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. 15 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 15 [ 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
Mark N. Jacobs, 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)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on May 1, 1996 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, 1995 was filed on February 28, 1996.
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 *
3 Condensed Financial Information 3
4 General Description of Registrant 9, 28
5 Management of the Fund 21
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 28
7 Purchase of Securities Being Offered 25
8 Redemption or Repurchase 26
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-37
13 Investment Objectives and Policies B-2
14 Management of the Fund B-17
15 Control Persons and Principal B-21
Holders of Securities
16 Investment Advisory and Other B-22
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-33
18 Capital Stock and Other Securities B-37
19 Purchase, Redemption and Pricing B-29
of Securities Being Offered
20 Tax Status *
21 Underwriters B-29
22 Calculations of Performance Data B-35
23 Financial Statements B-46
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-15
31 Management Services C-15
32 Undertakings C-15
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS MAY 1, 1996
DREYFUS VARIABLE INVESTMENT FUND
- ---------------------------------------------------------------------------
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 ELEVEN 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, 1996, 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 144.
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. MUTUAL
FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL. THE NET ASSET VALUE OF FUNDS OTHER THAN MONEY MARKET FUNDS WILL
FLUCTUATE FROM TIME TO TIME.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <S> <C>
PAGE PAGE
CONDENSED FINANCIAL INFORMATION........ 3 HOW TO REDEEM SHARES................... 26
PERFORMANCE INFORMATION................ 7 DIVIDENDS, DISTRIBUTIONS AND TAXES..... 26
DESCRIPTION OF THE FUND................ 9 GENERAL INFORMATION.................... 28
MANAGEMENT OF THE FUND................. 21 APPENDIX............................... 29
HOW TO BUY SHARES...................... 25
</TABLE>
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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 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
securities, debt securities and money market instruments of domestic and
foreign issuers.
The MANAGED ASSETS PORTFOLIO'S goal is to maximize total return,
consisting of capital appreciation and current income. This Series follows an
asset allocation strategy by investing in equity securities, debt securities
and money market instruments of domestic and foreign issuers.
The SMALL CAP PORTFOLIO'S goal is to maximize capital appreciation.
This Series invests primarily in common stocks of domestic and foreign
issuers. 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 SMALL COMPANY STOCK PORTFOLIO'S goal is to provide investment
results that are greater than the total return performance of publicly-traded
common stocks in the aggregate, as represented by the Russell 2500trademark
Index. This Series invests primarily in a portfolio of equity securities of
small- to medium-sized domestic issuers, while attempting to maintain
volatility and diversification similar to that of the Russell 2500trademark
Index.
The DISCIPLINED STOCK PORTFOLIO'S goal is to provide investment
results that are greater than the total return performance of publicly-traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. This Series will use quantitative statistical
modeling techniques to construct a portfolio in an attempt to achieve its
investment objective, without assuming undue risk relative to the broad stock
market.
The INTERNATIONAL VALUE PORTFOLIO'S goal is long-term capital growth.
This Series invests primarily in a portfolio of publicly-traded equity
securities of foreign issuers which would be characterized as "value"
companies according to criteria established by the Series' investment
advisers.
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.
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 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, which will mature on
or about December 31, 2000.
Page 2
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. No financial information is available for the International Value
Portfolio, Small Company Stock Portfolio and Disciplined Stock Portfolio,
which had not commenced operations as of the date of this Prospectus.
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 the Series and periods
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 1995
-------- ------ ------ ------ ----- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- ------ ------ ------ ------ -------
INVESTMENT OPERATIONS;
Investment income-net.................. .024 .058 .041 .032 .043 .055
DISTRIBUTIONS;
Dividends from investment income-net... (.024) (.058) (.041) (.032) (.043) (.055)
Net asset value, end of year........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- ------ ------ ------ ------ -------
TOTAL INVESTMENT RETURN.................. 7.27%(2) 5.99% 4.14% 3.29% 4.37% 5.66%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .03%(2) -- -- -- -- .62%
Ratio of net investment income to
average net assets..................... 7.18%(2) 5.78% 4.10% 3.23% 4.62% 5.51%
Decrease reflected in above
expense ratios due to undertakings
by The Dreyfus Corporation............. 30.51%(2) 3.94% 4.25% 2.81% .88% .03%
Net assets, end of year (000's omitted).... $ 741 $1,619 $ 790 $ 7,651 $34,728 $45,249
(1)From August 31, 1990 (commencement of operations) to December 31, 1990.
(2)Annualized.
</TABLE>
<TABLE>
<CAPTION>
Page 3
CAPITAL APPRECIATION PORTFOLIO
-----------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------
PER SHARE DATA: 1993(1) 1994 1995
------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of year................... $12.50 $13.27 $13.44
------- -------- ---------
INVESTMENT OPERATIONS:
Investment income-net................................ .08 .23 .23
Net realized and unrealized gain
on investments....................................... .76 .17 4.27
------- -------- ---------
TOTAL FROM INVESTMENT OPERATIONS..................... .84 .40 4.50
------- -------- ---------
DISTRIBUTIONS:
Dividends from investment income-net................. (.07) (.23) (.23)
------- -------- ---------
Net asset value, end of year......................... $13.27 $13.44 $17.71
====== ======== =======
TOTAL INVESTMENT RETURN................................ 6.74%(2) 3.04% 33.52%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .28%(2) .25% .85%
Ratio of net investment income to
average net assets................................... 1.89%(2) 2.99% 2.08%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.............. 3.67%(2) .86% .02%
Portfolio Turnover Rate.............................. .01%(2) .12% 2.81%
Net assets, end of year (000's omitted).............. $ 3,770 $16,118 $46,930
(1) From April 5, 1993 (commencement of operations) to December 31, 1993.
(2) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1994(1) 1995
--------- ----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year................... $12.50 $11.98
------- ------
INVESTMENT OPERATIONS:
Investment income-net................................ .28 .28
Net realized and unrealized gain (loss)
on investments....................................... (.43) 7.07
------- ------
TOTAL FROM INVESTMENT OPERATIONS..................... (.15) 7.35
------- ------
DISTRIBUTIONS:
Dividends from investment income-net................. (.28) (.27)
Dividends from net realized gain on investments...... (.09) (.73)
------- ------
TOTAL DISTRIBUTIONS.................................. (.37) (1.00)
------- ------
Net asset value, end of year......................... $11.98 $18.33
====== =======
TOTAL INVESTMENT RETURN................................ (1.22%)(2) 61.89%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .22%(2) .92%
Ratio of net investment income to
average net assets................................... 2.25%(2) 2.21%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.............. 1.28%(2) .03%
Portfolio Turnover Rate.............................. 237.09%(2) 255.42%
Net assets, end of year (000's omitted).............. $1,040 $71,161
(1) From May 2, 1994 (commencement of operations) to December 31, 1994.
(2) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
Page 4
MANAGED ASSETS PORTFOLIO
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995
-------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $10.00 $10.11 $10.76 $10.14 $12.92 $12.37
------- ------ ------ ------ ------- ------
INVESTMENT OPERATIONS:
Investment income-net.................. .08 .41 .22 .20 .35 .51
Net realized and unrealized gain
(loss) on investments.................. .11 .66 (.11) 2.71 (.56) (.54)
------- ------ ------ ------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS....... .19 1.07 .11 2.91 (.21) (.03)
------- ------ ------ ------ ------- ------
DISTRIBUTIONS;
Dividends from investment income-net... (.08) (.42) (.31) (.13) (.32) (.64)
Dividends in excess of investment income-net -- -- -- -- (.02) --
Dividends from net realized
gain on investments.................... -- -- (.42) -- -- --
------- ------ ------ ------ ------- ------
TOTAL DISTRIBUTIONS.................... (.08) (.42) (.73) (.13) (.34) (.64)
------- ------ ------ ------ ------- ------
Net asset value, end of year........... $10.11 $10.76 $10.14 $12.92 $12.37 $11.70
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN.................. 1.85%(2) 10.60% 1.07% 28.59% (1.56%) (.26%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .34%(2) 1.00% .97% .27% .25% .94%
Ratio of net investment income to
average net assets..................... 2.11%(2) 4.46% 1.88% 1.87% 3.54% 3.56%
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% 53.88%
Net assets, end of year (000's omitted) $ 716 $2,179 $1,865 $7,957 $30,510 $25,272
(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Not annualized.
SMALL CAP PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995
-------- ------ ------ ------ ------ -------
Net asset value, beginning of year..... $10.00 $10.21 $20.60 $22.71 $34.45 $36.52
-------- -------- ------- -------- -------- -------
INVESTMENT OPERATIONS:
Investment income-net.................. .21(2) .14(2) .18(2) .14 .17 .16
Net realized and unrealized gain on investments -- 15.85(2) 13.10(2) 14.93 2.50 10.54
-------- -------- ------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS....... .21(2) 15.99(2) 13.28(2) 15.07 2.67 10.70
-------- -------- ------- -------- -------- -------
DISTRIBUTIONS;
Dividends from investment income-net... -- (.15) (.15) (.14) (.16) (.18)
Dividends in excess of investment income-net -- -- -- (.01) -- --
Dividends from net realized
gain on investments.................... -- (5.45) (11.02) (3.18) (.33) (.91)
Dividends in excess of net realized gain
on investments......................... -- -- -- -- (.11) --
-------- -------- ------- -------- -------- -------
TOTAL DISTRIBUTIONS.................... -- (5.60) (11.17) (3.33) (.60) (1.09)
-------- -------- ------- -------- -------- -------
Net asset value, end of year........... $10.21 $20.60 $22.71 $34.45 $36.52 $46.13
======= ======= ======= ======= ====== =======
TOTAL INVESTMENT RETURN.................. 2.10%(3) 159.73% 71.28% 68.31% 7.75% 29.38%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .34%(3) 1.16% .94% .25% .55% .83%
Ratio of net investment income to average net assets 2.10%(3) .77% .76% .89% 1.18% .54%
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% 99.02%
Net assets, end of year (000's omitted) $36 $1,554$ 2,679 $18,337$173,215 $543,281
(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Based on average shares outstanding.
(3) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
Page 5
INTERNATIONAL EQUITY PORTFOLIO
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1994(1) 1995
--------- ----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year................... $12.50 $12.02
-------- ---------
INVESTMENT OPERATIONS:
Investment income-net................................ .15 .15
Net realized and unrealized gain (loss)
on investments....................................... (.40) .74
-------- ---------
TOTAL FROM INVESTMENT OPERATIONS..................... (.25) .89
-------- ---------
DISTRIBUTIONS;
Dividends from investment income-net................. (.14) (.08)
Dividends in excess of investment income-net......... (.09) (.01)
-------- ---------
TOTAL DISTRIBUTIONS.................................. (.23) (.09)
-------- ---------
Net asset value, end of year......................... $12.02 $12.82
======= =======
TOTAL INVESTMENT RETURN................................ (2.00%)(2) 7.39%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .23%(2) 1.59%
Ratio of net investment income to
average net assets................................... 1.11%(2) 1.13%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.............. 1.70%(2) .45%
Portfolio Turnover Rate.............................. 16.75%(2) 70.22%
Net assets, end of year (000's omitted).............. $1,089 $7,672
(1) From May 2, 1994 (commencement of operations) to December 31, 1994.
(2) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND PORTFOLIO
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $10.00 $10.01 $10.67 $10.94 $11.81 $10.53
------- ------- ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.................. .23 .70 .92 .76 .73 .68
Net realized and unrealized gain
(loss) on investments.............. .01 .66 .30 .88 (1.27) 1.42
------- ------- ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS....... .24 1.36 1.22 1.64 (.54) 2.10
------- ------- ------ ------ ------ ------
DISTRIBUTIONS;
Dividends from investment income-net... (.23) (.70) (.92) (.76) (.73) (.69)
Dividends from net realized
gain on investments.................... -- -- (.03) (.01) (.01) (.13)
------- ------- ------ ------ ------ ------
TOTAL DISTRIBUTIONS.................... (.23) (.70) (.95) (.77) (.74) (.82)
------- ------- ------ ------ ------ ------
Net asset value, end of year........... $10.01 $10.67 $10.94 $11.81 $10.53 $11.81
======== ======= ====== ====== ====== ======
TOTAL INVESTMENT RETURN.................. 7.12%(2) 14.12% 12.09% 15.33% (4.59%) 20.42%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .15%(2) -- -- -- -- .81%
Ratio of net investment income
to average net assets.................. 7.20%(2) 7.52% 8.54% 6.51% 7.03% 6.13%
Decrease reflected in above expense ratios due
to undertakings by The Dreyfus Corporation... 137.05%(2) 13.13% 5.33% 3.51% 1.20% .04%
Portfolio Turnover Rate................ -- -- 9.39% 110.62% 64.80% 263.53%
Net assets, end of year (000's omitted) $59 $410 $405 $4,706 $13,244 $37,447
(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Annualized.
Page 6
ZERO COUPON 2000 PORTFOLIO
----------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995
-------- ------ ------ ------ ------ -------
Net asset value, beginning of year..... $10.00 $10.45 $11.64 $11.77 $12.57 $11.39
-------- ----- ------- ------- ------ ------
INVESTMENT OPERATIONS:
Investment income-net.................. .22 .76 .83 .79 .69 .69
Net realized and unrealized gain
(loss) on investments............... .45 1.25 .15 .96 (1.18) 1.31
-------- ----- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS....... .67 2.01 .98 1.75 (.49) 2.00
-------- ----- ------- ------- ------ ------
DISTRIBUTIONS;
Dividends from investment income-net... (.22) (.76) (.84) (.78) (.68) (.69)
Dividends from net realized
gain on investments.................... -- (.06) (.01) (.17) (.01) --
-------- ----- ------- ------- ------ ------
TOTAL DISTRIBUTIONS.................... (.22) (.82) (.85) (.95) (.69) (.69)
-------- ----- ------- ------- ------ ------
Net asset value, end of year........... $10.45 $11.64 $11.77 $12.57 $11.39 $12.70
======= ====== ====== ======== ====== ========
TOTAL INVESTMENT RETURN.................. 20.09%(2) 20.09% 8.87% 15.19% (3.91%) 17.95%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .70%(2) .72% .64% -- -- .68%
Ratio of net investment income to
average net assets..................... 8.03%(2) 7.41% 7.15% 6.21% 6.04% 5.73%
Decrease reflected in above expense ratios due
to undertakings by The Dreyfus Corporation 81.13%(2) 5.04% 2.28% 2.43% 1.05% .03%
Portfolio Turnover Rate................ -- 42.82% 3.08% 106.35% -- 49.43%
Net assets, end of year (000's omitted) $ 155 $ 1,296 $ 1,362 $ 5,696 $10,913 $22,291
(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2)Annualized.
</TABLE>
Further information about each such 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.
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, DISCIPLINED STOCK, GROWTH AND INCOME, INTERNATIONAL
EQUITY, INTERNATIONAL VALUE, MANAGED ASSETS, SMALL CAP AND SMALL COMPANY
STOCK 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.
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
Page 7
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.
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 also could affect the 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. 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.
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." 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, Russell 2500trademark Index, Morgan Stanley Capital International
World Index, the Dow Jones Industrial Average, Morningstar, Inc., Value Line
Mutual Fund Survey and other industry publications.
Page 8
DESCRIPTION OF THE FUND
GENERAL -- The Fund is intended to be a funding vehicle for VA contracts and
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 Board intends 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.
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, as amended (the "1940 Act")) 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 below and under
"Appendix_Certain Portfolio Securities."
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
invests 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 or 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 corporations. 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. In addition, the Series may engage in lending
portfolio securities and may enter into reverse repurchase agreements. See
"Appendix_Investment Techniques." During normal market conditions, at least
25% of the Series' assets will be invested in bank obligations. See
"Investment Considerations and Risks."
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 1940 Act, certain requirements of which are summarized below. In
accordance with Rule 2a-7, the Series 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. dol-
Page 9
lar denominated securities determined in accordance with procedures
established by the Fund's Board 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 Fund's Board. 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 Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("S&P"), Duff & Phelps Credit Rating Co. ("Duff"), Fitch
Investors Service, L.P. ("Fitch"), IBCA Limited and IBCA Inc. and Thomson
BankWatch, Inc. and their rating criteria are described in the "Appendix" to
the Statement of Additional Information. For further information regarding
the amortized cost method of valuing securities, see "Determination of Net
Asset Value" in the 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.
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 Fayez Sarofim & Co. ("Sarofim"), the Series' sub-investment
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 Sarofim believes have the
potential to experience above average and predictable earnings growth. Market
capitalization of a company's stock is its market price per share times the
number of shares outstanding. 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 of the
type in which the Money Market Portfolio invests ("Money Market
Instruments"). 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. See "Investment
Considerations and Risks_Foreign Securities" below.
In addition, the Series may engage in lending portfolio securities
and foreign currency transactions. See "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information.
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 securities, 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 Series may invest consist of
common stocks, preferred stocks and securities convertible into common
stocks, including those in the form of American, European and
Page 10
Continental Depositary Receipts, as well as warrants to purchase such
securities. 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 in which the Series may invest include bonds,
debentures, notes, mortgage-related securities and municipal obligations.
Debt securities (other than convertible debt securities) purchased by the
Series must be rated at least Baa by Moody's or at least BBB by S&P, 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 S&P, 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 S&P, Fitch or
Duff, or, if unrated, deemed to be of comparable quality by The Dreyfus
Corporation. Debt securities rated Caa by Moody's and CCC by S&P, Fitch and
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.
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 Series may adopt a temporary defensive
posture and invest its entire portfolio in Money Market Instruments. The
Series also may invest in Money Market Instruments in anticipation of
investing cash positions.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions,
leveraging, lending portfolio securities and short-selling. See also
"Investment Considerations and Risks" and "Appendix_Investment Techniques"
below and "Investment Objectives and Management Policies_Management Policies"
in the Statement of Additional Information.
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 by investing
in equity securities, debt securities and Money Market Instruments of
domestic and foreign issuers. 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. The asset
classes, market sectors, securities and portfolio strategies selected will be
those that The Dreyfus Corporation and Comstock Partners, Inc. ("Comstock"),
the Series' sub-investment adviser, believe prudent and offer the greatest
potential for achieving the Series' investment objective. The asset
allocation mix selected will be a primary determinant of the Series'
investment performance.
The equity securities in which the Series may invest include common
stocks, preferred stocks, convertible securities and warrants. The debt
securities in which the Series may invest include bonds, debentures and
notes. 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. The Series
may invest in the securities of companies whose principal activities are in,
or governments of, emerging markets. See "Investment Considerations and
Risks_Foreign Securities" below.
Page 11
The Series generally seeks to invest in equity 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 generally seeks to invest in debt securities where the
yield and potential for capital appreciation of the security are considered
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 may 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 S&P or other
recognized rating agencies also will be considered. The judgment of The
Dreyfus Corporation and Comstock as to credit quality of a debt security may
differ, however, from that suggested by the ratings published by a rating
service. The Series is not subject to any limit on the percentage of its
assets that may be invested in 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. Such securities are considered to have speculative characteristics
and to be of poor quality; some obligations in which the Series may invest
may be in default. See "Investment Considerations and Risks_Lower Rated
Securities" below. The Series also may invest in Stripped Treasury Securities
(as defined below).
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.
To the extent permitted under the 1940 Act, 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.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions,
lending portfolio securities and short-selling. See also "Investment
Considerations and Risks" and "Appendix_Investment Techniques" below and
"Investment Objectives and Management Policies_Management Policies" in the
Statement of Additional Information.
SMALL CAP PORTFOLIO
The Small Cap Portfolio is a diversified portfolio, the goal of which
is to maximize capital appreciation. The Series seeks out companies that The
Dreyfus Corporation believes have the potential for significant growth.
During periods The Dreyfus Corporation 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, both domestic and
foreign, with market capitalizations of less than $750 million at the time of
purchase, 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
Page 12
Market Instruments. When the Series has adopted a temporary defensive posture,
the entire portfolio may 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. See "Investment Considerations and
Risks_Foreign Securities" below.
The Series also may invest in debt securities rated as low as the
lowest rating assigned by Moody's or S&P, and in unrated debt securities,
which have special risks. See "Investment Considerations and
Risks_Fixed-Income Securities" and "_Lower Rated Securities" below.
In addition, the Series may engage in various investment techniques,
such as lending portfolio securities, foreign currency transactions and, to a
limited extent, short-selling. See "Investment Considerations and Risks" and
"Appendix_Investment Techniques" below and "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information.
SMALL COMPANY STOCK PORTFOLIO
The Small Company Stock Portfolio is a diversified portfolio, the
goal of which is to provide investment results that are greater than the
total return performance of publicly-traded common stocks in the aggregate,
as represented by the Russell 2500trademark Index.* The Russell 2500trademark
Index is composed of common stocks issued by small- and medium-sized
companies, typically with market capitalizations between $100 million and
$1.5 billion. The Series invests primarily in a portfolio of equity
securities of small- to medium-sized domestic issuers, while attempting to
maintain volatility and diversification similar to that of the Russell
2500trademark Index. The Series will invest in the securities of such issuers
that are considered by The Dreyfus Corporation and Laurel Capital Advisors,
the Series' sub-investment adviser, to offer above-average growth potential.
The Series also may invest in initial public offerings of stock when The
Dreyfus Corporation and Laurel Capital Advisors determine that such offerings
provide above-average short-term appreciation opportunities. The equity
securities in which the Series invests consist of common stocks, preferred
stocks and securities convertible into common stocks, including those in the
form of American Depositary Receipts. The Series also may invest up to 20% of
its assets in foreign securities. See "Investment Considerations and
Risks_Foreign Securities" below.
While seeking desirable investments, the Series may invest in Money
Market Instruments. 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 Laurel Capital
Advisors determine that adverse market conditions exist, the Series may adopt
a temporary defensive posture and invest all of its assets in Money Market
Instruments.
In an effort to increase returns, the Series may engage in various
investment techniques, such as lending portfolio securities, foreign currency
transactions, and options and futures transactions, and may enter into
reverse repurchase agreements. See also "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information.
DISCIPLINED STOCK PORTFOLIO
The Disciplined Stock Portfolio is a diversified portfolio, the goal
of which is to provide investment results that are greater than the total
return performance of publicly-traded common stocks in the aggregate, as
represented by the Standard & Poor's 500 Composite Stock Price Index ("S&P
500 Index").**
- -----------------
* Russell 2500trademark is a trademark of Frank Russell Company. The Series
is not sponsored, endorsed, sold or promoted by Frank Russell Company.
**"S&PRegistration Mark" and "Standard & Poor's 500 Composite Stock Price
Index" are trademarks of The McGraw-Hill Companies, Inc. The Series is not
sponsored, endorsed, sold or promoted by S&P or The McGraw-Hill Companies,
Inc.
Page 13
The S&P 500 Index is composed of 500 common stocks, most of which are listed
on the New York Stock Exchange, chosen to reflect the industries of the U.S.
economy. The Series uses quantitative statistical modeling techniques to
identify equity securities which emphasize certain attributes expected to
produce in the aggregate total return greater than that of the S&P 500 Index.
This investment process utilizes disciplined control of fund risk and a
process of rigorous security selection. The Series is not an index fund and
its investments are not limited to securities of issuers in the S&P 500 Index.
Individual security selection is the foundation of the Series'
investment approach. Consistency of returns which exceed those of the S&P 500
Index and stability of the Series' asset value relative to the S&P 500 Index
are primary goals of the investment process. Information from diverse sources
is collected and used to construct valuation models which are combined to
form a comprehensive computerized valuation ranking system identifying common
stocks which appear to be over or under valued. These models include measures
of actual and estimated earnings changes and relative value based on dividend
discount calculations, book values to stock price ratios, earnings to stock
price ratios and return on equity ratios. The computerized ranking system
incorporates information from the most recent time period available to the
system and categorizes individual securities within each industry according
to relative attractiveness. The Dreyfus Corporation and Laurel Capital
Advisors, the Series' sub-investment adviser, then use the data provided by
the model to construct a portfolio in an attempt to achieve the Series'
investment objective, while attempting to maintain risk characteristics
similar to those of the S&P 500 Index.
Under normal circumstances, at least 65% of the Series' total assets
will be invested in equity securities, consisting of common stocks, preferred
stocks and securities convertible into common stocks, including those in the
form of American Depositary Receipts. While seeking desirable investments,
the Series may invest in Money Market Instruments. Under normal market
conditions, the Fund does not expect to have a substantial portion of its
assets invested in Money Market Instruments. However, when The Dreyfus
Corporation and Laurel Capital Advisors determine that adverse market
conditions exist, the Series may adopt a temporary defensive posture and
invest all of its assets in Money Market Instruments.
In an effort to increase returns, the Series may engage in various
investment techniques, such as options and futures transactions. See also
"Investment Considerations and Risks" and "Appendix--Investment Techniques"
below and "Investment Objectives and Management Policies--Management
Policies" in the Statement of Additional Information.
INTERNATIONAL VALUE PORTFOLIO
The International Value Portfolio is a diversified portfolio, the
goal of which is long-term capital growth. The Series anticipates that at
least 65% of the value of its total assets (except when maintaining a
temporary defensive position) will be invested in equity securities
principally of foreign issuers which would be characterized as "value"
companies according to criteria established by The Dreyfus Corporation and
The Boston Company Asset Management, Inc. ("TBC Asset Management"), the
Series' sub-investment adviser. Under normal market conditions, the Series
expects that substantially all of its assets will be invested in securities
of foreign issuers. While there are no prescribed limits on geographic asset
distribution outside the United States, the Series ordinarily will seek to
invest its assets in not less than three foreign countries. The Series'
securities selections generally will be made without regard to an issuer's
market capitalization. Equity securities consist of common stocks, convertible
securities and preferred stocks.
To manage the Series, The Dreyfus Corporation and TBC Asset
Management classify issuers as "growth" or "value" companies. In general, the
Series' advisers believe that companies with relatively low price to book
ratios, low price to earnings ratios or higher than average dividend payments
in relation to price should be classified as value companies. Alternatively,
companies which have above average
Page 14
earnings or sales growth and retention of earnings and command higher price to
earnings ratios fit the more classic growth description.
The Series may invest, to a limited extent, in debt securities issued
by foreign governments and securities issued by closed-end investment
companies. While seeking desirable investments, the Series may invest in
Money Market Instruments. 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 TBC Asset Management
determine that adverse market conditions exist, the Series may adopt a
temporary defensive posture and invest all of its assets in Money Market
Instruments.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. See also "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information.
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 Series
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 Series 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 Series may invest must be rated at
least Baa by Moody's or at least BBB by S&P, 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 S&P, Fitch or Duff are considered
investment grade obligations which lack outstanding investment
characteristics and have speculative characteristics as well. See "Investment
Considerations and Risks_Fixed-Income Securities" below.
While seeking desirable equity investments, the Series may invest in
Money Market Instruments. 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 determines that adverse
market conditions exist, the Series may adopt a temporary defensive posture
and invest all of its assets in Money Market Instruments.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. See also "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information.
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 Series invests principally 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 S&P, 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 Series also may invest in mortgage-related
securities, municipal
Page 15
obligations and zero coupon securities as described
herein. 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 S&P. 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, although the
Series currently does not intend to invest more than 5% of its assets in any
one of these types of instruments. 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 S&P or are unrated.
In addition, the Series will invest no more than 5% of its assets in bonds
rated Ba or B by Moody's and BB or B by S&P. The Series may invest up to 10%
of its assets in securities of foreign issuers. See "Investment
Considerations and Risks -- Foreign Securities" below.
In addition, the Series may engage in lending portfolio securities.
See also "Investment Considerations and Risks" and "Appendix_Investment
Techniques_Lending Portfolio Securities" below and "Investment Objectives and
Management Policies" in the Statement of Additional Information.
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"). See "Appendix_Certain Portfolio
Securities_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 corporations" (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"). Stripped Corporate Securities held by the Series will be rated
at least Baa by Moody's or BBB by S&P. In addition, the Series 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. See "Investment Considerations and Risks -- Foreign Securities." 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." 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.
Page 16
In addition to investing at least 65% of its net assets in Stripped
Securities, the Series 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.
There can be no assurance that the Series' 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.
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
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.
In addition, the Series may engage, to a limited extent, in various
investment techniques, such as options and futures transactions and lending
portfolio securities. See also "Investment Considerations and Risks" and
"Appendix_Investment Techniques" below and "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Since each Series will pursue different types of investments, the
risks of investing will vary depending on the Series selected for investment.
Before selecting a Series in which to invest, the investor should assess the
risks associated with the types of investments made by the Series. The net
asset value per share of each Series, other than the Money Market Portfolio,
should be expected to fluctuate. Investors should consider each Series as a
supplement to an overall investment program and should invest only if they
are willing to undertake the risks involved. See "Investment Objectives and
Management Policies_Management Policies" in the Statement of Additional
Information for a further discussion of certain risks.
EQUITY SECURITIES -- (Capital Appreciation, Disciplined Stock, Growth and
Income, International Equity, International Value, Managed Assets, Small Cap
and Small Company Stock Portfolios) Equity securities fluctuate in value,
often based on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be pronounced. Changes in the value of
the Series' investments will result in changes in the value of its shares and
thus the Series' total return to investors.
The securities of the smaller companies in which the Series may
invest may be subject to more abrupt or erratic market movements than larger,
more established companies, because these securities typically are traded in
lower volume and the issuers typically are more subject to changes in
earnings and prospects.
FIXED-INCOME SECURITIES -- (All Series) Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities generally are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Certain secu-
Page 17
rities 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 issuer. Certain securities
purchased by the Managed Assets, Growth and Income, International Equity and
Quality Bond Portfolios, such as those rated Baa or lower by Moody's and BBB
or lower by S&P, 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. Once the rating of a
portfolio security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to continue to hold the security. See
"Appendix_Certain Portfolio Securities_Ratings" below and "Appendix" in the
Statement of Additional Information.
SPECIAL CONSIDERATIONS RELATING TO STRIPPED SECURITIES -- (Zero Coupon 2000
Portfolio and, to a limited extent, all other 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 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
Page 18
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 or dividends or to meet redemptions at
times and at prices that might be disadvantageous, or, alternatively, 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. 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.
LOWER RATED SECURITIES--(Growth and Income, Managed Assets, Quality Bond and,
to a limited extent, Small Cap Portfolios) Each of these Series may invest a
portion of its assets in higher yielding (and, therefore, higher risk) debt
securities (convertible debt securities with respect to the Growth and Income
Portfolio) such as those rated Ba by Moody's or BB by S&P, Fitch or Duff, or
as low as those rated B by Moody's, S&P, Fitch or Duff in the case of the
Quality Bond Portfolio, or as low as those rated Caa by Moody's or CCC by
S&P, Fitch or Duff in the case of the Growth and Income Portfolio, or as low
as the lowest rating assigned by Moody's, S&P, Fitch or Duff in the case of
the Managed Assets and Small Cap Portfolios (commonly known as junk bonds).
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. The retail secondary market for these securities may be less
liquid than that of higher rated securities; 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.
See "Appendix -- Certain Portfolio Securities -- Ratings."
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.
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, seizure
or nationalization of foreign deposits and adoption of governmental
restrictions which might adversely affect the payment of principal and
interest on the foreign securities or restrict the payment of principal and
interest to investors located outside the country of the issuer, whether from
currency blockage or otherwise.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Series have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have
adverse effects on the economies and securities markets of certain of these
countries.
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.
The percentage of a Series' assets which may be invested in foreign
securities as noted above is not a fundamental policy and may be changed at
any time without shareholder approval.
Page 19
FOREIGN CURRENCY TRANSACTIONS -- (Capital Appreciation, Growth and Income,
International Equity, International Value, Managed Assets, Small Cap and
Small Company Stock 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
unpredictably 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. See "Appendix_Investment
Techniques_Foreign Currency Transactions."
USE OF DERIVATIVES -- (Disciplined Stock, Growth and Income, International
Value, International Equity, Managed Assets, Small Company Stock and Zero
Coupon 2000 Portfolios) These Series may invest in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate . The Derivatives the Series may use include options
and futures and, in the case of the Growth and Income Portfolio,
mortgage-related securities. While Derivatives can be used effectively in
furtherance of the Series' investment objective, under certain market
conditions, they can increase the volatility of the Series' net asset value,
can decrease the liquidity of the Series' portfolio and make more difficult
the accurate pricing of the Series' portfolio. See "Appendix_Investment
Techniques_Use of Derivatives" below, and "Investment Objectives and
Management Policies_Management Policies_Derivatives" in the Statement of
Additional Information.
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, 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.
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, Disciplined Stock, Small Company
Stock, International Value and International Equity Portfolios. Higher portfol
io 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
Page 20
turnover, but that should not adversely affect the Series since it usually
does not pay brokerage commissions when it purchases short-term debt
obligations.
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 1940 Act. A "diversified" investment
company is required by the 1940 Act 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. 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, the Series' portfolio may be more
sensitive to changes in the market value of a single issuer or industry.
However, to meet Federal tax requirements, at the close of each quarter
neither of these Series may have more than 25% of its total assets invested
in any one issuer and, with respect to 50% of total assets, more than 5% of
its total assets invested in any one issuer. These limitations do not apply
to U.S. Government securities.
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,
where applicable, the Series' sub-investment adviser). However, if such other
Series or investment companies desire to invest in, or dispose of, the same
securities as the 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
INVESTMENT ADVISER -- 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 February 29, 1996, The Dreyfus Corporation
managed or administered approximately $85 billion in assets for more than 1.7
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 authority of the Fund's Board 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 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., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$233 billion in assets as of December 31, 1995, including approximately $81
billion in proprietary mutual fund assets. As of December 31,
Page 21
1995, Mellon, through various subsidiaries, provided non-investment services,
such as custodial or administration services, for more than $786 billion in
assets including approximately $60 billion in mutual fund assets.
In allocating brokerage transactions for the Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus Corporation
may consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other funds managed, advised or administered by
The Dreyfus Corporation as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions" in
the Statement of Additional Information.
The Dreyfus Corporation, from time to time, may make payments from
its own assets to Participating Insurance Companies in connection with the
provision of certain administrative services to one or more Series and/or to
purchasers of VA contracts or VLI policies.
The primary portfolio managers of the Series are as follows:
CAPITAL APPRECIATION PORTFOLIO -- Fayez Sarofim. He has been the Series'
primary portfolio manager since the Series commenced operations and has been
employed by Sarofim since 1958.
GROWTH AND INCOME PORTFOLIO -- Richard Hoey. He has been the Series' primary
portfolio manager since the Series commenced operations and has been employed
by The Dreyfus Corporation since April 1991.
MANAGED ASSETS PORTFOLIO -- Investment decisions are made by the Investment
Policy Committee of Comstock, and no person is primarily responsible for
making recommendations to that committee.
SMALL CAP PORTFOLIO -- Thomas A. Frank. He has been the Series' primary
portfolio manager since the Series commenced operations and has been employed
by The Dreyfus Corporation since 1985.
SMALL COMPANY STOCK PORTFOLIO -- James Wadsworth. He has been the Series'
primary portfolio manager since the Series' inception and has been Chief
Investment Officer for Laurel Capital Advisors since October 1990. Mr.
Wadsworth also is a First Vice President of Mellon, where he has been
employed since 1977.
DISCIPLINED STOCK PORTFOLIO -- Bert Mullins. He has been the Series' primary
portfolio manager since the Series' inception and has been employed by Laurel
Capital Advisors since October 1990. Mr. Mullins also is a Vice President,
Portfolio Manager and Senior Security Analyst for Mellon, where he has been
employed since 1966.
INTERNATIONAL VALUE PORTFOLIO -- Sandor Cseh. He has been the Series' primary
portfolio manager since the Series' inception and has been employed by TBC
Asset Management or its predecessor since October 1994. Prior to joining TBC
Asset Management, Mr. Cseh was President of Cseh International & Associates
Inc., the international money management division of Cashman, Farrell &
Association, and was a securities analyst with several banks.
INTERNATIONAL EQUITY PORTFOLIO -- Ronald Chapman. He has been the Series'
primary portfolio manager since April 1996 and has been employed by The
Dreyfus Corporation since January 1996. Prior thereto, Mr. Chapman served for
ten years as Vice President of the Global Strategy and Management Group for
Northern Trust Company.
QUALITY BOND PORTFOLIO -- Garitt Kono. He has been the Series' primary
portfolio manager since the Series commenced operations and has been employed
by The Dreyfus Corporation since September 1992. Prior to joining The Dreyfus
Corporation, Mr. Kono was Vice President--Fixed Income at The First Boston
Corporation.
ZERO COUPON 2000 PORTFOLIO -- Garitt Kono. He has been the Series' primary
portfolio manager since the Series commenced operations.
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 .75
of 1% of the value of the Disciplined Stock Portfolio's average daily net
assets; .375 of 1% of the value of the Managed Assets Portfolio's average
Page 22
daily net assets; .75 of 1% of the value of the Growth and Income Portfolio's
average daily net assets; 1% of the value of the International Value
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; .75 of 1% of
the value of the Small Company Stock 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:
<TABLE>
<CAPTION>
ANNUAL FEE AS A
PERCENTAGE OF
AVERAGE DAILY NET
ASSETS OF THE CAPITAL
TOTAL ASSETS APPRECIATION PORTFOLIO
----------- ----------------------------
<S> <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, 1995, the Fund paid The
Dreyfus Corporation a monthly advisory fee at the following effective annual
rates, pursuant to undertakings in effect: .72 of 1% of the value of the
Growth and Income Portfolio's average daily net assets; .30 of 1% of the value
of the International Equity Portfolio's average daily net assets; .47 of 1% of
the value of the Money Market Portfolio's average daily net assets; .61 of 1%
of the value of the Quality Bond Portfolio's average daily net assets;
.42 of 1% of the value of the Zero Coupon 2000 Portfolio's average daily net
assets; and .53 of 1% of the value of the Capital Appreciation Portfolio's
average daily net assets. With respect to each other operational Series, the
Fund paid The Dreyfus Corporation an advisory fee at the annual rate set
forth in the preceding paragraph.
SUB-INVESTMENT ADVISERS -- With respect to the Managed Assets Portfolio,
Comstock Partners, a registered investment adviser located at 10 Exchange
Place, Jersey City, New Jersey 07302, serves as the Series' sub-investment
adviser. Comstock Partners was formed in 1986 and, as of February 29, 1996,
managed approximately $700 million in assets for other mutual funds and
several discretionary accounts. Comstock Partners, 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
in accordance with Massachusetts law. For the fiscal year ended December 31,
1995, the Fund paid Comstock Partners a monthly sub-investment advisory fee
at the annual rate of .375 of 1% of the value of the Managed Assets
Portfolio's average daily net assets.
With respect to the Capital Appreciation Portfolio, Sarofim, a
registered investment adviser located at Two Houston Center, Suite 2907,
Houston, Texas 77010, serves as the Series' sub-investment adviser. Sarofim
was formed in 1958 and, as of February 29, 1996, provided investment advisory
services to discretionary accounts having aggregate assets of approximately
$28 billion. Sarofim, 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
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 Sarofim an annual fee, payable monthly, as set forth
below:
Page 23
<TABLE>
<CAPTION>
ANNUAL FEE AS A
PERCENTAGE OF
AVERAGE DAILY NET
ASSETS OF THE CAPITAL
TOTAL ASSETS APPRECIATION PORTFOLIO
----------- ----------------------------
<S> <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 fiscal year ended December 31, 1995, the Fund paid Sarofim a monthly
sub-investment advisory fee at the annual rate of .20 of 1% of the value of
the Capital Appreciation Portfolio's average daily net assets.
With respect to the Disciplined Stock and Small Company Stock
Portfolios, The Dreyfus Corporation has engaged Laurel Capital Advisors,
located at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, to serve
as each Series' sub-investment adviser. Laurel Capital Advisors, a registered
investment adviser formed in 1990, is an indirect wholly-owned subsidiary of
Mellon and, thus, an affiliate of The Dreyfus Corporation. As of February 29,
1996, Laurel Capital Advisors managed approximately $4 billion in assets.
Laurel Capital Advisors, subject to the supervision and approval of The
Dreyfus Corporation, provides investment advisory assistance and the
day-to-day management of each of the Disciplined Stock and Small Company
Stock Portfolio's investments, as well as investment research and statistical
information, under a Sub-Investment Advisory Agreement with The Dreyfus
Corporation, subject to the overall authority of the Fund's Board in
accordance with Massachusetts law. Under the terms of the Sub-Investment
Advisory Agreement with respect to each of the Disciplined Stock and Small
Company Stock Portfolio, The Dreyfus Corporation has agreed to pay Laurel
Capital Advisors an annual fee, payable monthly, as set forth below:
<TABLE>
<CAPTION>
ANNUAL FEE AS A
PERCENTAGE OF
AVERAGE DAILY NET
ASSETS OF
TOTAL ASSETS EACH SUCH SERIES
----------- ----------------------------
<C> <C>
0 to $100 million................................. .25 of 1%
$100 million to $1 billion........................ .20 of 1%
$1 billion to $1.5 billion........................ .15 of 1%
$1.5 billion or more.............................. .10 of 1%
</TABLE>
With respect to the International Value Portfolio, The Dreyfus
Corporation has engaged TBC Asset Management, located at
One Boston Place, Boston, Massachusetts 02108, to serve as the Series'
sub-investment adviser. TBC Asset Management, a registered investment adviser
formed in 1970, is an indirect wholly-owned subsidiary of Mellon and, thus,
an affiliate of The Dreyfus Corporation. As of February 29, 1996, TBC Asset
Management managed approximately $15 billion in assets and serves as the
investment adviser of five other investment companies. TBC Asset Management,
subject to the supervision and approval of The Dreyfus Corporation, provides
investment advisory assistance and the day-to-day management of the
International Value Portfolio's investments, as well as investment research
and statistical information, under a Sub-Investment Advisory Agreement with
The Dreyfus Corporation, subject to the overall authority of the Fund's Board
in accordance with Massachusetts law. Under the terms of the Sub-Investment
Advisory Agreement with respect to the International Value Portfolio, The
Dreyfus Corporation has agreed to pay TBC Asset Management a monthly fee at
the annual rate of .50 of 1% of the value of the International Value
Portfolio's average daily net assets.
With respect to the International Equity Portfolio, from May 4, 1994
to March 31, 1996 The Dreyfus Corporation engaged M&G Investment Management
Limited ("M&G"), a registered invest-
Page 24
ment adviser located at Three Quays Tower Hill, London EC3R 6BQ, England, to
serve as the Series' sub-investment adviser. For the fiscal year ended
December 31, 1995, The Dreyfus Corporation paid M&G a monthly sub-investment
advisory fee at the annual rate of .30 of 1% of the value of the
International Equity Portfolio's average daily net assets.
EXPENSES -- All expenses incurred in the operation of the Fund are borne by
the Fund, except to the extent specifically assumed by The Dreyfus
Corporation or a sub-investment adviser. The expenses borne by the Fund
include: organizational costs, taxes, interest, loan commitment fees,
interest and distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
The Dreyfus Corporation or any sub-investment adviser or their affiliates,
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
preparing and printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing shareholders, costs
of shareholders' reports and meetings, 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 among the Series on
the basis determined by the Board, including, but not limited to,
proportionately in relation to the net assets of each Series.
The advisory fees of the Managed Assets, Capital Appreciation,
Disciplined Stock, Growth and Income, International Equity, International
Value, Small Cap and Small Company Stock 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 and, with respect to the Capital Appreciation Portfolio, Sarofim)
may waive receipt of its fees and/or voluntarily assume certain expenses of a
Series, which would have the effect of lowering the overall expense ratio of
that Series and increasing yield to investors. The Fund will not pay The
Dreyfus Corporation (or, with respect to the Managed Assets Portfolio,
Comstock or, with respect to the Capital Appreciation Portfolio, Sarofim) 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 or, with respect to the Capital Appreciation Portfolio, Sarofim) for
any amounts it may assume.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group, Inc.
02940-9671.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus 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 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 with procedures established by the
Participating Insurance Company will be effected at the net asset value of
the applicable Series
Page 25
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 Fund's Board 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 Fund's Board. The Money Market Portfolio uses the
amortized cost method of valuing its investments. The Disciplined Stock,
Managed Assets, Capital Appreciation, International Equity, International
Value, Growth and Income, Small Cap and Small Company Stock 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
Fund's Board. For further information regarding the methods employed in
valuing each Series' investments, see "Determination of Net Asset Value" in
the Statement of Additional Information.
HOW TO REDEEM 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.
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.
Page 26
GROWTH AND INCOME PORTFOLIO -- Declares and pays dividends from net
investment income quarterly.
CAPITAL APPRECIATION, DISCIPLINED STOCK, INTERNATIONAL EQUITY, INTERNATIONAL
VALUE, MANAGED ASSETS, SMALL CAP AND SMALL COMPANY STOCK PORTFOLIOS --
Declare and pay dividends from net investment income annually.
APPLICABLE TO ALL SERIES -- Under the Internal Revenue Code of 1986, as
amended (the "Code"), each Series of the Fund is treated as a separate entity
for purposes of qualification and taxation as a regulated investment company.
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 1940 Act. 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. An omnibus accountholder may indicate in
a partial redemption request that a portion of any accrued dividends to which
such account is entitled belongs to an underlying accountholder who has
redeemed all shares in his or her account, and such portion of the accrued
dividends will be paid to the accountholder 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 (other than the
Disciplined Stock, International Value and Small Company Stock Portfolios
which had not commenced operations) has qualified for the fiscal year ended
December 31, 1995 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. It is expected that each of the Disciplined
Stock, International Value and Small Company Stock Portfolios will qualify as
a "regulated investment company" under the Code so long as 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 provisions of the Code. The Series may be subject to a
non-deductible 4% excise tax, measured
Page 27
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.
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio.
To date, the Board has authorized the creation of eleven 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. The Fund has the ability to create, from time to time, new
series without shareholder approval.
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
Fund intends to conduct its operations 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 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. 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 Fund's Board and will provide other information about the Fund and its
operations.
Page 28
APPENDIX
INVESTMENT TECHNIQUES
FOREIGN CURRENCY TRANSACTIONS -- (Capital Appreciation, Growth and Income,
Managed Assets, Small Company Stock, International Equity and International
Value Portfolios) Foreign currency transactions may be entered into for a
variety of purposes, including: to fix in U.S. dollars, between trade and
settlement date, the value of a security the Series has agreed to buy or
sell; to hedge the U.S. dollar value of securities the Series already owns,
particularly if it expects a decrease in the value of the currency in which
the foreign security is denominated; or to gain exposure to the foreign
currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Series'
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, 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 the Fund contracted to receive in the
exchange. The Series' success in these transactions will depend principally
on The Dreyfus Corporation's (and, where applicable, the Series'
sub-investment adviser's) ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar.
SHORT-SELLING -- (Growth and Income and, to a limited extent, Managed Assets
and Small Cap Portfolios) In these transactions, the Series sells a security
it does not own in anticipation of a decline in the market value of the
security. To complete the transaction, the Series must borrow the security to
make delivery to the buyer. The Series is obligated to replace the security
borrowed by purchasing it subsequently 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, which would result in a loss or
gain, respectively.
Securities will not 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 make a short sale which results in the Series
having sold short in the aggregate more than 5% of the outstanding securities
of any class of an issuer.
The Growth and Income Portfolio also may make, and the Managed Assets
and Small Cap Portfolios only may make, short sales "against the box," in
which the Series enters into a short sale of a security it owns in order to
hedge an unrealized gain on the security. At no time will more than 15% of
the value of the Series' net assets be in deposits on short sales against the
box.
BORROWING MONEY -- (All Series) Each Series is permitted to borrow to the
extent permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331/3% of the value of its total assets. 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 its 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. While
borrowings exceed 5% of the Series' total assets, the Series will not make
any additional investments. In addition, the Money Market and Small Company
Stock Portfolios may borrow for investment purposes on a secured basis
through entering into reverse repurchase agreements as described below.
LEVERAGE -- (Growth and Income and, to a limited extent, Money Market and
Small Company Stock Portfolios) Leveraging exaggerates 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 limited to 331/3% of the
value of the Series' total assets. These borrowings will be subject to
interest costs which 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.
Page 29
The Series may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves 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. Except for these transactions, the Growth and Income Portfolio's
borrowings generally will be unsecured.
USE OF DERIVATIVES -- (Disciplined Stock, Growth and Income, International
Equity, International Value, Managed Assets, Small Company Stock and Zero
Coupon 2000 Portfolios) The Series may invest in the types of Derivatives
enumerated under "Description of the Fund -- Investment Considerations and
Risks -- Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objectives and Management
Policies -- Management Policies -- Derivatives" in the Statement of
Additional Information.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Series to increase or decrease
the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Series can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Series' performance.
If the Series invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Series' return
or result in a loss. The Series also could experience losses if it were
unable to liquidate its position because of an illiquid secondary market. The
market for many Derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for Derivatives.
Although neither the Fund nor any Series will be a commodity pool,
Derivatives subject the Series to the rules of the Commodity Futures Trading
Commission which limit the extent to which the Series can invest in certain
Derivatives. The Series may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, the Series may
not invest in such contracts and options for other purposes if the sum of the
amount of initial margin deposits and premiums paid for unexpired options
with respect to such contracts, other than for bona fide hedging purposes,
exceed 5% of the liquidation value of the Series' assets, after taking into
account unrealized profits and unrealized losses on such contracts and
options; 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% limitation.
The Series may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. The Series may write
(i.e., sell) covered call and put option contracts to the extent of 20% of
the value of its net assets at the time such option contracts are written.
When required by the Securities and Exchange Commission, the Series will set
aside permissible liquid assets in a segregated account to cover its
obligations relating to its transactions in Derivatives. To maintain this
required cover, the Series may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES -- (All Series) Each Series may lend securities
from its portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. The Series
continues to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned securities which
affords the Series an opportunity to earn interest on the amount of the loan
and on the loaned securities' collateral. Loans of portfolio securities may
not exceed 331/3% (20% with respect to the Managed Assets and Zero Coupon
2000 Portfolios and 10% with respect to the Capital Appreciation, Small Cap
and Quality Bond Portfolios) of the value of
Page 30
the Series' total assets and the Series will receive collateral consisting of
cash, U.S. Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the Series
at any time upon specified notice. The Series might experience risk of loss
if the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Series.
FORWARD COMMITMENTS -- (All Series) Each Series may purchase securities on a
forward commitment or when-issued basis, which means that delivery and
payment take place a number of days after the date of the commitment to
purchase. The payment obligation and the interest rate receivable on a
forward commitment or when-issued security are fixed when the Series enters
into the commitment, but the Series does not make payment until it receives
delivery from the counterparty. The Series will commit 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. A segregated account of the Series consisting of cash, cash
equivalents or U.S. Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the commitments will
be established and maintained at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CONVERTIBLE SECURITIES -- (Capital Appreciation, Disciplined Stock, Growth
and Income, International Equity, International Value, Managed Assets, Small
Cap and Small Company Stock Portfolios) Convertible securities may be
converted at either a stated price or stated rate into underlying shares of
common stock. Convertible securities have characteristics similar to both
fixed-income and equity securities. 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.
WARRANTS -- (Capital Appreciation, Growth and Income, International Equity,
International Value, Managed Assets, Small Cap and Small Company Stock
Portfolios) A warrant is an instrument issued by a corporation which gives
the holder the right to subscribe to a specified amount of the corporation's
capital stock at a set price for a specified period of time. The Series may
invest up to 5% (2% in the case of the Managed Assets, Capital Appreciation
and Small Cap Portfolios) of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Series that are sold
in units with, or attached to, other securities. Included in such amount, but
not exceed 2% of the value of the Series' net assets, may be warrants which
are not listed on the New York or American Stock Exchange.
MORTGAGE-RELATED SECURITIES -- (Growth and Income Portfolio) Mortgage-related
securities are a form of Derivative collateralized by pools of mortgages. The
mortgage-related securities which may be purchased 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. 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 secured. If a mortgage-related
security is purchased 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 on the underlying mortgage
collateral. As with other interest-bearing securities, the prices of certain
of these
Page 31
securities are inversely affected by changes in interest rates.
However, although 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 be prepaid. 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 Series. Moreover, with respect to
stripped mortgage-backed securities, if the underlying mortgage securities
experience greater than anticipated prepayments of principal, the Series may
fail to fully recoup its initial investment even if the securities are rated
in the highest rating category by a nationally recognized statistical rating
organization. For further discussion concerning the investment considerations
involved, see "Description of the Fund_Investment Considerations and
Risks_Fixed-Income Securities" and "Illiquid Securities" below.
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. Municipal obligations bear fixed, floating or
variable rates of interest. 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 obligations and
purchased and sold separately. The Series also may acquire call options on
specific municipal obligations. The Series generally would purchase these
call options to protect the Series from the issuer of the related municipal
obligation redeeming, or other holder of the call option from calling away,
the municipal obligation before maturity.
While, in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain municipal obligations are taxable
obligations, offering yields comparable to, and in some cases greater than,
the yields available on other permissible Series investments. Dividends
received by shareholders on Series shares which are attributable to interest
income received by the Series from municipal obligations generally will be
subject to Federal income tax. The Series will invest in municipal
obligations, the ratings of which correspond with the ratings of other
permissible Series investments. The Series currently intends to invest no
more than 25% of its assets in municipal obligations. However, this
percentage may be varied from time to time without shareholder approval.
DEPOSITARY RECEIPTS -- (Disciplined Stock, Growth and Income, International
Equity, International Value, Managed Assets and Small Company Stock
Portfolios) The Series may invest in the securities of foreign issuers in
the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") and other forms of depositary receipts. 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. 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.
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 Dreyfus Corporation (and, if
applicable, the Series' sub-investment adviser) to be of comparable quality
to the other obligations in which the Series may invest. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction or development and
international banking institutions and related government agencies. Examples
include the International
Page 32
Bank for Reconstruction and Development (the World Bank), the European Coal
and Steel Community, the Asian Development Bank and the InterAmerican
Development Bank.
MONEY MARKET INSTRUMENTS -- (All Series) Each Series may invest in the
following types of Money Market Instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. 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.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Series buys,
and the seller agrees to repurchase, a security at a mutually agreed upon
time and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Series' ability to dispose of the underlying
securities. The Series may enter into repurchase agreements with certain
banks or non-bank dealers.
BANK OBLIGATIONS. The Series may purchase certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations issued
by domestic banks, foreign subsidiaries or foreign branches of domestic
banks, domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign subsidiaries or foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, the Series may be
subject to additional investment risks that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. See "Description of the Fund -- Investment Considerations
and Risks -- Foreign Securities."
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 (in no event longer than seven
days) at a stated interest rate.
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 the drawer to pay the face amount of the
instrument upon maturity. The other short-term 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 Series will consist only of direct obligations which,
at the time of their purchase, are (a) rated not lower than Prime-1 by
Moody's, A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies
having an outstanding unsecured debt issue currently rated at least A3 by
Moody's or A- by S&P, Fitch or Duff, or (c) if unrated, determined by The
Dreyfus Corporation (and, if applicable, the Series' sub-investment adviser)
to be of comparable quality to those rated obligations which may be purchased
by the Series.
PARTICIPATION INTERESTS. The Series 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
Page 33
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.
INVESTMENT COMPANIES -- (Managed Assets and Small Company Stock Portfolios)
The Series may invest in securities issued by investment companies. Under the
1940 Act, 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' total assets with respect to
any one investment company and (iii) 10% of the Series' total assets in the
aggregate. Investments in the securities of other investment companies may
involve duplication of advisory fees and certain other expenses.
STRIPPED TREASURY SECURITIES -- (Zero Coupon 2000 Portfolio and, to a limited
extent, all other 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). See "Investment Objectives and Management
Policies_Portfolio Securities" in the Statement of Additional Information.
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 S&P. With respect
to other features of Stripped Corporate Securities, such as sales at deep
discounts, see "Stripped Treasury Securities" above and "Description of the
Fund_Investment Considerations and Risks_Special Considerations Relating to
Stripped Securities."
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
Page 34
days after notice, and certain privately negotiated, non-exchange traded
options and securities used to cover such options. As to these securities,
the Series is subject to a risk that should the 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 the Series' net assets could be
adversely affected.
RATINGS -- (Growth and Income, Managed Assets, Small Cap and Quality Bond
Portfolios) Obligations 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
S&P, Fitch and Duff are investment grade and regarded as having adequate
capacity to pay interest and repay principal; however, adverse changes in
economic conditions and circumstances are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. Securities 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. Securities rated BB by S&P, Fitch or Duff 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 S&P, Fitch or Duff are of poor
standing and may be in default or there may be present elements of danger
with respect to principal or interest. Such securities, though high yielding,
are characterized by great risk. See "Appendix" in the Statement of
Additional Information for a general description of securities ratings.
The ratings of Moody's, S&P, Fitch or Duff represent their opinions
as to the quality of the obligations which they undertake to rate. 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 such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, The Dreyfus
Corporation 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 The Dreyfus
Corporation's credit analysis than might be the case for a fund that invested
in higher rated securities.
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.
Page 35
DREYFUS
Variable
Investment
Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1996, Dreyfus Service Corporation
VIFp050196
__________________________________________________________________________
DREYFUS VARIABLE INVESTMENT FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1996
__________________________________________________________________________
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, 1996, 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-17
Investment Advisory Agreements . . . . . . . . . . . . . . . . . B-22
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . B-29
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . B-29
Determination of Net Asset Value . . . . . . . . . . . . . . . . B-29
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . B-31
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . B-33
Yield and Performance Information. . . . . . . . . . . . . . . . B-35
Information About the Fund . . . . . . . . . . . . . . . . . . . B-37
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . . . . . B-38
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-39
Financial Statements . . . . . . . . . . . . . . . . . . . . . . B-46
Report of Independent Auditors . . . . . . . . . . . . . . . . . B-46
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
Depositary Receipts. (Disciplined Stock, Growth and Income,
International Equity, International Value, Managed Assets and Small
Company Stock Portfolios). These securities may be purchased 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.
Repurchase Agreements. (All Series) The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by a Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Series. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, each Series will enter into
repurchase agreements only with domestic banks with total assets in excess
of $1 billion, or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type
in which the Series may invest, and will require that additional
securities be deposited with it if the value of the securities purchased
should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. (All
Series) These instruments include variable amount master demand notes,
which are obligations that permit a 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. 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, at any time.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, 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 a Fund may invest in them only if at the time of an
investment the borrower meets the criteria set forth in the Fund's
Prospectus for other commercial paper issuers.
Convertible Securities. (Capital Appreciation, Disciplined Stock,
Growth and Income, International Equity, International Value, Managed
Assets, Small Cap and Small Company Stock Portfolios). 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. 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.
Convertible securities are investments that provide for a stable
stream of income with generally higher yields than common stocks. There
can be no assurance of current income because the issuers of the
convertible securities may default on their obligations. 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 prices fluctuate. Convertible securities, however,
generally offer lower interest or dividend yields than non-convertible
securities of similar quality because of the potential for capital
appreciation.
Municipal Obligations. (Quality Bond and Growth and Income
Portfolios) Municipal obligations generally include debt obligations
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.
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.
Mortgage-Related Securities--Private Entity Securities. (Growth and
Income Portfolio) These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Timely
payment of principal and interest on mortgage-related securities backed by
pools created by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual loan,
title, pool and hazard insurance. The insurance and guarantees are issued
by government entities, private insurers and the mortgage poolers. There
can be no assurance that the private insurers or mortgage poolers can meet
their obligations under the policies, so that if the issuers default on
their obligations the holders of the security could sustain a loss. No
insurance or guarantee covers the Series or the price of the Series'
shares. Mortgage-related securities issued by non-governmental issuers
generally offer a higher rate of interest than government-agency and
government-related securities because there are no direct or indirect
government guarantees of payment. The Series will not invest more than 5%
of its assets in such private entity securities issued by any one issuer,
including any one bank or savings and loan institution.
Stripped Treasury Securities. (Zero Coupon 2000 Portfolio and, to a
limited extent, all other Series) 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 payments.
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, as amended (the "1940 Act"). 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 "Description of the Fund--Investment Considerations and
Risks--Special Considerations Relating to Stripped Securities" in the
Prospectus.
Illiquid Securities. (All Series) When purchasing securities that
have not been registered under the Securities Act of 1933, as amended, and
are not readily marketable, a Series will endeavor, to the extent
practicable, 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. However, where a substantial market of
qualified institutional buyers has developed for certain unregistered
securities purchased by the Series pursuant to Rule 144A under the
Securities Act of 1933, as amended, the Series intends to treat such
securities as liquid securities in accordance with procedures approved by
the Fund's Board. Because it is not possible to predict with assurance
how the market for specific restricted securities sold pursuant to Rule
144A will develop, the Fund's Board has directed the Manager to monitor
carefully the relevant 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 cease purchasing restricted
securities pursuant to Rule 144A, a Series' investing in such securities
may have the effect of increasing the level of illiquidity in its
investment portfolio during such period.
Management Policies
Leverage. (Growth and Income and, to a limited extent, Money Market
and Small Company Stock Portfolios) For borrowings for investment
purposes, the 1940 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 required
coverage should decline as a result of market fluctuations or other
reasons, the Series may be required to sell some of its portfolio
securities within three days to reduce the amount of its borrowings 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 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. To the extent a Series enters into a
reverse repurchase agreement, 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
reverse repurchase obligations, plus accrued interest, in certain cases,
in accordance with releases promulgated by the Securities and Exchange
Commission. The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by a Series.
Short-Selling. (Growth and Income and, to a limited extent, Managed
Assets and Small Cap Portfolios). Until a Series closes its short
position or replaces the borrowed security, it will: (a) maintain a
segregated account, containing cash or U.S. Government securities, at such
a level that the amount deposited in the account plus the amount deposited
with the broker as collateral always equals the current value of the
security sold short; or (b) otherwise cover its short position.
Lending Portfolio Securities. (All Series) In connection with its
securities lending transactions, a Series may return to the borrower or a
third party which is unaffiliated with the Series, 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
voting rights on the loaned securities may pass to the borrower, the
Fund's Board must terminate the loan and regain the right to vote the
securities if a material event adversely affecting the investment occurs.
Derivatives. (Disciplined Stock, Growth and Income, International
Equity, International Value, Managed Assets, Small Company Stock and Zero
Coupon 2000 Portfolios) A Series may invest in Derivatives (as defined in
the Fund's Prospectus) for a variety of reasons, including to hedge
certain market risks, to provide a substitute for purchasing or selling
particular securities or to increase potential income gain. Derivatives
may provide a cheaper, quicker or more specifically focused way for the
Series to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit a Series to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Series can increase
or decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing
agency guarantees over-the-counter Derivatives. Therefore, each party to
an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, the Manager (or, if applicable, the Series' sub-
investment adviser) will consider the creditworthiness of counterparties
to over-the-counter Derivatives in the same manner as it would review the
credit quality of a security to be purchased by a Series. Over-the-
counter Derivatives are less liquid than exchange-traded Derivatives since
the other party to the transaction may be the only investor with
sufficient understanding of the Derivative to be interested in bidding for
it.
Futures Transactions--In General. (Disciplined Stock, Growth and Income,
International Equity, International Value, Managed Assets, Small Company
Stock and Zero Coupon 2000 Portfolios) A Series may enter into 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,
if permitted in the Fund's Prospectus, 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 opportunities or arbitrage possibilities not
available in the United States. Foreign markets, however, may have
greater risk potential than domestic markets. For example, some foreign
exchanges are principal markets so that no common clearing facility exists
and an investor may look only to the broker for performance of the
contract. In addition, any profits that a 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. Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to a Fund which
could adversely affect the value of the Series' net assets. 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.
Successful use of futures by a Series also is subject to the ability
of the Manager (or, if applicable, the Series' sub-investment adviser) to
predict correctly movements in the direction of the relevant market and,
to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged
and the price movements of the futures contract. For example, if a Series
uses futures to hedge against the possibility of a decline in the market
value of securities held in its portfolio and the prices of such
securities instead increase, 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. Furthermore, if
in such circumstances the Series has insufficient cash, it may have to
sell securities to meet daily variation margin requirements. A Series may
have to sell such securities at a time when it may be disadvantageous to
do so.
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. The segregation of such assets will have the effect of
limiting a Series' ability otherwise to invest those assets.
Specific Futures Transactions. The Disciplined Stock, Growth and Income,
International Equity, International Value, Managed Assets and Small
Company Stock Portfolios may purchase and sell stock index futures
contracts. A stock index future obligates the Series to pay or receive an
amount of cash equal to a fixed dollar amount specified in the futures
contract multiplied by the difference between the settlement price of the
contract on the contract's last trading day and the value of the index
based on the stock prices of the securities that comprise it at the
opening of trading in such securities on the next business day.
The Growth and Income, International Equity, International Value,
Managed Assets and Small Company Stock Portfolios may purchase and sell
currency futures. A foreign currency future obligates the Series to
purchase or sell an amount of a specific currency at a future date at a
specific price.
The Growth and Income, International Equity, International Value,
Managed Assets and Zero Coupon 2000 Portfolios may purchase and sell
interest rate futures contracts. An interest rate future obligates the
Series to purchase or sell an amount of a specific debt security at a
future date at a specific price.
Options--In General. (Disciplined Stock, Growth and Income, International
Equity, Managed Assets, Small Company Stock and Zero Coupon 2000
Portfolios) The Series may purchase and write (i.e., sell) call or put
options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to
sell, the underlying security or securities at the exercise price at any
time during the option period, or at a specific date. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying security or securities at the exercise
price at any time during the option period.
A covered call option written by a Series is a call option with
respect to which the Series owns the underlying security or otherwise
covers the transaction by segregating cash or other securities. A put
option written by a Series is covered when, among other things, cash or
liquid securities having a value equal to or greater than the exercise
price of the option are placed in a segregated account with the Fund's
custodian to fulfill the obligation undertaken. The principal reason for
writing covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. A Series receives a premium from writing covered call
or put options which it retains whether or not the option is exercised.
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 of the clearing facilities
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, the 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 or it otherwise covers its
position.
Specific Options Transactions. The Disciplined Stock, Growth and Income,
International Equity, Managed Assets and Small Company Stock Portfolios
may purchase and sell call and put options in respect of specific
securities (or groups or "baskets" of specific securities) or stock
indices listed on national securities exchanges or traded in the over-the-
counter market. An option on a stock index is similar to an option in
respect of specific securities, except that settlement does not occur by
delivery of the securities comprising the index. Instead, the option
holder receives an amount of cash if the closing level of the stock index
upon which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. Thus,
the effectiveness of purchasing or writing stock index options will depend
upon price movements in the level of the index rather than the price of a
particular stock.
The Growth and Income, International Equity, Managed Assets and Small
Company Stock Portfolios may purchase and sell call and put options on
foreign currency. These options convey the right to buy or sell the
underlying currency at a price which is expected to be lower or higher
than the spot price of the currency at the time the option is exercised or
expires.
The Disciplined Stock, Growth and Income, International Equity,
Managed Assets and Small Company Stock Portfolios may purchase cash-
settled options on equity index swaps in pursuit of its investment
objective. Equity index swaps involve the exchange by the Series with
another party of cash flows based upon the performance of an index or a
portion of an index of securities which usually includes dividends. A
cash-settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash
equal to the value of the underlying swap as of the exercise date. These
options typically are purchased in privately negotiated transactions from
financial institutions, including securities brokerage firms.
Successful use by a Series of options will be subject to the ability
of the Manager (or, if applicable, the Series' sub-investment adviser) to
predict correctly movements in the prices of individual stocks, the stock
market generally, foreign currencies or interest rates. To the extent
such predictions are incorrect, a Series may incur losses.
Future Developments. A Series may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Series or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Series' investment objective and legally permissible for the Series.
Before entering into such transactions or making any such investment on
behalf of a Series, the Fund will provide appropriate disclosure in its
Prospectus or Statement of Additional Information.
Forward Commitments. (All Series) Securities purchased on a forward
commitment or when-issued basis are subject to changes in value (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
forward commitment or when-issued basis may expose a 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. Purchasing securities on a forward commitment or when-issued
basis when a Series is fully or almost fully invested may result in
greater potential fluctuation in the value of the Series' net assets and
its net asset value per share.
Investment Considerations and Risks
Lower Rated Securities. (Growth and Income, Managed Assets, Small
Cap and Quality Bond Portfolios) Each of the Growth and Income, Managed
Assets, Small Cap and Quality Bond Portfolios is permitted to invest in
securities (convertible debt securities with respect to the Growth and
Income Portfolio) rated Ba or lower by Moody's Investors Service, Inc.
("Moody's") or BB or lower by Standard & Poor's Ratings Group ("S&P"),
Fitch Investors Service, L.P. ("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. Such
securities, though higher yielding, are characterized by 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.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are
higher rated securities. These securities generally are considered by
S&P, Moody's, Fitch and Duff to be, on balance, 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.
Companies that issue certain of these 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 and will fluctuate over time. For example, during an economic
downturn or a sustained period of rising interest rates, highly leveraged
issuers of these securities 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 securities because such securities 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 Fund 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 securities 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.
These securities 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 Manager (or, if applicable, the Series' sub-
investment adviser) will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also
apply to lower rated 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. 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. 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
1940 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 Fund's Board members 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 1940 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.
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.
Disciplined Stock, Growth and Income, International Equity,
International Value and Small Company Stock Portfolios. Each of these
Series has adopted investment restrictions numbered 1 through 8 as
fundamental policies, and each of the Disciplined Stock, International
Value and Small Company Stock Portfolios has adopted investment
restrictions numbered 16 and 17 as additional fundamental policies. These
restrictions cannot be changed, as to a Series, without approval by the
holders of a majority (as defined in the 1940 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 Board members 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 1940 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.
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 1940 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 1940 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.
The following investment restrictions numbered 16 and 17 apply only
to the Disciplined Stock, International Value and Small Company Stock
Portfolios. None of these Series may:
16. Invest more than 5% of its assets in the obligations of any
single 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 limitation.
17. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to
75% of the Series' total assets.
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 Internal Revenue Code of 1986, as amended (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 Board members at any time.
MANAGEMENT OF THE FUND
Board members 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 Board member who is deemed to be an
"interested person" of the Fund, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members of the Fund
* JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995,
Chairman of the Board of 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 Manager and,
until August 24, 1994, the Fund's distributor. From August 1994
until December 31, 1994, he was a director of Mellon Bank
Corporation. He is also Chairman of the Board of Directors of Noel
Group, Inc.; a trustee of Bucknell University; and a director of The
Muscular Dystrophy Association, HealthPlan Services Corporation,
Belding Heminway Company, Inc., Curtis Industries, Inc., and Staffing
Resources, Inc. He is 52 years old and his address is 200 Park
Avenue, New York, New York 10166.
*DAVID P. FELDMAN, Board Member. 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 56 years old and his address is One Oak Way, Berkeley Heights, New
Jersey 07922.
JOHN M. FRASER, JR., Board Member. 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 74 years old and his address is
133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Board Member. 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 57 years old and his
address is 79 John F. Kennedy Street, Cambridge, Massachusetts 02138.
JAMES F. HENRY, Board Member. President of the CPR Institute for Dispute
Resolution, 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 the firm from January 1977 to September 1979. He was
President and a director of the Edna McConnell Clark Foundation, a
philanthropic organization, from September 1971 to December 1976.
Mr. Henry is 65 years old and his address is c/o CPR Institute for
Dispute Resolution, 366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Board Member. 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. Mrs. Jacobs is 70 years old and
her address is c/o Corporate Property Investors, 305 East 47th
Street, New York, New York 10017.
IRVING KRISTOL, Board Member. 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 May 1981 to December 1994, he was a consultant
to the Manager on economic matters; from 1969 to 1988, he was
Professor of Social Thought at the Graduate School of Business
Administration, New York University; and from September 1969 to
August 1979, he was Henry R. Luce Professor of Urban Values at New
York University. Mr. Kristol is 76 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, Board Member. 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 Professor of Medicine and of Human
Genetics and Development at Columbia University from 1968 to 1982.
He is also a director of Pfizer, Inc., a pharmaceutical company, Life
Technologies, Inc., a life science company producing products for
cell and molecular biology and microbiology, and Tularik, Inc., a
biotechnology company, and a general partner of LINC Venture Lease
Partners II, L.P., a limited partnership engaged in leasing. Dr.
Marks is 69 years old and his address is c/o Memorial Sloan-Kettering
Cancer Center, 1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Board Member. 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.
Dr. Peretz is 56 years old and his address is c/o The New Republic,
1220 19th Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Board Member. Financial Consultant. From January 1990
to March 1995, Executive Vice President and Chief Financial Officer,
and, from January 1990 to March 1993, a director 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 and a director of The New
Germany Fund, Mountasia Entertainment International, Inc. and the
Lillian Vernon Corporation. Mr. Wasserman is 63 years old and his
address is 126 East 56th Street, Suite 12 North, New York, New York
10022-3613.
There ordinarily will be no meetings of shareholders for the purpose
of electing Board members unless and until such time as less than a
majority of the Board members holding office have been elected by
shareholders, at which time the Board members then in office will call a
shareholders' meeting for the election of Board members. Under the 1940
Act, shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board members through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board members are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any such Board
members when requested in writing to do so by the shareholders of record
of not less than 10% of the Fund's outstanding shares.
The Fund typically pays its Board members 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. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee
of one-half the amount paid to them as Board members. The aggregate
amount of compensation paid to each Board member by the Fund, and by all
other funds in the Dreyfus Family of Funds for which such person is a
Board member (the number of which is set forth in parenthesis next to each
Board member's total compensation) for the year ended December 31, 1995,
were as follows:
Total Compensation
From Fund and
Aggregate Fund Complex
Name of Board Compensation Paid to Board
Member From Fund* Member
Joseph S. DiMartino $4,080 $448,618(93)
David P. Feldman $3,750 $113,783(37)
John M. Fraser, Jr. $3,750 $58,606(14)
Robert R. Glauber $3,750 $97,503(20)
James F. Henry $3,750 $53,500(10)
Rosalind Gersten Jacobs $3,750 $92,500(20)
Irving Kristol $3,750 $53,500(10)
Dr. Paul A. Marks $3,500 $49,427(10)
Dr. Martin Peretz $3,750 $53,500(10)
Bert W. Wasserman $3,750 $54,739(10)
______________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $764 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and Compliance 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., the ultimate parent of
which is Boston Institutional Group, Inc. Prior to December 1991,
she served as Vice President and Controller, and later as Senior Vice
President, of The Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President,
General Counsel and Secretary 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. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray. He is 31 years old.
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. He is 34 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Vice President
and 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. He is 31 years old.
ELIZABETH A. BACHMAN, Vice President and Assistant Secretary. Assistant
Vice President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.
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. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager. He is 60 years old.
MARGARET M. PARDO, Assistant Secretary. Legal Assistant with the
Distributor and an officer of other investment companies advised or
administered by the Manager. From June 1992 to April 1995, she was a
Medical Coordination Officer at ORBIS International. Prior to June
1992, she worked as Program Coordinator at Physicians World
Communications Group. She is 27 years old.
The address of each officer of the Company 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 indicated Series' shares outstanding on March 19, 1996:
Shareholder Series % of Shares
Transamerica Occidental Growth and Income 69.35%
Life Insurance Company International Equity 73.74%
1150 South Olive Street Capital Appreciation 77.02%
Los Angeles, CA Money Market 76.85%
90015-2223 Managed Assets 64.02%
Zero Coupon 2000 63.56%
Quality Bond 76.11%
Small Cap 19.50%
First Transamerica Life Growth and Income 19.04%
Insurance Company International Equity 14.35%
1150 South Olive Street Capital Appreciation 22.96%
Los Angeles, CA Money Market 22.40%
90015 Managed Assets 31.62%
Zero 2000 Coupon 20.38%
Quality Bond 14.86%
Small Cap 7.04%
Providian Life and Health Growth and Income 7.52%
Insurance Company Zero Coupon 2000 12.44%
P.O. Box 32830 Quality Bond 6.94%
Louisville, KY
40232-2830
Valic Separate Account A Small Cap 67.08%
2929 Allen Parkway
Houston, Texas
77019-2197
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 1940 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 or (ii) vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of such Series, provided that in either
event the continuance also is approved by a majority of the Board members
who are not "interested persons" (as defined in the 1940 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, including a majority of
the Board members who are not "interested persons" of any party to the
Agreement, at a meeting held on March 11, 1996. As to each Series, the
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board 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 1940 Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President,
Chief Operating Officer and a director; Stephen E. Canter, Vice Chairman,
Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman--Distribution and a director; Philip L. Toia, Vice
Chairman--Operations and Administration and a director; William T.
Sandalls, Jr., Senior Vice President and Chief Financial Officer; Barbara
E. Casey, Vice President--Dreyfus Retirement Services; Diane M. Coffey,
Vice President--Corporate Communications; Elie M. Genadry, Vice President-
- -Institutional Sales; William F. Glavin, Jr., Vice President--Corporate
Development; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Mary Beth Leibig, Vice President--Human Resources; Jeffrey N.
Nachman, Vice President--Mutual Fund Accounting; Andrew S. Wasser, Vice
President--Information Services; Maurice Bendrihem, Controller; Elvira
Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling, 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 or (ii) vote of a majority (as defined in the 1940
Act) of the Series' outstanding voting securities, provided that in either
event the continuance also is approved by a majority of the Board members
who are not "interested persons" (as defined in the 1940 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, including a majority of the Board members
who are not "interested persons" of any party to the Comstock Sub-Advisory
Agreement, at a meeting held on March 11, 1996. The Comstock Sub-Advisory
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board 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 1940 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
President; W. Troy Hottenstein, Chief Operating Officer; and Robert
Ringstad, Vice President of Operations.
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 or (ii) vote of a majority (as defined in
the 1940 Act) of the Series' outstanding voting securities, provided that
in either event the continuance also is approved by a majority of the
Board members who are not "interested persons" (as defined in the 1940
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, including a
majority of the Board members who are not "interested persons" of any
party to the Sarofim Sub-Advisory Agreement, at a meeting held on March
11, 1996. The Sarofim Sub-Advisory Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board 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 1940 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 Disciplined Stock and Small Company Stock
Portfolios, the Manager has entered into a Sub-Investment Advisory
Agreement (the "Laurel Sub-Advisory Agreement") with Laurel Capital
Advisors dated December 11, 1995. As to such Series, the Laurel Sub-
Advisory Agreement is subject to annual approval by (i) the Fund's Board
or (ii) vote of a majority (as defined in the 1940 Act) of the Series'
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Board Members who are
not "interested persons" (as defined in the 1940 Act) of the Fund or
Laurel Capital Advisors, by vote cast in person at a meeting called for
the purpose of voting on such approval. The Laurel Sub-Advisory Agreement
is terminable without penalty, (i) by the Manager on 60 days' notice, (ii)
by the Fund's Board 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 Laurel Capital Advisors. The Laurel Sub-Advisory
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
The following persons are officers and/or trustees of Laurel Capital
Advisors: Lawrence S. Kash, President and a trustee; Michael J. Ford,
Vice President and a trustee; Christopher M. Condron, W. Keith Smith,
Garry E. Orrill and Philip R. Roberts, trustees; James M. Gockley, Vice
President; William B. Tunney, Treasurer; and James C. Wadsworth, Chief
Investment Officer.
With respect to the International Value Portfolio, the Manager has
entered into a Sub-Investment Advisory Agreement (the "TBC Asset
Management Sub-Advisory Agreement") with The Boston Company Asset
Management, Inc. dated December 11, 1995. As to such Series, the TBC
Asset Management Sub-Advisory Agreement is subject to annual approval by
(i) the Fund's Board or (ii) vote of a majority (as defined in the 1940
Act) of the Series' outstanding voting securities, provided that in either
event the continuance also is approved by a majority of the Board members
who are not "interested persons" (as defined in the 1940 Act) of the Fund
or The Boston Company Asset Management, Inc., by vote cast in person at a
meeting called for the purpose of voting on such approval. The TBC Asset
Management Sub-Advisory Agreement is terminable without penalty, (i) by
the Managers on 60 days' notice, (ii) by the Fund's Board 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 The
Boston Company Asset Management, Inc. The TBC Asset Management Sub-
Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of The Boston
Company Asset Management, Inc.: Christopher M. Condron, Chairman of the
Board and Chief Executive Officer; and Philip R. Roberts and W. Keith
Smith, directors.
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. With respect to the Managed Assets Portfolio, Comstock
Partners, Inc., with respect to the Capital Appreciation Portfolio, Fayez
Sarofim & Co., with respect to the Disciplined Stock and Small Company
Stock Portfolios, Laurel Capital Advisors, and, with respect to the
International Value Portfolio, The Boston Company Asset Management, Inc.,
provides day-to-day management of such Series' portfolio of investments,
in each case subject to the supervision of the Manager and the Fund's
Board. The Series' adviser is responsible for investment decisions, and
provides the Fund with portfolio managers who are authorized by the Fund's
Board to execute purchases and sales of securities. The Fund's portfolio
managers are Bernard W. Kiernan, Jr. and Patricia A. Larkin, with respect
to the Money Market Portfolio; Garitt Kono and Gerald E. Thunelius, with
respect to the Quality Bond and Zero Coupon 2000 Portfolios; Thomas A.
Frank and Elaine Reese, with respect to the Small Cap Portfolio; Richard
Hoey, with respect to the Growth and Income Portfolio; Ronald Chapman,
with respect to the International Equity Portfolio; Stanley D. Salvigsen,
Charles L. Minter, W. Troy Hottenstein, with respect to the Managed Assets
Portfolio; Russell B. Hawkins and Fayez S. Sarofim, with respect to the
Capital Appreciation Portfolio; Bert Mullins, with respect to the
Disciplined Stock Portfolio; James Wadsworth, with respect to the Small
Company Stock Portfolio; and Sandor Cseh, with respect to the
International Value Portfolio. The Manager, Comstock Partners, Inc.,
Fayez Sarofim & Co., Laurel Capital Advisors and The Boston Company Asset
Management, Inc. 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., Laurel Capital Advisors or The Boston Company
Asset Management, Inc. All purchases and sales of each Series are
reported for the Board's 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, if
applicable, the Series sub-investment advisor). 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 Board members 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.,
Laurel Capital Advisors or The Boston Company Asset Management, Inc. 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 among the Series on the
basis determined by the Fund's Board, 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; .75 of 1% of the value of the Small Company
Stock Portfolio's average daily net assets; .75 of 1% of the value of the
Disciplined Stock Portfolio's average daily net assets; .75 of 1% of the
value of the International Equity Portfolio's average daily net assets;
and 1% of the value of the International Value 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 (other than the Disciplined Stock, Small
Company Stock and International Value Portfolios which had not commenced
operations) to the Manager for the fiscal years ended December 31, 1993,
1994 and 1995 were as follows:
Fee Paid For
Year Ended
December 31, 1993
Advisory 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
Advisory 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.
Fee Paid For
Year Ended
December 31, 1995
Advisory Reduction Net
Series Fee Payable in Fee Fee Paid
Capital Appreciation $157,346 $6,445 $150,901
Growth and Income 194,344 8,743 185,601
International Equity 29,314 17,393 11,921
Money Market 187,396 10,251 177,145
Managed Assets 108,913 0 108,913
Zero Coupon 2000 70,948 4,371 66,577
Quality Bond 147,830 10,017 137,813
Small Cap 2,610,562 0 2,610,562
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, 1993, 1994 and 1995 amounted to $11,281, $79,001
and $108,913, respectively. The sub-advisory fee payable to Comstock
Partners, Inc. for fiscal 1994 was reduced by $44,151 pursuant to an
undertaking in effect, resulting in a net fee paid to Comstock Partners,
Inc. of $34,850 for fiscal 1994.
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
Dally 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
years ended December 31, 1994 and 1995 amounted to $1,634, $18,022 and
$57,217, 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.
Prior to April 1, 1996, M&G Investment Management Limited served as
sub-investment adviser for the International Equity Portfolio pursuant to
a Sub-Investment Advisory Agreement with the Manager. Pursuant to such
agreement, the Manager 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 period
May 2, 1994 (commencement of operations) through December 31, 1994, no
sub-advisory fee was paid by the Manager to M&G Investment Management
Limited with respect to the International Equity Portfolio pursuant to an
undertaking then in effect. For the fiscal year ended December 31, 1995,
the Manager paid M&G Investment Management Limited a sub-advisory fee in
the amount of $4,800.
As compensation for The Boston Company Asset Management, Inc.'s
services, the Manager has agreed to pay The Boston Company Asset
Management, Inc. a monthly sub-advisory fee at the annual rate of .50 of
1% of the value of the International Value Portfolio's average daily net
assets.
As compensation for Laurel Capital Advisors' services with respect to
the Disciplined Stock Portfolio and Small Company Stock Portfolio, the
Manager has agreed to pay Laurel Capital Advisors a monthly sub-advisory
fee at the annual rate set forth below:
Annual Fee as a Percentage
of Average Daily Net Assets
Total Assets of each such Series
0 to $100 million .25 of 1%
$100 million to $1 billion .20 of 1%
$1 billion to $1.5 billion .15 of 1%
$1.5 billion or more .10 of 1%
The Manager (and, with respect to the Managed Assets Portfolio,
Comstock Partners, Inc., and, with respect to the Capital Appreciation
Portfolio, Fayez Sarofim & Co.) 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., and, with respect to the Capital Appreciation
Portfolio, Fayez Sarofim & Co.), or the Manager (and, with respect to the
Managed Assets Portfolio, Comstock Partners, Inc., and, with respect to
the Capital Appreciation Portfolio, Fayez Sarofim & Co.) 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 SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis 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 SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem 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 Fund's Board reserves the right to make payments in whole or
part in securities (which may include non-marketable 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
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 Fund's Board 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 Fund's Board, 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 Fund's Board.
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 Fund's
Board. If such deviation exceeds 1/2 of l%, the Board members promptly
will consider what action, if any, will be initiated. In the event the
Board 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 Fund's Board. 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. 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, Disciplined Stock, Growth and Income,
International Equity, International Value, Managed Assets, Small Company
Stock 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 Fund's Board. 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 Fund's Board, are valued at fair value as
determined in good faith by the Fund's Board. The Fund's Board will
review the method of valuation on a current basis. In making their good
faith valuation of restricted securities, the Board members 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 Fund's Board if the Board members 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 Fund's Board.
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 (other than the Disciplined Stock, Small Company Stock
and International Value Portfolios which had not commenced operations) has
qualified as a "regulated investment company" under the Code for the
fiscal year ended December 31, 1995. It is expected that each of the
Disciplined Stock, Small Company Stock and International Value Portfolios
will qualify as a regulated investment company under the Code. Each
Series intends to continue to so qualify as long as such qualification is
in the best interests of its shareholders. As a regulated investment
company, each Series will pay no Federal income tax on net investment
income and net realized securities gains to the extent that such income
and gains are distributed to shareholders in accordance with applicable
provisions of the Code. To qualify as a regulated investment company, the
Series must distribute at least 90% of its net income (consisting of net
investment income and net short-term capital gain) to its shareholders,
derive less than 30% of its annual gross income from gain on the sale of
securities held for less than three months, and meet certain asset
diversification and other requirements. The term "regulated investment
company" does not imply the supervision of management or investment
practices or policies by any government agency.
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
in the Prospectus. 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 of the Code. Finally, all
or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258 of the
Code. "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 of the Code. 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, if
applicable, the Series' sub-investment adviser) 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, if applicable, the
Series' sub-investment adviser) in advising other funds or accounts and,
conversely, research services furnished to the Manager (or, if applicable,
the Series' sub-investment adviser) 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, if applicable, the Series' sub-investment adviser) 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, 1993, 1994 and 1995. There were no concessions on
principal transactions for the fiscal years ended December 31, 1993, 1994
and 1995, except that concessions on principal transactions for 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. The high portfolio turnover rate for the Quality Bond
Portfolio in fiscal 1995 is largely attributable to the significant
increase in its assets during the period.
Capital Appreciation, Disciplined Stock, Growth and Income,
International Equity, International Value, Managed Assets, Small Company
Stock 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, 1993, 1994 and 1995, the Managed Assets
Portfolio paid brokerage commissions of $5,937,$38,724 and $45,926,
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 $37,885,
$21,115 and $3,165 for the fiscal years ended December 31, 1993, 1994 and
1995, respectively, none of which was paid to the Distributor.
In connection with its portfolio securities transactions for the
fiscal years ended December 31, 1993, 1994 and 1995, the Small Cap
Portfolio paid brokerage commissions of $6,138, $409,523 and $1,240,756,
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 $311,099,
$402,933 and $3,918,624 for the fiscal years ended December 31, 1993,
1994, and 1995, 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 years ended December 31, 1994 and 1995, the
Capital Appreciation Portfolio paid brokerage commissions of $3,731,
$8,911 and $26,346, respectively, none of which was paid to the
Distributor. The above figures for the Capital Appreciation Portfolio do
not include concessions on principal transactions which, where
determinable, amounted to $5,720 for the fiscal year ended December 31,
1995. There were no concessions on principal transactions for the period
April 5, 1993 (commencement of operations) through December 31, 1993 and
for the fiscal year ended December 31, 1994.
In connection with portfolio securities transactions for the period
May 2, 1994 (commencement of operations) through December 31, 1994 and for
the fiscal year ended December 31, 1995, the Growth and Income Portfolio
paid brokerage commissions of $6,175 and $277,680, respectively, none of
which was paid to the Distributor. The increase in brokerage commissions
paid by the Growth and Income Portfolio for fiscal 1995 is largely
attributable to the significant increase in its assets in fiscal 1995.
The above figures for the Growth and Income Portfolio do not include
concessions on principal transactions which, where determinable, amounted
to $1,006,258 for the fiscal year ended December 31, 1995, none of which
was paid to the Distributor. There were no concessions on principal
transactions for period May 2, 1994 (commencement of operations) through
December 31, 1994.
In connection with portfolio transactions for the period May 2, 1994
(commencement of operations) through December 31, 1994 and for the fiscal
year ended December 31, 1995, the International Equity Portfolio paid
brokerage commissions of $5,171 and $41,932, respectively. There were no
concessions on principal transactions for these periods.
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.
No performance information is available for the Disciplined Stock,
Small Company Stock or International Value Portfolios which had not
commenced operations.
Money Market Portfolio. For the seven-day period ended December 31,
1995, the Money Market Portfolio's yield was 5.23% and effective yield was
5.37%. 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 and Quality Bond Portfolios. The Zero Coupon 2000
and Quality Bond Portfolios' current yield for the 30-day period ended
December 31, 1995 was 4.89% and 5.17%, respectively. 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 5.334 year periods ended December 31, 1995 was 17.94% and 11.89%,
respectively. The Quality Bond Portfolio's average annual total return
for the 1 and 5.334 year periods ended December 31, 1995 was 20.42% and
10.88%, respectively. 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,
1995 was 82.23% and 73.58%, respectively. 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, Growth and Income, Small Cap
and International Equity Portfolios. The Managed Assets Portfolio's
average annual total return for the 1 and 5.334 year periods ended
December 31, 1995 was -.26% and 7.05%, respectively. The Capital
Appreciation Portfolio's average annual total return for the 1 and 2.742
year periods ended December 31, 1995 was 33.52% and 15.05%, respectively.
The Growth and Income Portfolio's average annual total return for the 1
and 1.668 year periods ended December 31, 1995 was 61.89% and 32.46%,
respectively. The Small Cap Portfolio's average annual total return for
the 1 and 5.334 year periods ended December 31, 1995 was 29.38% and
55.76%, respectively. The International Equity Portfolio's average annual
total return for the 1 and 1.668 year periods ended December 31, 1995 was
7.39% and 3.11%, respectively. 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, 1995
was 43.86% and 965.81%, respectively. The Capital Appreciation
Portfolio's total return for the period April 5, 1993 (commencement of
operations) through December 31, 1995 was 46.85%. The Growth and Income
Portfolio's total return from May 2, 1994 (commencement of operations)
through December 31, 1995 was 59.92%. The International Equity
Portfolio's total return from May 2, 1994 (commencement of operations)
through December 31, 1995 was 5.25%. 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.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of any
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 Board members from the separate voting requirements of the
rule.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer
and dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Fund during the month, and is reimbursed for
certain out-of-pocket expenses. The Bank of New York, 90 Washington
Street, New York, New York 10286, acts as custodian of the Fund's
investments. Neither the Transfer Agent nor The Bank of New York 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 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 exists 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.
FINANCIAL STATEMENTS and REPORTS OF INDEPENDENT AUDITORS: Money
Market Portfolio, Capital Appreciation Portfolio, Growth and Income
Portfolio, Managed Assets Portfolio, Small Cap Portfolio, International
Equity Portfolio, Quality Bond Portfolio and Zero Coupon 2000 Portfolio
The financial statements and reports of independent auditors
with respect to the above-referenced Series are incorporated by reference
to each Series'annual report dated December 31, 1995. When requesting a
copy of the Fund's Statement of Additional Information, please specify the
particular Series' annual report you wish to receive.
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 each of the five years in the period ended December
31, 1995.
Included in Part B of the Registration Statement:
Statement of Investments--December 31, 1995.
Statement of Financial Futures - Managed Assets
Portfolio--December 31, 1995.
Statement of Assets and Liabilities--December 31, 1995.
Statement of Operations--December 31, 1995.
Statement of Changes in Net Assets--for each of the two
years ended December 31, 1995.
Notes to Financial Statements--December 31, 1995.
Report of Ernst & Young LLP, Independent Auditors, dated
February 9, 1996.
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 are incorporated by reference to Exhibit (1) of
Post-Effective Amendment No. 13 to the Registration Statement on
Form N-1A, filed on April 19, 1995.
(2) Registrant's By-Laws are incorporated by reference to Exhibit (2)
of Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A, filed on April 19, 1995.
(5)(a) Investment Advisory Agreement.
(5)(b) Sub-Investment Advisory Agreement between the Registrant and
Comstock Partners, Inc. is incorporated by reference to Exhibit
(5)(b) of Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed on April 19, 1995.
(5)(c) Sub-Investment Advisory Agreement between the Registrant and Fayez
Sarofim and Co. is incorporated by reference to Exhibit (5)(c) of
Post-Effective Amendment No. 13 to the Registration Statement on
Form N-1A, filed on April 19, 1995.
(5)(d) Sub-Investment Advisory Agreement between The Dreyfus Corporation
and The Boston Company Asset Management, Inc.
(5)(e) Sub-Investment Advisory Agreement between The Dreyfus Corporation
and Laurel Capital Advisors.
(6) Distribution Agreement.
(8)(a) Custody Agreement between the Fund and The Bank of New York is
incorporated by reference to Exhibit (8)(a) of Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A, filed
on April 19, 1995.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A, filed on April 19, 1995.
(11) Consent of Independent Auditors.
(12) Financial Data Schedule.
(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. Other Powers of Attorney 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. Other 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 19, 1996
________________________
Money Market Portfolio . . . . . . . . . . . . . . . . . . . . 4
Managed Assets Portfolio . . . . . . . . . . . . . . . . . . . 4
Zero Coupon 2000 Portfolio . . . . . . . . . . . . . . . . . . 7
Quality Bond Portfolio . . . . . . . . . . . . . . . . . . . . 6
Small Cap Portfolio. . . . . . . . . . . . . . . . . . . . . . 7
Capital Appreciation Portfolio . . . . . . . . . . . . . . . . 3
Growth and Income Portfolio. . . . . . . . . . . . . . . . . . 6
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).
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:
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****;
Mellon Bank, N.A.****
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
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*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Operating Officer The Boston Company*****;
and a Director Deputy Director:
Mellon Trust****;
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
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*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
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, Inc.***;
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
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
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++
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
General Counsel 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
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* 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 131 Second Street,
Lewes, Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place,
Boston, Massachusetts 02108.
+ 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(b). Business and Other Connections of Sub-Investment Advisers
_________________________________________________________
(i) Registrant is fulfilling the requirement of this Item 28(b) to
provide a list of the officers and directors of Comstock Partners, Inc.
("Comstock"), the sub-investment adviser to Registrant's Managed Assets
Portfolio, together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by Comstock or
those of its officers and directors during the past two years, by
incorporating by reference the information contained in the Form ADV filed
with the SEC pursuant to the Investment Advisers Act of 1940 by Comstock (SEC
File No. 801-28570).
(ii) Registrant is fulfilling the requirement of this Item 28(b) to
provide a list of the officers and directors of Fayez Sarofim & Co.
("Sarofim"), the sub-investment adviser to Registrant's Capital Appreciation
Portfolio, together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by Sarofim or those
of its officers and directors during the past two years, by incorporating by
reference the information contained in the Form ADV filed with the SEC
pursuant to the Investment Advisers Act of 1940 by Sarofim (SEC File No. 801-
1725).
(iii) Registrant is fulfilling the requirement of this Item 28(b) to
provide a list of the officers and directors of The Boston Company Asset
Management, Inc. ("TBC Asset Management"), the Registrant's sub-investment
adviser to Registrant's International Value Portfolio, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by TBC Asset Management or those of its
officers and directors during the past two years, by incorporating by
reference the information contained in the Form ADV filed with the SEC
pursuant to the Investment Advisers Act of 1940 by TBC Asset Management (SEC
File No. 801-6829).
(iv) Registrant is fulfilling the requirement of this Item 28(b) to
provide a list of the officers and directors of Laurel Capital Advisors
("Laurel Capital"), the Registrant's sub-investment adviser to Registrant's
Disciplined Stock Portfolio and Small Company Stock Portfolio, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by Laurel Capital or those of its officers and
directors during the past two years, by incorporating by reference the
information contained in the Form ADV filed with the SEC pursuant to the
Investment Advisers Act of 1940 by Laurel Capital (SEC File No. 801-37598).
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 GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Capital Value Fund, Inc.
14) Dreyfus Cash Management
15) Dreyfus Cash Management Plus, Inc.
16) Dreyfus Connecticut Intermediate Municipal Bond Fund
17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth Fund
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth and Value Funds, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) The Dreyfus/Laurel Investment Series
38) Dreyfus Life and Annuity Index Fund, Inc.
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus Michigan Municipal Money Market Fund, Inc.
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus Ohio Municipal Money Market Fund, Inc.
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Short-Term Income Fund, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Strategic Income
70) Dreyfus Strategic Investing
71) Dreyfus Tax Exempt Cash Management
72) The Dreyfus Third Century Fund, Inc.
73) Dreyfus Treasury Cash Management
74) Dreyfus Treasury Prime Cash Management
75) Dreyfus Variable Investment Fund
76) Dreyfus-Wilshire Target Funds, Inc.
77) Dreyfus Worldwide Dollar Money Market Fund, Inc.
78) General California Municipal Bond Fund, Inc.
79) General California Municipal Money Market Fund
80) General Government Securities Money Market Fund, Inc.
81) General Money Market Fund, Inc.
82) General Municipal Bond Fund, Inc.
83) General Municipal Money Market Fund, Inc.
84) General New York Municipal Bond Fund, Inc.
85) General New York Municipal Money Market Fund
86) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
87) Peoples Index Fund, Inc.
88) Peoples S&P MidCap Index Fund, Inc.
89) Premier Insured Municipal Bond Fund
90) Premier California Municipal Bond Fund
91) Premier Capital Growth Fund, Inc.
92) Premier Global Investing, Inc.
93) Premier GNMA Fund
94) Premier Growth Fund, Inc.
95) Premier Municipal Bond Fund
96) Premier New York Municipal Bond Fund
97) Premier State Municipal Bond Fund
98) Premier Strategic Growth 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
Executive 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
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer 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. First Data Investor 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. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To file a post-effective amendment, using financial statements
which need not be certified, within four to six months from the
effective date of Registrant's 1933 Act Registration Statement
pertaining to Small Company Stock, Disciplined Stock and
International Value Portfolios.
(2) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or members 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.
(3) 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.
DREYFUS VARIABLE INVESTMENT FUND
SMALL CAP PORTFOLIO
SCHEDULE III
INVESTMENT IN AFFILIATES
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column D Column E
- ----------------- ----------------------------------------------------------- --------- ---------
Number of Shares
-----------------------------------------------------------
Amount of
Balance held Gross Balance held dividends Value at
Name of issuer at beginning purchase Gross at close credited closed of
and title of issue of period and additions reductions of period to income period (a)
- -------------------- ------------- ------------ ------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Common Stock:
Investment in
non-controlled
affiliate during the
year ended
December 31, 1995 (b);
Duff & Phelps Credit Rating - 317,500 - 317,500 $18,975 $4,564,063
</TABLE>
Column C ("Amount of equity in profit or loss for the period"), column D(2)
("Amount of dividends
or interest - other") were not applicable.
NOTES:
(a) Security restricted as to public resale. The valuation of this
security has been determined in good faith under the direction of the
Board of Directors.
(b) See Note 1(c) to the financial statements.
SIGNATURES
---------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it 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 10th day of April, 1996.
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 and Treasurer (Principal 4/10/96
______________________________ Executive and Financial Officer)
Marie E. Connolly
/s/Joseph F. Tower* Assistant Treasurer (Principal 4/10/96
______________________________ Accounting Officer)
Joseph F. Tower
/s/Joseph S. DiMartino* Trustee 4/10/96
______________________________
Joseph S. DiMartino
/s/David P. Feldman* Trustee 4/10/96
______________________________
David P. Feldman
/s/John M. Fraser, Jr.* Trustee 4/10/96
______________________________
John M. Fraser, Jr.
/s/Robert R. Glauber* Trustee 4/10/96
______________________________
Robert R. Glauber
/s/James F. Henry* Trustee 4/10/96
______________________________
James F. Henry
/s/Rosalind Gersten Jacobs* Trustee 4/10/96
______________________________
Rosalind Gersten Jacobs
/s/Irving Kristol* Trustee 4/10/96
______________________________
Irving Kristol
/s/Dr. Paul A. Marks* Trustee 4/10/96
______________________________
Dr. Paul A. Marks
/s/Dr. Martin Peretz* Trustee 4/10/96
______________________________
Dr. Martin Peretz
/s/Bert W. Wasserman* Trustee 4/10/96
______________________________
Bert W. Wasserman
*BY: /s/Eric B. Fischman
__________________________
Eric B. Fischman,
Attorney-in-Fact
INDEX OF EXHIBITS
(5)(a) Investment Advisory Agreement
(5)(d) Sub-Investment Advisory Agreement
(5)(e) Sub-Investment Advisory Agreement
(6) Distribution Agreement
(11) Consent of Independent Auditors
(12) Financial Data Schedule
Other Exhibits:
(a) Power of Attorney
(b) Certificate of Secretary
Exhibit (5)(a)
INVESTMENT ADVISORY AGREEMENT
DREYFUS VARIABLE INVESTMENT FUND
200 Park Avenue
New York, New York 10166
August 24, 1994
As Amended, December 11, 1995
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund") consisting of the
series named on Schedule 1 hereto, as such Schedule may be revised from
time to time (each, a "Series"), herewith confirms its agreement with you
as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its charter documents 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. The Fund desires to employ you to act as the Fund's
investment adviser.
In this connection 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 or 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. We have discussed and concur in your
employing on this basis the indicated sub-advisers ("Dreyfus-engaged Sub-
Investment Advisers") and we intend to employ the indicated sub-advisers
("Fund-engaged Sub-Investment Advisers") named on Schedule 1 hereto to act
as the Fund's sub-investment adviser with respect to the Series indicated
on Schedule 1 hereto (the "Sub-Advised Series") to provide day-to-day
management of the Sub-Advised Series' investments.
Subject to the supervision and approval of the Fund's Board, you
will provide investment management of each Series' portfolio in accordance
with such 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 each Series' investments and
conduct, or with respect to the Sub-Advised Series, supervise, a continuous
program of investment, evaluation and, if appropriate, sale and
reinvestment of such Series' assets. You will furnish to the Fund such
statistical information, with respect to the investments which a Series may
hold or contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially affecting
any 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.
In addition, you will supply office facilities (which may be in
your own offices), data processing services, clerical, accounting and
bookkeeping services, internal auditing and legal services, internal
executive and administrative services, and stationery and office supplies;
prepare reports to each Series' stockholders, tax returns, reports to and
filings with the Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of each Series' shares; and
generally assist in all aspects of the Fund's operations. You shall have
the right, at your expense, to engage other entities to assist you in
performing some or all of the obligations set forth in this paragraph,
provided each such entity enters into an agreement with you in form and
substance reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as if you had
acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the services
to be provided to the Fund hereunder and the Fund agrees as an inducement
to your undertaking the same that neither you nor a Dreyfus-engaged Sub-
Investment Adviser shall be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by one or more Series, provided
that nothing herein shall be deemed to protect or purport to protect you or
the Dreyfus-engaged Sub-Investment Adviser against any liability to the
Fund or a Series or to its 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, or to which the
Dreyfus-engaged Sub-Investment Adviser would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of
its duties under its Sub-Investment Advisory Agreement with you or by
reason of its reckless disregard of its obligations and duties under said
Agreement.
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
rate set forth opposite each Series' name on Schedule 1 hereto. 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. 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 Agree-ment.
For the purpose of determining fees payable to you, the value of
each Series' net assets shall be computed in the manner specified in the
Fund's charter documents for the computation of the value of each Series'
net assets.
You will bear all expenses in connection with the performance of
your services under this Agreement and will pay all fees of each Dreyfus-
engaged Sub-Investment Adviser in connection with its duties in respect of
the Fund. All other expenses to be incurred in the operation of the Fund
(other than those borne by any Sub-Investment 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, interest and
distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not your officers,
directors or employees or holders of 5% or more of your outstanding voting
securities or those of any Sub-Investment Adviser or any affiliate of you
or any Sub-Investment Adviser, Securities and Exchange Commission fees and
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 preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing stockholders, costs of
stockholders' reports and meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate expenses
of the Fund (including fees pursuant to this Agreement and the Fund's Sub-
Investment Advisory Agreement with a Fund-engaged Sub-Investment Adviser,
but excluding interest, taxes, brokerage 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
(and the Sub-Investment Advisory Agreement with the Fund-engaged Sub-
Investment Adviser), or you (and the Fund-engaged Sub-Investment Adviser)
will bear, such excess expense to the extent required by state law. Your
obligation pursuant hereto will be 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 and each Dreyfus-engaged Sub-
Investment Adviser now act, and that from time to time hereafter you or a
Dreyfus-engaged Sub-Investment Adviser may act, as investment adviser to
one or more other investment companies and fiduciary or other managed
accounts, and the Fund has no objection to your and the Dreyfus-engaged
Sub-Investment Adviser's so acting, provided that when the purchase or sale
of securities of the same issuer is suitable for the investment objectives
of two or more companies or accounts managed by you which have available
funds for investment, the available securities will be allocated in a
manner believed by you to be equitable to each company or account. It is
recognized that in some cases this procedure may adversely affect the price
paid or received by one or more Series or the size of the position
obtainable for or disposed of by one or more Series.
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 service and nothing contained herein
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.
Neither you nor a Dreyfus-engaged Sub-Investment Adviser shall be
liable for any error of judgment or mistake of law or for any loss suffered
by the Fund in connection with the matters to which this Agreement relates,
except, in the case of you, 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 and, in the case of a Dreyfus-engaged Sub-Investment
Adviser, for a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under its Sub-Investment
Advisory Agreement with you. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an officer,
Board member, 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.
As to each Series, this Agreement shall continue until the date
set forth opposite such Series' name on Schedule 1 hereto (the "Reapproval
Date") and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name
on Schedule 1 hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board or (ii)
vote of a majority (as defined in the Investment Company Act of 1940) of
such Series' outstanding voting securities, provided that in either event
its continuance also is approved by a majority of the Fund's Board members
who are not "interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. As to each Series, this Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by
vote of holders of a majority of such Series' shares or, upon not less than
90 days' notice, by you. This Agreement also will terminate automatically,
as to the relevant Series, in the event of its assignment (as defined in
said Act).
The Fund recognizes that from time to time your directors,
officers and employees may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other
entities may include the name "Dreyfus" as part of their name, and that
your corporation or its affiliates may enter into investment advisory or
other agreements with such other entities. If you cease to act as the
Fund's investment adviser, the Fund agrees that, at your request, the Fund
will take all necessary action to change the name of the Fund to a name not
including "Dreyfus" in any form or combination of words.
The Fund is agreeing to the provisions of this Agreement that
limit a Dreyfus-engaged Sub-Investment Adviser's liability and other
provisions relating to a Dreyfus-engaged Sub-Investment Adviser so as to
induce the Dreyfus-engaged Sub-Investment Adviser to enter into its Sub-
Investment Advisory Agreement with you and to perform its obligations.
Each Dreyfus-engaged Sub-Investment Adviser is expressly made a third party
beneficiary of this Agreement with rights as respects the Sub-Advised
Series to the same extent as if it had been a party hereto.
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 Board member,
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:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Managed Assets
Portfolio1 .375 of 1% May 21, 1996 May 21st
Capital Appreciation
Portfolio2 * May 21, 1996 May 21st
Disciplined Stock
Portfolio3 .75 of 1% May 21, 1997 May 21st
Growth and Income
Portfolio .75 of 1% May 21, 1996 May 21st
International Equity
Portfolio4 .75 of 1% May 21, 1996 May 21st
International Value
Portfolio5 1% May 21, 1997 May 21st
Money Market
Portfolio .50 of 1% May 21, 1996 May 21st
Quality Bond
Portfolio .65 of 1% May 21, 1996 May 21st
Small Cap Portfolio .75 of 1% May 21, 1996 May 21st
Small Company
Stock Portfolio3 .75 of 1% May 21, 1997 May 21st
Zero Coupon 2000
Portfolio .45 of 1% May 21, 1996 May 21st
_________________________
* .55% of the first $150 million of total assets; .50% of the next $150
million of total assets; and .375% of total assets over $300 million.
1 The Fund has employed Comstock Partners, Inc. to act as sub-investment
adviser.
2 The Fund has employed Fayez Sarofim & Co. to act as sub-investment
adviser.
3 The Dreyfus Corporation has employed Laurel Capital Advisors to act
as sub-investment adviser.
4 The Dreyfus Corporation has employed M&G Investment Management Limited
to act as sub-investment adviser.
5 The Dreyfus Corporation has employed The Boston Company Asset
Management, Inc. to act as sub-investment adviser.
Exhibit (5)(d)
SUB-INVESTMENT ADVISORY AGREEMENT
THE DREYFUS CORPORATION
200 Park Avenue
New York, New York 10166
December 11, 1995
The Boston Company Asset
Management, Inc.
One Boston Place
Boston, MA 02108-4402
Dear Sirs:
As you are aware, each series of Dreyfus Variable Investment Fund
(the "Fund") named on Schedule 1 hereto, as such Schedule may be revised
from time to time (each, a "Series"), desires to employ its capital by
investing and reinvesting the same in investments of the type and in
accordance with the limitations specified in the Fund's charter documents
and in the Fund's 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. The Fund employs The Dreyfus Corporation
(the "Adviser") to act as its investment adviser pursuant to a written
agreement (the "Investment Advisory Agreement"), a copy of which has been
furnished to you. The Adviser desires to employ you to act as each Series'
sub-investment adviser.
In this connection, 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 or 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,
you will provide investment management of each Series' portfolio in
accordance with such 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
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 a Series may
hold or contemplate purchasing, as the Adviser or the Fund may reasonably
request. The Fund and the Adviser wish to be informed of important
developments materially affecting a Series' portfolio and shall expect you,
on your own initiative, to furnish to the Fund or the Adviser 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 Adviser 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 one or more
Series or the Adviser, provided that nothing herein shall be deemed to
protect or purport to protect you against any liability to the Adviser, the
Fund or a Series or to its 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 Adviser will pay you, on the first business day of each month, out of
the management fee it receives and only to the extent thereof, a fee
calculated daily and paid monthly at the rate set forth opposite each
Series' name on Schedule 1 hereto.
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 you begin
to actively manage the assets of the Series to the end of such month 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 within 10 business days of date of termination
of this Agreement.
For the purpose of determining fees payable to you, the
value of each Series' net assets shall be computed in the manner specified
in the Fund's charter documents 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 Fund (other than those borne by the Adviser or others)
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, interest and
distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
you or the Adviser or any affiliate of you or the Adviser, Securities and
Exchange Commis-sion fees and 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 preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing stockholders, costs of
stockholders' reports and meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate expenses
of the Fund (including fees pursuant to the Fund's Investment Advisory
Agreement, but excluding interest, taxes, brokerage 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 Adviser may deduct from the fees to be
paid hereunder, or you will bear such excess expense on a pro-rata basis
with the Adviser, in the proportion ("Your Proportion") that the sub-
advisory fee payable to you pursuant to this Agreement bears to the fee
payable to the Adviser pursuant to the Investment Advisory Agreement, to
the extent required by state law. As to each Series, if the Adviser, after
notice to you, waives, for any other reason, or fails to receive any
portion of its fees with respect to such Series under the Investment
Advisory Agreement, your fee under this Agreement shall be reduced by Your
Proportion of the amount which the Adviser shall have waived or not
received. Your obligation pursuant hereto will be 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 Adviser understands that you now act, and that from time to
time hereafter you may act, as investment adviser to one or more other
investment companies and fiduciary or other managed accounts, and the
Adviser has no objection to your so acting, provided that when purchase or
sale of securities of the same issuer is suitable for the investment
objectives of two or more companies or accounts managed by you which have
available funds for investment, the available securities will be allocated
in a manner believed by you to be equitable to each company or account.
It is recognized that in some cases this procedure may adversely affect the
price paid or received by one or more Series or the size of the position
obtainable for or disposed of by one or more Series.
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 contained herein 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 Fund or the Adviser 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, Board member, 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.
As to each Series, this Agreement shall continue until the date
set forth opposite such Series' name on Schedule 1 hereto (the "Reapproval
Date"), and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name
on Schedule 1 hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board or (ii)
vote of a majority (as defined in the Investment Company Act of 1940, as
amended) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's
Board members who are not "interested persons" (as defined in said Act) of
any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this Agreement
is terminable without penalty (i) by the Adviser upon 60 days' notice
to you, (ii) by the Fund's Board or by vote of the holders of a majority of
such Series' shares upon 60 days' notice to you, or (iii) by you upon not
less than 60 days' notice to the Fund and the Adviser. This Agreement also
will terminate automatically, as to the relevant Series, in the event of
its assignment (as defined in said Act). In addition, notwithstanding
anything herein to the contrary, if the Investment Advisory Agreement
terminates for any reason, this Agreement shall terminate effective upon
the date the Investment Advisory Agreement terminates.
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,
THE DREYFUS CORPORATION
By:_________________________ Accepted:
THE BOSTON COMPANY ASSET
MANAGEMENT, INC.
By:__________________________
SCHEDULE 1
Annual
Fee as a
Percentage
of Average
Daily
Name of Series Net Assets Reapproval Date Reapproval Day
International Value .50 of 1% May 21, 1997 May 21st
Portfolio
Exhibit (5)(e)
SUB-INVESTMENT ADVISORY AGREEMENT
THE DREYFUS CORPORATION
200 Park Avenue
New York, New York 10166
December 11, 1995
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, PA 15258
Dear Sirs:
As you are aware, each series of Dreyfus Variable Investment Fund
(the "Fund") named on Schedule 1 hereto, as such Schedule may be revised
from time to time (each, a "Series"), desires to employ its capital by
investing and reinvesting the same in investments of the type and in
accordance with the limitations specified in the Fund's charter documents
and in the Fund's 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. The Fund employs The Dreyfus Corporation
(the "Adviser") to act as its investment adviser pursuant to a written
agreement (the "Investment Advisory Agreement"), a copy of which has been
furnished to you. The Adviser desires to employ you to act as each Series'
sub-investment adviser.
In this connection, 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 or 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, you will
provide investment management of each Series' portfolio in accordance with
such 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 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 a Series may hold or contemplate
purchasing, as the Adviser or the Fund may reasonably request. The Fund
and the Adviser wish to be informed of important developments materially
affecting a Series' portfolio and shall expect you, on your own initiative,
to furnish to the Fund or the Adviser 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 Adviser 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 one or more
Series or the Adviser, provided that nothing herein shall be deemed to
protect or purport to protect you against any liability to the Adviser, the
Fund or a Series or to its 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 Adviser will pay you, on the first business day of each month, out of
the management fee it receives and only to the extent thereof, a fee
calculated daily and paid monthly at the rate set forth opposite each
Series' name on Schedule 1 hereto.
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 you begin
to actively manage the assets of the Series to the end of such month 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 within 10 business days of date of termination
of this Agreement.
For the purpose of determining fees payable to you, the
value of each Series' net assets shall be computed in the manner specified
in the Fund's charter documents 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 Fund (other than those borne by the Adviser or others)
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, interest and
distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
you or the Adviser or any affiliate of you or the Adviser, Securities and
Exchange Commis-sion fees and 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 preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing stockholders, costs of
stockholders' reports and meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate expenses
of the Fund (including fees pursuant to the Fund's Investment Advisory
Agreement, but excluding interest, taxes, brokerage 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 Adviser may deduct from the fees to be
paid hereunder, or you will bear such excess expense on a pro-rata basis
with the Adviser, in the proportion ("Your Proportion") that the sub-
advisory fee payable to you pursuant to this Agreement bears to the fee
payable to the Adviser pursuant to the Investment Advisory Agreement, to
the extent required by state law. As to each Series, if the Adviser, after
notice to you, waives, for any other reason, or fails to receive any
portion of its fees with respect to such Series under the Investment
Advisory Agreement, your fee under this Agreement shall be reduced by Your
Proportion of the amount which the Adviser shall have waived or not
received. Your obligation pursuant hereto will be 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 Adviser understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one or more
other investment companies and fiduciary or other managed accounts, and the
Adviser has no objection to your so acting, provided that when purchase or
sale of securities of the same issuer is suitable for the investment
objectives of two or more companies or accounts managed by you which have
available funds for investment, the available securities will be allocated
in a manner believed by you to be equitable to each company or account.
It is recognized that in some cases this procedure may adversely affect the
price paid or received by one or more Series or the size of the position
obtainable for or disposed of by one or more Series.
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 contained herein 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 Fund or the Adviser 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, Board member, 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.
As to each Series, this Agreement shall continue until the date
set forth opposite such Series' name on Schedule 1 hereto (the "Reapproval
Date"), and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name
on Schedule 1 hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board or (ii)
vote of a majority (as defined in the Investment Company Act of 1940, as
amended) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's
Board members who are not "interested persons" (as defined in said Act) of
any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this Agreement
is terminable without penalty (i) by the Adviser upon 60 days' notice
to you, (ii) by the Fund's Board or by vote of the holders of a majority of
such Series' shares upon 60 days' notice to you, or (iii) by you upon not
less than 60 days' notice to the Fund and the Adviser. This Agreement also
will terminate automatically, as to the relevant Series, in the event of
its assignment (as defined in said Act). In addition, notwithstanding
anything herein to the contrary, if the Investment Advisory Agreement
terminates for any reason, this Agreement shall terminate effective upon
the date the Investment Advisory Agreement terminates.
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,
THE DREYFUS CORPORATION
By:_________________________ Accepted:
LAUREL CAPITAL ADVISORS
By:__________________________
SCHEDULE 1
Annual
Fee as a
Percentage
of Average
Daily
Name of Series Net Assets Reapproval Date Reapproval Day
Disciplined Stock * May 21, 1997 May 21st
Portfolio
Small Company Stock * May 21, 1997 May 21st
Portfolio
______________________
* .25% of the first $100 million of total assets; .20% of the next $900
million of total assets; .15% of the next $500 million of total
assets; and .10% of total assets over $1.5 billion.
Exhibit (6)
DISTRIBUTION AGREEMENT
DREYFUS VARIABLE INVESTMENT FUND
200 Park Avenue
New York, New York 10166
August 24, 1994
As Amended, December 11, 1995
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of 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 vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
5. Miscellaneous
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 Board member, officer or
shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
DREYFUS VARIABLE INVESTMENT FUND
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Name of Series Reapproval Date
Reapproval Day
Capital Appreciation May 21, 1996 May 21st
Portfolio
Disciplined Stock May 21, 1997 May 21st
Portfolio
Growth and Income May 21, 1996 May 21st
Portfolio
International Equity May 21, 1996 May 21st
Portfolio
International Value May 21, 1997 May 21st
Portfolio
Managed Assets May 21, 1996 May 21st
Portfolio
Money Market Portfolio May 21, 1996 May 21st
Quality Bond Portfolio May 21, 1996 May 21st
Small Cap Portfolio May 21, 1996 May 21st
Small Company Stock May 21, 1997 May 21st
Portfolio
Zero Coupon 2000 May 21, 1996 May 21st
Portfolio
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our report
dated February 9, 1996 in this Registration Statement (Form N-1A No.
33-13690) of Dreyfus Variable Investment Fund.
ERNST & YOUNG LLP
New York, New York
April 15, 1996
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<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 6584
<ACCUMULATED-NII-PRIOR> (7)
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 79
<AVERAGE-NET-ASSETS> 3909
<PER-SHARE-NAV-BEGIN> 12.02
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> .74
<PER-SHARE-DIVIDEND> (.09)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.82
<EXPENSE-RATIO> .016
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Other Exhibit
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints Frederick C.
Dey, Eric B. Fischman and John E. Pelletier and each of them, with full
power to act without the other, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to the Registration Statement for
each Fund listed on Schedule A attached hereto (including post-effective
amendments and amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/Joseph S. DiMartino
Joseph S. DiMartino, Director/Trustee
/s/David P. Feldman
David P. Feldman, Director/Trustee
Dated: December 1, 1995
Schedule A
Group II
Dreyfus A Bonds Plus, Inc.
Dreyfus Balanced Fund, Inc.
Dreyfus Global Bond Fund, Inc.
Dreyfus Growth and Income Fund, Inc.
Dreyfus Growth Opportunity Fund, Inc.
Dreyfus Institutional Money Market Fund
Dreyfus International Equity Fund, Inc.
Dreyfus International Recovery Fund, Inc.
Dreyfus Money Market Instruments, Inc.
Dreyfus Variable Investment Fund
Premier Capital Growth Fund, Inc.
Other Exhibit (b)
DREYFUS VARIABLE INVESTMENT FUND
Assistant Secretary's Certificate
The undersigned, Eric B. Fischman, Assistant Secretary of Dreyfus
Variable Investment Fund (the "Fund"), hereby certifies that set forth
below is a copy of the resolution adopted by the Written Consent of the
Fund's Board members on August 10, 1994, authorizing the signing by
Frederick C. Dey, Eric B. Fischman and John E. Pelletier on behalf of the
proper officers of the Fund pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto may be signed by any one of Frederick
C. Dey, Ruth D. Leibert, Eric B. Fischman and John E. Pelletier as the
attorney-in-fact for the proper officers of the Fund, with full power of
substitution and resubstitution; and that the appointment of each of such
persons as such attorney-in-fact hereby is authorized and approved; and
that such attorneys-in-fact, and each of them, shall have full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection with such Registration Statement and
any and all amendments and supplements thereto, as fully to all intents
and purposes as the officer for whom he is acting as attorney-in-fact,
might or could do in person.
IN WITNESS THEREOF, I have hereunto signed my name and affixed the
seal of the Fund on April 10, 1996.
Eric B. Fischman
Assistant Secretary
(SEAL)
