directors or advisory board or an owner of its securities, or (bb) his
membership in the immediate family of any person specified in clause (aa) of
this proviso; and
(B) when used with respect to an investment adviser of or principal
underwriter for any investment company --
(i) any affiliated person of such investment adviser or
principal underwriter,
(ii) any member of the immediate family of any natural person
who is an affiliated person of such investment adviser or principal
underwriter,
(iii) any person who knowingly has any direct or indirect
beneficial interest in, or who is designated as trustee, executor, or
guardian of any legal interest in, any security issued either by such
investment adviser or principal underwriter or by a controlling person
of such investment adviser or principal underwriter,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal years of such
investment company has acted as legal counsel for such investment
adviser or principal underwriter,
(v) any broker or dealer registered under the Securities
Exchange Act of 1934 or any affiliated person of such a broker or
dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having had at any
time since the beginning of the last two completed fiscal years of such
investment company a material business or professional relationship with
such investment adviser or principal underwriter or with the principal
executive officer or any controlling person of such investment adviser
or principal underwriter.
For the purposes of this paragraph (19), "member of the immediate family" means
any parent, spouse of a parent, child, spouse of a child, spouse, brother or
sister, and includes step and adoptive relationships. The Commission may
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Code of Ethics 25
<PAGE>
modify or revoke any order issued under clause (vi) of subparagraph (A) or (B)
of this paragraph whenever it finds that such order is no longer consistent with
the facts. No order issued pursuant to clause (vi) of subparagraph (A) or (B) of
this paragraph shall become effective until at least sixty days after the entry
thereof, and no such order shall affect the status of any person for the
purposes of this title or for any purpose for any period prior to the effective
date of such order.
[Security]
(36) "Security" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.
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26 Code of Ethics
<PAGE>
APPENDIX 3
TO
CODE OF ETHICS
FOUNDERS ASSET MANAGEMENT LLC
POLICY STATEMENT ON INSIDER TRADING
INTRODUCTION
Founders Asset Management LLC ("Founders") forbids any officer, director
or employee from trading, either personally or on behalf of others (such as
mutual funds or private accounts managed by Founders), on material nonpublic
information or communicating material nonpublic information to others in
violation of the law. This conduct is frequently referred to as "insider
trading." Any questions regarding this policy should be referred to Founders'
General Counsel (the "Reviewing Officer").
A. WHAT IS "INSIDER TRADING"?
"Insider trading" refers generally to buying or selling a security, in
breach of a fiduciary duty or other relationship of trust and confidence, while
in possession of material, nonpublic information about the security. Insider
trading violations may also include "tipping" such information, securities
trading by the person "tipped" and securities trading by those who
misappropriate such information. Examples of insider trading cases that have
been brought by the SEC are cases against: corporate officers, directors, and
employees who traded the corporation's securities after learning of significant,
confidential corporate developments; friends, business associates, family
members, and other "tippees" of such officers, directors, and employees, who
traded the securities after receiving such information; employees of law,
banking, brokerage and printing firms who were given such information in order
to provide services to the corporation whose securities they traded; government
employees who learned of such information because of their employment by the
government; and other persons who misappropriated, and took advantage of,
confidential information from their employers.
Because insider trading undermines investor confidence in the fairness
and integrity of the securities markets, it is imperative that all employees and
officers understand and comply with this legal requirement. The penalties for
insider trading are severe and the SEC considers insider trading violations as
one of its enforcement priorities.
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Code of Ethics 27
<PAGE>
B. WHAT IS "MATERIAL INFORMATION"?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant expansion or curtailment of operations, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
major litigation, liquidation problems, and extraordinary management
development. Individuals should exercise caution when questioning the
materiality of the information provided and should contact the Reviewing Officer
for clarification of its materiality.
C. WHAT IS NONPUBLIC INFORMATION?
Nonpublic information, often referred to as "insider information," is
information that has not been communicated to the marketplace. One must be able
to point to some fact to show that the information is generally public. For
example, information found in a report filed with the SEC, or appearing in DOW
JONES, REUTERS ECONOMIC SERVICE, THE WALL STREET JOURNAL, or other publications
of general circulation would be considered public.
D. PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material nonpublic information
are severe, both for individuals involved in such unlawful conduct and their
employers. A person can be subject to some or all of the penalties below even if
he or she does not personally benefit from the violation. Penalties include:
o civil injunction
o treble (i.e., triple) damages
o disgorgement of profits
o jail sentence
o fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
o fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
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28 Code of Ethics
<PAGE>
Any violation of this policy statement can be expected to result in
serious sanctions by Founders, including termination of employment.
E. RELEVANT TOPICS
CONTACT WITH PUBLIC COMPANIES
For Founders, contact with public companies represents an important part
of its research efforts. Investment decisions may be made by Founders on the
basis of conclusions formed through such contact and analysis of publicly
available information. Difficult legal issues arise, however, when directors,
officers or employees of Founders become aware of material nonpublic
information. This could happen, for example, if a company's chief financial
officer prematurely discloses quarterly results to an analyst or an investor
relations representative makes a selective disclosure of adverse news to a
handful of investors. In order to protect Founders and yourself, you must
contact the Reviewing Officer if you believe you have received material,
nonpublic information.
TENDER OFFERS
Tender offers represent a particular concern in the law of insider
trading. Tender offer activity often produces extraordinary gyrations in the
price of the target company's securities. Trading during this time period is
also more likely to attract regulatory attention (and produces a
disproportionate percentage of insider trading cases). Officers, directors, and
employees of Founders should exercise extreme caution any time they become aware
of nonpublic information relating to a tender offer.
F. PROCEDURES TO PREVENT INSIDER TRADING
The following procedures have been established to aid the officers,
directors, and employees of Founders to avoid insider trading, and to aid
Founders in preventing, detecting, and imposing sanctions against insider
trading. Every officer, director, and employee of Founders must follow these
procedures or risk serious sanctions including dismissal, substantial personal
liability, and criminal penalties. If you have any questions about these
procedures you should consult the Reviewing Officer.
IDENTIFYING INSIDE INFORMATION
Before trading for yourself or others, including mutual funds and
privately managed accounts managed by Founders, in the securities of a company
about which you have potential inside information, ask yourself the following
questions:
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Code of Ethics 29
<PAGE>
i. Is the information material? Is this information that an investor
would consider important in making his or her investment decision? Is
this information that would substantially affect the market price of the
security if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in REUTERS, THE WALL STREET Journal, or
other publications of general circulation?
If, after consideration of the above, you believe that the information
may be material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you MUST take the following steps:
i. Do NOT purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
Founders.
ii. Report the matter immediately to the Reviewing Officer. If the
Reviewing Officer is not available and an immediate determination is
necessary, such judgment may be made by the President of Founders or its
outside legal counsel.
iii. Do not communicate the information inside or outside Founders,
other than to the designated Reviewing Officer, the President of
Founders, or Founders' outside legal counsel.
iv. After the Reviewing Officer has reviewed the issue, you will be
instructed to continue the prohibitions against trading or communicating
the information received, or you will be allowed to trade and
communicate the information.
G. RESTRICTING ACCESS TO MATERIAL NONPUBLIC INFORMATION
Information in your possession that you identify as material and
nonpublic may not be communicated to anyone, including persons within Founders,
with the exception of Founders' Reviewing Officer, the President of Founders, or
Founders' outside legal counsel. In addition, care should be taken so that such
information is handled in a manner which Founders employees and others cannot
access. For example, physical documents containing such information should be
placed in a locked file cabinet and computer files should be password protected
and restricted from access.
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30 Code of Ethics
<PAGE>
H. PERSONAL SECURITIES TRANSACTIONS
All Founders employees are required to obtain pre-clearance for
securities transactions in which they have a beneficial interest. Please refer
to the Code of Ethics or contact Founders' Legal Department for details
regarding how to obtain prior approval. By requesting approval to engage in a
personal securities transaction, an individual is also certifying that they are
not acting on inside information.
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Code of Ethics 31
<PAGE>
MEMORANDUM
[LOGO]Founders (r)
TO: All Employees
FROM: Ken Christoffersen
DATE: June 2, 1998
RE: Addendum to the Code of Ethics
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At its May 28 meeting, the Board of Managers of Founders Asset Management LLC
adopted the attached "Restrictions on Transactions in Mellon Securities" as an
addendum to the Founders Code of Ethics. Please read this addendum and keep it
with your copy of the Code of Ethics.
The addendum contains a number of provisions relating to trading in the
securities of Mellon Bank Corporation that are required because Mellon is a
public company. These restrictions apply to all employees of Mellon and its
subsidiaries (referred to as "associates" in the document), other than outside
consultants or temporary employees. These restrictions apply to all Founders
employees effective immediately.
If you have any questions concerning the attached addendum, please feel free to
contact Allen French or me.
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32 Code of Ethics
<PAGE>
ADDENDUM TO THE CODE OF ETHICS
MAY 28, 1998
RESTRICTIONS ON TRANSACTIONS IN MELLON SECURITIES
Associates who engage in transactions involving Mellon securities should be
aware of their unique responsibilities with respect to such transactions arising
from the employment relationship and should be sensitive to even the appearance
of impropriety.
The following restrictions apply to all transactions in Mellon's publicly traded
securities occurring in the associate's own account and in all other accounts
over which the associate could be expected to exercise influence or control (see
provisions under "Beneficial Ownership" below for a more complete discussion of
the accounts to which these restrictions apply). These restrictions are to be
followed in addition to any restrictions that apply to particular officers or
directors (such as restrictions under Section 16 of the Securities Exchange Act
of 1934).
o Short Sales--Short sales of Mellon securities by associates are prohibited.
o Sales Within 60 Days of Purchase--Sales of Mellon securities within 60 days
of acquisition arE prohibited. For purposes of the 60-day holding period,
securities will be deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the other, or if the value
of one is expressly dependent on the value of the other (e.g., derivative
securities).
In cases of extreme hardship, associates (other than senior management) may
obtain permission to dispose of Mellon securities acquired within 60 days of the
proposed transaction, provided the transaction is precleared with the Manager of
Corporate Compliance and any profits earned are disgorged in accordance with
procedures established by senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period restriction in the event
of severe market disruption.
o Margin Transactions--Purchases on margin of Mellon's publicly traded
securities by associates iS prohibited. Margining Mellon securities in
connection with a cashless exercise of an employee stock option through the
Human Resources Department is exempt from this restriction. Further, Mellon
securities may be used to collateralize loans or the acquisition of
securities other than those issued by Mellon.
o Option Transactions--Option transactions involving Mellon's publicly traded
securities are prohibited. Transactions under Mellon's Long-Term Incentive
Plan or other associate option plans are exempt from this restriction.
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Code of Ethics 33
<PAGE>
o Major Mellon Events--Associates who have knowledge of major Mellon events
that have not yet beeN announced are prohibited from buying and selling
Mellon's publicly traded securities before such public announcements, even
if the associate believes the event does not constitute material nonpublic
information.
o Mellon Blackout Period--Associates are prohibited from buying or selling
Mellon's publicly tradeD securities during a blackout period, which begins
the 16th day of the last month of each calendar quarter and ends three
business days after Mellon publicly announces the financial results for that
quarter. In cases of extreme hardship, associates (other than senior
management) may request permission from the Manager of Corporate Compliance
to dispose of Mellon securities during the blackout period.
BENEFICIAL OWNERSHIP--The provisions discussed above apply to transactions in
the associate's own name and to all other accounts over which the associate
could be expected to exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom substantial
support is contributed;
o accounts of any other member of the associate's household (e.g., a relative
living in the same home);
o trust accounts for which the associate acts as trustee or otherwise
exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by the associate;
o arrangements similar to trust accounts that are established for bona fide
financial purposes and benefit the associate; and
o any other account for which the associate is the beneficial owner.
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34 Code of Ethics
<PAGE>
EXHIBIT A
REQUEST FOR APPROVAL OF SECURITY TRANSACTION
IN PERSONAL ACCOUNT
NAME: __________________________________________________________________________
DATE: ___________________________________
BUY: ___________________ SELL: ___________________
AMOUNT OR SHARES: ____________________________ PRICE: _________________________
NAME OF SECURITY: ______________________________________________________________
BROKER: _______________________________________
*Address: _____________________________________
_____________________________________
*Telephone: ___________________________________
*Account No.: ___________________ *Registered Owner: __________________________
THIS IS A NEW ISSUE: _______ YES ________ NO
THIS IS A SECONDARY: _______ YES ________ NO
I have not acted on inside information.
I have verified that the security described above is not being considered for
purchase or sale by a Client or Fund and is not being purchased or sold by a
Client or Fund. I have further verified that the security has not been purchased
or sold by a Client or Fund at any time during the SEVEN days prior to the date
set forth above.
EMPLOYEE SIGNATURE: ___________________________________________________________
CONFIRMATION THAT SECURITY HAS NOT BEEN PURCHASED OR SOLD WITHIN PRIOR SEVEN
DAYS:
_____________________________________
_____________________________________ Date: ________________________________
Trading Department
APPROVED BY: ________________________** Date: ________________________________
Approval Officer
* Complete if not previously provided.
** The Approval Officer Line must be signed by Tom Arrington, Rob Ammann, Scott
Chapman, or Doug Loeffler. Transactions must be approved by an Approval Officer
other than the employee effecting the transaction. No other Founders personnel
are authorized to approve this transaction.
<PAGE>
EXHIBIT B
NOTIFICATION OF INTENTION TO ENGAGE IN
DE MINIMIS TRANSACTION
NAME: __________________________________________________________________________
DATE: __________________________________________________________________________
BUY: __________ SELL: __________
AMOUNT OR SHARES: ________________________________ (cannot exceed the greater of
100 shares or $5,000 per transaction)
NAME OF SECURITY: ______________________________________________________________
BROKER: _____________________________________________
*Address: ___________________________________________
___________________________________________
*Telephone: _________________________________________
*Account No.: _________________ *Registered Owner: _________________________
I have not acted on inside information.
I am not involved in buying or selling this security for any Founders mutual
fund or private account client.
I have attached information confirming that this security is issued by a company
with a market capitalization of at least $1 billion and has an average daily
trading volume of at least 100,000 shares.
EMPLOYEE SIGNATURE: ____________________________________________________________
ACKNOWLEDGED:
_________________________________ Date: ____________________________________
Legal Department
*Complete if not previously provided.
<PAGE>
EXHIBIT C
APPROVAL FORM FOR TRIPS
WHERE A PORTION OF THE COST IS PAID BY A THIRD PARTY
Name of Founders Employee: _____________________________________________________
Name of Person or Entity paying for any portion of the trip: ___________________
________________________________________________________________________________
Type of Entity:
[ ] broker
[ ] publicly traded company
[ ] person or entity with which Founders may have a current or anticipated
business relationship
[ ] other
Purpose for trip: ______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The foregoing trip is hereby:
[ ] Approved [ ] Disapproved
FOUNDERS ASSET MANAGEMENT LLC
By: _________________________* By: _________________________*
Dated: ______________________ Dated: ______________________
* Must be signed by Department Manager and Founders Chief Executive Officer.
<PAGE>
EXHIBIT D
APPROVAL FORM FOR OUTSIDE EMPLOYMENT OR
BUSINESS ACTIVITY
Name of Founders Employee: _____________________________________________________
Name of Outside Employer: ______________________________________________________
(If self-employed, please so indicate.)
Type of Business: ______________________________________________________________
Brief Job Description: _________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Typical Weekly Work Schedule: __________________________________________________
________________________________________________________________________________
The foregoing employment/business activity is hereby:
[ ] Approved [ ] Disapproved
FOUNDERS ASSET MANAGEMENT LLC
By: ______________________________*
Dated: ___________________________
CC: Department Manager of Employee
Human Resources
* Must be signed by Founders Chief Executive Officer or Ken Christoffersen
following consultation with Department Manager.
<PAGE>
EXHIBIT E
NOTIFICATION OF POSSIBLE SECURITY TRANSACTION
BY
INVESTMENT CLUB OR SIMILAR ENTITY
Name of Investment Club: _______________________________________________________
Name of Employee: ______________________________________________________________
Name of Family Member: _________________________________________________________
Name of Security: ______________________________________________________________
[ ] Buy
[ ] Sell
Employee Signature: ____________________________________________________________
Date: __________________________________________________________________________
This form must be acknowledged by Tom Arrington, Rob Ammann, Scott Chapman, or
Doug Loeffler, and returned to the Legal Department.
ACKNOWLEDGED:
___________________________________
Approval Officer
<PAGE>
EXHIBIT F
FOUNDERS ASSET MANAGEMENT LLC
CODE OF ETHICS
INITIAL REPORT
By my signature below, I certify that I have received and read a copy of the
Code of Ethics for Founders Asset Management LLC (the "Code"), including,
without limitation, the Policy Statement on Insider Trading, and that I
understand the provisions and requirements of the Code as they apply to me. In
addition, I certify that the information provided herein with respect to
brokerage accounts and securities holdings is accurate and complete. I agree to
comply with all of the terms and provisions of the Code which are applicable to
me, and to disclose or report all personal securities transactions and other
information required to be disclosed or reported pursuant to the requirements of
the Code.
BROKERAGE ACCOUNTS. [Applicable to all employees.] The information provided
below is for all brokerage accounts in which I or any member of my household has
any direct or indirect beneficial ownership. I agree to notify the Legal
Department within ten days of the establishment of a new brokerage account not
previously reported to the Legal Department.
[ ] I have no brokerage accounts to report at this time.
[ ] The following brokerage accounts are maintained by me or a member of my
household (use additional copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ________________________________________ Telephone: __________________
Registered Owner Designation: ____________________ Account No.: ________________
SECURITIES. [Applicable to Access Persons only.] The information provided below
is for all securities in which I or any member of my household has any direct or
indirect beneficial ownership.
[ ] I have no securities to report at this time.
[ ] The following securities are ones in which I or a member of my household
have direct or indirect beneficial ownership (use additional copies of
this form if necessary):
Name of Ticker Number Date Transaction Price Principal Amount
Security Symbol of Shares Purchased (Equity Security) (Debt Security)
- -------- ------ --------- --------- ----------------- ----------------
Employee Signature ____________________________________ Date: _________________
Print Name: __________________________________________
<PAGE>
<TABLE>
<CAPTION>
REPORT OF OCCURRENCE OF SECURITIES TRANSACTIONS EXHIBIT G
AND INITIATION OF BROKERAGE ACCOUNTS WITHIN LAST CALENDAR QUARTER
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | INTEREST | | | |
| | | | | RATE/ | TRANSACTION | PRINCIPAL | |
| | | | DATE | MATURITY | PRICE | AMOUNT | |
| AMOUNT OR | | TICKER | | DATE (IF | (EQUITY | (DEBT | |
| SHARES | SECURITY NAME | SYMBOL | BOUGHT SOLD | APPLICABLE) | SECURITY) | SECURITY) | NAME OF DEALER OR BANK |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
</TABLE>
The above is a record of one or more purchase or sale transactions in securities
in which I have acquired or disposed of a direct or indirect beneficial
ownership in the last calendar quarter, as more fully defined in the Fund's and
Founders' Codes of Ethics.
BROKERAGE ACCOUNTS. In the past quarter, I established the brokerage account(s)
described below, which have not previously been reported to the Legal
Department.
[ ] I have no brokerage accounts to report at this time.
[ ] The following brokerage accounts have been established in the last
calendar quarter and are maintained by me or a member of my household
(use additional copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ____________________________________________ Telephone: ______________
Registered Owner Designation: _______________________ Account No.: ____________
Date of Establishment of Account: ___________________
DATE: ___________________________ SIGNATURE: _______________________________
Print Name: ______________________________
Note 1. If the transaction is other than a sale or purchase, please explain the
transaction on a separate page.
Note 2. If no broker or bank was involved in the transaction, describe on a
separate page the circumstances surrounding the transaction and the
manner in which the transaction was executed.
Note 3. If a broker was involved in the transaction, a copy of the broker's
confirmation of the transaction is attached or has previously been
received by Founders' Legal Department.
Note 4. This report shall not be construed as an admission by me that I have
acquired any direct or indirect beneficial ownership in the securities
involved in the transactions reported, which have been marked by me
with an asterisk(*). Such transactions are reported solely to meet the
standards imposed by Rule 17j-1 under the Investment Company Act of
1940.
<PAGE>
<TABLE>
<CAPTION>
REPORT OF SECURITIES OWNERSHIP EXHIBIT H
REPORT OF ESTABLISHMENT OF BROKERAGE ACCOUNTS
FOR CALENDAR YEAR ENDING DECEMBER 31, _____
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
| | | | | | CHECK TYPE OF ACCOUNT |
| AMOUNT OR | | DATE | TRANSACTION | PRINCIPAL | |
| SHARES | SECURITY NAME | BOUGHT | PRICE (EQUITY | AMOUNT (DEBT | HOUSEHOLD FIDUCIARY OR OTHER |
| | | | SECURITY) | SECURITY) | PERSONAL MEMBER BENEFICIAL OWNERSHIP |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
</TABLE>
The above is a listing of every security in which I have any direct or indirect
beneficial ownership as of the end of the above-described calendar year, as more
fully defined in the Fund's and Founders' Codes of Ethics.
BROKERAGE ACCOUNTS. I currently have the brokerage account(s) described below.
[ ] I have no new brokerage accounts to report at this time.
[ ] The following brokerage accounts have been established and are
maintained by me or a member of my household (use additional
copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ____________________________________________ Telephone: ______________
Registered Owner Designation: _______________________ Account No.: ____________
Date of Establishment of Account: ___________________
DATE: ___________________________ SIGNATURE: _______________________________
Print Name: ______________________________
Note 1. This report shall not be construed as an admission by me that I have
acquired any direct or indirect beneficial ownership in the securities
listed above which have been marked by me with an asterisk(*). Such
transactions are reported solely to meet the standards imposed by Rule
17j-1 under the Investment Company Act of 1940.
<PAGE>
EXHIBIT I
FOUNDERS ASSET MANAGEMENT LLC
CODE OF ETHICS COMPLIANCE CERTIFICATION
By my signature below, I certify that I have received and read a copy of the
Code of Ethics for Founders Asset Management LLC (the "Code"), including,
without limitation, the Policy Statement on Insider Trading, that I understand
the requirements of the Code, and that I recognize that I am subject to the
provisions of the Code. I also certify that as of the date below, I have
complied with the requirements of the Code and have disclosed or reported all
personal securities transactions and other information required to be disclosed
or reported pursuant to the requirements of the Code.
Employee Signature ______________________________ Date ________________________
Print Name ______________________________________
