SEPTEMBER 1, 2000
DREYFUS FOUNDERS FUNDS, INC.
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 2000
As of September 1, 2000, Eugene H. Vaughan, Jr. became Chairman of the Board of
Directors of Dreyfus Founders Funds, Inc. (the "Company"). Therefore, the
section of the Company's Statement of Additional Information entitled "Directors
and Officers - Directors" is hereby amended on page 30 to replace the
biographical information regarding Jay A. Precourt and Eugene H. Vaughan, Jr.
with the following:
NAME, ADDRESS POSITION(S) HELD PRINCIPAL OCCUPATION(S)
AND DATE OF BIRTH WITH FUND DURING PAST FIVE YEARS
--------------------------- ----------------------- --------------------------
EUGENE H. VAUGHAN, JR., CFA Chairman of the Board President and Chief
6300 Texas Commerce Tower and Director of the Executive Officer,
Houston, Texas 77002 Company 1,3 Vaughan, Nelson,
Born: October 5, 1933 Scarborough & McCullough,
L.P., an investment
counseling firm, Houston,
Texas. Founding Chairman
and Governor, Association
for Investment Management
and Research; Past
Chairman and Trustee,
Institute of Chartered
Financial Analysts; Past
Chairman and Director,
Financial Analysts
Federation; Trustee,
Vanderbilt University.
--------------------------- ----------------------- --------------------------
JAY A. PRECOURT Director of the Retired. Formerly (1988
328 Mill Creek Circle Company 2 to 1999), President, Chief
Vail, CO 81657 Executive Officer, Vice
Born: July 12, 1937 Chairman and Director,
Tejas Energy, L.L.C.,
Houston, Texas. Director,
Halliburton Company,
Dallas, Texas; Director,
The Timken Company,
Canton, Ohio. Until 1988,
President of the Energy
Related Group and
Director, Hamilton Oil
Corporation, Denver,
Colorado.
--------------------------- ----------------------- --------------------------
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Investment Integrity Committee
In addition, on September 1, 2000, Alan S. Danson, a director of the Company,
became a member of the Funds' Executive Committee.
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The section of the Company's Statement of Additional Information entitled
"Directors and Officers - Committees" is hereby amended on page 33 by replacing
the second sentence of the first paragraph with the following:
The Company also has a Committee on Directors, composed of all of the
non-interested ("independent") directors and chaired by Mr. Vaughan, which
serves as a nominating committee.
The section of the Company's Statement of Additional Information entitled
"Directors and Officers - Officers" is hereby amended on page 36 by deleting the
information regarding Brian C. Szilagyi, who is no longer associated with
Founders, and to add the following information concerning a new officer of the
Company elected in August 2000:
NAME, ADDRESS POSITION(S) HELD PRINCIPAL OCCUPATION(S)
AND DATE OF BIRTH WITH FUND DURING PAST FIVE YEARS
--------------------------- ----------------------- --------------------------
Robert T. Kelly Assistant Treasurer Founders' Vice President
2930 East Third Avenue of Portfolio Accounting
Denver, Colorado 80206 since July 2000.
Born: July 24, 1969 Formerly, Head of Equity
Desk for ABN Amro Trust
Company (Cayman) Limited
(February 1998 to July
2000); Assistant Vice
President - Accounting
Manager for PFPC
International Ltd. (August
1996 to December 1997);
Fund Controller (April
1996 to August 1996),
Manager, Banking
Operations (October 1994
to April 1996) for
OppenheimerFunds, Inc.
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The section of the Company's Statement of Additional Information entitled
"Investment Adviser, Distributor and Other Service Providers - Investment
Adviser" is hereby amended on page 40 by replacing the last paragraph on that
page with the following:
Founders and its predecessor companies have been providing investment
management services since 1938. In addition to serving as adviser to the
Funds, Founders serves as investment adviser or sub-adviser to various
other mutual funds and private accounts. The officers of Founders include
Christopher M. Condron, Chairman; Richard W. Sabo, President and Chief
Executive Officer; Robert T. Ammann, Vice President; Curtis J. Anderson,
Vice President; Thomas M. Arrington, Vice President; Marissa A. Banuelos,
Vice President; Angelo Barr, Senior Vice President and National Sales
Manager; Scott A. Chapman, Vice President; Kenneth R. Christoffersen,
Senior Vice President, General Counsel and Secretary; Gregory P. Contillo,
Executive Vice President and Chief Marketing Officer; Julie D. DiIorio,
Vice President; Francis P. Gaffney, Senior Vice President; Laurine M.
Garrity, Senior Vice President; Robert T. Kelly, Vice President; Douglas A.
Loeffler, Vice President; Andra C. Ozols, Vice President; David L. Ray,
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Senior Vice President and Treasurer; Richard A. Sampson, Vice President;
Kevin S. Sonnett, Vice President; Tracy P. Stouffer, Vice President; and
Lisa G. Warshafsky, Vice President. The affiliations of Messrs. Sabo, Ray,
Christoffersen, Gaffney and Kelly and Ms. Ozols with the Company are shown
under the "Directors and Officers" section of this SAI.
The section of the Company's Statement of Additional Information entitled
"Redemption of Shares - Redemption Commitment" is hereby amended on page 58 to
read as follows:
REDEMPTION COMMITMENT; REDEMPTIONS IN KIND. Each Fund has committed
itself to pay in cash all redemption requests by any shareholder of
record, limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the value of the Fund's net assets at the beginning of
such period. Such commitment is irrevocable without the prior approval of
the Securities and Exchange Commission. In the case of requests for
redemption in excess of such amount from any Fund other than Money Market
Fund, the Board of Directors reserves the right to make payments in whole
or in part in securities or other assets of the Fund in case of an
emergency or any time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders. In addition, the
Board of Directors has adopted "Investment Company Act Section 17(a)
Affiliate Redemption in Kind Conditions and Procedures." Under these
procedures, a Fund may satisfy redemption requests from a shareholder who
may be deemed to be an affiliated person of the Fund by means of an
in-kind distribution of the Fund's portfolio securities, subject to
certain conditions. In the event of any redemption in kind, the securities
distributed to the redeeming shareholder would be valued in the same
manner as the portfolio of the Fund. If the recipient sold such
securities, brokerage charges would be incurred.
The section of the Company's Statement of Additional Information entitled
"Additional Information - Code of Ethics" is hereby amended on page 86 by
replacing that section with the following:
Mellon Financial Corporation ("MFC"), the ultimate parent company of
Founders, has a comprehensive policy concerning personal securities
trading to which each of Founders' employees is subject. The procedures
established by this policy are intended to detect and prevent conflicts of
interest and activities prohibited by the federal securities laws.
Founders, its related persons and its other employees may, under certain
circumstances and consistent with the requirements of this policy,
purchase or sell securities for themselves that Founders also recommends
to clients.
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Founders, as an indirect subsidiary of MFC, is part of a diversified
financial services organization. While certain requirements of the policy
are generally applicable to all MFC employees, because responsibilities
vary among business areas, the policy imposes different requirements and
limitations on employees based on the nature of their business activities.
However, the purposes underlying these procedures are the same: preventing
an employee from placing his or her interests above those of any client
and avoiding even the appearance of impropriety. Portfolio managers and
analysts are subject to the most extensive procedures under this policy.
The provisions of the policy apply to transactions in an employee's own
name, as well as to transactions in all other accounts in which the
employee has a beneficial interest or which the employee may influence or
control. The principal elements of the policy applicable to Founders'
personnel are summarized below.
Founders' officers, Board of Managers members and employees who, in
the normal course of their job responsibilities, receive material
nonpublic information concerning Founders' trading in securities for the
accounts of others (collectively, "investment employees"), as well as
portfolio managers and analysts, are generally required to obtain prior
written authorization for all personal securities transactions from
designated pre-clearance officers. Such approval expires by the close of
business on the next day. Prior approval is not required for transactions
in shares in U.S. government securities, shares of open end investment
companies, non-affiliated closed end investment companies, municipal
bonds, index securities, and certain other securities which are not deemed
to present any potential conflict of interest. Additionally, prior
authorization is not required for securities transactions over which an
employee has no direct or indirect control over the investment decision
making process.
Pre-clearance officers consult a "restricted list" to determine
whether or not to grant trading authorization. In general, employees will
not be given clearance to trade in any security that is on the restricted
list or for which there is a pending buy or sell order. This provision
does not apply to certain de minimis transactions, as defined in the
policy.
Certain types of trading strategies are discouraged under the
policy. For example, portfolio managers, analysts and investment employees
are prohibited from engaging in short-term trading, which is defined under
the policy as any purchasing and selling, or selling and purchasing, the
same or equivalent securities within a sixty (60) calendar day period.
Profits derived from short-term trading must be surrendered. Furthermore,
portfolio managers generally are prohibited from buying or selling a
security within seven calendar days before or after any of their managed
accounts trade in the security. All employees are prohibited from
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investing in initial public offerings without prior approval, which is
granted in only very limited circumstances.
Portfolio managers, analysts and investment employees are required
to report their personal holdings of non-exempt securities, and to have
duplicate copies of confirmations and statements for their brokerage
accounts sent to Founders' compliance department. Transactions which are
not completed through brokerage accounts, such as inheritances, must be
reported within 10 days.
Founders, in conjunction with MFC, also has established an
Investment Ethics Committee having authority and oversight responsibility
with respect to personal securities trading by investment decision making
personnel (generally, portfolio managers and analysts) designated by the
Investment Ethics Committee as Access Decision Makers ("ADMs"). The
Investment Ethics Committee has established practices that apply to ADMs,
in addition to the standards set by the securities trading policy. These
practices: (i) prohibit Founders' ADMs from acquiring in a private
placement any security of any issuer in which any of Founders' managed
funds or accounts is authorized to invest; (ii) prohibit certain
designated ADMs from voluntarily acquiring securities of an issuer with a
common equity market capitalization of $100 million or less without prior
written approval from the Investment Ethics Committee; (iii) require ADMs
to report on a quarterly basis (a) personal holdings and transactions in
securities that were also recommended for a transaction or held in a
portfolio managed by the ADM during the quarter; (b) private placement
holdings; (c) personal holdings in securities of an issuer with common
equity market capitalization of $250 million or less; and (d) securities
held outside of brokerage accounts. Subject to certain exceptions, ADMs
are also required to disclose contemporaneously their personal interest in
certain securities prior to making or acting upon a portfolio
recommendation in the same or equivalent security.
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