DREYFUS FOUNDERS FUNDS
1999 ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1999
DREYFUS FOUNDERS FUNDS
THE GROWTH SPECIALISTS
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TABLE OF CONTENTS
About this Report ........................... 3 Dreyfus Founders Mid-Cap Growth Fund ........ 44
Statement of Investments ................ 47
A Message from Founders ..................... 4
Dreyfus Founders Money Market Fund
Dreyfus Founders Balanced Fund .............. 6 Statement of Investments ................ 50
Statement of Investments ................ 9
Dreyfus Founders Passport Fund .............. 52
Dreyfus Founders Discovery Fund ............. 12 Statement of Investments ................ 55
Statement of Investments ................ 15
Dreyfus Founders Worldwide Growth Fund ...... 61
Dreyfus Founders Focus Fund ................. 18 Statement of Investments ................ 64
Statement of Investments ................ 21
Statements of Assets and Liabilities ........ 68
Dreyfus Founders Government
Securities Fund ........................... 22 Statements of Operations .................... 70
Statement of Investments ................ 24
Statements of Changes in Net Assets ......... 72
Dreyfus Founders Growth Fund ................ 25
Statement of Investments ................ 28 Financial Highlights ........................ 76
Dreyfus Founders Growth and Income Fund ..... 32 Notes to Financial Statements ............... 86
Statement of Investments ................ 35
Report of Independent Accountants ........... 93
Dreyfus Founders International Equity Fund .. 38
Statement of Investments ................ 41 Other Information ........................... 94
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ABOUT THIS REPORT
HISTORICAL RETURNS
All total returns mentioned in this report account for both the change in a
Fund's per-share price and reinvestment of any dividends or capital gain
distributions made by that Fund. If your account is set up to pay out Fund
distributions rather than reinvest them, your return may differ from the figures
listed here.
The comparative indexes included with each Fund's performance chart are meant
to provide a basis for judging a Fund's performance against its peer group
and/or a specific securities market index [provided by Lipper, Inc., Morgan
Stanley Capital International (MSCI), and Russell]. Each
index shown accounts for both change in security price and reinvestment of any
dividends or coupon payments. The Lipper indexes reflect the expenses of
managing the mutual funds included in each index. The securities indexes are
unmanaged groups of securities; they do not reflect the costs of managing a
mutual fund. An investor may not invest directly in any of these indexes.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GUIDE TO UNDERSTANDING FOREIGN HOLDINGS OF THE DREYFUS FOUNDERS FUNDS
The following acronyms are used throughout the Statements of Investments to
indicate the country of origin of non-U.S. holdings:
SA South Africa FR France NE Netherlands
AR Argentina GE Germany NZ New Zealand
AU Australia GR Greece NW Norway
AT Austria HK Hong Kong PO Portugal
BE Belgium HU Hungary RU Russian Federation
BR Brazil IE Ireland SG Singapore
CA Canada IS Israel SP Spain
CH Chile IT Italy SW Sweden
DE Denmark JA Japan SZ Switzerland
DO Dominican Republic KR South Korea TW Taiwan
EG Egypt LU Luxembourg TU Turkey
FI Finland MX Mexico UK United Kingdom
<PAGE>
A MESSAGE FROM FOUNDERS
[PICTURE] RICHARD W. SABO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dear Fellow Shareholder:
The dawn of a new century is an exciting time. The world stands on the threshold
of something very special, a time when a new technology has created one of
history's greatest unifying forces. I am speaking, of course, about the
railroad.
At the start of the 20th century, standard gauges, steel rails, and
locomotives helped bring goods, services, and (most importantly) people together
in a way never seen before. The early 1900s saw the advent of mass production
and mass marketing, of national brands and advertising campaigns. It was a
revolutionary age for transportation, for communications, for the world economy.
Looking back at the events of the past year, at the continuing evolution of
computers, telecommunications, and the Internet, I wonder if we're not standing
at a similar juncture in history at the turn of the 21st century.
TECHNOLOGY ASCENDANT
In 1999, investors around the world heartily embraced technology stocks. The
21.03% rise in the broad-market Standard & Poor's 500 Index and the stunning
85.59% explosion of the Nasdaq Composite both owe a great deal to superior
strength in this single sector. More and more, investors are believing that we
have opened the door to a new economy, one where businesses can use technology
to enhance their productivity, expand their profits, and foster healthy economic
growth without loosing inflation on an undeserving world.
A YEAR IN THE LIFE OF FOUNDERS
I've been with Founders Asset Management for a little more than a year now, and
it certainly has been a dramatic one. Many of our Funds performed strongly, and
we're especially proud of delivering this performance to our shareholders.
But the market's strength is only half of the story I've experienced. Among
1999's developments were:
o A NEW NAME
As you've noticed, the end of 1999 brought with it a new name for our Fund
group: the Dreyfus Founders Funds. We've formed a strong bond with the
Dreyfus Funds since Founders joined Mellon Financial Corporation in 1998.
Founders' growth-stock approach is an excellent complement to Dreyfus'
well-established fund lineup, offering individual and professional
investors a broad array of products. And in our established role as the
growth specialists for Dreyfus, we felt it was time our name reflected our
new partnership.
The Dreyfus Founders name demonstrates what we have in common with
Dreyfus: decades of investment experience, a disciplined approach to
investing, great emphasis on research, and a commitment to seeking to
provide investors with the strong long-term
4
<PAGE>
performance they need to pursue their financial goals.
And all the while, we've kept the Founders name as a sign that we still
follow our own tried-and-true investment philosophy. It's a great way to
express the merger of pinstripes and rawhide that's proven so successful
for our groups.
o NEW FUND MANAGERS
We made some very promising additions to our Fund management team: Tracy
Stouffer on Passport Fund, Curt Anderson on Balanced Fund, and Kevin
Sonnett on Mid-Cap Growth Fund. These three new portfolio managers are
steeped in the growth-oriented strategy that's the cornerstone of the
Founders approach, and I believe they will each prove invaluable over the
years to come.
o NEW FUND OFFERING
This past year also saw the conception, creation, and launch of the newest
Dreyfus Founders product, the Focus Fund. This new Fund provides investors
with another way to pursue their financial goals: a concentrated fund
holding only 20-30 securities in its portfolio. We're very excited about
the prospects of this Fund, and we hope you'll learn more about how to
incorporate Focus Fund into your investment plan.
o RENEWED COMMITMENT
Another dramatic step was the decision to offer multiple classes of shares
of the Dreyfus Founders equity funds. With this step, we hope to attract
interest from one of the fastest-growing groups of investors: those who use
professional investment advisers. In this way, we look to expand the assets
in these Funds, in the hopes that this will create even greater portfolio
management and cost efficiencies.
THE TEST OF TIME
While this year certainly was an eventful one for the Dreyfus Founders Funds, it
only represents a fraction of our company's lifetime. The end of 1999 marks more
than six decades of equity investing experience-- that's a humbling figure.
At the same time, it's an inspiring one. Because in many ways, our present
success is the result of a consistent application of our core philosophy, a
philosophy that's been with us since we opened our doors in 1938: that
fundamentally strong companies, over the long term, may offer investors the best
appreciation potential.
The railroad is still with us today, the Internet is sure to be with us
tomorrow. And I firmly believe that our bottom-up, growth-oriented approach to
investing may be as successful in the 21st century as it was in
the 20th.
Respectfully yours,
/s/ RICHARD W. SABO
Richard W. Sabo
President and Chief Executive Officer
Founders Asset Management LLC
5
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DREYFUS FOUNDERS BALANCED FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
1 Year 5 Years 10 Years 20 Years
------ ------- -------- --------
-2.22% 14.90% 11.47% 12.77%
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
S & P LIPPER CONSUMER
BALANCED 500 BALANCED PRICE
FUND INDEX FUND INDEX INDEX
-------- -------- ---------- --------
12/89 10,000 10,000 10,000 10,000
12/90 9,500 9,685 10,065 10,625
12/91 11,672 12,635 12,666 10,941
12/92 12,376 13,597 13,611 11,265
12/93 15,080 14,966 15,237 11,582
12/94 14,788 15,160 14,926 11,890
12/95 19,137 20,851 18,640 12,191
12/96 22,727 25,645 21,066 12,594
12/98 30,283 43,966 29,093 13,014
12/99 29,610 53,211 31,710 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE]
A DISCUSSION WITH
PORTFOLIO MANAGER CURTIS ANDERSON, CFA
The Dreyfus Founders Balanced Fund
(Class F) declined 2.22% for the year ended December 31, 1999.
HOW DOES THIS COMPARE WITH THE PERFORMANCE OF BALANCED FUND'S BENCHMARK?
The Standard & Poor's 500 Index had another strong year in 1999, rising 21.03%,
substantially higher than Balanced Fund's return over the same period. However,
because the Fund may allocate a maximum of only 75% of its assets to equities,
Balanced Fund may underperform the S&P 500 Index in an advancing market.
The Standard & Poor's (S&P) 500 Index is a widely recognized index of common
stocks.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
6
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HOW DID 1999'S MARKETS AFFECT BALANCED FUND'S PORTFOLIO?
We entered the year in a defensive position, believing that equity valuations
were quite high and that a market downturn was a distinct possibility. We
consequently heavily weighted the portfolio in fixed-income securities for much
of the year. But investors' attention remained focused on stocks, and bonds
posted poor performance throughout 1999.
TOP 10 HOLDINGS
------------------------------------------------
1. General Electric Company 3.23%
2. Microsoft Corporation 3.03%
3. Cisco Systems, Inc. 2.60%
4. America Online, Inc. 1.94%
5. Motorola, Inc. 1.68%
6. Wal-Mart Stores, Inc. 1.64%
7. MCI WorldCom, Inc. 1.63%
8. XL Capital Ltd. Class A 1.55%
9. Sun Microsystems, Inc. 1.36%
10. Automatic Data Processing 1.33%
------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
Given stocks' high valuations during the year, we chose to concentrate the
Fund's equity positions, taking larger positions in those companies we believed
offered the best opportunity for long-term growth. As a result of this policy,
we did not participate in many technology or Internet-related offerings, and
technology companies accounted for the bulk of the return in the large-cap
marketplace during the year.
WHAT WERE THE MAJOR THEMES IN THE FUND'S PORTFOLIO?
For much of the year, Balanced Fund maintained a large weighting in
pharmaceutical stocks, as companies in this group had shown steady earnings
growth, introduced many new products, and had much more reasonable valuations
than many technology stocks. Unfortunately, due to the threat of increased
regulation, this group lagged the market for much of the year. However, we
believe in the fundamentals of certain high-quality, growth-oriented
pharmaceutical companies, and we will be monitoring them closely.
PORTFOLIO AT A GLANCE
-----------------------------------------
Total assets-Class F: $1,055.8 million
NAV-Class F on 12/31/99: $10.47
One year total return-Class F: -2.22%
Net expense ratio-Class F: 0.97%
Inception date-Class F: 2/19/63
-----------------------------------------
WHAT WERE SOME OF THE FUND'S MAJOR POSITIONS DURING THE YEAR?
Many of our positions early in the year in pharmaceutical, insurance, and energy
companies were trimmed as they failed to perform to our expectations. By
year-end, the Fund had used these assets to initiate several positions in
prominent technology firms, including Microsoft, Cisco Systems, and America
Online.
7
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DREYFUS FOUNDERS BALANCED FUND (CONTINUED)
As bonds suffered for much of the year, our fixed-income component was heavily
concentrated in short-duration securities, generally one-, two-, and three-year
Treasury instruments. Looking ahead, we will likely lengthen the duration of our
government bond holdings, strategically allocating assets in the 3-6 year range.
PORTFOLIO COMPOSITION
--------------------------------------------------
31.8% U.S. Bonds & Treasuries
0.1% Capital Goods
3.1% Cash & Equivalents
3.9% Energy
6.6% Financial
6.9% Consumer Staples
7.1% Telecom Services
9.0% Healthcare
11.2% Consumer Cyclicals
20.3% Technology
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
HOW DID THE RISE IN TECHNOLOGY STOCKS IMPACT THE FUND'S RELATIVE PERFORMANCE?
Companies from all segments of the technology sector experienced strong
performance during the year. We approached these issues cautiously for most of
the year, and therefore did not participate as fully in the performance of this
area as many of our peers. However, in the closing months of the year we became
convinced that, despite their high valuations, select technology companies did
offer superior long-term appreciation potential, and we added several marquee
names to the portfolio.
HOW WILL YOU BRING BALANCED FUND INTO 2000?
While interest rates have risen sharply, the market has remained unfazed, and
little money has moved out of equities and into bonds. We therefore expect to
maintain our increased weighting in equities and to manage our fixed-income
securities with an eye toward total return.
/s/ CURTIS ANDERSON
Curtis Anderson, CFA
Portfolio Manager
8
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DREYFUS FOUNDERS BALANCED FUND STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-63.7%
AUTOMOTIVE-0.2%
21,700 General Motors Corporation Class H* $ 2,083,200
-----------
BANKING-2.3%
251,200 Citigroup, Inc. 13,957,300
142,700 Fifth Third Bancorp 10,461,694
-----------
24,418,994
-----------
BIOTECHNOLOGY-1.4%
129,200 Amgen, Inc.* 7,752,000
52,200 Genentech, Inc.* 7,020,900
-----------
14,772,900
-----------
COMPUTER EQUIPMENT-2.5%
108,000 EMC Corporation* 11,799,000
185,300 Sun Microsystems, Inc.* 14,337,588
-----------
26,136,588
-----------
COMPUTER NETWORKING-2.6%
256,200 Cisco Systems, Inc.* 27,429,413
-----------
COMPUTER SOFTWARE/SERVICES-5.9%
261,400 Automatic Data Processing, Inc. 14,082,925
90,300 BMC Software, Inc.* 7,212,713
272,800 Microsoft Corporation* 31,832,350
83,500 Oracle Corporation* 9,352,000
-----------
62,479,988
-----------
CONSTRUCTION-0.1%
38,000 Lafarge Corporation 1,049,750
-----------
CONSUMER PRODUCTS-2.7%
201,800 The Clorox Company 10,165,675
342,850 The Dial Corporation 8,335,541
94,600 The Procter & Gamble Company 10,364,613
-----------
28,865,829
-----------
ELECTRONICS-3.2%
220,400 General Electric Company 34,106,900
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES-3.0%
222,000 Capital One Financial Corporation $10,697,625
224,600 Freddie Mac 10,570,238
163,700 Fannie Mae 10,221,019
-----------
31,488,882
-----------
FOOD & BEVERAGE-1.0%
472,100 ConAgra, Inc. 10,651,756
-----------
INSURANCE-2.9%
127,100 American International Group, Inc. 13,742,688
315,206 XL Capital Ltd. Class A 16,351,311
-----------
30,093,999
-----------
LEISURE & ENTERTAINMENT-4.4%
271,600 America Online, Inc.* 20,488,825
225,100 Carnival Corporation Class A 10,762,594
113,900 Harley-Davidson, Inc. 7,296,719
555,400 Mirage Resorts, Inc.* 8,504,563
-----------
47,052,701
-----------
MEDICAL SUPPLIES & EQUIPMENT-1.9%
197,800 Guidant Corporation* 9,296,600
291,700 Medtronic, Inc.* 10,628,819
-----------
19,925,419
-----------
OIL & GAS-3.8%
299,800 The Coastal Corporation 10,624,163
163,300 Columbia Energy Group 10,328,725
308,500 Conoco, Inc. Class A 7,635,375
122,500 Phillips Petroleum Company 5,757,500
127,500 Texaco Inc. 6,924,844
-----------
41,270,607
-----------
PHARMACEUTICALS-4.2%
215,500 Abbott Laboratories 7,825,344
206,100 Merck & Company, Inc. 13,821,581
314,300 Pfizer Inc. 10,195,106
146,800 Warner-Lambert Company 12,028,425
-----------
43,870,456
-----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
9
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DREYFUS FOUNDERS BALANCED FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
PUBLISHING & BROADCASTING-4.8%
137,800 AMFM, Inc.* $10,782,850
198,200 AT&T Corporation - Liberty Media
Group* 11,247,850
199,900 Comcast Corporation Special Class A 10,094,950
80,500 EchoStar Communications Corporation* 7,828,625
148,800 Time Warner, Inc. 10,778,700
-----------
50,732,975
-----------
RETAIL-4.3%
116,300 Costco Wholesale Corporation* 10,605,106
143,900 Dayton Hudson Corporation 10,567,656
99,900 The Home Depot, Inc. 6,849,394
250,200 Wal-Mart Stores, Inc. 17,295,075
-----------
45,317,231
-----------
SEMICONDUCTORS & EQUIPMENT-3.0%
106,800 Analog Devices, Inc.* 9,932,400
55,800 JDS Uniphase Corporation* 8,997,750
129,600 Texas Instruments, Inc. 12,555,000
-----------
31,485,150
-----------
TELECOMMUNICATION SERVICES-5.1%
325,650 MCI WorldCom, Inc.* 17,259,450
100,100 Nextel Communications, Inc.* 10,316,556
194,400 US West, Inc. 13,996,800
85,200 VoiceStream Wireless Corporation* 12,087,750
-----------
53,660,556
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-4.4%
53,400 Comverse Technology, Inc.* $ 7,726,313
67,900 E-Tek Dynamics, Inc.* 9,115,575
120,200 Motorola, Inc. 17,699,450
67,200 Qualcomm, Inc.* 11,831,395
-----------
46,372,733
-----------
TOTAL COMMON STOCKS
(DOMESTIC)
(COST-$630,906,888) 673,266,027
-----------
COMMON STOCKS (FOREIGN)-1.3%
TELECOMMUNICATION SERVICES-1.3%
135,550 Nortel Networks Corporation (CA) 13,690,550
-----------
TOTAL COMMON STOCKS
(FOREIGN)
(COST-$13,387,675) 13,690,550
-----------
10
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STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-31.8%
U.S. TREASURY NOTES-26.6%
$19,300,000 U.S. Treasury Note 6.25%
Due 02/15/07 $18,992,416
12,700,000 U.S. Treasury Note 6.625%
Due 03/31/02 12,787,313
26,900,000 U.S. Treasury Note 6.50%
Due 05/15/05 26,908,420
14,600,000 U.S. Treasury Note 6.00%
Due 07/31/02 14,513,320
55,100,000 U.S. Treasury Note 4.25%
Due 11/15/03 51,174,125
40,500,000 U.S. Treasury Note 5.50%
Due 02/15/08 37,943,438
22,700,000 U.S. Treasury Note 7.25%
Ser B Due 05/15/04 23,395,188
42,150,000 U.S. Treasury Note 6.875%
Due 05/15/06 42,887,625
52,925,000 U.S. Treasury Note 5.875%
Due 02/15/04 52,048,454
-------------
280,650,299
-------------
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
U.S. AGENCIES-5.2%
$22,500,000 Federal Home Loan Mortgage
Corporation 6.45% Callable 04/29/02
Due 04/29/09 $ 20,994,120
36,500,000 Federal National Mortgage Association
6.00% Due 05/15/08 34,113,740
-------------
55,107,860
-------------
TOTAL U.S. GOVERNMENT SECURITIES
(COST-$348,567,689) 335,758,159
-------------
CORPORATE SHORT-TERM NOTES-2.8%
FINANCIAL SERVICES-2.8%
29,400,000 American Express Credit Corporation
1.50% 01/03/00 29,397,550
-------------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$29,397,550) 29,397,550
-------------
TOTAL INVESTMENTS-99.6%
(COST-$1,022,259,802) 1,052,112,286
OTHER ASSETS &
LIABILITIES-0.4% 3,712,546
-------------
NET ASSETS-100.0% $1,055,824,832
=============
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
11
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DREYFUS FOUNDERS DISCOVERY FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
1 Year 5 Years 10 Years
------ ------- --------
94.55% 31.68% 23.96%
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
LIPPER SMALL RUSSELL CONSUMER
DISCOVERY CAP FUND 2000 PRICE
FUND INDEX INDEX INDEX
--------- ------------ -------- --------
12/89 10,000 10,000 10,000 10,000
12/90 11,317 8,052 8,621 10,625
12/91 18,387 11,759 12,806 10,941
12/92 21,176 13,924 14,237 11,265
12/93 23,465 16,553 16,643 11,582
12/94 21,646 16,251 16,562 11,890
12/95 28,421 20,875 21,799 12,191
12/96 34,448 24,318 24,929 12,594
12/97 38,563 29,757 28,682 12,808
12/98 44,036 28,999 28,439 13,014
12/99 85,689 35,164 39,654 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE]
A DISCUSSION WITH
PORTFOLIO MANAGER
ROBERT AMMANN, CFA
For the year ended December 31, 1999, the Dreyfus Founders Discovery Fund (Class
F) returned a stellar 94.59%.
HOW DID THE FUND PERFORM RELATIVE TO ITS MARKET AND ITS BENCHMARK?
Discovery Fund handily beat its benchmark, the unmanaged Russell 2000 Index,
which returned 21.26% in 1999, and topped the 21.03% return of the broad-market
Standard & Poor's 500 Index. The Fund also bested the S&P 500 Index for the
three-, five-, and 10-year periods ended December 31, 1999--periods generally
dominated by rising large-company stocks.
The Russell 2000 is an unmanaged index comprising common stocks of the 2,000
U.S. public companies next in size after the largest 1,000 publicly traded U.S.
companies. The Standard & Poor's 500 Index is a widely recognized index of
common stocks.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
Part of the Fund's historical performance is due to the allocation to the Fund
of securities sold in initial public offerings (IPOs). There is no guarantee
that the Fund's investments in IPOs, if any, will continue to have a similar
impact on performance.
12
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HOW DID THE SMALL-CAP MARKET PERFORM IN 1999?
After several years of underperforming large stocks, small companies came back
into their own during the year. Two factors were behind this move. First,
positive economic news such as low unemployment and strong growth encouraged
investors to seek opportunities outside the large-cap marketplace, and this
brought renewed attention to small caps. Second, an increasingly digital world
simply could not get enough of technology companies. This sector alone
contributed nearly 67% of the Russell 2000 Index's 1999 return.
TOP 10 HOLDINGS
--------------------------------------------------
1. Digital Microwave Corporation 2.88%
2. Cree Research, Inc. 2.30%
3. USWeb Corporation 2.20%
4. Rex Stores Corporation 1.95%
5. RAVISENT Technologies, Inc. 1.89%
6. Insight Enterprises, Inc. 1.79%
7. USFreightways Corporation 1.78%
8. Peregrine Systems, Inc. 1.66%
9. EMCORE Corporation 1.62%
10. Fossil, Inc. 1.56%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
WHAT WERE SOME OF THE DOMINANT THEMES IN DISCOVERY'S PORTFOLIO?
Technology stocks as a group fueled most of the small-cap market's rise in 1999,
and we noticed several areas of particular strength within this sector. These
areas included:
o Companies that have benefited from the rapid adoption of digital consumer
electronics such as digital video disks (DVDs) and digital cameras
o "Enabling materials" firms, which are developing new, non-silicon
substrates to help improve microchip performance
WHICH PORTFOLIO HOLDINGS MOST ENHANCED THE FUND'S PERFORMANCE?
The largest contributor to Discovery's return was Zomax, Inc., a company that
provides CD and DVD mastering and replication services. Another substantial
performer was Sawtek, Inc., which manufactures surface acoustic wave filters
used in cellular basestation and handset equipment.
PORTFOLIO AT A GLANCE
-------------------------------------------
Total assets-Class F: $806.2 million
NAV-Class F on 12/31/99: $40.86
One year total return-Class F: 94.59%
Net expense ratio-Class F: 1.45%
Inception date-Class F: 12/31/89
-------------------------------------------
We were also very pleased with RAVISENT Technologies, Inc., which we bought at
its initial public offering in July. The company develops software which helps
manage digital video and audio streams for personal computer systems and
consumer electronics.
13
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DREYFUS FOUNDERS DISCOVERY FUND (CONTINUED)
WERE THERE ANY DISAPPOINTMENTS IN THE FUND'S PORTFOLIO?
We had hoped to see greater growth from companies expected to benefit from
pharmaceutical outsourcing, which allows larger companies to "farm out" drug
research and development duties. We are still optimistic about the prospects for
this area, however, and have retained positions in select outsourcing companies.
PORTFOLIO COMPOSITION
--------------------------------------------------
47.9% Technology
0.3% Basic Materials
1.7% Financial
0.9% Energy
1.0% Consumer Staples
2.5% Telecom Services
3.5% Business Services
3.6% Transportation
5.1% Healthcare
4.3% Capital Goods
7.4% Cash & Equivalents
21.8% Consumer Cyclicals
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
HOW ARE YOU PREPARING THE FUND FOR THE YEAR TO COME?
The recent surge in technology stocks has resulted in high valuations throughout
the sector. While we feel that many of these are justified, we will continue to
be sensitive to valuation when buying new holdings or trimming existing
positions.
We also believe that the small-cap marketplace has much to offer investors in
addition to technology firms. Because we concentrate our efforts on seeking the
best small companies available, we will seek to position Discovery Fund
strategically should investors continue to expand their focus to the
smaller-capitalization area.
/s/ ROBERT AMMANN
Robert Ammann, CFA
Portfolio Manager
There are risks associated with small-cap investing such as limited product
lines and small market share.
14
<PAGE>
DREYFUS FOUNDERS DISCOVERY FUND STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-89.6%
BUILDING MATERIALS-0.3%
270,890 U.S. Plastic Lumber Corporation* $2,065,536
----------
BUSINESS SERVICES-13.3%
171,790 Braun Consulting, Inc. 12,282,985
58,950 CDW Computer Centers, Inc.* 4,631,259
40,525 Chemdex Corporation* 4,457,750
75,525 Corporate Executive Board Company* 4,182,197
36,950 Digex, Inc.* 2,512,600
179,950 Dycom Industries, Inc.* 7,929,047
357,387 Insight Enterprises, Inc.* 14,429,500
74,450 NCO Group, Inc.* 2,219,541
97,900 National Information Consortium,
Inc.* 3,132,800
100,200 Pfsweb, Inc.* 3,744,975
305,625 The Profit Recovery Group
International, Inc.* 8,099,063
304,368 Quanta Services, Inc.* 8,598,396
142,375 Sykes Enterprises, Inc.* 6,237,805
232,495 The Management Network Group, Inc.* 7,585,149
399,848 USWeb Corporation 17,768,223
----------
107,811,290
----------
COMPUTER NETWORKING-0.8%
55,575 Proxim, Inc.* 6,106,303
----------
COMPUTER SOFTWARE/SERVICES-19.5%
52,400 Andover.Net, Inc.* 1,860,200
137,875 Aspect Development, Inc.* 9,444,438
119,350 BindView Development Corporation* 5,922,744
366,800 Dendrite International, Inc.* 12,333,650
100,975 Digital River, Inc.* 3,363,730
135,125 Documentum, Inc.* 8,090,609
159,300 Entrust Technologies, Inc.* 9,538,088
95,750 Exchange Applications, Inc.* 5,266,250
24,075 JNI Corp.* 1,588,950
133,097 Liquid Audio, Inc.* 3,485,478
107,700 Macromedia, Inc.* 7,875,563
54,900 Mercury Interactive Corporation* 5,925,769
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
40,825 NetIQ Corporation* $2,153,519
168,450 PC-TEL, Inc.* 8,822,569
159,225 Peregrine Systems, Inc.* 13,374,900
213,975 Pinnacle Systems, Inc.* 8,665,988
55,820 Puma Technology, Inc.* 7,287,999
401,341 RAVISENT Technologies, Inc.* 15,250,958
139,125 Remedy Corporation* 6,608,438
71,425 Tanning Technology Corporation* 4,169,434
263,794 TenFold Corporation* 10,320,940
339,100 Zamba Corporation* 5,849,475
----------
157,199,689
----------
CONSUMER PRODUCTS-2.4%
543,075 Fossil, Inc.* 12,558,609
685,450 The Topps Company, Inc.* 7,068,703
----------
19,627,312
----------
CONSUMER SERVICES-0.4%
202,500 ITT Educational Services, Inc.* 3,126,094
----------
DISTRIBUTION-0.5%
86,525 Patterson Dental Company* 3,677,313
----------
ELECTRONICS-4.5%
199,950 Gentex Corporation* 5,548,613
132,800 Macrovision Corporation* 9,760,800
267,000 Methode Electronics, Inc. 8,544,000
78,975 SmartDisk Corporation* 2,586,431
210,086 The Titan Corporation* 9,900,303
----------
36,340,147
----------
FINANCIAL SERVICES-1.7%
211,925 CompuCredit Corporation* 8,159,113
115,725 Silicon Valley Bancshares* 5,713,922
----------
13,873,035
----------
HEALTHCARE SERVICES-3.3%
119,300 Accredo Health, Inc.* 3,668,475
259,725 Albany Molecular Research,
Inc.* 7,791,750
381,131 InfoCure Corporation* 11,886,523
270,700 Orthodontic Centers of America, Inc.* 3,231,481
----------
26,578,229
----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
DREYFUS FOUNDERS DISCOVERY FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT-4.4%
446,075 3D Company* $4,056,517
457,859 Callaway Golf Company 8,098,381
437,800 Fairfield Communities, Inc.* 4,706,350
433,225 JAKKS Pacific, Inc.* 8,068,816
316,600 Station Casinos, Inc.* 7,103,713
283,400 Sunterra Corporation* 3,259,100
----------
35,292,877
----------
MANUFACTURING-3.1%
133,350 Astec Industries, Inc.* 2,508,647
179,600 AstroPower, Inc.* 2,491,950
202,250 Insituform Technologies, Inc.* 5,663,000
94,550 Trex Company, Inc.* 2,529,213
262,950 Zomax Incorporated* 11,882,053
----------
25,074,863
----------
MEDICAL SUPPLIES & EQUIPMENT-1.2%
408,375 PolyMedica Corporation* 9,443,672
----------
OIL SERVICES-0.4%
202,175 National-Oilwell, Inc.* 3,171,620
----------
PHARMACEUTICALS-0.6%
93,150 King Pharmaceuticals, Inc.* 5,210,578
----------
PUBLISHING & BROADCASTING-0.9%
43,225 Cox Radio, Inc.* 4,311,694
110,625 Radio Unica Corp.* 3,194,297
----------
7,505,991
----------
RETAIL-10.1%
162,725 99 Cents Only Stores* 6,224,231
124,425 American Eagle Outfitters, Inc.* 5,599,125
191,220 Ames Department Stores, Inc.* 5,497,575
196,950 Bebe Stores, Inc.* 5,219,175
313,450 The Men's Wearhouse, Inc.* 9,207,594
240,450 Pacific Sunwear of California, Inc.* 7,649,316
450,100 Rex Stores Corporation* 15,753,500
383,958 Sharper Image Corporation* 4,847,470
275,675 The Yankee Candle Company, Inc.* 4,496,948
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
174,450 Tweeter Home Entertainment Group,
Inc.* $6,105,750
315,694 Ultimate Electronics, Inc.* 7,773,964
60,133 Williams-Sonoma, Inc.* 2,766,118
----------
81,140,766
----------
SEMICONDUCTORS & EQUIPMENT-12.1%
75,325 Advanced Energy Industries, Inc.* 3,705,048
379,150 American Xtal Technology, Inc.* 6,564,034
37,950 Applied Micro Circuits Corporation* 4,819,650
215,475 Brooks Automation, Inc.* 7,029,872
218,875 Cree Research, Inc.* 18,577,016
393,400 EMCORE Corporation* 13,080,550
153,500 Kopin Corporation* 6,466,188
16,225 Optical Coating Laboratory, Inc. 4,762,038
82,325 PRI Automation, Inc.* 5,484,903
220,450 Pericom Semiconductor Corporation* 5,786,813
109,750 SanDisk Corporation* 10,481,125
193,531 Zoran Corporation* 10,789,353
----------
97,546,590
----------
TELECOMMUNICATION SERVICES-1.5%
28,720 Aether Systems, Inc. 2,057,070
41,150 Allegiance Telecom, Inc.* 3,765,225
63,500 ITXC Corp.* 2,111,375
114,300 TeleCorp PCS, Inc.* 4,357,688
----------
12,291,358
----------
TELECOMMUNICATIONS EQUIPMENT-5.0%
990,300 Digital Microwave Corporation* 23,210,156
12,975 Finisar Corporation* 1,156,397
362,875 REMEC, Inc.* 9,230,633
99,650 Sawtek Inc.* 6,632,953
----------
40,230,139
----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION-3.6%
132,775 C.H. Robinson Worldwide, Inc. $ 5,277,806
441,050 Circle International Group, Inc. 9,647,969
303,650 USFreightways Corporation 14,385,412
-----------
29,311,187
-----------
TOTAL COMMON STOCKS
(DOMESTIC)
(COST-$470,424,670) 722,624,589
-----------
COMMON STOCKS (FOREIGN)-3.0%
BUSINESS SERVICES-0.4%
260,000 4Front Technologies, Inc. (UK)* 3,477,500
-----------
ELECTRONICS-1.1%
212,675 Optimal Robotics Corporation (CA)* 7,842,391
-----------
OIL SERVICES-0.5%
381,150 Stolt Comex Seaway Sponsored ADR
(UK)* 4,192,650
-----------
SEMICONDUCTORS & EQUIPMENT-1.0%
368,000 ASM International NV Sponsored ADR
(NE)* 8,395,000
-----------
TOTAL COMMON STOCKS (FOREIGN)
(COST-$18,567,302)
23,907,541
-----------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
AGENCY DISCOUNT NOTE-4.5%
U.S. AGENCIES-4.5%
$36,600,000 Federal National Mortgage Association
Discount Note 3.75% 01/05/00 $36,584,750
-----------
TOTAL AGENCY
DISCOUNT NOTE
(AMORTIZED COST-$36,584,750)
36,584,750
-----------
CORPORATE SHORT-TERM NOTES-4.1%
FINANCIAL SERVICES-4.1%
33,000,000 American Express Credit Corporation
1.50% 01/03/00 32,997,250
-----------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$32,997,250)
32,997,250
-----------
TOTAL INVESTMENTS-101.2%
(COST-$558,573,972) 816,114,130
OTHER ASSETS & LIABILITIES-(1.2%)
(9,961,890)
-----------
NET ASSETS-100.0% $806,152,240
===========
17
<PAGE>
DREYFUS FOUNDERS FOCUS FUND
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE]
A DISCUSSION WITH
PORTFOLIO MANAGER
SCOTT CHAPMAN, CFA
The Dreyfus Founders Focus Fund, launched on December 31, 1999, pursues
long-term growth by investing in a concentrated portfolio of 20-30 stocks
selected for their superior long-term growth potential.
WHAT EFFECTS DO YOU HOPE PORTFOLIO CONCENTRATION WILL HAVE ON FUND PERFORMANCE?
By limiting the number of stocks owned by the Fund, we hope to construct a
portfolio that represents some of our best domestic stock ideas. Our
concentrated approach means we have the flexibility to make larger percentage
commitments to the stocks of these select growth-oriented companies. In this
way, a rise in any one company will contribute much more to the overall
performance of the Fund.
WHAT SIZE OF STOCKS ARE CONSIDERED FOR THE FUND'S PORTFOLIO?
Focus Fund has the ability to invest in companies of any size throughout the
domestic equity markets. However, we anticipate that the Fund will generally
invest in larger, more established companies. We consider large companies to be
those with market capitalizations of about $8 billion or more, though this
number may fluctuate depending on changes in the value of the stock market as a
whole.
TOP 10 HOLDINGS
--------------------------------------------------
1. Sapient Corporation 3.57%
2. Voice Stream Wireless Corporation 3.53%
3. Nokia Oyj Sponsored ADR 3.53%
4. VeriSign, Inc. 3.50%
5. Sprint Corporation (PCS Group) 3.45%
6. VERITAS Software Corporation 3.45%
7. Viacom, Inc. Class B 3.44%
8. Nortel Networks Corporation 3.43%
9. Echo Star Communications Corporation 3.43%
10. Qualcomm, Inc. 3.41%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
Focus Fund is newly organized and has no historical performance.
18
<PAGE>
ARE THERE ANY COMMON THEMES AMONG YOUR PORTFOLIO CHOICES?
We've found that rapidly growing companies tend to be those that have undergone
fundamental transformations that have led to an acceleration in earnings. These
may include bringing in a new management team, moving into a booming
marketplace, or introducing revolutionary products or services.
Of course, if a company is in the midst of a change, its earnings growth
potential may yet be unclear. Therefore, we look for situations where corporate
transformations are already beginning to bear fruit, and may be reflected in the
company reporting earnings significantly higher than estimates by analysts. If
we can find these companies before the market realizes their true promise, the
Fund's performance may benefit.
ARE THERE INVESTMENT RISKS UNIQUE TO THE FOCUS FUND?
As with any equity mutual fund, investors assume the risks that are inherent in
the stock market: share prices may rise and fall, and different investment
styles or sectors of the market may fall in and out of favor. Focus Fund's
portfolio concentration may add yet another element.
19
<PAGE>
DREYFUS FOUNDERS FOCUS FUND (CONTINUED)
Because the Fund owns a limited stable of stocks, changes in the value of any
one holding may have a notable impact on its price and performance. Thus, the
Fund may be more volatile in the short term than diversified funds.
WHAT DO YOU SEE AHEAD IN THE MARKETS FOR THE FUND'S FIRST YEAR?
We feel very positive about the opportunities at hand with the efficiencies and
market potential available through the Internet and wireless environment.
Technological developments have allowed firms to increase productivity and tap
into new markets--just the kind of transformations the Focus Fund team searches
for. While we will keep a careful eye on the progress of the market, our focus
will remain on the long-term potential of these firms.
/s/ SCOTT CHAPMAN
Scott Chapman, CFA
Portfolio Manager
20
<PAGE>
DREYFUS FOUNDERS FOCUS FUND STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-85.0%
BANKING-3.4%
1,225 Citigroup, Inc. $ 68,217
---------
BIOTECHNOLOGY-3.3%
490 Genentech, Inc.* 65,905
---------
COMPUTER EQUIPMENT-6.7%
620 EMC Corporation* 67,735
867 Sun Microsystems, Inc.* 67,084
---------
134,819
---------
COMPUTER NETWORKING-3.4%
639 Cisco Systems, Inc.* 68,413
---------
COMPUTER SOFTWARE / SERVICES-17.1%
578 Microsoft Corporation* 67,445
602 Oracle Corporation* 67,424
510 Sapient Corporation* 71,846
486 VERITAS Software Corporation* 69,528
369 VeriSign, Inc.* 70,525
---------
346,768
---------
CONSUMER SERVICES-3.4%
2,573 Cendant Corporation* 68,345
---------
FINANCIAL SERVICES-3.4%
1,092 Fannie Mae 68,182
---------
LEISURE & ENTERTAINMENT-6.8%
902 America Online, Inc.* 68,439
1,148 Viacom, Inc. Class B* 69,382
---------
137,821
---------
PUBLISHING & BROADCASTING-10.2%
873 AMFM, Inc.* 68,312
1,204 AT&T Corporation-Liberty Media Group* 68,402
710 EchoStar Communications Corporation* 69,048
---------
205,762
---------
RETAIL-3.4%
742 Costco Wholesale Corporation* 67,661
---------
SEMICONDUCTORS & EQUIPMENT-6.8%
251 Broadcom Corporation* 68,350
421 JDS Uniphase Corporation* 67,886
---------
136,236
---------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES-10.4%
838 Level 3 Communications, Inc.* $ 68,507
679 Sprint Corporation (PCS Group)* 69,598
501 VoiceStream Wireless Corporation* 71,079
---------
209,184
---------
TELECOMMUNICATIONS EQUIPMENT-6.7%
390 Qualcomm, Inc.* 68,664
983 RF Micro Devices, Inc.* 67,090
---------
135,754
---------
TOTAL COMMON STOCK (DOMESTIC)
(COST-$1,701,587) 1,713,067
---------
COMMON STOCKS (FOREIGN)-10.3%
ELECTRONICS-3.4%
237 Sony Corporation Sponsored ADR (JA) 67,486
---------
TELECOMMUNICATION SERVICES-3.4%
684 Nortel Networks Corporation (CA) 69,084
---------
TELECOMMUNICATIONS EQUIPMENT-3.5%
372 Nokia Oyj Sponsored ADR(FI) 71,075
---------
TOTAL COMMON STOCKS (FOREIGN)
(COST-$204,766) 207,645
---------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTE-99.3%
$2,000,000 FHLMB Discount Note 1.30% 01/03/00 $1,999,856
----------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$1,999,856) 1,999,856
----------
TOTAL INVESTMENTS-194.6%
(COST-$3,906,209) 3,920,568
OTHER ASSETS & LIABILITIES-(94.6%)
(1,906,135)
----------
NET ASSETS-100.0% $2,014,433
==========
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
DREYFUS FOUNDERS GOVERNMENT SECURITIES FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
Since Inception
1 Year 5 Years 10 Years (3/1/88)
------ ------- -------- ---------------
-3.77% 5.32% 5.17% 5.74%
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
GOVERNMENT LEHMAN BROS. LIPPER U.S. CONSUMER
SECURITIES U.S. TREASURY GOVERNMENT PRICE
FUND COMP. INDEX FUND INDEX INDEX
--------- ------------- ----------- --------
12/89 10,000 10,000 10,000 10,000
12/90 10,383 10,860 10,770 10,625
12/91 11,735 12,529 11,381 10,941
12/92 12,193 13,434 11,763 11,265
12/93 12,925 14,877 12,077 11,582
12/94 12,772 14,367 12,522 11,890
12/95 14,193 17,004 13,202 12,191
12/96 14,465 17,476 13,840 12,594
12/97 15,604 19,130 14,435 12,808
12/98 17,131 21,049 15,115 13,014
12/99 16,477 20,518 15,396 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE]
A DISCUSSION WITH
PORTFOLIO MANAGER
MARGARET DANUSER
The Dreyfus Founders Government Securities Fund posted a loss of 3.77% for the
year ended December 31, 1999.
HOW DID BONDS PERFORM DURING THE YEAR?
In a year marked by rising interest rates, many fixed-income securities
suffered. This was reflected by the -2.52% performance of the Fund's benchmark,
the unmanaged Lehman Brothers U.S. Treasury Composite Index.
The Lehman Bros. U.S. Treasury Composite is composed of all public obligations
of the U.S. Treasury, excluding flower bonds and foreign-targeted issues, that
have at least one year to maturity and an outstanding par value of at least $100
million.
Performance shown is for Class F, which is open only to grandfathered
investors.
22
<PAGE>
WHAT WERE THE MAJOR DEVELOPMENTS IN THE FIXED-INCOME MARKET IN 1999?
Undoubtedly, the year's key events were the three short-term interest-rate hikes
engineered by the Federal Reserve. The Fed is still wary of strong economic
growth leading to wage pressures and to inflation, but has also acknowledged
that technology has become an important means for businesses to increase
productivity and offset that pressure.
While there were scattered bond rallies throughout the year, the environment
for fixed-income securities was decidedly negative. Yields on Treasury bonds
(which move in an opposite direction to their prices) rose steadily throughout
the year. 1999 was the worst year in 22 years for the long bond, which returned
- -14.22% including reinvested interest.
HOW DID YOU MANAGE THE FUND'S DURATION AMID THESE SHIFTING RATES?
In the first half, we took several opportunities to buy long-dated bonds in the
oversold fixed-income marketplace, locking in higher yields. Believing that the
Fed would raise rates again at its August meeting, we shortened the Fund's
duration in the third quarter by reallocating assets to the short and
intermediate areas of the yield curve.
In the fourth quarter, we chose to raise the Fund's duration. We believed
that, while economic growth was strong, inflation remained under control and
that this would keep the Fed from hiking short-term rates for a third time in
the year. Unfortunately, the Fed did raise interest rates, and our positions
underperformed the short end of the yield curve.
WHAT DO YOU SEE FOR THE FIXED-INCOME MARKETPLACE IN THE YEAR AHEAD?
A strong economy is what ultimately influences the Fed and interest rates. We've
yet to see any sort of slowdown, and inflation appears to be picking up. We
expect recent announcements by the Treasury Department regarding the paydown of
debt will affect the liquidity of the treasury market and the shape of the yield
curve. The 10-year note is perceived to be the replacement "bellwether
benchmark" for treasury bonds as the 30-year bond is progressively retired.
/s/ MARGARET DANUSER
Margaret Danuser
Fixed-Income Manager
23
<PAGE>
DREYFUS FOUNDERS GOVERNMENT STATEMENT OF INVESTMENTS
SECURITIES FUND DECEMBER 31, 1999
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-96.7%
U.S. AGENCIES-36.4%
$500,000 Federal Home Loan Mortgage
Corporation 6.25%
Due 07/15/04 $ 488,027
1,025,000 Federal Farm Credit Bank 6.55%
Due 08/19/03 1,016,809
500,000 Federal Home Loan Mortgage
Corporation 6.625%
Due 09/15/09 484,377
1,000,000 Federal Home Loan Mortgage
Corporation 6.45%
Callable 04/29/02
Due 04/29/09 933,072
500,000 Federal National Mortgage
Association 5.625%
05/14/04 476,894
1,000,000 Federal National Mortgage
Association 6.00%
Due 05/15/08 934,623
500,000 Federal National Mortgage
Association 6.5%
08/15/04 493,087
---------
4,826,889
---------
FANNIE MAE POOLS-10.8%
558,926 Federal National Mortgage
Association 7.00%
03/01/12
Pool #373543 553,700
926,295 Federal National Mortgage
Association 6.50%
04/01/28 876,507
---------
1,430,207
---------
MORTGAGE-BACKED SECURITIES-4.1%
549,559 Federal Home Loan Mortgage
Corporation 7.50%
11/01/29 544,521
---------
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY BONDS-6.9%
$350,000 U.S. Treasury Bond 7.625%
02/15/25 $ 387,844
500,000 U.S. Treasury Bond 7.25%
08/15/22 527,188
----------
915,032
----------
U.S. TREASURY NOTES-38.5%
500,000 U.S. Treasury Note 6.50%
05/15/05 500,157
500,000 U.S. Treasury Note 6.25%
Due 02/15/07 492,032
650,000 U.S. Treasury Note 5.75%
08/15/03 636,391
500,000 U.S. Treasury Note 6.125%
08/15/07 487,344
1,150,000 U.S. Treasury Note 6.50%
Due 10/15/06 1,146,766
225,000 U.S. Treasury Note 7.875%
Due 11/15/04 238,008
750,000 U.S. Treasury Note 5.625%
05/15/08 705,469
400,000 U.S. Treasury Note 7.00%
07/15/06 409,750
500,000 U.S. Treasury Note 6.25%
08/31/02 499,685
----------
5,115,602
----------
TOTAL U.S. GOVERNMENT
SECURITIES
(COST-$13,260,235) 12,832,251
----------
CORPORATE SHORT-TERM NOTES-4.6%
CONSUMER PRODUCTS-4.6%
620,000 Hasbro, Inc. 5.00%
01/03/00 619,828
----------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$619,828) 619,828
----------
TOTAL INVESTMENTS-101.3%
(COST-$13,880,063) 13,452,079
OTHER ASSETS &
LIABILITIES-(1.3%) (176,142)
----------
NET ASSETS-100.0% $13,275,937
==========
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
DREYFUS FOUNDERS GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
1 Year 5 Years 10 Years 20 Years
------ ------- -------- --------
39.06% 30.06% 20.07% 18.84%
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
LIPPER CONSUMER
GROWTH S&P GROWTH FUND PRICE
FUND INDEX 500 INDEX INDEX
--------- --------- ------------ ---------
12/89 10,000 10,000 10,000 10,000
12/90 8,939 9,685 9,457 10,625
12/91 13,176 12,635 12,893 10,941
12/92 13,745 13,597 13,878 11,265
12/93 17,254 14,966 15,539 11,582
12/94 16,677 15,160 15,294 11,890
12/95 24,280 20,851 20,285 12,191
12/96 28,302 25,645 23,831 12,594
12/97 35,828 34,196 30,522 12,808
12/98 44,797 43,966 36,650 13,014
12/99 62,296 53,211 41,665 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE] [PICTURE]
A DISCUSSION WITH PORTFOLIO MANAGERS
THOMAS ARRINGTON, CFA, LEFT, AND
SCOTT CHAPMAN, CFA
While large-company stocks, as represented by the Standard & Poor's 500 Index,
experienced an unprecedented fifth consecutive year of 20%+ performance, the
Dreyfus Founders Growth Fund's carefully constructed portfolio drove the Fund's
Class F shares up 39.06% for the year ended December 31, 1999.
The Standard & Poor's (S&P) 500 Index is a widely recognized index of common
stocks.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
25
<PAGE>
DREYFUS FOUNDERS GROWTH FUND (CONTINUED)
HOW DID THE FUND PERFORM RELATIVE TO ITS LARGE-COMPANY STOCKS AS A WHOLE?
The Dreyfus Founders Growth Fund Class F return almost doubled the performance
of large-capitalization stocks (as represented by the S&P 500 Index), which
gained 21.03% in 1999.
HOW WOULD YOU DESCRIBE THE PERFORMANCE OF GROWTH FUND'S MARKETPLACE IN 1999?
Large-caps started off well in the first quarter, but April's
stronger-than-expected economic news encouraged investors to move away from
large companies and into smaller firms and cyclical stocks (whose performance is
highly dependent upon the overall health of the economy).
TOP 10 HOLDINGS
--------------------------------------------------
1. Microsoft Corporation 4.60%
2. Cisco Systems, Inc. 4.09%
3. General Electric Company 3.76%
4. JDS Uniphase Corporation 2.71%
5. Qualcomm, Inc. 2.69%
6. Sun Microsystems, Inc. 2.37%
7. Intel Corporation 2.36%
8. Nokia Oyj Sponsored ADR 2.14%
9. AT&T Corp.-Liberty Media Group 2.03%
10. Time Warner, Inc. 1.90%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
The second half saw some concerning economic news: higher interest rates,
rising oil prices, and a federal judge ruling against Microsoft, America's
largest public company. Nevertheless, large caps rose during the period--on the
backs of technology stocks, which the market now believes have boosted worker
productivity and changed the rate at which the economy can grow without
overheating. Growth Fund was overweight in technology stocks throughout the
year, and this had a significant impact on performance.
WHAT PORTFOLIO TRENDS EMERGED FROM YOUR RESEARCH THIS YEAR?
We've found three major secular trends that are moving today's market. We call
them the BIG Theme:
o The impressive market power of the baby boom generation
o The explosive growth of the Internet
o The trend toward globalization, which is opening new markets for domestic
goods and services
We've concluded that many of the best investment opportunities are influenced by
one or more of these themes, and this
PORTFOLIO AT A GLANCE
---------------------------------------------
Total assets-Class F: $3,323.6 million
NAV-Class F on 12/31/99 $23.87
One year total return-Class F: 39.06%
Net expense ratio-Class F: 1.08%
Inception date-Class F: 1/5/62
---------------------------------------------
26
<PAGE>
has proven a valuable tool in locating new companies with long-term potential.
WHICH PORTFOLIO HOLDINGS EXCELLED IN 1999?
Technology stocks accounted for many of the year's top performers. Especially
noteworthy are firms that are benefiting from the advent of the "Internet
economy," companies such as Qualcomm, VeriSign, JDS Uniphase, Oracle, and Yahoo.
PORTFOLIO COMPOSITION
--------------------------------------------------
42.9% Technology
13.7% Consumer Staples
12.5% Consumer Cyclicals
8.3% Healthcare
7.6% Telecom Services
7.1% Financial
4.9% Capital Goods
3.0% Cash & Equivalents
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
While few other sectors beyond technology performed well over the course of
the year, the Fund's performance was boosted in the fourth quarter by three
major retailing firms, Wal-Mart, Home Depot, and Costco.
WHICH OF THE YEAR'S EVENTS PROVED MOST DIFFICULT FOR THE GROWTH FUND?
April's rotation away from large-company stocks was challenging to the Fund's
portfolio, but we believed that this represented healthy profit taking and would
not cause us any long-term concern. The second half's interest-rate hikes by the
Fed were not overly detrimental to Fund performance. We believed in the
fundamental strength of our stock picks, and it is because we stood by them that
we ended the year up nearly 40%.
WHAT IS YOUR OUTLOOK FOR 2000?
The economy continues to grow at a brisk pace, and inflation continues to be
subdued. While this has caused some concern about further Fed tightening, we
believe this is convincing evidence that technology has helped give birth to a
new economy, one in which higher productivity may lead to the possibility of
higher, noninflationary growth. We believe that this is an environment that has
much to offer the branded, fundamentally strong large- and mid-cap growth
companies that the Growth Fund focuses upon.
27
<PAGE>
DREYFUS FOUNDERS GROWTH FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-92.1%
AUTOMOTIVE-1.5%
536,400 General Motors Corporation Class H * $51,494,400
-----------
BANKING-2.0%
686,514 Citigroup, Inc. 38,144,434
183,311 Fifth Third Bancorp 13,438,988
379,054 Wells Fargo Company 15,327,996
-----------
66,911,418
-----------
BIOTECHNOLOGY-1.4%
162,154 Amgen, Inc. * 9,729,240
198,600 Chiron Corporation * 8,403,263
213,207 Genentech, Inc. * 28,676,342
-----------
46,808,845
-----------
BUSINESS SERVICES-1.1%
79,349 Amdocs Limited * 2,737,541
131,468 Cintas Corporation * 6,976,021
476,015 The Interpublic Group of Companies,
Inc. 27,460,115
-----------
37,173,677
-----------
COMPUTER EQUIPMENT-4.7%
341,100 Apple Computer, Inc. 35,048,025
399,880 EMC Corporation * 43,686,890
1,019,632 Sun Microsystems, Inc.* 78,894,026
-----------
157,628,941
-----------
COMPUTER NETWORKING-4.1%
1,271,257 Cisco Systems, Inc. * 136,103,953
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-13.5%
555,236 Automatic Data Processing, Inc. $29,913,340
118,625 BMC Software, Inc. * 9,475,172
1,310,619 Microsoft Corporation * 152,932,855
448,800 Oracle Corporation * 50,265,600
108,650 Phone.com, Inc. * 12,596,609
88,550 RealNetworks, Inc. * 10,653,672
257,300 Redback Networks Inc. * 45,461,694
90,800 Sapient Corporation * 12,791,450
177,550 Siebel Systems, Inc. * 14,958,588
198,112 VERITAS Software Corporation 28,342,398
122,375 VeriSign, Inc. * 23,388,922
117,577 Yahoo! Inc. * 50,874,098
275,450 go.com * 6,559,153
-----------
448,213,551
-----------
CONSUMER PRODUCTS-2.6%
364,831 Colgate-Palmolive Company 23,714,015
751,245 The Dial Corporation 18,264,644
344,064 Gillette Company 14,171,136
276,075 The Procter & Gamble Company 30,247,467
-----------
86,397,262
-----------
CONSUMER SERVICES-1.4%
689,200 Cendant Corporation * 18,306,875
865,739 DeVry, Inc. * 16,124,389
162,423 United Parcel Service, Inc. 11,207,187
-----------
45,638,451
-----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
DIVERSIFIED-1.1%
19,611 Berkshire Hathaway, Inc. * $35,888,130
-----------
ELECTRONICS-5.3%
808,336 General Electric Company 125,089,996
160,650 Jabil Circuit, Inc. * 11,727,450
251,968 PE Corp-PE Biosystems Group 30,314,900
92,576 Solectron Corporation * 8,806,292
-----------
175,938,638
-----------
FINANCIAL SERVICES-2.3%
252,230 Associates First Capital Corporation
Class A 6,920,561
407,757 The Charles Schwab Corporation 15,647,675
414,146 Fannie Mae 25,858,241
249,075 Merrill Lynch & Company, Inc. * 20,797,763
129,268 Northern Trust Corporation 6,899,680
-----------
76,123,920
-----------
FOOD & BEVERAGE-1.2%
707,862 The Coca-Cola Company 41,232,962
-----------
HEALTHCARE SERVICES-0.9%
1,143,641 IMS Health Incorporated 31,092,740
-----------
INSURANCE-2.4%
392,023 American International Group, Inc. 42,387,487
385,273 Marsh & McLennan Companies, Inc. 36,865,810
-----------
79,253,297
-----------
LEISURE & ENTERTAINMENT-4.0%
645,400 America Online, Inc. * 48,687,363
254,909 Carnival Corporation Class A 12,187,837
144,307 Harley-Davidson, Inc. 9,244,667
1,044,550 Viacom, Inc. Class B * 63,129,991
-----------
133,249,858
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
MANUFACTURING-0.9%
324,943 Danaher Corporation $15,678,500
331,110 Tyco International Limited 12,871,901
-----------
28,550,401
-----------
MEDICAL SUPPLIES & EQUIPMENT-1.0%
316,575 Guidant Corporation * 14,879,025
510,702 Medtronic, Inc.* 18,608,704
-----------
33,487,729
-----------
PHARMACEUTICALS-5.0%
703,364 Bristol-Myers Squibb Company 45,147,177
60,975 MedImmune, Inc.* 10,106,606
391,115 Merck & Company, Inc. 26,229,150
873,053 Pfizer, Inc. 28,319,657
686,971 Warner-Lambert Company 56,288,686
-----------
166,091,276
-----------
PUBLISHING & BROADCASTING-10.2%
794,937 AMFM, Inc.* 62,203,820
1,186,975 AT&T Corporation--
Liberty Media Group* 67,360,831
1,020,397 Comcast Corporation Special Class A 51,530,049
415,702 EchoStar Communications Corporation * 40,427,020
443,730 Gannett Company, Inc. 36,191,728
871,631 Time Warner, Inc. 63,138,771
317,900 USA Networks, Inc. * 17,544,106
-----------
338,396,325
-----------
RESTAURANTS-0.2%
152,551 McDonald's Corporation 6,149,712
-----------
29
<PAGE>
DREYFUS FOUNDERS GROWTH FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
RETAIL-6.1%
133,625 Amazon.com, Inc. * $10,172,203
637,791 Costco Wholesale Corporation * 58,158,567
907,263 The Home Depot, Inc. 62,204,219
141,361 Intimate Brands, Inc. 6,096,193
239,806 Kohl's Corporation * 17,310,996
103,225 Tandy Corporation 5,077,380
644,715 Wal-Mart Stores, Inc. 44,565,924
-----------
203,585,482
-----------
SEMICONDUCTORS & EQUIPMENT-7.8%
150,925 Applied Micro Circuits Corporation * 19,167,475
955,112 Intel Corporation 78,557,962
559,206 JDS Uniphase Corporation * 90,171,968
333,550 Maxim Integrated Products, Inc. * 15,718,544
579,600 Texas Instruments Inc. 56,148,750
-----------
259,764,699
-----------
TELECOMMUNICATION SERVICES-5.5%
155,875 General Instrument Corporation * 13,249,375
311,456 Infonet Services
Corporation * 8,175,720
287,950 Level 3 Communications, Inc. * 23,539,913
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
259,908 MCI WorldCom, Inc. * $13,775,124
265,500 Nextel Communications, Inc. * 27,363,094
216,700 Sprint Corporation (PCS Group) * 22,211,750
322,700 VoiceStream Wireless Corporation * 45,783,062
191,275 Western Wireless Corporation * 12,743,697
191,725 WinStar Communications, Inc. * 14,403,341
-----------
181,245,076
-----------
TELECOMMUNICATIONS EQUIPMENT-5.9%
154,025 Comverse Technology, Inc. * 22,285,483
207,507 Lucent Technologies Inc. 15,524,117
111,070 Motorola, Inc. 16,355,058
87,050 Omnipoint Corporation * 10,478,644
507,600 Qualcomm, Inc. * 89,369,325
295,525 RF Micro Devices, Inc. * 20,169,581
15,008 Sycamore Networks, Inc. * 4,556,804
147,855 Tellabs, Inc. * 9,481,202
243,025 Williams Communications Group, Inc. * 7,032,536
-----------
195,252,750
-----------
30
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(DOMESTIC)
(COST-$2,205,561,334) $3,061,673,493
-------------
COMMON STOCKS (FOREIGN)-4.9%
ELECTRONICS-0.7%
79,525 Sony Corporation Sponsored ADR (JA) 22,644,744
-------------
SEMICONDUCTORS & EQUIPMENT-0.6%
125,708 PMC-Sierra, Inc. Sponsored ADR (CA) * 20,144,707
-------------
TELECOMMUNICATION SERVICES-1.4%
349,025 Nortel Networks Corporation (CA) 35,251,525
248,190 Vodafone AirTouch PLC Sponsored ADR
(UK) 12,285,405
-------------
47,536,930
TELECOMMUNICATIONS EQUIPMENT-2.2%
374,402 Nokia Oyj Sponsored ADR (FI) 71,136,380
-------------
TOTAL COMMON STOCKS (FOREIGN)
(COST-$97,370,627)
161,462,761
-------------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES-1.2%
FINANCIAL SERVICES-1.2%
$40,000,000 American Express Credit Corporation
1.50% 01/03/00 $ 39,996,667
-------------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$39,996,667)
39,996,667
-------------
AGENCY DISCOUNT NOTE-1.8%
U.S. AGENCIES-1.8%
61,200,000 Federal National Mortgage Association
3.75% 01/05/00 61,174,500
-------------
TOTAL AGENCY
DISCOUNT NOTE
(AMORTIZED COST-$61,174,500)
61,174,500
-------------
TOTAL INVESTMENTS-100.0%
(COST-$2,404,103,128) 3,324,307,421
OTHER ASSETS &
LIABILITIES-(0.0%) (701,461)
-------------
NET ASSETS-100.0% $3,323,605,960
=============
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
DREYFUS FOUNDERS GROWTH AND INCOME FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
1 Year 5 Years 10 Years 20 Years
------ ------- -------- ---------
15.03% 21.03% 14.41% 15.20%
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
GROWTH AND LIPPER GROWTH CONSUMER
INCOME AND INCOME PRICE
FUND S&P 500 INDEX FUND INDEX INDEX
--------- ------------- ------------ --------
12/31/89 10,000 10,000 10,000 10,000
12/31/90 10,044 9,685 9,400 10,625
12/31/91 12,890 12,635 12,009 10,941
12/31/92 12,857 13,597 13,166 11,265
12/31/93 14,720 14,966 15,092 11,582
12/31/94 14,797 15,160 15,029 11,890
12/31/95 19,097 20,851 19,715 12,191
12/31/96 23,751 25,645 23,795 12,594
12/31/97 28,368 34,196 30,208 12,808
12/31/98 33,412 43,966 35,916 13,014
12/31/99 38,435 53,211 40,179 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE]
A DISCUSSION WITH
PORTFOLIO MANAGER
THOMAS ARRINGTON, CFA
The Dreyfus Founders Growth and Income Fund (Class F) posted another year of
positive performance in 1999, rising 15.03% for the year ended December 31,
1999.
HOW DID THIS RETURN COMPARE WITH THE PERFORMANCE OF THE LARGE-CAPITALIZATION
STOCK MARKET?
Large caps continued their rise in 1999, though much of the returns were
confined to the market's technology stocks. The unmanaged Standard & Poor's 500
Index advanced 21.03% for the year. The Fund was conservatively positioned in
the first month of 1999, and this somewhat hampered its total return.
The Standard & Poor's (S&P) 500 Index is a widely recognized index of common
stocks.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
32
<PAGE>
WHAT FACTORS DROVE LARGE-COMPANY PERFORMANCE IN 1999?
Investors continued to favor the market's blue chip firms in the opening months
of the year. However, by April it appeared that U.S. and international economic
growth might strengthen, and investors fled many high-valuation large caps,
instead seeking growth in value stocks, small- and mid-cap companies, and
cyclicals. While this put downward pressure on many of our largest positions,
several previously lagging industries (such as chemical, energy, and utility
stocks) began to rise.
TOP 10 HOLDINGS
--------------------------------------------------
1. Microsoft Corporation 4.84%
2. General Electric Company 4.34%
3. Cisco Systems, Inc. 4.19%
4. Exxon Corporation 2.64%
5. AMFM, Inc. 2.43%
6. Citigroup, Inc. 1.90%
7. Viacom, Inc. Class B 1.81%
8. AT&T Corp.-Liberty Media Group 1.71%
9. Time Warner, Inc. 1.68%
10. Intel Corporation 1.57%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
Technology stocks were the compelling story in the second half, despite
worries about the impact of Y2K concerns. Investors flocked to these issues,
believing that business' ability to boost worker productivity through
technological enhancements may reduce wage-related inflationary pressures. This
did not keep the Federal Reserve, however, from raising short-term interest
rates three times in 1999, though these hikes did not result in any major market
selloffs.
HOW DID YOU REACT TO THE CHANGING MARKET CONDITIONS?
After I took over management of Growth and Income Fund in February, I took steps
to restructure the Fund, which had been defensively positioned at the top of the
year. We sold off much of the Fund's fixed-income positions and reduced our
exposure to some underperforming sectors, reallocating the assets to attractive
growth opportunities in technology and communications stocks. These moves helped
shake the Fund out of its doldrums and provided solid returns throughout the
remainder of the year.
PORTFOLIO AT A GLANCE
---------------------------------------------
Total assets-Class F: $535.0 million
NAV-Class F on 12/31/99: $7.61
One year total return-Class F: 15.03%
Net expense ratio-Class F: 1.12%
Inception date-Class F: 7/5/38
----------------------------------------------
Other sectors saw up-and-down performance. Healthcare companies, for example,
lagged for much of the year due to worries about drug patent expirations and
33
<PAGE>
DREYFUS FOUNDERS GROWTH AND INCOME FUND (CONTINUED)
Medicare reform. However, several prominent healthcare firms (including Merck
and Warner Lambert) soared near year's end as investors sought safe haven from
the potential earnings disappointments related to the Y2K issue.
WHAT WERE SOME OF THE FUND'S BEST PERFORMERS IN 1999?
Technology stocks were the shining stars of many portfolios this year, and the
Growth and Income Fund was no exception. Several of our holdings posted stunning
returns for the year, each boosted by surges in the fourth quarter.
PORTFOLIO COMPOSITION
--------------------------------------------------
25.8% Technology
14.4% Consumer Staples
11.4% Consumer Cyclicals
0.2% Business Services
1.1% Basic Materials
1.2% Cash & Equivalents
2.0% Utilities
7.0% Energy
7.2% Capital Goods
8.2% Healthcare
9.5% Telecom Services
12.0% Financial
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
We also saw positive performance from consumer cyclical stocks. Dominant
retailers Home Depot, Wal-Mart, and Costco each had strong operating results
near the end of the year, and investors took notice.
WERE THERE ANY AREAS OF DISAPPOINTMENT DURING THE YEAR?
Our large position in healthcare stocks (29% at the beginning of the year) was
generally a detriment to performance in January. We did reduce our healthcare
weighting in February, focusing our attention on several of the industry's
highest-quality names, and this helped the Fund a great deal.
WHAT LIES AHEAD FOR THE LARGE-COMPANY MARKETPLACE?
We believe that, over time, investors follow earnings; and consequently, we feel
that the market will return to encompassing the potential of the entire
large-cap marketplace. With its focus on large, well-established, stable, and
mature growth companies, Growth and Income Fund will seek to capitalized on
these trends.
/s/ THOMAS ARRINGTON
Thomas Arrington, CFA
Portfolio Manager
34
<PAGE>
DREYFUS FOUNDERS GROWTH AND STATEMENT OF INVESTMENTS
INCOME FUND DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-94.7%
AEROSPACE-0.4%
36,725 United Technologies Corporation $2,387,125
----------
AUTOMOTIVE-1.5%
81,825 General Motors Corporation Class H* 7,855,200
----------
BANKING-6.0%
88,700 Bank of America Corporation 4,451,631
183,237 Citigroup, Inc. 10,181,106
74,200 Fifth Third Bancorp 5,439,788
37,500 SunTrust Banks, Inc. 2,580,469
45,475 The Chase Manhattan Corporation 3,532,839
144,400 Wells Fargo Company 5,839,175
----------
32,025,008
----------
BIOTECHNOLOGY-1.2%
41,700 Amgen, Inc.* 2,502,000
27,234 Genentech, Inc.* 3,662,973
----------
6,164,973
----------
BUSINESS SERVICES-1.5%
22,000 Cintas Corporation* 1,167,375
20,250 Computer Sciences
Corporation* 1,916,156
19,525 Electronic Data Systems Corporation 1,306,955
42,900 Fiserv, Inc.* 1,638,244
33,500 The Interpublic Group of Companies,
Inc. 1,932,531
----------
7,961,261
----------
CHEMICALS-1.1%
55,775 E.I. du Pont de Nemours and Company 3,674,178
56,975 Great Lakes Chemical Corporation 2,175,733
----------
5,849,911
----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMPUTER EQUIPMENT-4.9%
77,575 Apple Computer, Inc. $7,970,831
51,275 EMC Corporation* 5,601,794
28,525 Hewlett-Packard Company 3,250,067
23,225 International Business Machines
Corporation 2,508,300
89,650 Sun Microsystems, Inc.* 6,936,669
----------
26,267,661
----------
COMPUTER NETWORKING-4.2%
209,250 Cisco Systems, Inc.* 22,402,828
----------
COMPUTER SOFTWARE/SERVICES-9.1%
128,375 Automatic Data Processing, Inc. 6,916,203
42,050 BMC Software, Inc.* 3,358,744
221,825 Microsoft Corporation* 25,884,205
67,775 Oracle Corporation* 7,590,800
12,000 Yahoo! Inc.* 5,192,250
----------
48,942,202
----------
CONSUMER PRODUCTS-2.8%
51,600 Colgate-Palmolive Company 3,354,000
166,675 The Dial Corporation 4,052,286
47,975 Gillette Company 1,975,970
51,725 The Procter & Gamble Company 5,667,120
----------
15,049,376
----------
CONSUMER SERVICES-1.1%
116,650 Cendant Corporation* 3,098,516
48,350 DeVry, Inc.* 900,519
29,027 United Parcel Service, Inc. 2,002,863
----------
6,001,898
----------
DIVERSIFIED-0.5%
1,375 Berkshire Hathaway, Inc.* 2,516,250
----------
ELECTRONICS-5.2%
149,900 General Electric Company 23,197,025
25,900 PE Corp-PE Biosystems Group 3,116,094
17,550 Solectron Corporation* 1,669,444
----------
27,982,563
----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
DREYFUS FOUNDERS GROWTH AND INCOME FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES-3.7%
11,750 American Express Company $1,953,438
43,000 Associates First Capital Corporation
Class A 1,179,813
44,750 The Charles Schwab Corporation 1,717,281
76,650 Fannie Mae 4,785,834
44,325 Merrill Lynch &
Company, Inc.* 3,701,138
23,175 Morgan Stanley Dean Witter & Company* 3,308,231
58,950 Northern Trust Corporation 3,146,456
----------
19,792,191
----------
FOOD & BEVERAGE-1.1%
34,925 PepsiCo, Inc. 1,231,106
82,150 The Coca-Cola Company 4,785,238
----------
6,016,344
----------
HEALTHCARE SERVICES-1.0%
197,475 IMS Health Incorporated 5,368,852
----------
INSURANCE-2.1%
59,150 American International Group, Inc. 6,395,594
53,250 Marsh & McLennan Companies, Inc. 5,095,359
----------
11,490,953
----------
LEISURE & ENTERTAINMENT-3.0%
69,500 America Online, Inc.* 5,242,906
28,100 Carnival Corporation Class A 1,343,531
159,950 Viacom, Inc. Class B* 9,666,978
----------
16,253,415
MACHINERY-0.3%
32,225 Deere & Company 1,397,759
----------
MANUFACTURING-2.0%
49,500 Danaher Corporation 2,388,375
39,500 Honeywell International, Inc. 2,278,656
153,600 Tyco International Limited 5,971,200
----------
10,638,231
----------
MEDICAL SUPPLIES & EQUIPMENT-1.2%
36,200 Baxter International, Inc. 2,273,813
42,275 Johnson & Johnson 3,936,859
----------
6,210,672
----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
OIL & GAS-6.0%
51,425 Chevron Corporation $4,454,691
136,100 Conoco, Inc. 3,368,475
134,200 Enron Corporation 5,955,125
175,110 Exxon Corporation 14,107,327
78,050 Texaco Inc. 4,239,091
----------
32,124,709
----------
PHARMACEUTICALS-4.9%
56,550 Abbott Laboratories 2,053,472
58,425 American Home Products Corporation 2,304,136
115,250 Bristol-Myers Squibb Company 7,397,609
70,025 Merck & Company, Inc. 4,696,052
72,250 Pfizer Inc. 2,343,609
46,125 Pharmacia & Upjohn, Inc. 2,075,625
63,800 Warner-Lambert Company 5,227,613
----------
26,098,116
----------
PUBLISHING & BROADCASTING-10.4%
166,025 AMFM, Inc.* 12,991,456
161,025 AT&T Corp.-Liberty Media Group* 9,138,169
34,700 CBS Corporation* 2,218,631
99,200 Comcast Corporation Special Class A 5,009,600
27,806 Cox Communications, Inc.* 1,432,009
33,400 EchoStar Communications Corporation* 3,248,150
60,375 Gannett Company, Inc. 4,924,336
98,400 MediaOne Group, Inc.* 7,558,350
124,125 Time Warner, Inc. 8,991,305
----------
55,512,006
----------
RESTAURANTS-0.5%
61,750 McDonald's Corporation 2,489,297
----------
RETAIL-4.7%
49,075 Costco Wholesale Corporation* 4,475,027
110,325 The Home Depot, Inc. 7,564,158
60,191 Intimate Brands, Inc. 2,595,737
22,450 Kohl's Corporation* 1,620,609
18,400 Tandy Corporation 905,050
117,900 Wal-Mart Stores, Inc. 8,149,838
----------
25,310,419
----------
36
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
SEMICONDUCTORS & EQUIPMENT-2.6%
101,975 Intel Corporation $ 8,387,444
18,800 Linear Technology Corporation 1,345,375
41,675 Texas Instruments Inc. 4,037,266
-----------
13,770,085
-----------
TELECOMMUNICATION SERVICES-7.4%
58,825 Alltel Corporation* 4,864,092
73,825 Bellsouth Corporation 3,455,933
100,875 GTE Corporation 7,117,992
55,400 General Instrument Corporation* 4,709,000
52,700 Infonet Services Corporation* 1,383,375
124,275 MCI WorldCom, Inc.* 6,586,575
16,838 Nextel Communications, Inc.* 1,735,366
107,875 SBC Communications, Inc. 5,258,906
26,400 Sprint Corporation 1,777,050
17,800 VoiceStream Wireless Corporation* 2,525,375
-----------
39,413,664
-----------
TELECOMMUNICATIONS EQUIPMENT-2.3%
22,150 Comverse Technology, Inc.* 3,204,828
34,525 Lucent Technologies Inc. 2,582,902
23,975 Motorola, Inc. 3,530,319
15,550 Omnipoint Corporation* 1,871,831
21,100 Tellabs, Inc.* 1,353,038
-----------
12,542,918
-----------
UTILITIES-2.0%
122,625 Duke Energy Corporation 6,146,578
43,175 Edison International 1,130,645
40,225 The Montana Power Company 1,450,614
90,150 The Southern Company 2,118,525
-----------
10,846,362
-----------
TOTAL COMMON STOCKS
(DOMESTIC)
(COST-$410,144,595) 506,682,249
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (FOREIGN)-4.5%
LEISURE & ENTERTAINMENT-0.5%
54,475 The Seagram Company Limited Sponsored
ADR (CA) $ 2,447,970
-----------
OIL & GAS-1.1%
95,875 Royal Dutch Petroleum Company (NE) 5,794,445
-----------
TELECOMMUNICATION SERVICES-1.6%
65,600 Nortel Networks Corporation (CA) 6,625,600
36,500 Vodafone AirTouch PLC Sponsored ADR
(UK) 1,829,419
-----------
8,455,019
-----------
TELECOMMUNICATIONS EQUIPMENT-1.3%
38,150 Nokia Oyj (FI) 7,248,500
-----------
TOTAL COMMON STOCKS
(FOREIGN)
(COST-$13,392,553) 23,945,934
-----------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES-1.0%
FINANCIAL SERVICES-1.0%
$5,600,000 American Express Credit Corporation
1.50% 01/03/00 5,599,533
-----------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$5,599,533) 5,599,533
-----------
TOTAL INVESTMENTS-100.2%
(COST-$429,136,681) 536,227,716
OTHER ASSETS &
LIABILITIES-(0.2%) (1,193,020)
-----------
NET ASSETS-100.0% $535,034,696
===========
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
Since Inception
1 Year 3 Years (12/29/95)
------ ------- ---------------
58.71% 29.19% 25.85%
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
MSCI WORLD CONSUMER
INTERNATIONAL EX U.S. PRICE
EQUITY FUND INDEX INDEX
------------- ---------- ---------
12/31/95 10,000 10,000 10,000
12/31/96 11,860 10,686 10,330
12/31/97 13,770 10,929 10,506
12/31/98 16,112 12,980 10,674
12/31/99 25,570 16,604 10,953
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE] A DISCUSSION WITH
PORTFOLIO MANAGER
DOUGLAS LOEFFLER, CFA
International markets, as a whole, had a strong year, with select markets around
the world prospering, while others struggled.
Due to strong stock selection and the freedom to seek growth wherever it may be
found, the Dreyfus Founders International Equity Fund (Class F) returned 58.71%
for the year ended December 31, 1999.
HOW DID THE FUND PERFORM RELATIVE TO INTERNATIONAL MARKETS AS A WHOLE?
The Fund's benchmark, the unmanaged Morgan Stanley Capital International World
ex U.S. Index, returned 27.93%. While this bested the performance of large
domestic stocks (represented by the S&P 500 Index), it was not even half the
return posted by International Equity.
The Morgan Stanley Capital International (MSCI) World ex U.S. Index is an
arithmetical average of the performance of a number of select securities listed
on the stock exchanges of Europe, Canada, Australia, New Zealand, and the Far
East. Total return figures for this index assume change in share price and
reinvestment of dividends after the deduction of local taxes. The Standard &
Poor's (S&P) 500 Index is a widely recognized index of common stocks.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
Part of the Fund's historical performance is due to the allocation to the Fund
of securities sold in initial public offerings (IPOs). There is no guarantee
that the Fund's investments in IPOs, if any, will continue to have a similar
impact on performance.
38
<PAGE>
WHAT FACTORS DROVE THE INTERNATIONAL EQUITY MARKETPLACE IN 1999?
There was great diversity in the performance of individual regions. Europe, for
example, began the year well, but weakness in the Euro and in Germany's economy
dampened markets until a fourth-quarter surge. This encouraged us early in the
year to trim some of our positions and reallocate the assets to promising
companies in Japan, the United Kingdom, and emerging markets.
TOP 10 HOLDINGS
--------------------------------------------------
1. Sony Corporation 2.91%
2. Nippon Telegraph and Telephone 2.35%
3. Esat Telecom Group PLC Sponsored ADR 2.33%
4. NTT Mobile Communications 2.26%
5. Mannesmann AG 2.19%
6. Partner Comm. Co. Ltd. ADR 2.11%
7. Telefonica Publicidad 144A 1.91%
8. Petroleo Brasileiro SA 1.85%
9. Perlos Oyj 1.79%
10. China Telecom Limited 1.76%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
Economic health in Asia boosted markets all along the Pacific Rim. Japan in
particular flourished, thanks to increased interest by foreign investors. The
Japanese market also benefited from global interest in technology stocks and a
hope for economic recovery in Japan. The Fund prospered along with this trend,
as our Japanese weighting increased through much of the second half.
WERE THERE ANY DOMINANT THEMES IN THE FUND'S PORTFOLIO?
We found many exceptional opportunities throughout the year in the
telecommunications sector, including both equipment and service providers.
Growth continues to be strong in mobile telephony around the world, and we have
increased our exposure to start-up fixed-line operators in Europe. These
companies are taking advantage of the beginning of a data boom and are already
benefiting strongly from Internet-related traffic.
PORTFOLIO AT A GLANCE
---------------------------------------------
Total assets-Class F: $35.6 million
NAV-Class F on 12/31/99: $19.87
One year total return-Class F: 58.71%
Net expense ratio-Class F: 1.80%
Inception date-Class F: 12/29/95
---------------------------------------------
WHICH FUND HOLDINGS WERE YOU MOST PLEASED WITH DURING THE YEAR?
One of the Fund's top holdings was NTT of Japan. We continue to like the
Japanese telecommunications sector in general, but believe that the most value
at year-end lay with NTT, the dominant fixed-line
39
<PAGE>
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND (CONTINUED)
operator and the parent company of NTT Docomo, the major cellular player.
Another of our major holdings was VNU, a Dutch publisher. VNU last year
acquired several European phone directory publishers which we believe are
well-suited to capitalize on the Internet's growth by facilitating e-commerce.
VNU is putting the yellow pages online. Since 60% of all yellow pages
consultations result in a purchase, we believe yellow pages publishers like VNU
are well-suited to capitalize on e-commerce growth.
PORTFOLIO COMPOSITION
--------------------------------------------------
23.8% Other Countries
17.6% Japan
11.5% Netherlands
11.0% United Kingdom
9.4% France
5.4% Germany
5.1% Spain
4.5% Italy
3.8% Sweden
3.8% Finland
3.7% Switzerland
0.4% Cash & Equivalents
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
WERE THERE ANY AREAS OF DIFFICULTY FOR THE FUND DURING THE YEAR?
As occurred in the U.S., investors abroad made a sudden shift toward value and
cyclical stocks in the first half of the year. While this did put some downward
pressure on Fund performance, our focus on bottom-up stockpicking led us to
outperform our benchmark.
WHAT DO YOU BELIEVE LIES AHEAD FOR INTERNATIONAL MARKETS?
We believe that the current international investing environment is quite
positive: corporate earnings growth is strong, Asia's recovery remains on track,
and Europe looks as if its late-1999 rally may become a longer-term rise. But
whatever happens in the international economic arena, we intend to stick to the
strategy that's been behind our performance all along--finding the companies
with the most promising earnings-growth prospects, wherever they may be located.
/s/ DOUGLAS LOEFFLER
Douglas Loeffler, CFA
Portfolio Manager
Investment in foreign securities may entail unique risks, including political,
market, and currency risks.
40
<PAGE>
DREYFUS FOUNDERS INTERNATIONAL STATEMENT OF INVESTMENTS
EQUITY FUND DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (FOREIGN)-99.6%
BANKING-6.9%
31,625 Banco Santander Central Hispano SA
(SP) $ 356,284
8,350 Bank Austria AG (AT) * 468,678
34,912 DBS Group Holdings Limited (SG) 572,087
5,525 Deutsche Bank AG (GE) 464,339
24,000 ForeningsSparbanken AB (SW) 351,165
45,000 The Sakura Bank, Limited (JA) 260,271
---------
2,472,824
---------
BUSINESS SERVICES-3.1%
975 Altran Technologies SA (FR) 586,349
32,500 WPP Group PLC (UK) 513,820
---------
1,100,169
---------
CHEMICALS-1.0%
6,300 Aventis SA (FR) 364,348
---------
COMPUTER SOFTWARE/SERVICES-1.1%
5,050 Getronics NV (NE) 400,882
---------
CONSTRUCTION-1.3%
59,000 Brisa-Auto Estradas de Portugal SA
(PO) 450,616
---------
CONSUMER PRODUCTS-2.4%
29,875 Reckitt Benckiser PLC (UK) * 279,491
500 The Swatch Group AG (SZ) 572,874
---------
852,365
---------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
ELECTRONICS-11.8%
2,600 Citizen Electronics Company Limited
(JA) $ 469,933
19,000 NEC Corporation (JA) 452,005
66,000 Natsteel Electronics Limited (SG) 348,619
18,150 Perlos Oyj (FI) * 636,714
2,900 Philips Electronics NV New York
Shares Sponsored 391,500
ADR (NE)
3,500 Sony Corporation (JA) 1,036,100
3,000 TDK Corporation (JA) 413,561
8,950 Thomson Multimedia (FR) * 479,929
---------
4,228,361
---------
ENVIRONMENTAL SERVICES-1.7%
12,350 Tomra Systems ASA (NW) 208,978
4,225 Vivendi (FR) 379,644
---------
588,622
---------
FINANCIAL SERVICES-2.7%
7,200 ING Group NV (NE) 432,563
17,925 Skandia Forsakrings AB (SW) 539,240
---------
971,803
INSURANCE-1.4%
41,825 Alleanza Assicurazioni (IT) 507,668
---------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT-1.4%
10,000 Accor SA (FR) $ 480,806
---------
MACHINERY-2.8%
2,600 Fuji Machine Manufacturing Company,
Limited (JA) 209,311
3,250 Mannesmann AG (GE) 780,169
---------
989,480
---------
MEDICAL SUPPLIES & EQUIPMENT-1.1%
825 Synthes-Stratec, Inc. 144A (SZ)`* 375,726
---------
METALS & MINING-1.3%
15,450 De Beers Consolidated Mines Sponsored
ADR (SA) 447,084
---------
OFFICE SUPPLIES & EQUIPMENT-1.4%
27,000 Ricoh Company Limited (JA) 508,055
---------
OIL & GAS-5.5%
6,575 BP Amoco PLC Sponsored ADR (UK) 389,980
11 Elf Aquitaine SA (FR) 1,687
2,950 Petroleo Brasileiro SA (BR) 657,882
7,242 Preussag AG (GE) * 401,406
3,807 Total Fina SA (FR) 505,590
---------
1,956,545
---------
PAPER & FOREST PRODUCTS-0.5%
4,350 UPM-Kymmene Oyj (FI) 174,401
---------
PHARMACEUTICALS-2.3%
3,400 Novo Nordisk AS B-Shares(DE) 448,797
30 Roche Holding AG Dividend Right
Certificate (SZ) 354,220
---------
803,017
---------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
PUBLISHING & BROADCASTING-9.3%
19,000 Pearson PLC (UK) $ 613,634
284,150 Seat Pagine Gialle SpA (IT) 623,723
2,400 Societe Europeenne des Satellites
(LU) 348,802
14,075 Telefonica Publicidad e Informacion
SA 144A (SP) * 680,684
4,150 United Pan-Europe Communications NV
(NE)`* 528,265
9,775 VNU NV 144A (NE) * 511,235
---------
3,306,343
---------
RETAIL-5.6%
54,000 Bulgari SpA (IT) 482,790
20,150 Centros Comerciales Continente SA
(SP) 401,909
18,250 Dixons Group PLC (UK) 437,941
6,825 Douglas Holding AG (GE) 292,441
2,000 Ryohin Keikaku Company Limited (JA) 400,762
---------
2,015,843
---------
SEMICONDUCTORS & EQUIPMENT-5.7%
4,500 ASM Lithography Holding NV Sponsored
ADR (NE) * 507,938
12,000 Fujitsu Limited (JA) 546,334
3,500 STMicroelectronics NV (NE) 536,033
9,776 Taiwan Semiconductor Manufacturing
Company Limited 439,920
Sponsored ADR (TW)
---------
2,030,225
---------
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES-21.5%
12,375 AT&T Canada, Inc. Sponsored ADR (CA)
* $ 496,547
100,000 China Telecom Limited (HK)* 625,201
9,900 Energis PLC (UK) * 474,498
9,075 Esat Telecom Group PLC Sponsored ADR
(IE) * 830,363
10,500 Global TeleSystems Group, Inc. (RU)* 363,563
5,575 Jazztel PLC Sponsored ADR (SP)* 364,466
3,875 Koninklijke NV (NE) 376,353
7,925 Korea Telecom Corporation (KR) 592,394
3,800 NTL, Inc. (UK)* 473,100
21 NTT Mobile Communications Network,
Inc. (JA) 806,311
49 Nippon Telegraph & Telephone
Corporation (JA) 837,771
29,000 Partner Communications Company
Limited ADR (IS)* 750,375
11,124 SK Telecom Limited Sponsored ADR (KR) 426,884
49,850 Vodafone Airtouch PLC (UK) 246,438
-----------
7,664,264
-----------
TELECOMMUNICATIONS EQUIPMENT-5.7%
2,400 Alcatel (FR) 548,461
7,025 Telefonaktiebolaget LM Ericsson
Sponsored ADR 461,016
Class B (SW)
26,850 Marconi PLC (UK) 474,040
2,875 Nokia Oyj (FI) 546,250
-----------
2,029,767
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION-2.1%
61,000 Nippon Express Company Limited (JA) $ 336,720
13,900 TNT Post Group NV (NE) 396,367
-----------
733,087
-----------
TOTAL COMMON STOCKS
(FOREIGN)
(COST-$25,695,397) 35,452,301
-----------
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
CORPORATE BONDS (FOREIGN)-0.0%
MISCELLANEOUS-0.0%
$5,500 British Aerospace 7.45% 11/30/03 (UK) 5,346
-----------
TOTAL CORPORATE
BONDS (FOREIGN)
(COST-$4,062) 5,346
-----------
TOTAL INVESTMENTS-99.6%
(COST-$25,699,459) 35,457,647
OTHER ASSETS &
LIABILITIES-0.4% 149,207
-----------
NET ASSETS-100.0% $35,606,854
===========
43
<PAGE>
DREYFUS FOUNDERS MID-CAP GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
1 Year 5 Years 10 Years 20 Years
------ ------- -------- ----------
42.27% 18.73% 15.25% 15.40%
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
MID-CAP LIPPER CAPITAL CONSUMER
GROWTH S&P MIDCAP APPRECIATION PRICE
FUND 400 INDEX FUND INDEX INDEX
--------- ------------- ------------ --------
12/31/89 10,000 10,000 10,000 10,000
12/31/90 8,959 9,488 9,221 10,625
12/31/91 14,661 14,241 12,683 10,941
12/31/92 15,878 15,938 13,642 11,265
12/31/93 18,422 18,162 15,790 11,582
12/31/94 17,519 17,511 15,403 11,890
12/31/95 22,020 22,931 20,267 12,191
12/31/96 25,397 27,334 23,299 12,594
12/31/97 29,569 36,150 27,925 12,808
12/31/98 29,058 43,059 33,502 13,014
12/31/99 41,340 49,398 46,097 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE] A DISCUSSION WITH
PORTFOLIO MANAGER
KEVIN SONNETT, CFA
While medium-capitalization stocks generally trailed their larger and smaller
counterparts during the year, our bottom-up, growth-oriented strategy propelled
the Dreyfus Founders Mid-Cap Growth Fund (Class F) to a return of 42.27% in
1999.
HOW DID THIS RETURN COMPARE TO THE PERFORMANCE OF THE MID-CAP MARKETPLACE?
The Fund's performance was above that of its benchmark -- the unmanaged Standard
& Poor's MidCap 400 Index rose 14.72% for the year ended December 31, 1999. Mid-
Cap's return also surpassed the 21.03%
The Standard & Poor's (S&P) MidCap 400 Index is a market-value-weighted index
composed of 400 common stocks from a wide range of industries that measures the
mid-capitalization segment of the U.S. market. The S&P 500 Index is a widely
recognized index of common stocks.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
Part of the Fund's historical performance is due to the allocation to the Fund
of securities sold in initial public offerings (IPOs). There is no guarantee
that the Fund's investments in IPOs, if any, will continue to have a similar
impact on performance.
44
<PAGE>
increase posted by the broad market (represented by the S&P 500 Index).
WHAT EVENTS SHAPED THE MID-CAP MARKET THIS YEAR?
Mid-sized stocks (currently those from approximately $1.5 billion-8 billion in
market capitalization) began the year underperforming their larger brethren. But
by April, we saw a reversal of this long-standing trend: investors began to move
assets away from the stability of large firms, seeking growth prospects in other
areas of the market.
TOP 10 HOLDINGS
--------------------------------------------------
1. USWeb Corporation 2.57%
2. Citrix Systems, Inc. 2.25%
3. Celestica, Inc. 1.93%
4. Dendrite International, Inc. 1.89%
5. Metris Companies, Inc. 1.83%
6. Compuware Corporation 1.76%
7. SDL, Inc. 1.75%
8. Lam Research Corporation 1.74%
9. Peregrine Systems, Inc. 1.74%
10. Concord EFS, Inc. 1.68%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
While this renewed strength was interrupted in the third quarter by a hike in
short-term interest rates, mid-cap stocks ended the year with a sharp rise
thanks mostly to strong performance by technology firms.
WHAT WERE THE PREDOMINANT INVESTMENT THEMES IN THE PORTFOLIO?
Our focus is on companies which we believe have the necessary ingredients to
deliver sustainable revenue and earnings growth and which we believe have
favorable relative valuations. In 1999, many of the most promising companies
that met this criterion were technology stocks. We began the year overweight in
this sector, and (despite some weakness in the area in the first half) we
remained overweight as of December 31.
WHICH PORTFOLIO HOLDINGS WERE YOU MOST PLEASED WITH DURING THE YEAR?
Technology companies comprised most of the Fund's top performers in 1999.
Several of these were:
o Concord EFS, which provides the high-speed links necessary for merchants to
process credit-card transactions. Concord is also moving into new areas
such as electronic payments for welfare and healthcare benefits.
PORTFOLIO AT A GLANCE
---------------------------------------------
Total assets-Class F: $253.4 million
NAV-Class F on 12/31/99: $8.68
One year total return-Class F: 42.27%
Net expense ratio-Class F: 1.40%
Inception date-Class F: 9/8/61
---------------------------------------------
45
<PAGE>
DREYFUS FOUNDERS MID-CAP GROWTH FUND (CONTINUED)
o Digex, Inc., which offers a line of secure, scalable, high-performance web
and application-hosting solutions for businesses.
o JDS Uniphase and SDL, Inc., which sell equipment for fiber-optic data
transmission, have both benefited from the tremendous growth in this area.
PORTFOLIO COMPOSITION
--------------------------------------------------
48.9% Technology
15.7% Consumer Cyclicals
6.9% Cash & Equivalents
6.8% Telecom Services
5.1% Capital Goods
3.2% Consumer Staples
3.0% Healthcare
3.0% Energy
2.8% Utilities
2.6% Financial
1.6% Transportation
0.4% Business Services
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
WERE THERE AREAS OF WEAKNESS IN THE FUND'S PORTFOLIO?
This year's market rise was very narrow, confined almost exclusively to
technology stocks. As such, some non-technology areas of the Fund showed
lackluster performance. For example, financial stocks (though underweighted in
the portfolio relative to the S&P MidCap 400 Index) struggled throughout 1999.
WHAT DO YOU SEE FOR THE MID-CAP STOCK MARKET IN THE YEAR TO COME?
One of the things that became clear in 1999 is that technology is fundamentally
changing the world's approach to business. The development of enhanced
communication networks, productivity gains at all levels of industry, and easier
access to new markets and capital have focused investor attention on technology
providers. We expect to retain significant exposure to the technology sector,
but we feel that the market's view will broaden in the future to encompass
non-tech firms that are making use of new developments to improve their
businesses. We will continue to scour the mid-cap market for just such growth
opportunities.
/s/ KEVIN SONNETT
Kevin Sonnett, CFA
Portfolio Manager
46
<PAGE>
DREYFUS FOUNDERS MID-CAP GROWTH FUND STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-91.2%
AEROSPACE-1.3%
81,400 L-3 Communications Holdings, Inc.* $ 3,388,275
-----------
BIOTECHNOLOGY-1.0%
34,050 Maxygen, Inc.* 2,417,550
-----------
BUSINESS SERVICES-16.8%
67,050 Affiliated Computer Services, Inc.
Class A * 3,084,300
91,075 Amdocs Limited * 3,142,088
165,812 Concord EFS, Inc. * 4,259,296
131,375 Convergys Corporation * 4,039,781
45,750 Digex, Inc. * 3,111,000
31,050 Exodus Communications,
Inc. * 2,757,628
22,925 Luminant Worldwide Corporation * 1,040,222
41,600 National Information Consortium, Inc.
* 1,331,200
123,075 The Profit Recovery Group
International, Inc.* 3,261,488
86,750 Sykes Enterprises, Inc.* 3,800,734
146,671 USWeb Corporation 6,517,693
73,725 Verio Inc. * 3,405,173
17,450 VerticalNet, Inc. * 2,845,441
-----------
42,596,044
-----------
COMPUTER NETWORKING-0.9%
19,925 Proxim, Inc.* 2,189,259
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-15.2%
46,325 Citrix Systems, Inc. * $ 5,695,080
119,825 Compuware Corporation * 4,455,992
142,625 Dendrite International, Inc. * 4,795,766
52,425 Digital River, Inc. * 1,746,408
53,525 Entrust Technologies, Inc. * 3,204,809
63,275 J.D. Edwards & Company* 1,890,341
16,975 Macromedia, Inc.* 1,241,297
96,250 Parametric Technology Corporation* 2,598,750
52,350 Peregrine Systems, Inc.* 4,397,400
65,225 Remedy Corporation* 3,098,188
28,250 Siebel Systems, Inc.* 2,380,063
49,450 Symantec Corporation * 2,899,006
-----------
38,403,100
-----------
CONSUMER PRODUCTS-1.5%
152,750 The Dial Corporation 3,713,734
-----------
CONSUMER SERVICES-1.2%
104,700 Sotheby's Holdings, Inc. 3,141,000
-----------
DISTRIBUTION-1.7%
190,725 MSC Industrial Direct Company, Inc.* 2,527,106
40,450 Patterson Dental Company* 1,719,125
-----------
4,246,231
-----------
ELECTRONICS-7.1%
88,200 Celestica, Inc. * 4,895,100
90,550 Flextronics International Limited * 4,165,300
71,600 Gentex Corporation * 1,986,900
50,925 Jabil Circuit, Inc.* 3,717,525
71,100 The Titan Corporation * 3,350,588
-----------
18,115,413
-----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
DREYFUS FOUNDERS MID-CAP GROWTH FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES-2.6%
129,950 Metris Companies, Inc. $ 4,637,591
38,575 Silicon Valley Bancshares* 1,904,641
-----------
6,542,232
-----------
FOOD & BEVERAGE-0.7%
62,400 Keebler Foods Company* 1,755,000
-----------
HEALTHCARE SERVICES-1.0%
113,175 Renal Care Group, Inc.* 2,638,392
-----------
LEISURE & ENTERTAINMENT-3.0%
155,250 Callaway Golf Company 2,745,984
178,250 Fairfield Communities, Inc. * 1,916,188
66,425 Station Casinos, Inc.* 1,490,411
135,075 Sunterra Corporation* 1,553,363
-----------
7,705,946
-----------
MANUFACTURING-1.9%
41,575 Astec Industries, Inc. * 782,130
86,575 Zomax Incorporated * 3,912,108
-----------
4,694,238
-----------
MEDICAL SUPPLIES & EQUIPMENT-1.1%
108,000 Sybron International Corporation* 2,666,250
-----------
OIL SERVICES-3.0%
62,950 BJ Services Company * 2,632,097
80,800 Nabors Industries, Inc. * 2,499,750
60,225 Weatherford International, Inc. * 2,405,236
-----------
7,537,083
-----------
PUBLISHING & BROADCASTING-2.1%
30,075 EchoStar Communications Corporation * 2,924,794
79,650 Insight Communications Company, Inc.* 2,359,631
-----------
5,284,425
-----------
RESTAURANTS-0.4%
42,525 Starbucks Corporation 1,031,231
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
RETAIL-7.3%
69,875 American Eagle Outfitters, Inc.* $ 3,144,375
64,725 Ames Department Stores, Inc.* 1,860,844
38,000 Dollar Tree Stores, Inc. * 1,838,250
50,625 Federated Department Stores, Inc. * 2,559,727
104,475 The Men's Wearhouse, Inc.* 3,068,953
99,325 Pacific Sunwear of California, Inc.* 3,159,777
147,200 Spiegel, Inc.* 1,030,400
115,500 The Yankee Candle Company, Inc. * 1,884,094
-----------
18,546,420
-----------
SEMICONDUCTORS & EQUIPMENT-7.9%
87,300 American Xtal Technology, Inc. * 1,511,381
109,025 Brooks Automation, Inc. * 3,556,941
12,950 JDS Uniphase Corporation* 2,088,188
39,525 Lam Research Corporation* 4,409,508
20,375 SDL, Inc.* 4,441,750
60,450 Teradyne, Inc. * 3,989,700
-----------
19,997,468
-----------
TELECOMMUNICATION SERVICES-5.6%
40,625 Allegiance Telecom, Inc. * 3,717,188
56,400 McLeodUSA Inc.* 3,313,500
69,125 TeleCorp PCS, Inc. * 2,635,391
37,750 Time Warner Telecom Inc. * 1,873,344
84,475 Tritel, Inc. * 2,671,522
-----------
14,210,945
-----------
TELECOMMUNICATIONS EQUIPMENT-3.5%
70,450 CIENA Corporation * 4,050,875
59,300 CommScope, Inc. * 2,390,531
108,675 Digital Microwave Corporation * 2,547,070
-----------
8,988,476
-----------
48
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION-1.6%
84,800 USFreightways Corporation $ 4,017,400
-----------
UTILITIES-2.8%
85,525 The Montana Power Company 3,084,245
85,725 Plug Power Inc.* 2,378,869
75,425 Potomac Electric Power Company* 1,730,061
-----------
7,193,175
-----------
TOTAL COMMON STOCKS
(DOMESTIC)
(COST-$162,446,915) 231,019,287
-----------
COMMON STOCKS (FOREIGN)-1.9%
SEMICONDUCTORS & EQUIPMENT-0.8%
17,150 ASM Lithography Holding NV Sponsored
ADR (NE) * 1,935,806
-----------
TELECOMMUNICATIONS SERVICES-1.1%
114,100 Partner Communications Company
Limited (IS)* 2,952,338
-----------
TOTAL COMMON STOCKS
(FOREIGN)
(COST-$3,341,935) 4,888,144
-----------
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS (DOMESTIC)-0.6%
PHARMACEUTICALS-0.6%
$1,117,000 Sanmina Corporation Convertible 144A
4.25% Due 05/01/04 1,471,648
-----------
TOTAL CONVERTIBLE
BONDS (DOMESTIC)
(COST-$1,117,000) 1,471,648
-----------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
AGENCY DISCOUNT NOTE-3.5%
U.S. AGENCIES-3.5%
$9,000,000 Federal National Mortgage Association
3.75% 01/05/00 $ 8,996,250
-----------
TOTAL AGENCY
DISCOUNT NOTE
(AMORTIZED COST-$8,996,250) 8,996,250
-----------
CORPORATE SHORT-TERM NOTES-4.2%
FINANCIAL SERVICES-4.2%
10,600,000 American Express Credit Corporation
1.50% 01/03/00 10,599,117
-----------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$10,599,117)
10,599,117
-----------
TOTAL INVESTMENTS-101.4%
(COST-$186,501,217) 256,974,446
OTHER ASSETS & LIABILITIES-(1.4%)
(3,589,727)
-----------
NET ASSETS-100.0% $253,384,719
===========
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
DREYFUS FOUNDERS MONEY MARKET FUND
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
AGENCY DISCOUNT NOTE-32.7%
U.S. AGENCIES-32.7%
$4,800,000 Federal Home Loan Bank Discount Note
1.30% 01/03/00 $ 4,799,653
100,000 Federal Home Loan Mortgage
Corporation Discount Note 5.47%
01/27/00 99,605
2,900,000 Federal Home Loan Mortgage
Corporation Discount Note 5.13%
01/27/00 2,889,256
5,550,000 Federal Home Loan Mortgage
Corporation 4.50% 01/05/00 5,547,225
7,918,000 Federal Home Loan Mortgage
Corporation Discount Note 5.46%
01/19/00 7,896,384
4,400,000 Federal National Mortgage Association
5.47% 02/07/00 4,375,264
4,800,000 Federal National Mortgage Association
5.79% 03/23/00 4,736,696
-----------
TOTAL AGENCY DISCOUNT NOTE
(AMORTIZED COST
$30,344,083) 30,344,083
-----------
CORPORATE SHORT-TERM NOTES-71.8%
CAPTIVE FINANCE AUTOMOTIVE-2.2%
2,100,000 Toyota Motor Credit Corporation 5.91%
01/11/00 2,096,553
-----------
CHEMICALS-4.7%
4,400,000 Akzo Nobel, Inc. 6.10% 02/24/00 4,359,740
-----------
CONSUMER PRODUCTS-3.6%
3,373,000 Hasbro, Inc. 5.33% 01/10/00 3,368,505
-----------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
DIVERSIFIED-4.8%
$4,500,00 Dupont EI De Nemours 6.06% 01/21/00 $ 4,484,850
-----------
ELECTRIC UTILITIES-2.8%
2,600,000 Union Electric Company 6.07% 03/17/00 2,566,682
-----------
ELECTRONICS-5.4%
5,000,000 Sharp Electronics Corporation 6.05%
01/24/00 4,980,674
-----------
FINANCIAL SERVICES-15.0%
4,700,000 American Express Credit Corporation
1.50% 01/03/00 4,699,608
5,100,000 Merrill Lynch & Company 6.20%
01/18/00 5,085,068
4,200,000 Morgan Stanley Dean Witter 6.25%
02/04/00 4,175,208
-----------
13,959,884
-----------
FOOD & BEVERAGE-9.1%
3,900,000 Campbell Soup Company 6.02% 02/03/00 3,878,479
4,600,000 McCormick & Company 6.45% 01/25/00 4,580,220
-----------
8,458,699
-----------
INSURANCE-5.5%
5,100,000 MetLife Funding, Inc. 5.90% 01/26/00 5,079,104
-----------
CAPTIVE FINANCE INSURANCE-4.2%
3,900,000 Prudential Funding Corporation 6.52%
01/13/00 3,891,524
-----------
INVESTMENT COMPANIES-2.8%
2,600,000 Ciesco LP 6.30% 01/14/00 2,594,085
-----------
OFFICE EQUIPMENT-4.1%
3,850,000 Pitney Bowes, Inc. 5.20% 01/28/00 3,834,985
-----------
SEE NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
CAPTIVE FINANCE
TELECOMMUNICATIONS-5.4%
$5,000,000 Bell Atlantic Financial Services
5.90% 01/18/00 $ 4,986,069
-----------
TELECOMMUNICATION SERVICES-1.1%
1,000,000 AT&T Corporation 6.45% 01/21/00 996,417
-----------
UTILITIES-1.1%
1,000,000 Wisconsin Public Service Corporation
6.60% 01/10/00 998,350
-----------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-
$66,656,121) $66,656,121
-----------
TOTAL INVESTMENTS-104.5%
(AMORTIZED COST-
$97,000,204) 97,000,204
-----------
OTHER ASSETS &
LIABILITIES-(4.5%) (4,134,640)
-----------
NET ASSETS-100.0% $92,865,564
===========
51
<PAGE>
DREYFUS FOUNDERS PASSPORT FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
Since Inception
1 Year 5 Years (11/16/93)
------ ------- ---------------
87.44% 26.20% 19.64%
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
MSCI CONSUMER
PASSPORT WORLD PRICE
FUND EX U.S. INDEX INDEX
--------- ------------- -----------
12/31/93 10,519 10,715 10,027
12/31/94 9,429 11,503 10,294
12/31/95 11,729 12,815 10,554
12/31/96 14,080 13,695 10,904
12/31/97 14,316 14,006 11,089
12/31/98 16,106 16,634 11,267
12/31/99 30,188 21,279 11,561
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
[PICTURE] A DISCUSSION WITH
PORTFOLIO MANAGER
TRACY STOUFFER, CFA
Thanks to careful stock selection and strength in the international small-
capitalization equity marketplace, the Dreyfus Founders Passport Fund (Class F)
posted excellent returns, rising 87.44% for the year ended December 31, 1999.
HOW DID THE FUND'S RETURN COMPARE TO ITS BENCHMARK?
Passport's 1999 performance handily surpassed the 27.93% return posted by the
unmanaged Morgan Stanley Capital International (MSCI) World ex U.S. Index.
The Morgan Stanley Capital International (MSCI) World ex U.S. Index is an
arithmetical average of the performance of a number of select securities listed
on the stock exchanges of Europe, Canada, Australia, New Zealand, and the Far
East. Total return figures for this index assume change in share price and
reinvestment of dividends after the deduction of local taxes.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charges applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
Part of the Fund's historical performance is due to the allocation to the Fund
of securities sold in initial public offerings (IPOs). There is no guarantee
that the Fund's investments in IPOs, if any, will continue to have a similar
impact on performance.
Investments in foreign securities may entail unique risks, including political
market, and currency risks. There are risks associated with small-cap investing
such as limited product lines and small market share.
52
<PAGE>
HOW DID THE INTERNATIONAL SMALL-CAP MARKETPLACE PERFORM IN 1999?
Among the events this past year will be remembered for were the stunning returns
and positive economic growth posted by Asian markets. Japan was a particularly
strong performer--as the home of many of the world's best-known technology
companies, Japan saw a large influx of foreign investment, driving up valuations
in its market.
TOP 10 HOLDINGS
-----------------------------------------------
1. TCL International Holdings Limited 1.32%
2. Fantastic Corporation 1.22%
3. Information Highway 1.15%
4. Mobilephone Telecommunications
International Limited 1.14%
5. Teleste Corporation 1.14%
6. Ericsson SpA 1.11%
7. Baltimore Technologies PLC 1.10%
8. ASM International NV 1.09%
9. Dialog Semiconductor 144A 1.05%
10. Secure Network Solutions Ltd. 1.04%
------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
For most of the year, Europe presented the opposite side of the coin. The
general weakness of the Euro and the slow growth of the German economy led to
uninspired returns by European markets for most of the year. Many of these,
however, rallied in the fourth quarter as investors regained confidence in the
economic prospects for 2000.
WHAT WERE SOME OF THE DOMINANT THEMES IN THE FUND'S PORTFOLIO DURING THE YEAR?
As in America, technology was the fuel that drove small-cap markets overseas,
and this sector accounted for many of Passport's strongest performers. We found
excellent opportunities for the Fund in both telecommunications stocks and
Internet-related companies.
PORTFOLIO AT A GLANCE
--------------------------------------------
TOTAL ASSETS-CLASS F: $261.4 million
NAV-CLASS F ON 12/31/99: $22.93
ONE YEAR TOTAL RETURN-CLASS F: 87.44%
NET EXPENSE RATIO-CLASS F: 1.63%
INCEPTION DATE-CLASS F: 11/16/93
--------------------------------------------
WHICH FUND HOLDINGS OUTPERFORMED IN 1999?
Among our most productive holdings were:
o TISCALI SPA, an Italian telecommunications and Internet-service provider
o INFORMATION HIGHWAY AB, a Swedish company that provides businesses with
Internet solutions, software, and computer services
53
<PAGE>
Dreyfus Founders Passport Fund (CONTINUED)
o OPTICOM ASA, a Norwegian firm specializing in optical computer memory
systems
o TCL INTERNATIONAL, one of China's largest manufacturers of televisions and
Internet-related devices
WERE THERE ANY FACTORS THAT IMPAIRED FUND PERFORMANCE?
The Fund had a limited exposure to Japanese small companies in the first half of
the year, as we were concerned about the ability of these firms to be
profitable, and this hurt the Fund relative to some of its peers. Beginning in
the third quarter, however, we started seeing more earnings growth demonstrated
by numerous Japanese small companies, and we added a number of them to
Passport's portfolio. Many of these made major contributions to our 1999
performance.
PORTFOLIO COMPOSITION
--------------------------------------------------
--------------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
WHAT IS YOUR OUTLOOK FOR THE INTERNATIONAL SMALL-COMPANY MARKETPLACE?
As the technological revolution continues around the world, we feel that small
companies have a great deal to gain. For example, the Internet is allowing
smaller firms to compete on a global basis with larger companies, and often
without major expense.
We believe the years to come will see the Internet coming of age in Europe and
Asia, further developments in telecommunications, and large companies
increasingly outsourcing tasks. International small companies may stand to
benefit from each of these trends, and Passport Fund will continue to search for
the companies that may turn these trends into success.
/s/ TRACY STOUFFER
Tracy Stouffer, CFA
Portfolio Manager
54
<PAGE>
Dreyfus Founders Passport Fund Statement of Investments
December 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (FOREIGN)-105.8%
APPAREL-0.4%
49,000 Renown, Inc. (JA) $ 119,682
97,040 The Wil-Bes & Company (KR) 972,285
----------
1,091,967
----------
AUTOMOTIVE-0.3%
39,049 North American Bus Industries Rt.
(HU)* 814,738
----------
AUTO PARTS & EQUIPMENT-0.4%
284,575 Magneti Marelli SpA (IT) 1,081,026
----------
Banking-0.3%
57,050 Commercial International Bank 144A
(EG)* 817,812
----------
Biotechnology-0.4%
120,350 Celltech Group PLC (UK)* 1,026,030
----------
Building Materials-0.2%
24,550 Tourah Portland Cement Company (EG) 538,036
----------
Business Services-12.8%
7,200 ALTEN (FR)* 1,235,482
17,792 Articon Information Systems AG (GE)* 891,651
25,225 Consodata SA (FR)* 1,137,742
2,206 Cross Systems (FR)* 486,439
100 Cybertek Holdings Inc. (KR)* 1,545
34,400 Devoteam (FR)* 2,451,478
111,975 F.I. Group PLC (UK)* 1,393,146
3,825 FI System (FR)* 1,157,813
43,975 GFK AG 144A (GE)+* 1,763,055
66,200 Glotel PLC (UK)* 778,824
120,800 Guardian IT PLC (UK) 1,876,732
197,725 Harrier Group PLC (UK)* 1,306,483
20,075 HiQ International AB (SW)* 1,280,683
17,273 IPSOS (FR)* 1,421,382
18,250 Information Highway AB (SW)* 3,012,115
25,217 Infosources (FR)* 1,857,722
4,900 Kabel New Media (GE)* 121,800
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
130,350 Mandator AB (SW) $1,937,779
24,405 Medidas Co. Limited (KR)* 628,006
2,741,735 MultiEmedia.com Limited Sponsored ADR
(AU)* 1,273,724
43,900 ParaRede, SGPS (PO)* 436,052
44,925 Semcon AB (SW) 525,869
88,300 Sifo Group AB (SW) 1,116,282
14,669,000 Sino-i.com Limited (HK)* 1,358,678
20,700 TKC Corporation (JA) 786,703
72,000 Tanseisha Company Limited (JA) 492,404
110,743 Trafficmaster PLC (UK)* 1,624,112
12,200 Valtech (FR)* 1,002,095
----------
33,355,796
----------
COMPUTER EQUIPMENT-1.4%
163,600 Interx PLC (UK) 2,412,474
6,075 Opticom ASA (NW)* 1,284,962
----------
3,697,436
----------
COMPUTER NETWORKING-0.3%
10,875 AIT Group PLC (UK) 266,398
10,258 InterLink System Company Limited
Rights (KR) 51,978
10,300 Zuken Inc. (JA) 393,464
----------
711,840
----------
COMPUTER SOFTWARE/SERVICES-24.3%
760,400 Advantage Group Limited (NZ)* 1,546,576
44,400 Autonomy Corporation PLC (UK)* 2,153,400
35,575 Baltimore Technologies PLC (UK)* 2,875,240
12,475 Brokat Infosystems AG (GE)* 2,588,278
4,914 Coheris Atix (FR)* 900,843
99,175 ConNova Group AB (SW)* 1,665,880
31,075 Connecta AB 144A (SW)* 1,054,869
30,325 F-Secure Oyj 144A (FI)* 881,452
11,000 Easy Software AG (GE) 529,217
53,550 El Sitio, Inc. Sponsored ADR (AR)* 1,967,963
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
55
<PAGE>
DREYFUS FOUNDERS PASSPORT FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
2,600 Emprise Management Consulting AG
(GE)* $ 169,520
15,175 Enea Data AB (SW) 1,163,482
16,925 Fanatstic Corporation (SZ)* 3,189,235
19,833 Fluxx.com AG (GE)* 616,240
82,000 Focus Systems Corporation (JA) 2,002,833
17,500 Formida Holdings Limited (AU)* 34,237
4,050 Framtidsfabriken AB (SW)* 730,071
35,175 GEO Interactive Media Group PLC (IS)* 992,043
96,975 Health Communication Network Limited
Sponsored ADR 144A (AU)* 98,352
60,000 INTEC, Inc. (JA) 1,582,727
79,400 Industrial & Financial Systems AB
(SW)* 1,719,419
47,000 INES Corporation (JA) 1,519,419
40,475 Infobank International Holdings PLC
(UK)* 1,187,180
10,341 InternetMediaHouse.com AG (GE)* 395,937
282,800 Ixchange Technology Holdings Limited
(SA)* 1,194,121
27,900 Justsystem Corporation (JA)* 1,690,000
49,750 Kewill Systems PLC (UK) 1,250,766
2,305 Miracle Holding AG (SZ)* 662,398
37,175 NDS Group PLC (UK)* 1,129,191
17,300 NetBenefit PLC (UK)* 241,168
151,825 Norman ASA (NW)* 1,643,455
15,203 PCA Corporation (JA) 958,032
14,150 Pixelpark AG (GE)* 1,602,636
39,300 Protect Data AB (SW) 1,021,257
77,825 RM PLC (UK) 1,084,909
304,200 Recognition Systems Group PLC (UK)* 1,730,582
481,050 Sausage Software Limited Sponsored
ADR (AU)* 1,636,760
33,250 Secunet Security AG (GE)* 1,499,699
602,425 Secure Network Solutions Limited
(AU)* 2,719,841
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
71,750 Sigma AB (SW) $1,528,561
19,425 SinnerSchrader AG 144A (GE)* 950,125
118,175 Solution 6 Holdings Limited Sponsored
ADR (AU)* 1,283,586
118,800 Stonesoft Oyj (FI)* 1,571,775
126,425 Superscape VR PLC (UK)* 688,665
133,500 Synergon Information Systems (HU)* 1,284,968
28,850 TJ Group Oyj (FI)* 1,012,078
14,340 Taesan LCD Company Limited (KR)* 1,930,482
20,800 Unit 4 (NE)* 530,580
3,200 Ultimaco Safeware AG (GE)* 540,443
82,125 VISMA ASA (NW)* 613,087
----------
63,563,578
----------
CONSTRUCTION-0.5%
57,144 Orascom Construction Industries (EG)* 1,184,208
---------
CONSUMER PRODUCTS-0.6%
47,608 Zapf Creaton AG (GE)* 1,574,686
---------
CONSUMER SERVICES-0.2%
8,730 H.I.S. Company Limited (JA) 621,774
---------
DISTRIBUTION-0.8%
1,326,000 Datacapital SA (MX)* 559,488
22,967 Societe Manutan (FR) 1,528,524
---------
2,088,012
---------
DIVERSIFIED-1.3%
434,025 African Lakes Corporation PLC (UK)* 699,476
273,300 Anglovaal Industries Limited (SA) 264,534
4,864,000 e-New Media Company Limited (HK)* 2,377,719
---------
3,341,729
---------
56
<PAGE>
Statement of Investments
December 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
ELECTRONICS-12.9%
9,750 Austria Technologie & Systemtechnik
AG (AT)* $ 498,396
42,000 Chiypda Integre (JA) 553,954
125,175 ERG Limited Sposored ADR (AU) 700,285
35,700 Enplas Corporation (JA) 1,325,387
1,744,000 Hanny Holdings Limited (HK) 1,648,987
90,000 JIT Holdings Limited (SG) 313,325
117,300 JOT Automation Group Oyj (FI) 1,087,526
8,125 JUMPtec Industrielle Computertechnik
AG (GE)* 708,505
67,000 Kinseki Limited (JA) 710,224
124,000 Kasan Electronics (KR)* 958,898
26,450 Keycorp Limited Sponsored ADR (AU)* 141,743
11,000 Koha Company Limited (JA) 763,031
210 Kudelski SA (SZ)* 1,246,330
80 Kuroda Electric Company Limited (JA) 3,220
1,046,000 Manufacturing Integration Technology
Limited (SG)* 690,636
71,350 NXT PLC (UK)* 1,575,334
66,000 Nidec Copal Electronics Corporation
(JA) 1,231,596
54,450 PMJ automec Oyj (FI) 636,896
231,800 Pace Micro Technology PLC (UK) 1,942,562
3,625,000 QPL International Holdings Limited
(HK)* 2,704,702
2,950 SEZ Holding AG (SZ) 1,642,063
4,908,000 TCL International Holdings Limited
(HK)* 3,440,998
60,800 Technology Nexus AB (SW)* 1,138,710
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
9,620,334 Vestel ELektronik Sanayi ve Ticaret
AS (TU)* $ 2,305,758
763,000 WBL Corporation Limited (SG) 2,024,286
23,654 Wavecom SA (FR)* 2,074,496
70,000 Yokowo Company Limited (JA) 1,743,930
-----------
33,811,778
-----------
FINANCIAL SERVICES-1.8%
121,927 Challenger International Limited
Sponsored ADR (AU) 328,692
93,125 Durlacher Corporation PLC (UK)* 2,483,834
172,200 NewMedia SPARK PLC (UK)* 492,595
268,175 The Exchange Holdings PLC (UK)* 1,504,027
-----------
4,809,148
-----------
FOOD & BEVERAGE-1.1%
29,748 Kamps AG (GE) 2,042,401
37,840 Remy Cointreau SA (FR)* 846,536
-----------
2,888,937
-----------
LEISURE & ENTERTAINMENT-2.1%
293,650 Corporacion Interamericana de
Entretenimiento SA(MX)* 1,172,419
8,525 Eidos PLC Sponsored ADR (UK)* 707,575
9,275 Intershop Communications AG (GE)* 2,602,987
40,700 Jurys Doyle Hotel Group PLC (IE) 299,835
179,575 Orascom Hotel Holdings S.A.E. (EG)* 681,385
-----------
5,464,201
-----------
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
57
<PAGE>
DREYFUS FOUNDERS PASSPORT FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
MACHINERY-1.7%
1,525 4M Technologies Holding SA (SZ)* $ 456,347
31,650 Neopost SA (FR)* 1,324,434
240,000 Nippon Thompson Company Limited (JA) 1,978,995
40,100 Toolex International NV (NE)* 646,613
----------
4,406,389
----------
MANUFACTURING-1.9%
31,316 Balda AG (GE)* 2,542,444
13,298 Kumho Electric (KR)* 424,954
31,500 Oriental Weavers Company (EG) 598,544
7,575 Vestas Wind Systems AS 144A (DE)* 1,336,591
----------
4,902,533
----------
MEDICAL SUPPLIES & EQUIPMENT-1.7%
56,300 Etva S.A. (GR) 512,579
29,000 Megane Top Company Limited (JA) 991,647
7,000 Moritex Corporation (JA) 341,947
31,775 Sensar Corporation ADR(IS)* 1,894,585
34,600 Whatman PLC (UK) 697,019
----------
4,437,777
----------
METALS & MINING-0.4%
33,425 Arkivator AB (SW) 849,026
244,911 FiberTel Limited Sponsored ADR (AU)* 219,543
----------
1,068,569
----------
OFFICE SUPPLIES & EQUIPMENT-0.5%
222,000 Uchida Yoko Company Limited (JA) 1,355,576
----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
PHOTOGRAPHY & IMAGING-0.6%
14,700 Plaza Create (JA) $1,507,987
----------
PROPERTY-0.8%
544,050 Consorcio Ara, SA de CV (MX)* 901,002
315,550 Corporation GEO, SA de CV (MX)* 1,188,293
8,000 Fuso Lexel, Inc. (JA) 93,166
----------
2,182,461
----------
PUBLISHING & BROADCASTING-5.9%
97,500 Aoi Advertising Promotion, Inc. (JA) 1,743,198
70,300 Bloomsbury Publishing PLC (UK) 912,031
62,450 Capital Radio PLC (UK) 1,509,670
3,375 Chrysalis Group PLC (UK) 81,587
132,375 Class Editori SpA (IT) 2,295,367
147,565,000 Dogan Yayin Holding AS (TU) 2,176,475
17,225 HIT Entertainment PLC (UK) 591,285
213,300 Incepta Group PLC (UK) 391,881
16,850 LG Ad, Inc. (KR)* 937,103
950 NRJ SA (FR) 650,822
14,900 Shobunsha Publications, Inc. (JA) 931,659
41,775 Sportsworld Media Group PLC (UK)* 328,545
54,150 Talentum Oyj (FI) 1,308,023
32,225 TOMMORROW Internet AG (GE)* 1,647,264
----------
15,504,910
----------
RADIO STATIONS-0.3%
82,850 Grupo Radio Centro SA de CV (MX)* 693,869
----------
58
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
RESTAURANTS-0.8%
11,000 Global Dining, Inc. (JA)* $ 795,271
40,000 Kappa Create Company Limited (JA)* 840,213
12,000 Matsuya Foods Company Limited (JA) 451,370
-----------
2,086,854
-----------
RETAIL-4.5%
1,244,000 Global Tech Holdings Limited (HK) 1,440,278
16,875 Grafton Group Limited (IE)* 380,563
1,525,925 Grupo Elektra SA de CV (MX) 1,503,374
1,208,025 Grupo Sanborns SA (MX) 2,675,977
65,975 Matalan PLC (UK) 1,808,598
85,900 QXL Limited (UK)* 1,993,489
35,701 SIXT AG-Perf (GE) 644,099
11,975 ricardo.de AG (GE)* 1,326,288
-----------
11,772,666
-----------
SEMICONDUCTORS-0.7%
282,650 Imagination Technologies Group PLC
(UK)* 1,853,965
-----------
SEMICONDUCTORS & EQUIPMENT-3.5%
123,550 ASM International NV (NE)* 2,848,201
46,600 BE Semiconductor Industries NV (NE)* 665,581
37,325 Dialog Semiconductor 144A (GE)* 2,749,712
47,100 InnoTECH Corporation (JA)* 2,116,751
6,813 Silicon-On-Insulator Technologies
(FR)* 921,192
-----------
9,301,437
-----------
TELECOMMUNICATION SERVICES-11.2%
27,625 Aspiro Information AB (SW)* 1,099,438
7,205 Avenir Telecom (FR)* 1,359,107
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
7,057 Cellular CRT Participation Preferred
A (BR)* $ 1,239,451
1,343 Companhia Riograndense de
Telecomunicacoes (BR)* 431,999
30,975 Comptel Oyj 144A (FI)* 2,168,281
31,600 Connova Group AB (SW) 336,603
1,047,950 Davnet Limited Sponsored ADR (AU)* 1,577,102
9,750 Detron Group NV (NE)* 209,131
29,950 FirstCom Corporation (CH)* 1,100,663
27,300 International Quantum Epitaxy PLC
(UK)* 1,064,700
15,625 Jazztel PLC Sponsored ADR (SP)* 1,021,484
654,000 Keppel Telecommunications &
Transportation Limited (SG) 1,063,830
609,000 MediaRing.com Limited 144A (SG)* 657,983
30 Mobilephone Telecommunications
International Limited (JA) 2,989,595
662,159 One.Tel Limited Sponsored ADR (AU)* 1,018,173
126,000 Redstone Telecom PLC (UK)* 988,912
53,600 Tele Celular Sul Participacoes SA
Sponsored ADR (BR)* 1,701,800
39,200 Tele Centro Oeste Celular
Participacoes SA Sponsored ADR (BR)* 254,800
39,975 Telegate AG (GE)* 2,307,868
20,525 Telelogic AB (SW)* 1,085,953
96,475 Teligent AB (SW)* 1,637,466
3,650 Tiscali SpA 144A (IT)* 1,474,341
46,100 Tricom SA (DO)* 1,037,250
2,520,850 Westel Group Limited Sponsored ADR
(AU)* 1,352,547
-----------
29,178,477
-----------
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE>
DREYFUS FOUNDERS PASSPORT FUND STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-7.7%
10,150 ADVA AG Optical Networking (GE)* $ 1,912,599
4,300 Alpha Systems Inc. (JA) 903,229
6,975 AudioCodes Limited Sponsored ADR
(IS)* 635,597
19,825 BATM Advanced Communications Limited
(IS) 1,635,842
2,122,000 CCT Telecom Holdings Limited (HK) 1,569,628
24,325 Elcoteq Network (FI) 370,592
50,950 Ericsson SpA (IT) 2,892,971
10,100 Fibernet Group PLC (UK)* 288,106
198,175 ITG Group PLC 144A (IE)* 1,807,550
83,650 InfoCast AB (SW)* 538,540
7,040,00 Netas Northern Electric
Telekomunikasyon AS (TU) 934,513
14,275 Pandatel AG (GE)* 937,168
66,000 SwitchCore AB (SW)* 2,688,517
183,525 Teleste Corporation (FI)* 2,979,959
-----------
20,094,811
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION-1.0%
9,900 Distefora Holding AG (SZ)* $ 2,393,515
19,674 Hyundai Merchant Marine (KR) 128,694
-----------
2,522,209
-----------
UTILITIES-0.5%
38,250 Independent Energy Holdings PLC (UK)* 1,257,469
-----------
TOTAL COMMON STOCKS
(FOREIGN)
(COST-$217,444,685) 276,610,691
-----------
PREFERRED STOCKS (FOREIGN)-0.5%
MACHINERY-0.5%
294,825 Inepar S.A. e Construcoes (BR)* 1,251,795
-----------
TOTAL PREFERRED STOCKS
(FOREIGN)
(COST-$935,127) 1,251,795
-----------
TOTAL INVESTMENTS-106.3%
(COST-$218,379,812) 277,862,486
OTHER ASSETS & LIABILITIES-(6.3%)
(16,425,490)
-----------
NET ASSETS-100.0% $261,436,996
===========
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
60
<PAGE>
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN [BAR GRAPH]
AS OF 12/31/99*
Since Inception
1 Year 5 Years (12/31/89)
------ ------- ---------------
48.78% 19.90% 16.48%
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH OF $10,000 INVESTMENT
MSCI LIPPER CONSUMER
WORLDWIDE WORLD GLOBAL PRICE
GROWTH FUND INDEX FUND INDEX INDEX
----------- --------- ----------- ----------
12/31/89 10,000 10,000 10,000 10,000
12/31/90 10,666 8,298 9,075 10,625
12/31/91 14,379 9,815 10,917 10,941
12/31/92 14,596 9,302 10,923 11,265
12/31/93 18,958 11,396 14,506 11,582
12/31/94 18,549 11,974 14,190 11,890
12/31/95 22,376 14,454 16,264 12,191
12/31/96 25,499 16,403 18,909 12,594
12/31/97 28,189 18,990 21,558 12,808
12/31/98 30,902 23,611 24,711 13,014
12/31/99 45,975 29,498 33,039 13,354
- --------------------------------------------------------------------------------
MANAGEMENT OVERVIEW
<TABLE>
<S> <C> <C> <C>
[PICTURE] [PICTURE] [PICTURE] A DISCUSSION WITH
PORTFOLIO MANAGERS
DOUGLAS LOEFFLER, CFA SCOTT CHAPMAN, CFA THOMAS ARRINGTON, CFA
</TABLE>
By careful selection of promising growth opportunities, both here and abroad,
Dreyfus Founders Worldwide Growth Fund (Class F) returned 48.78% in 1999.
The Morgan Stanley Capital International (MSCI) World Index is an arithmetical
average of the performance of a number of select securities listed on the stock
exchanges of the United States, Europe, Canada, Australia, New Zealand, and the
Far East. Total return figures for this index assume change in share price and
reinvestment of dividends after the deduction of local taxes.
The Fund offers multiple classes of shares. Performance shown is for Class F,
which is open only to grandfathered investors. These figures do not reflect the
maximum sales charge applicable to Class A, B, C, or T shares of the Fund. For
these share classes, applying these charges will result in lower returns for
investors.
Part of the Fund's historical performance is due to the allocation to the Fund
of securities sold in initial public offerings (IPOs). There is no guarantee
that the Fund's investments in IPOs, if any, will continue to have a similar
impact on performance.
Investments in foreign securities may entail unique risks, including
political, market, and currency risks.
61
<PAGE>
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND (CONTINUED)
HOW DID THIS PERFORMANCE COMPARE TO THE FUND'S BENCHMARK INDEX?
Since we choose investments using a bottom-up process and do not use the index's
country weightings to build Worldwide Growth's portfolio, we were able to
significantly improve on the return of the unmanaged Morgan Stanley Capital
International World Index, which rose by 24.93% in 1999.
TOP 10 HOLDINGS
--------------------------------------------------
1. Microsoft Corporation 2.53%
2. Sony Corporation 2.41%
3. Cisco Systems, Inc. 2.07%
4. General Electric Company 1.92%
5. Nippon Telegraph and Telephone
Corporation 1.67%
6. Esat Telecom Group PLC 1.60%
7. Nokia Oyj Sponsored ADR 1.50%
8. Mannesmann AG 1.49%
9. Partner Comm. Co. Ltd. ADR 1.46%
10. Petroleo Brasileiro SA 1.43%
--------------------------------------------------
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
WHAT DEVELOPMENTS SHAPED INTERNATIONAL MARKETS IN 1999?
Many world markets boomed in 1999, much to the benefit of the Worldwide Growth
Fund. Investors once again began to look for growth potential in Pacific Rim
nations, and many of these markets had banner years. Japanese stocks surged on
foreign investment in the country's technology stocks--a sector which
outperformed in markets across the globe.
PORTFOLIO AT A GLANCE
---------------------------------------------
TOTAL ASSETS-CLASS F: $284.8 million
NAV-CLASS F ON 12/31/99: $25.17
ONE YEAR TOTAL RETURN-CLASS F: 48.78%
NET EXPENSE RATIO-CLASS F: 1.53%
INCEPTION DATE-CLASS F: 12/31/89
---------------------------------------------
Europe's 1999 performance was less straightforward. While this year's
introduction of the unified currency, the Euro, sparked a great deal of
exuberance, markets failed to follow suit. The Euro slid throughout the year,
and weakness in the German economy cast a pall over Continental markets. But by
the fourth quarter, fundamentals had won the day as investors, impressed by
rising earnings and a low-inflation environment, pushed many major European
markets to double-digit 1999 returns.
HOW DID THE FUND'S ASSET ALLOCATION IMPACT PERFORMANCE?
Throughout the year, the Fund's largest regional exposure was to the United
States, and our domestic weighting rose as the year
62
<PAGE>
wore on. Much of the Fund's U.S. position was held in technology stocks, which
proved to be the year's best-performing sector, in America and abroad.
The Fund also held a substantial Japanese weighting, spending much of the year
overweight versus our benchmark. Japan's telecommunications sector proved to be
fertile ground for growth opportunities, and several of our top holdings at
year's end were in this area.
PORTFOLIO COMPOSITION
---------------------------------------------
37.4% United States
16.5% Other Countries
10.3% Japan
6.9% France
6.8% Netherlands
3.9% Cash & Equivalents
6.0% United Kingdom
2.9% Germany
2.6% Sweden
2.6% Spain
2.1% Italy
2.0% South Korea
---------------------------------------------
PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
WHICH OF THE FUND'S HOLDINGS WERE YOU MOST PLEASED WITH?
The Fund benefited a great deal from telecommunications stocks, and ideas came
to us from all over the world, including:
o ESAT TELECOM GROUP, an Irish firm with strong positioning in virtually all
aspects of its country's telecommunications: mobile, fixed-line, data, and
Internet traffic.
o NIPPON TELEGRAPH & TELEPHONE, the dominant fixed-line operator in Japan and
the parent company of NTT Docomo, Japan's major cellular player.
o PARTNER COMMUNICATIONS, an Israeli mobile phone operator that launched an
extremely impressive and successful startup operation in 1999.
WHAT IS YOUR OUTLOOK FOR THE COMING YEAR?
By the numbers, the world's markets look strong. Many nations are enjoying
healthy economic growth and low inflation, borders to investment across the
globe are falling, and technology has brought international investors closer
together. We believe that the year ahead may be quite fruitful for Worldwide
Growth's style of investing, where the focus is on fundamentally strong
companies, wherever in the world they may be found.
63
<PAGE>
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (DOMESTIC)-37.4%
AUTOMOTIVE-0.8%
22,900 General Motors Corporation Class H* $ 2,198,400
-----------
BANKING-1.0%
29,300 Citigroup, Inc. 1,627,981
7,400 Fifth Third Bancorp 542,513
16,700 Wells Fargo Company 675,306
-----------
2,845,800
-----------
BIOTECHNOLOGY-0.6%
7,400 Amgen, Inc.* 444,000
9,400 Genentech, Inc.* 1,264,300
-----------
1,708,300
-----------
BUSINESS SERVICES-0.4%
21,525 The Interpublic Group of Companies,
Inc. 1,241,723
-----------
COMPUTER EQUIPMENT-2.6%
19,000 Apple Computer, Inc. 1,952,250
17,700 EMC Corporation* 1,933,725
43,800 Sun Microsystems, Inc.* 3,389,025
-----------
7,275,000
-----------
COMPUTER NETWORKING-2.1%
55,125 Cisco Systems, Inc.* 5,901,820
-----------
COMPUTER SOFTWARE/SERVICES-5.3%
25,000 Automatic Data Processing, Inc. 1,346,875
4,375 BMC Software, Inc.* 349,453
61,800 Microsoft Corporation* 7,211,288
19,500 Oracle Corporation* 2,184,000
11,500 Redback Networks Inc.* 2,031,906
5,000 Yahoo! Inc.* 2,163,438
-----------
15,286,960
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS-1.2%
14,300 Colgate-Palmolive
Company $ 929,500
26,800 The Dial Corporation 651,575
15,475 Gillette Company 637,377
12,000 The Procter & Gamble Company 1,314,750
-----------
3,533,202
-----------
DIVERSIFIED-0.5%
775 Berkshire Hathaway, Inc.* 1,418,250
-----------
ELECTRONICS-1.9%
35,400 General Electric Company 5,478,150
-----------
FINANCIAL SERVICES-1.1%
22,775 The Charles Schwab Corporation 873,991
18,100 Fannie Mae 1,130,119
15,225 Merrill Lynch & Company, Inc.* 1,271,288
-----------
3,275,398
-----------
FOOD & BEVERAGE-0.6%
30,250 The Coca-Cola Company 1,762,063
-----------
HEALTHCARE SERVICES-0.5%
51,600 IMS Health Incorporated 1,402,875
-----------
INSURANCE-0.5%
12,175 American International Group, Inc. 1,316,422
-----------
LEISURE & ENTERTAINMENT-1.8%
32,250 America Online, Inc.* 2,432,859
46,500 Viacom, Inc. Class B* 2,810,344
-----------
5,243,203
-----------
MANUFACTURING-0.2%
13,800 Tyco International Limited 536,475
-----------
MEDICAL SUPPLIES & EQUIPMENT-0.3%
22,400 Medtronic, Inc.* 816,200
-----------
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
64
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
PHARMACEUTICALS-2.2%
9,600 American Home Products Corporation $ 378,600
34,500 Bristol-Myers Squibb Company 2,214,469
37,775 Pfizer Inc. 1,225,327
29,400 Warner-Lambert Company 2,408,963
-----------
6,227,359
-----------
PUBLISHING & BROADCASTING-4.3%
35,000 AMFM, Inc.* 2,738,750
52,050 AT&T Corp.-Liberty Media Group* 2,953,838
45,350 Comcast Corporation Special Class A 2,290,175
19,000 Gannett Company, Inc. 1,549,688
39,100 Time Warner, Inc. 2,832,306
-----------
12,364,757
-----------
RESTAURANTS-0.1%
6,500 McDonald's Corporation 262,031
-----------
RETAIL-2.7%
26,550 Costco Wholesale Corporation* 2,421,028
38,287 The Home Depot, Inc. 2,625,052
5,700 Intimate Brands, Inc. 245,813
5,475 Kohl's Corporation* 395,227
27,025 Wal-Mart Stores, Inc. 1,868,103
-----------
7,555,223
-----------
SEMICONDUCTORS & EQUIPMENT-3.6%
2,400 Broadcom Corporation* 653,550
40,075 Intel Corporation 3,296,169
24,000 JDS Uniphase Corporation* 3,870,000
25,475 Texas Instruments Inc. 2,467,891
-----------
10,287,610
-----------
TELECOMMUNICATION SERVICES-1.1%
25,162 MCI WorldCom, Inc.* 1,333,586
12,000 VoiceStream Wireless Corporation* 1,702,500
-----------
3,036,086
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-2.0%
4,975 Comverse Technology, Inc.* $ 719,820
9,175 Lucent Technologies Inc. 686,405
22,000 Qualcomm, Inc.* 3,873,375
6,125 Tellabs, Inc.* 392,766
-----------
5,672,366
-----------
TOTAL COMMON STOCKS
(DOMESTIC)
(COST-$80,950,044) 106,645,673
-----------
COMMON STOCKS (FOREIGN)-58.7%
BANKING-3.3%
217,600 Banco Santander Central Hispano SA
(SP) 2,451,462
184,820 DBS Group Holdings Limited (SG) 3,028,563
26,000 Deutsche Bank AG (GE) 2,185,126
122,000 ForeningsSparbanken AB (SW) 1,785,087
-----------
9,450,238
-----------
BUSINESS SERVICES-2.0%
4,900 Altran Technologies SA (FR) 2,946,778
169,000 WPP Group PLC (UK) 2,671,861
-----------
5,618,639
-----------
CHEMICALS-1.1%
53,650 Aventis SA (FR) 3,102,741
-----------
COMPUTER SOFTWARE/SERVICES-0.9%
34,000 Getronics NV (NE) 2,699,008
-----------
CONSTRUCTION-1.0%
379,125 Brisa-Auto Estradas de Portugal SA
(PO) 2,895,592
-----------
CONSUMER PRODUCTS-1.1%
2,700 The Swatch Group AG (SZ) 3,093,522
-----------
ELECTRONICS-6.4%
22,400 Citizen Electronics Company Limited
(JA) 4,048,654
310,000 Natsteel Electronics Limited (SG) 1,637,455
23,200 Sony Corporation (JA) 6,867,862
19,000 TDK Corporation (JA) 2,619,217
55,775 Thomson Multimedia (FR)* 2,990,841
-----------
18,164,029
-----------
65
<PAGE>
DREYFUS FOUNDERS WORLDWIDE GROWTH FUND
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES-1.0%
30,000 Vivendi (FR) $ 2,695,700
-----------
FINANCIAL SERVICES-1.1%
105,000 Skandia Forsakrings AB (SW) 3,158,726
-----------
INSURANCE-1.0%
223,900 Alleanza Assicurazioni (IT) 2,717,680
-----------
LEISURE & ENTERTAINMENT-0.7%
44,000 Accor SA (FR) 2,115,546
-----------
MACHINERY-1.5%
17,725 Mannesmann AG (GE) 4,254,884
-----------
MEDICAL SUPPLIES & EQUIPMENT-0.8%
4,850 Synthes-Stratec, Inc. 144A (SZ)* 2,208,815
-----------
METALS & MINING-1.2%
120,375 De Beers Consolidated Mines Sponsored
ADR (SA) 3,483,352
-----------
OFFICE SUPPLIES & EQUIPMENT-1.2%
175,000 Ricoh Company Limited (JA) 3,292,951
-----------
OIL & GAS-3.9%
40,000 BP Amoco PLC Sponsored ADR (UK) 2,372,500
2 Elf Aquitaine SA (FR) 307
18,270 Petroleo Brasileiro SA (BR) 4,074,409
35,000 Preussag AG (GE)* 1,939,962
20,824 Total Fina SA (FR) 2,765,541
-----------
11,152,719
-----------
PHARMACEUTICALS-0.9%
20,000 Novo Nordisk AS B-Shares (DE) 2,639,980
-----------
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
PUBLISHING & BROADCASTING-5.9%
121,550 Pearson PLC (UK) $ 3,925,644
1,495,425 Seat Pagine Gialle SpA (IT) 3,282,531
77,775 Telefonica Publicidad e Informacion
SA 144A (SP)* 3,761,295
43,750 UnitedGobalCom, Inc. Sponsored ADR
(NE)* 3,073,438
54,775 VNU NV 144A (NE)* 2,864,748
-----------
16,907,656
-----------
RETAIL-0.8%
90,000 Dixons Group PLC (UK) 2,159,709
-----------
SEMICONDUCTORS & EQUIPMENT-3.9%
26,425 ASM Lithography Holding NV Sponsored
ADR (NE)* 2,982,722
65,000 Fujitsu Limited (JA) 2,959,308
18,675 STMicroelectronics NV (NE) 2,860,118
52,750 Taiwan Semiconductor Manufacturing
Company Limited Sponsored ADR (TW) 2,373,750
-----------
11,175,898
-----------
66
<PAGE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
(CONTINUED)
SHARES MARKET VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES-13.1%
59,150 AT&T Canada, Inc. Sponsored ADR (CA)* $ 2,373,394
646,000 China Telecom Limited (HK)* 4,038,798
50,000 Esat Telecom Group PLC Sponsored ADR
(IE)* 4,575,000
59,800 Global TeleSystems Group, Inc. (RU)* 2,070,575
18,650 Jazztel PLC Sponsored ADR (SP)* 1,219,244
21,000 Koninklijke NV (NE) 2,039,591
42,780 Korea Telecom Corporation (KR) 3,197,805
28,000 NTL, Inc. (UK)* 3,486,000
73 NTT Mobile Communications Network,
Inc. (JA) 2,802,892
279 Nippon Telegraph & Telephone
Corporation (JA) 4,770,163
160,700 Partner Communications Company
Limited (IS)* 4,158,113
65,714 SK Telecom Limited Sponsored ADR (KR) 2,521,775
-----------
37,253,350
-----------
Telecommunications Equipment-4.2%
13,000 Alcatel (FR) 2,970,833
36,100 Telefonaktiebolaget LM Ericsson
Sponsored ADR Class B (SW) 2,369,063
138,675 Marconi PLC (UK) 2,448,323
22,450 Nokia Oyj (FI) 4,265,500
-----------
12,053,719
-----------
Transportation-1.7%
380,000 Nippon Express Company Limited (JA) $ 2,097,601
95,000 TNT Post Group NV (NE) 2,708,981
-----------
4,806,582
-----------
Total Common Stocks
(Foreign)
(Cost-$117,200,635) 167,101,036
-----------
PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------
Corporate Bonds (Foreign)-0.0%
Miscellaneous-0.0%
$47,297 British Aerospace 7.45% 11/30/03 (UK) 45,964
-----------
Total Corporate Bonds
(Foreign)
Cost-$35,218) 45,964
-----------
PRINCIPAL AMOUNT AMORTIZED COST
- --------------------------------------------------------------------------------
Corporate Short-Term Notes-2.8%
Financial Services-2.8%
8,000,000 American Express Credit Corporation
1.50% 01/03/00 7,999,333
-----------
TOTAL CORPORATE
SHORT-TERM NOTES
(AMORTIZED COST-$7,999,333) 7,999,333
-----------
TOTAL INVESTMENTS-98.9%
(COST-$206,185,230) 281,792,006
OTHER ASSETS & LIABILITIES-1.1%
3,047,382
-----------
NET ASSETS-100.0% $284,839,388
===========
+ SECURITIES WERE ACQUIRED PURSUANT TO RULE 144A AND MAY BE DEEMED TO BE
RESTRICTED FOR RESALE.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
67
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 BALANCED DISCOVERY FOCUS
(IN THOUSANDS) FUND FUND FUND
--------- --------- ------
ASSETS
Investment securities, at cost....... $1,022,260 $558,574 $3,906
--------- --------- ------
Investment securities, at market..... 1,052,112 816,114 3,921
Cash................................. 2,681 4,432 0
Foreign currency (cost $5,948 and
$122).............................. 0 0 0
Receivables:
Investment securities sold......... 24,537 4,214 0
Capital shares sold................ 669 5,325 0
Dividends and interest............. 5,232 34 0
From adviser....................... 0 0 0
Other assets......................... 73 10 0
--------- --------- ------
Total Assets..................... 1,085,304 830,129 3,921
--------- --------- ------
LIABILITIES
Payables:
Investment securities purchased.... 22,529 19,523 1,906
Capital shares redeemed............ 4,555 3,711 0
Advisory fee....................... 517 515 0
Shareholder servicing fees......... 13 36 0
Accounting fees.................... 21 14 0
Distribution fees.................. 441 178 0
Custodian.......................... 1,229 0 0
Other.............................. 72 0 0
Dividends.......................... 102 0 0
--------- --------- ------
Total Liabilities................ 29,479 23,977 1,906
--------- --------- ------
Net Assets........................... $1,055,825 $806,152 $2,015
========= ========= ======
Net Assets-Class F................... $1,055,825 $806,152 $ 252
Shares Outstanding-Class F........... 100,885 19,732 20
Net Asset Value, Offering and
Redemption Price Per Share......... $10.47 $40.86 $12.59
Net Assets-Class A................... 755
Shares Outstanding-Class A........... 60
Net Asset Value and Redemption Price
Per Share.......................... $12.59
Maximum offering price per share (net
asset value plus sales charge of
5.75% of offering price)........... $13.36
Net Assets-Class B................... 252
Shares Outstanding-Class B........... 20
Net Asset Value, Offering and
Redemption Price (excluding
applicable contingent deferred
sales charge) Per Share............ $12.59
Net Assets-Class C................... 252
Shares Outstanding-Class C 20
Net Asset Value, Offering and
Redemption Price (excluding
applicable contingent deferred
sales charge) Per Share............ $12.59
Net Assets-Class R................... 252
Shares Outstanding-Class R........... 20
Net Asset Value, Offering and
Redemption Price Per Share......... $12.59
Net Assets-Class T................... 252
Shares Outstanding-Class T........... 20
Net Asset Value and Redemption Price
Per Share.......................... $12.59
Maximum offering price per share (net
asset value plus sales charge of
4.50% of offering price)........... $13.18
SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT GROWTH AND INTERNATIONAL MID-CAP MONEY WORLDWIDE
SECURITIES GROWTH INCOME EQUITY GROWTH MARKET PASSPORT GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND
---------- --------- ---------- ------------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 13,880 $2,404,103 $429,137 $25,699 $186,501 $97,000 $218,380 $206,185
---------- --------- ---------- ------------- -------- ------- -------- ---------
13,452 3,324,307 536,228 35,458 256,975 97,000 277,862 281,792
8 8,297 1,428 0 698 73 0 1,451
0 0 0 0 0 0 5,897 111
0 13,080 1,081 453 1,642 0 5,685 4,315
73 5,430 112 314 1,276 672 3,566 1,225
209 954 282 2 16 0 56 0
0 0 0 26 0 0 122 0
0 38 10 13 10 0 13 124
---------- --------- ---------- ------------- -------- ------- -------- ---------
13,742 3,352,106 539,141 36,266 260,617 97,745 293,201 289,018
---------- --------- ---------- ------------- -------- ------- -------- ---------
0 14,452 0 306 3,444 0 22,229 2,254
388 10,705 3,653 11 3,508 4,408 1,092 1,561
8 1,763 277 28 163 41 194 225
2 63 37 4 22 12 8 16
0 61 10 1 5 2 4 5
4 1,302 102 12 47 0 99 118
0 0 0 287 0 0 8,025 0
3 154 27 10 43 19 0 0
61 0 0 0 0 397 113 0
---------- --------- ---------- ------------- -------- ------- -------- ---------
466 28,500 4,106 659 7,232 4,879 31,764 4,179
---------- --------- ---------- ------------- -------- ------- -------- ---------
$ 13,276 $3,323,606 $535,035 $35,607 $253,385 $92,866 $261,437 $284,839
========== ========= ========== ============= ======== ======= ======== =========
$ 13,276 $3,323,606 $535,035 $35,607 $253,385 $92,866 261,437 $284,839
1,481 139,247 70,305 1,792 29,207 92,866 11,404 11,317
$8.96 $23.87 $7.61 $19.87 $8.68 $1.00 22.93 $25.17
</TABLE>
69
<PAGE>
- -----------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR OR PERIOD ENDED
DECEMBER 31, 1999 (NOTE 1)
(IN THOUSANDS)
BALANCED DISCOVERY FOCUS
FUND FUND FUND
--------- --------- --------
INVESTMENT INCOME:
Income:
Dividends.......................... $ 11,962 $ 90 $ 0
Interest........................... 33,408 1,708 0
Foreign taxes withheld............. (326) 0 0
--------- --------- --------
Total Investment Income.......... 45,044 1,798 0
--------- --------- --------
Expenses:
Advisory fees...................... 6,992 3,414 0
Shareholder servicing fees......... 179 314 0
Accounting fees.................... 294 91 0
Distribution fees.................. 3,121 925 0
Transfer agency expenses........... 866 117 0
Registration fees.................. 191 65 0
Postage and mailing expenses....... 72 46 0
Custodian fees and expenses........ 135 37 0
Printing expenses.................. 85 124 0
Proxy expenses..................... 94 24 0
Legal and audit fees............... 65 29 0
Directors' fees and expenses....... 72 20 0
Line of Credit expenses............ 0 19 0
Merger expenses.................... 0 80 0
Other expenses..................... 116 138 0
--------- --------- --------
Total Expenses................... 12,282 5,443 0
Earnings Credits................. (159) (64) 0
Reimbursed/Waived Expenses....... 0 0 0
--------- --------- --------
Net Expenses..................... 12,123 5,379 0
--------- --------- --------
Net Investment Income (Loss)....... 32,921 (3,581) 0
--------- --------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net Realized Gain (Loss) from
Security Transactions:
Proceeds from long-term securities
sold............................. 1,871,589 527,974 0
Proceeds from long-term U.S.
Government Obligations........... 844,103 0 0
Cost of securities sold............ 2,701,717 378,597 0
--------- --------- --------
Net Realized Gain (Loss) from
Security Transactions.............. 13,975 149,377 0
Net Realized Gain (Loss) from Foreign
Currency Transactions.............. (2) 0 0
Net Change in Unrealized
Appreciation/Depreciation.......... (73,716) 196,819 15
--------- --------- --------
Net Realized and Unrealized Gain
on Investments and Foreign
Currency Transactions............ (59,743) 346,196 15
--------- --------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations.......... $ (26,822) $342,615 $ 15
========= ========= ========
Purchases of long-term securities.... $1,885,529 $603,943 $ 1,906
========= ========= ========
Purchases of long-term U.S.
Government Obligations............. $ 700,909 $ 0 $ 0
========= ========= ========
SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT GROWTH AND INTERNATIONAL MID-CAP MONEY WORLDWIDE
SECURITIES GROWTH INCOME EQUITY GROWTH MARKET PASSPORT GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 13,776 $ 4,646 $ 332 $ 297 $ 0 $ 835 $ 2,966
851 2,900 905 44 613 5,533 241 440
0 (43) (59) (27) (2) 0 (102) (258)
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
851 16,633 5,492 349 908 5,533 974 3,148
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
96 18,136 3,200 243 1,688 535 1,337 2,481
29 784 478 44 300 161 87 205
3 639 121 6 50 26 32 59
37 6,792 1,285 61 538 0 334 624
12 1,164 179 16 118 58 29 97
17 329 50 18 33 51 25 26
3 295 51 4 41 15 23 23
5 152 42 61 26 11 281 149
11 375 179 16 119 62 32 79
1 192 36 2 16 7 11 19
2 191 36 3 22 12 4 10
1 164 37 1 20 8 7 37
0 0 0 0 12 0 8 0
0 0 0 0 0 0 0 0
8 457 124 7 64 25 22 63
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
225 29,670 5,818 482 3,047 971 2,232 3,872
(5) (310) (82) (5) (44) (24) (22) (51)
(27) 0 0 (41) 0 0 0 0
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
193 29,360 5,736 436 3,003 947 2,210 3,821
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
658 (12,727) (244) (87) (2,095) 4,586 (1,236) (673)
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
0 3,100,965 803,099 48,599 431,581 0 442,902 473,206
17,893 0 36,980 0 0 0 0 0
17,933 2,663,545 804,683 41,344 370,497 0 365,072 383,210
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
(40) 437,420 35,396 7,255 61,084 (12) 77,830 89,996
0 0 0 0 0 0 (68) 0
(1,166) 517,565 36,716 6,505 17,834 0 28,881 12,136
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
(1,206) 954,985 72,112 13,760 78,918 0 106,643 102,132
- ---------- --------- ---------- ------------- -------- -------- -------- ---------
$ (548) $ 942,258 $ 71,868 $13,673 $ 76,823 $ 4,574 $105,407 $101,459
========== ========= ========== ============= ======== ======== ======== =========
$ 0 $3,087,083 $768,712 $51,644 $344,770 $ 0 $505,365 $378,541
========== ========= ========== ============= ======== ======== ======== =========
$ 17,976 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== ========= ========== ============= ======== ======== ======== =========
</TABLE>
71
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED DISCOVERY
FUND FUND
---------------------- ----------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
(IN THOUSANDS) 12/31/99 12/31/98 12/31/99 12/31/98
--------- --------- --------- ---------
OPERATIONS
<S> <C> <C> <C> <C>
Net Investment Income (Loss)......... $ 32,921 $ 28,619 $ (3,581) $ (1,975)
Net Realized Gain (Loss) from
Security Transactions.............. 13,975 65,428 149,377 23,886
Net Realized Gain (Loss) from Foreign
Currency Transactions.............. (2) (131) 0 0
Net Change in Unrealized
Appreciation/Depreciation.......... (73,716) 53,472 196,819 10,818
--------- --------- --------- ---------
Net Increase (Decrease) in Net
Assets Resulting from
Operations....................... (26,822) 147,388 342,615 32,729
--------- --------- --------- ---------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income
Class F.......................... (32,921) (28,641) 0 0
From Net Realized Gains from Security
Transactions and Foreign Currency
Transactions
Class F.......................... (41,779) (42,393) (101,165) (19,443)
In Excess of Net Investment Income
Class F.......................... (114) (149) 0 0
In Excess of Net Realized Gains from
Security Transactions and Foreign
Currency Transactions
Class F.......................... (61,158) 0 0 0
--------- --------- --------- ---------
Net Decrease from Dividends and
Distributions
Class F.......................... (135,972) (71,183) (101,165) (19,443)
--------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold
Class A..........................
Class B..........................
Class C..........................
Class F.......................... 518,571 527,902 478,103 167,199
Class R..........................
Class T..........................
Shares issued in connection with
acquisition
Class F.......................... 0 0 112,828 0
Reinvested distributions
Class F.......................... 136,655 69,523 90,038 16,296
--------- --------- --------- ---------
655,226 597,425 680,969 183,495
Cost of Shares Redeemed
Class F.......................... (680,828) (372,099) (357,391) (201,938)
--------- --------- --------- ---------
Net increase (decrease) from
capital share transactions....... (25,602) 225,326 323,578 (18,443)
--------- --------- --------- ---------
Net Increase (Decrease) in Net
Assets........................... (188,396) 301,531 565,028 (5,157)
NET ASSETS
Beginning of year.................. 1,244,221 942,690 241,124 246,281
--------- --------- --------- ---------
End of year........................ $1,055,825 $1,244,221 $ 806,152 $ 241,124
========= ========= ========= =========
Net Assets consist of:
Capital (par value and paid-in
surplus)........................... $1,087,159 $1,112,851 $ 497,767 $ 174,223
Accumulated undistributed
(distribution in excess of ) net
investment income.................. (5) 0 0 0
Accumulated undistributed net
realized gain (loss) from security
transactions....................... (61,178) 27,805 50,845 6,180
Unrealized appreciation
(depreciation) on investments and
foreign currency transactions...... 29,849 103,565 257,540 60,721
--------- --------- --------- ---------
Total............................. $1,055,825 $1,244,221 $ 806,152 $ 241,124
========= ========= ========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
72
<PAGE>
<TABLE>
<CAPTION>
FOCUS
FUND GOVERNMENT GROWTH GROWTH AND INCOME
-------- SECURITIES FUND FUND FUND
PERIOD --------------------- ----------------------- ---------------------
ENDED YEAR YEAR YEAR YEAR YEAR YEAR
12/31/99 ENDED ENDED ENDED ENDED ENDED ENDED
(NOTE 1) 12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98
-------- -------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 658 $ 631 $ (12,727) $ 1,079 $ (244) $ 7,635
0 (40) 250 437,420 250,782 35,396 63,627
0 0 0 0 0 0 (58)
15 (1,166) 407 517,565 202,198 36,716 18,228
-------- -------- -------- --------- --------- -------- --------
15 (548) 1,288 942,258 454,059 71,868 89,432
-------- -------- -------- --------- --------- -------- --------
0 (660) (630) 0 (1,079) 0 (7,779)
0 0 0 (493,802) (124,570) (50,521) (48,265)
0 0 0 0 (86) 0 (51)
0 0 0 0 0 0 0
-------- -------- -------- --------- --------- -------- --------
0 (660) (630) (493,802) (125,735) (50,521) (56,095)
-------- -------- -------- --------- --------- -------- --------
750
250
250
250 21,630 20,731 938,299 839,972 27,279 78,226
250
250
0 0 0 0 0 0 0
0 581 560 474,679 119,172 44,526 49,402
-------- -------- -------- --------- --------- -------- --------
2,000 22,211 21,291 1,412,978 959,144 71,805 127,628
0 (22,947) (19,988) (898,008) (684,737) (100,424) (161,826)
-------- -------- -------- --------- --------- -------- --------
2,000 (736) 1,303 514,970 274,407 (28,619) (34,198)
-------- -------- -------- --------- --------- -------- --------
2,015 (1,944) 1,961 963,426 602,731 (7,272) (861)
0 15,220 13,259 2,360,180 1,757,449 542,307 543,168
-------- -------- -------- --------- --------- -------- --------
$ 2,015 $13,276 $15,220 $3,323,606 $2,360,180 $535,035 $542,307
======== ======== ======== ========= ========= ======== ========
$ 2,000 $16,768 $17,504 $2,333,807 $1,818,815 $424,871 $453,452
0 4 6 0 (2) 0 0
0 (3,068) (3,028) 69,597 138,730 3,077 18,484
15 (428) 738 920,202 402,637 107,087 70,371
-------- -------- -------- --------- --------- -------- --------
$ 2,015 $13,276 $15,220 $3,323,606 $2,360,180 $535,035 $542,307
======== ======== ======== ========= ========= ======== ========
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<S> <C> <C> <C> <C>
INTERNATIONAL MID-CAP GROWTH
EQUITY FUND FUND
-------------------- ---------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
(IN THOUSANDS) 12/31/99 12/31/98 12/31/99 12/31/98
-------- -------- -------- ---------
OPERATIONS
Net Investment Income (Loss)......... $ (87) $ 3 $(2,095) $ (1,141)
Net Realized Gain (Loss) from
Security Transactions.............. 7,255 366 61,084 1,160
Net Realized Gain (Loss) from Foreign
Currency
Transactions....................... 0 0 0 0
Net Change in Unrealized
Appreciation/Depreciation.......... 6,505 2,094 17,834 (1,755)
-------- -------- -------- ---------
Net Increase (Decrease) in Net
Assets Resulting from
Operations....................... 13,673 2,463 76,823 (1,736)
-------- -------- -------- ---------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income
Class F.......................... 0 0 0 0
From Net Realized Gains from Security
Transactions and
Foreign Currency Transactions
Class F.......................... (3,489) (92) (44,216) (4,577)
In Excess of Net Investment Income
Class F.......................... 0 0 0 0
-------- -------- -------- ---------
Net Decrease from Dividends and
Distributions
Class F.......................... (3,489) (92) (44,216) (4,577)
-------- -------- -------- ---------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold
Class A..........................
Class B..........................
Class C..........................
Class F.......................... 49,052 15,361 104,423 90,913
Class R..........................
Class T..........................
Shares issued in connection with
acquisition
Class F.......................... 0 0 0 0
Reinvested distributions
Class F.......................... 3,156 87 41,722 4,278
-------- -------- -------- ---------
52,208 15,448 146,145 95,191
Cost of Shares Redeemed
Class F.......................... (45,723) (14,621) (178,222) (156,209)
-------- -------- -------- ---------
Net increase (decrease) from
capital share transactions....... 6,485 827 (32,077) (61,018)
-------- -------- -------- ---------
Net Increase (Decrease) in Net
Assets........................... 16,669 3,198 530 (67,331)
NET ASSETS
Beginning of year.................. 18,938 15,740 252,855 320,186
-------- -------- -------- ---------
End of year........................ $35,607 $18,938 $253,385 $ 252,855
======== ======== ======== =========
Net Assets consist of:
Capital (par value and paid-in
surplus)........................... $21,974 $15,489 $167,209 $ 199,284
Accumulated undistributed
(distribution in excess of) net
investment income.................. (1) 3 0 0
Accumulated undistributed net
realized gain (loss) from
security transactions.............. 3,877 194 15,704 933
Unrealized appreciation
(depreciation) on investments and
foreign currency transactions...... 9,757 3,252 70,472 52,638
-------- -------- -------- ---------
Total.............................. $35,607 $18,938 $253,385 $ 252,855
======== ======== ======== =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
74
<PAGE>
<TABLE>
MONEY MARKET PASSPORT WORLDWIDE
FUND FUND GROWTH FUND
----------------------- ---------------------- -----------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98
--------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 4,586 $ 5,310 $(1,236) $ 118 $ (673) $ 1,017
(12) 0 77,830 4,421 89,996 12,478
0 0 (68) 0 0 0
0 0 28,881 8,927 12,136 13,892
--------- --------- -------- --------- --------- ---------
4,574 5,310 105,407 13,466 101,459 27,387
--------- --------- -------- --------- --------- ---------
(4,574) (5,310) 0 (84) 0 (1,077)
0 0 (42,827) (3,150) (64,913) (11,626)
0 0 0 0 0 (8)
--------- --------- -------- --------- --------- ---------
(4,574) (5,310) (42,827) (3,234) (64,913) (12,711)
--------- --------- -------- --------- --------- ---------
338,594 235,921 306,250 134,188 211,862 152,229
0 0 0 0 0 0
4,191 4,960 40,314 2,993 60,370 11,598
--------- --------- -------- --------- --------- ---------
342,785 240,881 346,564 137,181 272,232 163,827
(341,334) (255,539) (272,279) (145,487) (295,992) (215,327)
--------- --------- -------- --------- --------- ---------
1,451 (14,658) 74,285 (8,306) (23,760) (51,500)
--------- --------- -------- --------- --------- ---------
1,451 (14,658) 136,865 1,926 12,786 (36,824)
91,415 106,073 124,572 122,646 272,053 308,877
--------- --------- -------- --------- --------- ---------
$ 92,866 $ 91,415 $261,437 $ 124,572 $ 284,839 $ 272,053
========= ========= ======== ========= ========= =========
$ 92,862 $ 91,413 $167,298 $ 93,013 $ 182,613 $ 206,387
19 3 (39) 21 (14) 0
(15) (1) 34,695 936 26,638 2,200
0 0 59,483 30,602 75,602 63,466
--------- --------- -------- --------- --------- ---------
$ 92,866 $ 91,415 $261,437 $124,572 $ 284,839 $ 272,053
========= ========= ======== ========= ========= =========
</TABLE>
75
<PAGE>
FINANCIAL HIGHLIGHTS
Per Share Income and Capital Changes
Selected data for each share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
BALANCED FUND - CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period....................... $ 12.19 $ 11.35 $ 10.61 $ 9.58 $ 8.56
Income from investment
operations:
Net investment income
(loss).................. 0.32 0.30 0.29 0.28 0.28
Net gains (losses) on
securities (both
realized and
unrealized)............. (0.61) 1.27 1.48 1.50 2.21
--------- --------- --------- --------- ---------
Total from investment
operations.......... (0.29) 1.57 1.77 1.78 2.49
Less distributions:
From net investment
income*................. (0.32) (0.30) (0.30) (0.27) (0.28)
From net realized gains... (0.45) (0.43) (0.73) (0.48) (1.19)
In excess of net realized
gains................... (0.66) 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions... (1.43) (0.73) (1.03) (0.75) (1.47)
Net Asset Value, end of
period...................... $ 10.47 $ 12.19 $ 11.35 $ 10.61 $ 9.58
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. (2.22%) 13.96% 16.90% 18.76% 29.40%
Net assets, end of period
(000s).................. $1,055,825 $1,244,221 $ 942,690 $ 394,896 $ 130,346
Net expenses to average
net assets#............. 0.97% 0.99% 0.99% 1.10% 1.19%
Gross expenses to average
net assets#............. 0.98% 1.00% 1.01% 1.12% 1.23%
Net investment income
(loss) to average net
assets.................. 2.64% 2.51% 2.77% 3.09% 2.92%
Portfolio turnover
rate@................... 218% 211% 203% 146% 286%
</TABLE>
* Distributions in excess of net investment income for the years ended December
31, 1999 and 1998 aggregated less than $0.01 on a per share basis.
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
SEE NOTES TO FINANCIAL STATEMENTS.
76
<PAGE>
<TABLE>
<CAPTION>
DISCOVERY FUND--CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period....................... $ 24.37 $ 23.45 $ 24.22 $ 21.70 $ 19.88
Income from investment
operations:
Net investment income
(loss).................. (0.08) (0.07) 0.07 (0.20) (0.12)
Net gains (losses) on
securities (both
realized and
unrealized)............. 22.72 3.15 2.69 4.72 6.29
--------- --------- --------- --------- ---------
Total from investment
operations.............. 22.64 3.08 2.76 4.52 6.17
Less distributions:
From net investment
income.................. 0.00 0.00 0.00 0.00 0.00
From net realized gains... (6.15) (2.16) (3.53) (2.00) (4.35)
--------- --------- --------- --------- ---------
Total distributions..... (6.15) (2.16) (3.53) (2.00) (4.35)
Net Asset Value, end of
period...................... $ 40.86 $ 24.37 $ 23.45 $ 24.22 $ 21.70
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. 94.59% 14.19% 12.00% 21.20% 31.30%
Net assets, end of period
(000s).................. $ 806,152 $ 241,124 $ 246,281 $ 247,494 $ 216,623
Net expenses to average
net assets#............. 1.45% 1.55% 1.52% 1.58% 1.58%
Gross expenses to average
net assets#............. 1.46% 1.57% 1.54% 1.59% 1.63%
Net investment income
(loss) to average net
assets.................. (0.96%) (0.91%) (0.55%) (0.85%) (0.60%)
Portfolio turnover
rate@................... 157% 121% 90% 106% 118%
</TABLE>
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
77
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND--CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period...................... $ 9.74 $ 9.28 $ 9.04 $ 9.29 $ 8.78
Income from investment
operations:
Net investment income
(loss).................. 0.42 0.43 0.45 0.46 0.45
Net gains (losses) on
securities (both
realized and
unrealized)............. (0.78) 0.46 0.24 (0.25) 0.51
--------- --------- --------- --------- ---------
Total from investment
operations.......... (0.36) 0.89 0.69 0.21 0.96
Less distributions:
From net investment
income.................... (0.42) (0.43) (0.45) (0.46) (0.45)
From net realized gains..... 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions... (0.42) (0.43) (0.45) (0.46) (0.45)
Net Asset Value, end of
period........................ $ 8.96 $ 9.74 $ 9.28 $ 9.04 $ 9.29
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. (3.77%) 9.76% 7.90% 2.34% 11.10%
Net assets, end of period
(000s).................. $ 13,276 $ 15,220 $ 13,259 $ 15,190 $ 20,263
Net expenses to average
net assets#,+........... 1.31% 1.25% 1.26% 1.26% 1.30%
Gross expenses to average
net assets#,+........... 1.35% 1.28% 1.31% 1.29% 1.30%
Net investment income
(loss) to average net
assets+................. 4.47% 4.46% 4.99% 5.06% 4.92%
Portfolio turnover
rate@................... 127% 90% 147% 166% 141%
</TABLE>
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
+ Certain fees were waived by the management company. Had these fees not been
waived, the net expense ratios would have been 1.49% (1999), 1.46% (1998),
1.44% (1997) and 1.46% (1996). The gross expense ratios would have been 1.53%
(1999), 1.49% (1998), 1.49% (1997) and 1.49% (1996). The net investment
income ratios would have been 4.29% (1999), 4.25% (1998), 4.81% (1997) and
4.86% (1996).
@ 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.
SEE NOTES TO FINANCIAL STATEMENTS.
78
<PAGE>
Per Share Income and Capital Changes
Selected data for each share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
GROWTH FUND--CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period...................... $ 20.41 $ 17.28 $ 15.87 $ 14.77 $ 11.63
Income from investment
operations:
Net investment income
(loss).................. (0.09) 0.01 0.07 0.02 0.02
Net gains (losses) on
securities (both
realized and
unrealized)............. 7.73 4.26 4.09 2.40 5.27
--------- --------- --------- --------- ---------
Total from investment
operations............ 7.64 4.27 4.16 2.42 5.29
Less distributions:
From net investment
income*................. 0.00 (0.01) (0.07) (0.02) (0.02)
From net realized gains... (4.18) (1.13) (2.68) (1.30) (2.13)
--------- --------- --------- --------- ---------
Total distributions..... (4.18) (1.14) (2.75) (1.32) (2.15)
Net Asset Value, end of
period...................... $ 23.87 $ 20.41 $ 17.28 $ 15.87 $ 14.77
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. 39.06% 25.04% 26.60% 16.57% 45.59%
Net assets, end of period
(000s).................. $3,323,606 $2,360,180 $1,757,449 $1,118,323 $ 655,927
Net expenses to average
net assets#............. 1.08% 1.08% 1.10% 1.19% 1.24%
Gross expenses to average
net assets#............. 1.09% 1.10% 1.12% 1.20% 1.28%
Net investment income
(loss) to average net
assets.................. (0.47%) 0.05% 0.48% 0.15% 0.12%
Portfolio turnover
rate@................... 117% 143% 189% 134% 130%
</TABLE>
* Distributions in excess of net investment income for the year ended December
31, 1998 aggregated less than $0.01 on a per share basis.
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
79
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND--CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period........................ $ 7.32 $ 6.92 $ 7.23 $ 6.69 $ 6.16
Income from investment
operations:
Net investment income
(loss)........................ 0.00 0.71 0.13 0.09 0.09
Net gains (losses) on
securities (both realized and
unrealized)................... 1.06 0.51 1.25 1.52 1.70
--------- --------- --------- --------- ---------
Total from investment
operations.................... 1.06 1.22 1.38 1.61 1.79
Less distributions:
From net investment income*... 0.00 (0.11) (0.13) (0.09) (0.09)
From net realized gains....... (0.77) (0.77) (1.56) (0.98) (1.17)
--------- --------- --------- --------- ---------
Total distributions........... (0.77) (0.82) (1.69) (1.07) (1.26)
Net Asset Value, end of
period........................ $ 7.61 $ 7.32 $ 6.92 $ 7.23 $ 6.69
========= ========= ========= ========= =========
Total Return/Ratios
Total return.................. 15.03% 17.78% 19.40% 24.37% 29.06%
Net assets, end of period
(000s)........................ $ 535,035 $ 542,307 $ 543,168 $ 535,866 $ 375,200
Net expenses to average net
assets#....................... 1.12% 1.08% 1.09% 1.15% 1.17%
Gross expenses to average net
assets#....................... 1.13% 1.10% 1.11% 1.16% 1.22%
Net investment income (loss)
to average net assets......... (0.05%) 1.38% 1.84% 1.40% 1.19%
Portfolio turnover rate@...... 165% 259% 256% 195% 235%
</TABLE>
* Distributions in excess of net investment income for the year ended December
31, 1998 aggregated less than $0.01 on a per share basis.
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
SEE NOTES TO FINANCIAL STATEMENTS.
80
<PAGE>
Per Share Income and Capital Changes
Selected data for each share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND - CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995*
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period....................... $ 14.03 $ 12.05 $ 11.86 $ 10.00 $ 10.00
Income from investment
operations:
Net investment income
(loss).................. (0.05) 0.03 (0.01) (0.01) 0.00
Net gains (losses) on
securities (both
realized and
unrealized)............. 8.07 2.02 1.89 1.87 0.00
--------- --------- --------- --------- ---------
Total from investment
operations............ 8.02 2.05 1.88 1.86 0.00
Less distributions:
From net investment
income.................. 0.00 0.00 0.00 0.00 0.00
From net realized gains... (2.18) (0.07) (1.69) 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions... (2.18) (0.07) (1.69) 0.00 0.00
Net Asset Value, end of
period...................... $ 19.87 $ 14.03 $ 12.05 $ 11.86 $ 10.00
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. 58.71% 17.01% 16.10% 18.60% 0.00%
Net assets, end of period
(000s).................. $ 35,607 $ 18,938 $ 15,740 $ 10,119 $ 767
Net expenses to average
net assets#,+........... 1.80% 1.80% 1.85% 1.94% n/a
Gross expenses to average
net assets#,+........... 1.82% 1.83% 1.89% 2.00% n/a
Net investment income
(loss) to average net
assets+................. (0.36%) 0.02% (0.21%) (0.15%) n/a
Portfolio turnover
rate@................... 205% 148% 164% 71% n/a
</TABLE>
* Period December 29, 1995 (inception) to December 31, 1995.
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
+ Certain fees were reimbursed by the management company. Had these fees not
been reimbursed, the net expense ratios would have been 1.97% (1999), 1.89%
(1998), 2.01% (1997) and 2.46% (1996). The gross expense ratios would have
been 1.99% (1999), 1.92% (1998), 2.05% (1997) and 2.52% (1996). The net
investment income ratios would have been (0.53%) (1999), (0.07%) (1998),
(0.37%) (1997) and (0.67%) (1996).
@ 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.
81
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MID-CAP GROWTH FUND - CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period........................ $ 7.44 $ 7.72 $ 7.66 $ 7.05 $ 7.01
Income from investment
operations:
Net investment income
(loss)........................ (0.08) (0.03) 0.01 (0.02) 0.00
Net gains (losses) on
securities (both realized and
unrealized)................... 3.12 (0.11) 1.21 1.09 1.79
--------- --------- --------- --------- ---------
Total from investment
operations.................... 3.04 (0.14) 1.22 1.07 1.79
Less distributions:
From net investment income.... 0.00 0.00 0.00 0.00 0.00
From net realized gains....... (1.80) (0.14) (1.16) (0.46) (1.75)
--------- --------- --------- --------- ---------
Total distributions........... (1.80) (0.14) (1.16) (0.46) (1.75)
Net Asset Value, end of
period........................ $ 8.68 $ 7.44 $ 7.72 $ 7.66 $ 7.05
========= ========= ========= ========= =========
Total Return/Ratios
Total return.................. 42.27% (1.73%) 16.40% 15.33% 25.70%
Net assets, end of period
(000s)........................ $ 253,385 $ 252,855 $ 320,186 $ 363,835 $ 388,754
Net expenses to average net
assets#....................... 1.40% 1.33% 1.30% 1.34% 1.29%
Gross expenses to average net
assets#....................... 1.42% 1.35% 1.32% 1.36% 1.35%
Net investment income (loss)
to average net assets......... (0.98%) (0.39%) (0.05%) (0.28%) 0.00%
Portfolio turnover rate@...... 186% 152% 110% 186% 263%
</TABLE>
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
SEE NOTES TO FINANCIAL STATEMENTS.
82
<PAGE>
Per Share Income and Capital Changes
Selected data for each share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
MONEY MARKET FUND - CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income
(loss).................. 0.04 0.05 0.05 0.05 0.05
Net gains (losses) on
securities (both
realized and
unrealized)............. 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total from investment
operations.......... 0.04 0.05 0.05 0.05 0.05
Less distributions:
From net investment
income.................. (0.04) (0.05) (0.05) (0.05) (0.05)
From net realized gains... 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions... (0.04) (0.05) (0.05) (0.05) (0.05)
Net Asset Value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. 4.35% 4.67% 4.70% 4.51% 5.10%
Net assets, end of period
(000s).................. $ 92,866 $ 91,415 $ 106,073 $ 109,866 $ 125,646
Net expenses to average
net assets#............. 0.89% 0.85% 0.82% 0.86% 0.89%
Gross expenses to average
net assets#............. 0.91% 0.87% 0.84% 0.88% 0.89%
Net investment income
(loss) to average net
assets.................. 4.30% 4.67% 4.77% 4.58% 5.11%
</TABLE>
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
83
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PASSPORT FUND - CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period....................... $ 14.93 $ 13.64 $ 13.91 $ 11.68 $ 9.42
Income from investment
operations:
Net investment income
(loss).................. (0.11) 0.00 0.02 0.04 0.04
Net gains (losses) on
securities (both
realized and
unrealized)............. 12.94 1.68 0.22 2.30 2.26
--------- --------- --------- --------- ---------
12.83 1.68 0.24 2.34 2.30
Less distributions:
From net investment
income.................. 0.00 (0.01) (0.03) (0.02) (0.04)
From net realized gains... (4.83) (0.38) (0.48) (0.09) 0.00
--------- --------- --------- --------- ---------
(4.83) (0.39) (0.51) (0.11) (0.04)
Net Asset Value, end of
period........................ $ 22.93 $ 14.93 $ 13.64 $ 13.91 $ 11.68
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. 87.44% 12.50% 1.70% 20.05% 24.39%
Net assets, end of period
(000s).................. $ 261,437 $ 124,572 $ 122,646 $ 177,921 $ 49,922
Net expenses to average
net assets#............. 1.63% 1.52% 1.53% 1.57% 1.76%
Gross expenses to average
net assets#............. 1.64% 1.54% 1.55% 1.59% 1.84%
Net investment income
(loss) to average net
assets.................. (0.91%) 0.09% 0.20% 0.40% 0.60%
Portfolio turnover
rate@................... 330% 34% 51% 58% 37%
</TABLE>
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
SEE NOTES TO FINANCIAL STATEMENTS.
84
<PAGE>
<TABLE>
<CAPTION>
WORLDWIDE GROWTH FUND - CLASS F
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period....................... $ 22.06 $ 21.11 $ 21.79 $ 19.87 $ 17.09
Income from investment
operations:
Net investment income
(loss).................. (0.06) 0.08 0.02 0.10 0.09
Net gains (losses) on
securities (both
realized and
unrealized)............. 10.11 1.90 2.22 2.64 3.43
--------- --------- --------- --------- ---------
10.05 1.98 2.24 2.74 3.52
Less distributions:
From net investment
income*................. 0.00 (0.09) (0.04) (0.07) (0.09)
From net realized gains... (6.94) (0.94) (2.88) (0.75) (0.65)
--------- --------- --------- --------- ---------
(6.94) (1.03) (2.92) (0.82) (0.74)
Net Asset Value, end of
period...................... $ 25.17 $ 22.06 $ 21.11 $ 21.79 $ 19.87
========= ========= ========= ========= =========
Total Return/Ratios
Total return.............. 48.78% 9.63% 10.60% 13.95% 20.63%
Net assets, end of period
(000s).................. $ 284,839 $ 272,053 $ 308,877 $ 342,079 $ 228,595
Net expenses to average
net assets#............. 1.53% 1.47% 1.45% 1.53% 1.56%
Gross expenses to average
net assets#............. 1.55% 1.49% 1.47% 1.55% 1.65%
Net investment income
(loss) to average net
assets.................. (0.27%) 0.33% 0.18% 0.50% 0.61%
Portfolio turnover
rate@................... 157% 86% 82% 72% 54%
</TABLE>
* Distributions in excess of net investment income for the year ended December
31, 1998 aggregated less than $0.01 on a per share basis.
# Ratio of Net Expenses to Average Net Assets reflects reductions in a Fund's
expenses through the use of brokerage commissions and custodial and transfer
agent credits. Ratio of Gross Expenses to Average Net Assets is the total of
a Fund's operating expenses before expense offset arrangements and earnings
credits divided by its average net assets for the stated period.
@ 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.
85
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Dreyfus Founders Funds, Inc. (the "Company") is an open-end management
investment company registered under the Investment Company Act of 1940. Eleven
series of shares are currently issued: Balanced, Discovery, Focus, Government
Securities, Growth, Growth and Income (formerly Blue Chip), International
Equity, Mid-Cap Growth (formerly Special), Money Market, Passport, and Worldwide
Growth Funds (individually a "Fund"). All of the Company's series Funds, with
the exception of Focus Fund, are diversified portfolios. The Company's board of
directors approved, effective December 31, 1999, a change of the Company's name
from "Founders Funds, Inc." to "Dreyfus Founders Funds, Inc." as well as the
Funds' name from "Founders" to "Dreyfus Founders," coinciding with the
Fund's implementing a multiple class structure. Premier Mutual Fund Services,
Inc. (the "Distributor") is the distributor of the Funds' shares. Balanced,
Discovery, Focus, Growth, Growth and Income, International Equity, Mid-Cap
Growth, Passport, and Worldwide Growth Funds offer Class A, Class B, Class C,
Class F, Class R, and Class T shares. Effective December 30, 1999, MBC
Investment Corporation, an affiliate of the investment adviser, invested $1,000
of initial seed capital in each of the Class A, Class B, Class C, Class R, and
Class T shares of each of the Balanced, Discovery, Growth, Growth and Income,
International Equity, Mid-Cap Growth, Passport, and Worldwide Growth Funds,
which investments are not reflected in the financial statements. Focus Fund
commenced investment operations on December 31, 1999. Effective December 30,
1999, MBC Investment Corporation invested $2.0 million of initial seed capital
apportioned among Class A, Class B, Class C, Class F, Class R, and Class T
shares of Focus Fund.
Government Securities and Money Market Funds offer Class F shares. Class A and
Class T shares are subject to a sales charge imposed at the time of purchase,
Class B shares are subject to a contingent deferred sales charge ("CDSC")
imposed on Class B share redemptions made within six years of purchase, Class C
shares are subject to a CDSC imposed on Class C shares redeemed within one year
of purchase, and Class F and Class R shares are sold at net asset value per
share (with Class R shares sold only to eligible institutional investors). Other
differences between the classes include services offered to and the expenses
borne by each class. The following significant accounting policies have been
consistently followed by the Funds in the preparation of their financial
statements.
SECURITIES VALUATION--With the exception of Money Market Fund, market value of
investments is determined from closing quotations on national security exchanges
or at the last current bid price in the case of securities traded
over-the-counter or by quotes from dealers making a market for securities not
listed on an exchange or traded over-the-counter. 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 market quotations are not readily available,
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. London closing quotes for exchange rates are used to convert
foreign security values into U.S. dollars. Short-term securities, with
maturities of less than 60 days, and all securities held by Money Market Fund,
are valued at amortized cost, which approximates market.
86
<PAGE>
FOREIGN SECURITIES--Foreign securities may carry more risk than U.S.
securities, such as political, market, and currency risks. All of the Funds may
invest at least a portion of their assets in foreign securities. In the event
that a Fund executes a foreign security transaction, the Fund will enter into a
foreign currency contract to settle the foreign security transaction. The
resultant foreign currency gain or loss from the contract is recorded as foreign
currency gain or loss and is presented as such in the Statements of Operations.
Foreign currency held at December 31, 1999 for settling foreign trades is listed
on the Statements of Assets and Liabilities.
FEDERAL INCOME TAXES--No provision has been made for federal income taxes
since it is the policy of the Funds to comply with the special provisions of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies, and to make distributions of income and capital gains sufficient to
relieve it from all income taxes. Each Fund is treated as a separate tax entity
for federal income tax purposes.
INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date.
Certain dividends from foreign securities will be recorded as soon as the Fund
is informed of the dividend if such information is obtained subsequent to the
ex-dividend date. Interest income is accrued daily and includes the accretion of
discounts and the amortization of premiums.
DISTRIBUTIONS TO SHAREHOLDERS--For Government Securities and Money Market
Funds, distributions are declared daily and paid monthly from net investment
income, and capital gains (if any) are distributed annually. For Balanced Fund,
distributions from income are declared and distributed quarterly and capital
gains (if any) are distributed annually. All other Funds declare and distribute
dividends and capital gains (if any) annually. All distributions are recorded on
the ex-dividend date.
EXPENSES--Each Fund or Class bears expenses incurred specifically on its
behalf and, in addition, each Fund or Class bears a portion of general expenses
based on the relative net assets, or number of shareholder accounts of each Fund
or Class. The type of expense determines the allocation method.
ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
OTHER--Security transactions are recorded on the date the securities are
purchased or sold (trade date).
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
In accordance with the investment advisory agreements between the Funds and
Founders Asset Management LLC ("Founders"), the Funds compensate Founders for
its services as investment adviser by the payment of fees computed daily and
paid monthly at the annual rate equal to a percentage of the average daily value
of the Funds' net assets. For Balanced and Growth and Income Funds, the fee is
0.65% of the first $250 million of net assets, 0.60% of the next $250 million of
net assets, 0.55% of the next $250 million of net assets and 0.50% of net assets
in excess of $750 million. For Discovery, International Equity, Passport, and
Worldwide Growth Funds, the fee is 1% of the first $250 million of net assets,
0.80% of the next $250 million of net assets, and 0.70% of net assets in excess
of $500 million. For Focus Fund, the fee is 0.85% of the first $250 million of
net assets, 0.80% of the next $250 million of net assets, and 0.75% of net
assets in excess of $500 million. For Government Securities Fund, the fee is
0.65% of the first $250 million of net assets, and 0.50% of the net assets in
excess of $250 million. For Growth and Mid-Cap Growth Funds, the fee is 1% of
the first $30 million of net assets, 0.75% of the next $270 million of net
assets, 0.70% of the next $200 million of net assets, and 0.65% of net assets in
excess of $500 million. For Money Market Fund, the fee is 0.50% of the first
$250 million of net assets, 0.45% of the next $250 million of net assets, 0.40%
of the next $250 million
87
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of net assets, and 0.35% of the net assets in excess of $750 million.
Founders has agreed to limit the total expenses of Focus Fund so that "Net
expenses to average net assets" will not exceed 1.50% for Class A and Class F
shares, 2.25% for Class B and Class C shares, 1.25% for Class R shares, and
1.75% for Class T shares. Founders has also agreed to limit the total expenses
of International Equity Fund so that "Net expenses to average net assets" will
not exceed 1.80% for Class A and Class F shares, 2.55% for Class B and Class C
shares, 1.55% for Class R shares, and 2.05% for Class T shares. For the year
ended December 31, 1999, $40,853 was reimbursed to the International Equity
Fund.
Investors Fiduciary Trust Company ("IFTC") is the designated transfer and
dividend disbursing agent for the Class F shares of each Fund. With the
exception of out-of-pocket charges, the fees charged by IFTC are paid by
Founders. The out-of-pocket charges from IFTC are paid by the Funds. IFTC also
serves as custodian for the Funds. The fees for the custody services are subject
to reduction by credits earned on the cash balances of the Funds held by IFTC as
custodian. Dreyfus Transfer, Inc. is the designated transfer and dividend
disbursing agent for Class A, Class B, Class C, Class R, and Class T shares of
Balanced, Discovery, Focus, Growth, Growth and Income, International Equity,
Mid-Cap, Passport, and Worldwide Growth Funds.
The Funds have agreed to compensate Founders for providing certain shareholder
servicing functions to holders of Class F shares in addition to those currently
provided by IFTC. The Funds paid Founders a monthly fee equal on an annual basis
to $26.00 per Class F shareholder account of the Funds considered to be an open
account at any time during a given month.
The Funds have also agreed to compensate Founders for providing accounting
services, administration, compliance monitoring, regulatory and shareholder
reporting, as well as facilities, equipment and clerical help as shall be
necessary to provide these services to the Funds. The fee is computed at the
annual rate of 0.06% of the average daily net assets of the Funds from $0 to
$500 million and 0.02% of the net assets of the Funds in excess of $500 million.
The fee so computed is allocated to each Fund on a pro rata basis based on
relative average daily net assets.
Balanced, Discovery, Focus, Government Securities, Growth, Growth and Income,
International Equity, Mid-Cap Growth, Passport, and Worldwide Growth Funds each
have adopted a Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940 applicable to their Class F shares. Under the plan, each
Fund is authorized to reimburse the Distributor for expenses paid for
distributing its Class F shares at an annual rate of up to 0.25% of the value of
the average daily net assets of the Fund's Class F shares. During the year,
Founders elected not to collect the full 0.25% from the Government Securities
Fund and waived $26,476, which resulted in the Fund paying 0.07% under the plan.
Balanced, Discovery, Focus, Growth, Growth and Income, International Equity,
Mid-Cap Growth, Passport, and Worldwide Growth Funds also each have adopted a
Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of
1940 applicable to their Class B, Class C, and Class T shares. Under the plan,
Class B and Class C shares pay the Distributor for distributing their shares at
an annual rate of 0.75% of the value of the average daily net assets of Class B
and Class C shares and 0.25% of the average daily net assets of Class T shares.
These Funds also have adopted a Shareholder Services Plan applicable to their
Class A, Class B, Class C, and Class T shares. Under the Shareholder Services
Plan, Class A, Class B, Class C, and Class T shares pay the Distributor at an
annual rate of 0.25% of the value
88
<PAGE>
of their average daily net assets for the provision of certain services.
Certain shareholders of the Funds are also officers and/or directors of
Founders.
Founders serves as investment adviser to each of the Funds. Founders is a
majority-owned subsidiary of Mellon Bank, N.A., with a minority interest held by
certain Founders executives and portfolio managers. Mellon Bank, N.A. is a
wholly-owned subsidiary of Mellon Financial Corporation, a publicly-owned
multibank holding company which provides a comprehensive range of financial
products and services in domestic and selected international markets. The
affairs of the Funds, including services provided by Founders, are subject to
the supervision and general oversight of the Funds' board of directors.
3. FEDERAL INCOME TAXES
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales, foreign currency
transactions, net operating losses and capital loss carryforwards. Permanent
items identified in the period ended December 31, 1999 have been reclassified
among the components of net assets as follows:
<TABLE>
<CAPTION>
UNDISTRIBUTED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAINS AND PAID-IN
INCOME LOSSES CAPITAL
-------------- ------------- --------
<S> <C> <C> <C>
Balanced Fund........................... $ 109,642 $ (19,349) $(90,293)
Discovery Fund.......................... 3,581,246 (3,547,043) (34,203)
Focus Fund.............................. 0 0 0
Government Securities Fund.............. 0 0 0
Growth Fund............................. 12,729,140 (12,750,894) 21,754
Growth and Income Fund.................. 243,734 (281,657) 37,923
International Equity Fund............... 82,655 (82,543) (112)
Mid-Cap Growth Fund..................... 2,094,671 (2,097,058) 2,387
Money Market Fund....................... 3,870 (1,869) (2,001)
Passport Fund........................... 1,175,785 (1,175,860) 75
Worldwide Growth Fund................... 659,499 (645,499) (14,000)
</TABLE>
89
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Net capital loss carryovers and post-October 31 capital losses noted below, if
any, as of December 31, 1999, are available to offset future realized capital
gains and thereby reduce future taxable gains distributions. Post-October 31
foreign currency losses noted below, if any, will offset future net investment
income and thereby reduce future ordinary income distributions. The capital loss
carryover for the Government Securities Fund expires in the years 2002 through
2004. Net capital loss carryovers utilized in 1999 by the Government Securities
Fund amounted to $12,749. The aggregate cost of investments and the composition
of unrealized appreciation and depreciation of investment securities for federal
income tax purposes as of December 31, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
NET POST- POST-
CAPITAL OCTOBER OCTOBER
LOSS CAPITAL CURRENCY FEDERAL NET
CARRY- LOSS LOSS TAX UNREALIZED UNREALIZED APPRECIATION/
OVERS DEFERRAL DEFERRAL COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
-------- -------- -------- --------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund........................... $ 0 $61,670 $ 0 $1,022,895 $ 49,484 $(20,267) $ 29,217
Discovery Fund.......................... 0 0 0 559,072 270,261 (13,219) 257,042
Focus Fund.............................. 0 0 0 3,906 19 (4) 15
Government Securities Fund.............. 3,016 46 0 13,886 20 (454) (434)
Growth Fund............................. 0 0 0 2,407,827 968,999 (52,519) 916,480
Growth and Income Fund.................. 0 0 0 430,054 122,800 (16,626) 106,174
International Equity Fund............... 0 0 0 25,858 9,957 (357) 9,600
Mid-Cap Growth Fund..................... 0 0 0 186,614 75,503 (5,142) 70,361
Money Market Fund....................... 5 10 0 97,000 0 0 0
Passport Fund........................... 0 0 68 219,192 65,938 (7,268) 58,670
Worldwide Growth Fund................... 0 0 0 206,813 78,371 (3,392) 74,979
</TABLE>
4. ACQUISITION OF FOUNDERS FRONTIER FUND
On August 13, 1999, Discovery Fund acquired all the net assets of Founders
Frontier Fund ("Frontier") pursuant to a plan of reorganization approved by
Frontier shareholders on August 9, 1999. The acquisition was accomplished by a
tax-free exchange of 4,485,462.830 shares of Discovery (valued at $141,740,944)
for the 6,877,122.864 shares of Frontier outstanding on August 13, 1999.
Frontier's net assets at that date ($141,740,944), including $28,912,612 of
unrealized appreciation, were combined with those of Discovery. The aggregate
net assets of Discovery and Frontier immediately before the acquisition were
$301,264,362 and $141,740,944, respectively.
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<PAGE>
5. FUND SHARE TRANSACTIONS
The Funds have authorized ten billion shares of $0.01 par value capital stock in
the aggregate to be apportioned among each Fund and their class(es) of shares.
Transactions in shares of the Funds for the periods indicated were as follows
(in thousands):
<TABLE>
<CAPTION>
ISSUED IN
CONNECTION
WITH
ACQUISITION REINVESTED NET INCREASE
SOLD (NOTE 4) DISTRIBUTIONS REDEEMED (DECREASE)
--------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balanced Fund-Class F:
Year ended 12/31/99................... 43,238 0 12,957 (57,397) (1,202)
Year ended 12/31/98................... 44,178 0 5,736 (30,911) 19,003
Discovery Fund-Class F:
Year ended 12/31/99................... 14,797 4,485 2,351 (11,794) 9,839
Year ended 12/31/98................... 7,262 0 744 8,614) (608)
Focus Fund
Period ended 12/31/99:
Class A............................. 60 0 0 0 60
Class B............................. 20 0 0 0 20
Class C............................. 20 0 0 0 20
Class F............................. 20 0 0 0 20
Class R............................. 20 0 0 0 20
Class T............................. 20 0 0 0 20
Government Securities Fund-Class F:
Year ended 12/31/99................... 2,323 0 63 (2,468) (82)
Year ended 12/31/98................... 2,146 0 59 (2,071) 134
Growth Fund-Class F:
Year ended 12/31/99................... 42,508 0 21,479 (40,444) 23,543
Year ended 12/31/98................... 43,696 0 6,112 (35,805) 14,003
Growth and Income Fund-Class F:
Year ended 12/31/99................... 3,714 0 6,125 (13,622) (3,783)
Year ended 12/31/98................... 10,345 0 6,757 (21,455) (4,353)
International Equity Fund-Class F:
Year ended 12/31/99................... 3,069 0 175 (2,803) 441
Year ended 12/31/98................... 1,136 0 6 (1,098) 44
Mid-Cap Growth Fund-Class F:
Year ended 12/31/99................... 12,996 0 5,094 (22,879) (4,789)
Year ended 12/31/98................... 12,202 0 624 (20,324) (7,498)
Money Market Fund-Class F:
Year ended 12/31/99................... 338,595 0 4,191 (341,335) 1,451
Year ended 12/31/98................... 235,921 0 4,960 (255,539) (14,658)
Passport Fund-Class F:
Year ended 12/31/99................... 16,115 0 1,841 (14,895) 3,061
Year ended 12/31/98................... 8,672 0 211 (9,533) (650)
Worldwide Growth Fund-Class F:
Year ended 12/31/99................... 8,847 0 2,643 (12,507) (1,017)
Year ended 12/31/98................... 6,762 0 550 (9,611) (2,299)
</TABLE>
91
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. LINE OF CREDIT
Discovery, Mid-Cap Growth, and Passport Funds have a Line of Credit Arrangement
("LOC") with State Street, to be used for extraordinary or emergency purposes,
primarily for financing redemption payments. For Discovery and Passport Funds,
borrowings will be limited to 10% of each Fund's net assets computed at the
lesser of cost or market value. Mid-Cap Growth Fund may borrow amounts up to 10%
of the market value of the net assets of the Fund. Combined borrowings will be
subject to the $50 million cap on the total LOC. Each Fund agrees to pay annual
fees and interest on the unpaid balance based on prevailing market rates as
defined in the LOC. At December 31, 1999 there were no such borrowings.
92
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Dreyfus Founders Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the portfolios constituting
Dreyfus Founders Funds, Inc. (formerly Founders Funds, Inc., hereafter referred
to as the Fund) at December 31, 1999, the results of each of their operations
for each of the periods indicated, the changes in each of their net assets for
each of the periods indicated and the financial highlights for each of the four
years in the period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and broker, provide a reasonable
basis for the opinion expressed above. The financial statements of the Fund for
the year ended December 31, 1995 were audited by other independent accountants
whose report dated January 26, 1996 expressed an unqualified opinion on those
statements.
PricewaterhouseCoopers LLP
Denver, Colorado
February 11, 2000
93
<PAGE>
OTHER INFORMATION (UNAUDITED)
CORPORATE DIVIDENDS RECEIVED DEDUCTION
Dividends paid by the Funds from net investment income and distributions of net
realized short-term capital gains are, for federal tax purposes, taxable as
ordinary income to shareholders. Of the ordinary income distributions declared
for the period ended December 31, 1999, the following amounts qualified for the
dividends received deduction available to the Funds' corporate shareholders:
Balanced Fund........................ 12.25%
Discovery Fund....................... 0.08%
Focus Fund........................... 0.00%
Growth Fund.......................... 11.40%
Growth and Income Fund............... 25.33%
International Equity Fund............ 0.00%
Mid-Cap Growth Fund.................. 0.62%
Passport Fund........................ 0.00%
Worldwide Growth Fund................ 1.51%
SHAREHOLDER VOTES
On August 3, 1999, a special meeting of the shareholders of Founders Frontier
Fund was held at which the shareholders voted on a Plan of Reorganization which
provided for: (a) the transfer of all of the assets of Founders Frontier Fund to
Founders Discovery Fund in exchange solely for shares of Discovery Fund and the
assumption by Discovery Fund of all the liabilities of Frontier Fund; (b) the
distribution of the Discovery Fund shares to the shareholders of Frontier Fund;
and (c) the subsequent termination of Frontier Fund. The votes necessary to
approve the Plan of Reorganization were obtained at an adjournment of the
special meeting held on August 9, 1999, at which the following votes were cast:
PERCENTAGE OF
OUTSTANDING
SHARES SHARES
-------- -------------
For..................................... 2,595,147 50.28%
Against................................. 114,061 2.21%
Abstain................................. 168,870 3.27%
94
<PAGE>
DREYFUS FOUNDERS FUNDS
THE GROWTH SPECIALISTS
Founders Asset Management LLC
2930 East Third Avenue
Denver, CO 80206-5002
1-800-525-2440
WWW.FOUNDERS.COM
FUND DIRECTORS
Jay A. Precourt, Chairman
Eugene H. Vaughan, Jr., Vice Chairman
Alan S. Danson
Joan D. Manley
Robert P. Mastrovita
Trygve E. Myhren
George W. Phillips
This report is authorized for distribution to prospective investors only if
preceded or accompanied by a current prospectus for Dreyfus Founders Funds,
Inc., which contains more complete information, including charges, expenses, and
share classes. Please read the prospectus carefully before you invest or send
money.
2000 Founders Asset Management LLC, Broker-Dealer. Premier Mutual Fund Services,
Inc., Distributor.
Date of first use: February 23, 2000
A-646-ANN
