File No. 33-13690
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 13 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 13 [ X ]
(Check appropriate box or boxes.)
DREYFUS VARIABLE INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on May 1, 1995 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the fiscal
year ended December 31, 1994 was filed on February 24, 1995.
DREYFUS VARIABLE INVESTMENT FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 4
3 Condensed Financial Information 4
4 General Description of Registrant 10
5 Management of the Fund 40
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 46
7 Purchase of Securities Being Offered 43
8 Redemption or Repurchase 44
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-33
13 Investment Objectives and Policies B-2
14 Management of the Fund B-15
15 Control Persons and Principal B-19
Holders of Securities
16 Investment Advisory and Other B-20
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS VARIABLE INVESTMENT FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-30
18 Capital Stock and Other Securities B-33
19 Purchase, Redemption and Pricing B-25, 25, 26
of Securities Being Offered
20 Tax Status *
21 Underwriters B-25
22 Calculations of Performance Data B-31
23 Financial Statements B-43
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-14
30 Location of Accounts and Records C-17
31 Management Services C-17
32 Undertakings C-17
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus Variable Investment Fund
(LION LOGO)
PROSPECTUS MAY 1, 1995
- -----------------------------------------------------------------------------
Dreyfus Variable Investment Fund (the "Fund") is an open-end, management
investment company, known as a mutual fund, that is intended to be a funding
vehicle for variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies") offered through separate accounts of
various life insurance companies (the "Participating Insurance Companies").
The Fund permits investors to invest in eight separate portfolios (each, a
"Series"), although certain portfolios may not be available for investment
through certain VA contracts or VLI policies offered by certain Participating
Insurance Companies. A purchaser of a VA contract or VLI policy should refer
to the prospectus for his or her contract or policy for information as to
which portfolios of the Fund are available for investment through the
contract or policy. A general description of each Series is set forth on the
following page.
The Dreyfus Corporation serves as the Fund's investment adviser.
(Continued on next page)
This Prospectus sets forth concisely information about the Fund that an
investor should know before investing in a Series through a VA contract or
VLI policy offered by a Participating Insurance Company. It should be read
and retained for future reference.
The Statement of Additional Information, dated May 1, 1995, which may be
revised from time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to some investors.
It has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, write to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-554-4611. When telephoning, ask for Operator 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THE
MONEY MARKET PORTFOLIO'S YIELD AND EACH OTHER SERIES' SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE AND ARE NOT GUARANTEED.
- ----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ----------------------------------------------------------------------------
FUND SHARES ARE AVAILABLE EXCLUSIVELY AS A FUNDING VEHICLE FOR LIFE INSURANCE
COMPANIES ISSUING VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY
CONTRACTS. THIS PROSPECTUS SHOULD BE ACCOMPANIED BY A PROSPECTUS FOR SUCH
POLICIES OR CONTRACTS.
(Continued from cover page.)
The MONEY MARKET PORTFOLIO'S goal is to provide as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. This Series invests in short-term money market
instruments. AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE
MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
The MANAGED ASSETS PORTFOLIO'S goal is to maximize total return,
consisting of capital appreciation and current income. This Series invests in
a wide range of equity and debt securities and money market instruments.
The ZERO COUPON 2000 PORTFOLIO'S goal is to provide as high an investment
return as is consistent with the preservation of capital. This Series invests
primarily in debt obligations of the U.S. Treasury that have been stripped of
their unmatured interest coupons, interest coupons that have been stripped
from debt obligations issued by the U.S. Treasury, receipts and certificates
for such stripped debt obligations, and stripped coupons and zero coupon
securities issued by domestic corporations. This Series' assets will consist
primarily of portfolio securities which will mature on or about December 31,
2000.
The QUALITY BOND PORTFOLIO'S goal is to provide the maximum amount of
current income to the extent consistent with the preservation of capital and
the maintenance of liquidity. This Series invests principally in debt
obligations of corporations, the U.S. Government and its agencies and
instrumentalities and major banking institutions.
The SMALL CAP PORTFOLIO'S goal is to maximize capital appreciation. This
Series invests principally in common stocks. This Series will be particularly
alert to companies that The Dreyfus Corporation considers to be emerging
smaller-sized companies which are believed to be characterized by new or
innovative products, services or processes which should enhance prospects for
growth in future earnings.
The CAPITAL APPRECIATION PORTFOLIO'S primary goal is to provide long-term
capital growth consistent with the preservation of capital; current income is
a secondary goal. This Series invests primarily in the common stocks of
domestic and foreign issuers.
The GROWTH AND INCOME PORTFOLIO'S goal is to provide long-term capital
growth, current income and growth of income, consistent with reasonable
investment risk. This Series invests primarily in equity and debt securities
and money market instruments of domestic and foreign issuers.
The INTERNATIONAL EQUITY PORTFOLIO'S goal is to maximize capital
appreciation. This Series invests primarily in the equity securities of
foreign issuers located throughout the world.
Page 2
TABLE OF CONTENTS
Page
Condensed Financial Information........................... 4
Yield and Performance Information......................... 8
Description of the Fund................................... 10
Management of the Fund.................................... 40
How to Buy Fund Shares.................................... 43
How to Redeem Fund Shares................................. 44
Dividends, Distributions and Taxes........................ 45
General Information....................................... 46
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of beneficial interest outstanding, total investment return, ratios
to average net assets and other supplemental data for each period
indicated. This information has been derived from the Series' financial
statements. The total investment return information set forth below does
not reflect certain expenses charged the separate accounts or related
insurance policies by the Participating Insurance Companies, the
inclusion of which would reduce the Series' total investment return for
each period indicated.
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
__________________________________________________
YEAR ENDED DECEMBER 31,
____________________________________________________
PER SHARE DATA: 1990(1) 1991 1992 1993 1994
-------- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $1.0000 $1.0000 $1.0002 $1.0002 $1.0000
-------- ------- ------- -------- --------
INVESTMENT OPERATIONS:
Investment income-net................ .0244 .0583 .0407 .0323 .0431
Net realized gain on investments..... -- .0002 -- -- --
-------- ------ ------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS..... .0244 .0585 .0407 .0323 .0431
DISTRIBUTIONS:
Dividends from investment income-net... (.0244) (.0583) (.0407) (.0323) (.0429)
Dividends from net realized gain
on investments........................ -- -- -- (.0002) --
-------- ------- ------- -------- --------
TOTAL DISTRIBUTIONS.................. (.0244) (.0583) (.0407) (.0325) (.0429)
-------- ------- ------- -------- --------
Net asset value, end of year......... $1.0000 $1.0002 $1.0002 $1.0000 $1.0002
======== ======== ======= ======= =======
TOTAL INVESTMENT RETURN 7.27%(2) 5.99% 4.14% 3.29% 4.37%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .03%(2) -- -- -- --
Ratio of net investment income
to average net assets........ 7.18%(2) 5.78% 4.10% 3.23% 4.62%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.... 30.51%(2) 3.94% 4.25% 2.81% .88%
Net assets, end of year (000's Omitted) $ 741 $1,619 $790 $7,651 $34,728
- -----------------------------
(1)From August 31, 1990 (commencement of operations) to December 31, 1990.
(2)Annualized.
</TABLE>
Page 4
<TABLE>
<CAPTION>
MANAGED ASSETS PORTFOLIO
_________________________________________________
YEAR ENDED DECEMBER 31,
_________________________________________________
PER SHARE DATA: 1990(1) 1991 1992 1993 1994
-------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $10.00 $10.11 $10.76 $10.14 $12.92
------- ------- ------- ------ ------
INVESTMENT OPERATIONS:
Investment income-net................ .08 .41 .22 .20 .35
Net realized and unrealized gain
(loss) on investments............... .11 .66 (.11) 2.71 (.56)
------- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS..... .19 1.07 .11 2.91 (.21)
------- ------- ------- ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.... (.08) (.42) (.31) (.13) (.32)
Dividends in excess of investment
income-net............................. -- -- -- -- (.02)
Dividends from net realized gain
on investments........................ -- -- (.42) -- --
------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS.................. (.08) (.42) (.73) (.13) (.34)
------- ------- ------- ------ ------
Net asset value, end of year......... $10.11 $10.76 $10.14 $12.92 $12.37
======= ======= ====== ====== =======
TOTAL INVESTMENT RETURN 1.85%(2) 10.60% 1.07% 28.59% (1.56%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.... .34%(2) 1.00% .97% .27% .25%
Ratio of net investment income to
average net assets.................. 2.11%(2) 4.46% 1.88% 1.87% 3.54%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.... 8.82%(2) 2.83% 1.70% 2.25% .88%
Portfolio Turnover Rate.............. -_ 91.97% 118.78% 99.08% 25.96%
Net assets, end of year (000's Omitted)... $716 $2,179 $1,865 $7,957 $30,510
- -----------------------
(1)From August 31, 1990 (commencement of operations) to December 31, 1990.
(2)Not annualized.
</TABLE>
<TABLE>
<CAPTION>
ZERO COUPON 2000 PORTFOLIO
____________________________________________________
YEAR ENDED DECEMBER 31,
____________________________________________________
PER SHARE DATA: 1990(1) 1991 1992 1993 1994
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year. $10.00 $10.45 $11.64 $11.77 $12.57
------ ------ ------- ------- ------
INVESTMENT OPERATIONS:
Investment income-net.............. .22 .76 .83 .79 .69
Net realized and unrealized gain (loss)
on investments..................... .45 1.25 .15 .96 (1.18)
------ ------ ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS... .67 2.01 .98 1.75 (.49)
------ ------ ------- ------- ------
DISTRIBUTIONS:
Dividends from investment income-net.... (.22) (.76) (.84) (.78) (.68)
Dividends from net realized
gain on investments.............. -- (.06) (.01) (.17) (.01)
------ ------ ------- ------- ------
TOTAL DISTRIBUTIONS................ (.22) (.82) (.85) (.95) (.69)
------ ------ ------- ------- ------
Net asset value, end of year....... $10.45 $11.64 $11.77 $12.57 $11.39
======= ====== ======= ======= =======
TOTAL INVESTMENT RETURN 20.09%(2) 20.09% 8.87% 15.19% (3.91%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.... .70%(2) .72% .64% -- --
Ratio of net investment income to
average net assets............... 8.03%(2) 7.41% 7.15% 6.21% 6.04%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation... 81.13%(2) 5.04% 2.28% 2.43% 1.05%
Portfolio Turnover Rate............ -_ 42.82% 3.08% 106.35% -_
Net assets, end of year (000's Omitted)... $ 155 $1,296 $1,362 $5,696 $10,913
- -----------------------------
(1)From August 31, 1990 (commencement of operations) to December 31, 1990.
(2)Annualized.
</TABLE>
Page 5
<TABLE>
<CAPTION>
QUALITY BOND PORTFOLIO
_________________________________________________________
YEAR ENDED DECEMBER 31,
_________________________________________________________
PER SHARE DATA: 1990(1) 1991 1992 1993 1994
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $10.00 $10.01 $10.67 $10.94 $11.81
------ ------- ------ ------ -------
INVESTMENT OPERATIONS:
Investment income-net.............. .23 .70 .92 .76 .73
Net realized and unrealized gain (loss)
on investments..................... .01 .66 .30 .88 (1.27)
------ ------- ------ ------ -------
TOTAL FROM INVESTMENT OPERATIONS... .24 1.36 1.22 1.64 (.54)
------ ------- ------ ------ -------
DISTRIBUTIONS:
Dividends from investment income-net..... (.23) (.70) (.92) (.76) (.73)
Dividends from net realized
gain on investments................. -- -- (.03) (.01) (.01)
------ ------- ------ ------ -------
TOTAL DISTRIBUTIONS................ (.23) (.70) (.95) (.77) (.74)
------ ------- ------ ------ -------
Net asset value, end of year....... $10.01 $10.67 $10.94 $11.81 $10.53
====== ======= ======= ======= =======
TOTAL INVESTMENT RETURN 7.12%(2) 14.12% 12.09% 15.33% (4.59%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .15%(2) -- -- -- --
Ratio of net investment income to
average net assets......... 7.20%(2) 7.52% 8.54% 6.51% 7.03%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.... 137.05%(2) 13.13% 5.33% 3.51% 1.20%
Portfolio Turnover Rate............ -- -- 9.39% 110.62% 64.80%
Net assets, end of year (000's Omitted)..... $59 $410 $405 $4,706 $13,244
- --------------------
(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Annualized.
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
________________________________________________________
YEAR ENDED DECEMBER 31,
________________________________________________________
PER SHARE DATA: 1990(1) 1991 1992 1993 1994
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $10.00 $10.21 $20.60 $22.71 $34.45
------ ------- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net........... .21(2) .14(2) .18(2) .14 .17
Net realized and unrealized gain
on investments.................. -- 15.85(2) 13.10(2) 14.93 2.50
------ ------- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.... .21(2) 15.99 13.28(2) 15.07 2.67
------ ------- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net..... -- (.15) (.15) (.14) (.16)
Dividends in excess of
investment income-net......... -- -- -- (.01) --
Dividends from net realized
gain on investments........... -- (5.45) (11.02) (3.18) (.33)
Dividends in excess of net realized gain
on investments.................. -- -- -- -- (.11)
------ ------- ------ ------- ------
TOTAL DISTRIBUTIONS............. -- (5.60) (11.17) (3.33) (.60)
------ ------- ------ ------ ------
Net asset value, end of year.... $10.21 $20.60 $22.71 $34.45 $36.52
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN 2.10%(3) 159.73% 71.28% 68.31% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.. .34%(3) 1.16% .94% .25% .55%
Ratio of net investment income to
average net assets.............. 2.10%(3) .77% .76% .89% 1.18%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation... 84.84%(3) 3.64% 2.29% 1.79% .52%
Portfolio Turnover Rate......... -- 388.70% 358.27% 244.59% 106.00%
Net assets, end of year (000's Omitted).. $36 $1,554 $2,679 $18,337 $173,215
- -----------------
(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Based on average shares outstanding.
(3) Not annualized.
</TABLE>
Page 6
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO
_______________________________
YEAR ENDED DECEMBER 31,
_______________________________
PER SHARE DATA: 1993(1) 1994
-------- --------
<S> <C> <C>
Net asset value, beginning of year... $ 12.50 $ 13.27
--------- ---------
INVESTMENT OPERATIONS:
Investment income-net................ .08 .23
Net realized and unrealized gain
on investments....................... .76 .17
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS..... .84 .40
--------- ---------
DISTRIBUTIONS:
Dividends from investment income-net. (.07) (.23)
--------- ---------
Net asset value, end of year......... $ 13.27 $ 13.44
========= =========
TOTAL INVESTMENT RETURN 6.74%(2) 3.04%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .28%(2) .25%
Ratio of net investment income to
average net assets................... 1.89%(2) 2.99%
Decrease reflected in above expense
ratios due to undertakings by The Dreyfus Corporation.. 3.67%(2) .86%
Portfolio Turnover Rate............... .01%(2) .12%
Net assets, end of year (000's Omitted)... $ 3,770 $16,118
(1) From April 5, 1993 (commencement of operations) to December 31, 1993.
(2) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
_________________________________
FOR THE PERIOD MAY 2, 1994
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1994
_________________________________
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........... $ 12.50
-------
INVESTMENT OPERATIONS:
Investment income-net.......................... .28
Net realized and unrealized (loss)
on investments................................. (.43)
-------
TOTAL FROM INVESTMENT OPERATIONS............... (.15)
-------
DISTRIBUTIONS:
Dividends from investment income-net........... (.28)
Dividends from net realized gain on investments (.09)
-------
TOTAL DISTRIBUTIONS............................ (.37)
-------
Net asset value, end of period................. $ 11.98
=======
TOTAL INVESTMENT RETURN (1.22)%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........ .22%(1)
Ratio of net investment income to
average net assets............................. 2.25%(1)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation........ 1.28%(1)
Portfolio Turnover Rate........................ 237.09%(1)
Net assets, end of period (000's Omitted)...... $1,040
- ------------------
(1)Not annualized.
</TABLE>
<TABLE>
<CAPTION>
Page 7
INTERNATIONAL EQUITY PORTFOLIO
___________________________________
FOR THE PERIOD MAY 2, 1994
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1994
___________________________________
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........... $ 12.50
-------
INVESTMENT OPERATIONS:
Investment income-net.......................... .15
Net realized and unrealized (loss)
on investments and foreign currency transactions (.40)
-------
TOTAL FROM INVESTMENT OPERATIONS............... (.25)
-------
DISTRIBUTIONS:
Dividends from investment income-net........... (.14)
Dividends from net realized gain on investments (.09)
-------
TOTAL DISTRIBUTIONS............................ (.23)
____
Net asset value, end of period................. $ 12.02
=======
TOTAL INVESTMENT RETURN (2.00)%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........ .23%(1)
Ratio of net investment income to
average net assets............................. 1.11%(1)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation........ 1.70%(1)
Portfolio Turnover Rate........................ 16.75%(1)
Net assets, end of period (000's Omitted)...... $ 1,089
- -------------------
(1) Not annualized.
</TABLE>
Further information about each Series' performance is contained in
the Fund's annual report which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
YIELD AND PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO_From time to time, the Series will advertise
its yield and effective yield. It can be expected that these yields will
fluctuate substantially. Both yield figures are based on historical
earnings and are not intended to indicate future performance. The yield
of the Series refers to the income generated by an investment in the
Series over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in the Series is assumed
to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
CAPITAL APPRECIATION, INTERNATIONAL EQUITY, MANAGED ASSETS AND SMALL
CAP PORTFOLIOS_The Series may calculate performance on an average annual
total return or total return basis. Average annual total return is
calculated pursuant to a standardized formula which assumes that an
investment in the Series was purchased with an initial payment of $1,000
and that the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period.
Advertisements of the Series' performance will include the Series'
average annual total return for one, five and ten year periods, or for
shorter time periods depending upon the length of time during which the
Series has operated. Computations of average annual total return for
periods of less than one year represent an annualization of the Series'
actual total return for the applicable period.
Page 8
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value per share at the beginning of the period. Advertisements
may include the percentage rate of total return or may include the value
of a hypothetical investment at the end of the period, which assumes the
application of the percentage rate of total return.
GROWTH AND INCOME, QUALITY BOND AND ZERO COUPON 2000 PORTFOLIOS_For
purposes of advertising, performance may be calculated on several bases,
including current yield, average annual total return and/or total return.
Current yield refers to the Series' annualized net investment
income per share over a 30-day period, expressed as a percentage of the
net asset value per share at the end of the period. For purposes of
calculating current yield, the amount of net investment income per share
during that 30-day period, computed in accordance with regulatory
requirements, is compounded by assuming that it is reinvested at a
constant rate over a six-month period. An identical result is then
assumed to have occurred during a second six-month period which, when
added to the result for the first six months, provides an "annualized"
yield for an entire one-year period.
Average annual total return and total return for these Series
will be calculated as described above for the Capital Appreciation,
International Equity, Managed Assets and Small Cap Portfolios.
In addition, the Zero Coupon 2000 Portfolio will calculate on
each business day its anticipated growth rate, which is the annualized
rate of growth investors may expect from the time they purchase a share
until the Series' target date. The anticipated growth rate cannot be
guaranteed, as it involves certain assumptions about variable factors
such as reinvestment of dividends and distributions, the Series' expense
ratio and its portfolio composition. The rate will vary from day-to-day
due to changes in interest rates and other market factors affecting the
value of such Series' investments. Furthermore, differences in the price
changes of securities with different maturities can affect investment
return, as can the skill of the investment adviser in managing the
Series. Under certain circumstances, shareholder redemptions could also
affect anticipated growth rate. See "Description of the Fund_Investment
Considerations and Risks_Special Considerations Relating to Stripped
Securities."
APPLICABLE TO ALL SERIES_Performance will vary from time to time and
past results are not necessarily representative of future results.
Investors should remember that performance is a function of portfolio
management in selecting the type and quality of portfolio securities and
is affected by operating expenses. Yield and performance information,
such as that described above, may not provide a basis for comparison with
other investments or other investment companies using a different method
of calculating performance. Yield and performance information of any
Series should not be compared with other funds that offer their shares
directly to the public since the figures provided do not reflect charges
imposed by Participating Insurance Companies under their VA contracts or
VLI policies. The effective yield and total return for a Series should be
distinguished from the rate of return of a corresponding sub-account or
investment division of a separate account of a Participating Insurance
Company, which rate will reflect the deduction of additional charges,
including mortality and expense risk charges, and will therefore be
lower. Variable annuity contract holders and variable life insurance
policy holders should consult the prospectus for their contract or
policy.
Calculations of the Series' yield or performance information
may reflect absorbed expenses pursuant to any undertaking that may be in
effect. See "Management of the Fund."
Page 9
Comparative performance information may be used from time to
time in advertising a Series' shares, including data from Lipper
Analytical Services, Inc., IBC/Donoghue's Money Fund ReportRegistration
Mark, Money Magazine, Bank Rate Monitortrademark, N. Palm Beach, Fla.
33408, Standard & Poor's 500 Composite Stock Price Index, Standard &
Poor's MidCap 400 Index, Morgan Stanley Capital International World
Index, the Dow Jones Industrial Average, Morningstar, Inc., Value Line
Mutual Fund Survey and other industry publications.
DESCRIPTION OF THE FUND
GENERAL_The Fund is a series fund, which is a mutual fund divided
into separate portfolios (each, a "Series"). Each Series is treated as a
separate entity for certain matters under the Investment Company Act of
1940 and for other purposes, and a shareholder of one Series is not
deemed to be a shareholder of any other Series. The Fund is intended to
be a funding vehicle for variable annuity contracts ("VA contracts") and
variable life insurance policies ("VLI policies") to be offered by the
separate accounts of Participating Insurance Companies. The VA contracts
and the VLI policies are described in separate prospectuses issued by the
Participating Insurance Companies over which the Fund assumes no
responsibility. The Fund currently does not foresee any disadvantages to
the holders of VA contracts and VLI policies arising from the fact that
the interests of the holders of such contracts and policies may differ.
Nevertheless, the Fund's Trustees intend to monitor events in order to
identify any material conflicts which may arise and to determine what
action, if any, should be taken in response thereto. Resolution of an
irreconcilable conflict might result in the withdrawal of a substantial
amount of a Series' assets which could adversely affect such Series' net
asset value per share.
Individual VA contract holders and VLI policy holders are not
the "shareholders" of the Fund. Rather, the Participating Insurance
Companies and their separate accounts are the shareholders (the
"shareholders"), although such companies will pass through voting rights
to their VA contract holders and VLI policy holders. As described below,
for certain matters Fund shareholders vote together as a group; as to
others they vote separately by Series.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES_Each Series has a
different investment objective which it pursues through separate
investment policies, as described herein. The differences in objectives
and policies among the Series determine the types of portfolio securities
in which each Series invests, and can be expected to affect the degree of
risk to which each Series is subject and each Series' yield or return.
Each Series' investment objective cannot be changed without approval by
the holders of a majority (as defined in the Investment Company Act of
1940) of such Series' outstanding voting shares. There can be no
assurance that a Series' investment objective will be achieved. The types
of portfolio securities in which each Series may invest are described in
greater detail under "Portfolio Securities" below.
MONEY MARKET PORTFOLIO
The Money Market Portfolio is a diversified portfolio, the
goal of which is to provide as high a level of current income as is
consistent with the preservation of capital and the maintenance of
liquidity. The Series will invest in U.S. dollar denominated short-term
money market instruments, including securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, certificates of
deposit, time deposits, bankers' acceptances and other short-term
obligations issued by domestic banks, foreign branches of domestic banks,
foreign subsidiaries of domestic banks, and domestic and foreign branches
of foreign banks, repurchase agreements, and high quality domestic and
foreign commercial paper and other short-term corporate and bank
obligations, including those with floating and variable rates of interest,
issued by domestic and foreign corpora-
Page 10
tions. The Series will invest in U.S. dollar denominated obligations
issued or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities, including
obligations of supranational entities. The Series currently does not
intend to invest more than 20% of its assets in foreign securities.
Securities in which the Series will invest may not earn as high a level
of current income as long-term or lower quality securities which generally
have less liquidity, greater market risk and more fluctuation in market
value. From time to time, the Money Market Portfolio may engage in
portfolio securities lending to the extent of 331/3% of its total assets.
See "Investment Techniques_Lending Portfolio Securities." The Series also
may enter into reverse repurchase agreements. See "Investment
Techniques_Leverage Through Borrowing." During normal market conditions,
at least 25% of the Money Market Portfolio's assets will be invested in
bank obligations.
The Money Market Portfolio seeks to maintain a net asset value
of $1.00 per share for purchases and redemptions. To do so, the Series
uses the amortized cost method of valuing its securities pursuant to Rule
2a-7 under the Investment Company Act of 1940, certain requirements of
which are summarized below.
In accordance with Rule 2a-7, the Money Market Portfolio will
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of 13 months or
less and invest only in U.S. dollar denominated securities determined in
accordance with procedures established by the Board of Trustees to
present minimal credit risks and which are rated in one of the two
highest rating categories for debt obligations by at least two nationally
recognized statistical rating organizations (or one rating organization
if the instrument was rated by only one such organization) or, if
unrated, are of comparable quality as determined in accordance with
procedures established by the Board of Trustees. The nationally
recognized statistical rating organizations currently rating instruments
of the type the Money Market Portfolio may purchase are Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("Standard &
Poor's"), Duff & Phelps Credit Rating Co. ("Duff"), Fitch Investors
Service, Inc. ("Fitch"), IBCA Limited and IBCA Inc. and Thomson BankWatch,
Inc. and their rating criteria are described in the Appendix to the Fund's
Statement of Additional Information.
In addition, the Series will not invest more than 5% of its
total assets in the securities (including the securities collateralizing
a repurchase agreement) of, or subject to puts issued by, a single
issuer, except that (i) the Series may invest more than 5% of its total
assets in a single issuer for a period of up to three business days in
certain limited circumstances, (ii) the Series may invest in obligations
issued or guaranteed by the U.S. Government without any such limitation,
and (iii) the limitation with respect to puts does not apply to
unconditional puts if no more than 10% of the Series' total assets is
invested in securities issued or guaranteed by the issuer of the
unconditional put. Investments in rated securities not rated in the
highest category by at least two rating organizations (or one rating
organization if the instrument was rated by only one such organization),
and unrated securities not determined by the Board of Trustees to be
comparable to those rated in the highest category, will be limited to
5% of the Series' total assets, with the investment in any one such
issuer being limited to no more than the greater of 1% of the Series'
total assets or $1,000,000. As to each security, these percentages are
measured at the time the Series purchases the security. For further
information regarding the amortized cost method of valuing securities,
see "Determination of Net Asset Value" in the Fund's Statement of
Additional Information. There can be no assurance that the Money Market
Portfolio will be able to maintain a stable net asset value of $1.00 per
share.
Page 11
MANAGED ASSETS PORTFOLIO
The Managed Assets Portfolio is a diversified portfolio, the
goal of which is to maximize total return, consisting of capital
appreciation and current income. The Series follows an asset allocation
strategy that contemplates shifts, which may be frequent, among a wide
range of investments and market sectors. The Series will invest in equity
securities of domestic and foreign issuers, including common stocks,
preferred stocks, convertible securities and warrants; debt securities of
domestic and foreign issuers, including bonds, debentures and notes; and
domestic and foreign money market instruments. The Series may invest up
to 60% of the value of its total assets in the securities of foreign
issuers, including those issued in the form of American Depositary
Receipts and European Depositary Receipts. The Series may invest up to
20% of the value of its total net assets in securities of issuers
principally located in any one foreign country, except that the Series
may invest up to 35% of the value of its total net assets in securities of
issuers located in any one of the following foreign countries: Australia,
Canada, France, Japan, the United Kingdom or Germany. See "Portfolio
Securities _ American, European and Continental Depositary Receipts" and
"Investment Considerations and Risk _ Foreign Securities." The foregoing
is not a fundamental policy and may be changed at any time without
shareholder approval.
The Series will not be managed as a balanced portfolio and is
not required to maintain a portion of its investments in each of the
Series' permitted investment categories at all times. Thus, during the
course of a business cycle, for example, the Series may invest solely in
equity securities, debt securities or money market instruments, or in a
combination of these classes of investments. The asset allocation mix for
the Series will be determined at any given time in light of an assessment
of current economic conditions and investment opportunities. The asset
allocation mix selected will be a primary determinant of the Series'
investment performance.
The Series generally seeks to invest in securities determined
to offer above average potential for total return. In making this
determination, factors including price-earnings ratios, cash flow and the
relationship of asset value to market value of the securities will be
taken into account. The Series will be alert to companies engaged in
restructuring efforts, such as mergers, acquisitions and divestitures of
less profitable units.
The Series typically purchases a debt security if it is
believed that the yield and potential for capital appreciation of the
security are sufficiently attractive in light of the risks of ownership
of the security. In determining whether the Series should invest in
particular debt securities, the factors considered include: the price,
coupon and yield to maturity; assessment of the credit quality of the
issuer; the issuer's available cash flow and the related coverage ratios;
the property, if any, securing the obligation; and the terms of the debt
securities, including the subordination, default, sinking fund and early
redemption provisions. Ratings, if any, assigned to the securities by
Moody's or Standard & Poor's or other recognized rating agencies will be
considered. The Fund's judgment as to credit quality of a debt security
may differ, however, from that suggested by the ratings published by a
rating service. The Series may also invest in Stripped Treasury
Securities (as defined below).
The Managed Assets Portfolio is not subject to any limit on
the percentage of its assets that may be invested in debt securities
having a certain rating. Low-rated and unrated securities have special
risks relating to the ability of the Series to receive timely, or perhaps
ultimate, payment of principal and interest. They are considered to have
speculative characteristics and to be of poor quality; some obligations
in which the Series may invest, such as debt securities rated D by
Standard & Poor's, may be in default. See "Investment Considerations and
Risks_Lower Rated Securities" below.
Page 12
The Series generally invests in United States equity and debt
securities, including convertible securities, that are listed on
securities exchanges or traded in the over-the-counter market. Foreign
securities in which the Series may invest may be listed on foreign
securities exchanges or traded in the over-the-counter market. In
addition, to the extent permitted under the Investment Company Act of
1940, the Series may invest in securities issued by closed-end investment
companies which principally invest in securities of foreign issuers.
The Series also may purchase to a limited extent securities
representing the right to receive the capital appreciation above a
certain amount, and other securities representing the right to receive
dividends and all other attributes of beneficial ownership, in respect of
an entity's common stock or other similar instrument. These securities
typically are sold as shares in unit investment trusts. The percentage of
the Series' assets that may be invested in shares of unit investment
trusts is subject to the limitations set forth in the Investment Company
Act of 1940.
The money market instruments in which the Series may invest
include the same portfolio securities in which the Money Market Portfolio
may invest. The Managed Assets Portfolio may invest up to 100% of its
assets in money market instruments, but at no time will the Series'
investments in bank obligations, including time deposits, exceed 25% of
its assets.
The Managed Assets Portfolio may invest up to 15% of the value
of its total assets in securities that are illiquid and have not been
registered under the Securities Act of 1933, provided such investments
are consistent with the Series' investment objective. When purchasing
such unregistered securities, the Series will endeavor to obtain the
right to registration at the expense of the issuer. Generally, there will
be a lapse of time between the Series' decision to sell any such security
and the registration of the security permitting sale. During any such
period, the price of the securities will be subject to market
fluctuations.
In addition to usual investment practices, the Managed Assets
Portfolio may use speculative investment techniques such as
short-selling, foreign exchange transactions and options and futures
transactions. The use of these investment techniques, as well as lending
of portfolio securities, involves greater risk than that incurred by
funds with a similar objective which do not use such techniques. Using
these techniques may produce higher than normal portfolio turnover which
usually generates additional brokerage commissions and transaction costs.
The Managed Assets Portfolio's investment policies may result in a high
portfolio turnover rate. Portfolio turnover will not be a limiting factor
when making portfolio decisions. Investors should purchase shares only as
a supplement to an overall investment program and only if willing to
undertake the risks involved.
From time to time, the Managed Assets Portfolio may engage in
portfolio securities lending to the extent of 20% of its total assets.
See "Investment Techniques_Lending Portfolio Securities."
ZERO COUPON 2000 PORTFOLIO
The Zero Coupon 2000 Portfolio is a diversified portfolio, the
goal of which is to provide as high an investment return as is consistent
with the preservation of capital. The Zero Coupon 2000 Portfolio invests
in a portfolio consisting primarily (but currently not anticipated to be
in excess of 55% of the Series' assets) of debt obligations issued by the
U.S. Treasury that have been stripped of their unmatured interest
coupons, interest coupons that have been stripped from debt obligations
issued by the U.S. Treasury, and receipts and certificates for stripped
debt obligations and stripped coupons, including U.S. Government trust
certificates (collectively, "Stripped Treasury Securities"). The Series
also may purchase other zero coupon securities issued by the U.S.
Government and its agencies and instrumentalities, by a variety of tax
exempt issuers such as state and local governments and their agencies and
instrumentalities and by "mixed-ownership government cor-
Page 13
porations" (collectively, "Stripped Government Securities"). In addition,
the Series may purchase zero coupon securities issued by domestic
corporations which consist of corporate debt obligations without interest
coupons, and, if available, interest coupons that have been stripped from
corporate debt obligations, and receipts and certificates for such
stripped debt obligations and stripped coupons (collectively, "Stripped
Corporate Securities"). In addition, the Zero Coupon 2000 Portfolio may
purchase stripped Eurodollar obligations, which are debt securities
denominated in U.S. dollars that are issued by foreign issuers, often
guaranteed subsidiaries of domestic corporations. The Series may invest
up to 25% of its assets in securities of foreign issuers. At the present
time, the Series does not intend to invest more than 20% of its assets in
securities of foreign issuers. This present intention is not a
fundamental policy and may be changed at any time without shareholder
approval. To the extent that a liquid secondary market is not available
for Stripped Treasury Securities, Stripped Government Securities,
Stripped Corporate Securities or stripped Eurodollar obligations, the
Series will invest no more than 15% of its net assets in such securities
and in other securities that are illiquid. For a further discussion
concerning stripped securities, including stripped Eurodollar
obligations, see "Investment Considerations and Risks _ Special
Considerations Relating to Stripped Securities" below.
Stripped Treasury Securities, Stripped Government Securities,
Stripped Corporate Securities and stripped Eurodollar obligations are
referred to collectively herein as "Stripped Securities." A Stripped
Security pays no interest to its holder during its life, and its value
consists of the difference between its face value at maturity and its
price. The Zero Coupon 2000 Portfolio is so designated because at least
65% of the value of the Series' assets will consist of portfolio
securities which will mature on or about December 31, 2000.
In addition to investing at least 65% of its net assets in
Stripped Securities, the Zero Coupon 2000 Portfolio also will purchase
interest-bearing U.S. Government securities and other money market
instruments held for the purpose of providing income with which to pay
the expenses of the Series and to provide funds with which to meet
redemption requests. The Series may enter into repurchase agreements with
respect to securities in which the Series invests.
There can be no assurance that the Zero Coupon 2000
Portfolio's objective can be met if Series shares are redeemed prior to
maturity of the underlying Stripped Securities because market prices of
the Stripped Securities before maturity will vary with changes in
interest rates. Stripped Securities, including stripped Eurodollar
obligations, do not make any periodic payments of interest prior to
maturity and the stripping of the interest coupons causes the Stripped
Securities to be offered at a substantial (or "deep") discount from their
face amounts. The market value of Stripped Securities, and therefore of
the shares of the Series, will fluctuate with changes in interest rates
and other factors and may be subject to greater fluctuations in response
to changing interest rates than would a fund consisting of debt
obligations of comparable maturities that pay interest currently. The
amount of fluctuation increases with a longer period to maturity. See
"Investment Considerations and Risks _ Special Considerations Relating
to Stripped Securities."
Stripped Corporate Securities held by the Zero Coupon 2000
Portfolio will be rated at least Baa by Moody's or BBB by Standard &
Poor's.
On December 31, 2000, the maturity date for the Zero Coupon
2000 Portfolio, the portfolio will be liquidated. Some of the Series'
portfolio securities may mature up to several months earlier than the
planned maturity date of the Series. Attempts will be made to match the
maturity dates of the portfolio assets with the Series' maturity date as
closely as possible, but securities may be purchased with earlier
maturities where additional revenue
Page 14
for the Series may be achieved by such purchases. Prior to December 31,
2000, shareholders will be informed of the liquidation of the Series and
will be offered the opportunity to exchange their investment upon maturity
for another Series of the Fund. In the event the Zero Coupon 2000
Portfolio has not received instructions from shareholders as to the
disposition of funds upon maturity of the Series, such funds will be
invested automatically in the Money Market Portfolio.
The Stripped Securities held by the Zero Coupon 2000 Portfolio
are debt obligations and will not have any of the characteristics of
equity securities nor will they have any conversion features.
The Zero Coupon 2000 Portfolio may use interest rate futures
contracts and options thereon for the purpose of hedging against changes
in values of the Fund's portfolio investments resulting from anticipated
changes in interest rates and market conditions, and not for purposes of
speculation.
From time to time, the Zero Coupon 2000 Portfolio may engage
in portfolio securities lending to the extent of 20% of its total assets.
See "Investment Techniques_Lending Portfolio Securities."
QUALITY BOND PORTFOLIO
The Quality Bond Portfolio is a diversified portfolio, the
goal of which is to provide the maximum amount of current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. The Quality Bond Portfolio invests in debt obligations of
corporations, the U.S. Government and its agencies and instrumentalities,
and major U.S. banking institutions. At least 80% of the value of the
Series' net assets will consist of obligations of corporations which, at
the time of purchase by the Series, are rated at least A by Moody's or
Standard & Poor's, or determined to be of comparable quality by The
Dreyfus Corporation, and of securities issued or guaranteed as to
principal and interest by the U.S. Government or its agencies or
instrumentalities. The Quality Bond Portfolio also may invest in
Municipal Obligations as described herein. In addition, at least 65% of
the value of the Series' net assets (except when maintaining a temporary
defensive position) will be invested in bonds, debentures and other debt
instruments.
Up to 20% of the Series' assets may consist of high grade
commercial paper of U.S. issuers, certificates of deposit, time deposits
and bankers' acceptances, and corporate bonds which are rated in any
category lower than A by both Moody's and Standard & Poor's. When deemed
necessary for temporary defensive purposes or in connection with loans of
portfolio securities, the Series' investment in high grade commercial
paper, certificates of deposit, time deposits and bankers' acceptances
may exceed 20% of its assets. Under no circumstances will the Series
invest more than 20% of its assets in corporate bonds which are rated
lower than A, but in no case lower than B, by both Moody's and Standard &
Poor's. In addition, the Series will invest no more than 5% of its assets
in bonds rated B by Moody's and Standard & Poor's. The Series may invest
up to 10% of its assets in securities of foreign issuers. The foregoing
is not a fundamental policy and may be changed at any time without
shareholder approval.
From time to time, the Quality Bond Portfolio may engage in
portfolio securities lending to the extent of 10% of its total assets.
See "Investment Techniques_Lending Portfolio Securities."
SMALL CAP PORTFOLIO
The Small Cap Portfolio is a diversified portfolio, the goal
of which is to maximize capital appreciation. The Small Cap Portfolio
seeks out companies that The Dreyfus Corporation believes have the
potential for significant growth. During periods The Dreyfus Corporation
Page 15
judges to be of market strength, the Series will act aggressively to
increase shareholders' capital by investing principally in common stocks
(some of which may be dividend paying) of domestic and foreign issuers.
Under normal market conditions, the Series will invest at least 65% of
its total assets in companies with market capitalizations of less than
$750 million at the time of purchase, both domestic and foreign, which
the Series believes to be characterized by new or innovative products or
services which should enhance prospects for growth in future earnings.
The Series also will make investments based on prospective economic or
political changes. Further, the Series will invest in special situations
such as corporate restructurings, mergers or acquisitions, thereby
seeking out undervalued securities. In periods of market weakness, the
Series may adopt a temporary defensive posture to preserve shareholders'
capital by investing the Series' assets in money market instruments such
as those in which the Money Market Portfolio may invest. When the Series
has adopted a temporary defensive posture, the entire portfolio can be so
invested.
The Series may invest up to 25% of the value of its assets in
the common stocks of foreign companies which are not publicly traded in
the United States. The Series currently does not intend to invest more
than 20% of its assets in foreign securities. The foregoing is not a
fundamental policy and may be changed at any time without shareholder
approval.
The Small Cap Portfolio may invest up to 15% of the value of
its total assets in securities which are illiquid and have not been
registered under the Securities Act of 1933, provided such investments
are consistent with the Series' investment objective. When purchasing
unregistered securities, the Series will endeavor to obtain the right to
registration at the expense of the issuer. Generally, there will be a
lapse of time between the Series' decision to sell any such security and
the registration of the security permitting sale. During any such period,
the price of the securities will be subject to market fluctuations.
From time to time, the Small Cap Portfolio may engage in
portfolio securities lending to the extent of 10% of its total assets.
See "Investment Techniques_Lending Portfolio Securities."
CAPITAL APPRECIATION PORTFOLIO
The Capital Appreciation Portfolio is a diversified portfolio,
the primary goal of which is to provide long-term capital growth
consistent with the preservation of capital; current income is a
secondary goal. During periods which the Series' adviser determines to be
of market strength, the Series acts aggressively to increase
shareholders' capital by investing principally in common stocks of
domestic and foreign issuers, common stocks with warrants attached and
debt securities of foreign governments. The Series will seek investment
opportunities generally in large capitalization companies (those with
market capitalizations exceeding $500 million) which Fayez Sarofim & Co.,
the Series' sub-investment adviser, believes have the potential to
experience above average and predictable earnings growth. The Series will
be alert to those foreign and domestic issuers, which it considers
undervalued by the stock market in terms of current earnings, assets or
growth prospects. These companies will include those that management
believes have new or innovative products, services or processes which can
enhance prospects for growth in future earnings. Other than in periods of
anticipated market weakness, the Series will invest at least 80% of its
net assets in common stocks. In periods of market weakness, the Series
may adopt a temporary defensive posture to preserve shareholders' capital
by investing the Series' assets in money market instruments such as those
in which the Money Market Portfolio may invest. When market conditions
warrant, all of the Series' assets may be so invested.
The Series may invest up to 10% of the value of its assets in
securities of foreign governments and foreign companies which are not
publicly traded in the United States. By investing in foreign securities,
the Series seeks to further its objective of capital growth.
Page 16
The foregoing is not a fundamental policy and may be changed at any time
without shareholder approval.
From time to time, the Capital Appreciation Portfolio may
engage in portfolio securities lending to the extent of 10% of its total
assets. See "Investment Techniques_Lending Portfolio Securities."
GROWTH AND INCOME PORTFOLIO
The Growth and Income Portfolio is a non-diversified
portfolio, the goal of which is long-term capital growth, current income
and growth of income, consistent with reasonable investment risk. The
Series invests in equity and debt securities and money market instruments
of domestic and foreign issuers. The proportion of the Series' assets
invested in each type of security will vary from time to time in
accordance with The Dreyfus Corporation's assessment of economic
conditions and investment opportunities.
The equity securities in which the Growth and Income Portfolio
may invest consist of common stocks, preferred stocks and convertible
securities, including those in the form of American, European and
Continental Depositary Receipts, as well as warrants to purchase such
securities. See "Portfolio Securities" below. The Series will be
particularly alert to companies which offer opportunities for capital
appreciation and growth of earnings, while paying current dividends.
The debt securities (other than convertible debt securities)
in which the Series may invest must be rated at least Baa by Moody's or
at least BBB by Standard & Poor's, Fitch or Duff or, if unrated, deemed
to be of comparable quality by The Dreyfus Corporation. Debt securities
rated Baa by Moody's or BBB by Standard & Poor's, Fitch or Duff are
considered investment grade obligations which lack outstanding investment
characteristics and have speculative characteristics as well. The Series
may invest up to 35% of the value of its net assets in convertible debt
securities rated not lower than Caa by Moody's or CCC by Standard &
Poor's, Fitch or Duff, or, if unrated, deemed to be of comparable quality
by The Dreyfus Corporation. Securities rated Caa by Moody's and CCC by
Standard & Poor's, Fitch or Duff are considered to have predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal and are considered to be of poor standing. See
"Investment Considerations and Risks_Lower Rated Securities" below.
The money market instruments in which the Growth and Income
Portfolio may invest include the same portfolio securities in which the
Money Market Portfolio may invest. While the Series does not intend to
limit the amount of its assets invested in money market instruments,
except to the extent believed necessary to achieve its investment
objective, it does not expect under normal market conditions to have a
substantial portion of its assets invested in money market instruments.
However, when The Dreyfus Corporation determines that adverse market
conditions exist, the Growth and Income Portfolio may adopt a temporary
defensive posture and invest its entire portfolio in money market
instruments. In addition, the Series may invest in money market
instruments in anticipation of investing cash positions.
The Growth and Income Portfolio may invest up to 15% of the
value of its net assets in securities that are illiquid and have not been
registered under the Securities Act of 1933, provided such investments
are consistent with the Series' investment objective. When purchasing
such unregistered securities, the Series will endeavor to obtain the
right to registration at the expense of the issuer. Generally, there will
be a lapse of time between the Series' decision to sell any such security
and the registration of the security permitting sale. During any such
period, the price of the securities will be subject to market
fluctuations.
Page 17
In addition to usual investment practices, the Growth and
Income Portfolio may use speculative investment techniques such as
short-selling, leveraging, foreign exchange transactions and futures and
options transactions. The use of these investment techniques, as well as
lending of portfolio securities, involves greater risk than that incurred
by funds with a similar objective which do not use such techniques. Using
these techniques may produce higher than normal portfolio turnover which
usually generates additional brokerage commissions and transaction costs.
The Growth and Income Portfolio's investment policies may result in a
high portfolio turnover rate. Portfolio turnover will not be a limiting
factor when making portfolio decisions. Investors should purchase shares
only as a supplement to an overall investment program and only if willing
to undertake the risks involved.
From time to time, the Growth and Income Portfolio may engage
in portfolio securities lending to the extent of 331/3% of its total
assets. See "Investment Techniques_Lending Portfolio Securities."
INTERNATIONAL EQUITY PORTFOLIO
The International Equity Portfolio is a non-diversified
portfolio, the goal of which is capital growth. It is a fundamental
policy of the International Equity Portfolio that at least 65% of the
value of its total assets (except when maintaining a temporary defensive
position) will be invested in equity securities of foreign issuers.
Equity securities consist of common stocks, convertible securities and
preferred stocks. The Series also may invest in debt securities of
foreign issuers that management believes, based on market conditions, the
financial condition of the issuer, general economic conditions and other
relevant factors, offer opportunities for capital growth. Under normal
market conditions, it is expected that substantially all of the Series'
assets will be invested in securities of foreign issuers. While there are
no prescribed limits on geographic asset distribution outside the United
States, the International Equity Portfolio ordinarily will seek to invest
its assets in no fewer than three foreign countries. The Series may
invest up to 5% of its assets in securities of companies that have been
in continuous operation for fewer than three years.
The debt securities in which the International Equity
Portfolio may invest must be rated at least Baa by Moody's or at least
BBB by Standard & Poor's, Fitch or Duff or, if unrated, deemed to be of
comparable quality by The Dreyfus Corporation, the Series' investment
adviser, and M&G Investment Management Limited, the Series'
sub-investment adviser. Debt securities rated Baa by Moody's or BBB by
Standard & Poor's, Fitch or Duff are considered investment grade
obligations which lack outstanding investment characteristics and have
speculative characteristics as well. See "Investment Considerations and
Risk_Fixed Income Securities" below.
The International Equity Portfolio's policy is to purchase
marketable securities which are not restricted as to public sale. The
Series may invest, however, up to 15% of the value of its net assets in
securities that are illiquid and have not been registered under the
Securities Act of 1933, provided such investments are consistent with the
Series' investment objective. When purchasing such unregistered
securities, the Series will endeavor to obtain the right to registration
at the expense of the issuer. Generally, there will be a lapse of time
between the Series' decision to sell any such security and the
registration of the security permitting sale. During any such period, the
price of the securities will be subject to market fluctuations.
The International Equity Portfolio may invest, in anticipation
of investing cash positions, in the same portfolio securities in which
the Money Market Portfolio may invest. The Series also may hold U.S.
Government securities to meet certain asset segregation require-
Page 18
ments. Under normal market conditions, the Series does not expect to have
a substantial portion of its assets invested in money market instruments.
However, when The Dreyfus Corporation and M&G Investment Management
Limited determine that adverse market conditions exist, the International
Equity Portfolio may adopt a temporary defensive posture and invest all
of its assets in money market instruments.
In addition to usual investment practices, the International
Equity Portfolio may use speculative investment techniques such as
foreign exchange transactions and futures and options transactions. The
use of these investment techniques, as well as lending of portfolio
securities, involves greater risk than that incurred by funds with a
similar objective which do not use such techniques. Using these
techniques may produce higher than normal portfolio turnover which
usually generates additional brokerage commissions and transaction costs.
The International Equity Portfolio's investment policies may result in a
high portfolio turnover rate. Portfolio turnover will not be a limiting
factor when making portfolio decisions. Investors should purchase shares
only as a supplement to an overall investment program and only if willing
to undertake the risks involved.
From time to time, the International Equity Portfolio may
engage in portfolio securities lending to the extent of 331/3% of its
total assets. See "Investment Techniques_Lending Portfolio Securities."
PORTFOLIO SECURITIES
MONEY MARKET INSTRUMENTS_(All Series) Each Series may invest in the
following type of money market instruments:
U. S. GOVERNMENT SECURITIES. Each Series may purchase
securities issued or guaranteed by the U. S. Government or its agencies
or instrumentalities, which include U. S. Treasury securities. Some
obligations issued or guaranteed by U. S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks,
by the right of the issuer to borrow from the U.S. Treasury; others, such
as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S.
Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law. Each
Series will invest in such securities only when it is satisfied that the
credit risk with respect to the issuer is minimal.
BANK OBLIGATIONS. Each Series may invest in certificates of
deposit, time deposits, bankers' acceptances, zero coupon securities and
other short-term obligations issued by banks, savings and loan
associations and similar entities with assets in excess of one billion
dollars.
Certificates of deposit are negotiable certificates evidencing
the obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time at a stated interest
rate. Time deposits which may be held will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Page 19
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to
pay the face amount of the instrument upon maturity. Other short-term
bank obligations may include uninsured, direct obligations bearing fixed,
floating or variable interest rates.
COMMERCIAL PAPER. Commercial paper consists of short-term,
unsecured promissory notes issued to finance short-term credit needs. The
commercial paper purchased by the Money Market Portfolio will comply with
Rule 2a-7 and the commercial paper purchased by the other Series will
consist only of direct obligations which, at the time of their purchase,
are (a) rated high quality (in one of the two highest categories) by at
least one nationally recognized statistical rating organization or (b) if
unrated, determined by the Series' adviser to be of comparable quality to
those rated obligations which may be purchased by such Series.
REPURCHASE AGREEMENTS. Repurchase agreements involve the
acquisition of an underlying debt instrument, subject to an obligation of
the seller to repurchase, and the Series to resell, the instrument at a
fixed price, usually not more than one week after its purchase. Certain
costs may be incurred by the Series in connection with the sale of the
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on
the securities by the Series may be delayed or limited.
STRIPPED TREASURY SECURITIES_(All Series) Stripped Treasury
Securities are U.S. Treasury securities that have been stripped of their
unmatured interest coupons (which typically provide for interest payments
semi-annually), interest coupons that have been stripped from such U.S.
Treasury securities, and receipts and certificates for such stripped debt
obligations and stripped coupons.
Stripped bonds and stripped coupons are sold at a deep
discount because the buyer of those securities receives only the right to
receive a future fixed payment on the security and does not receive any
rights to periodic interest payments on the security.
Stripped Treasury Securities will include one or more of the
following types of securities: (a) U.S. Treasury debt obligations
originally issued as bearer coupon bonds which have been stripped of
their unmatured interest coupons, (b) coupons which have been stripped
from U.S. Treasury bonds, either of which may be held through the Federal
Reserve Bank's book entry system called "Separate Trading of Registered
Interest and Principal of Securities" ("STRIPS") or "Coupon Under
Book-Entry Safekeeping" ("CUBES"), and (c) receipts or certificates for
stripped U.S. Treasury debt obligations evidencing ownership of future
interest or principal payments on U.S. Treasury notes or bonds which are
direct obligations of the United States. The receipts or certificates
must be issued in registered form by a major bank which acts as custodian
and nominal holder of the underlying stripped U.S. Treasury obligation
(which may be held by it either in physical or in book-entry form).
The U.S. Government does not issue Stripped Treasury
Securities directly. The STRIPS program, which is ongoing, is designed to
facilitate the secondary market stripping of selected U.S. Treasury notes
and bonds into separate interest and principal components. Under the
program, the U.S. Treasury continues to sell its notes and bonds through
its customary auction process. A purchaser of those specified notes and
bonds who has access to a book-entry account at a Federal Reserve bank,
however, may separate the Treasury notes and bonds into interest and
principal components. The selected Treasury securities thereafter may be
maintained in the book-entry system operated by the Federal Reserve in a
manner that permits the separate trading and ownership of the interest
and principal pay-
Page 20
ments. Investment banks also may strip U.S. Treasury
securities and sell them under proprietary names. Such securities may not
be as liquid as STRIPS and CUBES and are not viewed by the staff of the
Securities and Exchange Commission as U.S. Government securities for
purposes of the Investment Company Act of 1940.
CUBES, like STRIPS, are direct obligations of the U.S.
Government. CUBES are coupons that have previously been physically
stripped from U.S. Treasury notes and bonds, but which were deposited
with the Federal Reserve Bank's book-entry system and are now carried and
transferable in book-entry form only. Only stripped U.S. Treasury coupons
maturing on or after January 15, 1988, that were stripped prior to
January 5, 1987, were eligible for conversion to book-entry form under
the CUBES program.
By agreement, the underlying debt obligations will be held
separate from the general assets of the custodian and nominal holder of
such securities, and will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of or against the custodian
or any person claiming through the custodian, and the custodian will be
responsible for applying all payments received on those underlying debt
obligations to the related receipts or certificates without making any
deductions other than applicable tax withholding. The custodian is
required to maintain insurance for the protection of holders of receipts
or certificates in customary amounts against losses resulting from the
custody arrangement due to dishonest or fraudulent action by the
custodian's employees. The holders of receipts or certificates, as the
real parties in interest, are entitled to the rights and privileges of
the underlying debt obligations, including the right, in the event of
default in payment of principal or interest, to proceed individually
against the issuer without acting in concert with other holders of those
receipts or certificates or the custodian.
Publicly filed documents state that counsel to the
underwriters of certificates or other evidences of ownership of U.S.
Treasury securities have stated that for Federal tax and securities
purposes, purchasers of such certificates most likely will be deemed the
beneficial holders of the underlying U.S. Government securities, which
are payable in full at their stated maturity amount and are not subject
to redemption prior to maturity. See "Investment Considerations and
Risks_Special Considerations Relating to Stripped Securities" below.
STRIPPED CORPORATE SECURITIES_(Growth and Income, International
Equity, Managed Assets, Quality Bond and Zero Coupon 2000 Portfolios)
Stripped Corporate Securities consist of corporate debt obligations
issued by domestic corporations without interest coupons, and, if
available, interest coupons that have been stripped from corporate debt
obligations, and receipts and certificates for such stripped debt
obligations and stripped coupons. Stripped Corporate Securities purchased
by the Managed Assets, Growth and Income, International Equity or Quality
Bond Portfolios will bear ratings comparable to non-stripped corporate
obligations that may be purchased by such Series. Stripped Corporate
Securities purchased by the Zero Coupon 2000 Portfolio will be rated at
least Baa by Moody's or BBB by Standard & Poor's. With respect to other
features of Stripped Corporate Securities, such as sales at deep
discounts, see "Stripped Treasury Securities" above and see "Investment
Considerations and Risks_Special Considerations Relating to Stripped
Securities" below.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES_
(All Series) Each Series may invest in obligations issued or guaranteed by
one or more foreign governments or any of their political subdivisions,
agencies, or instrumentalities that are determined by the Series' adviser
to be of comparable quality to the other obligations in which such Series
may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by
Page 21
governmental entities to promote economic reconstruction or development
and international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development
(the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of
the Series' assets invested in securities issued by foreign governments
will vary depending on the relative yields of such securities, the
economic and financial markets of the countries in which the investments
are made and the interest rate climate of such countries.
WARRANTS_(Capital Appreciation, Growth and Income, International
Equity, Managed Assets and Small Cap Portfolios) A warrant is an
instrument which gives the holder the right to subscribe to a specified
amount of the issuer's securities at a set price for a specified period
of time.
CONVERTIBLE SECURITIES_(Capital Appreciation, Growth and Income,
International Equity, Managed Assets and Small Cap Portfolios) A
convertible security is a fixed income security that may be converted at
either a stated price or stated rate into underlying shares of common
stock. Convertible securities have general characteristics similar to both
fixed-income and equity securities. Although to a lesser extent than with
fixed-income securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely,
tends to increase as interest rates decline. In addition, because of the
conversion feature, the market value of convertible securities tends to
vary with fluctuations in the market value of the underlying common
stock, and, therefore, also will react to variations in the general
market for equity securities. A unique feature of convertible securities
is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and
so may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as
a reflection of the value of the underlying common stock. While no
securities investments are without risk, investments in convertible
securities generally entail less risk than investments in common stock of
the same issuer.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with generally
higher yields than common stocks. Of course, like all fixed-income
securities, there can be no assurance of current income because the
issuers of the convertible securities may default on their obligations.
Convertible securities, however, generally offer lower interest or
dividend yields than non-convertible securities of similar quality
because of the potential for capital appreciation. A convertible
security, in addition to providing fixed-income, offers the potential for
capital appreciation through the conversion feature, which enables the
holder to benefit from increases in the market price of the underlying
common stock. There can be no assurance of capital appreciation, however,
because securities fluctuate.
Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in
right of payment to all equity securities, and convertible preferred
stock is senior to common stock, of the same issuer. Because of the
subordination, feature, however, convertible securities typically have
lower ratings than similar non-convertible securities.
MUNICIPAL OBLIGATIONS_(Growth and Income and Quality Bond
Portfolios) Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities. While, in
general, Municipal Obligations
Page 22
are tax exempt securities having relatively low yields as compared to
taxable, non-municipal obligations of similar quality, certain issues of
Municipal Obligations, both taxable and non-taxable, offer yields
comparable and in some cases greater than the yields available on other
permissible Series' investments. Municipal Obligations generally include
debt obli-gations issued to obtain funds for various public purposes as
well as certain industrial development bonds issued by or on behalf of
public authorities. Municipal Obligations are classified as general
obligation bonds, revenue bonds and notes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from the
revenue derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific
revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds and generally do not
carry the pledge of the credit of the issuing municipality, but generally
are guaranteed by the corporate entity on whose behalf they are issued.
Notes are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal Obligations
include municipal lease/purchase agreements which are similar to
installment purchase contracts for property or equipment issued by
municipalities. Municipal Obligations bear fixed, floating or variable
rates of interest, which are determined in some instances by formulas
under which the Municipal Obligation's interest rate will change directly
or inversely to changes in interest rates or an index, or multiples
thereof, in many cases subject to a maximum and minimum. Certain Municipal
Obligations are subject to redemption at a date earlier than their stated
maturity pursuant to call options, which may be separated from the
related Municipal Obligation and purchased and sold separately. Each of
the Growth and Income and Quality Bond Portfolios will invest in Municipal
Obligations, the ratings of which correspond with the ratings of such
Series' other permissible investments. It is currently the intention of
each of these Series to invest no more than 25% of its total assets in
Municipal Obligations. However, this percentage may be varied from time
to time without shareholder approval.
UNREGISTERED NOTES_(Money Market Portfolio) The Money Market
Portfolio may purchase unsecured promissory notes ("Notes") which are
illiquid and have not been registered under the Securities Act of 1933,
provided such investments are consistent with the Series' goal.
FLOATING AND VARIABLE RATE OBLIGATIONS_(Growth and Income,
International Equity and Money Market Portfolios) Each of the Growth and
Income, International Equity and Money Market Portfolios may purchase
floating and variable rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 13 months, but which
permit the holder to demand payment of principal at any time, or at
specified intervals. Variable rate demand notes include master demand
notes which are obligations that permit the Series to invest fluctuating
amounts, at varying rates of interest, pursuant to direct arrangements
between the Series, as lender, and the borrower. These notes permit daily
changes in the amounts borrowed. As mutually agreed between the parties,
the Series may increase or decrease the amount under the obligations at
any time and the borrower may repay up to the full amount of the
obligation without penalty. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrange-
Page 23
ments, the Series' right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies and, if not so rated,
the Series may invest in them only if the Series' adviser determines that
at the time of investment the obligations are of comparable quality to
the other obligations in which such Series may invest. The Series'
adviser, on behalf of the Series, will consider on an ongoing basis the
creditworthiness of the issuers of the floating and variable rate demand
obligations in such Series' portfolio.
PARTICIPATION INTERESTS_(Money Market Portfolio) The Money Market
Portfolio may purchase from financial institutions participation
interests in securities in which the Series may invest. A participation
interest gives the Series an undivided interest in the security in the
proportion that the Series' participation interest bears to the total
principal amount of the security. These instruments may have fixed,
floating or variable rates of interest with remaining maturities of 13
months or less. If the participation interest is unrated, or has been
given a rating below that which is permissible for purchase by the
Series, the participation interest will be backed by an irrevocable
letter of credit or guarantee of a bank, or the payment obligation
otherwise will be collateralized by U.S. Government securities, or, in
the case of unrated participation interests, The Dreyfus Corporation must
have determined that the instrument is of comparable quality to those
instruments in which the Series may invest.
CLOSED-END INVESTMENT COMPANIES_(Managed Assets Portfolio) The
Series may invest in securities issued by closed-end investment companies
which principally invest in securities of foreign issuers. Under the
Investment Company Act of 1940, the Series' investment in such
securities, subject to certain exceptions, currently is limited to (i) 3%
of the total voting stock of any one investment company, (ii) 5% of the
Series' net assets with respect to any one investment company and (iii)
10% of the Series' net assets in the aggregate. Investments in the
securities of other investment companies may involve duplication of
advisory fees and certain other expenses.
ILLIQUID SECURITIES_(All Series) Each Series may invest up to 15%
(10% with respect to the Money Market Portfolio) of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Series' investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain options
traded in the over-the-counter market and securities used to cover such
options. As to these securities, a Series is subject to a risk that
should such Series desire to sell them when a ready buyer is not
available at a price the Series deems representative of their value, the
value of such Series' net assets could be adversely affected. See "State
Insurance Regulation" below.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS_(Growth and
Income and International Equity and Managed Assets Portfolios) Each of
the Growth and Income and International Equity Portfolios may invest in
the securities of foreign issuers in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs"). These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically
issued by a United States bank or trust company which evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depositary Receipts ("CDRs"), are
receipts issued in Europe typically by non-United States banks and trust
companies that evidence ownership of either foreign or domestic
securities.
Page 24
Generally, ADRs in registered form are designed for use in
the United States securities markets and EDRs and CDRs in bearer form are
designed for use in Europe.
MORTGAGE-RELATED SECURITIES_(Growth and Income Portfolio) The Growth
and Income Portfolio may invest in mortgage-related securities which are
collateralized by pools of mortgage loans assembled for sale to investors
by various governmental agencies, such as the Government National
Mortgage Association and government-related organizations such as the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation, as well as by private issuers such as commercial banks,
savings and loan institutions, mortgage banks and private mortgage
insurance companies, and similar foreign entities. Mortgage-related
securities are a form of derivative security. The mortgage-related
securities in which the Series may invest include those with fixed,
floating and variable interest rates, those with interest rates that
change based on multiples of changes in interest rates and those with
interest rates that change inversely to changes in interest rates, as
well as stripped mortgage-backed securities. Stripped mortgage-backed
securities usually are structured with two classes that receive different
proportions of interest and principal distributions on a pool of
mortgage-backed securities or whole loans. A common type of stripped
mortgage-backed security will have one class receiving some of the
interest and most of the principal from the mortgage collateral, while
the other class will receive most of the interest and the remainder of
the principal. In the most extreme case, one class will receive all of
the interest (the interest-only or "IO" class), while the other class
will receive all of the principal (the principal-only or "PO" class).
Although certain mortgage-related securities are guaranteed by a third
party or otherwise similarly secured, the market value of the security,
which may fluctuate, is not so secured. If the Growth and Income
Portfolio purchases a mortgage-related security at a premium, all or part
of the premium may be lost if there is a decline in the market value of
the security, whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of certain mortgage-backed
securities are inversely affected by changes in interest rates, while
others may not be. However, though the value of a mortgage-related
security may decline when interest rates rise, the converse is not
necessarily true, since in periods of declining interest rates the
mortgages underlying the security are more likely to prepay. For this and
other reasons, a mortgage-related security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages, and,
therefore, it is not possible to predict accurately the security's return
to the Fund. Moreover, with respect to stripped mortgage-backed
securities, if the underlying mortgage securities experience greater than
anticipated prepayments of principal, the Growth and Income Portfolio may
fail to fully recoup its initial investment in these securities even if
the securities are rated in the highest rating category by a nationally
recognized statistical rating organization. In addition, regular payments
received in respect of mortgage-related securities include both interest
and principal. No assurance can be given as to the return the Series will
receive when these amounts are reinvested. The Growth and Income
Portfolio also may invest in collateralized mortgage obligations
structured on pools of mortgage pass-through certificates or mortgage
loans. Collateralized mortgage obligations will be purchased only if
rated in one of the two highest rating categories by a nationally
recognized statistical rating organization such as Moody's, Standard &
Poor's, Fitch or Duff or, if unrated, deemed to be of comparable quality
by The Dreyfus Corporation. For further discussion concerning the
investment considerations involved see "Investment Considerations and
Risks" below.
Page 25
INVESTMENT TECHNIQUES
LENDING PORTFOLIO SECURITIES_(All Series) From time to time, a
Series may lend its portfolio securities to brokers, dealers and other
financial institutions needing to borrow securities to complete certain
transactions. In connection with such loans, the Series will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit. Such collateral will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. A Series can increase its income through the investment of
such collateral. The Series continues to be entitled to payments in
amounts equal to the interest, dividends or other distributions payable
on the loaned security and receives interest on the amount of the loan.
Such loans will be terminable at any time upon specified notice. A Series
might experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement with the
Fund.
BORROWING MONEY_As a fundamental policy, each Series, other than the
Money Market Portfolio, is permitted to borrow to the extent permitted
under the Investment Company Act of 1940. However, each Series, other
than the Growth and Income Portfolio, currently intends to borrow money
only for temporary or emergency (not leveraging) purposes, in an amount
up to 15% of the value of such Series' total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made. In
addition, The Money Market Portfolio may borrow in connection with the
entry into reverse repurchase agreements. While borrowings exceed 5% of a
Series' total assets, such Series, except the Growth and Income
Portfolio, will not make any additional investments.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES_(Capital Appreciation,
Growth and Income, International Equity, Managed Assets and Small Cap
Portfolios) Each of the Capital Appreciation, Growth and Income,
International Equity, Managed Assets and Small Cap Portfolios may invest
up to 5% of its assets, represented by the premium paid, in the purchase
of call and put options in respect of specific securities (or groups or
"baskets" of specific securities) in which such Series may invest. Each
of the Series may write (sell) covered call options and, except for the
Capital Appreciation Portfolio, covered put options to the extent of 20%
of the value of its net assets at the time such option contracts are
written. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying security at the
exercise price at any time during the option period. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying security at the exercise price at any
time during the option period. A covered call option sold by a Series,
which is a call option with respect to which such Series owns the
underlying security, exposes the Series during the term of the option to
possible loss of opportunity to realize appreciation in the market price
of the underlying security or to possible continued holding of a security
which might otherwise have been sold to protect against depreciation in
its market price. The principal reason for writing covered call options
is to realize, through the receipt of premiums, a greater return than
would be realized on the Series' portfolio securities alone. A covered
put option sold by the Series exposes the Series during the term of the
option to the decline in price of the underlying security. Similarly, the
principal reason for writing covered put options is to realize income in
the form of premiums. A put option sold by the Series is covered when,
among other things, cash, U.S. Government securities or other liquid
securities are placed in a segregated account with the Fund's custodian
to fulfill the obligation undertaken.
Page 26
To close out a position when writing covered options, a Series
may make a "closing purchase transaction" by purchasing an option on the
same security with the same exercise price and expiration date as the
option it has previously written. To close out the position as a
purchaser of an option, the Series may make a "closing sale transaction,"
which involves liquidating such Series' position by selling the option
previously purchased. A Series will realize a profit or loss from a
closing purchase or sale transaction depending upon the difference
between the amount paid to purchase an option and the amount received
from the sale thereof.
These Series intend to treat options in respect of specific
securities that are not traded on a national securities exchange and the
securities underlying covered call options written by the Series as
illiquid and therefore subject to the limitations set forth under
"Portfolio Securities_Restricted Securities" above.
These Series will purchase options only as permitted pursuant
to applicable law, as from time to time in effect. Options transactions
involve so-called "derivative securities."
FUTURES TRANSACTIONS_IN GENERAL_(Growth and Income, International
Equity, Managed Assets and Zero Coupon 2000 Portfolios) None of the
Series is a commodity pool. However, as a substitute for a comparable
market position in the underlying securities or for hedging purposes,
each of these Series may engage in futures and options on futures
transactions, as described below. Options and futures transactions
involve so-called "derivative securities."
The Series may trade futures contracts and options on futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade
and the International Monetary Market of the Chicago Mercantile Exchange,
or, to the extent permitted under applicable law, on exchanges located
outside the United States, such as the London International Financial
Futures Exchange and the Sydney Futures Exchange Limited. Foreign markets
may offer advantages such as trading in commodities that are not
currently traded in the United States or arbitrage possibilities not
available in the United States. Foreign markets, however, may have
greater risk potential than domestic markets. See "Investment
Considerations and Risks_Foreign Commodity Transactions."
Each Series' commodities transactions must constitute bona
fide hedging or other permissible transactions pursuant to regulations
promulgated by the Commodity Futures Trading Commission (the "CFTC"). In
addition, no Series may engage in such transactions if the sum of the
amount of initial margin deposits and premiums paid for unexpired
commodity options, other than for bona fide hedging transactions, would
exceed 5% of the liquidation value of the Series' assets, after taking
into account unrealized profits and unrealized losses on such contracts
it has entered into; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5%. Pursuant to regulations and/or
published positions of the Securities and Exchange Commission, a Series
may be required to segregate cash or high quality money market
instruments in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. To the extent a
Series engages in the use of futures and options on futures for other
than bona fide hedging purposes, the Series may be subject to additional
risk.
Initially, when purchasing or selling futures contracts the
Series will be required to deposit with the Fund's custodian in the
broker's name an amount of cash or U.S. Government securities up to
approximately 10% of the contract amount. This amount is subject to
change by the exchange or board of trade on which the contract is traded
and members of such exchange or board of trade may impose their own
higher requirements. This amount is known as "initial margin" and is in
the nature of a performance bond or
Page 27
good faith deposit on the contract which is returned to the Series upon
termination of the futures position, assuming all contractual obligations
have been satisfied. Subsequent payments, known as "variation margin," to
and from the broker will be made daily as the price of the index or
securities underlying the futures contract fluctuates, making the long
and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration
of a futures contract, the Series may elect to close the position by
taking an opposite position at the then prevailing price, which will
operate to terminate the Series' existing position in the contract.
Although each Series intends to purchase or sell futures
contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of
trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Series to substantial losses. If it is not possible or the
Series determines not to close a futures position in anticipation of
adverse price movements, the Series will be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may offset
partially or completely losses on the futures contract. However, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
To the extent a Series is engaging in a futures transaction as
a hedging device, because of the risk of an imperfect correlation between
securities in such Series' portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is
possible that the hedge will not be fully effective if, for example,
losses on the portfolio securities exceed gains on the futures contract
or losses on the futures contract exceed gains on the portfolio
securities. For futures contracts based on indices, the risk of imperfect
correlation increases as the composition of the Series' portfolio varies
from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being
hedged and movements in the price of futures contracts, the Series may
buy or sell futures contracts in a greater or lesser dollar amount than
the dollar amount of the securities being hedged if the historical
volatility of the futures contract has been less or greater than that of
the securities. Such "over hedging" or "under hedging" may adversely
affect the Series' net investment results if the market does not move as
anticipated when the hedge is established.
An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if
the option is a put) at a specified exercise price at any time during the
option exercise period. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if
the option is a call and a long position if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by
the writer and holder of the option will be accompanied by delivery of
the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case
of a put, the exercise price of the option on the futures contract.
Page 28
Call options sold by a Series with respect to futures
contracts will be covered by, among other things, entering into a long
position in the same contract at a price no higher than the strike price
of the call option, or by ownership of the instruments underlying, or
instruments the prices of which are expected to move relatively
consistently with the instruments underlying, the futures contract. Put
options sold by the Series with respect to futures contracts will be
covered in the same manner as put options on specific securities as
described above.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS_(Growth and Income, International Equity, Managed Assets and
Zero Coupon 2000 Portfolios) These Series may purchase and sell interest
rate futures contracts and options on interest rate futures contracts as
a substitute for a comparable market position or to hedge against adverse
movements in interest rates.
To the extent a Series has invested in interest rate futures
contracts or options on interest rate futures contracts as a substitute
for a comparable market position, such Series will be subject to the
investment risks of having purchased the securities underlying the
contract.
The Series may purchase call options on interest rate futures
contracts to hedge against a decline in interest rates and may purchase
put options on interest rate futures contracts to hedge its portfolio
securities against the risk of rising interest rates.
If any such Series has hedged against the possibility of an
increase in interest rates adversely affecting the value of securities
held in its portfolio and rates decrease instead, the Series will lose
part or all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Series has
insufficient cash, it may have to sell securities to meet daily variation
margin requirements at a time when it may be disadvantageous to do so.
These sales of securities may, but will not necessarily, be at increased
prices which reflect the decline in interest rates.
The Series may sell call options on interest rate futures
contracts to partially hedge against declining prices of portfolio
securities. If the futures price at expiration of the option is below the
exercise price, the Series will retain the full amount of the option
premium which provides a partial hedge against any decline that may have
occurred in the Series' portfolio holdings. The Series may sell put
options on interest rate futures contracts to hedge against increasing
prices of the securities which are deliverable upon exercise of the
futures contract. If the futures price at expiration of the option is
higher than the exercise price, the Series will retain the full amount of
the option premium which provides a partial hedge against any increase in
the price of securities which the Series intends to purchase. If a put or
call option sold by the Series is exercised, the Series will incur a loss
which will be reduced by the amount of the premium it receives. Depending
on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures positions,
the Series' losses from existing options on futures may to some extent be
reduced or increased by changes in the value of its portfolio securities.
The Series also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate its
options positions. No assurance can be given that such closing
transactions can be effected or that there will be a correlation between
price movements in the options on interest rate futures and price
movements in the Series' portfolio securities which are the subject of
the hedge. In addition, the Series' purchase of such options will be
based upon predictions as to anticipated interest rate trends, which
could prove to be inaccurate.
Page 29
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES_(Growth and
Income, International Equity and Managed Assets Portfolios) These Series
may purchase and sell stock index futures contracts and options on stock
index futures contracts.
A stock index future obligates the seller to deliver (and the
purchaser to take) an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the
index is made. The Series purchases and sells futures contracts on the
stock index for which it can obtain the best price with consideration
also given to liquidity. Stock index futures may be used as a substitute
for a comparable market position in the underlying securities.
There can be no assurance of the Series' successful use of
stock index futures as a hedging device. One risk arises because of the
imperfect correlation between movements in the price of the stock index
futures and movements in the price of the securities which are the
subject of the hedge. In addition to the possibility that there may be an
imperfect correlation, or no correlation at all, between movements in the
stock index futures and the portion of the portfolio being hedged, the
price of stock index futures may not correlate perfectly with the
movement in the stock index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the
index and futures markets. Secondly, from the point of view of
speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market also may
cause temporary price distortions. Because of the possibility of price
distortions in the futures market and the imperfect correlation between
movements in the stock index and movements in the price of stock index
futures, a correct forecast of general market trends still may not result
in a successful hedging transaction.
Successful use of stock index futures by the Series also is
subject to the ability to predict correctly movements in the direction of
the market. For example, if the Series has hedged against the possibility
of a decline in the market adversely affecting stocks held in its
portfolio and stock prices increase instead, the Series will lose part or
all of the benefit of the increased value of its stocks which it has
hedged because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances a Series has insufficient cash, it
may have to sell securities to meet daily variation margin requirements.
The Series may have to sell such securities at a time when it may be
disadvantageous to do so.
STOCK INDEX OPTIONS_(Growth and Income, International Equity and
Managed Assets Portfolios) These Series may purchase and write put and
call options on stock indices for speculative purposes in order to
realize their investment objectives or for the purpose of hedging their
portfolios.
The effectiveness of purchasing or writing stock index options
will depend upon the extent to which price movements in the Series'
portfolio correlate with price movements of the stock index selected.
Because the value of an index option depends upon movements in the level
of the index rather than the price of a particular stock, whether the
Series will realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of stock prices
in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a
particular stock. Accordingly, successful use by the Series of options on
stock indices will be subject to the ability of the Series' adviser to
predict correctly movements in the direction of the stock market
generally or of a particular industry. This requires different skills and
tech-
Page 30
niques than predicting changes in the price of individual stocks.
When the Growth and Income, International Equity or Managed
Assets Portfolio writes an option on a stock index, such Series will
establish a segregated account containing cash or U.S. Government
securities with the Fund's custodian in an amount at least equal to the
market value of the underlying stock index and will maintain the account
while the option is open or it will otherwise cover the transaction.
CURRENCY FUTURES AND OPTIONS ON CURRENCY FUTURES_(Growth and Income,
International Equity and Managed Assets Portfolios) These Series may
purchase and sell currency futures contracts and options thereon. See
"Call and Put Options on Specific Securities" above. By selling foreign
currency futures, the Series can establish the number of U.S. dollars it
will receive in the delivery month for a certain amount of a foreign
currency. In this way, if the Series anticipates a decline of a foreign
currency against the U.S. dollar, the Series can attempt to fix the U.S.
dollar value of some or all of its securities that are denominated in
that currency. By purchasing foreign currency futures, the Series can
establish the number of U.S. dollars it will be required to pay for a
specified amount of a foreign currency in the delivery month. Thus, if
the Series intends to buy securities in the future and expects the U.S.
dollar to decline against the relevant foreign currency during the period
before the purchase is effected, the Series, for the price of the currency
future, can attempt to fix the price in U.S. dollars of the securities it
intends to acquire.
The purchase of options on currency futures will allow the
Series, for the price of the premium it must pay for the option, to
decide whether or not to buy (in the case of a call option) or to sell
(in the case of a put option) a futures contract at a specified price at
any time during the period before the option expires. If the Series, in
purchasing an option, has been correct in its judgment concerning the
direction in which the price of a foreign currency would move as against
the U.S. dollar, it may exercise the option and thereby take a futures
position to hedge against the risk it had correctly anticipated or close
out the option position at a gain that will offset, to some extent,
currency exchange losses otherwise suffered by the Series. If exchange
rates move in a way the Series did not anticipate, the Series will have
incurred the expense of the option without obtaining the expected
benefit. As a result, the Series' profits on the underlying securities
transactions may be reduced or overall losses incurred.
FOREIGN CURRENCY OPTIONS_(Growth and Income, International Equity
and Managed Assets Portfolios) These Series may purchase and sell call
and put options on foreign currency for the purpose of hedging against
changes in future currency exchange rates. Call options convey the right
to buy the underlying currency at a price which is expected to be lower
than the spot price of the currency at the time the option expires. Put
options convey the right to sell the underlying currency at a price which
is anticipated to be higher than the spot prices of the currency at the
time the option expires. The Series may use foreign currency options for
the same purposes as forward currency exchange and futures transactions,
as described herein. See also "Call and Put Options on Specific Securities
" and "Currency Futures and Options on Currency Futures" above.
FOREIGN CURRENCY TRANSACTIONS_(Capital Appreciation, Growth and
Income, International Equity, Managed Assets and Small Cap Portfolios)
Each of these Series may engage in currency exchange transactions either
on a spot (i.e., cash) basis at the rate prevailing in the currency
exchange market, or through entering into forward contracts to purchase
or sell currencies. A forward currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date,
which must be more than two days from the date of the contract, at a
price set at the time of the contract. Transaction hedging is the
pur-
Page 31
chase or sale of forward currency with respect to specific receivables
or payables of the Series arising in connection with the purchase or sale
of its portfolio securities. Position hedging is the sale of forward
currency with respect to portfolio security positions denominated or
quoted in the foreign currency. These contracts are entered into in the
interbank market conducted directly between currency traders (typically
commercial banks or other financial institutions) and their customers.
The International Equity Portfolio also may maintain short
positions in forward currency exchange transactions, which would involve
the Series agreeing to exchange an amount of a currency it did not
currently own for another currency at a future date in anticipation of a
decline in the value of the currency sold relative to the currency such
Series contracted to receive in the exchange. The Series will maintain in
a segregated custodial account cash or U.S. Government securities or
other high quality liquid debt securities at least equal to the aggregate
amount of its short positions, plus accrued interest, in certain cases,
in accordance with releases promulgated by the Securities and Exchange
Commission.
SHORT-SELLING_(Growth and Income and, to a limited extent, Managed
Assets and Small Cap Portfolios) The Growth and Income Portfolio may make
short sales, which are transactions in which the Series sells a security
it does not own in anticipation of a decline in the market value of that
security. To complete such a transaction, the Series must borrow the
security to make delivery to the buyer. The Series then is obligated to
replace the security borrowed by purchasing it at the market price at the
time of replacement. The price at such time may be more or less than the
price at which the security was sold by the Series.
The Growth and Income Portfolio will incur a loss as a result
of the short sale if the price of the security increases between the date
of the short sale and the date on which the Series replaces the borrowed
security. The Series will realize a gain if the security declines in
price between those dates.
The Growth and Income Portfolio may purchase call options to
provide a hedge against an increase in the price of a security sold short
by the Series. When the Series purchases a call option, it has to pay a
premium to the person writing the option and a commission to the broker
selling the option. If the option is exercised by the Series, the premium
and the commission paid may be more than the amount of the brokerage
commission charged if the security were to be purchased directly. See
"Call and Put Options on Specific Securities" above.
The Growth and Income Portfolio anticipates that the frequency
of short sales will vary substantially in different periods, and it does
not intend that any specified portion of its assets, as a matter of
practice, will be invested in short sales. However, no securities will be
sold short if, after effect is given to any such short sale, the total
market value of all securities sold short would exceed 25% of the value
of the Series' net assets. The Series may not sell short the securities
of any single issuer listed on a national securities exchange to the
extent of more than 5% of the value of the Series' net assets. The Series
may not sell short the securities of any class of an issuer to the
extent, at the time of the transaction, of more than 5% of the
outstanding securities of that class.
Each of the Growth and Income, Managed Assets and Small Cap
Portfolios may make short sales "against the box," a transaction in which
the Series enters into a short sale of a security which it owns. At no
time will any of these Series have more than 15% of the value of its net
assets in deposits on short sales against the box.
LEVERAGE THROUGH BORROWING_(Growth and Income and, to a limited
extent, Money Market Portfolios) Each of the Growth and Income and Money
Market Portfolios may borrow for investment purposes up to 331/3% of the
value of its total assets. This borrowing, which is known as leveraging,
will be conducted by the Money Market Portfolio on a
Page 32
secured basis through entering into reverse repurchase agreements with
banks, brokers or dealers and by the Growth and Income Portfolio generally
on an unsecured basis, except to the extent the Growth and Income
Portfolio enters into reverse repurchase agreements. Leveraging will
exaggerate the effect on net asset value of any increase or decrease in
the market value of the Series' portfolio. Money borrowed for leveraging
will be subject to interest costs that may or may not be recovered by
appreciation of the securities purchased; in certain cases, interest costs
may exceed the return received on the securities purchased.
Both of these Series may enter into reverse repurchase
agreements. These transactions involve the transfer by the Series of an
underlying debt instrument in return for cash proceeds based on a
percentage of the value of the security. The Series retains the right to
receive interest and principal payments on the security. At an agreed
upon future date, the Series repurchases the security at principal, plus
accrued interest. In certain types of agreements, there is no agreed upon
repurchase date and interest payments are calculated daily, often based
on the prevailing overnight repurchase rate. The Fund's Trustees have
considered the risks to the Money Market Portfolio and its shareholders
which may result from the entry into reverse repurchase agreements and
have determined that the entry into such agreements is consistent with
the Series' investment objective and management policies.
CERTAIN ADDITIONAL FUNDAMENTAL POLICIES
The following (except as otherwise noted) constitute
fundamental policies that cannot be changed as to a Series without
approval by the holders of a majority (as defined in the Investment
Company Act of 1940) of such Series' outstanding voting shares. See
"Investment Objectives and Management Policies_Investment Restrictions"
in the Statement of Additional Information for more complete information
concerning the investment restrictions applicable to the Series.
Each Series may (i) borrow money to the extent permitted under
the Investment Company Act of 1940, which currently limits borrowing to
no more than 331/3% of the value of the Series' total assets, except that
the Money Market Portfolio may borrow money (a) from banks, but only for
temporary or emergency (not leveraging) purposes in an amount up to 15%
of the value of its total assets (including the amount borrowed) valued
at the lesser of cost or market, less liabilities (not including the
amount borrowed) valued at the time the borrowing is made and (b) in
connection with the entry into reverse repurchase agreements; (ii) invest
up to 25% of its total assets in a single industry, provided that, when a
Series has adopted a temporary defensive posture, there shall be no
limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, and provided further
that, under normal market conditions, the Money Market Portfolio will
invest up to 25% of its assets in obligations issued by banks; and (iii)
purchase securities of any company having less than three years'
continuous operation (including operations of any predecessors) if such
purchase does not cause the value of such Series' investments in all such
companies to exceed 5% of the value of its total assets. In addition,
each Series, other than the Growth and Income and International Equity
Portfolios, may invest up to 5% of its total assets in the obligations of
any one issuer, except that up to 25% of the value of such Series' total
assets may be invested (subject, in the case of the Money Market
Portfolio, to the provisions of Rule 2a-7), and obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities may
be purchased, without regard to any such limitations. With respect to the
Growth and Income and International Equity Portfolios only, the policy
set forth in clause (iii) is not fundamental and may be changed by vote
of a majority of the Fund's Trustees at any time.
Page 33
Though not a fundamental policy, each Series, other than the
Growth and Income and International Equity Portfolios, has agreed to
invest no more than 10% of its total assets in the obligations of any one
issuer (excluding U.S. Government securities) and to purchase no more
than 10% of an issuer's outstanding securities.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each Series may (i) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings; and (ii)
invest up to 15% (10% in the case of the Money Market Portfolio) of the
value of its net assets in repurchase agreements providing for settlement
in more than seven days after notice and in other illiquid securities.
See "Investment Objectives and Management Policies_Investment
Restrictions" in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
FOREIGN SECURITIES_(All Series) Foreign securities markets generally
are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable U.S. issuers. Similarly, volume and liquidity in
most foreign securities markets are less than in the United States and,
at times, volatility of price can be greater than in the United States.
The issuers of some of these securities, such as bank obligations, may be
subject to less stringent or different regulations than are U.S. issuers.
In addition, there may be less publicly available information about a
non-U.S. issuer, and non-U.S. issuers are not generally subject to
uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers.
Because evidences of ownership of such securities usually are
held outside the United States, the Series will be subject to additional
risks which include possible adverse political and economic developments,
possible seizure or nationalization of foreign deposits and possible
adoption of governmental restrictions which might adversely affect the
payment of principal and interest on the foreign securities or might
restrict the payment of principal and interest to investors located
outside the country of the issuer, whether from currency blockage or
otherwise. Custodial expenses for a portfolio of non-U.S. securities
generally are higher than for a portfolio of U.S. securities. Since
foreign securities often are purchased with and payable in currencies of
foreign countries, the value of these assets as measured in U.S. dollars
may be affected favorably or unfavorably by changes in currency rates and
exchange control regulations. Some currency exchange costs may be
incurred when the Series changes investments from one country to another.
Furthermore, some of these securities may be subject to
brokerage taxes levied by foreign governments, which has the effect of
increasing the cost of such investment and reducing the realized gain or
increasing the realized loss on such securities at the time of sale.
Income earned or received by the Series from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United
States, however, may reduce or eliminate such taxes. All such taxes paid
will reduce a Series' net income available for distribution. The Series'
adviser will consider available yields, net of any required taxes, in
selecting foreign securities.
FOREIGN CURRENCY EXCHANGE_(Capital Appreciation, Growth and Income,
International Equity,Managed Assets and Small Cap Portfolios) Currency
exchange rates may fluctuate significantly over short periods of time.
They generally are determined by the forces of supply and demand in the
foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates and
other complex factors, as seen from an international perspective.
Currency exchange rates also can be affected unpre-
Page 34
dictably by intervention by U.S. or foreign governments or central banks,
or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
Foreign currency markets offer less protection against
defaults in the forward trading of currencies than is available when
trading in currencies occurs on an exchange. Since a forward currency
contract is not guaranteed by an exchange or clearinghouse, a default on
the contract would deprive the Series of unrealized profits or force such
Series to cover its commitments for purchase or resale, if any, at the
current market price.
FOREIGN COMMODITY TRANSACTIONS_(Growth and Income, International
Equity, Managed Assets and Zero Coupon 2000 Portfolios) Unlike trading on
domestic commodity exchanges, trading on foreign commodity exchanges is
not regulated by the CFTC and may be subject to greater risks than
trading on domestic exchanges. For example, some foreign exchanges are
principal markets so that no common clearing facility exists and a trader
may look only to the broker for performance of the contract. Accordingly,
when entering into foreign commodity transactions, the Series will attempt
to ensure that the broker has the ability to perform the contract. Foreign
commodity transactions also are subject to the risk of the availability
of a liquid secondary market. If a liquid secondary market does not exist
for a foreign commodity transaction, the commodity would be deemed to be
not readily marketable and subject to the restrictions on investment set
forth herein. In addition, unless the Series hedges against fluctuations
in the exchange rate between the U.S. dollar and the currencies in which
trading is done on foreign exchanges, any profits that the Series might
realize in trading could be eliminated by adverse changes in the exchange
rate, or the Series could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not.
BANK SECURITIES_(Money Market Portfolio) To the extent the Money
Market Portfolio's investments are concentrated in the banking industry,
the Series will have correspondingly greater exposure to the risk factors
which are characteristic of such investments. Sustained increases in
interest rates can adversely affect the availability or liquidity and
cost of capital funds for a bank's lending activities, and a
deterioration in general economic conditions could increase the exposure
to credit losses. In addition, the value of and the investment return on
the Money Market Portfolio's shares could be affected by economic or
regulatory developments in or related to the banking industry, which
industry also is subject to the effects of the concentration of loan
portfolios in leveraged transactions and in particular businesses, and
competition within the banking industry as well as with other types of
financial institutions. The Money Market Portfolio, however, will seek to
minimize its exposure to such risks by investing only in debt securities
which are determined to be of high quality.
EQUITY SECURITIES_(Capital Appreciation, Growth and Income,
International Equity, Managed Assets and Small Cap Portfolios) Investors
should be aware that equity securities fluctuate in value, often based on
factors unrelated to the value of the issuer of the securities, and that
fluctuations can be pronounced. The securities of the smaller companies
in which each such Series may invest may be subject to more abrupt or
erratic market movements than larger, more-established companies, both
because the securities typically are traded in lower volume and because
the issuers typically are subject to a greater degree to changes in
earnings and prospects. As a result, a Series investing in such securities
may be subject to greater investment risks than those assumed by some
other investment companies. Changes in the value of the Series' portfolio
securities will result in changes in the value of such Series' shares and
thus the Series' yield and total return to investors.
FIXED INCOME SECURITIES_(All Series) Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely
Page 35
affected by changes in interest rates and, therefore, are subject to the
risk of market price fluctuations. Certain securities that may be
purchased by a Series, such as those with interest rates that fluctuate
directly or indirectly based on multiples of a stated index, are designed
to be highly sensitive to changes in interest rates and can subject the
holders thereof to extreme reductions of yield and possibly loss of
principal.
The values of fixed income securities also may be affected by
changes in the credit rating or financial condition of the issuing
entities. Certain debt securities purchased by the Managed Assets, Growth
and Income, International Equity and Quality Bond Portfolios, such as
those rated Baa by Moody's and BBB by Standard & Poor's, Fitch and Duff,
may be subject to such risk with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated
fixed income securities. Obligations which are rated Baa by Moody's are
considered medium grade obligations; they are neither highly protected
nor poorly secured, and are considered by Moody's to have speculative
characteristics. Bonds rated BBB by Standard & Poor's are regarded as
having adequate capacity to pay interest and repay principal for bonds in
this category than in higher rated categories. Bonds rated BBB by Fitch
are considered investment grade and of satisfactory credit quality;
however, adverse changes in economic conditions and circumstances are
more likely to have an adverse impact on these bonds and, therefore,
impair timely payment. Bonds rated BBB by Duff have below average
protection factors but nonetheless are considered sufficient for prudent
investment.
SPECIAL CONSIDERATIONS RELATING TO STRIPPED SECURITIES_(All Series)
A Stripped Security is a debt obligation that does not entitle the holder
to any periodic payments of interest prior to maturity and therefore is
issued and traded at a discount from its face amount. The discount from
face value at which Stripped Securities are purchased varies depending on
the time remaining until maturity, prevailing interest rates, the
liquidity of the security and the perceived credit quality of the issuer.
Because the discount from face value is known at the time of investment,
investors holding Stripped Securities until maturity know the total
amount of their investment return at the time of investment. In contrast,
a portion of the total realized return from conventional interest-paying
obligations comes from the reinvestment of periodic interest. Since the
rate to be earned on these reinvestments may be higher or lower than the
rate quoted on the interest-paying obligations at the time of the
original purchase, the investment's total return is uncertain even for
investors holding the securities to their maturity. This uncertainty is
commonly referred to as reinvestment risk and can have a significant
impact on total realized investment return. With Stripped Securities,
however, there are no cash distributions to reinvest, so investors bear no
reinvestment risk if they hold the Stripped Securities to maturity.
Stripped Securities can be sold prior to their due date in the
secondary market at their then prevailing market value, which depends
primarily on the time remaining to maturity, prevailing levels of
interest rates and the perceived credit quality of the issuer, which may
be more or less than the securities' value. The market prices of Stripped
Securities are generally more volatile than the market prices of
securities that pay interest periodically and, accordingly, are likely to
respond to a greater degree to changes in interest rates than do other
debt obligations having similar maturities and credit quality
characteristics. As a result, the net asset value of shares of the Zero
Coupon 2000 Portfolio may fluctuate over a greater range than shares of
other mutual funds that invest in obligations of the U.S. Government or
corporations having similar maturities but that make current
distributions of interest.
As an open-end investment company, the Zero Coupon 2000
Portfolio will be issuing new shares and will be required to redeem its
shares upon the request of any shareholder
Page 36
at the net asset value next determined after receipt of the request.
However, because of the price volatility of Stripped Securities prior to
maturity, a shareholder who redeems shares may realize an amount that is
less or greater than the entire amount initially invested. Accordingly,
the Zero Coupon 2000 Portfolio may not be appropriate for investors that
expect to have a current need for income from the investment or wish to
liquidate their investment prior to December 31, 2000.
Each year the Zero Coupon 2000 Portfolio will be required to
accrue an increasing amount of income on its Stripped Securities. To
maintain its tax status as a regulated investment company and to avoid
imposition of excise taxes, however, the Zero Coupon 2000 Portfolio and
any other Series that invests in Stripped Securities will be required to
distribute dividends equal to substantially all of its net investment
income, including the accrued income, derived from its Stripped
Securities for which it receives no payments in cash prior to their
maturity.
The Series cannot assure that it will be able to achieve a
certain level of return due to the possible necessity of having to sell
certain Stripped Securities to pay expenses, dividends or meet
redemptions at times and at prices that might be disadvantageous or,
alternatively, the need to invest assets received from new purchases at
prevailing interest rates, which would expose the Series to reinvestment
risk. In addition, no assurance can be given as to the liquidity of the
market for certain of these securities. Determination as to the liquidity
of such securities will be made in accordance with guidelines established
by the Fund's Board of Trustees. In accordance with such guidelines, the
Series' adviser will monitor the Series' investments in such securities
with particular regard to trading activity, availability of reliable
price information and other relevant information.
The Fund may seek to satisfy redemption requests and cash
payments of dividends and distributions by liquidating a portion of its
holdings of securities other than Stripped Securities. No assurance can
be given that this strategy will prove successful. For further
information on Stripped Securities see "Portfolio Securities_Stripped
Treasury Securities" and "Portfolio Securities_Stripped Corporate
Securities" herein.
LOWER RATED SECURITIES_(Growth and Income, Managed Assets and
Quality Bond Portfolios) Shareholders should carefully consider the
relative risks of investing in higher yielding (and, therefore, higher
risk) debt securities (convertible debt securities with respect to the
Growth and Income Portfolio) in which such Series may invest. These are
securities such as those rated Ba by Moody's or BB by Standard & Poor's,
or as low as those rated B by Moody's and Standard & Poor's in the case
of the Quality Bond Portfolio, or as low as those rated Caa by Moody's or
CCC by Standard & Poor's, Fitch or Duff in the case of the Growth and
Income Portfolio, or as low as the lowest rating assigned by Moody's or
Standard & Poor's in the case of the Managed Assets Portfolio. They
generally are not meant for short-term investing and may be subject to
certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed income
securities. Obligations rated Ba by Moody's are judged to have
speculative elements; their future cannot be considered as well assured
and often the protection of interest and principal payments may be very
moderate. Obligations rated BB by Standard & Poor's are regarded as
having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other
speculative grade debt, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
Securities rated Caa by Moody's or CCC by Standard & Poor's, Fitch or
Duff are considered to have predominantly speculative characteristics
with respect to capacity to pay interest and repay principal and to be of
poor standing.
Page 37
Obligations rated C by Moody's are regarded as having extremely poor
prospects of ever attaining any real investment standing. Obligations
rated D by Standard & Poor's are in default and the payment of interest
and/or repayment of principal is in arrears. Such obligations, though high
yielding, are characterized by great risk. See "Appendix" in the Statement
of Additional Information for a general description of Moody's, Standard
& Poor's, Fitch and Duff ratings of obligations. The ratings of Moody's,
Standard & Poor's, Fitch and Duff represent their opinions as to the
quality of the securities which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value
risk of these securities. Therefore, although these ratings may be an
initial criterion for selection of portfolio investments, the Series'
adviser also will evaluate these securities and the ability of the
issuers of such securities to pay interest and principal. The Series'
ability to achieve its investment objective may be more dependent on its
adviser's credit analysis than might be the case for a fund that invested
in higher rated securities. Once the rating of a portfolio security has
been changed, the Series will consider all circumstances deemed relevant
in determining whether to continue to hold the security.
The market price and yield of bonds rated Ba or lower by
Moody's or BB or lower by Standard & Poor's, Fitch or Duff are more
volatile than those of higher rated bonds. Factors adversely affecting
the market price and yield of these securities will adversely affect a
Series' net asset value. In addition, the retail secondary market for
these bonds may be less liquid than that of higher rated bonds; adverse
conditions could make it difficult at times for the Series to sell
certain securities or could result in lower prices than those used in
calculating the Series' net asset value.
The market values of certain of these lower rated obligations
tend to reflect individual corporate developments to a greater extent
than do higher rated securities, which react primarily to fluctuations in
the general level of interest rates, and tend to be more sensitive to
economic conditions than are higher rated securities. Companies that
issue such securities often are highly leveraged and may not have
available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally
is greater than is the case with higher rated securities.
WHEN-ISSUED SECURITIES_(All Series) A Series may purchase securities
on a when-issued basis, which means that delivery and payment for such
securities take place after the customary securities settlement period.
The payment obligation and the interest rate that will be received are
fixed at the time the Series enters into the commitment. A Series will
make commitments to purchase such securities only with the intention of
actually acquiring the securities, but the Series may sell these
securities before the settlement date if it is deemed advisable. The
Series will not accrue income in respect of a when-issued security prior
to its stated delivery date. No additional when-issued commitments will
be made for a Series if more than 20% of such Series' net assets would be
so committed.
Securities purchased on a when-issued basis and the securities
held in a Series' portfolio are subject to changes in value (both
generally changing in the same way, i.e., appreciating when interest
rates decline and depreciating when interest rates rise) based upon the
public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities purchased
on a when-issued basis may expose the Series to risks because they may
experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued basis can involve the additional risk that
the yield available in the market when the delivery takes place actually
may be higher than that obtained in the transaction itself. A segregated
account of the Series consisting of cash,
Page 38
cash equivalents or U.S. Government securities or other liquid debt
securities at least equal at all times to the amount of the when-issued
commitments will be established and maintained at the Fund's custodian
bank. Purchasing securities on a when-issued basis when the Series is
fully or almost fully invested may result in greater potential fluctuation
in the value of such Series' net assets and its net asset value per share.
MUNICIPAL LEASE/PURCHASE OBLIGATIONS_(Growth and Income and Quality
Bond Portfolios) Certain municipal lease/purchase obligations in which
the Series may invest may contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease payments in
future years unless money is appropriated for such purpose on a yearly
basis. Although "non-appropriation" lease/purchase obligations are
secured by the leased property, disposition of the leased property in the
event of foreclosure might prove difficult. In evaluating the credit
quality of a municipal lease/purchase obligation that is unrated, The
Dreyfus Corporation will consider, on an ongoing basis, a number of
factors including the likelihood that the issuing municipality will
discontinue appropriating funding for the leased property.
PORTFOLIO TURNOVER_(All Series) No Series will consider portfolio
turnover to be a limiting factor in making investment decisions. Under
normal market conditions, the portfolio turnover rates are anticipated to
exceed 100% for the Managed Assets and Small Cap Portfolios, to be less
than 100% for the Capital Appreciation Portfolio and to be less than 150%
for the Growth and Income, Quality Bond, Zero Coupon 2000 and
International Equity Portfolios. Higher portfolio turnover rates are
likely to result in comparatively greater brokerage commissions and
transaction costs. In addition, short-term gains realized from portfolio
transactions are taxable to shareholders as ordinary income. The Money
Market Portfolio may have a high portfolio turnover, but that should not
adversely affect the Series since it usually does not pay brokerage
commissions when it purchases short-term debt obligations.
SHORT-TERM TRADING_(Growth and Income, International Equity, Managed
Assets and Small Cap Portfolios) Each Series intends to engage in certain
short-term investment techniques, but may be limited in its use of such
activities designed to generate short-term capital gains due to certain
requirements imposed on investment companies by the Internal Revenue Code
of 1986, as amended (the "Code"). Specifically, to qualify as a regulated
investment company, a Series must earn no more than 30% of its gross
income from the disposition of securities held for less than three
months. This 30% test limits the extent to which a Series may sell
securities held for less than three months, effect short sales of
securities held for less than three months, write options expiring in
less than three months and invest in certain futures contracts, among
other strategies.
MORTGAGE-BACKED SECURITIES_(Growth and Income Portfolio) No
assurance can be given as to the liquidity of the market for certain
mortgage-backed securities, such as collateralized mortgage obligations
and stripped mortgage-backed securities. Determination as to the
liquidity of such securities will be made in accordance with guidelines
established by the Fund's Board of Trustees. In accordance with such
guidelines, The Dreyfus Corporation will monitor the Series' investments
in such securities with particular regard to trading activity,
availability of reliable price information and other relevant
information.
NON-DIVERSIFIED PORTFOLIOS_(Growth and Income and International
Equity Portfolios) The Growth and Income and International Equity
Portfolios are classified as "non-diversified" investment companies,
which means that the proportion of such Series' assets that may be
invested in the securities of a single issuer is not limited by the
Investment Company Act of 1940. A "diversified" investment company is
required by the Investment Company Act
Page 39
of 1940 generally, with respect to 75% of its total assets, to invest not
more than 5% of such assets in the securities of a single issuer and to
hold not more than 10% of the outstanding voting securities of a single
issuer. However, each Series intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Code,
which requires that, at the end of each quarter of its taxable year,
(i) at least 50% of the market value of the Series' total assets be
invested in cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other
securities of any one issuer limited for the purposes of this calculation
to an amount not greater than 5% of the value of the Series' total assets
and 10% of the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of its total assets be invested in the
securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies). Since a
relatively high percentage of each of these Series' assets may be invested
in the securities of a limited number of issuers, some of which may be
within the same industry or economic sector, the Series' portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified
investment company.
STATE INSURANCE REGULATION_(All Series) The Fund is intended to be a
funding vehicle for VA contracts and VLI policies to be offered by
Participating Insurance Companies and will seek to be offered in as many
jurisdictions as possible. Certain states have regulations concerning
concentration of investments, purchase and sale of futures contracts and
short sales of securities, among other techniques. If applied to the Fund,
each Series may be limited in its ability to engage in such techniques
and to manage its portfolio with the flexibility provided herein. It is
the Fund's intention that each Series operate in material compliance with
current insurance laws and regulations, as applied, in each jurisdiction
in which the Series is offered.
SIMULTANEOUS INVESTMENT BY OTHER SERIES OR FUNDS_(All Series)
Investment decisions for each Series are made independently from those of
the other Series and investment companies managed by The Dreyfus
Corporation (and, with respect to the Managed Assets Portfolio, Comstock
Partners, Inc., with respect to the Capital Appreciation Portfolio, Fayez
Sarofim & Co. and, with respect to the International Equity Portfolio,
M&G Investment Management Limited). However, if such other Series or
investment companies are prepared to invest in, or desire to dispose of,
securities of the type in which the Series invests at the same time as a
Series, available investments or opportunities for sales will be
allocated equitably to each. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by a Series
or the price paid or received by a Series.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947 and serves as the Fund's investment
adviser. The Dreyfus Corporation is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1995, The Dreyfus Corporation managed or
administered approximately $72 billion in assets for more than 1.9
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under an Investment Advisory Agreement
with the Fund, subject to the overall authority of the Fund's Board of
Trustees in accordance with Massachusetts law.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and
Page 40
services in domestic and selected international markets. Mellon is among
the twenty-five largest bank holding companies in the United States based
on total assets. Mellon's principal wholly-owned subsidiaries are Mellon
Bank, N.A., Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCOCredit Corporation and a number of companies
known as Mellon Financial Services Corporations. Through its subsidiaries,
including The Dreyfus Corporation, Mellon managed approximately $193
billion in assets as of December 31, 1994, including approximately $70
billion in mutual fund assets. As of December 31, 1994, various
subsidiaries of Mellon provided non-investment services, such as
custodial or administration services, for approximately $654 billion in
assets including approximately $74 billion in mutual fund assets.
Investment decisions for the Managed Assets Portfolio are made
by the Investment Policy Committee of Comstock Partners, Inc., which
serves as the Series' sub-investment adviser, and no person is primarily
responsible for making recommendations to that committee. The primary
portfolio manager of the Zero Coupon 2000 and Quality Bond Portfolios is
Garitt Kono. He has held that position since June 1994 and has been
employed by The Dreyfus Corporation since September 1, 1992. For more
than five years prior to joining The Dreyfus Corporation, Mr. Kono was
Vice President _ Fixed Income at The First Boston Corporation. The
primary portfolio manager of the Small Cap Portfolio is Thomas A. Frank.
He has held that position since the Fund's inception and has been
employed by The Dreyfus Corporation since 1985. The primary portfolio
manager of the Capital Appreciation Portfolio is Fayez Sarofim of Fayez
Sarofim & Co., the Series' sub-investment adviser. He has held that
position since the Series commenced operations and has been employed by
Fayez Sarofim & Co. since 1958. The primary portfolio manager of the
Growth and Income Portfolio is Richard Hoey. He has held that position
since the Series commenced operations and has been employed by The
Dreyfus Corporation since April 1991. From April 1990 to March 1991, Mr.
Hoey was Chief Economist and a Managing Director of Barclays de Zoete
Wedd. The primary portfolio manager of the International Equity Portfolio
is William Vincent of M&G Investment Management Limited, the Series'
sub-investment adviser. He has held that position since April 1995 and
has been employed by M&G Investment Management Limited since 1992. From
1989 to 1992, Mr.Vincent was a Managing Director of Societe Generale of
Touche Remnant, U.S.A. The Fund's other portfolio managers are identified
in the Fund's Statement of Additional Information. The Dreyfus
Corporation, Comstock Partners, Inc., Fayez Sarofim & Co. and M&G
Investment Management Limited also provide research services for the
relevant Series as well as for other funds advised by The Dreyfus
Corporation, Comstock Partners, Inc., Fayez Sarofim & Co. or M&G
Investment Management Limited, respectively, through a professional staff
of portfolio managers and securities analysts.
Under the terms of the Investment Advisory Agreement, the Fund
has agreed to pay The Dreyfus Corporation a monthly fee at the annual
rate of .375 of 1% of the value of the Managed Assets Portfolio's average
daily net assets; .75 of 1% of the value of the Growth and Income
Portfolio's average daily net assets; .75 of 1% of the value of the
International Equity Portfolio's average daily net assets; .50 of 1% of
the value of the Money Market Portfolio's average daily net assets; .65
of 1% of the value of the Quality Bond Portfolio's average daily net
assets; .75 of 1% of the value of the Small Cap Portfolio's average daily
net assets; and .45 of 1% of the value of the Zero Coupon 2000
Portfolio's average daily net assets. Under the terms of the Investment
Advisory Agreement with respect to the Capital Appreciation Portfolio,
the Fund has agreed to pay The Dreyfus Corporation an annual fee, payable
monthly, as set forth below:
Page 41
<TABLE>
<CAPTION>
ANNUAL FEE AS A
PERCENTAGE OF
AVERAGE DAILY NET
ASSETS OF THE CAPITAL
TOTAL ASSETS APPRECIATION PORTFOLIO
------------- --------------------------
<S> <C> <C>
0 to $150 million..................... .55 of 1%
$150 million to $300 million.......... .50 of 1%
$300 million or more.................. .375 of 1%
</TABLE>
For the fiscal year ended December 31, 1994, the Fund paid The Dreyfus
Corporation an investment advisory fee with respect to the Small Cap
Portfolio at the effective annual rate of .23 of 1% of the value of the
Small Cap Portfolio's average daily net assets. For the fiscal year ended
December 31, 1994, the Fund paid no other investment advisory fees to The
Dreyfus Corporation with respect to any of the other Series pursuant to
undertakings by The Dreyfus Corporation.
With respect to the Managed Assets Portfolio, Comstock
Partners, Inc., a registered investment adviser located at 10 Exchange
Place, Jersey City, New Jersey 07302, serves as the Series'
sub-investment adviser. Comstock Partners, Inc. was formed in 1986 and,
as of December 31, 1994, managed approximately $979 million in assets for
other mutual funds and several discretionary accounts. Comstock Partners,
Inc., subject to the supervision and approval of The Dreyfus Corporation,
provides investment advisory assistance and the day-to-day management of
the Managed Assets Portfolio, as well as research and statistical
information under a Sub-Investment Advisory Agreement with the Fund,
subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law. Under the terms of the Sub-Investment
Advisory Agreement with respect to the Managed Assets Portfolio, the Fund
has agreed to pay Comstock Partners, Inc. a monthly fee at the annual
rate of .375 of 1% of the value of the Managed Assets Portfolio's average
daily net assets. For the year ended December 31, 1994, the Fund paid
Comstock Partners, Inc. a sub-investment advisory fee with respect to the
Managed Assets Portfolio at the effective annual rate of .17 of 1% of the
Managed Assets Portfolio's average daily net assets.
With respect to the Capital Appreciation Portfolio, Fayez
Sarofim & Co., a registered investment adviser located at Two Houston
Center, Suite 2907, Houston, Texas 77010, serves as the Series'
sub-investment adviser. Fayez Sarofim & Co. was formed in 1958 and, as of
December 31, 1994, provided investment advisory services to discretionary
accounts having aggregate assets of approximately $21.2 billion. Fayez
Sarofim & Co., subject to the supervision and approval of The Dreyfus
Corporation, provides investment advisory assistance and the day-to-day
management of the Capital Appreciation Portfolio, as well as investment
research and statistical information, under a Sub-Investment Advisory
Agreement with the Fund, subject to the overall authority of the Fund's
Board of Trustees in accordance with Massachusetts law. Under the terms
of the Sub-Investment Advisory Agreement with respect to the Capital
Appreciation Portfolio, the Fund has agreed to pay Fayez Sarofim & Co. an
annual fee, payable monthly, as set forth below:
<TABLE>
<CAPTION>
ANNUAL FEE AS A
PERCENTAGE OF
AVERAGE DAILY NET
ASSETS OF THE CAPITAL
TOTAL ASSETS APPRECIATION PORTFOLIO
------------ ----------------------
<S> <C> <C>
0 to $150 million..................... .20 of 1%
$150 million to $300 million.......... .25 of 1%
$300 million or more.................. .375 of 1%
</TABLE>
For the year ended December 31, 1994, no sub-investment advisory fee
was paid to Fayez Sarofim & Co. by the Fund with respect to the Capital
Appreciation Portfolio pursuant to an undertaking then in effect.
Page 42
With respect to the International Equity Portfolio, The
Dreyfus Corporation has engaged M&G Investment Management Limited, a
registered investment adviser located at Three Quays Tower Hill, London
EC3R 6BQ, England, to serve as the Series' sub-investment adviser. M&G
Investment Management Limited was formed in 1961 and, as of February 28,
1995, managed approximately $21.5 billion in assets. M&G Investment
Management Limited, subject to the supervision and approval of The
Dreyfus Corporation provides investment advisory assistance and the
day-to-day management of the International Equity Portfolio, as well as
research and statistical information under a Sub-Investment Advisory
Agreement with The Dreyfus Corporation, subject to the overall authority
of the Fund's Board of Trustees in accordance with Massachusetts law.
Under the terms of the Sub-Investment Advisory Agreement with respect to
the International Equity Portfolio, The Dreyfus Corporation has agreed to
pay M&G Investment Management Limited a monthly fee at the annual rate of
.30 of 1% of the value of the International Equity Portfolio's average
daily net assets. For the fiscal year ended December 31, 1994, no
sub-investment advisory fee was paid to M&G Investment Management Limited
by The Dreyfus Corporation with respect to the International Equity
Portfolio pursuant to an undertaking then in effect.
The advisory fees of the Managed Assets, Capital Appreciation,
Growth and Income, International Equity and Small Cap Portfolios are
higher than those paid by most other investment companies. From time to
time, The Dreyfus Corporation (and, with respect to the Managed Assets
Portfolio, Comstock Partners, Inc. and, with respect to the Capital
Appreciation Portfolio, Fayez Sarofim & Co.) may waive receipt of its
fees and/or voluntarily assume certain expenses of the Fund, which would
have the effect of lowering the overall expense ratio of the Fund and
increasing yield to investors at the time such amounts are waived or
assumed, as the case may be. The Fund will not pay The Dreyfus
Corporation (or, with respect to the Managed Assets Portfolio, Comstock
Partners, Inc. or, with respect to the Capital Appreciation Portfolio,
Fayez Sarofim & Co.) at a later time for any amounts it may waive nor
will the Fund reimburse The Dreyfus Corporation (or, with respect to the
Managed Assets Portfolio, Comstock Partners, Inc. or, with respect to the
Capital Appreciation Portfolio, Fayez Sarofim & Co.) for any amounts it
may assume.
The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor is a wholly-owned subsidiary of FDI Distribution
Services, Inc., a provider of mutual fund administration services, which
in turn is a wholly-owned subsidiary of FDI Holdings Inc., the parent
company of which is Boston Institutional Group,Inc.
The Shareholder Services Group, Inc., a subsidiary of First
Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is
the Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent").
The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Fund's Custodian.
HOW TO BUY FUND SHARES
Separate accounts of the Participating Insurance Companies
place orders based on, among other things, the amount of premium payments
to be invested pursuant to VA contracts and VLI policies. Individuals may
not place orders directly with the Fund. See the prospectus of the
separate account of the Participating Insurance Company for more
information on the purchase of Fund shares and with respect to the
availability for investment in specific portfolios of the Fund. The Fund
does not issue share certificates.
Purchase orders from separate accounts based on premiums and
transaction requests received by the Participating Insurance Company on a
given business day in accordance
Page 43
with procedures established by the Participating Insurance Company will
be effected at the net asset value of the applicable Series determined on
such business day if the orders are received by the Fund in proper form
and in accordance with applicable requirements on the next business day
and Federal Funds (monies of member banks within the Federal Reserve
System which are held on deposit at a Federal Reserve Bank) in the net
amount of such orders are received by the Fund on the next business day
in accordance with applicable requirements. It is each Participating
Insurance Company's responsibility to properly transmit purchase orders
and Federal Funds in accordance with applicable requirements. VA contract
holders and VLI policy holders should refer to the prospectus for their
contracts or policies in this regard.
Fund shares are sold on a continuous basis. Net asset value
per share is determined as of the close of trading on the floor of the
New York Stock Exchange (currently 4:00 p.m., New York time), on each day
that the New York Stock Exchange is open for business. For purposes of
determining net asset value, options and futures will be valued 15
minutes after the close of trading on the floor of the New York Stock
Exchange. Net asset value per share is computed by dividing the value of
the net assets of each Series (i.e., the value of its assets less
liabilities) by the total number of shares outstanding. The Zero Coupon
2000 and Quality Bond Portfolios' investments are valued each business
day by an independent pricing service approved by the Board of Trustees
and are valued at fair value as determined by the pricing service. The
pricing service's procedures are reviewed under the general supervision
of the Board of Trustees. The Money Market Portfolio uses the amortized
cost method of valuing its investments. The Managed Assets, Capital
Appreciation, International Equity, Growth and Income and Small Cap
Portfolios' investments are valued based on market value, or where market
quotations are not readily available, based on fair value as determined
in good faith by the Board of Trustees. For further information regarding
the methods employed in valuing each Series' investments, see
"Determination of Net Asset Value" in the Fund's Statement of Additional
Information.
HOW TO REDEEM FUND SHARES
Series shares may be redeemed at any time by the separate
accounts of the Participating Insurance Companies. Individuals may not
place redemption orders directly with the Fund. Redemption requests from
separate accounts based on premiums and transaction requests received by
the Participating Insurance Company on a given business day in accordance
with procedures established by the Participating Insurance Company will
be effected at the net asset value of the applicable Series determined on
such business day if the requests are received by the Fund in proper form
and in accordance with applicable requirements on the next business day.
It is each Participating Insurance Company's responsibility to properly
transmit redemption requests in accordance with applicable requirements.
VA contract holders and VLI policy holders should consult their
Participating Insurance Company in this regard. The value of the shares
redeemed may be more or less than their original cost, depending on the
Series' then-current net asset value. No charges are imposed by the Fund
when shares are redeemed.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission.
Should any conflict between VA contract holders and VLI policy
holders arise which would require that a substantial amount of net assets
be withdrawn, orderly portfolio management could be disrupted to the
potential detriment of such contract holders and policy holders.
Page 44
DIVIDENDS, DISTRIBUTIONS AND TAXES
MONEY MARKET PORTFOLIO_Declares dividends from net investment income
on each day that the Fund determines its net asset value. Dividends
usually are paid on the last calendar day of each month. The earnings for
Saturdays, Sundays and holidays are declared as dividends on the next
business day.
ZERO COUPON 2000 AND QUALITY BOND PORTFOLIOS_Declare and pay
dividends from net investment income monthly.
GROWTH AND INCOME PORTFOLIO_Declares and pays dividends from net
investment income quarterly.
CAPITAL APPRECIATION, INTERNATIONAL EQUITY, MANAGED ASSETS AND SMALL
CAP PORTFOLIOS_Declare and pay dividends from net investment income
annually.
APPLICABLE TO ALL SERIES_Each Series will make distributions from
net realized securities gains, if any, once a year, but may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the Investment Company Act of 1940. No Series will make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. Dividends are
automatically reinvested in additional shares at net asset value unless
payment in cash is elected. Shares begin earning dividends on the day the
purchase order is effective. If all shares in an account are redeemed at
any time, all dividends to which the shareholder is entitled will be paid
along with the proceeds of the redemption. All expenses are accrued daily
and deducted before declaration of dividends to investors.
Notice as to the tax status of dividends and distributions
will be mailed to shareholders annually. Dividends from net investment
income (including discount recognized as ordinary income, if any),
together with distributions of net realized short-term securities gains
and all or a portion of any gains realized from the sale or other
disposition of certain market discount bonds, generally are taxable as
ordinary income whether received in cash or reinvested in additional
shares. Distributions from net realized long-term securities gains
generally are taxable as long-term capital gains whether received in cash
or reinvested in additional shares. Since the Fund's shareholders are the
Participating Insurance Companies and their separate accounts, no
discussion is included herein as to the Federal income tax consequences
to VA contract holders and VLI policy holders. For information concerning
the Federal income tax consequences to such holders, see the prospectus
for such contract or policy.
Section 817(h) of the Code requires that the investments of a
segregated asset account of an insurance company be "adequately
diversified" as provided therein or in accordance with U.S. Treasury
Regulations in order for the account to serve as the basis for VA
contracts or VLI policies. Section 817(h) and the U.S. Treasury
Regulations issued thereunder provide the manner in which a segregated
asset account will treat investments in a regulated investment company
for purposes of the diversification requirements. If a Series satisfies
certain conditions, a segregated asset account owning shares of the
Series will be treated as owning multiple investments consisting of the
account's proportionate share of each of the assets of the Series. Each
Series intends to satisfy the requisite conditions so that the shares of
the Series owned by a segregated asset account of a Participating
Insurance Company will be treated as multiple investments.
Management of the Fund believes that each Series has qualified
for the fiscal year ended December 31, 1994 as a "regulated investment
company" under the Code. Each Series intends to continue to so qualify if
such qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves the Series of
any liability for Federal income taxes to the extent its earnings are
distributed in accordance with applicable
Page 45
provisions of the Code. The Series may be subject to a non-deductible 4%
excise tax, measured with respect to certain undistributed amounts of
investment income and capital gains.
Participating Insurance Companies should consult their tax
advisers regarding specific questions as to Federal, state or local taxes.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated October
29, 1986, and commenced operations on August 31, 1990. The Fund is
authorized to issue an unlimited number of shares of beneficial interest,
par value $.001 per share. Each share has one vote. In accordance with
current law, the Fund anticipates that a Participating Insurance Company
issuing a VA contract or VLI policy that participates in the Fund will
request voting actions from policy holders and will vote shares in
proportion to the voting instructions received. For further information
on voting rights, see the prospectus for the VA contract or VLI policy
for information in respect of voting.
To date, the Trustees have authorized the creation of eight
Series of shares. All consideration received by the Fund for shares of
one of the Series, and all assets in which such consideration is
invested, will belong to that Series (subject only to the rights of
creditors of the Fund) and will be subject to the liabilities related
thereto. The income attributable to, and the expenses of, one Series
would be treated separately from those of the other Series. See
"Management of the Fund."
Rule 18f-2 under the Investment Company Act of 1940 provides
that any matter required to be submitted under the provisions of the
Investment Company Act of 1940 or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company
such as the Fund will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of
each Series affected by such matter. Rule 18f-2 further provides that a
Series shall be deemed to be affected by a matter unless it is clear that
the interests of each Series in the matter are identical or that the
matter does not affect any interest of such Series. However, the Rule
exempts the selection of independent accountants and the election of
trustees from the separate voting requirements of the Rule.
Under Massachusetts law, shareholders, under certain
circumstances, could be held personally liable for the obligations of the
Fund. However, the Trust Agreement disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Fund or a Trustee. The Trust Agreement provides
for indemnification from the Fund's property for all losses and expenses
of any shareholder held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the
Fund itself would be unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by
the Fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Trustees intend to
conduct the operations of the Fund in such a way so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of
the Fund. As described under "Management of the Fund" in the Fund's
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances
may have the right to call a meeting of shareholders for the purpose of
voting to remove Trustees.
The Transfer Agent maintains a record of each shareholder's
ownership and will send confirmations and statements of account.
Page 46
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by
calling 516-338-3300.
Owners of VLI policies and VA contracts issued by Participating
Insurance Companies for which shares of one or more Series are the
investment vehicle will receive from the Participating Insurance
Companies unaudited semi-annual financial statements and audited year-end
financial statements certified by the Fund's independent public auditors.
Each report will show the investments owned by the Fund and the market
values thereof as determined by the Trustees and will provide other
information about the Fund and its operations.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
VIFP7050195
Page 47
DREYFUS VARIABLE INVESTMENT FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Variable Investment Fund (the "Fund"), dated May 1, 1995, as it
may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call (516) 338-3300.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies . . . . . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . .B-15
Investment Advisory Agreements . . . . . . . . . . . . . . . . . . . .B-20
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . .B-27
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . .B-27
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . .B-27
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . .B-29
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . .B-31
Yield and Performance Information. . . . . . . . . . . . . . . . . . .B-33
Information About the Fund . . . . . . . . . . . . . . . . . . . . . .B-35
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . .B-35
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-36
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .B-43
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . .B-76
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
Portfolio Securities
Bank Obligations. (All Series) Domestic commercial banks organized
under Federal law are supervised and examined by the Comptroller of the
Currency and are required to be members of the Federal Reserve System and
to have their deposits insured by the Federal Deposit Insurance Corporation
(the "FDIC"). Domestic banks organized under state law are supervised and
examined by state banking authorities but are members of the Federal
Reserve System only if they elect to join. In addition, state banks whose
certificates of deposit ("CDs") may be purchased by the Series are insured
by the Bank Insurance Fund administered by the FDIC (although such
insurance may not be of material benefit to a Series, depending upon the
principal amount of the CDs of each bank held by such Series) and are
subject to Federal examination and to a substantial body of Federal law and
regulation. As a result of Federal or state laws and regulations, domestic
branches of domestic banks generally are required, among other things, to
maintain specified levels of reserves, are limited in the amounts which
they can loan to a single borrower and are subject to other regulations
designed to promote financial soundness. However, not all of such laws and
regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks, such as CDs and time deposits ("TDs"), may be general obligations of
the parent banks in addition to the issuing branch, or may be limited by
the terms of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of domestic
banks. These risks include foreign economic and political developments,
foreign governmental restrictions that may adversely affect payment of
principal and interest on the obligations, foreign exchange controls and
foreign withholding and other taxes on interest income. Foreign branches
and subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as mandatory
reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a
foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent banks in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal or state
regulation as well as governmental action in the country in which the
foreign bank has its head office. In addition, Federal branches licensed
by the Comptroller of the Currency and branches licensed by certain states
("State Branches") may be required to: (1) pledge to the regulator, by
depositing assets with a designated bank within the state, a certain
percentage of their assets as fixed from time to time by the appropriate
regulatory authority; and (2) maintain assets within the state in an amount
equal to a specified percentage of the aggregate amount of liabilities of
the foreign bank payable at or through all of its agencies or branches
within the state. The deposits of Federal branches and State branches must
be insured by the FDIC if such branches take deposits of less than
$100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign
subsidiaries of domestic banks, by foreign branches of foreign banks or by
domestic branches of foreign banks, such investments are carefully
evaluated on a case-by-case basis.
The Fund may purchase CDs issued by banks, savings and loan
associations and similar institutions with less than one billion dollars in
assets, whose deposits are insured by the FDIC, provided a Series purchases
any such CD in a principal amount of not more than $100,000, which amount
would be fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC. Interest payments on
such a CD are not so insured. A Series may not own more than one such CD
per such issuer.
Municipal Lease Obligations. (Quality Bond Portfolio, Growth and
Income Portfolio) Municipal lease obligations or installment purchase
contract obligations (collectively, "lease obligations") have special risks
not ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. The staff of the Securities
and Exchange Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Fund's Board. Pursuant to
such guidelines, the Board has directed the Manager to monitor carefully
the Series' investment in such securities with particular regard to (1) the
frequency of trades and quotes for the lease obligation; (2) the number of
dealers willing to purchase or sell the lease obligation and the number of
other potential buyers; (3) the willingness of dealers to undertake to make
a market in the lease obligation; (4) the nature of the marketplace trades
including the time needed to dispose of the lease obligation, the method of
soliciting offers and the mechanics of transfer; and (5) such other factors
concerning the trading market for the lease obligation as the Manager may
deem relevant. In addition, in evaluating the liquidity and credit quality
of a lease obligation that is unrated, the Fund's Board has directed the
Manager to consider (a) whether the lease can be cancelled; (b) what
assurance there is that the assets represented by the lease can be sold;
(c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. Neither Series will invest more than 15% of the
value of its net assets in lease obligations that are illiquid and in other
illiquid securities.
American, European and Continental Depositary Receipts. (Growth and
Income International Equity and Managed Assets Portfolios) Each of these
Series may invest in American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs") and Continental Depositary Receipts ("CDRs").
Each of these Series may invest in ADRs, EDRs and CDRs through "sponsored"
or "unsponsored" facilities. A sponsored facility is established jointly
by the issuer of the underlying security and a depositary, whereas a
depositary may establish an unsponsored facility without participation by
the issuer of the deposited security. Holders of unsponsored depositary
receipts generally bear all the costs of such facilities and the depositary
of an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts
in respect of the deposited securities.
Mortgage-Related Securities--Government Agency Securities. (Growth
and Income Portfolio) Mortgage-related securities issued by the Government
National Mortgage Association ("GNMA") include GNMA Mortgage Pass-Through
Certificates (also known as "Ginnie Maes") which are guaranteed as to the
timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a
wholly-owned U.S. Government corporation within the department of Housing
and Urban Development. GNMA certificates also are supported by the
authority of GNMA to borrow funds from the U.S. Treasury to make payments
under its guarantee.
Mortgage-Related Securities--Government Related Securities. (Growth
and Income Portfolio) Mortgage-related securities issued by the Federal
National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely
the obligations of FNMA and are not backed by or entitled to the full faith
and credit of the United States. FNMA is a government-sponsored
organization owned entirely by private stockholders. Fannie Maes are
guaranteed as to timely payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). FHLMC is a corporate
instrumentality of the United States created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment
of interest, which is guaranteed by FHLMC. FHLMC guarantees either
ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
Unit Investment Trust Purchases. (Managed Assets Portfolio) Under
the Investment Company Act of 1940, as amended (the "Act"), the Series'
purchases of securities of unit investment trusts are limited, subject to
certain exceptions, to a maximum of (i) 3% of the total outstanding voting
stock of any one unit investment trust, (ii) 5% of the value of the Series'
total assets with respect to the purchase of the securities of any one unit
investment trust and (iii) 10% of the value of the Series' total assets
with respect to its aggregate purchases of securities of unit investment
trusts.
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities acquired
by the Series under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the Series entering into them. In an attempt to reduce the risk
of incurring a loss on the repurchase agreement, a Series will enter into
repurchase agreements only with domestic banks with total assets in excess
of one billion dollars or primary government securities dealers reporting
to the Federal Reserve Bank of New York, with respect to securities of the
type in which it may invest or government securities regardless of their
remaining maturities, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. The Series' adviser will monitor on an ongoing basis
the value of the collateral to assure that it always equals or exceeds the
repurchase price. Each Series will consider on an ongoing basis the
creditworthiness of the institutions with which such Series enters into
repurchase agreements.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain of these securities held by a Series,
the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board of Trustees.
Because it is not possible to predict with assurance how the market for
restricted securities will develop, the Fund's Board of Trustees has
directed the Series' adviser to monitor carefully such Series' investments
in such securities with particular regard to trading activity, availability
of reliable price information and other relevant information. To the
extent that for a period of time, qualified institutional buyers become
uninterested in purchasing restricted securities pursuant to Rule 144A, a
Series' investing in such securities may have the effect of increasing the
level of illiquidity in the Series' portfolio during such period.
Management Policies
Leverage Through Borrowing. (Growth and Income and Money Market
Portfolios) The Growth and Income Portfolio and, to a limited extent,
Money Market Portfolio may borrow for investment purposes. The Act
requires the Series to maintain continuous asset coverage (that is, total
assets including borrowings, less liabilities exclusive of borrowings) of
300% of the amount borrowed. If the 300% asset coverage should decline as
a result of market fluctuations or other reasons, the Series may be
required to sell some of its portfolio holdings within three days to reduce
the debt and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. The Series also may be required to maintain minimum average balances
in connection with such borrowing or to pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate.
Options Transactions. (Capital Appreciation, Growth and Income,
International Equity, Managed Assets and Small Cap Portfolios) Each of the
Capital Appreciation, Growth and Income, International Equity, Managed
Assets and Small Cap Portfolios may write covered call options on
securities owned by such Series and, except for the Capital Appreciation
Portfolio, may engage in other options transactions, such as purchasing or
writing covered put options. In return for a premium, the writer of a
covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option
(or until a closing purchase transaction can be effected). Nevertheless,
the call writer retains the risk of a decline in the price of the
underlying security. The writer of a covered put option accepts the risk
of a decline in the price of the underlying security. The size of the
premiums that the Series may receive may be adversely affected as new or
existing institutions, including other investment companies, engage in or
increase their option-writing activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may
be below, equal to or above the market values of the underlying securities
at the times the options are written. In the case of call options, these
exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. A Series may write (a) in-the-money call
options when it is expected that the price of the underlying security will
remain stable or decline moderately during the option period, (b)
at-the-money call options when it is expected that the price of the
underlying security will remain stable or advance moderately during the
option period and (c) out-of-the-money call options when it is expected
that the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price,
the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put
options (the reverse of call options as to the relation of exercise price
to market price) may be utilized in the same market environments that such
call options are used in equivalent transactions.
So long as a Series' obligation as the writer of an option continues,
the Series may be assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Series to deliver, in the case of
a call, or take delivery of, in the case of a put, the underlying security
against payment of the exercise price. This obligation terminates when the
option expires or the Series effects a closing purchase transaction. The
Series can no longer effect a closing purchase transaction with respect to
an option once it has been assigned an exercise notice. To secure its
obligation to deliver the underlying security when it writes a call option,
or to pay for the underlying security when it writes a put option, the
Series will be required to deposit in escrow the underlying security or
other assets.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized
securities exchange or in the over-the-counter market. The Fund expects
the Series to write options on securities exchanges and in the
over-the-counter market.
While it may choose to do otherwise, a Series generally will purchase
or write only those options for which it is believed there is an active
secondary market so as to facilitate closing transactions. There is no
assurance that sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any particular option or at
any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated
trading activity or order flow, or other unforeseen events, at times have
rendered certain clearing facilities and securities exchanges inadequate
and resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If as a covered call
option writer a Series is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise.
Stock Index Options. (Growth and Income, International Equity and
Managed Assets Portfolios) The Growth and Income, International Equity and
Managed Assets Portfolios may purchase and write put and call options on
stock indices listed on securities exchanges or traded in the over-the-
counter market. A stock index fluctuates with changes in the market values
of the stocks included in the index.
Options on stock indices are similar to options on stock except that
(a) the expiration cycles of stock index options are monthly, while those
of stock options are currently quarterly, and (b) the delivery requirements
are different. Instead of giving the right to take or make delivery of
stock at a specified price, an option on a stock index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the
amount, if any, by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing
value of the underlying index on the date of exercise, multiplied by (ii) a
fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. The amount of cash received will be
equal to such difference between the closing price of the index and the
exercise price of the option expressed in dollars times a specified
multiple. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a
closing transaction on an exchange or it may let the option expire
unexercised.
Futures Contracts and Options on Futures Contracts. (Growth and
Income, International Equity, Managed Assets and Zero Coupon 2000
Portfolios) Upon exercise of an option, the writer of the option will
deliver to the holder of the option the futures position and the
accumulated balance in the writer's futures margin account, which
represents the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. The potential loss
related to the purchase of an option on futures contracts is limited to the
premium paid for the option (plus transaction costs). Because the value of
the option is fixed at the point of sale, there are no daily cash payments
to reflect changes in the value of the underlying contract; however, the
value of the option does change daily and that change would be reflected in
the net asset value of the relevant Series.
Foreign Currency Transactions. (Capital Appreciation, Growth and
Income, International Equity, Managed Assets and Small Cap Portfolios) If
a Series enters into a currency transaction, the Fund will deposit, if so
required by applicable regulations, with its custodian or sub-custodian
cash or readily marketable securities in a segregated account of the Series
in an amount equal to the value of the Series' total assets committed to
the consummation of the forward contract. If the value of the securities
placed in the segregated account declines, additional cash or securities
will be placed in the account so that the value of the account will equal
the amount of the Series' commitment with respect to the contract.
At or before the maturity of a forward contract, the Series either may
sell a portfolio security and make delivery of the currency, or retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Series will obtain, on
the same maturity date, the same amount of the currency as it is obligated
to deliver. If the Series retains the portfolio security and engages in an
offsetting transaction, the Series, at the time of execution of the
offsetting transaction, will incur a gain or a loss to the extent that
movement has occurred in forward contract prices. Should forward prices
decline during the period between its entering into a forward contract for
the sale of a currency and the date it enters into an offsetting contract
for the purchase of the currency, the Series will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward prices increase,
the Series will suffer a loss to the extent the price of the currency it
has agreed to purchase exceeds the price of the currency it has agreed to
sell.
The cost to a Series of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because transactions in
currency exchange are usually conducted on a principal basis, no fees or
commissions are involved. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities, but it
does establish a rate of exchange that can be achieved in the future.
If a devaluation is generally anticipated, a Series may not be able to
contract to sell the currency at a price above the devaluation level it
anticipates. The requirements for qualification as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"),
may cause a Series to restrict the degree to which it engages in currency
transactions. See "Dividends, Distributions and Taxes."
Lending Portfolio Securities. (All Series) To a limited extent, each
Series may lend its portfolio securities to brokers, dealers and other
financial institutions, provided it receives cash collateral which at all
times is maintained in an amount equal to at least 100% of the current
market value of the securities loaned. By lending its portfolio
securities, a Series can increase its income through the investment of the
cash collateral. For the purposes of this policy, the Fund considers
collateral consisting of U.S. Government securities or irrevocable letters
of credit issued by banks whose securities meet the standards for
investment by the Series to be the equivalent of cash. From time to time,
a Series may return to the borrower or a third party which is unaffiliated
with the Fund, and which is acting as a "placing broker," a part of the
interest earned from the investment of collateral received for securities
loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral;
(3) the Series must be able to terminate the loan at any time; (4) the
Series must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions payable on the loaned
securities, and any increase in market value; (5) the Series may pay only
reasonable custodian fees in connection with the loan; and (6) while any
voting rights on the loaned securities may pass to the borrower, the Fund's
Trustees must terminate the loan and regain the right to vote the
securities if a material event adversely affecting the investment occurs.
These conditions may be subject to future modification.
Short-selling. (Growth and Income Portfolio) The Growth and Income
Portfolio may engage in short-selling of securities it does not own. Until
the Growth and Income Portfolio replaces a borrowed security in connection
with a short sale, the Series will: (a) maintain daily a segregated
account, containing cash or U.S. Government securities, at such a level
that (i) the amount deposited in the account plus the amount deposited with
the broker as collateral will equal the current value of the security sold
short and (ii) the amount deposited in the segregated account plus the
amount deposited with the broker as collateral will not be less than the
market value of the security at the time it was sold short; or (b)
otherwise cover its short position.
The Growth and Income Portfolio will incur a loss as a result of the
short sale if the price of the security increases between the date of the
short sale and the date on which the Series replaces the borrowed security.
The Series will realize a gain if the security declines in price between
those dates.
Risk Factors--Lower Rated Securities. (Growth and Income, Managed
Assets and Quality Bond Portfolios) Each of the Growth and Income, Managed
Assets and Quality Bond Portfolios is permitted to invest in debt
securities (convertible debt securities with respect to the Growth and
Income Portfolio) rated below Baa by Moody's Investors Service, Inc.
("Moody's") and below BBB by Standard & Poor's Corporation ("S&P"), Fitch
Investors Service, Inc. ("Fitch") and Duff & Phelps Credit Rating Co.
("Duff"). In no case, however, will the Quality Bond Portfolio invest in
bonds rated lower than B by Moody's and S&P and in no case will the Growth
and Income Portfolio invest in convertible debt securities rated lower than
Caa by Moody's and CCC by S&P, Fitch and Duff. Bonds rated below Baa by
Moody's and below BBB by S&P, Fitch and Duff, though higher yielding, are
characterized by greater risk. See "Description of the Fund--Investment
Considerations and Risks--Lower Rated Securities" in the Prospectus for a
discussion of certain risks and "Appendix" for a general description of
Moody's, S&P, Fitch and Duff ratings. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these securities. The Series will rely
on its adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Series' adviser
will take into consideration, among other things, the issuer's financial
resources, its sensitivity to economic conditions and trends, its operating
history, the quality of the issuer's management and regulatory matters. It
also is possible that a rating agency might not timely change the rating on
a particular issue to reflect subsequent events. Once the rating of a bond
in the Series' portfolio has been changed, the Series' adviser will
consider all circumstances deemed relevant in determining whether such
Series should continue to hold the security.
Companies that issue certain of these bonds often are highly leveraged
and may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with higher rated securities
and will fluctuate over time. For example, during an economic downturn or
a sustained period of rising interest rates, highly leveraged issuers of
these bonds may experience financial stress. During such periods, such
issuers may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations also may
be affected adversely by specific corporate developments, or the issuer's
inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss because of
default by the issuer is significantly greater for the holders of these
bonds because such bonds generally are unsecured and often are subordinated
to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Manager anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. To
the extent a secondary trading market for these bonds does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Series' ability to dispose of
particular issues when necessary to meet such Series' liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid security market for
certain securities also may make it more difficult for the Series to obtain
accurate market quotations for purposes of valuing the Series' portfolio
and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds are considered by S&P, Moody's, Fitch and
Duff, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in
the higher rating categories.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.
The Series may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The
Series has no arrangement with any persons concerning the acquisition of
such securities, and the Series' adviser will review carefully the credit
and other characteristics pertinent to such new issues.
Stripped Corporate Securities in which each Series other than the
Quality Bond Portfolio may invest and pay-in-kind bonds in which each
Series may invest up to 5% of its total assets involve special
considerations. Stripped Corporate Securities are debt obligations which
do not entitle the holder to any periodic payments of interest prior to
maturity or a specified cash payment date when the securities begin paying
current interest (the "cash payment date") and therefore are issued and
traded at a discount from their face amounts or par value. The discount
varies depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. The discount, in the absence of financial
difficulties of the issuer, decreases as the final maturity or cash payment
date of the security approaches.
The market prices of Stripped Corporate Securities generally are more
volatile than the market prices of securities that pay interest
periodically and are likely to respond to changes in interest rates to a
greater degree than do non-zero coupon securities having similar maturities
and credit quality. The credit risk factors pertaining to lower rated
securities also apply to lower rated Stripped Corporate Securities and
pay-in-kind bonds. Such Stripped Corporate Securities, pay-in-kind or
delayed interest bonds carry an additional risk in that, unlike bonds which
pay interest throughout the period to maturity, the relevant Series will
realize no cash until the cash payment date unless a portion of such
securities are sold and, if the issuer defaults, the Series may obtain no
return at all on its investment. See "Dividends, Distributions and Taxes."
Investment Restrictions
Capital Appreciation, Managed Assets, Money Market, Quality Bond,
Small Cap and Zero Coupon 2000 Portfolios. Each of these Series (except as
noted below) has adopted investment restrictions numbered 1 through 14 as
fundamental policies. These restrictions cannot be changed, as to a
Series, without approval by the holders of a majority (as defined in the
Act) of such Series' outstanding voting shares. However, the amendment of
these restrictions to add an additional Series, which amendment does not
substantively affect the restrictions with respect to an existing Series,
will not require approval as described in the preceding sentence.
Investment restrictions numbered 15 and 16 are not fundamental policies and
may be changed, as to a Series, by vote of a majority of the Fund's
Trustees at any time. With respect to the Capital Appreciation Portfolio,
investment restrictions numbered 2 and 3, 10 through 12 and 14 are not
fundamental policies and may be changed, as to that Series, by vote of a
majority of the Trustees at any time. Except where otherwise expressly
stated, each such Series may not:
1. Borrow money, except, with respect to each Series other than the
Money Market Portfolio, to the extent permitted under the Act (which
currently limits borrowing to no more than 33 1/3% of the value of the Series'
total assets); the Money Market Portfolio may borrow money only (i) from
banks for temporary or emergency (not leveraging) purposes in an amount up
to 15% of the value of its total assets (including the amount borrowed)
based on the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made and (ii) in connection
with the entry into reverse repurchase agreements to the extent described
in the Prospectus. While borrowings under (i) above exceed 5% of a Series'
total assets, the Series will not make any additional investments.
2. Sell securities short or purchase securities on margin, except
that the Managed Assets and Small Cap Portfolios may engage in short sales
and each Series may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities.
3. Purchase or write puts and calls or combinations thereof, except
as described in the Prospectus and Statement of Additional Information.
4. Act as an underwriter of securities of other issuers.
5. Purchase or sell real estate or real estate investment trust
securities, but each Series may purchase and sell securities that are
secured by real estate and may purchase and sell securities issued by
companies that invest or deal in real estate.
6. Invest in commodities, except that the Managed Assets, Capital
Appreciation and Zero Coupon 2000 Portfolios may invest in futures
contracts, including those related to indexes, and options on futures
contracts or indices, and commodities underlying or related to any such
futures contracts as well as invest in forward contracts and currency
options.
7. Lend any funds or other assets except through the purchase of
bonds, debentures or other debt securities, or the purchase of bankers'
acceptances, commercial paper of corporations, and repurchase agreements.
However, each Series may lend its portfolio securities to the extent set
forth in the Prospectus. Any portfolio securities will be loaned according
to guidelines established by the Securities and Exchange Commission and the
Fund's Board of Trustees.
8. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Series' total assets may
be invested, and securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities may be purchased, without regard to any
such limitations. Notwithstanding the foregoing, to the extent required by
the rules of the Securities and Exchange Commission, the Money Market
Portfolio will not invest more than 5% of its assets in the obligations of
any one bank.
9. Purchase the securities of any issuer if such purchase would cause
the Series to hold more than 10% of the voting securities of such issuer.
This restriction applies only with respect to 75% of such Series' total
assets.
10. Invest in the securities of a company for the purpose of
exercising management or control, but the Series will vote the securities
it owns as a shareholder in accordance with its views.
11. Purchase or retain the securities of any issuer if the officers
or Trustees of the Fund or the officers or Directors of the Manager (and,
with respect to the Managed Assets Portfolio, the officers and Directors of
Comstock Partners, Inc. and, with respect to the Capital Appreciation
Portfolio, the officers and Directors of Fayez Sarofim & Co.) individually
own beneficially more than 1/2 of l% of the securities of such issuer or
together own beneficially more than 5% of the securities of such issuer.
12. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of its investments in all such companies to
exceed 5% of the value of its total assets.
13. Invest, except in the case of the Money Market Portfolio, more
than 25% of its total assets in the securities of issuers in any single
industry; provided that for temporary defensive purposes, there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Money Market Portfolio
may not invest less than 25% of its assets in obligations issued by banks
under normal market conditions.
14. Purchase warrants, except each of the Capital Appreciation,
Managed Assets and Small Cap Portfolios may purchase warrants not to exceed
2% of its respective net assets. For purposes of this restriction, such
warrants shall be valued at the lower of cost or market, except that
warrants acquired by the Series in units or attached to securities shall
not be included within this 2% restriction.
15. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings. The Managed
Assets, Capital Appreciation, Zero Coupon 2000 and Small Cap Portfolios'
entry into collateral arrangements with respect to options, currency
options, futures contracts, including those related to indices, and options
on futures contracts or indices and arrangements with respect to initial or
variation margin for futures contracts or options will not be deemed to be
pledges of such Series' assets.
16. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 15% (10% with respect to the Money Market
Portfolio) of the value of the Series' net assets would be so invested.
Growth and Income and International Equity Portfolios. Each of the
Growth and Income and International Equity Portfolios has adopted
investment restrictions numbered 1 through 8 as fundamental policies.
These restrictions cannot be changed, as to a Series, without approval by
the holders of a majority (as defined in the Act) of such Series'
outstanding voting shares. However, the amendment of these restrictions to
add an additional Series, which amendment does not substantively effect the
restrictions with respect to an existing Series, will not require approval
as described in the preceding sentence. Investment restrictions numbered 9
through 15 are not fundamental policies and may be changed, as to a Series,
by vote of a majority of the Fund's Trustees at any time. Each such Series
may not:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
2. Invest in commodities, except that a Series may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
3. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but a Series may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.
4. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33 1/3% of the value of the Series'
total assets). For purposes of this Investment Restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not constitute
borrowing.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Series
may lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Trustees.
6. Act as an underwriter of securities of other issuers, except to
the extent a Series may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
7. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted in
Investment Restriction Nos. 2, 4, 11 and 12 may be deemed to give rise to a
senior security.
8. Purchase securities on margin, but a Series may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
9. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor) if such
purchase would cause the value of its investments in all such companies to
exceed 5% of the value of its total assets.
10. Invest in the securities of a company for the purpose of
exercising management or control, but the Series will vote the securities
it owns as a shareholder in accordance with its views.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
12. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Prospectus and Statement of Additional
Information.
13. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 15% of the value of its net assets would be so
invested.
14. Purchase securities of other investment companies, except to the
extent permitted under the Act.
15. Purchase warrants in excess of 5% of its net assets. For
purposes of this restriction, such warrants shall be valued at the lower of
cost or market, except that warrants acquired by a Series in units or
attached to securities shall not be included within this restriction.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of a Series' shares in certain
states. Should the Fund determine that a commitment is no longer in the
best interest of a Series and its shareholders, the Fund reserves the right
to revoke the commitment by terminating the sale of such Series' shares in
the state involved.
In addition, each Series has adopted the following policies as
non-fundamental policies. Each Series intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h)
of the Code, and (ii) to comply in all material respects with insurance
laws and regulations that the Fund has been advised are applicable to
investments of separate accounts of Participating Insurance Companies. In
addition, each Series, except the Growth and Income and International
Equity Portfolios, has agreed not to invest more than 10% of its total
assets in the obligations of any one issuer (excluding U.S. Government
securities) and to purchase no more than 10% of an issuer's outstanding
securities. As non-fundamental policies, these policies may be changed by
vote of a majority of the Trustees at any time.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees of the Fund
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief Operating
Officer of the Manager and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manger
and, until August 24, 1994, the Fund's distributor. From August 1994
to December 31, 1994, he was a director of Mellon Bank Corporation.
Mr. DiMartino is a director and former Treasurer of the Muscular
Dystrophy Association; a trustee of Bucknell University; Chairman of
the Board of Directors of Noel Group, Inc.; and a director of
HealthPlan Corporation. Mr. DiMartino is also a Board member of 90
other funds in the Dreyfus Family of Funds. He is 51 years old and
his address is 200 Park Avenue, New York, New York 10166.
*DAVID P. FELDMAN, Trustee. Chairman and Chief Executive Officer of AT&T-
Investment Management Corporation. He is also a trustee of Corporate
Property Investors, a real estate investment company. He is also a
Board member of 37 other funds in the Dreyfus Family of Funds. Mr.
Feldman is 55 years old and his address is One Oak Way, Berkeley
Heights, New Jersey 07922.
JOHN M. FRASER, JR., Trustee. President of Fraser Associates, a service
company for planning and arranging corporate meetings and other
events. From September 1975 to June 1978, he was Executive Vice
President of Flagship Cruises, Ltd. Prior thereto, he was Senior Vice
President and Resident Director of the Swedish-American Line for the
United States and Canada. He is also a Board member of 14 other funds
in the Dreyfus Family of Funds. Mr. Fraser is 73 years old and his
address is 133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Trustee. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University, since January 1992. He was Under Secretary of the
Treasury for Finance at the U.S. Treasury Department from May 1989 to
January 1992. For more than five years prior thereto, he was a
Professor of Finance at the Graduate School of Business Administration
of Harvard University and, from 1985 to 1989, Chairman of its Advanced
Management Program. He is also a Board member of 20 other funds in
the Dreyfus Family of Funds. Mr. Glauber is 56 years old and his
address is 79 John F. Kennedy Street, Cambridge, Massachusetts 02138.
JAMES F. HENRY, Trustee. President of the Center for Public Resources, a
non-profit organization principally engaged in the development of
alternatives to business litigation. He was of counsel to the law
firm of Lovejoy, Wasson & Ashton from October 1975 to December 1976
and from October 1979 to June 1983, and was a partner of that firm
from January 1977 to September 1979. From September 1971 to December
1976, he was President and a director of the Edna McConnell Clark
Foundation, a philanthropic organization. He is also a Board member
of 10 other funds in the Dreyfus Family of Funds. Mr. Henry is 64
years old and his address is c/o Center for Public Resources, 366
Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Trustee. Director of Merchandise and Marketing
for Corporate Property Investors, a real estate investment company.
From 1974 to 1976, she was owner and manager of a merchandise and
marketing consulting firm. Prior to 1974, she was a Vice President of
Macy's, New York. She is also a Board member of 20 other funds in the
Dreyfus Family of Funds. Mrs. Jacobs is 69 years old and her address
is c/o Corporate Property Investors, 305 East 47th Street, New York,
New York 10017.
IRVING KRISTOL, Trustee. He is also John M. Olin Distinguished Fellow of
the American Enterprise Institute for Public Policy Research,
co-editor of The Public Interest magazine, and an author or co-editor
of several books. From 1969 to 1988, he was Professor of Social
Thought at the Graduate School of Business Administration, New York
University; from September 1969 to August 1979, he was Henry R. Luce
Professor of Urban Values at New York University; from 1975 to 1990,
he was a director of Lincoln National Corporation, an insurance
company; and from 1977 to 1990, he was a director of Warner-Lambert
Company, a pharmaceutical and consumer products company. He is also a
Board member of 10 other funds in the Dreyfus Family of Funds. Mr.
Kristol is 75 years old and his address is c/o The Public Interest,
1112 16th Street, N.W., Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Trustee. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He was Vice President for
Health Sciences and Director of the Cancer Center at Columbia
University from 1973 to 1980, and was Professor of Medicine and of
Human Genetics and Development at Columbia University from 1968 to
1982. From 1976 to 1991, he was a director of the Charles H. Revson
Foundation; and, from 1992 to 1993, he was a director of Biotechnology
General, Inc., a biotechnology development company. He serves as a
director of Pfizer, Inc., a pharmaceutical company, Life Technologies,
Inc., a life science company providing products for cell and molecular
biology and microbiology, National Health Laboratories, a national
clinical diagnostic laboratory, and Tulerik, Inc., a biotechnology
company. He is also a Board member of 10 other funds in the Dreyfus
Family of Funds. Dr. Marks is 68 years old and his address is c/o
Memorial Sloan-Kettering Cancer Center, 1275 York Avenue, New York,
New York 10021.
DR. MARTIN PERETZ, Trustee. Editor-in-Chief of The New Republic magazine
and a lecturer in Social Studies at Harvard University where he has
been a member of the faculty since 1965. He is a trustee of The
Center for Blood Research at the Harvard Medical School and a director
of Leukosite Inc., a biopharmaceutical company. From 1988 to 1989, he
was a director of Bank of Leumi Trust Company of New York; and, from
1988 to 1991, he was a director of Carmel Container Corporation. He
is also a Board member of 10 other funds in the Dreyfus Family of
Funds. Dr. Peretz is 55 years old and his address is c/o The New
Republic, 1220 19th Street, N.W., Washington, D.C. 20036.
BERT WASSERMAN, Trustee. Executive Vice President and Chief Financial
Officer since January 1990, and a director, from January 1990 to March
1993, of Time Warner Inc. From 1981 to 1990, he was a member of the
office of the President and a director of Warner Communications, Inc.
He is also a member of the Chemical Bank National Advisory Board. He
is also a Board member of 10 other funds in the Dreyfus Family of
Funds. Mr. Wasserman is 62 years old and his address is c/o Time
Warner Inc., 75 Rockefeller Plaza, New York, New York 10019.
The Fund typically pays its Trustees an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. For the fiscal year
ended December 31, 1994, the aggregate amount of compensation paid to each
Trustee by the Fund and all other funds in the Dreyfus Family of Funds for
which such person is a Board member were as follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund * Fund's Expenses Retirement Board Members *
- ---------------------- --------------------- ---------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Joseph S. DiMartino ** $4,375 none none $445,000
David P. Feldman $ 387 none none $ 85,631
John M. Fraser, Jr. $3,500 none none $ 46,766
Robert R. Glauber $3,500 none none $ 79,696
James F. Henry $3,500 none none $ 44,946
Rosalind Gersten Jacobs $3,500 none none $ 57,638
Irving Kristol $3,500 none none $ 44,946
Dr. Paul A. Marks $3,500 none none $ 44,946
Dr. Martin Peretz $3,500 none none $ 44,946
Bert W. Wasserman $3,500 none none $ 40,720
____________________________
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $709 for all
Trustees as a group.
** Estimated amounts for the current fiscal year ending December 31, 1995.
</TABLE>
There ordinarily will be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of
the Trustees holding office have been elected by shareholders, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of not less
than two-thirds of the outstanding shares of the Fund may remove a Trustee
through a declaration in writing or by vote cast in person or by proxy at a
meeting called for that purpose. The Trustees are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company,
Inc. Prior to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The Boston Company
Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. Prior thereto, he was employed as an Associate at Ropes & Gray,
and prior to August 1990, he was employed as an Associate at Sidley &
Austin.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President, Treasurer
and Chief Financial Officer of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
July 1988 to August 1994, he was employed by The Boston Company, Inc.
where he held various management positions in the Corporate Finance
and Treasury areas.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of
Springs Industries Inc.
ERIC B. FISCHMAN, Vice-President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. Prior to September 1992, he attended the
Boston University School of Law.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor and
an officer of other investment companies advised or administered by
the Manager. From 1984 to July 1994, he held the position of
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From January 1992 to July 1994, he was a
Senior Legal Product Manager, and, from January 1990 to January 1992,
he was a mutual fund accountant for The Boston Company Advisors, Inc.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The following shareholders are known by the Fund to own of record 5%
or more of the Fund's shares of beneficial interest outstanding on March
20, 1995: (1) Transamerica Occidental Life Insurance Company, 1150 S.
Olive St., Los Angeles, CA 90015-2211 (23,419,380.57 shares of the Money
Market Portfolio - 69.37%; 1,535,608.782 shares of the Managed Assets
Portfolio - 60.76%; 590,543.01 shares of the Zero Coupon 2000 Portfolio -
56.61%; 1,277,924.08 shares of the Quality Bond Portfolio - 81.92%;
1,515,656.73 shares of the Small Cap Portfolio - 23.50%; 1,064,670.934
shares of the Capital Appreciation Portfolio - 77.14%; 231,816.788 shares
of the Growth and Income Portfolio - 47.70%; and 76,912.763 shares of the
International Equity Portfolio - 77.14%); (2) Mutual Benefit Life, 520
Broad St., Newark, NJ 07102-3298 (1,116,271.34 shares of the Money Market
Portfolio - 3.31%; 11,047.31 shares of the Managed Assets Portfolio -
4.51%; 61,716.87 shares of the Zero Coupon 2000 Portfolio - 5.92%;
27,693.487 shares of the Quality Bond Portfolio - 1.78% and 85,127.338
shares of the Small Cap Portfolio - 1.32%); (3) First Transamerica Life
Insurance Company, 1150 S. Olive St., Los Angeles, CA 90015-2211
(9,204,364.58 shares of the Money Market Portfolio - 27.26%; 249,338.013
shares of the Zero Coupon 2000 Portfolio - 23.90%; 315,444.131 shares of
the Capital Appreciation Portfolio - 22.86%; 861,558.14 shares of the
Managed Assets Portfolio - 34.09%; 719,150.68 shares of the Small Cap
Portfolio - 11.15%; and 225,835.891 shares of the Quality Bond Portfolio -
14.47%); (4) Provident Mutual Life & Annuity Company of America, Provident
Mutual Building, 1600 Market Street, Philadelphia, PA 19103-7240
(136,074.756 shares of the Zero Coupon 2000 Portfolio 3.04%); (5) Valic
Separate Account A, 2929 Allen Parkway, Houston, Texas (3,860,243.886
shares of the Small Cap Portfolio - 59.85%); (6) Major Trading Corporation,
200 Park Avenue, New York, New York 10166 (82,457.028 shares of the Growth
and Income Portfolio - 25.77%; 81,530.782 shares of the International
Equity Portfolio - 50.57%; 20,637.02 shares of the Money Market Portfolio -
.06%; 2,331,956 shares of the Managed Assets Portfolio - .09%; 2,740.44
shares of the Zero Coupon 2000 Portfolio - .27%; 2,770.2 shares of the
Quality Bond Portfolio - 0.18%; 4,511.277 shares of the Small Cap Portfolio
- - .07%.) A shareholder that beneficially owns, directly or indirectly, 25%
or more of a Series' voting securities may be deemed to be a "control
person" (as defined in the Act) of such Series.
INVESTMENT ADVISORY AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides advisory services pursuant to the Investment
Advisory Agreement (the "Agreement") with the Fund dated August 24, 1994.
As to each Series, the Agreement is subject to annual approval by (i) the
Fund's Board of Trustees or (ii) vote of a majority (as defined in the Act)
of the outstanding voting securities of such Series, provided that in
either event the continuance also is approved by a majority of the Trustees
who are not "interested persons" (as defined in the Act) of the Fund or the
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Agreement was approved by shareholders of
each Series (other than the Growth and Income and International Equity
Portfolios) on August 22, 1994 and by the shareholder of the Growth and
Income and International Equity Portfolios on August 2, 1994. The
Agreement was last approved by the Fund's Board of Trustees, including a
majority of the Trustees who are not "interested persons" of any party to
the Agreement, at a meeting held on March 13, 1995. As to each Series, the
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board of Trustees or by vote of the holders of a majority of the shares of
such Series, or, upon not less than 90 days' notice, by the Manager. The
Agreement will terminate automatically, as to the relevant Series, in the
event of its assignment (as defined in the Act).
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board of Directors; Robert E. Riley, President,
Chief Operating Officer and a director; Lawrence S. Kash, Vice Chairman,
Distribution; Philip L. Toia, Vice Chairman, Operations and Administration;
Paul H. Snyder, Vice President and Chief Financial Officer; Daniel C.
Maclean III, General Counsel and Vice President; Elie M. Genadry, Vice
President, Wholesale; Henry D. Gottmann, Vice President, Retail; Jeffrey N.
Nachman, Vice President, Fund Administration; Barbara E. Casey, Vice
President, Retirement Services; Diane M. Coffey, Vice President, Corporate
Communications; William F. Glavin, Jr., Vice President-Product Management;
Katherine C. Wickham, Vice President, Human Resources; Andrew S. Wasser,
Vice President-Information Systems; Maurice Bendrihem, Controller; Mark N.
Jacobs, Vice President, Fund Legal and Compliance; and Mandell L. Berman,
Alvin E. Friedman, Frank Cahouet, Lawrence M. Greene, Julian M. Smerling
and David B. Truman, directors.
With respect to the Managed Assets Portfolio, the Fund has entered
into a Sub-Investment Advisory Agreement (the "Comstock Sub-Advisory
Agreement") with Comstock Partners, Inc. dated May 21, 1990. As to such
Series, the Comstock Sub-Advisory Agreement is subject to annual approval
by (i) the Fund's Board of Trustees or (ii) vote of a majority (as defined
in the Act) of the Series' outstanding voting securities, provided that in
either event the continuance also is approved by a majority of the Trustees
who are not "interested persons" (as defined in the Act) of the Fund or
Comstock Partners, Inc., by vote cast in person at a meeting called for the
purpose of voting on such approval. The Comstock Sub-Advisory Agreement
was approved by shareholders on July 12, 1991, and was last approved by the
Fund's Board of Trustees, including a majority of the Trustees who are not
"interested persons" of any party to the Comstock Sub-Advisory Agreement,
at a meeting held on March 13, 1995. The Comstock Sub-Advisory Agreement
is terminable without penalty, on 60 days' notice, by the Fund's Board of
Trustees or by vote of the holders of a majority of the Series' outstanding
voting securities, or, upon not less than 90 days' notice, by Comstock
Partners, Inc. The Comstock Sub-Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the Act).
The following persons are officers and/or directors of Comstock
Partners, Inc.: Stanley D. Salvigsen, Chairman of the Board and Chief
Executive Officer; Charles L. Minter, Vice Chairman of the Board and Chief
Operating Officer; and Edward A. Leskowicz, Jr., Vice President, Treasurer
and Chief Financial Officer.
With respect to the Capital Appreciation Portfolio, the Fund has
entered into a Sub-Investment Advisory Agreement (the "Sarofim Sub-Advisory
Agreement") with Fayez Sarofim & Co. dated August 17, 1992. As to such
Series, the Sarofim Sub-Advisory Agreement is subject to annual approval by
(i) the Fund's Board of Trustees or (ii) vote of a majority (as defined in
the Act) of the Series' outstanding voting securities, provided that in
either event the continuance also is approved by a majority of the Trustees
who are not "interested persons" (as defined in the Act) of the Fund or
Fayez Sarofim & Co., by vote cast in person at a meeting called for the
purpose of voting on such approval. The Sarofim Sub-Advisory Agreement was
last approved by the Fund's Board of Trustees, including a majority of the
Trustees who are not "interested persons" of any party to the Sarofim Sub-
Advisory Agreement, at a meeting held on March 13, 1995. The Sarofim
Sub-Advisory Agreement is terminable without penalty, on 60 days' notice,
by the Fund's Board of Trustees or by vote of the holders of a majority of
the Series' outstanding voting securities, or, upon not less than 90 days'
notice, by Fayez Sarofim & Co. The Sarofim Sub-Advisory Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of Fayez Sarofim &
Co.: Fayez S. Sarofim, Chairman of the Board and President; Raye G. White,
Executive Vice President, Secretary, Treasurer and a director; Russell M.
Frankel, Russell B. Hawkins, William K. McGee, Jr., Charles E. Sheedy and
Ralph B. Thomas, Senior Vice Presidents; and Nancy Daniel, Frank P. Lee and
James A. Reynolds, III, Vice Presidents.
With respect to the International Equity Portfolio, the Manager has
entered into a Sub-Investment Advisory Agreement (the "M&G Sub-Advisory
Agreement") with M&G Investment Management Limited dated August 24, 1994.
As to such Series, the M&G Sub-Advisory Agreement is subject to annual
approval by (i) the Fund's Board of Trustees or (ii) vote of a majority (as
defined in the Act) of the Series' outstanding voting securities, provided
that in either event the continuance also is approved by a majority of the
Trustees who are not "interested persons" (as defined in the Act) of the
Fund or M&G Investment Management Limited, by vote cast in person at a
meeting called for the purpose of voting on such approval. The M&G
Sub-Advisory Agreement is terminable without penalty, (i) by the Managers
on 60 days' notice, (ii) by the Fund's Board of Trustees or by vote of the
holders of a majority of the Series' outstanding voting securities on 60
days' notice, or (iii) upon not less than 90 days' notice, by M&G
Investment Management Limited. The M&G Sub-Advisory Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of M&G Investment
Management Limited: David L. Morgan, Chairman of the Board of Directors;
John P. Allard, John W. Boeckmann, Gordon P. Craig, Robert A.R. Hayes,
Richard S. Hughes, David J. Hutchins, Peter D. Jones, James R.D. Korner,
Michael G.A. McLintock, Ewen A. Macpherson, Paul R. Marsh, Nigel D.
Morrison, Roger D. Nightingale, William J. Nott, Neil A. Pegrum, Duncan N.
Robertson and J. Christopher Whitaker, directors; and Anthony J. Ashplant,
Secretary.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board of Trustees. With respect to the Managed Assets Portfolio, Comstock
Partners, Inc. provides day-to-day management of such Series' portfolio of
investments, subject to the supervision of the Manager and the Board of
Trustees. With respect to the Capital Appreciation Portfolio, Fayez
Sarofim & Co. and, with respect to the International Equity Portfolio, M&G
Investment Management Limited, provides day-to-day management of such
Series' portfolio of investments, subject to the supervision of the Manager
and the Board of Trustees. The Manager (and, with respect to the Managed
Assets Portfolio, Comstock Partners, Inc., with respect to the Capital
Appreciation Portfolio, Fayez Sarofim & Co. and, with respect to the
International Equity Portfolio, M&G Investment Management Limited) is
responsible for investment decisions, and provides the Fund with portfolio
managers who are authorized by the Board of Trustees to execute purchases
and sales of securities. The Fund's portfolio managers are Thomas A.
Frank, Richard B. Hoey, Garitt Kono, Patricia A. Larkin, Elaine Rees,
Howard Stein, Gerald Thunelius and, with respect to the Managed Assets
Portfolio, Stanley D. Salvigsen and Charles L. Minter, with respect to the
Capital Appreciation Portfolio, Russell B. Hawkins and Fayez S. Sarofim
and, with respect to the International Equity Portfolio, William Vincent.
The Manager, Comstock Partners, Inc., Fayez Sarofim & Co. and M&G
Investment Management Limited maintain research departments with
professional portfolio managers and securities analysts who provide
research services for the Fund as well as for other funds advised by the
Manager, Comstock Partners, Inc., Fayez Sarofim & Co. or M&G Investment
Management Limited. All purchases and sales of each Series are reported
for the Trustees' review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager (or, with
respect to the Managed Assets Portfolio, Comstock Partners, Inc., or with
respect to the Capital Appreciation Portfolio, Fayez Sarofim & Co. or, with
respect to or the International Equity Portfolio, M&G Investment Management
Limited). The expenses borne by the Fund include: organizational costs,
taxes, interest, loan commitment fees, dividends and interest on securities
sold short, brokerage fees and commissions, if any, fees of Trustees who
are not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, Comstock Partners, Inc.,
Fayez Sarofim & Co. or M&G Investment Management Limited or any affiliates
thereof, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, costs
of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. Expenses attributable to a
particular Series are charged against the assets of that Series; other
expenses of the Fund are allocated between the Series on the basis
determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Series.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for its services, the Fund has agreed to pay the
Manager a monthly fee at the annual rate of .50 of l% of the value of the
Money Market Portfolio's average daily net assets; .375 of l% of the value
of the Managed Assets Portfolio's average daily net assets; .45 of l% of
the value of the Zero Coupon 2000 Portfolio's average daily net assets; .65
of l% of the value of the Quality Bond Portfolio's average daily net
assets; .75 of l% of the value of the Small Cap Portfolio's average daily
net assets; .75 of l% of the value of the Growth and Income Portfolio's
average daily net assets; and .75 of l% of the value of the International
Equity Portfolio's average daily net assets. With respect to the Capital
Appreciation Portfolio, the Fund has agreed to pay the Manager a monthly
advisory fee at the annual rate as set forth below:
Annual Fee as a
Percentage of Average
Daily Net Assets of the
Total Assets Capital Appreciation Portfolio
------------ ------------------------------
0 to $150 million .55 of l%
$150 million to $300 million .50 of 1%
$300 million or more .375 of 1%
The fees paid by each Series to the Manager for the fiscal years ended
December 31, 1992, 1993 and 1994 were as follows:
Fee Paid For
Year Ended
December 31, 1992
- -----------------
Management Reduction Net
Series Fee Payable in Fee Fee Paid
------ ----------- --------- --------
Money Market $6,616 $6,616 $ 0
Managed Assets 7,254 437 6,817
Zero Coupon 2000 5,940 358 5,582
Quality Bond 2,527 2,527 0
Small Cap 13,883 837 13,046
Fee Paid For
Year Ended
December 31, 1993
- -----------------
Management Reduction Net
Series Fee Payable in Fee Fee Paid
------ ----------- --------- --------
Capital Appreciation* $ 4,494 $ 4,494 $ 0
Money Market 13,390 13,390 0
Managed Assets 11,281 11,281 0
Zero Coupon 2000 9,842 9,842 0
Quality Bond 9,382 9,382 0
Small Cap 45,094 45,094 0
_____________________________________
* From April 5, 1993 (commencement of operations) through December 31,
1993.
Fee Paid For
Year Ended
December 31, 1994
- -----------------
Management Reduction Net
Series Fee Payable in Fee Fee Paid
------ ----------- ---------- ---------
Capital Appreciation $ 49,561 $ 49,561 $ 0
Growth and Income* 5,069 5,069 0
International Equity* 5,080 5,080 0
Money Market 108,958 108,958 0
Managed Assets 79,001 79,001 0
Zero Coupon 2000 38,947 38,947 0
Quality Bond 60,106 60,106 0
Small Cap 487,316 340,893 146,423
_____________________________
* From May 2, 1994 (commencement of operations) through December 31,
1994.
As compensation for Comstock Partners, Inc.'s services, the Fund has
agreed to pay Comstock Partners, Inc. a monthly sub-advisory fee at the
annual rate of .375 of 1% of the value of the Managed Assets Portfolio's
average daily net assets. The fees payable by the Fund to Comstock
Partners, Inc. with respect to the Managed Assets Portfolio for the fiscal
years ended December 31, 1992, 1993 and 1994 were $7,254, $11,281 and
$79,001, respectively. The net fees paid to Comstock Partners, Inc. for
the fiscal years ended December 31, 1992, 1993 and 1994 were $7,254, $11,281
and $34,850, respectively.
As compensation for Fayez Sarofim & Co.'s services, the Fund has
agreed to pay Fayez Sarofim & Co. a monthly sub-advisory fee at the annual
rate as set forth below:
Annual Fee as a
Percentage of Average
Daily Net Assets of the
Total Assets Capital Appreciation Portfolio
------------ ------------------------------
0 to $150 million .20 of 1%
$150 million to $300 million .25 of 1%
$300 million or more .375 of 1%
The fees payable by the Fund to Fayez Sarofim & Co. with respect to
the Capital Appreciation Portfolio for the period April 5, 1993
(commencement of operations) through December 31, 1993 and for the fiscal
year ended December 31, 1994 were $1,634 and $18,022, respectively.
However, no sub-advisory fee was paid to Fayez Sarofim & Co. for the period
April 5, 1993 (commencement of operations) through December 31, 1993 or for
the fiscal year ended December 31, 1994 pursuant to an undertaking then in
effect.
As compensation for M&G Investment Management Limited's services, the
Manager has agreed to pay M&G Investment Management Limited a monthly fee
at the annual rate of .30 of 1% of the value of the International Equity
Portfolio's average daily net assets. No sub-advisory fee was paid by the
Manager to M&G Investment Management Limited with respect to the
International Equity Portfolio for the period May 2, 1994 (commencement of
operations) through December 31, 1994, pursuant to an undertaking then in
effect.
The Manager (and, with respect to the Managed Assets Portfolio,
Comstock Partners, Inc., with respect to the Capital Appreciation
Portfolio, Fayez Sarofim & Co. and, with respect to the International
Equity Portfolio, M&G Investment Management Limited) has agreed that if, in
any fiscal year, the aggregate expenses of the Fund, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of
the necessary state securities commissions) extraordinary expenses, but
including the advisory fees, exceed the expense limitation of any state
having jurisdiction over the Fund, the Fund may deduct from the payment to
be made to the Manager (and, with respect to the Managed Assets Portfolio,
Comstock Partners, Inc., with respect to the Capital Appreciation
Portfolio, Fayez Sarofim & Co. and, with respect to the International
Equity Portfolio, M&G Investment Management Limited), or the Manager (and,
with respect to the Managed Assets Portfolio, Comstock Partners, Inc., with
respect to the Capital Appreciation Portfolio, Fayez Sarofim & Co. and,
with respect to the International Equity Portfolio, M&G Investment
Management Limited) will bear, such excess expense to the extent required
by state law. Such deduction or payment, if any, will be estimated daily,
and reconciled and effected or paid, as the case may be, on a monthly
basis.
The aggregate of the fees payable to the Manager (other than for the
Capital Appreciation Portfolio) and Comstock Partners, Inc. is not subject
to reduction as the value of a Series' assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Redemption Commitment. The Fund has committed 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 a Series'
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, the Board of
Trustees reserves the right to make payments in whole or part in securities
or other assets of the Series in case of an emergency or any time a cash
distribution would impair the liquidity of the Series to the detriment of
the existing shareholders. In such event, the securities would be valued
in the same manner as the Series' portfolio is valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Money Market Portfolio. The valuation of the Money Market Portfolio's
securities is based upon their amortized cost which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower
than the price the Series would receive if it sold the instrument.
The Board of Trustees has established, as a particular responsibility
within the overall duty of care owed to the Money Market Portfolio's
shareholders, procedures reasonably designed to stabilize the Series' price
per share as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Series' portfolio holdings by the
Board of Trustees, at such intervals as it deems appropriate, to determine
whether the Series' net asset value per share calculated by using available
market quotations or market equivalents deviates from $1.00 per share based
on amortized cost. In such review, investments for which market quotations
are readily available will be valued at the most recent bid price or yield
equivalent for such securities or for securities of comparable maturity,
quality and type, as obtained from one or more of the major market makers
for the securities to be valued. Other investments and assets will be
valued at fair value as determined in good faith by the Board of Trustees.
The extent of any deviation between the Money Market Portfolio's net
asset value based upon available market quotations or market equivalents
and $1.00 per share based on amortized cost will be examined by the Board
of Trustees. If such deviation exceeds 1/2 of l%, the Board of Trustees
promptly will consider what action, if any, will be initiated. In the
event the Board of Trustees determines that a deviation exists which may
result in material dilution or other unfair results to investors or
existing shareholders, it has agreed to take such corrective action as it
regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market
quotations or market equivalents.
Zero Coupon 2000 and Quality Bond Portfolios. Substantially all of
each Series' investments are valued each business day by an independent
pricing service (the "Service") approved by the Board of Trustees. When,
in the judgment of the Service, quoted bid prices for investments are
readily available and are representative of the bid side of the market,
these investments are valued at the mean between the quoted bid prices (as
obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments are carried at fair value as
determined by the Service, based on methods which include consideration of:
yields or prices of municipal bonds of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. The Service's procedures are reviewed by the Fund's officers
under the general supervision of the Board of Trustees. Short-term
investments are not valued by the Service and are carried at amortized
cost, which approximates value. Other investments that are not valued by
the Service are valued at the average of the most recent bid and asked
prices in the market in which such investments are primarily traded, or at
the last sales price for securities traded primarily on an exchange. In
the absence of reported sales of investments traded primarily on an
exchange, the average of the most recent bid and asked prices is used. Bid
price is used when no asked price is available. Investments traded in
foreign currencies are translated to U.S. dollars at the prevailing rates
of exchange. Expenses and fees of a Series, including the advisory fee
(reduced by the expense limitation, if any), are accrued daily and taken
into account for the purpose of determining the net asset value of shares.
Capital Appreciation, Growth and Income, International Equity, Managed
Assets and Small Cap Portfolios. Each Series' portfolio securities are
valued at the last sale price on the securities exchange or national
securities market on which such securities are primarily traded.
Securities not listed on an exchange or national securities market, or
securities in which there were no transactions, are valued at the average
of the most recent bid and asked prices, except in the case of open short
positions where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Market quotations for foreign
securities in foreign currencies are translated into U.S. dollars at the
prevailing rates of exchange. Because of the need to obtain prices as of
the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place contemporaneously with
the determination of prices of many of the Series' portfolio securities.
Short-term investments are carried at amortized cost, which approximates
value. Any securities or other assets for which recent market quotations
are not readily available are valued at fair value as determined in good
faith by the Board of Trustees. Expenses and fees, including the advisory
fees (reduced by the expense limitation, if any), are accrued daily and
taken into account for the purpose of determining the net asset value of
shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board of Trustees, are valued at fair value as
determined in good faith by the Board of Trustees. The Board of Trustees
will review the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Trustees generally will
take the following factors into consideration: restricted securities which
are, or are convertible into, securities of the same class of securities
for which a public market exists usually will be valued at market value
less the same percentage discount at which purchased. This discount will
be revised periodically by the Board of Trustees if the Trustees believe
that it no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a
public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Trustees.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Each Series has qualified as a "regulated investment company" under
the Code for the fiscal year ended December 31, 1994. Each Series intends
to continue to so qualify as long as such qualification is in the best
interests of its shareholders. Among the requirements for such
qualification is that less than 30% of a Series' income must be derived
from gains from the sale or other disposition of securities held for less
than three months. Accordingly, each Series may be restricted in the
selling of securities held for less than three months, and, for the Growth
and Income, Managed Assets and Small Cap Portfolios, in effecting short
sales of securities held for less than three months (or of substantially
identical stock or securities), in the writing of options on securities
which have been held for less than three months, in the writing of options
which expire in less than three months and in effecting closing purchase
transactions with respect to options which have been written less than
three months prior to such transactions.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of the shares below the
cost of the investment. Such a dividend or distribution would be a return
of investment in an economic sense, although taxable as stated above. In
addition, the Code provides that if a shareholder holds shares of the
Series for six months or less and has received a capital gain distribution
with respect to such shares, any loss incurred on the sale of such shares
will be treated as long-term capital loss to the extent of the capital gain
distribution received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, all or a portion of the
gain or loss realized from the disposition of foreign currency, non-U.S.
dollar denominated debt instruments, and certain financial futures and
options, may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of the gain realized from the
disposition of certain market discount bonds will be treated as ordinary
income under Section 1276. Finally, all or a portion of the gain realized
from engaging in "conversion transactions" may be treated as ordinary
income under Section 1258. "Conversion transactions" are defined to
include certain forward, futures, option and straddle transactions,
transactions marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by a Series from
certain financial futures and options transactions (other than those taxed
under Section 988 of the Code) will be treated as 60% long-term capital
gain or loss and 40% short-term capital gain or loss. Gain or loss will
arise upon the exercise or lapse of such futures and options as well as
from closing transactions. In addition, any such futures or options
remaining unexercised at the end of the Series' taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to the Series characterized in the manner described above.
Offsetting positions held by a Series involving financial futures and
options may constitute "straddles." Straddles are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of straddles is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the provisions of
Sections 988 and 1256. As such, all or a portion of any short- or long-
term capital gain from certain "straddle" transactions may be
recharacterized as ordinary income.
If a Series were treated as entering into straddles by reason of its
futures or options transactions, such straddles could be characterized as
"mixed straddles" if the futures or options transactions comprising such
straddles were governed by Section 1256 of the Code. The Series may make
one or more elections with respect to "mixed straddles." Depending upon
which election is made, if any, the results to the Series may differ. If
no election is made, to the extent the straddle rules apply to positions
established by the Series, losses realized by the Series will be deferred
to the extent of unrealized gain in any offsetting positions. Moreover, as
a result of the straddle and conversion transaction rules, short-term
capital loss on straddle positions may be recharacterized as long-term
capital loss, and long-term capital gain may be recharacterized as short-
term capital gain or ordinary income.
Investment by a Series in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders by causing a Series to recognize
income prior to the receipt of cash payments. For example, the Series
could be required to recognize annually a portion of the discount (or
deemed discount) at which such securities were issued and to distribute an
amount equal to such income in order to maintain its qualification as a
regulated investment company. In such case, the Series may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
Since shareholders of the Fund will be the separate accounts of
Participating Insurance Companies, no discussion is included herein as to
the Federal income tax consequences at the level of the holders of the VA
contracts or VLI policies. For information concerning the Federal income
tax consequences to such holders, see the prospectuses for such VA
contracts or VLI policies.
PORTFOLIO TRANSACTIONS
General. Transactions are allocated to various dealers by the Fund's
Portfolio Managers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager (and, with
respect to the Managed Assets Portfolio, Comstock Partners, Inc., with
respect to the Capital Appreciation Portfolio, Fayez Sarofim & Co. and,
with respect to the International Equity Portfolio, M&G Investment
Management Limited) to supplement its own research and analysis with the
views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager (or Comstock Partners,
Inc., Fayez Sarofim & Co. or M&G Investment Management Limited) in advising
other funds or accounts and, conversely, research services furnished to the
Manager (or Comstock Partners, Inc., Fayez Sarofim & Co. or M&G Investment
Management Limited) by brokers in connection with other funds or accounts
may be used in advising a Series. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager (and
Comstock Partners, Inc., Fayez Sarofim & Co. or M&G Investment Management
Limited) that the receipt and study of such services should not reduce the
overall research department expenses.
Money Market, Quality Bond and Zero Coupon 2000 Portfolios. Purchases
and sales of portfolio securities usually are principal transactions.
Portfolio securities ordinarily are purchased directly from the issuer or
from an underwriter or market maker. Usually no brokerage commissions are
paid by the Series for such purchases and sales. The prices paid to
underwriters of newly-issued securities usually include a concession paid
by the issuer to the underwriter, and purchases of securities from market
makers may include the spread between the bid and asked price. No
brokerage commissions were paid for the fiscal years ended December 31,
1992, 1993 and 1994. There were no concessions on principal transactions
for the fiscal years ended December 31, 1992, 1993 and 1994, except that
concessions on principal transactions of the Quality Bond Portfolio, where
determinable, amounted to $1,250 for the fiscal year ended December 31,
1993, none of which was paid to the Distributor.
Capital Appreciation, Growth and Income, International Equity, Managed
Assets and Small Cap Portfolios. Brokers also will be selected because of
their ability to handle special executions such as are involved in large
block trades or broad distributions, provided the primary consideration is
met. Large block trades may, in certain cases, result from two or more
funds in the Dreyfus Family of Funds being engaged simultaneously in the
purchase or sale of the same security. Certain of the Series' transactions
in securities of foreign issuers may not benefit from the negotiated
commission rates available for transactions in securities of domestic
issuers. Higher portfolio turnover rates are likely to result in
comparatively greater brokerage expenses. The overall reasonableness of
brokerage commissions paid is evaluated based upon knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
In connection with its portfolio securities transactions for the
fiscal years ended December 31, 1992, 1993 and 1994 the Managed Assets
Portfolio paid brokerage commissions of $8,918, $5,937 and $38,724
respectively, none of which was paid to the Distributor. In connection
with its portfolio securities transactions for the fiscal years ended
December 31, 1992, 1993 and 1994, the Small Cap Portfolio paid brokerage
commissions of $49,622, $6,138 and $409,523 respectively, none of which was
paid to the Distributor. The above figures for the Managed Assets
Portfolio do not include concessions on principal transactions, which,
where determinable, amounted to $1,560, $37,885, and $21,115 for the fiscal
years ended December 31, 1992, 1993 and 1994, respectively, none of which
was paid to the Distributor. The above figures for the Small Cap Portfolio
do not include concessions on principal transactions, which, where
determinable, amounted to $169,752, $311,099 and $402,933 for the fiscal
years ended December 31, 1992, 1993, and 1994, respectively, none of which
was paid to the Distributor. In connection with its portfolio securities
transactions for the period April 5, 1993 (commencement of operations)
through December 31, 1993 and for the fiscal year ended December 31, 1994,
the Capital Appreciation Portfolio paid brokerage commissions of $3,731 and
$8,911, respectively, none of which was paid to the Distributor. There
were no concessions on principal transactions for these periods. In
connection with portfolio securities transactions for the period May 2,
1994 (commencement of operations) through December 31, 1994, the Growth and
Income and International Equity Portfolios paid brokerage commissions of
$6,175 and $5,171, respectively. There were no concessions on principal
transactions for this period for either Series during this period.
YIELD AND PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The performance figures shown below do not reflect the separate
charges applicable to the variable annuity contracts and variable life
policies offered by Participating Insurance Companies.
Money Market Portfolio. For the seven-day period ended December 31,
1994, the Money Market Portfolio's yield was 5.94% and effective yield was
6.12%. The Series' yield and effective yield reflect the absorption of
certain expenses of the Series by the Manager, without which the Series'
yield and effective yield for the seven-day period ended December 31, 1994
would have been 5.27% and 5.41%, respectively. See "Management of the
Fund" in the Prospectus. Yield is computed in accordance with a
standardized method which involves determining the net change in the value
of a hypothetical pre-existing Money Market Portfolio account having a
balance of one share at the beginning of a seven calendar day period for
which yield is to be quoted, dividing the net change by the value of the
account at the beginning of the period to obtain the base period return,
and annualizing the results (i.e., multiplying the base period return by
365/7). The net change in the value of the account reflects the value of
additional shares purchased with dividends declared on the original share
and any such additional shares and fees that may be charged to shareholder
accounts, in proportion to the length of the base period and the Series'
average account size, but does not include realized gains and losses or
unrealized appreciation and depreciation. Effective annualized yield is
computed by adding 1 to the base period return (calculated as described
above), raising that sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.
Yields will fluctuate and are not necessarily representative of future
results. The investor should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed.
See "Determination of Net Asset Value" for a discussion of the manner in
which the Series' price per share is determined.
Zero Coupon 2000, Quality Bond and Growth and Income Portfolios. The
Zero Coupon 2000 and Quality Bond Portfolios' current yield for the 30-day
period ended December 31, 1994 was 7.57% and 8.02%, respectively. Each
Series' yield reflects the absorption of certain expenses of the Series by
the Manager, without which the Zero Coupon 2000 and Quality Bond
Portfolios' 30-day yield for the period ended December 31, 1994 would have
been 6.72% and 7.04%, respectively. See "Management of the Fund" in the
Prospectus. Current yield is computed pursuant to a formula which operates
as follows: The amount of the relevant Series' expenses accrued for the
30-day period (net of reimbursements) is subtracted from the amount of the
dividends and interest earned (computed in accordance with regulatory
requirements) by such Series during the period. That result is then
divided by the product of: (a) the average daily number of such Series'
shares outstanding during the period that were entitled to receive
dividends, and (b) the net asset value per share on the last day of the
period less any undistributed earned income per share reasonably expected
to be declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the result
by 2.
The Zero Coupon 2000 Portfolio's average annual total return for the 1
and 4.337 year periods ended December 31, 1994 was -3.91% and 10.55%,
respectively. The Quality Bond Portfolio's average annual total return for
the 1 and 4.337 year periods ended December 31, 1994 was -4.59% and 8.80%,
respectively. The Growth and Income Portfolio's average annual total
return from May 2, 1994 (commencement of operations) through December 31,
1994 was -1.82%. Average annual total return is calculated by determining
the ending redeemable value of an investment purchased with a hypothetical
$1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and distributions), dividing by the amount of the
initial investment, taking the "n"th root of the quotient (where "n" is the
number of years in the period) and subtracting 1 from the result.
The Zero Coupon 2000 and Quality Bond Portfolios' total return for the
period August 31, 1990 (commencement of operations) to December 31, 1994
was 54.50% and 44.14%, respectively. The Growth and Income Portfolio's
total return from May 2, 1994 (commencement of operations) through December
31, 1994 was -1.22%. Total return is calculated by subtracting the amount
of the relevant Series' net asset value per share at the beginning of a
stated period from the net asset value per share at the end of the period
(after giving effect to the reinvestment of dividends and distributions
during the period), and dividing the result by the net asset value per
share at the beginning of the period.
Managed Assets, Capital Appreciation, Small Cap and International
Equity Portfolios. The Managed Assets Portfolio's average annual total
return for the 1 and 4.337 year periods ended December 31, 1994 was -1.56%
and 8.81%, respectively. The Small Cap Portfolio's average annual total
return for the 1 and 4.337 year periods ended December 31, 1994 was 7.75%
and 62.62%, respectively. The Capital Appreciation Portfolio's average
annual total return for the 1 and 1.742 year periods ended December 31,
1994 was 3.04% and 5.61%, respectively. The International Equity
Portfolio's average annual total return from May 2, 1994 (commencement of
operations) through December 31, 1994 was -2.98%. Average annual total
return is calculated as described above.
The Managed Assets and Small Cap Portfolios' total return for the
period August 31, 1990 (commencement of operations) to December 31, 1994
was 44.23% and 723.77%, respectively. The Capital Appreciation Portfolio's
total return for the period April 5, 1993 (commencement of operations)
through December 31, 1994 was 9.98%. The International Equity Portfolio's
total return from May 2, 1994 (commencement of operations) through December
31, 1994 was -2.00%. Total return is calculated as described above.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events. From time to time advertising materials for the Fund also
may refer to Morningstar ratings and related analyses supporting the
rating. From time to time, advertising materials from the Fund may refer
to, or include, commentary by the Fund's portfolio managers relating to
their investment strategy, asset growth of the Series, current or past
business, political, economic or financial conditions and other matters of
general interest to shareholders.
From time to time, the Fund may advertise that Thomas A. Frank was
awarded "1994 Variable Fund Manager of the Year" by Morningstar, Inc. for
managing the Fund's Small Cap Portfolio.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Shares have no preemptive, subscription or conversion
rights and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
acts as custodian of the Fund's investments. The Shareholder Services
Group, Inc., a subsidiary of First Data Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, acts as the Fund's transfer and
dividend disbursing agent. Neither The Bank of New York nor The
Shareholder Services Group, Inc. has any part in determining the investment
policies of the Fund or which securities are to be purchased or sold by the
Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Description of Certain Ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned to a debt
obligation. Capacity to pay interest and repay principal is extremely
strong.
AA
Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small
degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in
higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default
than other speculative grade bonds. However, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payment.
B
Bonds rated B have a greater vulnerability to default but
presently have the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions would
likely impair capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to
default, and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, they
are not likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to bonds subordinated to
senior debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to bonds subordinated to senior
debt which is assigned an actual or implied CCC- rating.
D
Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or
a minus sign, which is used to show relative standing within the major
ratings categories, except in the AAA (Prime Grade) category.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show
relative standing within the major rating categories, except in the Aaa
category and in the categories below B. The modifier 1 indicates a rating
for the security in the higher end of a rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates a ranking in
the lower end of a rating category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2)
have a strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained. Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability
to meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability
to pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in
this class are currently meeting debt service requirements, the probability
of continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable business and
economic activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which,
if not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than issues
rated F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A
Bonds rated A have protection factors which are average but
adequate. However, risk factors are more variable and greater in periods
of economic stress.
BBB
Bonds rated BBB are considered to have below average protection
factors but still considered sufficient for prudent investment.
Considerable variability in risk during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff
as likely to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the
category.
B
Bonds rated B are below investment grade and possess the risk
that obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry conditions
and/or company fortunes. Potential exists for frequent changes in quality
rating within this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such
bonds may be in default or have considerable uncertainty as to timely
payment of interest, preferred dividends and/or principal. Protection
factors are narrow and risk can be substantial with unfavorable economic or
industry conditions and/or with unfavorable company developments.
Plus (+) and minus (-) signs are used with a rating symbol
(except AAA) to indicate the relative position of a credit within the
rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned
by Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by
ample asset protection. Risk factors are minor.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Money Market Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSITS--18.4% AMOUNT VALUE
------------- -------------
<S> <C> <C>
Chase Manhattan Bank N.A. (London)
6.56%, 5/1/95........................................................... $ 1,500,000 $ 1,500,000
Fleet Bank of Massachussets (London)
6.55%, 4/13/95.......................................................... 1,000,000 1,000,000
Industrial Bank of Japan Ltd. (Yankee)
6.50%, 5/22/95.......................................................... 1,500,000 1,500,000
Sanwa Bank Ltd. (Yankee)
5.76%-5.77%, 2/10/95-4/21/95............................................ 1,500,000 1,500,022
Sumitomo Bank Ltd. (Yankee)
5.23%, 3/7/95........................................................... 900,000 900,000
------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $ 6,400,022 )..................................................... $ 6,400,022
============
BANKERS' ACCEPTANCES-4.2%
Dai-Ichi Kangyo Bank Ltd. (Yankee)
6.77%, 5/30/95
(cost $1,459,149)....................................................... $ 1,500,000 $ 1,459,149
============
COMMERCIAL PAPER-57.0%
Den Danske Corp. Inc.
5.54%, 1/13/95.......................................................... $ 1,000,000 $ 998,180
Dresdner U.S. Finance Inc.
6.52%, 5/22/95.......................................................... 1,500,000 1,462,694
Ford Motor Credit Co.
6.49%, 4/11/95.......................................................... 1,000,000 982,361
General Electric Capital Corp.
5.11%-5.47%, 1/12/95-3/10/95............................................ 1,500,000 1,493,703
General Electric Capital Services Inc.
5.47%-6.56%, 1/12/95-4/12/95............................................ 1,650,000 1,636,642
General Motors Acceptance Corp.
5.13%-6.49%, 1/30/95-4/6/95............................................. 1,400,000 1,381,632
Generale Bank Inc.
6.49%, 4/20/95.......................................................... 1,500,000 1,471,160
Goldman Sachs Group L.P.
5.12%-6.08%, 1/5/95-4/14/95............................................. 1,500,000 1,482,726
ITT Corp.
5.71%, 1/17/95.......................................................... 1,000,000 997,489
ITT Financial Corp.
5.02%-5.91%, 1/4/95-2/21/95............................................. 1,550,000 1,541,365
Merrill Lynch & Co. Inc.
5.48%, 1/20/95.......................................................... 800,000 797,720
NYNEX Corp.
6.28%, 4/4/95........................................................... 1,500,000 1,476,169
Sears Roebuck Acceptance Corp.
5.45%-5.56%, 1/13/95-1/25/95............................................ 1,500,000 1,495,519
Spintab AB
6.02%-6.04%, 3/15/95-3/23/95............................................ 1,600,000 1,580,044
DREYFUS VARIABLE INVESTMENT FUND, Money Market Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
------------- -------------
SwedBank Inc.
5.65%, 1/26/95.......................................................... $ 1,000,000 $ 996,125
-------------
TOTAL COMMERCIAL PAPER (cost $19,793,529)................................... $19,793,529
============
CORPORATE NOTES-4.9%
Bear Stearns Companies Inc.
5.85%, 8/25/95........................................................ (a) $ 1,000,000 $ 1,000,000
Merrill Lynch & Co. Inc.
5.79%, 4/26/95........................................................ (a) 700,000 700,000
-------------
TOTAL CORPORATE NOTES (cost $1,700,000)..................................... $ 1,700,000
============
U.S. GOVERNMENT AGENCIES-17.0%
Federal Home Loan Mortgage Corp., Discount Notes
6.25%, 1/3/95
(cost $5,896,952)....................................................... $ 5,899,000 $ 5,896,952
============
TOTAL INVESTMENTS (cost $35,249,652)......................... 101.5% $35,249,652
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES....................... (1.5%) $ (521,249)
====== ============
NET ASSETS ............................................. 100.0% $34,728,403
====== ============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate-subject to periodic change.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Managed Assets Portfolio
STATEMENT OF INVESTMENTS
DECEMBER 31, 1994
COMMON STOCKS--25.8% SHARES VALUE
------------- -------------
<S> <C> <C>
AGRICULTURE--1.2% IMC Global 8,400 $ 363,300
-------------
COAL--.2% Addington Resources (a) 5,000 48,750
-------------
CONSUMER
GROWTH STAPLES--.5% Paragon Trade Brands................... (a) 12,000 159,000
-------------
CONSUMER STAPLES--.1% Kimberly-Clark, Cl. A 3,500 42,072
-------------
ENERGY--.4% Baker Hughes 7,500 136,875
-------------
FOODS & BEVERAGES--.3% Dole Food 3,400 78,200
-------------
HEALTH CARE--.4% National Medical Enterprises (a) 8,500 120,063
-------------
MINING & METALS--22.2% ASARCO 9,000 256,500
Amax Gold............................ (a) 43,000 258,000
American Barrick Resources............. 5,200 115,700
Anglovaal.............................. 5,000 161,548
Ashanti Goldfields, G.D.R. ........ (a,b) 3,000 65,437
Battle Mountain Gold, Cl. A............ 30,000 330,000
Bema Gold............................ (a) 87,000 146,812
Buffelsfontein Gold Mining, A.D.R...... 13,000 113,750
Canyon Resources..................... (a) 68,000 106,250
Crystallex International............. (a) 16,000 39,943
Driefontein Consolidated, A.D.R........ 6,300 95,288
Echo Bay Mines......................... 3,000 31,875
El Callao Mining..................... (a) 8,000 7,703
Free State Consolidated Gold Mines, A.D.R. 4,800 73,800
Freeport McMoRan Copper & Gold, Cl. A.. 3,800 80,750
Goldcorp, Cl. A........................ 29,040 163,117
Herald Resources....................... 90,200 72,049
Homestake Mining....................... 30,700 525,738
ISCOR................................ (a) 102,400 117,747
Impala Platinum Holdings, A.D.R........ 11,000 270,270
Inco................................... 12,200 349,225
International Gold Resources......... (a) 80,000 251,070
International Gold Resources (Warrants) (a) 20,750 2,960
Johannesburg Consolidated Investment, A.D.R. (a) 1,400 35,946
Kloof Gold Mining, A.D.R............... 6,300 93,713
MK Gold.............................. (a) 99,000 457,875
Menzies Gold......................... (a) 250,000 162,855
Newmont Mining......................... 14,871 535,356
Pegasus Gold......................... (a) 17,500 199,063
Placer Dome............................ 14,400 313,200
Prime Resource Group................. (a) 26,000 187,767
Randfontein Estates Gold Mining, A.D.R. 7,200 82,260
Rio Amarillo Mining................ (a,b) 80,000 41,084
Royal Oak Mines...................... (a) 33,000 107,250
Santa Fe Pacific Gold................ (a) 23,000 296,125
DREYFUS VARIABLE INVESTMENT FUND, Managed Assets Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
MINING & METALS (CONTINUED) Southwestern Gold (a) 25,000 $ 200,606
TVX Gold............................. (a) 29,200 197,860
Vaal Reefs Exploration & Mining, A.D.R. 7,500 67,969
Vengold.............................. (a) 82,000 174,842
-------------
6,789,303
-------------
RETAIL TRADE--.5% K mart 11,000 143,000
-------------
TOTAL COMMON STOCKS
(cost $7,788,805).................... $ 7,880,563
=============
PREFERRED STOCK--0.8%
MINING & METALS; Freeport McMoRan Copper & Gold, Cl. A,
(cost $291,563)...................... 7,500 $ 247,500
=============
CONTRACTS
SUBJECT
PUT OPTIONS--2.9% TO PUT
-------------
Brokerage Basket;
November '95 @ $95................. (g) 21,930 $ 118,860
Standard & Poor's 500 Index Flex Options:
September '95 @ $450................. 4,500 65,250
December '95 @ $450.................. 11,000 187,000
Standard & Poor's 500 Index:
March '95 @ $450..................... 8,000 54,000
June '95 @ $450...................... 15,000 150,000
September '95 @ $450................. 12,000 168,000
December '95 @ $450.................. 4,000 62,000
March '96 @ $453................... (g) 4,547 85,520
-------------
TOTAL PUT OPTIONS
(cost $1,421,430).................... $ 890,630
=============
PRINCIPAL
BONDS--16.3% AMOUNT
-------------
FOREIGN: Austrian Securities;
Republic of Austria,
4.50%, 2/12/2000............... (c) $ 1,910,585 $ 1,866,259
German Securities;
Bundesrepublik Deutschland,
9%, 10/20/2000................. (d) 1,612,903 1,717,742
South African Securities;
Eskom,
11%, 6/1/2008.................. (e) 1,965,602 1,383,980
-------------
TOTAL BONDS
(cost $4,898,166).................... $ 4,967,981
=============
DREYFUS VARIABLE INVESTMENT FUND, Managed Assets Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1994
PRINCIPAL
SHORT-TERM INVESTMENTS--53.1% AMOUNT VALUE
------------- -------------
U.S. GOVERNMENT
AGENCIES--26.2%Federal Home Loan Bank
5.78%, 1/5/95........................ $ 8,000,000 $ 7,994,862
-------------
U.S. TREASURY BILLS--26.9% 5.27%, 2/9/95 (f) 136,000 135,224
5.38%, 3/16/95......................... 8,154,000 8,063,826
-------------
8,199,050
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $16,193,912)................... $16,193,912
=============
TOTAL INVESTMENTS (cost $30,593,876) ................................ 98.9% $30,180,586
====== =============
CASH AND RECEIVABLES (NET) ......................................... 1.1% $ 328,936
====== =============
NET ASSETS.................................................................. 100.0% $30,509,522
====== =============
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
December 31, 1994, these securities amounted to $106,521 or .3% of net
assets.
(c) Denominated in Swiss Francs.
(d) Denominated in German Marks.
(e) Denominated in South African Rand.
(f) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
(g) Securities restricted as to public resale. Investments in
restricted securities, with an aggregate market value of $204,380,
represents approximately .7% of net assets:
<TABLE>
<CAPTION>
ACQUISITION PURCHASE PERCENTAGE OF
PUT OPTIONS: DATE PRICE NET ASSETS VALUATION*
- ------------- ------------ ---------- --------------- ------------
<S> <C> <C> <C> <C>
Brokerage Basket**
November '95 @ $95....................... 11/11/94 $5.70 0.39 fair value
Standard & Poor's 500 Index
March '96 @ $453......................... 12/14/94 $21.99 0.28 fair value
</TABLE>
* The valuation of these securities has been determined in good faith
under the direction of the Board of Directors.
**Consists of Common Stocks of six publicly traded brokerage firms.
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES DECEMBER 31, 1994
FINANCIAL FUTURES SOLD SHORT; MARKET VALUE UNREALIZED
NUMBER OF COVERED (DEPRECIATION)
ISSUER CONTRACTS BY CONTRACTS EXPIRATION AT 12/31/94
- ------ ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
Standard & Poor's 500........................ 11 $(2,537,425) March '95 $(34,100)
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Zero Coupon 2000 Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
BONDS AND NOTES--84.8% AMOUNT VALUE
------------- -------------
<S> <C> <C>
BANKING--3.0% CoreStates Capital,
Sub. Notes, 9 5/8%, 2001............. $ 200,000 $ 209,639
J.P. Morgan and Co.,
Sub. Notes, Zero Coupon, 1998........ 160,000 123,634
-------------
333,273
-------------
CONSUMER--1.3% News America Holdings (Gtd. by News),
Sr. Notes, 7 1/2%, 2000.............. 150,000 141,824
-------------
INDUSTRIAL--4.0% USX,
Deb., 9 1/8%, 2013................... 450,000 435,831
-------------
INSURANCE--1.2% SunAmerica,
Notes, 9%, 1999...................... 130,000 131,985
-------------
FOREIGN--.7% Kingdom of Sweden,
Bonds, Ser. A, Zero Coupon, 1997..... 40,000 33,379
Montreal Urban Community,
Deb., 9 1/8%, 2001................... 40,000 41,504
-------------
74,883
-------------
OTHER--7.6% FICO Coupon Strips:
Ser.17, Zero Coupon, 4/5/2000........ 500,000 331,274
Zero Coupon, 10/6/2000............... 478,000 304,378
Ser. 1, Zero Coupon, 11/11/2000...... 150,000 94,779
Ser.10, Zero Coupon, 11/30/2000...... 152,000 95,645
-------------
826,076
-------------
U.S. GOVERNMENT
AND AGENCIES--67.0% Chattanooga Valley,
Secured First Mortgage, Zero Coupon, 1/1/2000 176,000 118,723
Federal National Mortgage Association,
Callable Principal Strips, Ser. 1:
Zero Coupon, 8/21/1996......... (a) 145,000 127,078
Zero Coupon, 10/10/2001.......... 400,000 339,250
Resolution Funding, Coupon Strips:
Zero Coupon, 7/15/2000............... 260,000 169,360
Zero Coupon, 10/15/2000.............. 2,830,000 1,812,406
U.S. Treasury Coupon Receipts,
Zero Coupon, 11/15/2000.............. 430,355 272,589
U.S. Treasury Coupon Strips,
Zero Coupon, 11/15/2000.............. 1,800,000 1,147,549
U.S. Treasury Principal Strips:
Zero Coupon, 8/15/2000............... 500,000 324,884
Zero Coupon, 11/15/2000.............. 4,700,000 2,996,377
-------------
7,308,216
-------------
TOTAL BONDS AND NOTES
(cost $9,933,455).................... $ 9,252,088
=============
DREYFUS VARIABLE INVESTMENT FUND, Zero Coupon 2000 Portfolio
STATEMENT OF INVESTMENTS(CONTINUED) DECEMBER 31, 1994
PRINCIPAL
SHORT-TERM INVESTMENT--13.7% AMOUNT VALUE
------------- -------------
AGENCY DISCOUNT NOTE; Federal Home Loan Mortgage Corp.,
6 1/4%, 1/3/1995
(cost $1,501,478).................... $ 1,502,000 $ 1,501,478
=============
TOTAL INVESTMENTS (cost $11,434,933)........................................ 98.5% $10,753,566
====== =============
CASH AND RECEIVABLES (NET).................................................. 1.5% $ 159,883
====== =============
NET ASSETS.................................................................. 100.0% $10,913,449
====== =============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Zero coupon until 8/21/1996, date on which a stated coupon rate of
8.40% becomes effective; the stated maturity date is 2001.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Quality Bond Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
BONDS AND NOTES--92.0% AMOUNT VALUE
------------- -------------
<S> <C> <C>
AEROSPACE--2.8% Boeing,
Deb., 7 1/4%, 2025................... $ 200,000 $ 170,717
McDonnell Douglas,
Notes, 8 1/4%, 2000.................. 200,000 195,719
-------------
366,436
-------------
BANKING--1.9% First Chicago, Sub. Notes:
8 1/4%, 2002......................... 15,000 14,609
6 7/8%, 2003......................... 100,000 89,042
NationsBank,
Sub. Notes, 6 1/2%, 2003............. 175,000 151,521
-------------
255,172
-------------
CONSUMER--2.3% News America Holdings (Gtd. by News):
Sr. Deb., 8 1/4%, 2018............... 100,000 88,542
Sr. Notes, 9 1/8%, 1999.............. 25,000 25,258
Rite Aid,
Sr. Deb., 6 7/8%, 2013............... 100,000 81,996
Time Warner,
Deb., 9.15%, 2023.................... 125,000 112,487
-------------
308,283
-------------
FINANCE--10.3% Ford Motor Credit,
Notes, 7 1/2%, 2004.................. 1,000,000 930,765
Heller Financial,
Floating Rate Notes, 5 15/16%, 1999 (a) 100,000 99,639
Merrill Lynch & Co.,
Notes, 8.30%, 2002................... 350,000 341,406
-------------
1,371,810
-------------
INDUSTRIAL--13.5% American Brands,
Deb., 8 5/8%, 2021................... 400,000 393,889
Eastman Kodak,
Deb., 9.95%, 2018.................... 400,000 454,966
Ford Motor,
Deb., 8 7/8%, 2022................... 400,000 407,129
USX,
Deb., 9 1/8%, 2013................... 550,000 532,683
-------------
1,788,667
-------------
INSURANCE--6.9% SunAmerica:
Deb., 9.95%, 2012.................... 13,000 14,063
Notes, 9%, 1999...................... 130,000 131,985
USF&G,
Sr. Notes, 8 3/8%, 2001.............. 800,000 766,032
-------------
912,080
-------------
DREYFUS VARIABLE INVESTMENT FUND, Quality Bond Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------- -------------
FOREIGN--3.4% Kingdom of Sweden,
Bonds, Ser. A, Zero Coupon, 1997..... $ 60,000 $ 50,068
Province of Quebec,
Deb., 8.80%, 2003.................... 400,000 405,068
-------------
455,136
-------------
OTHER--.7% City of New York,
General Obligation Bonds, Ser. D, 10%, 2007 25,000 25,594
FICO Coupon Strips,
Ser. 1, Zero Coupon, 5/11/2000....... 95,000 62,671
-------------
88,265
-------------
U.S. GOVERNMENT
AND AGENCIES--50.2% Federal National Mortgage Association,
Callable Principal Strips,
Ser. 1, Zero Coupon, 8/21/1996..... (b) 55,000 48,202
U.S. Treasury Bonds:
10 3/4%, 8/15/2005................... 100,000 120,141
11 1/4%, 2/15/2015................... 100,000 132,187
7 1/4%, 5/15/2016.................... 1,200,000 1,109,626
8%, 11/15/2021....................... 1,000,000 1,004,219
7 1/8%, 2/15/2023.................... 300,000 273,047
U.S. Treasury Notes:
7 1/4%, 8/31/1996.................... 230,000 228,634
7 1/4%, 11/30/1996................... 2,000,000 1,984,688
7 3/8%, 11/15/1997................... 1,000,000 989,531
8 1/2%, 11/15/2000................... 600,000 618,656
U.S. Treasury Principal Strips,
Zero Coupon, 5/15/2020............... 1,000,000 136,412
-------------
6,645,343
-------------
TOTAL BONDS AND NOTES
(cost $12,942,799)................... $12,191,192
=============
SHORT-TERM INVESTMENT--5.3%
AGENCY DISCOUNT NOTE; Federal Home Loan Mortgage Corp.,
6 1/4%, 1/3/1995
(cost $699,757)...................... $ 700,000 $ 699,757
=============
TOTAL INVESTMENTS (cost $13,642,556)........................................ 97.3% $12,890,949
====== =============
CASH AND RECEIVABLES (NET).................................................. 2.7% $ 353,190
====== =============
NET ASSETS.................................................................. 100.0% $13,244,139
====== =============
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Variable rate security - interest rate subject to periodic change.
(b) Zero coupon until 8/21/96, date on which a stated coupon rate of
8.40% becomes effective; the stated maturity date is 2001.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Small Cap Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS--70.2% SHARES VALUE
-------------- --------------
<S> <C> <C>
CONSUMER
NON-DURABLE--6.4% Bush Boake Allen......................... 155,000 $ 4,185,000
Canandaigua Wine, Cl. A.............. (a) 75,000 2,850,000
Eskimo Pie............................. 95,000 1,781,250
Norton McNaughton...................... 150,000 2,287,500
-------------
11,103,750
-------------
CONSUMER SERVICES--1.7% Au Bon Pain, Cl. A (a) 190,000 3,040,000
-------------
ENERGY--6.8% Cairn Energy USA (a) 200,000 1,625,000
Coda Energy.......................... (a) 350,000 2,100,000
Cross Timbers Oil...................... 105,000 1,575,000
Global Industries.................... (a) 50,000 1,143,750
Hornbeck Offshore Services........... (a) 150,000 1,875,000
International Colin Energy........... (a) 175,000 1,203,125
Optima Petroleum..................... (a) 150,000 592,980
Tide West Oil........................ (a) 157,500 1,594,688
Unit................................. (a) 44,800 134,400
-------------
11,843,943
-------------
FINANCIAL--8.0% Dime Bancorp (a) 175,000 1,356,250
Executive Risk......................... 131,000 1,866,750
FirstFed Michigan...................... 145,000 2,972,500
Fremont General........................ 73,400 1,715,725
Hibernia, Cl. A........................ 325,000 2,518,750
Presidential Life...................... 140,000 735,000
Western National....................... 210,000 2,703,750
-------------
13,868,725
-------------
HEALTH CARE--9.2% Advantage Health (a) 37,500 1,190,625
Coram Healthcare....................... 70,000 1,155,000
Corvel............................... (a) 112,500 3,121,875
FPA Medical Management................. 75,000 937,500
Horizon Healthcare................... (a) 95,000 2,660,000
National Health Laboratories Holdings.. 225,000 2,981,250
Ramsay Health Care................... (a) 125,000 812,500
Universal Health Services, Cl. B..... (a) 125,000 3,062,500
-------------
15,921,250
-------------
NON-ENERGY MINERALS--2.5% Cleveland-Cliffs 70,000 2,590,000
IMCO Recycling......................... 111,100 1,680,387
-------------
4,270,387
-------------
PROCESS INDUSTRIES--7.9% Albany International, Cl. A 125,000 2,406,250
Ferro.................................. 150,000 3,581,250
Longview Fibre......................... 125,000 1,968,750
OM Group............................... 135,000 3,240,000
Schulman (A.).......................... 90,000 2,475,000
-------------
13,671,250
-------------
DREYFUS VARIABLE INVESTMENT FUND, Small Cap Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
PRODUCER
MANUFACTURING--8.4% Andros................................. (a) 100,000 $ 1,650,000
Apogee................................. 165,000 2,887,500
Applied Power, Cl. A................... 75,000 1,903,125
Central Tractor Farm & Country......... 100,000 1,450,000
Flair.................................. 35,000 665,000
Greenfield Industries.................. 50,000 1,200,000
Moorco International................... 67,300 992,675
Roper Industries....................... 90,000 2,272,500
Titan Wheel International.............. 31,000 860,250
Wyman-Gordon......................... (a) 100,000 625,000
-------------
14,506,050
-------------
RETAIL TRADE--1.7% Genovese Drug Stores, Cl. A 61,000 693,875
Talbots................................ 70,000 2,187,500
-------------
2,881,375
-------------
TECHNOLOGY--15.0% Aspen Technology 125,000 2,453,125
Glenayre Technologies................ (a) 57,500 3,320,625
International Rectifier.............. (a) 135,000 3,273,750
LSI Logic............................ (a) 50,000 2,018,750
Rohr................................. (a) 175,000 1,815,625
Sierra On-Line....................... (a) 90,000 3,082,500
SoftKey International.................. 95,000 2,422,500
Spectrum HoloByte...................... 40,000 540,000
Sybase............................... (a) 35,000 1,820,000
Thermedics........................... (a) 150,000 1,912,500
Veeco Instruments...................... 190,000 1,923,750
Xilinx............................... (a) 25,000 1,481,250
-------------
26,064,375
-------------
TRANSPORTATION--1.6% U.S. Delivery Systems 72,500 996,875
Werner Enterprises..................... 75,000 1,781,250
-------------
2,778,125
-------------
UTILITIES--1.0% IntelCom Group (a) 125,000 1,656,250
-------------
TOTAL COMMON STOCKS
(cost $115,862,706).................. $121,605,480
=============
PRINCIPAL
SHORT-TERM INVESTMENTS--35.7% AMOUNT
--------------
U.S. TREASURY BILLS: 4.90%, 1/12/95 $ 747,000 $ 745,882
5.00%, 1/19/95......................... 1,006,000 1,003,485
5.10%, 1/26/95......................... 12,677,000 12,632,116
5.11%, 2/2/95.......................... 6,005,000 5,977,728
5.27%, 2/9/95.......................... 959,000 953,525
5.23%, 2/16/95......................... 1,042,000 1,035,036
5.18%, 3/2/95.......................... 2,109,000 2,090,792
DREYFUS VARIABLE INVESTMENT FUND, Small Cap Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
U.S. TREASURY BILLS (CONTINUED): 5.33%, 3/9/95 $ 17,088,000 $ 16,918,608
5.39%, 3/16/95......................... 20,614,000 20,385,452
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $61,742,624)................... $ 61,742,624
=============
TOTAL INVESTMENTS (cost $177,605,330)....................................... 105.9% $183,348,104
====== =============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (5.9%) $ (10,133,103)
====== =============
NET ASSETS.................................................................. 100.0% $173,215,001
====== =============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Capital Appreciation Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS--70.9% SHARES VALUE
------------- -------------
<S> <C> <C> <C>
AEROSPACE
& ELECTRONICS--6.4% Emerson Electric......................... 2,000 $ 125,000
General Electric....................... 12,050 614,550
Motorola............................... 3,050 176,519
Texas Instruments...................... 1,600 119,800
-------------
1,035,869
-------------
AUTO RELATED--1.5% Chrysler 5,000 245,000
-------------
BANKING--3.0% Banc One 1,800 45,675
Citicorp............................... 8,525 352,722
KeyCorp................................ 1,800 45,000
PNC Bank............................... 1,800 38,025
-------------
481,422
-------------
CAPITAL GOODS--.2% Cooper Industries 1,000 34,125
-------------
CHEMICALS--5.7% Dow Chemical 6,000 403,500
duPont (E.I.) de Nemours............... 6,000 337,500
Rohm & Haas............................ 3,000 171,375
-------------
912,375
-------------
ENERGY--6.3% Chevron 5,500 245,437
Exxon.................................. 4,025 244,519
Mobil.................................. 3,025 254,856
Royal Dutch Petroleum.................. 2,500 268,750
-------------
1,013,562
-------------
FINANCE-MISCELLANEOUS--3.3%. American General 3,000 84,750
Federal National Mortgage Association.. 3,500 255,063
HSBC Holdings PLC...................... 2,400 25,902
HSBC Holdings PLC, A.D.R............... 1,000 108,500
Merrill Lynch.......................... 1,800 64,350
-------------
538,565
-------------
FOOD,
BEVERAGE & TOBACCO--14.1% Anheuser-Busch Cos....................... 700 35,612
Coca-Cola.............................. 15,000 772,500
General Mills.......................... 600 34,200
Kellogg................................ 2,000 116,250
Nestle, A.D.R.......................... 1,000 47,625
PepsiCo................................ 9,000 326,250
Philip Morris Cos...................... 11,500 661,250
Sara Lee............................... 2,500 63,125
Seagram................................ 7,500 221,250
-------------
2,278,062
-------------
DREYFUS VARIABLE INVESTMENT FUND, Capital Appreciation Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
HEALTH CARE--9.5% Abbott Laboratories 3,000 $ 97,875
Amgen................................ (a) 2,500 147,500
Johnson & Johnson...................... 7,050 385,987
Merck & Co............................. 12,000 457,500
Pfizer................................. 4,550 351,487
Roche Holdings A.D.S................... 2,000 95,875
-------------
1,536,224
-------------
MEDIA/ENTERTAINMENT--2.5% McGraw-Hill 2,000 133,750
News Corp. A.D.S....................... 5,000 78,125
Reader's Digest Association, Cl. A..... 4,000 196,500
-------------
408,375
-------------
MULTI INDUSTRY--3.2% AlliedSignal 5,000 170,000
Minnesota Mining & Manufacturing....... 6,500 346,938
-------------
516,938
-------------
OFFICE & BUSINESS
EQUIPMENT--2.2% AT&T 5,500 276,375
Ericsson (LM) Telephone, Cl. B, A.D.R.. 800 44,100
MCI Communications..................... 1,800 33,075
-------------
353,550
-------------
PERSONAL CARE--5.0% Colgate-Palmolive 1,000 63,375
Gillette............................... 4,500 336,375
Procter & Gamble....................... 5,500 341,000
Unilever, N.V.......................... 500 58,250
-------------
799,000
-------------
PERSONNEL SERVICES--.7% Block (H & R) 3,000 111,375
-------------
PHOTOGRAPHY--1.3% Eastman Kodak 4,500 214,875
-------------
RETAIL--3.6% May Department Stores 6,000 202,500
Toys R Us.............................. (a) 2,950 89,975
Wal-Mart Stores........................ 7,000 148,750
Walgreen............................... 3,000 131,250
-------------
572,475
-------------
TRANSPORTATION--2.4% Norfolk Southern 4,000 242,500
Union Pacific.......................... 3,000 136,875
-------------
379,375
-------------
TOTAL COMMON STOCKS
(cost $11,259,865)................... $11,431,167
=============
DREYFUS VARIABLE INVESTMENT FUND, Capital Appreciation Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PREFERRED STOCKS--2.8% SHARES VALUE
------------- -------------
AUTO RELATED--2.6% Ford Motor, Ser. A, Cum. Conv., $4.20 4,500 $ 414,000
-------------
MEDIA/ENTERTAINMENT--.2% News Corp. 2,500 34,688
-------------
TOTAL PREFERRED STOCKS
(cost $445,524)...................... $ 448,688
=============
PRINCIPAL
SHORT-TERM INVESTMENTS--25.6% AMOUNT
-------------
U.S. TREASURY BILLS: 4.75%,2/2/1995 $ 21,000 $ 20,909
4.95%,3/2/1995......................... 202,000 200,152
4%,3/9/1995............................ 3,642,000 3,604,597
4.91%,3/16/1995........................ 305,000 301,556
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $4,127,214).................... $ 4,127,214
=============
TOTAL INVESTMENTS (cost $15,832,603)........................................ 99.3% $16,007,069
====== =============
CASH AND RECEIVABLES (NET)................................................... .7% $ 111,228
====== =============
NET ASSETS................................................................... 100.0% $16,118,297
====== =============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, Growth & Income Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS--55.0% SHARES VALUE
------------ ------------
<S> <C> <C>
BASIC INDUSTRIES--4.1% Minnesota Mining & Manufacturing 800 $ 42,700
------------
CAPITAL GOODS--6.3% Albany International, Cl. A 1,400 26,950
Methanex............................. (a) 3,000 38,812
------------
65,762
------------
ENERGY--11.7% Coastal 1,200 30,900
Schlumberger........................... 1,000 50,375
UGI.................................... 2,000 40,750
------------
122,025
------------
FINANCIAL-BROKERAGE--4.0% Bank of Boston 1,600 41,400
------------
MANUFACTURING--3.4% Premark International 800 35,800
------------
MEDICAL SUPPLIES--4.6% DENTSPLY International 1,500 47,250
------------
TELECOMMUNICATIONS--14.6% AT&T 800 40,200
GTE.................................... 1,200 36,450
IntelCom Group....................... (a) 3,000 39,750
US West................................ 1,000 35,625
------------
152,025
------------
TRANSPORTATION--2.9% Canadian Pacific 2,000 30,000
------------
UTILITIES-ELECTRIC POWER--3.4% Entergy 1,600 35,000
------------
TOTAL COMMON STOCKS
(cost $611,293)...................... $ 571,962
============
CONVERTIBLE PREFERRED STOCKS-12.2%
ELECTRICAL & ELECTRONICS--3.9% Cooper Industries, Cum., $1.60 2,000 $ 41,000
------------
REAL ESTATE--4.0% Tanger Factory Outlet Centers, Cum., $1.66 2,000 41,250
------------
RETAILERS-MERCHANDISING--4.3% Sears, Roebuck & Co., Ser. A, $3.75 800 44,500
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $130,436)...................... $ 126,750
============
PRINCIPAL
SHORT-TERM INVESTMENTS--37.1% AMOUNT
------------
U.S. TREASURY BILLS; 4.91%, 3/16/1995
(cost $385,597)...................... $ 390,000 $ 385,597
============
TOTAL INVESTMENTS (cost $1,127,326)......................................... 104.3% $1,084,309
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (4.3%) $ (44,415)
====== ============
NET ASSETS.................................................................. 100.0% $1,039,894
====== ============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, International Equity Portfolio
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS--83.2% SHARES VALUE
------------ ------------
<S> <C> <C> <C>
AUSTRALIA-- 5.0% Commonwealth Bank of Australia 2,500 $ 15,433
Mayne Nickless......................... 2,800 14,331
Newcrest Mining........................ 5,500 24,525
------------
54,289
------------
AUSTRIA-- 1.3% Burgenland Holding 400 14,509
------------
FRANCE-- 8.1% BUT S.A. 100 16,579
Naf Naf S.A............................ 315 12,392
Naf Naf S.A. (Warrants).............. (a) 35 74
Renault S.A............................ 370 12,234
Roussel Uclaf S.A...................... 210 25,139
Vallourec Usines a Tubes de Lorraine Escaut
et Vallourec Reunies............... (a) 450 21,750
------------
88,168
------------
GERMANY-- 2.6% BASF AG 75 15,460
Continental AG......................... 90 13,122
------------
28,582
------------
HONG KONG-- 3.6% China Light & Power 4,000 17,061
HSBC Holdings PLC...................... 2,000 21,585
------------
38,646
------------
JAPAN-- 22.9% Amway Japan 1,000 34,421
East Japan Railway..................... 4 19,990
Honda Motor............................ 1,000 17,762
Mitsubishi Bank........................ 1,000 24,586
Mitsui Fudosan......................... 1,000 10,637
NGK Spark Plug......................... 2,000 26,292
Nippon Telegraph & Telephone........... 2 17,682
Sony................................... 500 28,349
Tokio Marine & Fire Insurance.......... 1,000 12,243
Toshoku................................ 3,300 22,320
Ushio.................................. 3,000 34,621
------------
248,903
------------
MALAYSIA-- 3.6% Leader Universal Holdings Berhad 6,666 21,392
Renong Berhad.......................... 14,000 17,311
------------
38,703
------------
MEXICO-- 3.6% Cemex S.A., Cl.B, A.D.R. 1,181 12,105
Grupo Carso S.A., Ser.B, A.D.R. ... (a,b) 800 11,600
Panamerican Beverages, Cl. A........... 500 15,813
------------
39,518
------------
NETHERLANDS-- 2.3% Philips Electronics 850 25,182
------------
DREYFUS VARIABLE INVESTMENT FUND, International Equity Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------ ------------
SINGAPORE--2.3% Keppel 3,000 $ 25,514
------------
SOUTH AFRICA--4.0% Premier Group Holdings 15,000 19,349
South African Breweries................ 1,000 23,649
------------
42,998
------------
SPAIN--5.1% Banco Bilbao Vizcaya S.A. 870 21,585
Iberdrola S.A.......................... 2,900 17,894
Repsol S.A............................. 600 16,276
------------
55,755
------------
SWITZERLAND--6.3% Baloise Holdings 20 36,377
Baloise Holdings (Warrants).......... (a) 20 176
Elektrowatt AG......................... 120 31,731
------------
68,284
------------
UNITED KINGDOM--12.5% BAT Industries PLC 3,000 20,285
Booker PLC............................. 3,500 21,938
British Steel PLC...................... 9,000 21,930
Lucas Industries PLC................... 7,000 22,596
Royal Doulton PLC...................... 5,500 21,977
Zeneca Group PLC....................... 2,000 27,485
------------
136,211
------------
TOTAL COMMON STOCKS
(cost $919,899)...................... $ 905,262
============
PREFERRED STOCK--1.0%
GERMANY; Herlitz AG
(cost $14,543)....................... 65 $ 11,113
============
PRINCIPAL
SHORT-TERM INVESTMENTS--10.0% AMOUNT
------------
UNITED STATES; U.S. Treasury Bills:
4.85%, 2/9/95........................ $ 13,000 $ 12,932
5.30%, 3/9/95........................ 97,000 96,043
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $108,975)...................... $ 108,975
============
TOTAL INVESTMENTS (cost $1,043,417)......................................... 94.2% $1,025,350
====== ============
CASH AND RECEIVABLES (NET).................................................. 5.8% $ 63,229
====== ============
NET ASSETS.................................................................. 100.0% $1,088,579
====== ============
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1994, this security amounted to $11,600 or 1.1% of net assets.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
MONEY MANAGED ZERO COUPON QUALITY
MARKET ASSETS 2000 BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
[cost_Note 4(b)]_see statement....... $35,249,652 $30,180,586 $10,753,566 $12,890,949
Cash................................... 231,532 219,408 91,573 137,083
Dividends and interest receivable...... 48,986 130,888 36,528 188,433
Receivable for futures variation margin_Note 4(a) -- 17,875 -- --
Prepaid expenses and other assets...... 4,446 4,372 4,462 4,321
Due from The Dreyfus Corporation....... 82,227 -- 51,830 51,163
------------- ------------- ------------- -------------
35,616,843 30,553,129 10,937,959 13,271,949
------------- ------------- ------------- -------------
LIABILITIES:
Due to The Dreyfus Corporation......... $ -- $ 11,223 $ -- $ --
Payable for shares of Beneficial Interest redeemed 844,089 -- 785 594
Accrued expenses and other liabilities. 44,351 32,384 23,725 27,216
------------- ------------- ------------- -------------
888,440 43,607 24,510 27,810
------------- ------------- ------------- -------------
NET ASSETS ..................... $34,728,403 $30,509,522 $10,913,449 $13,244,139
============= ============= ============= =============
REPRESENTED BY:
Paid-in capital........................ $34,722,439 $30,808,212 $11,592,449 $14,092,165
Accumulated undistributed investment
income_net........................... 5,895 -- 2,786 4,797
Accumulated distributions in excess of
investment income_net................ -- (48,981) -- --
Accumulated undistributed net realized gain
(loss) on investments and foreign
currency transactions................ 69 197,455 (419) (101,216)
Accumulated net unrealized (depreciation) on
investments and foreign currency transactions
[including $(34,100) net unrealized
(depreciation) on financial futures for
Managed Assets Portfolio]_Note 4(b).. -- (447,164) (681,367) (751,607)
------------- ------------- ------------- -------------
NET ASSETS at value, applicable to outstanding
shares of Beneficial Interest.......... $34,728,403 $30,509,522 $10,913,449 $13,244,139
============= ============= ============= =============
SHARES OUTSTANDING (unlimited number of
$.001 par value shares authorized for each series) 34,722,439 2,466,347 957,822 1,257,435
============= ============= ============= =============
NET ASSET VALUE per share
(Net Assets / Shares Outstanding)...... $1.00 $12.37 $11.39 $10.53
====== ======= ======= =======
See notes to financial statements.
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1994
CAPITAL GROWTH AND INTERNATIONAL
SMALL CAP APPRECIATION INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
ASSETS:
Investments in securities, at value
[cost_Note 4(b)]_see statement....... $183,348,104 $16,007,069 $ 1,084,309 $ 1,025,350
Cash................................... 1,531,615 95,800 47,677 75,058
Receivable for investment securities sold 1,297,449 -- -- --
Dividends and interest receivable...... 66,117 33,169 3,011 2,538
Prepaid expenses and other assets...... 4,366 90 -- --
Due from The Dreyfus Corporation....... -- 9,740 7,857 385
------------- ------------- ------------- -------------
186,247,651 16,145,868 1,142,854 1,103,331
------------- ------------- ------------- -------------
LIABILITIES:
Due to The Dreyfus Corporation......... $ 98,483 $ -- $ -- $ --
Payable for investment securities purchased 12,820,444 -- 92,837 --
Payable for shares of Beneficial Interest redeemed -- -- 10 --
Net unrealized depreciation on forward currency
exchange contracts_Note 4(a)......... -- -- -- 254
Accrued expenses and other liabilities. 113,723 27,571 10,113 14,498
------------- ------------- ------------- -------------
13,032,650 27,571 102,960 14,752
------------- ------------- ------------- -------------
NET ASSETS .................... $173,215,001 $16,118,297 $ 1,039,894 $ 1,088,579
============= ============= ============= =============
REPRESENTED BY:
Paid-in capital........................ $168,735,476 $15,941,804 $ 1,082,331 $ 1,126,622
Accumulated undistributed investment
income_net........................... 35,405 1,355 58 --
Accumulated distributions in excess of
investment income_net................ -- -- -- (7,247)
Accumulated undistributed net realized gain
(loss) on investments and foreign currency
transactions......................... (817,310) 672 522 (12,479)
Accumulated distributions in excess of net realized
gains on investments................. (481,344) -- -- --
Accumulated net unrealized appreciation
(depreciation) on investments and foreign
currency transactions_Note 4(b)...... 5,742,774 174,466 (43,017) (18,317)
------------- ------------- ------------- -------------
NET ASSETS at value, applicable to outstanding
shares of Beneficial Interest.......... $173,215,001 $16,118,297 $ 1,039,894 $ 1,088,579
============= ============= ============= =============
SHARES OUTSTANDING (unlimited number of
$.001 par value shares authorized for each series) 4,743,058 1,198,926 86,822 90,532
============= ============= ============= =============
NET ASSET VALUE per share
(Net Assets / Shares Outstanding)...... $36.52 $13.44 $11.98 $12.02
====== ======= ======= =======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
MONEY MANAGED ZERO COUPON QUALITY
MARKET ASSETS 2000 BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest............................. $1,006,418 $ 727,651 $ 522,791 $ 649,784
Cash dividends (net of $7,289 foreign taxes
withheld at source for the Managed
Assets Portfolio)................ -- 71,099 --_ --_
------------- ------------- ------------- -------------
TOTAL INCOME................... 1,006,418 798,750 522,791 649,784
------------- ------------- ------------- -------------
EXPENSES--NOTE 2(D):
Investment advisory fee_Note 3(a).... $ 108,958 $ 79,001 $ 38,947 $ 60,106
Sub-investment advisory fee_Note 3(a) ___ 79,001 ___ ___
Legal fees........................... 24,877 20,998 8,875 9,386
Auditing fees........................ 19,829 18,047 17,242 16,521
Custodian fees....................... 14,440 16,114 10,091 10,284
Registration fees.................... 8,980 7,946 1,780 2,893
Organization expenses................ 6,950 5,968 6,895 6,465
Trustees' fees and expenses_Note 3(b) 3,005 3,960 1,176 1,791
Prospectus and shareholders' reports. 2,791 6,500 2,047 ___
Shareholder servicing costs.......... 598 306 299 241
Miscellaneous........................ 957 969 3,425 3,581
------------- ------------- ------------- -------------
191,385 238,810 90,777 111,268
Less_expense reimbursement from The
Dreyfus Corporation and Comstock
Partners due to undertakings_Note 3(a) 191,385 185,292 90,777 111,268
------------- ------------- ------------- -------------
TOTAL EXPENSES................. ___ 53,518 ___ ___
------------- ------------- ------------- -------------
INVESTMENT INCOME--NET......... 1,006,418 745,232 522,791 649,784
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments (including
foreign currency transactions)_Note 4(a) $ 40 $ 59,386 $ ___ $(101,063)
Net realized gain on financial futures_Note 4(a) ___ 87,189 ___ -__
------------- ------------- ------------- -------------
NET REALIZED GAIN (LOSS)............. 40 146,575 ___ (101,063)
Net unrealized (depreciation) on investments and
foreign currency transactions [including $(29,115)
net unrealized (depreciation) on financial
futures for the Managed Assets Portfolio] ___ (1,091,304) (791,423) (776,871)
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 40 (944,729) (791,423) (877,934)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $1,006,458 $ (199,497) $(268,632) $(228,150)
============= ============= ============= =============
See notes to financial statements.
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED DECEMBER 31, 1994
CAPITAL GROWTH AND INTERNATIONAL
SMALL CAP APPRECIATION INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO*
------------- ------------- ------------- -------------
INVESTMENT INCOME:
INCOME:
Interest............................. $ 822,120 $ 97,376 $ 13,052 $ 2,834
Cash dividends (net of $2,354, $35 and $1,441
foreign taxes withheld at source for the
Capital Appreciation, Growth and Income and
International Equity Portfolios, respectively) 299,488 195,251 11,999 10,744
------------- ------------- ------------- -------------
TOTAL INCOME................... 1,121,608 292,627 25,051 13,578
------------- ------------- ------------- -------------
EXPENSES--NOTE 2(D):
Investment advisory fee_Note 3(a).... $ 487,316 $ 49,561 $ 5,069 $ 5,080
Sub-investment advisory fee_Note 3(a) ___ 18,022 __- ---
Legal fees........................... 74,443 9,192 402 514
Registration fees.................... 51,931 4,132 363 382
Auditing fees........................ 25,921 9,500 6,333 6,330
Custodian fees....................... 24,874 4,137 860 5,294
Trustees' fees and expenses_Note 3(b) 13,356 1,990 129 124
Prospectus and shareholders' reports. 11,615 2,368 1,301 1,059
Organization expenses................ 5,565 __-- __--- __---
Shareholder servicing costs.......... 672 263 15 7
Miscellaneous........................ 1,166 1,057 718 789
------------- ------------- ------------- -------------
696,859 100,222 15,190 19,579
Less_expense reimbursement from The
Dreyfus Corporation due to
undertakings_Note 3(a)........... 340,893 77,322 12,926 17,220
------------- ------------- ------------- -------------
TOTAL EXPENSES................. 355,966 22,900 2,264 2,359
------------- ------------- ------------- -------------
INVESTMENT INCOME--NET......... 765,642 269,727 22,787 11,219
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments_Note 4(a):
Long transactions (including foreign currency
transactions).................... $ (692,673) $ 588 $ 7,824 $(12,479)
Short sale transactions.............. (119,353) __-- __--- __---
------------- ------------- ------------- -------------
NET REALIZED GAIN (LOSS)............. (812,026) 588 7,824 (12,479)
Net unrealized appreciation (depreciation) on
investments, foreign currency transactions and
securities sold short................ 3,743,892 93,162 (43,017) (18,317)
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS. 2,931,866 93,750 (35,193) (30,796)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $3,697,508 $363,477 $(12,406) $(19,577)
============= ============= ============= =============
</TABLE>
* From May 2, 1994 (commencement of operations) to December 31, 1994.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
MONEY MARKET PORTFOLIO MANAGED ASSETS PORTFOLIO
-------------------------------- ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------- ------------------------------
1993 1994 1993 1994
-------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income_net.................. $ 86,426 $ 1,006,418 $ 56,340 $ 745,232
Net realized gain on investments, foreign
currency transactions and financial futures 35 40 36,233 146,575
Net unrealized appreciation (depreciation) on
investments and foreign currency transactions
for the year......................... ___ ___- 626,021 (1,091,304)
-------------- --------------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ 86,461 1,006,458 718,594 (199,497)
-------------- --------------- ------------ -------------
DIVIDENDS TO SHAREHOLDERS:
From investment income_net............. (86,426) (1,000,523) (51,408) (769,916)
In excess of investment income_net..... ___ ___- __-- (48,981)
From net realized gain on investments.. (273) ___- __-- __--
-------------- --------------- ------------ -------------
TOTAL DIVIDENDS...................... (86,699) (1,000,523) (51,408) (818,897)
-------------- --------------- ------------ -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......... 40,424,117(3) 141,994,565(3) 5,959,592 26,699,972
Dividends reinvested................... 86,613(3) 1,000,523(3) 51,408 818,897
Cost of shares redeemed................ (33,650,057)(3)(115,923,303)(3) (586,787) (3,947,678)
-------------- --------------- ------------ -------------
INCREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS............ 6,860,673 27,071,785 5,424,213 23,571,191
-------------- --------------- ------------ -------------
TOTAL INCREASE IN NET ASSETS..... 6,860,435 27,077,720 6,091,399 22,552,797
NET ASSETS:
Beginning of year...................... 790,248 7,650,683 1,865,326 7,956,725
-------------- --------------- ------------ -------------
End of year............................ $ 7,650,683 $ 34,728,403(1) $7,956,725(2) $30,509,522(2)
============= ============= ============= =============
SHARES SHARES
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 478,384 2,094,088
Shares issued for dividends reinvested.................................. 4,070 67,318
Shares redeemed......................................................... (50,692) (310,779)
------------ -------------
NET INCREASE IN SHARES OUTSTANDING.................................... 431,762 1,850,627
============ =============
(1) Includes undistributed investment income_net; $5,895 in 1994.
(2) Includes distributions in excess of investment income_net: $(13,920) in
1993 and $(48,981) in 1994.
(3) $1.00 per share.
See notes to financial statements.
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
ZERO COUPON 2000 PORTFOLIO QUALITY BOND PORTFOLIO
------------------------------ ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ ------------------------------
1993 1994 1993 1994
-------------- --------------- ------------ -------------
OPERATIONS:
Investment income_net.................. $ 135,741 $ 522,791 $ 93,931 $ 649,784
Net realized gain (loss) on investments 79,385 ___ 13,099 (101,063)
Net unrealized (depreciation) on investments for
the year............................. (11,552) (791,423) (7,491) (776,871)
-------------- --------------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ 203,574 (268,632) 99,539 (228,150)
-------------- --------------- ------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net.................. (134,657) (519,948) (93,069) (645,868)
Net realized gain on investments....... (72,191) (7,541) (2,048) (11,191)
-------------- --------------- ------------ -------------
TOTAL DIVIDENDS...................... (206,848) (527,489) (95,117) (657,059)
-------------- --------------- ------------ -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......... 5,035,897 8,129,045 4,643,084 10,900,540
Dividends reinvested................... 206,848 479,850 95,117 657,134
Cost of shares redeemed................ (905,731) (2,595,464) (440,933) (2,134,797)
-------------- --------------- ------------ -------------
INCREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS............ 4,337,014 6,013,431 4,297,268 9,422,877
-------------- --------------- ------------ -------------
TOTAL INCREASE IN NET ASSETS..... 4,333,740 5,217,310 4,301,690 8,537,668
NET ASSETS:
Beginning of year...................... 1,362,399 5,696,139 404,781 4,706,471
-------------- --------------- ------------ -------------
End of year............................ $5,696,139(1) $10,913,449(1) $4,706,471(2) $13,244,139(2)
============= ============= ============= =============
SHARES SHARES SHARES SHARES
-------------- --------------- ------------ -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 392,187 683,960 390,577 991,178
Shares issued for dividends reinvested. 16,372 40,904 8,057 61,022
Shares redeemed........................ (71,372) (220,025) (37,102) (193,286)
-------------- --------------- ------------ -------------
NET INCREASE IN SHARES OUTSTANDING... 337,187 504,839 361,532 858,914
============= ============= ============= =============
- ----------------------------
(1) Includes distributions in excess of investment income_net; $(57) in
1993 and undistributed investment income_net; $2,786 in 1994.
(2) Includes undistributed investment income_net: $881 in 1993 and $4,797
in 1994.
See notes to financial statements.
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SMALL CAP PORTFOLIO CAPITAL APPRECIATION PORTFOLIO
------------------------------- ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- ------------------------------
1993 1994 1993(1) 1994
------------- -------------- ------------ -------------
OPERATIONS:
Investment income_net.................. $ 53,316 $ 765,642 $ 20,787 $ 269,727
Net realized gain (loss) on investments 1,862,231 (812,026) 84 588
Net unrealized appreciation on investments
for the year......................... 1,392,389 3,743,892 81,304 93,162
------------- -------------- ------------ -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... 3,307,936 3,697,508 102,175 363,477
------------- -------------- ------------ -------------
DIVIDENDS TO SHAREHOLDERS:
From investment income_net............. (56,919) (727,613) (19,425) (269,734)
In excess of investment income_net..... (2,625) ___ ___ ___
From net realized gain on investments.. (1,237,464) (720,564) ___ ___
In excess of net realized gain on investments ___ (481,344) ___ ___
------------- -------------- ------------ -------------
TOTAL DIVIDENDS...................... (1,297,008) (1,929,521) (19,425) (269,734)
------------- -------------- ------------ -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......... 13,550,837 158,015,337 3,764,767 13,455,892
Dividends reinvested................... 1,297,008 1,929,521 19,425 269,733
Cost of shares redeemed................ (1,200,662) (6,835,267) (146,916) (1,471,097)
------------- -------------- ------------ -------------
INCREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS............ 13,647,183 153,109,591 3,637,276 12,254,528
------------- -------------- ------------ -------------
TOTAL INCREASE IN NET ASSETS..... 15,658,111 154,877,578 3,720,026 12,348,271
NET ASSETS:
Beginning of year...................... 2,679,312 18,337,423 50,000 3,770,026
------------- -------------- ------------ -------------
End of year............................ $18,337,423(2) $173,215,001(2) $3,770,026(3) $16,118,297(3)
============= ============= ============= =============
SHARES SHARES SHARES SHARES
------------- -------------- ------------ -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 410,543 4,347,955 289,718 1,004,793
Shares issued for dividends reinvested. 40,243 52,997 1,466 20,097
Shares redeemed........................ (36,379) (190,260) (11,139) (110,009)
------------- -------------- ------------ -------------
NET INCREASE IN SHARES OUTSTANDING... 414,407 4,210,692 280,045 914,881
============= ============= ============= =============
- ----------------------
(1) From April 5, 1993 (commencement of operations) to December 31, 1993.
(2) Includes distribution in excess of investment income_net; $(2,625) in 1993 and undistributed investment income_net;
$35,405 in 1994.
(3) Includes undistributed investment income_net: $1,362 in 1993 and $1,355
in 1994.
See notes to financial statements.
DREYFUS VARIABLE INVESTMENT FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FROM MAY 2, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994.
GROWTH AND INTERNATIONAL
INCOME EQUITY
PORTFOLIO PORTFOLIO
------------ ------------
OPERATIONS:
Investment income_net................................................... $ 22,787 $ 11,219
Net realized gain (loss) on investments and foreign currency transactions 7,824 (12,479)
Net unrealized (depreciation) on investments and foreign
currency transactions for the period.................................. (43,017) (18,317)
------------ ------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ (12,406) (19,577)
------------ ------------
DIVIDENDS TO SHAREHOLDERS:
From investment income_net.............................................. (22,729) (11,219)
In excess of investment income_net...................................... ___ (7,247)
From net realized gain on investments and foreign currency
transactions.......................................................... (7,302) ___
------------ ------------
TOTAL DIVIDENDS....................................................... (30,031) (18,466)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 1,053,630 1,120,503
Dividends reinvested.................................................... 30,031 18,466
Cost of shares redeemed................................................. (1,330) (12,347)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.......... 1,082,331 1,126,622
------------ ------------
TOTAL INCREASE IN NET ASSETS...................................... 1,039,894 1,088,579
NET ASSETS:
Beginning of period..................................................... ___ ___
------------ ------------
End of period........................................................... $1,039,894(1) $1,088,579(2)
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 84,474 90,002
Shares issued for dividends reinvested.................................. 2,457 1,536
Shares redeemed......................................................... (109) (1,006)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING.................................... 86,822 90,532
============ ============
</TABLE>
- -----------------
(1) Includes undistributed investment income_net; $58 in 1994.
(2) Includes distributions in excess of investment income_net; $(7,247) in
1994.
See notes to financial statements.
DREYFUS VARIABLE INVESTMENT FUND
FINANCIAL HIGHLIGHTS
Reference is made to pp. 4-8 of the Prospectus dated May 1, 1995.
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--GENERAL:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as an open-end management investment company and is intended to be a funding
vehicle for variable annuity contracts and variable life insurance policies
to be offered by the separate accounts of life insurance companies. The Money
Market, Managed Assets, Zero Coupon 2000, Quality Bond, Small Cap and Capital
Appreciation Portfolios are diversified portfolios. The Growth and Income and
International Equity Portfolios are non-diversified portfolios. The Growth
and Income and International Equity Portfolios commenced operations on May 2,
1994. The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Effective August 24, 1994, Dreyfus became a direct subsidiary of Mell
on Bank, N.A. With respect to the Managed Assets, Capital Appreciation and
International Equity Portfolios, Comstock Partners, Inc. ("Comstock
Partners"), Fayez Sarofim & Co. ("Sarofim") and M&G Investment Management
Limited ("M&G") serve as the Series' sub-investment adviser, respectively.
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus, until
August 24, 1994, acted as the exclusive distributor of the Fund's shares,
which are sold without a sales charge.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
On May 4, 1994, the shareholders of the Managed Assets Portfolio approved
a change of the Portfolio's name from "Asset Allocation Portfolio" to
"Managed Assets Portfolio".
It is the Fund's policy, with respect to the Money Market Portfolio, to
maintain a continuous net asset value per share of $1.00; the Fund has
adopted certain investment, portfolio valuation and dividend and distribution
policies to enable it to do so. There is no assurance, however, that the Fund
will be able to maintain a stable net asset value of $1.00, with respect to
the Money Market Portfolio.
The Fund currently functions as the funding vehicle for the Dreyfus
Series 2000 Variable Annuity Contract (the "Account") issued by Mutual
Benefit Life Insurance Company ("Mutual Benefit Life"). On July 16, 1991, the
Superior Court of New Jersey entered an Order (the "Order") appointing the
New Jersey Insurance Commissioner as Rehabilitator of Mutual Benefit Life.
The Commissioner was granted immediate exclusive possession and control of,
and title to, the business and assets of Mutual Benefit Life, including the
assets and liabilities of the Account.
The Commissioner was empowered by the Order to take such steps as he
deemed appropriate toward removing the cause and conditions that made
rehabilitation necessary. On January 15, 1993, the Commissioner filed the
First Amended Plan of Rehabilitation ("Plan") with the Court. The Plan
stipulated that the assets and liabilities of the Account will be transferred
to a separate account of MBL Life Assurance Corporation ("MBLLAC"), a
wholly-owned subsidiary of Mutual Benefit Life. The Plan also provided for the
transfer of the ownership of the stock of MBLLAC to a Trust. The
Commissioner was designated as the sole Trustee of the Trust. On August 12,
1993, the Court rendered an opinion approving the Plan with certain
modifications. Two subsequent amendments to the Plan were filed and approved
by the Court. None of the modifications or amendments affected the status of
the Account. On November 10, 1993, the Court issued an Order of Confirmation
permitting the implementation of the Plan.
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
An order was also issued by the Court on January 28, 1994, approving the
form of the Third Amended Plan of Rehabilitation, the Election Materials and
related documents. On April 29, 1994, the Plan was implemented. Substantially
all of the assets of Mutual Benefit Life were transferred to MBLLAC and
MBLLAC assumed and reinsured Mutual Benefit's restructured insurance
liabilities. The stock of MBLLAC was assigned to the Stock Trust and the
Commissioner was designated as Trustee.
In view of the terms and conditions of both the Order and the Plan,
applications for new contracts and additional purchase payments under
existing contracts are currently not being accepted by the Account. The terms
of the Order and the Plan permit redemptions from the Account to continue as
requested.
The proceedings of the New Jersey Insurance Commissioner with respect to
Mutual Benefit Life or the Account do not apply to the separate accounts of
other life insurance companies that may use the Fund as a funding vehicle for
contracts or policies issued by them.
<TABLE>
<CAPTION>
As of December 31, 1994, Dreyfus held the following shares:
<S> <C> <C> <C>
Money Market Portfolio.............. 25,215 Small Cap Portfolio.............. 4,511
Managed Assets Portfolio............ 2,332 Growth and Income Portfolio....... 82,457
Zero Coupon 2000 Portfolio.......... 2,714 International Equity Portfolio.... 81,531
Quality Bond Portfolio.............. 2,738
</TABLE>
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION:
Money Market Portfolio:
Investments are valued at amortized cost, which has been determined by
the Fund's Board of Trustees to represent the fair value of the Series'
investments.
Managed Assets, Capital Appreciation, Small Cap, Growth and Income and
International Equity Portfolios:
Investments in securities (including options and financial futures) are
valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid
price is used when no asked price is available. Short-term investments are
carried at amortized cost, which approximates value. Investments traded in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the offsetting rate.
Zero Coupon 2000 and Quality Bond Portfolios:
Investments (excluding short-term investments and U.S. Government
obligations) are valued each business day by an independent pricing service
("Service") approved by the Board of Trustees. Investments for which quoted
bid prices are readily available and are representative of the bid side of
the market in the judgment of the Service are valued at the mean between the
quoted bid prices (as obtained by the Service from dealers in such
securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other investments (which
constitute a majority of the portfolio securities) are carried at fair value
as determined by the Service, based on
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
methods which include consideration of: yields or prices of securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Investments in U.S. Government
obligations are valued at the mean between quoted bid and asked prices.
Short-term investments are carried at amortized cost, which approximates
value.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized on securities transactions, the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in
exchange rates.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) EXPENSES: Expenses directly attributable to each series are charged
to that series' operations; expenses which are applicable to all series are
allocated among them.
(E) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date.
The Money Market Portfolio declares dividends daily from investment
income-net; such dividends are paid monthly. The Managed Assets, Capital
Appreciation, Small Cap and International Equity Portfolios declare and pay
dividends from investment income-net annually. The Zero Coupon 2000 and
Quality Bond Portfolios declare and pay dividends from investment income-net
monthly. The Growth and Income Portfolio declares and pays dividends from
investment income-net quarterly. Dividends from net realized capital gain for
each series are normally declared and paid annually.
Each series may make distributions from capital gains and with respect to
the Managed Assets, Capital Appreciation, Small Cap and International Equity
series distributions from investment income-net on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. This
may result in distributions that are in excess of investment income-net and
net realized capital gains on a fiscal year basis. However, to the extent
that a net realized capital gain of any series can be reduced by a capital
loss carryover, if any, of that series, such gain will not be distributed.
The Managed Assets and International Equity Portfolios had dividends in
excess of investment income_net for financial statement purposes resulting
from Federal income tax distribution requirements, primarily from gains of
Passive Foreign Investment Companies.
During the year ended December 31, 1994, the Managed Assets Portfolio
reclassified $38,604 charged to undistributed income_net in prior years to
paid-in capital.
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Small Cap Portfolio had dividends in excess of net realized gains for
financial statement purposes resulting from Federal income tax distribution
requirements.
(F) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes. For Federal income tax purposes, each series is treated as a
single entity for the purpose of determining such qualification.
The Managed Assets Portfolio has an unused capital loss carryover of
approximately $369,600 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent to
December 31, 1994. If not applied, $5,500 of the carryover expires in fiscal
2001 and $364,100 expires in fiscal 2002.
The Quality Bond Portfolio has an unused capital loss carryover of
approximately $31,100 available for Federal income tax purposes to be applied
against future net securities profits, if any, realized subsequent to
December 31, 1994. The carryover does not include net realized securities
losses from November 1, 1994 through December 31, 1994 which are treated, for
Federal income tax purposes, as arising in fiscal 1995. If not applied, the
carryover expires in fiscal 2002.
The International Equity Portfolio has an unused capital loss carryover
of approximately $8,300 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent to
December 31, 1994. The carryover does not include net realized securities
losses from November 1, 1994 through December 31, 1994 which are treated, for
Federal income tax purposes, as arising in fiscal 1995. If not applied, the
carryover expires in fiscal 2002.
NOTE 3--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS
WITH AFFILIATES:
(A) Fees payable by the Fund pursuant to the provisions of an Investment
Advisory Agreement with Dreyfus are payable monthly, computed on the average
daily value of each series' net assets at the following annual rates: .50 of
1% of the Money Market Portfolio, .375 of 1% of the Managed Assets Portfolio,
.45 of 1% of the Zero Coupon 2000 Portfolio, .65 of 1% of the Quality Bond
Portfolio, .75 of 1% of the Small Cap Portfolio, .55 of 1% of the first $150
million; .50 of 1% of the next $150 million; and .375 of 1% over $300 million
of the Capital Appreciation Portfolio, .75 of 1% of the Growth and Income
Portfolio and .75 of 1% of the International Equity Portfolio. With respect
to the Managed Assets Portfolio, pursuant to a Sub-Investment Advisory
Agreement with Comstock Partners, the sub-investment advisory fee is computed
at an annual rate of .375 of 1% of the average daily value of the series' net
assets and is payable monthly. With respect to the Capital Appreciation
Portfolio, pursuant to a Sub-Investment Advisory Agreement with Sarofim, the
sub-investment advisory fee is computed at an annual rate of .20 of 1% of the
first $150 million; .25 of 1% of the next $150 million; and .375 of 1% over
$300 million of the average daily value of the series' net assets and is
payable monthly. With respect to the International Equity Portfolio, pursuant
to a Sub-Investment Advisory Agreement between Dreyfus and M&G, the
sub-investment advisory fee is computed at an annual rate of .30 of 1% of the
average daily value of the series' net assets and is payable monthly by
Dreyfus.
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The agreements further provide that if in any full year the aggregate
expenses of any series, exclusive of taxes, brokerage, interest on borrowings
and extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund, that series may deduct from the payments to be
made to Dreyfus (and Comstock Partners, Sarofim or M&G, with respect to the
Managed Assets, Capital Appreciation and International Equity Portfolios,
respectively), or Dreyfus (and Comstock Partners, Sarofim or M&G, with
respect to the Managed Assets, Capital Appreciation and International Equity
Portfolios, respectively) will bear the amount of such excess to the extent
required by state law.
However, Dreyfus has undertaken, with respect to the Money Market
Portfolio, from January 1, 1994 through December 31, 1994, to reimburse all
fees and expenses (excluding certain expenses as described above) of the
series. With respect to the Managed Assets Portfolio, Dreyfus has undertaken
from January 1, 1994 to reduce the investment advisory fee, or reimburse such
excess expenses of the series, to the extent that such expenses exceeded
specified annual percentages of the average daily value of the series' net
assets. In addition, Comstock Partners has undertaken from July 1, 1994
through December 31, 1994 to waive the sub-investment advisory fee. With
respect to the Capital Appreciation, Growth and Income and International
Equity Portfolios, Dreyfus has undertaken, from January 1, 1994(May 2, 1994,
Commencement of operations for the Growth and Income and International Equity
Portfolios) through December 31, 1994 to reimburse expenses (excluding
certain expenses as described above) in excess of an annual rate of .25 of 1%
of the average daily value of the series net assets. With respect to the Zero
Coupon 2000 and Quality Bond Portfolios, Dreyfus has undertaken, from January
1, 1994 through December 31, 1994, to reimburse all fees and expenses (excludi
ng certain expenses as described above) of the series. With respect to the
Small Cap Portfolio, Dreyfus had undertaken, from January 1, 1994 through
November 7, 1994, to reduce the investment advisory fee and/or reimburse such
excess expenses of the series, to the extent that such expenses exceeded
specified annual percentages of the average daily value of the series' net
assets.
The expense reimbursements, pursuant to the undertakings, amounted to
the following for the year ended December 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market Portfolio.............. $191,385 Small Cap Portfolio............ $340,893
Managed Assets Portfolio............ 141,141 Capital Appreciation Portfolio.. 77,322
Zero Coupon 2000 Portfolio.......... 90,777 Growth and Income Portfolio...... 12,926
Quality Bond Portfolio.............. 111,268 International Equity Portfolio.. 17,220
</TABLE>
In addition, Comstock Partners, pursuant to the undertakings, waived
sub-investment advisory fees of $44,151 for the Managed Assets Portfolio.
The undertakings may be modified by Dreyfus from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the agreements.
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of Dreyfus, Comstock
Partners, Sarofim, M&G and/or Dreyfus Service Corporation. Each trustee who
is not an "affiliated person" receives from the Fund an annual fee of $2,500
and an attendance fee of $250 per meeting.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short by the Fund, excluding
short-term securities, options and forward currency exchange contracts, for
the year ended December 31, 1994:
<TABLE>
<CAPTION>
LONG TRANSACTIONS:
PURCHASES SALES PURCHASES SALES
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Managed Assets Portfolio $ 13,258,729 $ 1,928,580 Capital Appreciation Portfolio $8,670,726 $ 8,376
Zero Coupon 2000 Portfolio 4,331,463 _ Growth and Income Portfolio. 2,077,561 1,343,816
Quality Bond Portfolio. 13,418,997 4,463,039 International Equity Portfolio 1,104,219 162,355
Small Cap Portfolio.... 157,127,951 54,726,841
SHORT SALE TRANSACTIONS;
PURCHASES SALES
------------- ------------
Small Cap Portfolio..... $ 2,090,925 $ 1,971,572
</TABLE>
With respect to the Small Cap Portfolio, the series is engaged in
short-selling which obligates the series to replace the
security borrowed by purchasing the security at current market value. The
series would incur a loss if the price of the security increases between the
date of the short sale and the date on which the series replaces the borrowed
security. The series would realize a gain if the price of the security
declines between those dates. Until the series replaces the borrowed
security, the series will maintain daily, a segregated account with a broker
and custodian of cash and/or U.S. Government securities sufficient to cover
its short position. At December 31, 1994, there were no securities sold short
outstanding.
In addition, the following summarizes open forward currency exchange
contracts for the International Equity Portfolio at December 31, 1994;
<TABLE>
<CAPTION>
U.S. DOLLAR UNREALIZED
FORWARD CURRENCY SALE CONTRACTS PROCEEDS VALUE DEPRECIATION
- ------------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
Japanese Yen, expiring 4/12/95............................... $86,128 $86,382 $(254)
======
</TABLE>
When executing forward currency exchange contracts, the series is
obligated to buy or sell a foreign currency at a specified
rate on a certain date in the future. With respect to sales of forward
currency exchange contracts, the series would incur a loss if the value of
the contract increases between the date the forward contract is opened and
the date the forward contract is closed. The series realizes a gain if the
value of the contract decreases between those dates. With respect to
purchases of forward currency exchange contracts, the series would incur a
loss if the value of the contract decreases between the date the forward
contract is opened and the date the forward contract is closed. The series
realizes a gain if the value of the contract increases between those dates.
The series' exposure to credit risk associated with counter party
nonperformance on these investments is typically limited to the unrealized
gains in such contracts that are recognized in the Statement of Assets and
Liabilities.
DREYFUS VARIABLE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
With respect to the Managed Assets Portfolio, the series is engaged in
trading financial futures contracts. The series is exposed to market risk as
a result of changes in the value of the underlying financial instruments (see
the Statement of Financial Futures). Investments in financial futures require
the series to "mark to market" on a daily basis, which reflects the change in
the market value of the contract at the close of each day's trading.
Accordingly, variation margin payments are made or received to reflect daily
unrealized gains or losses. When the contracts are closed, the series
recognizes a realized gain or loss. These investments require initial margin
deposits with a custodian, which consist of cash or cash equivalents, up to
approximately 10% of the contract amount. The amount of these deposits is
determined by the exchange or Board of Trade on which the contract is traded
and is subject to change. Contracts open at December 31, 1994 and their
related unrealized market depreciation are set forth in the Statement of
Financial Futures.
With respect to the Managed Assets Portfolio, the series is also engaged
in trading restricted options, which are not exchange traded. The series'
exposure to credit risk associated with counter party nonperformance on these
investments is typically limited to the market value of such investments that
are disclosed in the Statement of Investments.
(B) The following summarizes the accumulated net unrealized
appreciation(depreciation) on investments and financial futures for each
series at December 31, 1994, excluding foreign currency transactions for the
Managed Assets and International Equity Portfolios:
<TABLE>
<CAPTION>
GROSS GROSS
APPRECIATION (DEPRECIATION) NET
-------------- ------------- --------------
<S> <C> <C> <C>
Money Market Portfolio....................................... $ ---- $ ---- $ ------
Managed Assets Portfolio..................................... 1,152,659 (1,600,048) (447,389)
Zero Coupon 2000 Portfolio................................... 9,619 (690,986) (681,367)
Quality Bond Portfolio....................................... 5,272 (756,879) (751,607)
Small Cap Portfolio.......................................... 9,611,890 (3,869,116) 5,742,774
Capital Appreciation Portfolio............................... 611,091 (436,625) 174,466
Growth and Income Portfolio.................................. 2,574 (45,591) (43,017)
International Equity Portfolio............................... 37,794 (56,115) (18,321)
</TABLE>
At December 31, 1994, the cost of investments of each series for Federal
income tax purposes was substantially the same as
the cost for financial reporting purposes. The cost of investments for each
series for financial reporting purposes as of December 31, 1994 was as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market Portfolio......... $35,249,652 Small Cap Portfolio............... $177,605,330
Managed Assets Portfolio....... 30,593,876 Capital Appreciation Portfolio 15,832,603
Zero Coupon 2000 Portfolio..... 11,434,933 Growth and Income Portfolio 1,127,326
Quality Bond Portfolio......... 13,642,556 International Equity Portfolio 1,043,417
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS VARIABLE INVESTMENT FUND
We have audited the accompanying statements of assets and liabilities,
including the statements of investments and financial futures, of Dreyfus
Variable Investment Fund (comprising, respectively, the Money Market, Managed
Assets, Zero Coupon 2000, Quality Bond, Small Cap, Capital Appreciation,
Growth and Income and International Equity Portfolios) as of December 31,
1994, and the related statements of operations and changes in net assets, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian
and others. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective portfolios constituting the Dreyfus
Variable Investment Fund at December 31, 1994, and the results of their
operations, the changes in their net assets and the financial highlights for
each of the indicated periods, in conformity with generally accepted
accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
February 13, 1995
DREYFUS VARIABLE INVESTMENT FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Dreyfus Variable Investment Fund
- -- Small Cap Portfolio hereby designates $.015 per share as a long-term
capital gain distribution of the $.330 per share paid on September 14, 1994.
The Portfolio also designates $.0075 per share as a long-term capital gain
distribution of the $.270 per share paid on December 22, 1994.
DREYFUS VARIABLE INVESTMENT FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from August 31,
1990 (commencement of operations) to December 31, 1990 and for
the four year period ended December 31, 1994.
Included in Part B of the Registration Statement:
Statement of Investments--for the fiscal year ended
December 31, 1994.
Statement of Financial Futures--for the fiscal year ended
December 31, 1994 (Managed Assets Portfolio only).
Statement of Assets and Liabilities--for the fiscal year
ended December 31, 1994.
Statement of Operations--for the fiscal year ended
December 31, 1994.
Statement of Changes in Net Assets--for the fiscal years
ended December 31, 1993 and 1994.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
February 13, 1995.
All Schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Agreement and Declaration of Trust and Articles of
Amendment thereto.
(2) Registrant's By-Laws.
(5)(a) The Investment Advisory Agreement, between the Registrant and The
Dreyfus Corporation is incorporated by reference to Exhibit (5)(a)
of Post-Effective Amendment No. 12 to the Registration Statement on
Form N-1A, filed on September 16, 1994.
(5)(b) The Sub-Investment Advisory Agreement between the Registrant and
Comstock Partners, Inc.
(5)(c) The Sub-Investment Advisory Agreement between the Registrant and
Fayez Sarofim and Co.
(5)(d) The Sub-Investment Advisory Agreement between The Dreyfus
Corporation and M&G Investment Management Limited is incorporated
by reference to Exhibit (5)(d) of Post-Effective Amendment No. 12
to the Registration Statement on From N-1A, filed on September 16,
1994.
(6) The Distribution Agreement is incorporated by reference to Exhibit
(6) of Post-Effective Amendment No. 12 to the Registration Statement
on Form N-1A, filed on September 16, 1994.
(8)(a) The Custody Agreement between the fund and the Bank of New York.
(10) Opinion and consent of Registrant's counsel.
(11) Consent of Independent Auditors.
(16) Schedules of Computation of Performance Data are incorporated by
reference to the Exhibit (16) of Post-Effective Amendment No. 11 to
the Registration Statement on Form N-1A, filed on April 28, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and officers are
incorporated by reference to Other Exhibits (a) of Post-
Effective Amendment No. 12 to the Registration Statement
on Form N-1A, filed on September 16, 1994.
(b) Certificate of Secretary is incorporated by reference to
Other Exhibits (b) of Pre-Effective Amendment No. 7 to the
Registration Statement on Form N-1A, filed on July 10,
1990.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1)
Title of Class
______________
Shares of Beneficial Interest
(Par value $.001)
(2)
Number of Record Holders
as of March 20, 1995
________________________
Money Market Portfolio. . . . . . . . . . . . . . . . . . . . .4
Managed Assets Portfolio. . . . . . . . . . . . . . . . . . . .5
Zero Coupon 2000 Portfolio. . . . . . . . . . . . . . . . . . .6
Quality Bond Portfolio. . . . . . . . . . . . . . . . . . . . .5
Small Cap Portfolio . . . . . . . . . . . . . . . . . . . . . .8
Capital Appreciation Portfolio. . . . . . . . . . . . . . . . .2
Growth and Income Portfolio . . . . . . . . . . . . . . . . . .4
International Equity Portfolio. . . . . . . . . . . . . . . . .3
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract, arrangements
or statute under which a director, officer, underwriter or affiliated
person of the Registrant is insured or indemnified in any manner
against any liability which may be incurred in such capacity, other
than insurance provided by any director, officer, affiliated person
or underwriter for their own protection, is incorporated by reference
to Item 27 of Part II of Pre-Effective Amendment No. 7 to the
Registration Statement on Form N-1A, filed on July 10, 1990.
Reference is also made to the Distribution Agreement attached as
Exhibit (6) of Post-Effective Amendment No. 12 to the Registration
Statement on Form N-1A, filed on September 16, 1994.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser, manager and distributor for sponsored investment
companies registered under the Investment Company Act of 1940 and
as an investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves primarily
as a registered broker-dealer of shares of investment companies
sponsored by Dreyfus and of other investment companies for which
Dreyfus acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various
pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
DAVID B. TRUMAN Former Director:
(cont'd) Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
ROBERT E. RILEY Director:
President, Chief Dreyfus Service Corporation
Operating Officer,
and a Director
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++'
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company+++;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization*;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
PAUL H. SNYDER Director:
Vice President-Finance Pennsylvania Economy League
and Chief Financial Philadelphia, Pennsylvania;
Officer Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Dreyfus Service Corporation*
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals*;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President. The
Vice President-Product Boston Company Advisory, Inc.
Management 531 State Street Exchange Place
Boston, Massachusetts 02109
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-Fund Lion Management, Inc.*;
Legal and Compliance, Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President- Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 28. Business and Other Connections of Investment Adviser (continued)
(b) Sub-Investment Adviser-Comstock Partners, Inc.
Comstock Partners, Inc. ("Comstock") serves as sub-investment adviser to the
Fund's Asset Allocation Portfolio. Comstock, with its principal place of
business at 45 Broadway, New York, New York 10006, is a registered investment
adviser organized in 1986.
Officers and Directors of Sub-Investment Adviser
Principal Occupation or Other
Name and Position with Comstock Employment of a Substantial Nature
STANLEY D. SALVIGSEN Chairman of the Board and Chief
Chairman of the Board and Executive Officer:
Chief Executive Officer Comstock Partners Strategy Fund, Inc.;
Prior to joining the Sub-Investment
Adviser, Chief Investment Strategist:
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
250 Vesey Street
World Financial Center
New York, NY 10281;
Investment Officer:
STANLEY D. SALVIGSEN Dreyfus Variable Investment
(cont'd) Fund--Asset Allocation Portfolio
CHARLES L. MINTER Director, Vice President and
Vice Chairman and Secretary:
Chief Operating Officer Comstock Partners Strategy
Fund, Inc.;
Prior to joining the Sub-Investment
Adviser, Vice President Equity
Institutional Sales:
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
250 Vesey Street
World Financial Center
New York, NY 10281;
Investment Officer:
Dreyfus Variable Investment
Fund--Asset Allocation Portfolio
EDWARD A. LESKOWICZ, JR. Vice President, Treasurer and Chief
Vice President, Treasurer, Financial Officer:
and Chief Financial Officer Comstock Partners Strategy Fund, Inc.;
Prior to joining the Sub-Investment
Adviser, Vice President-Operations
President-Operations:
Gabelli Funds, Inc.
655 Third Avenue
New York, NY 10017
(c) Sub-Investment Adviser - Fayez Sarofim & Co.
Fayez Sarofim & Co. ("Sarofim") serves as sub-investment adviser to the Fund's
Capital Appreciation Portfolio. Sarofim, a privately-held corporation with
its principal place of business at Two Houston Center, Suite 2907, Houston,
Texas 77010, is a registered investment adviser formed in 1958.
Officers and Directors of Sub-Investment Adviser
Name and Position with Sarofim Principal Occupation or Other Employment
of a Substantial Nature
FAYEZ S. SAROFIM
Chairman of the Board,
President and Director President and Director:
Sarofim Trust Co.
Sarofim Realty Co.
FSI Corporation
FS Air, Inc.;
Director:
Argonaut Group, Inc.
Imperial Holly Corporation
Memorial Sloan Kettering
MESA, Inc.
Sarofim Securities Co.
Teledyne, Inc.
Unitrin, Inc.
RAYE G. WHITE
Executive Vice President,
Secretary, Treasurer and
Director Executive Vice President, Secretary,
Treasury and Director:
Sarofim Trust Co.
Sarofim Realty Co.;
Secretary, Treasurer and Director:
Sarofim Securities Co.
FSI Corporation;
Vice President and Director:
FS Air, Inc.
RUSSELL M. FRANKEL
Senior Vice President Associate:
Sarofim Trust Co.
RUSSELL B. HAWKINS
Senior Vice President Vice President and Director:
Sarofim Trust Co.
WILLIAM K. McGEE, JR.
Senior Vice President Vice President & Director:
Sarofim Trust Co.;
Vice President:
Sarofim Securities Co.;
Member Board of Trustees:
Texas Children's Hospital
CHARLES E. SHEEDY
Senior Vice President Vice President and Director:
Sarofim Trust Co.
CHARLES E. SHEEDY Director:
Senior Vice President Spend Today Retire Tomorrow, Inc.
(cont'd) Time, Inc.
WeatherChem Industries, Inc.
RALPH B. THOMAS
Senior Vice President Vice President and Director:
Sarofim Trust Co.;
President:
Sarofim Securities Co.;
Member of Governing Board:
Park Plaza Hospital
JAMES A. REYNOLDS, III
Vice President Associate:
Sarofim Trust Co.;
Associated Person:
Sarofim Securities Co.;
Principal:
Sarofim Realty Co.
NANCY V. DANIEL
Vice President
FRANK P. LEE
Vice President
(d) Sub-Investment Adviser - M&G Investment Management Limited
M&G Investment Management Limited ("M&G"), a corporation with principal place
of business at Three Quays Tower Hill, London EC3R 6B2, England, is a
registered investment adviser under the Investment Advisers Act of 1940. The
business of M&G consists primarily of providing investment counselling
services to institutional investors.
DAVID LESLIE MORGAN Investment Manager,
Chairman of the M&G Investment Management
Board of Directors Limited
JOHN PETER ALLARD Investment Manager,
Director M&G Investment Management
Limited
JOHN WILLIAM BOECKMANN Investment Manager,
Director M&G Investment Management
Limited
GORDON PETER CRAIG Investment Manager,
Director M&G Investment Management
Limited
ROBERT AIDEN ROCHE HAYES Investment Manager,
Director M&G Investment Management
Limited
RICHARD STORMONT HUGHES Investment Manager,
Director M&G Investment Management
Limited
DAVID JAMES HUTCHINS Investment Manager,
Director M&G Investment Management
Limited
JAMES ROBERT DOMINIC KORNER Investment Manager,
Director M&G Investment Management
Limited
EWEN ALAN MACPHERSON Director of Notz Stucid & Cie,
Director Geneva, and non-executive
director of a number
of other companies
PAUL RODNEY MARSH Professor of Management and
Director Finance at the London Business
School
NIGEL DOUGLAS MORRISON Investment Manager,
Director M&G Investment Management
Limited
ROGER DANIEL NIGHTINGALE Economist with RDN Associates
Director
WILLIAM JOHN NOTT Investment Manager,
Director M&G Investment Management
Limited
DUNCAN NEIL ROBERTSON Investment Manager,
Director M&G Investment Management
Limited
JOHN CHRISTOPHER WHITAKER Investment Manager,
Director M&G Investment Management
Limited
ANTHONY JOHN ASHPLANT Secretary,
Secretary M&G Investment Management
Limited
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) The Dreyfus/Laurel Investment Series
40) The Dreyfus Leverage Fund, Inc.
41) Dreyfus Life and Annuity Index Fund, Inc.
42) Dreyfus Liquid Assets, Inc.
43) Dreyfus Massachusetts Intermediate Municipal Bond Fund
44) Dreyfus Massachusetts Municipal Money Market Fund
45) Dreyfus Massachusetts Tax Exempt Bond Fund
46) Dreyfus Michigan Municipal Money Market Fund, Inc.
47) Dreyfus Money Market Instruments, Inc.
48) Dreyfus Municipal Bond Fund, Inc.
49) Dreyfus Municipal Cash Management Plus
50) Dreyfus Municipal Money Market Fund, Inc.
51) Dreyfus New Jersey Intermediate Municipal Bond Fund
52) Dreyfus New Jersey Municipal Bond Fund, Inc.
53) Dreyfus New Jersey Municipal Money Market Fund, Inc.
54) Dreyfus New Leaders Fund, Inc.
55) Dreyfus New York Insured Tax Exempt Bond Fund
56) Dreyfus New York Municipal Cash Management
57) Dreyfus New York Tax Exempt Bond Fund, Inc.
58) Dreyfus New York Tax Exempt Intermediate Bond Fund
59) Dreyfus New York Tax Exempt Money Market Fund
60) Dreyfus Ohio Municipal Money Market Fund, Inc.
61) Dreyfus 100% U.S. Treasury Intermediate Term Fund
62) Dreyfus 100% U.S. Treasury Long Term Fund
63) Dreyfus 100% U.S. Treasury Money Market Fund
64) Dreyfus 100% U.S. Treasury Short Term Fund
65) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
66) Dreyfus Pennsylvania Municipal Money Market Fund
67) Dreyfus Short-Intermediate Government Fund
68) Dreyfus Short-Intermediate Municipal Bond Fund
69) Dreyfus Short-Term Income Fund, Inc.
70) The Dreyfus Socially Responsible Growth Fund, Inc.
71) Dreyfus Strategic Growth, L.P.
72) Dreyfus Strategic Income
73) Dreyfus Strategic Investing
74) Dreyfus Tax Exempt Cash Management
75) Dreyfus Treasury Cash Management
76) Dreyfus Treasury Prime Cash Management
77) Dreyfus-Wilshire Target Funds, Inc.
78) Dreyfus Worldwide Dollar Money Market Fund, Inc.
79) General California Municipal Bond Fund, Inc.
80) General California Municipal Money Market Fund
81) General Government Securities Money Market Fund, Inc.
82) General Money Market Fund, Inc.
83) General Municipal Bond Fund, Inc.
84) General Municipal Money Market Fund, Inc.
85) General New York Municipal Bond Fund, Inc.
86) General New York Municipal Money Market Fund
87) Pacific American Fund
88) Peoples Index Fund, Inc.
89) Peoples S&P MidCap Index Fund, Inc.
90) Premier Insured Municipal Bond Fund
91) Premier California Municipal Bond Fund
92) Premier GNMA Fund
93) Premier Growth Fund, Inc.
94) Premier Municipal Bond Fund
95) Premier New York Municipal Bond Fund
96) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Ruth D. Leibert++ Assistant Vice President Assistant
Secretary
Paul D. Furcinito++ Assistant Vice President Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Vice President Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Trustee or Trustees when requested
in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
---------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York on the 19th day of April, 1995.
DREYFUS VARIABLE INVESTMENT FUND
BY: /s/Marie E. Connolly*
____________________________
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signatures Title Date
___________________________ ______________________________ ___________
/s/Marie E. Connolly* President (Principal Executive 4/19/95
______________________________ Officer and Principal Financial
Marie E. Connolly Officer) and Treasurer
/s/Joseph S. DiMartino* Trustee 4/19/95
______________________________
Joseph S. DiMartino
/s/David P. Feldman* Trustee 4/19/95
______________________________
David P. Feldman
/s/John M. Fraser, Jr.* Trustee 4/19/95
______________________________
John M. Fraser, Jr.
/s/Robert R. Glauber* Trustee 4/19/95
______________________________
Robert R. Glauber
/s/James F. Henry* Trustee 4/19/95
______________________________
James F. Henry
/s/Rosalind Gersten Jacobs* Trustee 4/19/95
______________________________
Rosalind Gersten Jacobs
/s/Irving Kristol* Trustee 4/19/95
______________________________
Irving Kristol
/s/Dr. Paul A. Marks* Trustee 4/19/95
______________________________
Dr. Paul A. Marks
/s/Dr. Martin Peretz* Trustee 4/19/95
______________________________
Dr. Martin Peretz
/s/Bert W. Wasserman* Trustee 4/19/95
______________________________
Bert W. Wasserman
*BY: Eric B. Fischman
__________________________
Eric B. Fischman,
Attorney-in-Fact
DREYFUS MERRICK FUND
Declaration of Trust
Dated: October 29, 1986
THIS AGREEMENT AND DECLARATION OF TRUST made at Boston,
Massachusetts, this 29th day of October, 1986, by Christine Pavalos
(hereinafter with any additional and successor trustees referred to as "the
Trustees") and the holders of shares of beneficial interest to be issued
hereunder as hereinafter provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all property coming
into their hands as trustees of a Massachusetts business trust in
accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold
all cash, securities and other assets, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the pro rata
benefit of the holders from time to time of Shares, whether or not
certificated, in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "Dreyfus Merrick
Fund."
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The term "Commission" shall have the meaning provided in the
1940 Act;
(b) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as amended from
time to time;
(c) "Shareholder" means a record owner of Shares of the Trust;
(d) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided
from time to time or, if more than one series of Shares is authorized by
the Trustees, the equal proportionate transferable units into which each
series of Shares shall be divided from time to time, and includes a
fraction of a Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company Act of 1940,
and the Rules and Regulations thereunder, all as amended from time to time;
(f) The term "Manager" is defined in Article IV, Section 5; and
(g) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other enterprise.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, lend, write
options on, exchange, distribute or otherwise dispose of and deal in and
with securities of every nature, kind, character, type and form, including,
without limitation of the generality of the foregoing, all types of stocks,
shares, futures contracts, bonds, debentures, notes, bills and other
negotiable or non-negotiable instruments, obligations, evidences of
interest, certificates of interest, certificates of participation,
certificates, interests, evidences of ownership, guarantees, warrants,
options or evidences of indebtedness issued or created by or guaranteed as
to principal and interest by any state or local government or any agency or
instrumentality thereof, by the United States Government or any agency,
instrumentality, territory, district or possession thereof, by any foreign
government or any agency, instrumentality, territory, district or
possession thereof, by any corporation organized under the laws of any
state, the United States or any territory or possession thereof or under
the laws of any foreign country, bank certificates of deposit, bank time
deposits, bankers' acceptances and commercial paper; to pay for the same
in cash or by the issue of stock, including treasury stock, bonds or notes
of the Trust or otherwise; and to exercise any and all rights, powers and
privileges or ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or corporations to
exercise any of said rights, powers and privileges in respect of any said
instruments;
(c) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the assets
of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares
including Shares in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares
of any funds or other assets of the appropriate series of Shares, whether
capital or surplus or otherwise, to the full extent now or hereafter
permitted by the laws of The Commonwealth of Massachusetts;
(e) to conduct its business, promote its purposes, and carry on
its operations in any and all of its branches and maintain offices both
within and without The Commonwealth of Massachusetts, in any and all States
of the United States of America, in the District of Columbia, and in any
other parts of the world; and
(f) to do all and everything necessary, suitable, convenient, or
proper for the conduct, promotion, and attainment of any of the businesses
and purposes herein specified or which at any time may be incidental
thereto or may appear conducive to or expedient for the accomplishment of
any of such businesses and purposes and which might be engaged in or
carried on by a Trust organized under the Massachusetts General Laws, and
to have and exercise all of the powers conferred by the laws of The
Commonwealth of Massachusetts upon a Massachusetts business trust.
The foregoing provisions of this Article II shall be construed
both as purposes and powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares of the
Trust shall be issued in one or more series as the Trustees may, without
Shareholder approval, authorize. Each series shall be preferred over all
other series in respect of the assets allocated to that series. The
beneficial interest in each series at all times shall be divided into
Shares, with or without par value as the Trustees may from time to time
determine, each of which shall represent an equal proportionate interest in
the series with each other Share of the same series, none having priority
or preference over another. The number of Shares authorized shall be
unlimited, and the Shares so authorized may be represented in part by
fractional shares. From time to time, the Trustees may divide or combine
the Shares of any series into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series.
Section 2. Ownership of Shares. The ownership of Shares will be
recorded in the books of the Trust or a transfer agent. The record books
of the Trust or any transfer agent, as the case may be, shall be conclusive
as to who are the holders of Shares of each series and as to the number of
Shares of each series held from time to time by each. No certificates
certifying the ownership of Shares need be issued except as the Trustees
may otherwise determine from time to time.
Section 3. Issuance of Shares. The Trustees are authorized,
from time to time, to issue or authorize the issuance of Shares at not less
than the par value thereof, if any, and to fix the price or the minimum
price or the consideration (in cash and/or such other property, real or
personal, tangible or intangible, as from time to time they may determine)
or minimum consideration for such Shares. Anything herein to the contrary
notwithstanding, the Trustees may issue Shares pro rata to the Shareholders
at any time as a stock dividend.
All consideration received by the Trust for the issue or sale of
Shares of each series, together with all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
belong irrevocably to the series of Shares with respect to which the same
were received by the Trust for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of the Trust
and are herein referred to as "assets of" such series.
Shares may be issued in fractional denominations to the same
extent as whole Shares, and Shares in fractional denominations shall be
Shares having proportionately to the respective fractions represented
thereby all the rights of whole Shares, including, without limitation, the
right to vote, the right to receive dividends and distributions, and the
right to participate upon liquidation of the Trust or of a particular
series of Shares.
Section 4. No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe for any additional Shares or other
securities issued by the Trust.
Section 5. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to
the terms hereof and to have become a party hereto. The death of a
Shareholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said decedent
under this Trust. Ownership of Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders partners.
Neither the Trust nor the Trustees, nor any officer, employee or agent of
the Trust shall have any power to bind any Shareholder or Trustee
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder at any
time personally may agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by or on
behalf of the Trust shall include a recitation limiting the obligation
represented thereby to the Trust and its assets (but the omission of such a
recitation shall not operate to bind any Shareholder or Trustee
personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either by the
Trustees or the Shareholders. The Trustees named herein shall serve until
the first meeting of the Shareholders or until the election and
qualification of their successors. Prior to the first meeting of
Shareholders the initial Trustees hereunder may elect additional Trustees
to serve until such meeting and until their successors are elected and
qualified. The Trustees also at any time may elect Trustees to fill
vacancies in the number of Trustees. The number of Trustees shall be fixed
from time to time by the Trustees and, at or after the commencement of the
business of the Trust, shall be not less than three. each Trustee, whether
named above or hereafter becoming a Trustee, shall serve as a Trustee
during the lifetime of this Trust, until such Trustee dies, resigns,
retires, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and the election
and qualification of his successor. Subject to Section 16(a) of the 1940
Act, the Trustees may elect their own successors and, pursuant to this
Section, may appoint Trustees to fill vacancies.
Section 2. Powers. The Trustees shall have all powers necessary
or desirable to carry out the purposes of the Trust, including, without
limitation, the powers referred to in Article II hereof. Without limiting
the generality of the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of
the business of the Trust and may amend and repeal them to the extent that
they do not reserve that right to the Shareholders; they may fill vacancies
in their number, including vacancies resulting from increases in their own
number, and may elect and remove such officers and employ, appoint and
terminate such employees or agents as they consider appropriate; they may
appoint from their own number and terminate any one or more committees;
they may employ one or more custodians of the assets of the Trust and may
authorize such custodians to employ subcustodians and to deposit all or any
part of such assets in a system or systems for the central handling of
securities, retain a transfer agent and a Shareholder servicing agent, or
both, provide for the distribution of Shares through a principal
underwriter or otherwise, set record dates, and in general delegate such
authority as they consider desirable (including, without limitation, the
authority to purchase and sell securities and to invest funds, to determine
the net income of the Trust for any period, the value of the total assets
of the Trust and the net asset value of each Share, and to execute such
deeds, agreements or other instruments either in the name of the Trust or
the names of the Trustees or as their attorney or attorneys or otherwise as
the Trustees from time to time may deem expedient) to any officer of the
Trust, committee of the Trustees, any such employee, agent, custodian or
underwriter or to any Manager.
Without limiting the generality of the foregoing, the Trustees
shall have full power and authority:
(a) To invest and reinvest cash and to hold cash uninvested;
(b) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(c) To hold any security or property in a form not indicating
any trust whether in bearer, unregistered or other negotiable form or in
the name of the Trust or a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or concern, and
to pay calls or subscriptions with respect to any security held in the
Trust;
(e) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(f) To compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including, but
not limited to, claims for taxes;
(g) To allocate assets, liabilities and expenses of the Trust to
a particular series of Shares or to apportion the same among two or more
series, provided that any liabilities or expenses incurred by a particular
series of Shares shall be payable solely out of the assets of that series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or Managers,
principal underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Trustee, officer, employee, agent, investment
adviser or Manager, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
person against such liability; and
(j) To pay pensions for faithful service, as deemed appropriate
by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including
the purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
Further, without limiting the generality of the foregoing, the
Trustees shall have full power and authority to incur and pay out of the
principal or income of the Trust such expenses and liabilities as may be
deemed by the Trustees to be necessary or proper for the purposes of the
Trust; provided, however, that all expenses and liabilities incurred or
arising in connection with a particular series of Shares, as determined by
the Trustees, shall be payable solely out of the assets of that series.
Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles by or pursuant to the authority granted by the Trustees, as to
the amount of the assets, debts, obligations or liabilities of the Trust;
the amount of any reserves or charges set up and the propriety thereof; the
time of or purpose for creating such reserves or charges; the use,
alteration or cancellation of any reserves or charges (whether or not any
debt, obligation or liability for which such reserves or charges shall have
been created shall have been paid or discharged or shall be then or
thereafter required to be paid or discharged); the price or closing bid or
asked price of any investment owned or held by the Trust; the market value
of any investment or fair value of any other asset of the Trust; the number
of Shares outstanding; the estimated expense to the Trust in connection
with purchases of its Shares; the ability to liquidate investments in an
orderly fashion; the extent to which it is practicable to deliver a
cross-section of the portfolio of the Trust in payment for any such Shares,
or as to any other matters relating to the issue, sale, purchase and/or
other acquisition or disposition of investments or Shares of the Trust,
shall be final and conclusive, and shall be binding upon the Trust and its
Shareholders, past, present and future, and Shares are issued and sold on
the condition and understanding that any and all such determinations shall
be binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a majority
of the Trustees then in office shall constitute a quorum. Any meeting may
be adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be held
as adjourned without further notice.
When a quorum is present at any meeting, a majority of the
Trustees present may take any action, except when a larger vote is required
by this Declaration of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of
the Trustees or of any committee thereof may be taken without a meeting, if
a written consent to such action is signed by a majority of the Trustees or
members of any such committee then in office, as the case may be, and such
written consent is filed with the minutes of proceedings of the Trustees or
any such committee.
The Trustees or any committee designated by the Trustees may
participate in a meeting of the Trustees or such committee by means of a
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
Section 4. Ownership of Assets of the Trust. Title to all of
the assets of each series of Shares of the Trust at all times shall be
considered as vested in the Trustees.
Section 5. Investment Advice and Management Services. The
Trustees shall not in any way be bound or limited by any present or future
law or custom in regard to investments by trustees. The Trustees from time
to time may enter into a written contract or contracts with any person or
persons (herein called the "Manager"), including The Dreyfus Corporation or
any other firm, corporation, trust or association in which any Trustee or
Shareholder may be interested, to act as investment advisers and/or
managers of the Trust and to provide such investment advice and/or
management as the Trustees from time to time may consider necessary for the
proper management of the assets of the Trust, including, without
limitation, authority to determine from time to time what investments shall
be purchased, held, sold or exchanged and what portion, if any, of the
assets of the Trust shall be held uninvested and to make changes in the
Trust's investments. Any such contract shall be subject to the
requirements of the 1940 Act with respect to its continuance in effect, its
termination and the method of authorization and approval of such contract,
or any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be
associated also may act as broker for the Trust in making purchases and
sales of securities for or to the Trust for its investment portfolio, and
may charge and receive from the Trust the usual and customary commission
for such service. Any organization with which a Trustee may be associated
in acting as broker for the Trust shall be responsible only for the proper
execution of transactions in accordance with the instructions of the Trust
and shall be subject to no further liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a distributor
for the sale of Shares by separate contract or may be a person controlled
by or affiliated with any Trustee or any distributor or a person in which
any Trustee or any distributor is interested financially, subject only to
applicable provisions of law. Nothing herein contained shall operate to
prevent any Manager, who also acts as such a distributor, from also
receiving compensation for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The Trustees or
the Shareholders (by vote of 66-2/3% of the outstanding shares entitled to
vote thereon) may remove at any time any Trustee with or without cause, and
any Trustee may resign at any time as Trustee, without penalty by written
notice to the Trust; provided that sixty days' advance written notice shall
be given in the event that there are only three or less Trustees at the
time a notice of resignation is submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Article IV,
Section 1, of this Declaration of Trust; provided, however, that no meeting
of Shareholders is required to be called for the purpose of electing
Trustees unless and until such time as less than a majority of the Trustees
have been elected by the Shareholders, (ii) for the removal of Trustees as
provided in Article IV, Section 6, (iii) with respect to any Manager as
provided in Article IV, Section 5, (iv) with respect to any amendment of
this Declaration of Trust as provided in Article IX, Section 8, (v) with
respect to a consolidation, merger or certain sales of assets as provided
in Article IX, Section 4, (vi) with respect to the termination of the Trust
or a series of Shares as provided in Article IX, Section 5, (vii) to the
same extent as the stockholders of a Massachusetts business corporation, as
to whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters relating
to the Trust as may be required by law, by this Declaration of Trust, or
the By-Laws of the Trust or any registration of the Trust with the
Commission or any state, or as the Trustees may consider desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote (except that in the election of Trustees said vote may be
cast for as many persons as there are Trustees to be elected), and each
fractional Share shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any
matter submitted to a vote of Shareholders, all Shares of the Trust then
entitled to vote shall be voted by individual series, except (i) when
required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual series and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series, then only
Shareholders of such series shall be entitled to vote thereon. There shall
be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them, unless
at or prior to exercise of the proxy the Trust receives a specific written
notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by
law, this Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
Section 2. Meetings. Meetings of the Shareholders may be called
by the Trustees or such other person or persons as may be specified in the
By-Laws and shall be called by the Trustees upon the written request of
Shareholders owning at least 30% of the outstanding Shares entitled to
vote. Shareholders shall be entitled to at least ten days' prior notice of
any meeting.
Section 3. Quorum and Required Vote. Thirty percent (30%) of
the outstanding Shares shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that holders of any series shall
vote as a series, then thirty percent (30%) of the aggregate number of
Shares of that series entitled to vote shall be necessary to constitute
quorum for the transaction of business by that series. Any lesser number,
however, shall be sufficient for adjournment and any adjourned session or
sessions may be held within 90 days after she date set for the original
meeting without the necessity of further notice. Except when a larger vote
is required by any provision of this Declaration of Trust or the By-Laws of
the Trust and subject to any applicable requirements of law, a majority of
the Shares voted shall decide any question and a plurality shall elect a
Trustee, provided that where any provision of law or of this Declaration of
Trust permits or requires that the holders of any series shall vote as a
series, then a majority of the Shares of that series voted on the matter
(or a plurality with respect to the election of a Trustee) shall decide
that matter insofar as that series is concerned.
Section 4. Action by Written Consent. Any action required or
permitted to be taken at any meeting may be taken without a meeting if a
consent in writing, setting forth such action, is signed by all the
Shareholders entitled to vote on the subject matter thereof and such
consent is filed with the records of the Trust.
Section 5. Additional Provisions. The By-Laws may include
further provisions for Shareholders' votes and meetings and related
matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall distribute
periodically to the Shareholders of each series of Shares an amount
approximately equal to the net income of that series, determined by the
Trustees or as they may authorize and as herein provided. Distributions of
income may be made in one or more payments, which shall be in Shares, cash
or otherwise, and on a date or dates and as of a record date or dates
determined by the Trustees. At any time and from time to time in their
discretion, the Trustees also may cause to be distributed to the
Shareholders of any one or more series as of a record date or dates
determined by the Trustees, in Shares, cash or otherwise, all or part of
any gains realized on the sale or disposition of the assets of the series
or all or part of any other principal of the Trust attributable to the
series. Each distribution pursuant to this Section 1 shall be made ratably
according to the number of Shares of the series held by the several
Shareholders on the record date for such distribution, provided that no
distribution need be made on Shares purchased pursuant to orders received,
or for which payment is made, after such time or times as the Trustees may
determine.
Section 2. Determination of Net Income. In determining the net
income of each series of Shares for any period, there shall be deducted
from income for that period (a) such portion of all charges, taxes,
expenses and liabilities due or accrued as the Trustees shall consider
properly chargeable and fairly applicable to income for that period or any
earlier period and (b) whatever reasonable reserves the Trustees shall
consider advisable for possible future charges, taxes, expenses and
liabilities which the Trustees shall consider properly chargeable and
fairly applicable to income for that period or any earlier period. The net
income of each series for any period may be adjusted for amounts included
on account of net income in the net asset value of Shares issued or
redeemed or repurchased during that period. In determining the net income
of a series for a period ending on a date other than the end of its fiscal
year, income may be estimated as the Trustees shall deem fair. Gains an
the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under
applicable accounting principles, except in the exercise of the
discretionary powers of the Trustees. Any amount contributed to the Trust
which is received as income pursuant to a decree of any court of competent
jurisdiction shall be applied as required by the said decree.
Section 3. Redemptions. Any Shareholder shall be entitled to
require the Trust to redeem and the Trust shall be obligated to redeem at
the option of such Shareholder all or any part of the Shares owned by said
Shareholder, at the redemption price, pursuant to the method, upon the
terms and subject to the conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be presented for
redemption in proper form for transfer to the Trust or the agent of the
Trust appointed for such purpose, and these shall be presented with a
written request that the Trust redeem all or any part of the Shares
represented thereby.
(b) The redemption price per Share shall be the net asset value
per Share when next determined by the Trust at such time or times as the
Trustees shall designate, following the time of presentation of
certificates for Shares, if issued, and an appropriate request for
redemption, or such other time as the Trustees may designate in accordance
with any provision of the 1940 Act, or any rule or regulation made or
adopted by any securities association registered under the Securities
Exchange Act of 1934, as determined by the Trustees.
(c) Net asset value of each series of Shares for the purpose of
issuance of Shares as well as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of such series determined
as provided in paragraph (d) below less, to the extent determined
by or pursuant to the direction of the Trustees in accordance
with generally accepted accounting principles, all debts,
obligations and liabilities of such series (which debts,
obligations and liabilities shall include, without limitation of
the generality of the foregoing, any and all debts, obligations,
liabilities, or claims, of any and every kind and nature, fixed,
accrued and otherwise, including the estimated accrued expenses
of management and supervision, administration and distribution
and any reserves or charges for any or all of the foregoing,
whether for taxes, expenses, or otherwise, and the price of
Shares redeemed but not paid for) but excluding the Trust's
liability upon its Shares and its surplus, by
(ii) the total number of Shares of such series outstanding.
The Trustees are empowered, in their absolute discretion, to
establish other methods for determining such net asset value whenever such
other methods are deemed by them to be necessary to enable the Trust to
comply with, or are deemed by them to be desirable, provided they are not
inconsistent with any provision of the 1940 Act.
(d) In determining for the purposes of this Declaration of Trust
the total value of the assets of each series of Shares at any time,
investments and any other assets of such series shall be valued in such
manner as may be determined from time to time by or pursuant to the order
of the Trustees.
(e) Payment of the redemption price by the Trust may be made
either in cash or in securities or other assets at the time owned by the
Trust or partly in cash and partly in securities or other assets at the
time owned by the Trust. The value of any part of such payment to be made
in securities or other assets of the Trust shall be the value employed in
determining the redemption price. Payment of the redemption price shall be
made on or before the seventh day following the day on which the Shares are
properly presented for redemption hereunder, except that delivery of any
securities included in any such payment shall be made as promptly as any
necessary transfers on the books of the issuers whose securities are to be
delivered may be made and, except as postponement of the date of payment
may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct from
the payment made for any Shares redeemed a liquidating charge not in excess
of one percent (1%) of the redemption price of the Shares so redeemed, and
the Trustees may alter or suspend any such liquidating charge from time to
time.
(f) The right of any holder of Shares redeemed by the Trust as
provided in this Article VI to receive dividends or distributions thereon
and all other rights of such Shareholder with respect to such Shares shall
terminate at the time as of which the redemption price of such Shares is
determined, except the right of such Shareholder to receive (i) the
redemption price of such Shares from the Trust in accordance with the
provisions hereof, and (ii) any dividend or distribution to which such
Shareholder previously had become entitled as the record holder of such
Shares on the record date for such dividend or distribution.
(g) Redemption of Shares by the Trust is conditional upon the
Trust having funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may
repurchase its Shares, out of funds legally available therefor, upon such
terms and conditions and for such consideration as the Trustees shall deem
advisable, by agreement with the owner at a price not exceeding the net
asset value per Share as determined by or pursuant to the order of the
Trustees at such time or times as the Trustees shall designate, less a
charge not to exceed one percent (1%) of such net asset value, if and as
fixed by resolution of the Trustees from time to time, and to take all
other steps deemed necessary or advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be cancelled
or held by the Trust for reissue, as the Trustees from time to time may
determine.
(j) The obligations set forth in this Article VI may be
suspended or postponed, (1) for any period (i) during which the New York
Stock Exchange is closed other than for customary weekend and holiday
closings, or (ii) during which trading on the New York Stock Exchange is
restricted, (2) for any period during which an emergency exists as a result
of which (i) the disposal by the Trust of investments owned by it is not
reasonably practicable, or (ii) it is not reasonably practicable for the
Trust fairly to determine the value of its net assets, or (3) for such
other periods as the Commission or any successor governmental authority by
order may permit.
Notwithstanding any other provision of this Section 3 of Article
VI, if certificates representing such Shares have been issued, the
redemption or repurchase price need not be paid by the Trust until such
certificates are presented in proper form for transfer to the Trust or the
agent of the Trust appointed for such purpose; however, the redemption or
repurchase shall be effective, in accordance with the resolution of the
Trustees, regardless of whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The Trust
shall have the right at its option and at any time to redeem Shares of any
Shareholder at the net asset value thereof as determined in accordance with
Section 3 of Article VI of this Declaration of Trust: (i) if at such time
such Shareholder owns fewer Shares than, or Shares having an aggregate net
asset value of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Shareholder owns Shares of a
particular series of Shares equal to or in excess of a percentage of the
outstanding Shares of that series determined from time to time by the
Trustees; or (iii) to the extent that such Shareholder owns Shares of the
Trust representing a percentage equal to or in excess of such percentage of
the aggregate number of outstanding Shares of the Trust or the aggregate
net asset value of the Trust determined from time to time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and
Repurchases. No dividend or distribution (including, without limitation,
any distribution paid upon termination of the Trust or of any series) with
respect to, nor any redemption or repurchase of, the Shares of any series
shall be effected by the Trust other than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to
reasonable compensation from the Trust and may fix the amount of their
compensation.
Section 2. Limitation of Liability. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee or Manager of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee, but nothing
herein contained shall protect any Trustee against any liability to which
he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Every note, bond, contract, instrument, certificate, share, or
undertaking and every other act or thing whatsoever executed or done by or
on behalf of the Trust or the Trustees or any of them in connection with
the Trust, shall be deemed conclusively to have been executed or done only
in their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees, Officers, Employees and
Agents. Each person who is or was a Trustee, officer, employee or agent of
the Trust shall be entitled to indemnification out of the assets of the
Trust to the extent provided in, and subject to the provisions of, the
By-Laws, provided that no indemnification shall be granted by the Trust in
contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of this
Article VIII references to "the Trust" include any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, employees or agents as
well as the resulting or surviving entity; so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or
is or was serving at the request of such a constituent corporation as a
trustee, director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the
same position under the provisions of this Article VIII with respect to the
resulting or surviving entity as he would have with respect to such a
constituent corporation if its separate existence had continued.
Section 3. Shareholders. In case any Shareholder or former
Shareholder shall be held to be personally liable solely by reason of his
being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to be held
harmless from and indemnified against all losses and expenses arising from
such liability. Upon request, the Trust shall cause its counsel to assume
the defense of any claim which, if successful, would result in an
obligation of the Trust to indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby. Neither the
Trust nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally either the Trust's Trustees or
officers or any Shareholders. All persons extending credit to, contracting
with or having any claim against the Trust or a particular series of Shares
shall look only to the assets of the Trust or the assets of that particular
series for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees
or agents, whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any Trustee
against any liability to which such Trustee otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond
or Surety. The exercise by the Trustees of their powers and discretion
hereunder under the circumstances then prevailing, shall be binding upon
everyone interested. A Trustee shall be liable for his or her own willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or
law. The Trustees may take advice of counsel or other experts with respect
to the meaning and operation of this Declaration of Trust, and subject to
the provisions of Section l of this Article IX shall be under no liability
for any act or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give any bond as
such, nor any surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees pursuant hereto or to see to the application of any payments made
or property transferred to the Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not Personally Liable:
Notice. All persons extending credit to, contracting with or having any
claim against the Trust or a particular series of Shares shall look only to
the assets of the Trust or the assets of that particular series of Shares
for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees
or agents, whether past, present or future, shall be personally liable
therefor.
Section 5. Consolidation, Merger, Sale of Assets. The Trust
may, in accordance with the provisions of this Section:
(1) Consolidate with one or more corporations or trusts to form
a new consolidated corporation or trust; or
(2) Merge into a corporation or trust, or have merged-into it
one or more corporations or trusts; or
(3) Sell, lease, exchange or transfer all, or substantially all,
its property and assets, including its good will and franchises.
Any such consolidation, merger, sale, lease, exchange or other
transfer of all or substantially all of the property and assets of the
Trust may be made only upon substantially the terms and conditions set
forth in a proposed form of articles of consolidation, articles of merger
or articles of sale, lease,
exchange or transfer, as the case may be, which are approved by votes of
the Trustees and Shareholders holding a majority of the Shares entitled to
vote thereon, provided that in the case of a merger in which the Trust is
the surviving entity which effects no reclassification or change of any
outstanding shares of the Trust or other amendment of this Declaration of
Trust, no vote of the Shareholders shall be necessary (and in lieu thereof,
the proposed articles of merger shall be approved by a majority of the
Trustees) if the number of Shares, if any, of the Trust to be issued or
delivered in the merger does not exceed fifteen percent of the number of
Shares outstanding (before giving effect to the merger) on the effective
date of the merger. Any articles of consolidation, merger, sale, lease,
exchange or transfer shall constitute a supplemental Declaration of Trust,
copies of which shall be filed as specified in Section 7 of this Article
IX.
Section 6. Termination of Trust. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may
be terminated at any time by vote of Shareholders holding at least a
majority of the Shares of each series entitled to vote or by the Trustees
by written notice to the Shareholders. Any series of Shares may be
terminated at any time by vote of Shareholders holding at least a majority
of the Shares of such series entitled to vote or by the Trustees by written
notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more series of
Shares, after paying or otherwise providing for all charges, taxes,
expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall reduce, in accordance with such
procedures as the Trustees consider appropriate, the remaining assets to
distributable form in cash or shares or other securities, or any
combination thereof, and distribute the proceeds to the Shareholders of the
series involved, ratably according to the number of Shares of such series
held by the several Shareholders of such series on the date of termination.
Section 7. Filing of Copies, References, Headings. The original
or a copy of this instrument and of each amendment hereto and of each
Declaration of Trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each such amendment and supplemental Declaration of Trust
shall be filed by the Trust with the Secretary of The Commonwealth of
Massachusetts and the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing
with the Trust may rely on a certificate by an officer of the Trust as to
whether or not any such amendments or supplemental Declarations of Trust
have been made and as to matters in connection with the Trust hereunder;
and, with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this instrument or of
any such amendment or supplemental Declaration of Trust. In this
instrument or in any such amendment or supplemental Declaration of Trust,
references to this instrument, and all expressions like "herein," "hereof,"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such amendment or supplemental Declaration of Trust.
Headings are placed herein for convenience of reference only and in case of
any conflict, the text of this instrument, rather than the headings, shall
control. This instrument may be executed in any number of counterparts
each of which shall be deemed an original.
Section 8. Applicable Law. The Trust set forth in this
instrument is made in The Commonwealth of Massachusetts, and it is created
under and is to be governed by and construed and administered according to
the laws of said Commonwealth. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised by
such a trust.
Section 9. Amendments. This Declaration of Trust may be amended
at any time by an instrument in writing signed by a majority of the then
Trustees when authorized so to do by a vote of Shareholders holding a
majority of the Shares of each series entitled to vote, except that an
amendment which shall affect the holders of one or more series of Shares
but not the holders of all outstanding series shall be authorized by vote
of the Shareholders holding a majority of the Shares entitled to vote of
each series affected and no vote of Shareholders of a series not affected
shall be required. Amendments having the purpose of changing the name of
the Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
IN WITNESS WHEREOF, Christine Pavalos has hereunto set her hand
and seal in the City of Boston, Massachusetts, for herself and her assigns
as of the day and year first above written.
/s/Christine Pavalos
Christine Pavalos
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston, October 29, 1986
Then personally appeared the above-named Christine Pavalos, and
acknowledged the foregoing instrument to be her free act and deed, before
me.
______________________________
Notary Public
(Notarial Seal)
DREYFUS MERRICK FUND
ARTICLES OF AMENDMENT
Dreyfus Merrick Fund, a business trust formed by an Agreement and
Declaration of Trust dated October 29, 1986 pursuant to the laws of the
Commonwealth of Massachusetts (the "Trust"), hereby certifies to the
Secretary of State of the Commonwealth of Massachusetts and to the City
Clerk of the City of Boston that:
FIRST: The Agreement and Declaration of Trust of the Trust is
hereby amended by striking out Article I, Section 1 and inserting in lieu
thereof the following:
"Section 1. Name. This Trust shall be known as 'Dreyfus
Variable Life Investment Fund.'"
SECOND: The amendment to the Agreement and Declaration of Trust
herein made was duly approved by the Written Consent of the Sole Trustee of
the Trust dated as of February 5, 1987 pursuant to Article IX, Section 9 of
the Agreement and Declaration of Trust.
IN WITNESS WHEREOF, Dreyfus Merrick Fund has caused these Articles to be signed
in its name and on its behalf by its Sole Trustee.
DREYFUS MERRICK FUND
By: /s/Christine Pavalos
Christine Pavalos, Sole Trustee
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Then personally appeared the above-named Christine Pavalos, and
acknowledged the foregoing instrument to be her free act and deed, before
me.
______________________________
Notary Public
DREYFUS VARIABLE LIFE INVESTMENT FUND
ARTICLES OF AMENDMENT
Dreyfus Variable Life Investment Fund, a business trust formed by
an Agreement and Declaration of Trust dated October 29, 1986 pursuant to
the laws of the Commonwealth of Massachusetts (the "Trust"), hereby
certifies to the Secretary of State of the Commonwealth of Massachusetts
and to the City Clerk of the City of Boston that:
FIRST: The Agreement and Declaration of Trust of the Trust is
hereby amended by striking out Article I, Section 1 and inserting in lieu
thereof the following:
"Section 1. Name. This Trust shall be known as 'Dreyfus
Variable Investment Fund.'"
SECOND: The amendment to the Agreement and Declaration of Trust
herein made was duly approved by the written consent of the Sole Trustee of
the Trust dated as of March 9, 1989 pursuant to Article IX, Section 9 of
the Agreement and Declaration of Trust.
IN WITNESS WHEREOF, Dreyfus Variable Life Investment Fund has caused these
Articles to be signed in its name and on its behalf by its
Sole Trustee.
DREYFUS VARIABLE LIFE INVESTMENT
FUND
By:/s/Christine Pavalos
Christine Pavalos, Sole Trustee
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Then personally appeared the above-named Christine Pavalos and
acknowledged the foregoing instrument to be her free act and deed, before
me.
/s/Lenora Hines
Notary Public
BY-LAWS
OF
DREYFUS VARIABLE INVESTMENT FUND
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1. Agreement and Declaration of Trust. These By-Laws shall be
subject to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of the above-captioned Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2. Principal Office of the Trust. The principal office of the
Trust shall be located in New York, New York. Its resident agent in
Massachusetts shall be CT Corporation System, 2 Oliver Street, Boston,
Massachusetts, or such other person as the Trustees from time to time may
select.
ARTICLE 2
Meetings of Trustees
2.1. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees
from time to time may determine, provided that notice of the first regular
meeting following any such determination shall be given to absent Trustees.
2.2. Special Meetings. Special meetings of the Trustees may be held
at any time and at any place designated in the call of the meeting when
called by the President or the Treasurer or by two or more Trustees,
sufficient notice thereof being given to each Trustee by the Secretary or
an Assistant Secretary or by the officer or the Trustees calling the
meeting.
2.3. Notice of Special Meetings. It shall be sufficient notice to a
Trustee of a special meeting to send notice by mail at least forty-eight
hours or by telegram at least twenty-four hours before the meeting
addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone
at least twenty-four hours before the meeting. Notice of a meeting need
not be given to any Trustee if a written waiver of notice, executed by him
or her before or after the meeting, is filed with the records of the
meeting, or to any Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him or her. Neither
notice of a meeting nor a waiver of a notice need specify the purposes of
the meeting.
2.4. Notice of Certain Actions by Consent. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees
by a written consent of less than all of the Trustees, then prompt notice
of any such action shall be furnished to each Trustee who did not execute
such written consent, provided that the effectiveness of such action shall
not be impaired by any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1. Enumeration; Qualification. The officers of the Trust shall be
a President, a Treasurer, a Secretary, and such other officers, if any, as
the Trustees from time to time may in their discretion elect. The Trust
also may have such agents as the Trustees from time to time may in their
discretion appoint. Officers may be but need not be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2. Election. The President, the Treasurer and the Secretary shall
be elected by the Trustees upon the occurrence of any vacancy in any such
office. Other officers, if any, may be elected or appointed by the
Trustees at any time. Vacancies in any such other office may be filled at
any time.
3.3. Tenure. The President, Treasurer and Secretary shall hold
office in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent
shall retain authority at the pleasure of the Trustees.
3.4. Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as commonly are
incident to the office occupied by him or her as if the Trust were
organized as a Massachusetts business corporation or such other duties and
powers as the Trustees may from time to time designate.
3.5. President. Unless the Trustees otherwise provide, the President
shall preside at all meetings of the shareholders and of the Trustees.
Unless the Trustees otherwise provide, the President shall be the chief
executive officer.
3.6. Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder
servicing or similar agent, shall be in charge of the valuable papers,
books of account and accounting records of the Trust, and shall have such
other duties and powers as may be designated from time to time by the
Trustees or by the President.
3.7. Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or
a copy thereof shall be kept at the principal office of the Trust. In the
absence of the Secretary from any meeting of the shareholders or Trustees,
an Assistant Secretary, or if there be none or if he or she is absent, a
temporary Secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books.
3.8. Resignations and Removals. Any Trustee or officer may resign at
any time by written instrument signed by him or her and delivered to the
President or Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some
other time. The Trustees may remove any officer elected by them with or
without cause. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer
removed shall have any right to any compensation for any period following
his or her resignation or removal, or any right to damages on account of
such removal.
ARTICLE 4
Committees
4.1. Appointment. The Trustees may appoint from their number an
executive committee and other committees. Except as the Trustees otherwise
may determine, any such committee may make rules for conduct of its
business.
4.2. Quorum; Voting. A majority of the members of any Committee of
the Trustees shall constitute a quorum for the transaction of business, and
any action of such a Committee may be taken at a meeting by a vote of a
majority of the members present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the time and in the
manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may
deem desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
Except as from time to time otherwise provided by the Trustees, the
fiscal year of the Trust shall end on December 31 in each year.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die with the word
"Massachusetts," together with the name of the Trust and the year of its
organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and in its
absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases may authorize
the execution thereof in some other manner, all deeds, leases, contracts,
notes and other obligations made by the Trustees shall be signed by the
President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1. Sale of Shares. Except as otherwise determined by the Trustees,
the Trust will issue and sell for cash or securities from time to time,
full and fractional shares of its shares of beneficial interest, such
shares to be issued and sold at a price of not less than net asset value
per share as from time to time determined in accordance with the
Declaration of Trust and these By-Laws and, in the case of fractional
shares, at a proportionate reduction in such price. In the case of shares
sold for securities, such securities shall be valued in accordance with the
provisions for determining value of assets of the Trust as stated in the
Declaration of Trust and these By-Laws. The officers of the Trust are
severally authorized to take all such actions as may be necessary or
desirable to carry out this Section 9.1.
9.2. Share Certificates. In lieu of issuing certificates for shares,
the Trustees or the transfer agent either may issue receipts therefor or
may keep accounts upon the books of the Trust for the record holders of
such shares, who shall in either case, for all purposes hereunder, be
deemed to be the holders of certificates for such shares as if they had
accepted such certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees at any time may authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a
certificate stating the number of shares owned by him, in such form as
shall be prescribed from time to time by the Trustees. Such certificate
shall be signed by the President or Vice President and by the Treasurer or
Assistant Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent, or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall cease
to be such officer before such certificate is issued, it may be issued by
the Trust with the same effect as if he or she were such officer at the
time of its issue.
9.3. Loss of Certificates. The Trust, or if any transfer agent is
appointed for the Trust, the transfer agent with the approval of any two
officers of the Trust, is authorized to issue and countersign replacement
certificates for the shares of the Trust which have been lost, stolen or
destroyed subject to the deposit of a bond or other indemnity in such form
and with such security, if any, as the Trustees may require.
9.4. Discontinuance of Issuance of Certificates. The Trustees at any
time may discontinue the issuance of share certificates and by written
notice to each shareholder, may require the surrender of share certificates
to the Trust for cancellation. Such surrender and cancellation shall not
affect the ownership of shares in the Trust.
ARTICLE 10
Indemnification
10.1. Trustees, Officers, etc. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise)
(hereinafter referred to as a "Covered Person") against all liabilities and
expenses, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been threatened,
while in office or thereafter, by reason of being or having been such a
Trustee or officer, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in a decision on the
merits in any such action, suit or other proceeding not to have acted in
good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust and except that no Covered Person shall
be indemnified against any liability to the Trust or its Shareholders to
which such Covered Person would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Trust in advance
of the final disposition or any such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Covered Person to repay
amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article,
provided that (a) such Covered Person shall provide security for his
undertaking, (b) the Trust shall be insured against losses arising by
reason of such Covered Person's failure to fulfill his undertaking, or (c)
a majority of the Trustees who are disinterested persons and who are not
Interested Persons (as that term is defined in the Investment Company Act
of 1940) (provided that a majority of such Trustees then in office act on
the matter), or independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (but not a full
trial-type inquiry), that there is reason to believe such Covered Person
ultimately will be entitled to indemnification.
10.2. Compromise Payment. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body
before which the proceeding was brought, that such Covered Person either
(a) did not act in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust or (b) is liable to
the Trust or its Shareholders by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office, indemnification shall be provided
if (a) approved as in the best interest of the Trust, after notice that it
involves such indemnification, by at least a majority of the Trustees who
are disinterested persons and are not Interested Persons (provided that a
majority of such Trustees then in office act on the matter), upon a
determination, based upon a review of readily available facts (but not a
full trial type inquiry) that such Covered Person acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders
by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's
office, or (b) there has been obtained an opinion in writing of independent
legal counsel, based upon a review of readily available facts (but not a
full trial-type inquiry) to the effect that such Covered Person appears to
have acted in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust and that such
indemnification would not protect such Covered Person against any liability
to the Trust to which such Covered Person would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office. Any
approval pursuant to this Section shall not prevent the recovery from any
Covered Person of any amount paid to such Covered Person in accordance with
this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good
faith in the reasonable belief that such Covered Person's action was in the
best interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Covered
Person's office.
10.3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to
which any such Covered Person may be entitled. As used in this Article 10,
the term "Covered Person" shall include such person's heirs, executors and
administrators, and a "disinterested person" is a person against whom none
of the actions, suits or other proceedings in question or another action,
suit, or other proceeding on the same or similar grounds is then or has
been pending. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of such person.
10.4. Limitation. Notwithstanding any provisions in the Declaration
of Trust and these By-Laws pertaining to indemnification, all such
provisions are limited by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
In the event that a claim for indemnification is asserted by a
Trustee, officer or controlling person of the Trust in connection
with the registered securities of the Trust, the Trust will not
make such indemnification unless (i) the Trust has submitted,
before a court or other body, the question of whether the person
to be indemnified was liable by reason of wilful misfeasance, bad
faith, gross negligence, or reckless disregard of duties, and has
obtained a final decision on the merits that such person was not
liable by reason of such conduct or (ii) in the absence of such
decision, the Trust shall have obtained a reasonable
determination, based upon a review of the facts, that such person
was not liable by virtue of such conduct, by (a) the vote of a
majority of Trustees who are neither interested persons as such
term is defined in the Investment Company Act of 1940, nor
parties to the proceeding or (b) an independent legal counsel in
a written opinion.
The Trust will not advance attorneys' fees or other expenses
incurred by the person to be indemnified unless the Trust shall have
(i) received an undertaking by or on behalf of such person to repay
the advance unless it is ultimately determined that such person is
entitled to indemnification and one of the following conditions shall
have occurred: (x) such person shall provide security for his
undertaking, (y) the Trust shall be insured against losses arising by
reason of any lawful advances or (z) a majority of the disinterested,
non-party Trustees of the Trust, or an independent legal counsel in a
written opinion, shall have determined that based on a review of
readily available facts there is reason to believe that such person
ultimately will be found entitled to indemnification.
ARTICLE 11
Shareholders
11.1. Meetings. A meeting of the shareholders shall be called by the
Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to
vote at such meeting. If the meeting is a meeting of the shareholders of
one or more series of shares, but not a meeting of all shareholders of the
Trust, then only the shareholders of such one or more series shall be
entitled to notice of and to vote at the meeting. If the Secretary, when
so ordered or requested, refuses or neglects for more than five days to
call such meeting, the Trustees, or the shareholders so requesting may, in
the name of the Secretary, call the meeting by giving notice thereof in the
manner required when notice is given by the Secretary.
11.2. Access to Shareholder List. Shareholders of record may apply
to the Trustees for assistance in communicating with other shareholders for
the purpose of calling a meeting in order to vote upon the question of
removal of a Trustee. When ten or more shareholders of record who have
been such for at least six months preceding the date of application and who
hold in the aggregate shares having a net asset value of at least $25,000
or at least 1% of the outstanding shares, whichever is less, so apply, the
Trustees shall within five business days either:
(i) afford to such applicants access to a list of names and
addresses of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of
shareholders of record and the approximate cost of mailing material to them
and, within a reasonable time thereafter, mail, at the applicants' expense,
materials submitted by the applicants, to all such shareholders of record.
The Trustees shall not be obligated to mail materials which they believe to
be misleading or in violation of applicable law.
11.3. Record Dates. For the purpose of determining the shareholders
of any series who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees from time to time may fix a
time, which shall be not more than 90 days before the date of any meeting
of shareholders or the date of payment of any dividend or of any other
distribution, as the record date for determining the shareholders of such
series having the right to notice of and to vote at such meeting and any
adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders of record on such record date shall have
such right notwithstanding any transfer of shares on the books of the Trust
after the record date; or without fixing such record date the Trustees may
for any such purposes close the register or transfer books for all or part
of such period.
11.4. Place of Meetings. All meetings of the shareholders shall be
held at the principal office of the Trust or at such other place within the
United States as shall be designated by the Trustees or the President of
the Trust.
11.5. Notice of Meetings. A written notice of each meeting of
shareholders, stating the place, date and hour and the purposes of the
meeting, shall be given at least ten days before the meeting to each
shareholder entitled to vote thereat by leaving such notice with him or at
his residence or usual place of business or by mailing it, postage prepaid,
and addressed to such shareholder at his address as it appears in the
records of the Trust. Such notice shall be given by the Secretary or an
Assistant Secretary or by an officer designated by the Trustees. No notice
of any meeting of shareholders need be given to a shareholder if a written
waiver of notice, executed before or after the meeting by such shareholder
or his attorney thereunto duly authorized, is filed with the records of the
meeting.
11.6. Ballots. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and
entitled to vote in the election.
11.7. Proxies. Shareholders entitled to vote may vote either in
person or by proxy in writing dated not more than six months before the
meeting named therein, which proxies shall be filed with the Secretary or
other person responsible to record the proceedings of the meeting before
being voted. Unless otherwise specifically limited by their terms, such
proxies shall entitle the holders thereof to vote at any adjournment of
such meeting but shall not be valid after the final adjournment of such
meeting.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or
by one or more writings signed by such a majority.
Dated: April 23, 1987
SUB-INVESTMENT ADVISORY AGREEMENT
DREYFUS VARIABLE INVESTMENT FUND
P.O. Box 6014
Garden City, New York 11530-6014
May 21, 1990
Comstock Partners, Inc.
45 Broadway
New York, New York 10006
Dear Sirs:
Dreyfus Variable Investment Fund, a Massachusetts
business trust (the "Fund"), currently consisting of five
series, herewith confirms its agreement with you as follows:
The Fund desires to employ the capital of its Asset
Allocation Portfolio (the "Series") by investing and reinvesting
the same in investments of the type and in accordance with the
limitations specified in the Fund's Declaration of Trust and in
its Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from
time to time may be approved by the Fund's Board of Trustees.
The Fund desires to employ you to act as its sub-investment
adviser with respect to the Series and intends to employ The
Dreyfus Corporation (the "Adviser") to act as its investment
adviser.
In connection with your serving as sub-investment
adviser to the Series, it is understood that from time to time
you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers and employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Adviser
and the Fund's Board of Trustees, you will provide investment
management of the Series' portfolio in accordance with the
Series' investment objectives and policies as stated in the
Fund's Prospectus and Statement of Additional Information as
from time to time in effect. In connection therewith, you will
obtain and provide investment research and will supervise the
Series' investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and
reinvestment of the Series' assets. You will furnish to the
Adviser or the Fund such statistical information, with respect
to the investments which the Series may hold or contemplate
purchasing, as the Adviser or the Fund may reasonably request.
The Fund wishes to be informed of important developments
materially affecting the Series' portfolio and shall expect you,
on your own initiative, to furnish to the Fund from time to time
such information as you may believe appropriate for this
purpose.
You shall exercise your best judgment in rendering the
services to be provided hereunder, and the Fund agrees as an
inducement to your undertaking the same that you shall not be
liable hereunder for any error of judgment or mistake of law or
for any loss suffered by the Series, provided that nothing
herein shall be deemed to protect or purport to protect you
against any liability to the Fund or the Series' security
holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the annual rate of .375 of 1% of the value
of the Series' average daily net assets. Net asset value shall
be computed on such days and at such time or times as described
in the Fund's then-current Prospectus and Statement of
Additional Information. The fee for the period from the date of
the commencement of the initial public sale of the Series'
shares to the end of the month during which such sale shall have
been commenced shall be pro-rated according to the proportion
which such period bears to the full monthly period, and upon any
termination of this Agreement before the end of any month, the
fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this
Agreement.
For the purpose of determining fees payable to you,
the value of the Series' net assets shall be computed in the
manner specified in the Fund's Declaration of Trust for the
computation of the value of the Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Series (other
than those borne by the Adviser) will be borne by the Fund,
except to the extent specifically assumed by you. The expenses
to be borne by the Fund include, without limitation, the
following: organizational costs, taxes, interest, loan commit-
ment fees, dividends and interest on securities sold short,
brokerage fees and commissions, if any, fees of Trustees who are
not officers, directors, employees or holders of 5% or more of
your outstanding voting securities or those of the Adviser or
any affiliates of you or the Adviser, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Fund's existence,
costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders and any extraordinary expenses.
If in any fiscal year the aggregate expenses of the
Series (including fees pursuant to this Agreement and the Fund's
Investment Advisory Agreement, but excluding interest, taxes,
brokerage, interest on borrowings and, with the prior written
consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such
excess expense equally with the Adviser to the extent required
by state law. Your obligation is limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the
case may be, on a monthly basis.
The Fund understands that you now act and will
continue to act as investment adviser to various fiduciary or
other managed accounts, and the Fund has no objection to your so
acting. In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder
will not devote their full time to such services and nothing
herein contained shall be deemed to limit or restrict your right
or the right of any of your affiliates to engage in and devote
time and attention to other businesses or to render services of
whatever kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Series in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your
duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your
officer, director, partner, employee or agent, who may be or
become an officer, trustee, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee or agent or one under your control or direction even
though paid by you.
This Agreement shall continue until May 21, 1992, and
thereafter shall continue automatically for successive annual
periods ending on May 21st of each year, provided such
continuance is specifically approved at least annually by (i)
the Fund's Board of Trustees or (ii) vote of a majority (as
defined in the Investment Company Act of 1940) of the Series'
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's
Trustees who are not "interested persons" (as defined in said
Act) of the Fund or any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board of Trustees or by vote of
holders of a majority of the Series' outstanding shares, or,
upon not less than 90 days' notice, by you. This Agreement also
will terminate automatically in the event of its assignment (as
defined in said Act).
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, officer or shareholder of
the Fund individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS VARIABLE INVESTMENT FUND
By:
Accepted:
COMSTOCK PARTNERS, INC.
By:
SUB-INVESTMENT ADVISORY AGREEMENT
DREYFUS VARIABLE INVESTMENT FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 17, 1992
Fayez Sarofim & Co.
Two Houston Center
Suite 2907
Houston, Texas 77010
Dear Sirs:
Dreyfus Variable Investment Fund, a Massachusetts business trust
(the "Fund"), consisting of several series, herewith confirms its agreement
with you as follows:
The Fund desires to employ the capital of its Capital
Appreciation Portfolio (the "Series") by investing and reinvesting the same
in investments of the type and in accordance with the limitations specified
in the Fund's Declaration of Trust and in its Prospectus and Statement of
Additional Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such extent as
from time to time may be approved by the Fund's Board of Trustees. The
Fund desires to employ you to act as its sub-investment adviser with
respect to the Series and currently employs The Dreyfus Corporation (the
"Adviser") to act as its investment adviser.
In connection with your serving as sub-investment adviser to the
Series, it is understood that from time to time you will employ or
associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement.
Such person or persons may be officers and employees who are employed by
both you and the Fund. The compensation of such person or persons shall be
paid by you and no obligation may be incurred on the Fund's behalf in any
such respect.
Subject to the supervision and approval of the Adviser and the
Fund's Board of Trustees, you will provide investment management of the
Series' portfolio in accordance with the Series' investment objectives and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as from time to time in effect. In connection therewith, you
will obtain and provide investment research and will supervise the Series'
investments and conduct a continuous program of investment, evaluation and,
if appropriate, sale and reinvestment of the Series' assets. You will
furnish to the Adviser or the Fund such statistical information, with
respect to the investments which the Series may hold or contemplate
purchasing, as the Adviser or the Fund may reasonably request. The Fund
wishes to be informed of important developments materially affecting the
Series' portfolio and shall expect you, on your own initiative, to furnish
to the Fund from time to time such information as you may believe
appropriate for this purpose.
You shall exercise your best judgment in rendering the services
to be provided hereunder, and the Fund agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error
of judgment or mistake of law or for any loss suffered by the Series,
provided that nothing herein shall be deemed to protect or purport to
protect you against any liability to the Fund or the Series' security
holders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your
duties hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement,
the Fund will pay you on the first business day of each month a fee at the
annual rate based upon the value of the Series' average daily net assets as
follows:
Annual Fee as a Percentage
Total Assets of Average Daily Net Assets
- ---------------------------- ---------------------------
0 to $150 million .20 of 1%
$150 million to $300 million .25 of 1%
$300 million or more .375 of 1%
Net asset value shall be computed on such days and at such time
or times as described in the Fund's then-current Prospectus and Statement
of Additional Information. The fee for the period from the date of the
commencement of the initial public sale of the Series' shares to the end of
the month during which such sale shall have been commenced shall be pro-
rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end
of any month, the fee for such part of a month shall be pro-rated according
to the proportion which such period bears to the full monthly period and
shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of
the Series' net assets shall be computed in the manner specified in the
Fund's Declaration of Trust for the computation of the value of the Series'
net assets.
You will bear all expenses in connection with the performance of
your services under this Agreement. All other expenses to be incurred in
the operation of the Series (other than those borne by the Adviser) will be
borne by the Fund, except to the extent specifically assumed by you. The
expenses to be borne by the Fund include, without limitation, the
following: organizational costs, taxes, interest, loan commitment fees,
dividends and interest on securities sold short, brokerage fees and
commissions, if any, fees of Trustees who are not your officers, directors
or employees or holders of 5% or more of your outstanding voting securities
or those of the Adviser or any affiliates of you or the Adviser, Securities
and Exchange Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside auditing and
legal expenses, costs of independent pricing services, costs of maintaining
the Fund's existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders and any
extraordinary expenses.
If in any fiscal year the aggregate expenses of the Series
(including fees pursuant to this Agreement and the Fund's Investment
Advisory Agreement, but excluding interest, taxes, brokerage, interest on
borrowings and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Series, the Fund may
deduct from the fees to be paid hereunder, or you will bear, such excess
expense equally with the Adviser to the extent required by state law. Your
obligation is limited to the amount of your fees hereunder. Such deduction
or payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The Fund understands that you now act and will continue to act as
investment adviser to various fiduciary or other managed accounts, and the
Fund has no objection to your so acting. In addition, it is understood
that the persons employed by you to assist in the performance of your
duties hereunder will not devote their full time to such services and
nothing herein contained shall be deemed to limit or restrict your right or
the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or
nature.
You shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Series in connection with the matters
to which this Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on your part in the performance
of your duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an officer,
trustee, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or acting on any business of the Fund, to be rendering
such services to or acting solely for the Fund and not as your officer,
director, partner, employee or agent or one under your control or direction
even though paid by you.
This Agreement shall continue until May 21, 1994, and thereafter
shall continue automatically for successive annual periods ending on May
21st of each year, provided such continuance is specifically approved at
least annually by (i) the Fund's Board of Trustees or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of the Series'
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Trustees who are
not "interested persons" (as defined in said Act) of the Fund or any party
to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board of Trustees or by vote of
holders of a majority of the Series' outstanding shares, or, upon not less
than 90 days' notice, by you. This Agreement also will terminate
automatically in the event of its assignment (as defined in said Act).
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund.
The obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will
you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
DREYFUS VARIABLE INVESTMENT FUND
By:
Accepted:
FAYEZ SAROFIM & CO.
By:
CUSTODY AGREEMENT
Custody Agreement made as of May 21, 1990 between
DREYFUS VARIABLE INVESTMENT FUND, a business trust organized and existing
under the laws of the Commonwealth of Massachusetts, having as an address
P.O. Box 6014, Garden City, New York 11530-6014 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a
banking business, having its principal office and place of business at 48
Wall Street, New York, New York 10015 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth
the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or not any such
person is an Officer or employee of the Fund, duly authorized by the
Trustees of the Fund to give Oral Instructions and Written Instructions on
behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds held in the
Fund's custody account(s) at The Bank of New York, or its successors, as of
the close of such day or, if such day is not a business day, the close of
the preceding business day.
3. "Bankruptcy" shall mean with respect to a party such
party's making a general assignment, arrangement or composition with or for
the benefit of its creditors, or instituting or having instituted against
it a proceeding seeking a judgment of insolvency or bankruptcy or the entry
of an order for relief under the Federal bankruptcy law or any other relief
under any bankruptcy or insolvency law or other similar law affecting
creditors' rights, or if a petition is presented for the winding up or
liquidation of the party or a resolution is passed for its winding up or
liquidation, or it seeks, or becomes subject to, the appointment of an
administrator, receiver, trustee, custodian or other similar official for
it or for all or substantially all of its assets or its taking any action
in furtherance of, or indicating its consent to approval of, or
acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal Reserve/
Treasury book-entry system for United States and Federal agency securities,
its successor or successors and its nominee or nominees.
5. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options, Futures
Contracts and Futures Contract Options entitling the holder, upon timely
exercise and payment of the exercise price, as specified therein, to
purchase from the writer thereof the specified underlying Securities.
6. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Fund by any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and a member of
a national securities exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably believed by the
Custodian to be such a clearing member.
8. "Collateral Account" shall mean a segregated account
so denominated and pledged to the Custodian as security for, and in
consideration of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article V herein, or
(b) any receipt described in Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S. Consumer
Price Index, all items and all urban consumers, U.S. city average l982-84
equals l00, as first published without seasonal adjustment by the Bureau of
Labor Statistics, the Department of Labor, without regard to subsequent
revisions or corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof
the specified Securities (excluding Futures Contracts) which are owned by
the writer thereof and subject to appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nominee or
nominees, provided the Custodian has received a certified copy of a
resolution of the Fund's Trustees specifically approving deposits in DTC.
The term "Depository" shall further mean and include any other person
authorized to act as a depository under the Investment Company Act of 1940,
its successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Trustees
specifically approving deposits therein by the Custodian.
12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate for such
date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available
same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as published in
Federal Reserve Statistical Release H.15 (519) and applicable to such day
and each succeeding day which is not a business day.
15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including, without
limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds,
domestic bank certificates of deposit, and Eurodollar certificates of
deposit, during a specified month at an agreed upon price.
16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
18. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant or Clearing
Member, or in the name of the Fund for the benefit of a broker, dealer,
futures commission merchant or Clearing Member, or otherwise, in accordance
with an agreement between the Fund, the Custodian and a broker, dealer,
futures commission merchant or Clearing Member (a "Margin Account
Agreement"), separate and distinct from the custody account, in which
certain Securities and/or money of the Fund shall be deposited and
withdrawn from time to time in connection with such transactions as the
Fund may from time to time determine. Securities held in the Book-Entry
System or the Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.
19. "Merger" shall mean (a) with respect to the Fund,
the consolidation or amalgamation with, merger into, or transfer of all or
substantially all of its assets to, another entity, where the Fund is not
the surviving entity, and (b) with respect to the Custodian, any
consolidation or amalgamation with, merger into, or transfer of all or
substantially all of its assets to, another entity, except for any such
consolidation, amalgamation, merger or transfer of assets between the
Custodian and The Bank of New York Company, Inc. or any subsidiary thereof,
or the Irving Bank Corporation or any subsidiary thereof, provided that the
surviving entity agrees to be bound by the terms of this Agreement.
20. "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to principal
and interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, certificates of deposit and
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in Federal funds on the same
date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation, a
clearing agency registered under Section 17A of the Securities Exchange Act
of 1934, its successor or successors, and its nominee or nominees.
22. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer or any other
person or persons duly authorized by the Fund's Trustees to execute any
Certificate, instruction, notice or other instrument on behalf of the Fund
and listed in the Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to time.
23. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person or from a
person reasonably believed by the Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying Securities, to sell such
Securities to the writer thereof for the exercise price.
26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and price.
27. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options, Stock Index
Options, Stock Index Futures Contracts, Stock Index Futures Contract
Options, Financial Futures Contracts, Financial Futures Contract Options,
Reverse Repurchase Agreements, common stock and other instruments or rights
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities (including, without limitation, general obligation bonds,
revenue bonds and industrial bonds and industrial development bonds),
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase, sell or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or
assets.
28. "Segregated Security Account" shall mean an account
maintained under the terms of this Agreement as a segregated account, by
recordation or otherwise, within the custody account in which certain
Securities and/or other assets of the Fund shall be deposited and withdrawn
from time to time in accordance with Certificates received by the Custodian
in connection with such transactions as the Fund may from time to time
determine.
29. "Series" shall mean the series of the Fund
specified on Appendix D hereto, or, where the context requires, each such
series.
30. "Shares" shall mean the shares of beneficial
interest of any Series of the Fund, each of which is allocated to a
particular Series.
31. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the value of a particular stock index at the close of
the last business day of the contract and the price at which the futures
contract is originally struck.
32. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive an amount of
cash determined by reference to the difference between the exercise price
and the value of the index on the date of exercise.
33. "Written Instructions" shall mean written
communications actually received by the Custodian from an Authorized Person
or from a person reasonably believed by the Custodian to be an Authorized
Person by telex or any other such system whereby the receiver of such
communications is able to verify by codes or otherwise with a reasonable
degree of certainty the authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any time owned
by the Fund during the period of this Agreement, except that (a) if the
Custodian fails to provide for the custody of any of the Fund's Securities
and moneys located or to be located outside the United States in a manner
satisfactory to the Fund, the Fund shall be permitted to arrange for the
custody of such Securities and moneys located or to be located outside the
United States other than through the Custodian at rates to be negotiated
and borne by the Fund and (b) if the Custodian fails to continue any
existing sub-custodial or similar arrangements on substantially the same
terms as exist on the date of this Agreement, the Fund shall be permitted
to arrange for such or similar services other than through the Custodian at
rates to be negotiated and borne by the Fund. The Custodian shall not
charge the Fund for any such terminated services after the date of such
termination.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to be delivered
to the Custodian all Securities and all moneys owned by any Series,
including cash received for the issuance of such Series' shares, at any
time during the period of this Agreement and shall specify the Series to
which the same are to be specifically allocated. The Custodian will not be
responsible for such Securities and such moneys until actually received by
it. The Custodian will be entitled to reverse any credits made on a
Series' behalf where such credits have been previously made and moneys are
not finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Fund's Trustees approving, authorizing and instructing
the Custodian on a continuous and on-going basis to deposit in the Book-
Entry System all Securities eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Prior to a deposit of Securities of a
Series in the Depository the Fund shall deliver to the Custodian a
certified resolution of the Fund's Trustees approving, authorizing and
instructing the Custodian on a continuous and on-going basis until
instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection
with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral.
Securities and moneys of such Series deposited in either the Book-Entry
System or the Depository will be represented in accounts which include only
assets held by the Custodian for customers, including, but not limited to,
accounts in which the Custodian acts in a fiduciary or representative
capacity. Prior to the Custodian's accepting, utilizing and acting with
respect to Clearing Member confirmations for Options and transactions in
Options as provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees approving, authorizing
and instructing the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate actually received by the
Custodian, to accept, utilize and act in accordance with such confirmations
as provided in this Agreement.
2. The Custodian shall credit to a separate account in
the name of the Fund for each Series all moneys received by it for the
account of the Fund, with respect to such Series. Money credited to the
separate account for a Series shall be disbursed by the Custodian only:
(a) In payment for Securities purchased, as provided in
Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes, as
provided in Article XII hereof;
(d) In payment for the Series' Shares redeemed by it,
as provided in Article XII hereof;
(e) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the Series account
from which payment is to be made and the purpose for which payment is to be
made; or
(f) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian, as provided in Article XV
hereof.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a summary of
all transfers to or from the account of each Series during said day. Where
Securities are transferred to the account of a Series, the Custodian shall
also by book-entry or otherwise identify as belonging to such Series a
quantity of Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the Custodian's account
on the books of the Book-Entry System or the Depository. At least monthly
and from time to time, the Custodian shall furnish the Fund with a detailed
statement of the Securities and moneys held for each Series under this
Agreement.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held for a Series, which are
issued or issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held for a Series may be registered in the name of such
Series, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to furnish to
the Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Series
and which may from time to time be registered in the name of such Series.
The Custodian shall hold all such Securities which are not held in the
Book-Entry System or in the Depository in a separate account in the name of
such Series physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate, the Custodian
by itself, or through the use of the Book-Entry System or the Depository
with respect to Securities therein deposited, shall with respect to all
Securities held for each Series in accordance with this Agreement:
(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from the Fund specifying
that an amount of income should have been received by the Custodian within
the last 90 days, the Custodian will provide a conditional payment of
income within 60 days from the date the Custodian received such notice,
unless the Custodian reasonably concludes that such income was not due or
payable to the Fund, provided that the Custodian may reverse any such
conditional payment upon its reasonably concluding that all or any portion
of such income was not due or payable, and provided further that the
Custodian shall not be liable for failing to collect on a timely basis the
full amount of income due or payable in respect of a "floating rate
instrument" or "variable rate instrument" (as such terms are defined under
Rule 2a-7 under the Investment Company Act of l940, as amended) if it has
acted in good faith, without negligence or willful misconduct.
(b) Present for payment and collect the amount payable
upon such Securities which are called, but only if either (i) the Custodian
receives a written notice of such call, or (ii) notice of such call appears
in one or more of the publications listed in Appendix C annexed hereto,
which may be amended at any time by the Custodian upon five business days'
prior notification to the Fund;
(c) Present for payment and collect the amount payable
upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws or the laws
or regulations of any other taxing authority now or hereafter in effect;
and
(f) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited, for the
account of each Series all rights and similar securities issued with
respect to any Securities held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System or the
Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as owner of any
Securities may be exercised;
(b) Deliver any Securities held for the Series
specified in such Certificate in exchange for other Securities or cash
issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Series
specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this Agreement
such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of
the Series specified in such Certificate and take such other steps as shall
be stated in said Certificate to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger, consolidation
or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable
upon Securities not described in preceding paragraph 5(b) of this Article
which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession of any
instrument or certificate representing any Futures Contract, Option or
Futures Contract Option until after it shall have determined, or shall have
received a Certificate from the Fund stating, that any such instruments or
certificates are available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the availability of
any such instrument or certificate. Prior to such availability, the
Custodian shall comply with Section 17(f) of the Investment Company Act of
1940, as amended, in connection with the purchase, sale, settlement,
closing out or writing of Futures Contracts, Options or Futures Contract
Options by making payments or deliveries specified in Certificates received
by the Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer or futures
commission merchant of a statement or confirmation reasonably believed by
the Custodian to be in the form customarily used by brokers, dealers, or
futures commission merchants with respect to such Futures Contracts,
Options or Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures commission
merchant, in book-entry form or otherwise, in the name of the Custodian (or
any nominee of the Custodian) as custodian for the Fund, provided, however,
that payments to or deliveries from the Margin Account shall be made in
accordance with the terms and conditions of the Margin Account Agreement.
Whenever any such instruments or certificates are available, the Custodian
shall, notwithstanding any provision in this Agreement to the contrary,
make payment for any Futures Contract, Option or Futures Contract Option
for which such instruments or such certificates are available only against
the delivery to the Custodian of such instrument or such certificate, and
deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt by
the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of any Option, Futures Contract, Futures
Contract Option or Reverse Repurchase Agreement, the Fund shall deliver to
the Custodian (i) with respect to each purchase of Securities which are not
Money Market Securities, a Certificate, and (ii) with respect to each
purchase of Money Market Securities, a Certificate, Oral Instructions or
Written Instructions, specifying with respect to each such purchase:
(a) the Series to which the Securities purchased are to be specifically
allocated; (b) the name of the issuer and the title of the Securities; (c)
the number of shares or the principal amount purchased and accrued
interest, if any; (d) the date of purchase and settlement; (e) the purchase
price per unit; (f) the total amount payable upon such purchase; (g) the
name of the person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the name of the
broker to which payment is to be made. The Custodian shall, upon receipt
of Securities purchased by or for such Series, pay out of the moneys held
for the account of such Series the total amount payable to the person from
whom, or the broker through whom, the purchase was made, provided that the
same conforms to the total amount payable as set forth in such Certificate,
Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures Contract Option
or Reverse Repurchase Agreement, the Fund shall deliver to the Custodian
(i) with respect to each sale of Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each sale of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such sale: (a) the Series to
which such Securities sold were specifically allocated; (b) the name of the
issuer and the title of the Security; (c) the number of shares or principal
amount sold, and accrued interest, if any; (d) the date of sale; (e) the
sale price per unit; (f) the total amount payable to the Fund for the
account of such Series upon such sale; (g) the name of the broker through
whom or the person to whom the sale was made, and the name of the clearing
broker, if any; and (h) the name of the broker to whom the Securities are
to be delivered. The Custodian shall deliver the Securities upon receipt
of the total amount payable to the Fund for the account of such Series upon
such sale, provided that the same conforms to the total amount payable as
set forth in such Certificate, Oral Instructions or Written Instructions.
Subject to the foregoing, the Custodian may accept payment in such form as
shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in
Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate specifying with
respect to each Option purchased: (a) the Series to which the Option
purchased is to be specifically allocated; (b) the type of Option (put or
call); (c) the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Stock Index Options
purchased; (d) the expiration date; (e) the exercise price; (f) the dates
of purchase and settlement; (g) the total amount payable by the Fund for
the account of such Series in connection with such purchase; (h) the name
of the Clearing Member through which such Option was purchased; and (i) the
name of the broker to whom payment is to be made. The Custodian shall pay,
upon receipt of a Clearing Member's statement confirming the purchase of
such Option held by such Clearing Member for the account of the Custodian
(or any duly appointed and registered nominee of the Custodian) as
custodian for the Fund, out of moneys held for the account of such Series,
the total amount payable upon such purchase to the Clearing Member through
whom the purchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) the
Series to which the Option sold was specifically allocated; (b) the type of
Option (put or call); (c) the name of the issuer and the title and number
of shares subject to such Option or, in the case of a Stock Index Option,
the stock index to which such Option relates and the number of Stock Index
Options sold; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund for the account of
such Series upon such sale; and (h) the name of the Clearing Member through
which the sale was made. The Custodian shall consent to the delivery of
the Option sold by the Clearing Member which previously supplied the
confirmation described in preceding paragraph 1 of this Article with
respect to such Option against payment to the Custodian of the total amount
payable to the Fund for the account of such Series, provided that the same
conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Call
Option: (a) the Series to which the Call Option exercised was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which such Call
Option was exercised. The Custodian shall, upon receipt of the Securities
underlying the Call Option which was exercised, pay out of the moneys held
for the account of such Series the total amount payable to the Clearing
Member through whom the Call Option was exercised, provided that the same
conforms to the total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series to which the Put Option exercised was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which such Put
Option was exercised. The Custodian shall, upon receipt of the amount
payable upon the exercise of the Put Option, deliver or direct the
Depository to deliver the Securities, provided the same conforms to the
amount payable to the Fund for the account of such Series as set forth in
such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
such Stock Index Option: (a) the Series to which the Stock Index Option
exercised was specifically allocated; (b) the type of Stock Index Option
(put or call); (c) the number of Options being exercised; (d) the stock
index to which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the Fund for the
account of such Series in connection with such exercise; and (h) the
Clearing Member from which such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to such Covered Call Option: (a) the Series to which the Covered
Call Option written is to be specifically allocated; (b) the name of the
issuer and the title and number of shares for which the Covered Call Option
was written and which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund for the account
of such Series; (f) the date such Covered Call Option was written; and (g)
the name of the Clearing Member through which the premium is to be
received. The Custodian shall deliver or cause to be delivered, in
exchange for receipt of the premium specified in the Certificate with
respect to such Covered Call Option, such receipts as are required in
accordance with the customs prevailing among Clearing Members dealing in
Covered Call Options and shall impose, or direct the Depository to impose,
upon the underlying Securities specified in the Certificate such
restrictions as may be required by such receipts. Notwithstanding the
foregoing, the Custodian has the right, upon prior written notification to
the Fund, at any time to refuse to issue any receipts for Securities in the
possession of the Custodian and not deposited with the Depository
underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is exercised, the
Fund shall promptly deliver to the Custodian a Certificate instructing the
Custodian to deliver, or to direct the Depository to deliver, the
Securities subject to such Covered Call Option and specifying: (a) the
Series to which the Covered Call Option exercised was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Covered Call Option; (c) the Clearing Member to whom the
underlying Securities are to be delivered; and (d) the total amount payable
to the Fund for the account of such Series upon such delivery. Upon the
return and/or cancellation of any receipts delivered pursuant to paragraph
6 of this Article, the Custodian shall deliver, or direct the Depository to
deliver, the underlying Securities as specified in the Certificate for the
amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series to which the Put Option written
is to be specifically allocated; (b) the name of the issuer and the title
and number of shares for which the Put Option is written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund for the account of such Series; (f) the date
such Put Option is written; (g) the name of the Clearing Member through
which the premium is to be received and to whom a Put Option guarantee
letter is to be delivered; (h) the amount of cash, and/or the amount and
kind of Securities, if any, to be deposited in the Segregated Security
Account; and (i) the amount of cash and/or the amount and kind of
Securities to be deposited into the Collateral Account. The Custodian
shall, after making the deposits into the Collateral Account specified in
the Certificate, issue a Put Option guarantee letter substantially in the
form utilized by the Custodian on the date hereof, and deliver the same to
the Clearing Member specified in the Certificate against receipt of the
premium specified in said Certificate. Notwithstanding the foregoing, the
Custodian shall be under no obligation to issue any Put Option guarantee
letter or similar document if it is unable to make any of the represen-
tations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to which
the Put Option exercised was specifically allocated; (b) the name of the
issuer and title and number of shares subject to the Put Option; (c) the
Clearing Member from which the underlying Securities are to be received;
(d) the total amount payable by the Fund upon such delivery; (e) the amount
of cash and/or the amount and kind of Securities to be withdrawn from the
Collateral Account; and (f) the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Segregated Security
Account. Upon the return and/or cancellation of any Put Option guarantee
letter or similar document issued by the Custodian in connection with such
Put Option, the Custodian shall pay out of the moneys held for the account
of such Series the total amount payable to the Clearing Member specified in
the Certificate as set forth in such Certificate, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the
Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to such Stock Index Option: (a) the Series to which the Stock
Index Option written is to be specifically allocated; (b) whether such
Stock Index Option is a put or a call; (c) the number of Options written;
(d) the stock index to which such Option relates; (e) the expiration date;
(f) the exercise price; (g) the Clearing Member through which such Option
was written; (h) the premium to be received by the Fund for the account of
such Series; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Segregated Security Account;
(j) the amount of cash and/or the amount and kind of Securities, if any, to
be deposited in the Collateral Account; and (k) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in a Margin
Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium specified in
the Certificate, make the deposits, if any, into the Segregated Security
Account specified in the Certificate, and either (1) deliver such receipts,
if any, which the Custodian has specifically agreed to issue, which are in
accordance with the customs prevailing among Clearing Members in Stock
Index Options and make the deposits into the Collateral Account specified
in the Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is exercised, the
Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to such Stock Index Option: (a) the Series to which the Stock Index
Option exercised was specifically allocated; (b) such information as may be
necessary to identify the Stock Index Option being exercised; (c) the
Clearing Member through which such Stock Index Option is being exercised;
(d) the total amount payable upon such exercise, and whether such amount is
to be paid by or to the Fund for the account of such Series; (e) the amount
of cash and/or amount and kind of Securities, if any, to be withdrawn from
the Margin Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security Account
and the amount of cash and/or the amount and kind of Securities, if any, to
be withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any, delivered
pursuant to the preceding paragraph of this Article, the Custodian shall
pay to the Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to
a previously written Option described in paragraphs 6, 8 or 10 of this
Article in a transaction expressly designated as a "Closing Purchase
Transaction" in order to liquidate its position as a writer of an Option,
the Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to the Option being purchased: (a) the Series to which the
Option purchased is to be specifically allocated; (b) that the transaction
is a Closing Purchase Transaction; (c) the name of the issuer and the title
and number of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by the
Fund for the account of such Series; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase; (i) the name of the
Clearing Member to which the premium is to be paid; and (j) the amount of
cash and/or the amount and kind of Securities, if any, to be withdrawn from
the Collateral Account, a specified Margin Account or the Segregated
Security Account. Upon the Custodian's payment of the premium and the
return and/or cancellation of any receipt issued pursuant to paragraphs 6,
8 or 10 of this Article with respect to the Option being liquidated through
the Closing Purchase Transaction, the Custodian shall remove, or direct the
Depository to remove, the previously imposed restrictions on the Securities
underlying the Call Option.
13. Upon the expiration or exercise of, or consummation
of a Closing Purchase Transaction with respect to, any Option purchased or
written by the Fund and described in this Article, the Custodian shall
delete such Option from the statements delivered to the Fund for the
account of a Series pursuant to paragraph 3 of Article III herein, and upon
the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, the Margin Account
and/or the Segregated Security Account as may be specified in a Certificate
received in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Futures Contract (or with respect to any number of
identical Futures Contract(s)): (a) the Series to which the Futures
Contract entered into is to be specifically allocated; (b) the category of
Futures Contract (the name of the underlying stock index or financial
instrument); (c) the number of identical Futures Contracts entered into;
(d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date;
(f) whether the Fund is buying (going long) or selling (going short) on
such Futures Contract(s); (g) the amount of cash and/or the amount and kind
of Securities, if any, to be deposited in the Segregated Security Account;
(h) the name of the broker, dealer or futures commission merchant through
which the Futures Contract was entered into; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker, dealer or
futures commission merchant to whom such amount is to be paid. The
Custodian shall make the deposits, if any, to the Margin Account in
accordance with the terms and conditions of the Margin Account Agreement.
The Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and deposit in the Segregated Security Account
the amount of cash and/or the amount and kind of Securities specified in
said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund for the account of a Series to a broker,
dealer or futures commission merchant with respect to an outstanding
Futures Contract shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment
from a broker, dealer or futures commission merchant to the Fund with
respect to an outstanding Futures Contract shall be received and dealt with
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement is made on
such Futures Contract, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series to which the Futures Contract
retained is to be specifically allocated; (b) the Futures Contract; (c)
with respect to a Stock Index Futures Contract, the total cash settlement
amount to be paid or received, and with respect to a Financial Futures
Contract, the Securities and/or amount of cash to be delivered or received;
(d) the broker, dealer or futures commission merchant to or from which
payment or delivery is to be made or received; and (e) the amount of cash
and/or Securities to be withdrawn from the Segregated Security Account.
The Custodian shall make the payment or delivery specified in the
Certificate and delete such Futures Contract from the statements delivered
to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian hereunder, the
Fund shall deliver to the Custodian a Certificate specifying: (a) the
Series to which the offsetting Futures Contract is to be specifically
allocated; / the items of information required in a Certificate described
in paragraph 1 of this Article, and (c) the Futures Contract being offset.
The Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset
from the statements delivered to the Fund for the account of such Series
pursuant to paragraph 3 of Article III herein, and make such withdrawals
from the Segregated Security Account as may be specified in such
Certificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the Series to
which the Futures Contract Option purchased is to be specifically
allocated; (b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract Option
purchased;
(d) the expiration date; (e) the exercise price; (f) the dates of purchase
and settlement; (g) the amount of premium to be paid by the Fund for the
account of such Series upon such purchase; (h) the name of the broker or
futures commission merchant through which such option was purchased; and
(i) the name of the broker or futures commission merchant to whom payment
is to be made. The Custodian shall pay the total amount to be paid upon
such purchase to the broker or futures commission merchant through whom the
purchase was made, provided that the same conforms to the amount set forth
in such Certificate.
2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) the Series to which the Futures Contract Option sold
was specifically allocated; (b)the type of Futures Contract Option (put or
call); (c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund for the account of
such Series upon such sale; and (h) the name of the broker or futures
commission merchant through which the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being closed
against payment to the Custodian of the total amount payable to the Fund
for the account of such Series, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a) the Series
to which the Futures Contract Option exercised was specifically allocated;
(b) the particular Futures Contract Option (put or call) being exercised;
(c) the type of Futures Contract underlying the Futures Contract Option;
(d) the date of exercise;
(e) the name of the broker or futures commission merchant through which the
Futures Contract Option is exercised; (f) the net total amount, if any,
payable by the Fund; (g) the amount, if any, to be received by the Fund;
and (h) the amount of cash and/or the amount and kind of Securities to be
deposited in the Segregated Security Account. The Custodian shall make the
payments, if any, and the deposits, if any, into the Segregated Security
Account as specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the Series to which the
Futures Contract Option written is to be specifically allocated; (b) the
type of Futures Contract Option (put or call); (c) the type of Futures
Contract and such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund
for the account of such Series; (g) the name of the broker or futures
commission merchant through which the premium is to be received; and (h)
the amount of cash and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account. The Custodian shall, upon
receipt of the premium specified in the Certificate, make the deposits into
the Segregated Security Account, if any, as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which the Futures
Contract Option exercised was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the name of the broker or
futures commission merchant through which such Futures Contract Option was
exercised; (e) the net total amount, if any, payable to the Fund for the
account of such Series upon such exercise; (f) the net total amount, if
any, payable by the Fund for the account of such Series upon such exercise;
and (g) the amount of cash and/or the amount and kind of Securities to be
deposited in the Segregated Security Account. The Custodian shall, upon
its receipt of the net total amount payable to the Fund for the account of
such Series, if any, specified in such Certificate make the payments, if
any, and the deposits, if any, into the Segregated Security Account as
specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a Put Option is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to which
the Futures Contract Option exercised was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of Futures
Contract underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through which such Futures Contract
Option is exercised; (e) the net total amount, if any, payable to the Fund
for the account of such Series upon such exercise; (f) the net total
amount, if any, payable by the Fund for the account of such Series upon
such exercise; and (g) the amount and kind of Securities and/or cash to be
withdrawn from or deposited in the Segregated Security Account, if any.
The Custodian shall, upon its receipt of the net total amount payable to
the Fund for the account of such Series, if any, specified in the
Certificate, make the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate. The deposits
to and/or withdrawals from the Margin Account, if any, shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option described
in this Article in order to liquidate its position as a writer of such
Futures Contract Option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which the Futures Contract Option purchased
is to be specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of Futures Contract and such other information as
may be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the exercise price; (e) the premium to be paid by the
Fund for the account of such Series; (f) the expiration date; (g) the name
of the broker or futures commission merchant to which the premium is to be
paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Segregated Security Account. The
Custodian shall effect the withdrawals from the Segregated Security Account
specified in the Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or consummation
of a closing transaction with respect to, any Futures Contract Option
written or purchased by the Fund and described in this Article, the
Custodian shall (a) delete such Futures Contract Option from the statements
delivered to the Fund pursuant to paragraph 3 of Article III herein, and
(b) make such withdrawals from, and/or, in the case of an exercise, such
deposits into, the Segregated Security Account as may be specified in a
Certificate. The deposits to and/or withdrawals from the Margin Account,
if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article shall be
subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the Series to which
the short sale is to be specifically allocated; (b) the name of the issuer
and the title of the Security; (c) the number of shares or principal amount
sold, and accrued interest or dividends, if any; (d) the dates of the sale
and settlement; (e) the sale price per unit; (f) the total amount credited
to the Fund for the account of such Series upon such sales, if any; (g) the
amount of cash and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated
Security Account; and (i) the name of the broker through which such short
sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming such sale and that the total amount credited to the
Fund upon such sale, if any, as specified in the Certificate is held by
such broker for the account of the Custodian (or any nominee of the
Custodian) as custodian of the Fund, issue a receipt or make the deposits
into the Margin Account and the Segregated Security Account specified in
the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such closing-out: (a) the Series to which
the short sale being closed-out was specifically allocated; (b) the name of
the issuer and the title of the Security; (c) the number of shares or the
principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of the
closing-out and settlement; (e) the purchase price per unit; (f) the net
total amount payable to the Fund for the account of such Series upon such
closing-out; (g) the net total amount payable to the broker upon such
closing-out; (h) the amount of cash and the amount and kind of Securities
to be withdrawn, if any, from the Margin Account; (i) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn from the
Segregated Security Account; and (j) the name of the broker through which
the Fund is effecting such closing-out. The Custodian shall, upon receipt
of the net total amount payable to the Fund for the account of such Series
upon such closing-out and the return and/or cancellation of the receipts,
if any, issued by the custodian with respect to the short sale being
closed-out, pay out of the moneys held for the account of the Series to the
broker the net total amount payable to the broker, and make the withdrawals
from the Margin Account and the Segregated Security Account, as the same
are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund, on behalf of a Series,
enters into a Reverse Repurchase Agreement with respect to Securities and
money held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate or in the event such Reverse Repurchase Agreement
is a Money Market Security, a Certificate, Oral Instructions or Written
Instructions specifying: (a) the Series to which the Reverse Repurchase
Agreement is to be specifically allocated; (b) the total amount payable to
the Fund for the account of such Series in connection with such Reverse
Repurchase Agreement; (c) the broker or dealer through or with which the
Reverse Repurchase Agreement is entered; (d) the amount and kind of
Securities to be delivered by the Fund to such broker or dealer; (e) the
date of such Reverse Repurchase Agreement; and (f) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable
to the Fund specified in the Certificate, Oral Instructions or Written
Instructions make the delivery to the broker or dealer, and the deposits,
if any, to the Segregated Security Account, specified in such Certificate,
Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph 1 of this Article, the Fund shall promptly
deliver a Certificate or, in the event such Reverse Repurchase Agreement is
a Money Market Security, a Certificate, Oral Instructions or Written
Instructions to the Custodian specifying: (a) the Series to which the
Reverse Repurchase Agreement terminated was specifically allocated; (b) the
Reverse Repurchase Agreement being terminated; (c) the total amount payable
by the Fund for the account of such Series in connection with such
termination; (d) the amount and kind of Securities to be received by the
Fund for the account of such Series in connection with such termination;
(e) the date of termination; (f) the name of the broker or dealer with or
through which the Reverse Repurchase Agreement is to be terminated; and (g)
the amount of cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security Account. The Custodian shall, upon receipt of
the amount and kind of Securities to be received by the Fund specified in
the Certificate, Oral Instructions or Written Instructions, make the
payment to the broker or dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such Certificate, Oral
Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Segregated Security Account as
specified in a Certificate received by the Custodian. Such Certificate
shall specify the amount of cash and/or the amount and kind of Securities
to be deposited in, or withdrawn from, the Segregated Security Account. In
the event that the Fund fails to specify in a Certificate the designated
Series, the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Segregated Securities Account, the
Custodian shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from
a Margin Account to the broker, dealer, futures commission merchant or
Clearing Member in whose name, or for whose benefit, the account was
established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin Account
shall be dealt with in accordance with the terms and conditions of the
Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the Custodian
in any Collateral Account described herein. In accordance with applicable
law, the Custodian may enforce its lien and realize on any such property
whenever the Custodian has made payment or delivery pursuant to any Put
Option guarantee letter or similar document or any receipt issued hereunder
by the Custodian. In the event the Custodian should realize on any such
property net proceeds which are less than the Custodian's obligations under
any Put Option guarantee letter or similar document or any receipt, such
deficiency shall be a debt owed the Custodian by the Fund within the scope
of Article XIII herein.
5. On each business day, the Custodian shall furnish
the Fund with a statement with respect to each Margin Account in which
money or Securities are held specifying as of the close of business on the
previous business day: (a) the name of the Margin Account; (b) the amount
and kind of Securities held therein; and (c) the amount of money held
therein. The Custodian shall make available upon request to any broker,
dealer or futures commission merchant specified in the name of a Margin
Account a copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a Collateral
Account, the Custodian shall furnish the Fund with a Statement with respect
to such Collateral Account specifying the amount of cash and/or the amount
and kind of Securities held therein. No later than the close of business
next succeeding the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions specifying
the then market value of the securities described in such statement. In
the event such then market value is indicated to be less than the
Custodian's obligation with respect to any outstanding Put Option,
guarantee letter or similar document, the Fund shall promptly specify in a
Certificate the additional cash and/or Securities to be deposited in such
Collateral Account to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall furnish to the
Custodian a copy of the resolution of the Trustees, certified by the
Secretary or any Assistant Secretary, either (i) setting forth the date of
the declaration of a dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as
of that date and the total amount payable to the Dividend Agent of the Fund
on the payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis and authorizing the Custodian to rely on
Oral Instructions, Written Instructions or a Certificate setting forth the
date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution,
Oral Instructions, Written Instructions or Certificate, as the case may be,
the Custodian shall pay out of the moneys held for the account of the
Series the total amount payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF BENEFICIAL INTEREST
1. Whenever a Series shall sell any of its Shares, the
Fund shall deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares of such Series sold, trade
date, and price; and
(b) The amount of money to be received by the Custodian
for the sale of such Shares.
2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the account of such Series.
3. Upon issuance of any of such Series' Shares in
accordance with the foregoing provisions of this Article, the Custodian
shall pay, out of the money held for the account of such Series, all
original issue or other taxes required to be paid by the Fund for the
account of such Series in connection with such issuance upon the receipt of
a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever a Series
shall hereafter redeem any of its Shares, it shall furnish to the Custodian
a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting forth the number of Shares of a Series received by the Transfer
Agent for redemption and that such Shares are valid and in good form for
redemption, the Custodian shall make payment to the Transfer Agent out of
the moneys held for the account of such Series of the total amount
specified in the Certificate issued pursuant to the foregoing paragraph 4
of this Article.
6. Notwithstanding the above provisions regarding the
redemption of any Series' Shares, whenever its Shares are redeemed pursuant
to any check redemption privilege which may from time to time be offered by
the Fund, the Custodian, unless otherwise instructed by a Certificate,
shall, upon receipt of an advice from the Fund or its agent setting forth
that the redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of such check
redemption privilege out of the money held in the account of such Series
for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of a Series which results in an overdraft because
the moneys held by the Custodian for the account of such Series shall be
insufficient to pay the total amount payable upon a purchase of Securities
as set forth in a Certificate or Oral Instructions issued pursuant to
Article IV, or which results in an overdraft in the account for such Series
for some other reason, or if a Series is for any other reason indebted to
the Custodian (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article
XIII), such overdraft or indebtedness shall be deemed to be a loan made by
the Custodian to such Series payable on demand and shall bear interest from
the date incurred at a rate per annum (based on a 360-day year for the
actual number of days involved) equal to the Federal Funds Rate plus l/2%,
such rate to be adjusted on the effective date of any change in such
Federal Funds Rate but in no event to be less than 6% per annum, except
that any overdraft resulting from an error by the Custodian shall bear no
interest. Any such overdraft or indebtedness shall be reduced by an amount
equal to the total of all amounts due such Series which have not been
collected by the Custodian on behalf of such Series when due because of the
failure of the Custodian to make timely demand or presentment for payment.
In addition, the Fund hereby agrees that the Custodian shall have a
continuing lien and security interest in and to any property at any time
held by it for the benefit of such Series or in which such Series may have
an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting in the Custodian's behalf.
The Fund authorizes the Custodian, in its sole discretion, at any time to
charge any such overdraft or indebtedness together with interest due
thereon against any balance of account standing to such Series' credit on
the Custodian's books. For purposes of this Section 1 of Article XIII,
"overdraft" shall mean a negative Available Balance.
2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a separate
agreement, the Custodian) from which it borrows money for investment or for
temporary or emergency purposes using Securities in a Series' portfolio as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the Series to which
the borrowing relates; (b) the name of the bank; (c) the amount and terms
of the borrowing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other loan
agreement; (d) the time and date, if known, on which the loan is to be
entered into; (e) the date on which the loan becomes due and payable; (f)
the total amount payable to the Fund for the account of such Series on the
borrowing date; (g) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the title and
the number of shares or the principal amount of any particular Securities;
and (h) a statement specifying whether such loan is for investment purposes
or for temporary or emergency purposes and that such loan is in conformance
with the Investment Company Act of 1940 and the Fund's prospectus. The
Custodian shall deliver on the borrowing date specified in a Certificate
the specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in
the Certificate. The Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such
Securities as additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this paragraph. The
Fund shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall receive from
time to time such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in a Certificate the name of the
issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
Agreement and Declaration of Trust and as disclosed in its most recent and
currently effective prospectus to lend the portfolio Securities of a
Series, within 24 hours after each loan of portfolio Securities the Fund
shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan: (a) the Series to which the
Securities to be loaned are specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount loaned; (d) the date of loan and delivery; (e) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (f) the name of the broker, dealer or financial institution
to which the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution to which the
loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment
in connection with a delivery otherwise than through the Book-Entry System
or Depository only in the form of a certified or bank cashier's check
payable to the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance with the
customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each such loan
termination and return of Securities: (a) the Series to which the
Securities to be returned are to be specifically allocated; (b) the name of
the issuer and the title of the Securities to be returned; (c) the number
of shares or the principal amount to be returned; (d) the date of
termination; (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Certificate); and (f) the name of the broker,
dealer or financial institution from which the Securities will be returned.
The Custodian shall receive all Securities returned from the broker,
dealer, or financial institution to which such Securities were loaned and
upon receipt thereof shall pay, out of the moneys held for the account of
the Series specified in the Certificate, the total amount payable upon such
return of Securities as set forth in the Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or damage, including
counsel fees, resulting from its action or omission to act or otherwise,
either hereunder or under any Margin Account Agreement, except for any such
loss or damage arising out of its own negligence or willful misconduct.
The Custodian may, with respect to questions of law arising hereunder or
under any Margin Account Agreement, apply for and obtain the advice and
opinion of counsel to the Fund or of its own counsel, at the expense of the
Fund, and shall be fully protected with respect to anything done or omitted
by it in good faith in conformity with such advice or opinion. The
Custodian shall be liable to the Fund for any loss or damage resulting from
the use of the Book-Entry System or any Depository arising by reason of any
negligence, misfeasance or willful misconduct on the part of the Custodian
or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and shall not
be liable for:
(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the legality of the
purchase, sale or writing thereof, or the propriety of the amount paid or
received therefor;
(b) The legality of the issue or sale of any of the
Fund's Shares, or the sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's
Shares, or the propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any
dividend by the Fund;
(e) The legality of any borrowing by the Fund using
Securities as collateral;
(f) The legality of any loan of portfolio Securities
pursuant to Article XIV of this Agreement, nor shall the Custodian be under
any duty or obligation to see to it that any cash collateral delivered to
it by a broker, dealer or financial institution or held by it at any time
as a result of such loan of portfolio Securities of the Fund is adequate
collateral for the Fund against any loss it might sustain as a result of
such loan. The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the Fund is
sufficient collateral for the Fund, but such duty or obligation shall be
the sole responsibility of the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent pursuant to
Article XIV of this Agreement makes payment to it of any dividends or
interest which are payable to or for the account of the applicable Series
of the Fund during the period of such loan or at the termination of such
loan, provided, however, that the Custodian shall promptly notify the Fund
in the event that such dividends or interest are not paid and received when
due; or
(g) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Segregated Security Account
or Collateral Account in connection with transactions by the Fund. In
addition, the Custodian shall be under no duty or obligation to see that
any broker, dealer, futures commission merchant or Clearing Member makes
payment to the Fund of any variation margin payment or similar payment
which the Fund may be entitled to receive from such broker, dealer, futures
commission merchant or Clearing Member, to see that any payment received by
the Custodian from any broker, dealer, futures commission merchant or
Clearing Member is the amount the Fund is entitled to receive, or to notify
the Fund of the Custodian's receipt or non-receipt of any such payment;
provided however that the Custodian, upon the Fund's written request,
shall, as Custodian, demand from any broker, dealer, futures commission
merchant or Clearing Member identified by the Fund the payment of any
variation margin payment or similar payment that the Fund asserts it is
entitled to receive pursuant to the terms of a Margin Account Agreement or
otherwise from such broker, dealer, futures commission merchant or Clearing
Member.
3. The Custodian shall not be liable for, or considered
to be the Custodian of, any money, whether or not represented by any check,
draft or other instrument for the payment of money, received by it on
behalf of the Fund until the Custodian actually receives and collects such
money directly or by the final crediting of the account representing the
Fund's interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls, conversions,
exchange, offers, tenders, interest rate changes or similar matters
relating to Securities held in the Depository, unless the Custodian shall
have actually received timely notice from the Depository. In no event
shall the Custodian have any responsibility or liability for the failure of
the Depository to collect, or for the late collection or late crediting by
the Depository of any amount payable upon Securities deposited in the
Depository which may mature or be redeemed, retired, called or otherwise
become payable. However, upon receipt of a Certificate from the Fund of an
overdue amount on Securities held in the Depository, the Custodian shall
make a claim against the Depository on behalf of the Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or
defend any action, suit or proceeding in respect to any Securities held by
the Depository which in its opinion may involve it in expense or liability,
unless indemnity satisfactory to it against all expense and liability be
furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due to the
Fund from the Transfer Agent of the Fund nor to take any action to effect
payment or distribution by the Transfer Agent of the Fund of any amount
paid by the Custodian to the Transfer Agent of the Fund in accordance with
this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default, or if payment
is refused after due demand or presentation, unless and until (i) it shall
be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction of reimbursement of its costs and expenses in
connection with any such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-Custodian or Sub-
Custodians, including, but not limited to, banking institutions located in
foreign countries, of Securities and moneys at any time owned by the Fund,
upon terms and conditions approved in a Certificate, which shall, if
requested by the Custodian, be accompanied by an approving resolution of
the Fund's Board of Trustees adopted in accordance with Rule 17f-5 under
the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time delivered to or
held by it for the account of the Fund are such as properly may be held by
the Fund under the provisions of its Agreement and Declaration of Trust.
9. (a) The Custodian shall be entitled to receive and
the Fund agrees to pay to the Custodian all reasonable out-of-pocket
expenses and such compensation and fees as are specified on Schedule A
hereto. The Custodian shall not deem amounts payable in respect of foreign
custodial services to be out-of-pocket expenses, it being the parties'
intention that all fees for such services shall be as set forth on Schedule
B hereto and shall be provided for the term of this Agreement without any
automatic or unilateral increase. The Custodian shall have the right to
unilaterally increase the figures on Schedule A on or after March 1, 1991
and on or after each succeeding March 1 thereafter by an amount equal to
50% of the increase in the Consumer Price Index for the calendar year
ending on the December 31 immediately preceding the calendar year in which
such March 1 occurs, provided, however, that during each such annual period
commencing on a March 1, the aggregate increase during such period shall
not be in excess of 10%. Any increase by the Custodian shall be specified
in a written notice delivered to the Fund at least thirty days prior to the
effective date of the increase. The Custodian may charge such compensation
and any expenses incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money held by it for the account of
the Fund. The Custodian shall also be entitled to charge against any money
held by it for the account of the Fund the amount of any loss, damage,
liability or expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this Agreement. The
expenses which the Custodian may charge against the account of the Fund
include, but are not limited to, the expenses of Sub-Custodians and foreign
branches of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of the Fund.
(b) The Fund shall receive a credit for each
calendar month against such compensation and fees of the Custodian as may
be payable by the Fund with respect to such calendar month in an amount
equal to the aggregate of its Earnings Credit for such calendar month. In
no event may any Earnings Credits be carried forward to any fiscal year
other than the fiscal year in which it was earned, or, unless permitted by
applicable law, transferred to, or utilized by, any other person or entity,
provided that any such transferred Earnings Credit can be used only to
offset compensation and fees of the Custodian for services rendered to such
transferee and cannot be used to pay the Custodian's out-of-pocket
expenses. For purposes of this sub-section (b), the Fund is permitted to
transfer Earnings Credits only to The Dreyfus Corporation, its affiliates
and/or any investment company now or in the future sponsored by The Dreyfus
Corporation or any of its affiliates or for which The Dreyfus Corporation
or any of its affiliates acts as the sole investment adviser or as the
principal distributor, and Daiwa Money Fund Inc. For purposes of this sub-
section (b), a fiscal year shall mean the twelve-month period commencing on
the effective date of this Agreement and on each anniversary thereof.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by the
Custodian and reasonably believed by the Custodian to be a Certificate.
The Custodian shall be entitled to rely upon any Oral Instructions and any
Written Instructions actually received by the Custodian pursuant to Article
IV or XI hereof. The Fund agrees to forward to the Custodian a Certificate
or facsimile thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof
is received by the Custodian, whether by hand delivery, telex or otherwise,
by the close of business of the same day that such Oral Instructions or
Written Instructions are given to the Custodian. The Fund agrees that the
fact that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or enforceability
of the transactions hereby authorized by the Fund. The Fund agrees that
the Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and reasonably
believed by the Custodian to be given in accordance with the terms and
conditions of any Margin Account Agreement. Without limiting the generality
of the foregoing, the Custodian shall be under no duty to inquire into, and
shall not be liable for, the accuracy of any statements or representations
contained in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a broker, dealer,
futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property of the Fund.
Such books and records shall be prepared and maintained as required by the
Investment Company Act of 1940, as amended, and other applicable securities
laws and rules and regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by the
Custodian to the Fund or the Fund's authorized representative at the Fund's
expense.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal accounting
control of the Book-Entry System or the Depository, or O.C.C., and with
such reports on its own systems of internal accounting control as the Fund
may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims, losses and
demands whatsoever, including attorney's fees, howsoever arising or
incurred because of or in connection with the Custodian's payment or non-
payment of checks pursuant to paragraph 6 of Article XII as part of any
check redemption privilege program of the Fund, except for any such
liability, claim, loss and demand arising out of the Custodian's own
negligence or willful misconduct.
15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive Securities, and receipts
with respect to such Securities, and arrange for payments to be made and
received by the Custodian in accordance with the customs prevailing from
time to time among brokers or dealers in such Securities.
16. The Custodian shall have no duties or responsi-
bilities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. (a) Except as provided in subparagraphs (b), (c)
and (d) herein, neither party may terminate this Agreement until the
earlier of the following: (i) August 31, 1993, and (ii) the third
anniversary of the earliest date on which none of the companies listed on
Schedule C hereto is a transfer agency customer of the Custodian. Any such
termination may be effected only by the terminating party giving to the
other party a notice in writing specifying the date of such termination,
which shall be not less than two hundred seventy (270) days after the date
of giving of such notice.
(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its obligations under
this Agreement and such breach has remained uncured for a period of thirty
days after the Custodian's receipt from the Fund of written notice
specifying such breach.
(c) Either party, immediately upon written notice
to the other party, may terminate this Agreement upon the Merger or
Bankruptcy of the other party.
(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its obligations under
the "Amendment to Transfer Agency Agreements" dated August 18, 1989 and has
not cured such breach as promptly as practicable and in any event within
seven days of its receipt of written notice of such breach, provided that
the Custodian shall not be permitted to cure any such material breach
arising from the willful misconduct of the Custodian.
In the event notice of termination is given by the Fund,
it shall be accompanied by a copy of a resolution of the Fund's Trustees,
certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less
than $2,000,000 aggregate capital, surplus and undivided profits. In the
event notice of termination is given by the Custodian, the Fund shall, on
or before the termination date, deliver to the Custodian a copy of a
resolution of its Trustees, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the absence
of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. Upon the date
set forth in such notice, this Agreement shall terminate and the Custodian
shall, upon receipt of a notice of acceptance by the successor custodian,
on that date deliver directly to the successor custodian all Securities and
moneys then owned by the Fund and held by it as Custodian, after deducting
all fees, expenses and other amounts for the payment or reimbursement of
which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding paragraph, the Fund
shall, upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other
than Securities held in the Book-Entry System which cannot be delivered to
the Fund) and moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System, in any Depository or
by a Clearing Member which cannot be delivered to the Fund, to hold such
Securities hereunder in accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
setting forth the names of the present Authorized Persons. The Fund agrees
to furnish to the Custodian a new Certificate in similar form in the event
that any such present Authorized Person ceases to be an Authorized Person
or in the event that other or additional Authorized Persons are elected or
appointed. Until such new Certificate shall be received, the Custodian
shall be fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized Persons as
set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed
by two of the present Officers of the Fund, setting forth the names of the
present Officers of the Fund. The Fund agrees to furnish to the Custodian
a new Certificate in similar form in the event any such present Officer
ceases to be an Officer of the Fund, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under
the provisions of this Agreement upon the signatures of the Officers as set
forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian,
shall be sufficiently given if addressed to the Custodian and mailed or
delivered to it at its offices at 90 Washington Street, New York, New York
10015, or at such other place as the Custodian may from time to time
designate in writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund, shall be
sufficiently given if addressed to the Fund and mailed or delivered to it
at P.O. Box 6014, Garden City, New York 11530-6014, or at such other place
as the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties with the same
formality as this Agreement and approved by a resolution of the Fund's
Trustees.
6. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Fund
without the written consent of the Custodian, or by the Custodian without
the written consent of the Fund, authorized or approved by a resolution of
its Trustees.
7. This Agreement shall be construed in accordance with
the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
9. This Agreement has been executed on behalf of the
Fund by the undersigned Officer of the Fund in his capacity as an Officer
of the Fund. The obligations of this Agreement shall only be binding upon
the assets and property of the Fund and shall not be binding upon any
Trustee, Officer or shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto duly
authorized, as of the day and year first above written.
DREYFUS VARIABLE INVESTMENT FUND
By:
Attest:
THE BANK OF NEW YORK
By:
Attest:
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
ASSET ALLOCATION PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
John Bale, Frank Greene, Jeffrey Nachman Lawrence Greene
Stephen Hart and Frank John Pyburn Julian Smerling
Brensic Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Paul Casti, Jr., Thomas Durante,
Stephen Hart, Frank Brensic, Mike Fiore, Steven
Weiss, Nancy Jones and Robert Liberto.
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
SMALL CAP PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
John Bale, Frank Greene, Jeffrey Nachman Lawrence Greene
Stephen Hart and Frank John Pyburn Julian Smerling
Brensic Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Paul Casti, Jr., Thomas Durante,
Stephen Hart, Frank Brensic, Rocco Delguercio,
Mike Fiore, Steven Weiss and Robert Liberto.
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
MONEY MARKET PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Frank Greene, John Bale, Jeffrey Nachman Lawrence Greene
Jack Pierce and Mary Kate John Pyburn Julian Smerling
Schoenberger Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Paul Casti, Jr., John DeLise,
Michael McCarthy, Thomas Durante, Mary Kate
Schoenberger, Jack Pierce and Claudia Delgado.
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
QUALITY BOND PORTFOLIO
ZERO COUPON 2000 PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Frank Greene, John Bale, Jeffrey Nachman Lawrence Greene
William Maeder, John Pyburn Julian Smerling
Lisa Parrett and William Joseph DiMartino Thomas Durante
McDowell Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Paul Casti, Jr., Scott Hyndman,
William Maeder, Lori McNab, Peter Sutton, James
Windels, Nadja Bendouro, Michael Stalzer, William
McDowell, Lisa Parrett and James Windels.
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Frank Greene, Anna Mancini, Jeffrey Nachman Lawrence Greene
Phyllis Meiner and Frank Brensic John Pyburn Julian Smerling
Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Paul Casti, Jr., Thomas Durante,
Anna Mancini, Frank Brensic, Mike Fiore, Nancy
Jones, Andrew Oh and Marc Weiden.
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
GROWTH AND INCOME PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Michael Condon, Frank Greene, Jeffrey Nachman Lawrence Greene
Phyllis Meiner, Steven Powanda, John Pyburn Julian Smerling
and Richard Cassaro Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Michael Condon, A. Paul Disdier,
Gregory S. Gruber, Richard Cassaro, Alan Brown,
Linda Lionetti, Steven Powanda, Richard Weiner and
Colleen Brennan.
Appendix A
DREYFUS VARIABLE INVESTMENT FUND
INTERNATIONAL EQUITY PORTFOLIO
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Michael Condon, Frank Greene, Jeffrey Nachman Lawrence Greene
Phyllis Meiner, Steven Powanda John Pyburn Julian Smerling
and Richard Cassaro Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Michael Condon, A. Paul Disdier,
Gregory S. Gruber, Richard Cassaro, Alan Brown,
Linda Lionetti, Steven Powanda, Richard Weiner and
Colleen Brennan.
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO
Domestic Custody Fees
Basic Fee: 1/50th of 1% of the first $50,000,000 and 1/100th
of 1% of the excess over $50,000,000 per annum of
the total market value of domestic securities
held.
Custodial Transactions:
$13.00 for each receipt and delivery of book-entry
securities.
$20.00 for domestic physicals, same-day
settlements, Fed Funds, writing options
(preparation of depository or escrow receipts) and
initial futures transactions.
$5.00 for futures variation margin maintenance.
$40.00 for any receipt, delivery or redemption of
a Euro Dollar CD for which BNY's London Branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on
securities held in "street name."
DREYFUS VARIABLE INVESTMENT FUND
GROWTH AND INCOME PORTFOLIO
Domestic Custody Fees
Basic Fee: 1/100 of 1% per annum of the first $500,000,000,
and 1/200 of 1% of the excess over $500,000,000
per annum of the total market value of domestic
securities held.
Custodial Transactions:
$8.00 per transaction for each receipt and
delivery of book entry securities through DTC/FRB.
$20.00 per transaction for physical settlements,
municipal sub-custodian settlements, writing
options (preparation of depository or escrow
receipts) and initial futures transactions.
$5.00 for futures variation margin maintenance.
DREYFUS VARIABLE INVESTMENT FUND
INTERNATIONAL EQUITY PORTFOLIO
Domestic Custody Fees
Basic Fee: 1/100 of 1% per annum of the first $500,000,000,
and 1/200 of 1% of the excess over $500,000,000
per annum of the total market value of domestic
securities held.
Custodial Transactions:
$8.00 per transaction for each receipt and
delivery of book entry securities through DTC/FRB.
$20.00 per transaction for physical settlements,
municipal sub-custodian settlements, writing
options (preparation of depository or escrow
receipts) and initial futures transactions.
$5.00 for futures variation margin maintenance.
CUSTODY AGREEMENT
APPENDIX C
The following are designated publications for
purposes of paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
CUSTODY AGREEMENT
APPENDIX D
Name of Series
Asset Allocation Portfolio
Capital Appreciation Portfolio
Growth and Income Portfolio
International Equity Portfolio
Money Market Portfolio
Quality Bond Portfolio
Small Cap Portfolio
Zero Coupon 2000 Portfolio
Schedule A
The fees payable to the Custodian with respect to
securities held in domestic custody are annexed hereto.
Schedule B
The fees payable to the Custodian with respect to
securities held in foreign custody are as set forth in a letter
dated January 4, 1990 from Masao Yamaguchi of The Bank of New
York to Jeffrey Nachman of The Dreyfus Corporation.
The above foreign custody fees apply to the
following Global Custody Network countries:
1. Australia 12. Japan
2. Austria 13. Luxembourg
3. Belgium 14. Malaysia
4. Canada 15. Netherlands
5. Denmark 16. New Zealand
6. Finland 17. Norway
7. France 18. Singapore
8. Germany 19. Spain
9. Hong Kong 20. Sweden
10. Ireland 21. Switzerland
11. Italy 22. United Kingdom
[THE BANK OF NEW YORK LETTERHEAD]
January 4, 1990
Mr. Jeffrey Nachman
Vice President
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Re: Global Custodian Fees
Dear Jeff:
This letter is to confirm our discussion regarding
our Global Custody fee schedule. The fees will be calculated on
a relationship basis with no annual minimum.
- Safekeeping/Income Collection/Capital
Changes/Tax Reclamation/Daily Reporting/Monthly
Summary
16 basis points per annum on the market value
of securities held for all of your funds in our
sub-custodian network, up to $250 MM.
15 basis points on the next $250 MM.
14 basis points on the next $250 MM.
12 basis points on the excess.
- Securities Settlements
$35 per transaction - includes our processing
and the sub-custodians.
- Out-of-Pocket Expense
Telex, swift, telephone, securities
registration, etc., are in addition to the
above.
- We can provide centralized foreign exchange
services.
The above fee schedule is applicable to the 22
countries listed on Attachment I. Please note that expansion
into other more emerging markets/countries is possible, but would
be covered under a separate agreement.
If you are in agreement with this fee schedule,
please sign and return the enclosed copy of this letter.
Sincerely,
/s/Masao Yamaguchi
Masao Yamaguchi
Approved by: Date:
Jeffrey Nachman
Vice President
MY:to
cc: The Bank of New York
F. Ricciardi
Stroock & Stroock
D. Stephens
Dreyfus
S. Newman
THE BANK OF NEW YORK
GLOBAL NETWORK PROGRAM
Supported by Citibank, N.A.
Attachment I
1. Australia 12. Japan
2. Austria 13. Luxembourg
3. Belgium 14. Malaysia
4. Canada 15. Netherlands
5. Denmark 16. New Zealand
6. Finland 17. Norway
7. France 18. Singapore
8. Germany 19. Spain
9. Hong Kong 20. Sweden
10. Ireland 21. Switzerland
11. Italy 22. United Kingdom
Schedule C
Daiwa Money Fund, Inc.
Dreyfus A Bonds Plus, Inc.
Dreyfus California Tax Exempt Bond Fund, Inc.
Dreyfus California Tax Exempt Money Market Fund
Dreyfus Cash Management
Dreyfus Cash Management Plus, Inc.
The Dreyfus Convertible Securities Fund, Inc.
The Dreyfus Fund Incorporated
Dreyfus Dollar International Fund, Inc.
Dreyfus GNMA Fund, Inc.
Dreyfus Government Cash Management
Dreyfus Government Cash Management Plus, Inc.
Dreyfus Growth Opportunity Fund, Inc.
Dreyfus Index Fund
Dreyfus Institutional Money Market Fund
Dreyfus Insured Tax Exempt Bond Fund, Inc.
The Dreyfus Intercontinental Investment Fund N.V.
Dreyfus Intermediate Tax Exempt Bond Fund, Inc.
Dreyfus Life and Annuity Index Fund, Inc.
Dreyfus Liquid Assets, Inc.
Dreyfus Massachusetts Tax Exempt Bond Fund
Dreyfus Money Market Instruments, Inc.
Dreyfus New Jersey Tax Exempt Bond Fund, Inc.
Dreyfus New Jersey Tax Exempt Money Market Fund, Inc.
Dreyfus New Leaders Fund, Inc.
Dreyfus New York Insured Tax Exempt Bond Fund
Dreyfus New York Tax Exempt Bond Fund, Inc.
Dreyfus New York Tax Exempt Intermediate Bond Fund
Dreyfus New York Tax Exempt Money Market Fund
Dreyfus Short-Intermediate Government Fund
Dreyfus Short-Intermediate Tax Exempt Bond Fund
Dreyfus Tax Exempt Bond Fund, Inc.
Dreyfus Tax Exempt Cash Management
Dreyfus Tax Exempt Money Market Fund, Inc.
The Dreyfus Third Century Fund, Inc.
Dreyfus Treasury Cash Management
Dreyfus Treasury Prime Cash Management
Dreyfus Worldwide Dollar Money Market Fund, Inc.
First Prairie Diversified Asset Fund
First Prairie Money Market Fund
First Prairie Tax Exempt Bond Fund, Inc.
First Prairie Tax Exempt Money Market Fund
FN Network Tax Free Money Market Fund, Inc.
General Aggressive Growth Fund, Inc.
General California Municipal Bond Fund, Inc.
General California Tax Exempt Money Market Fund
General Government Securities Money Market Fund, Inc.
General Money Market Fund, Inc.
General New York Municipal Bond Fund, Inc. (formerly, General
New York Tax Exempt Intermediate Bond Fund, Inc.)
General New York Tax Exempt Money Market Fund
General Tax Exempt Bond Fund, Inc.
General Tax Exempt Money Market Fund, Inc.
The Westwood Fund
[STROOCK & STROOCK & LAVAN LETTERHEAD]
June 27, 1990
Dreyfus Variable Investment Fund
666 Old Country Road
Garden City, New York 11530
Gentlemen:
We have acted as counsel to Dreyfus Variable Investment Fund (the "Fund")
in connection with the preparation of a Registration Statement on Form N-
1A, Registration No. 33-13690 (the "Registration Statement"), covering
shares of beneficial interest (the "Shares") of the Money Market Portfolio,
Asset Allocation Portfolio, Zero Coupon 2000 Portfolio, Quality Bond
Portfolio and Small Cap Portfolio (collectively, the "Series") of the Fund.
We have examined copies of the Agreement and Declaration of Trust and By-
Laws of the Fund, the Registration Statement and such other documents,
records, papers, statutes and authorities as we deemed necessary to form a
basis for the opinion hereinafter expressed. In our examination of such
material, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us. As to
various questions of fact material to such opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.
Attorneys involved in the preparation of this opinion are admitted only to
the bar of the State of New York. As to various questions arising under
the laws of the Commonwealth of Massachusetts, we have relied on the
opinion of Messrs. Ropes & Gray, a copy of which is attached hereto.
Qualifications set forth in their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that the Shares of each
Series to be issued in accordance with the terms of the offering as set
forth in the Prospectus included as part of the Registration Statement,
when so issued and paid for, will constitute validly authorized and issued
Shares, fully paid and non-assessable by the Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus
included in the Registration Statement, and to the filing of this opinion
as an exhibit to any application made by or on behalf of the Fund or any
distributor or dealer in connection with the registration and qualification
of the Fund or the Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby that we
come within the category of persons whose consent is required under Section
7 of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
[ROPES & GRAY LETTERHEAD]
June 15, 1990
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Gentlemen:
We are furnishing this opinion in connection with proposed offer and
sale from time to time by Dreyfus Variable Investment Fund, a Massachusetts
business trust (the "Trust"), of an indefinite number of shares of
beneficial interest (the "Shares") of the Trust pursuant to the Trust's
Registration Statement on Form N-1A under the Securities Act of 1933.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's records
of Trustee action, its By-Laws and its Agreement and Declaration of Trust,
as amended to date, on file at the Office of the Secretary of State of The
Commonwealth of Massachusetts. We have examined copies of such
Registration Statement in the form filed with the Securities and Exchange
Commission, and such other documents as we deem necessary for the purposes
of this opinion.
We assume that, upon sale of the Shares, the Trust will receive the
net asset value thereof. We also assume that, in connection with any offer
and sale of the Shares, the Trust will take proper steps to effect
compliance with applicable federal and state laws regulating offerings and
sales of securities.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the
Shares are issued and sold and the authorized consideration therefor is
received by the Trust, they will be validly issued, fully paid and
nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust"). Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the obligations of the
Trust. However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or the Trustees. The
Agreement and Declaration of Trust provides for indemnification out of the
Trust property for all loss and expense of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its
obligations.
We consent to the filing of this opinion as an exhibit to the
aforesaid Registration Statement.
Very truly yours,
Ropes & Gray
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our report
dated February 13, 1995 in this Registration Statement (Form N-1A No.
33-13690) of Dreyfus Variable Investment Fund.
ERNST & YOUNG LLP
New York, New York
April 17, 1995
