File Nos. 33-13690
811-5125
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. 25 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 25 [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)
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X on May 1, 2000 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(1)
----
on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Dreyfus Variable Investment Fund
Appreciation Portfolio
Investing in common stocks for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Appreciation Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objectives and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks long-term capital growth consistent with the preservation of
capital; current income is a secondary goal. To pursue these goals, the
portfolio invests in common stocks focusing on "blue chip" companies with total
market values of more than $5 billion at the time of purchase. These established
companies have demonstrated sustained patterns of profitability, strong balance
sheets, an expanding global presence and the potential to achieve predictable,
above-average earnings growth.
In choosing stocks, the portfolio looks primarily for growth companies. The
portfolio first identifies economic sectors it believes will expand over the
next three to five years or longer. Using fundamental analysis, the portfolio
then seeks companies within these sectors that have demonstrated sustained
patterns of profitability, strong balance sheets, an expanding global presence
and the potential to achieve predictable, above-average earnings growth. The
portfolio is also alert to companies which it considers undervalued in terms of
earnings, assets or growth prospects. The portfolio generally maintains
relatively large positions in the securities it purchases.
The portfolio typically employs a "buy-and-hold" investment strategy, and seeks
to keep annual portfolio turnover below 15%. As a result, the portfolio invests
for long-term growth rather than short-term profits.
The portfolio typically sells a stock when there is a change in a company's
business fundamentals or in the portfolio's view of company management.
Concepts to understand
"BLUE CHIP" COMPANIES: established companies that are considered "known
quantities." These companies often have a long record of profit growth and
dividend payment and a reputation for quality management, products and services
"BUY-AND-HOLD" STRATEGY: an investment strategy characterized by a low portfolio
turnover rate, which helps reduce the portfolio's trading costs and minimizes
tax liability by limiting the distribution of capital gains.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
smaller companies). Moreover, since the portfolio holds large positions in a
relatively small number of stocks, it can be volatile when the
large-capitalization sector of the market is out of favor with investors.
Growth companies are expected to increase their earnings at a certain rate. When
these expectations are not met, investors can punish the stocks inordinately --
even if earnings showed an absolute increase. In addition, growth stocks
typically lack the dividend yield to cushion stock prices in market downturns.
While many companies in which the portfolio invests are listed on a domestic
exchange, they have foreign operations that pose special risks such as exposure
to currency fluctuations and changing political climate.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its primary
investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goals, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the S&P 500((reg.tm)), a widely recognized, unmanaged index of stock
performance. Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
3.04 33.52 25.56 28.05 30.22 11.46
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +20.77%
WORST QUARTER: Q3 '98 -10.69%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (4/5/93)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 11.46% 25.52% 20.05%
S&P 500 21.03% 28.54% 21.63%*
</TABLE>
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 3/31/93 IS USED AS THE
BEGINNING VALUE ON 4/5/93.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.03%
- --------------------------------------------------------------------------------
TOTAL 0.78%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$80 $249 $433 $966
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment advisers for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid an aggregate investment advisory fee at the annual rate of 0.75%
of the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Fayez Sarofim. He has been the
portfolio's primary portfolio manager since the portfolio's inception. He is the
president and chairman of Fayez Sarofim & Co., Two Houston Center, Suite 2907,
Houston, Texas 77010, which serves as the portfolio's sub-investment adviser.
Sarofim managed approximately $60.3 billion in discretionary separate accounts
and provided investment advisory services for five other investment companies
having aggregate assets of approximately $7.1 billion as of December 31, 1999.
The portfolio, Dreyfus, Fayez Sarofim & Co., and Dreyfus Service Corporation
(the portfolio's distributor) each have adopted a code of ethics that permits
its personnel, subject to such code, to invest in securities, including
securities that may be purchased or held by the portfolio. The Dreyfus code of
ethics restricts the personal securities transactions of its employees, and
requires portfolio managers and other investment personnel to comply with the
code's preclearance and disclosure procedures. Its primary purpose is to ensure
that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst &Young LLP, whose report, along with the portfolio's financial statements,
is included in the annual report, which is available upon request. Keep in mind
that fees and charges imposed by participating insurance companies, which are
not reflected in the table, would reduce the investment returns that are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 36.11 27.91 21.98 17.71 13.44
Investment operations: Investment income -- net .25(1) .20 .22 .23 .23
Net realized and unrealized gain (loss)
on investments 3.88 8.21 5.95 4.30 4.27
Total from investment operations 4.13 8.41 6.17 4.53 4.50
Distributions: Dividends from investment income -- net (.22) (.20) (.22) (.23) (.23)
Dividends from net realized gain on investments (.01) (.01) (.02) (.03) --
Dividends in excess of net realized gain on investments (.14) -- -- -- --
Total distributions (.37) (.21) (.24) (.26) (.23)
Net asset value, end of period 39.87 36.11 27.91 21.98 17.71
Total return (%) 11.46 30.22 28.05 25.56 33.52
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .78 .80 .80 .84 .85
Ratio of interest expense and loan commitment fees
to average net assets (%) .00(2) .01 -- -- --
Ratio of net investment income
to average net assets (%) .64 .84 1.08 1.46 2.08
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .02
Portfolio turnover rate (%) 3.87 1.34 1.69 2.47 2.81
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,027,797 673,835 247,011 103,745 46,930
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) AMOUNT REPRESENTS LESS THAN .01%.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares.
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Appreciation Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund Appreciation Portfolio
(formerly, Capital Appreciation Portfolio)
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
112P0500
<PAGE>
Dreyfus Variable Investment Fund
Balanced Portfolio
Investing in stocks and bonds for total return
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Balanced Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks to provide investment results that are greater than the
total return performance of common stocks and bonds represented by a hybrid
index, 60% of which is the Standard & Poor's 500 Composite Stock Price Index
("S&P 500") and 40% of which is the Lehman Brothers Intermediate
Government/Corporate Bond Index ("Lehman Intermediate Index"). To pursue this
goal, the portfolio invests in a diversified mix of stocks and investment grade
bonds of both U.S. and foreign issuers. The portfolio's normal asset allocation
is approximately 60% stocks and 40% bonds. However, the portfolio is permitted
to invest up to 75%, and as little as 40%, of its assets in stocks and up to
60%, and as little as 25%, of its assets in bonds.
In allocating assets between stocks and bonds, the portfolio managers assess the
relative return and risks of each asset class using a model which analyzes
several factors, including interest-rate-adjusted price/earnings ratios, the
valuation and volatility levels of stocks relative to bonds, and other economic
factors, such as interest rates.
In selecting stocks, Dreyfus uses a valuation model to identify and rank stocks
within an industry or sector, based on:
* value, or how a stock is priced relative to its perceived intrinsic worth
* growth, in this case the sustainability or growth of earnings
* financial profile, which measures the financial health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities. Dreyfus then manages risk by diversifying across
companies and industries and by maintaining risk characteristics, such as
growth, size, quality and yield, that are similar to those of the S&P 500.
In choosing bonds, the portfolio managers review economic, market and other
factors, leading to valuations by sector, maturity and quality. The portfolio's
bond component consists primarily of domestic and foreign bonds issued by
corporations or governments and rated investment grade or considered to be of
comparable quality by Dreyfus. The dollar-weighted average maturity of the bond
component normally will not exceed 10 years.
Concepts to understand
S&P 500((reg.tm)): a widely recognized, unmanaged index of 500 common stocks
chosen to reflect the industries of the U.S. economy.
LEHMAN INTERMEDIATE INDEX: a recognized, unmanaged index of U.S. government and
investment grade corporate bonds.
MAIN RISKS
The stock and bond markets can perform differently from each other, so the
portfolio will be affected by its asset allocation. If the portfolio favors an
asset class during a period when that class underperforms, performance may be
hurt. The value of a shareholder's investment in the portfolio will go up and
down, which means that shareholders could lose money.
The portfolio is exposed to risks of both growth and value companies. Value
stocks may never reach what the portfolio manager believes is their full market
value and, even though they are undervalued, may decline in price. While the
portfolio's investments in value stocks may limit the overall downside risk of
the portfolio over time, they may produce smaller gains than riskier stocks.
Prices of growth stocks are based in part on future expectations, which means
they can fall sharply if the prospects for a stock, industry or the economy in
general are below the market's expectations, even if earnings do increase.
Growth stocks also typically lack the dividend yield to cushion stock prices in
market downturns.
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in prices, and therefore in the portfolio's
share price as well.
Bond prices also may be hurt by a downgrade of the bond's credit rating, or a
decline in or the perception of a decline in the financial condition of the
issuer, which could potentially lower the portfolio's share price.
In general, the risks of foreign stocks and bonds are greater than the risks of
their U.S. counterparts because of less liquidity, changes in currency exchange
rates, a lack of comprehensive company information and political instability.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some of its assets in derivative securities,
such as options and futures. These practices, when employed, are used primarily
to hedge the portfolio but may be used to increase returns; however, such
practices may reduce returns or increase volatility. Derivatives can be
illiquid, and a small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
The portfolio, at times, may also engage in short-term trading, which could
increase the portfolio's transaction costs and taxable distributions, lowering
its after-tax performance accordingly.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the S&P 500((reg.tm)), the Lehman Intermediate Index, and the hybrid
index composed of 60% S&P 500((reg.tm)) and 40% Lehman Intermediate Index. Of
course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
22.34 8.13
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +14.14%
WORST QUARTER: Q3 '98 -1.39%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (5/1/97)
- --------------------------------------------------------------------------------
PORTFOLIO 8.13% 18.33%
S&P 500 21.03% 27.36%*
LEHMAN
INTERMEDIATE INDEX -2.06% 5.78%*
HYBRID INDEX 12.78% 18.68%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 4/30/97 IS USED AS THE
BEGINNING VALUE ON 5/1/97.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.11%
- --------------------------------------------------------------------------------
TOTAL 0.86%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$88 $274 $477 $1,061
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio managers are Ron Gala and Laurie Carroll. Mr.
Gala has managed the equity portion of the portfolio since the portfolio's
inception. Mr. Gala is a vice president and portfolio manager for Mellon Bank
and a portfolio manager for Mellon Equity Associates, an affiliate of Dreyfus.
Mr. Gala also is responsible for Mellon Equity Associates' asset allocation. Mr.
Gala has been employed by Mellon Bank in various capacities since 1982. Ms.
Carroll has managed the fixed-income portion of the portfolio since the
portfolio's inception. Ms. Carroll is a vice president and portfolio manager at
Mellon Bank. Ms. Carroll has been employed by Mellon Bank since 1986. Mr. Gala
and Ms. Carroll have been employed by Dreyfus as portfolio managers since
October 1994.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C>
Net asset value, beginning of period 15.94 14.04 12.50
Investment operations: Investment income -- net .47(2) .43 .25
Net realized and unrealized gain (loss) on investments .80 2.67 2.06
Total from investment operations 1.27 3.10 2.31
Distributions: Dividends from investment income -- net (.46) (.43) (.25)
Dividends from net realized gain on investments (.73) (.77) (.52)
Total distributions (1.19) (1.20) (.77)
Net asset value, end of period 16.02 15.94 14.04
Total return (%) 8.13 22.34 18.48(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .86 .87 .67(3)
Ratio of net investment income to average net assets (%) 2.94 2.98 1.91(3)
Portfolio turnover rate (%) 98.61 111.75 45.78(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 90,130 59,841 41,144
(1) FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares.
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Balanced Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number if applicable of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
quarterly, and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
Balanced Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
154P0500
<PAGE>
Dreyfus Variable Investment Fund
Disciplined Stock Portfolio
Investing in growth and value stocks for investment returns that exceed the
total return performance of the S&P 500((reg.tm))
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Disciplined Stock Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks investment returns (consisting of capital appreciation and
income) that are greater than the total return performance of stocks represented
by the Standard & Poor's 500 Composite Stock Price Index. To pursue this goal,
the portfolio invests in a blended portfolio of growth and value stocks chosen
through a disciplined investment process. Consistency of returns and stability
of the portfolio's share price compared to the S&P 500((reg.tm)) are primary
goals of the process.
Dreyfus uses a computer model to identify and rank stocks within an industry or
sector, based on:
* VALUE, or how a stock is priced relative to its perceived intrinsic worth
* GROWTH, in this case the sustainability or growth of earnings
* FINANCIAL PROFILE, which measures the financial health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities, drawing on information technology as well as Wall Street
sources and company management. Then Dreyfus manages risk by diversifying across
companies and industries, limiting the potential adverse impact from any one
stock or industry. The portfolio is structured so that its sector weightings and
risk characteristics, such as growth, size, quality and yield, are similar to
those of the S&P 500.
Concepts to understand
S&P 500((reg.tm)): a widely recognized, unmanaged index of 500 common stocks
chosen to reflect the industries of the U.S. economy.
COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe
of 2,000 stocks, screening each stock for relative attractiveness within its
economic sector and industry. To ensure that the model remains effective,
Dreyfus reviews each of the screens on a regular basis, and maintains the
flexibility to adapt the screening criteria to changes in market and economic
conditions.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Although the portfolio seeks to manage risk by broadly diversifying among
industries and by maintaining a risk profile very similar to the S&P 500, the
portfolio is expected to hold fewer securities than the index. Owning fewer
securities and the ability to purchase stocks of companies not listed in the
index can cause the portfolio to underperform the index.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both, and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if earnings expectations are not
met or investors believe the prospects for a stock, industry or the economy in
general are weak, even if earnings do increase. Growth stocks also typically
lack the dividend yield that could cushion stock prices in market downturns.
With value stocks, there is the risk that they may never reach what the manager
believes is their full market value, either because the market fails to
recognize the stocks' intrinsic worth, or the portfolio manager misgauged that
worth. They also may decline in price even though in theory they are already
underpriced. While investments in value stocks may limit downside risk over
time, they may produce smaller gains than riskier stocks.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures. When employed, derivatives are used primarily to hedge
the portfolio but may be used to increase returns; however, they sometimes may
reduce returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the S&P 500((reg.tm)). Of course, past performance is no guarantee of
future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
31.51 26.72 18.45
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +22.71%
WORST QUARTER: Q3 '98 -12.32%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/96)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PORTFOLIO 18.45% 26.16%
S&P 500 21.03% 26.75%*
</TABLE>
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/96 IS USED AS THE
BEGINNING VALUE ON 5/1/96.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.06%
- --------------------------------------------------------------------------------
TOTAL 0.81%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$83 $259 $450 $1,002
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Bert Mullins, who has managed the
portfolio since its inception, and has been employed by Dreyfus since October
1994. In addition to being a portfolio manager with Dreyfus, Mr. Mullins also
has been employed by Laurel Capital Advisors, an affiliate of Dreyfus, since
October 1990. Mr. Mullins also is a vice president, portfolio manager and senior
security analyst of Mellon, where he has been employed since 1966.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report,which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce investment returns that are
shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C>
Net asset value, beginning of period 22.95 18.30 14.79 12.50
Investment operations: Investment income -- net .11(2) .08 .08 .07
Net realized and unrealized gain (loss) on investments 4.12 4.80 4.53 2.29
Total from investment operations 4.23 4.88 4.61 2.36
Distributions: Dividends from investment income -- net (.10) (.09) (.08) (.07)
Dividends from net realized gain on investments (.16) (.14) (1.02) --
Total distributions (.26) (.23) (1.10) (.07)
Net asset value, end of period 26.92 22.95 18.30 14.79
Total return (%) 18.45 26.72 31.51 18.86(3,4)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .81 .88 1.02 .80(3)
Ratio of net investment income to average net assets (%) .45 .53 .68 .72(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- .16(3)
Portfolio turnover rate (%) 48.95 56.28 79.74 30.62(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 214,296 140,897 53,317 17,722
(1) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
(4) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1, 1996
(COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1996.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: DISCIPLINED STOCK PORTFOLIO),
for purchase of portfolio shares. The wire must include the portfolio account
number (for new accounts, a taxpayer identification number should be included
instead), account registration and dealer number, if applicable, of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
and distributes any net capital gains it has realized once a year.
DISTRIBUTIONS WILL BE REINVESTED in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund Disciplined Stock Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
150P0500
<PAGE>
Dreyfus Variable Investment Fund
Growth and Income Portfolio
Investing in stocks, bonds and money market instruments for long-term capital
growth, current income and growth of income
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Growth and Income Portfolio
GOAL/APPROACH
The portfolio seeks long-term capital growth, current income and growth of
income consistent with reasonable investment risk. To pursue this goal, it
invests in stocks, bonds and money market instruments of domestic and foreign
issuers. The port-folio's stock investments may include common stocks, preferred
stocks and convertible securities.
The portfolio employs a "bottom-up" approach focusing primarily on low and
moderately priced stocks with market capitalizations of $1 billion or more at
the time of purchase. The portfolio manager uses fundamental analysis to create
a broadly diversified, value-tilted portfolio typically with a weighted average
P/E ratio less than that of the S&P 500, and a long-term projected earnings
growth greater than that of the S&P 500. The manager also considers balance
sheet and income statement items, such as return on equity and debt-to-capital
ratios, as well as projected dividend growth rates. The portfolio looks for
companies with strong positions in their industries that have the potential for
something positive to happen, including above-average earnings growth or
positive changes in company management or the industry.
The portfolio will invest in investment grade debt securities (other than
convertible securities). The portfolio may invest up to 35% of its assets in
convertible debt securities rated, when purchased, at least Caa/CCC or the
unrated equivalent as determined by Dreyfus.
The portfolio typically sells a security when it has met the price target
established by the portfolio manager; the original reason for purchasing the
stock or bond is no longer valid; the company shows deteriorating fundamentals;
or another more attractive opportunity has been identified.
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
Concepts to understand
VALUE COMPANIES: companies that appear undervalued in terms of price relative to
other financial measurements of the intrinsic worth or business prospects (such
as price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price, such as new products or markets; opportunities for greater
market share; more effective management; positive changes in corporate structure
or market perception.
"BOTTOM-UP" APPROACH: an investment style that focuses on selecting outstanding
companies before looking at economic and industry trends.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Midsize companies carry additional risks because their earnings tend to be less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies.
The portfolio's investments in value stocks are subject to the risk that they
may never reach what the portfolio manager believes is their full market value
either because the market fails to recognize the stocks' intrinsic worth, or the
portfolio manager misgauged that worth. They may also decline in price even
though they are already underpriced. While the portfolio's investments in value
stocks also may limit the overall downside risk of the portfolio over time, the
portfolio may produce more modest gains than riskier stock funds as a trade-off
for this potentially lower risk.
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore the portfolio's
share price as well.
The portfolio may also invest in lower-rated convertible securities which have
higher credit risk. With this type of investment, there is a greater likelihood
that interest and principal payments will not be made on a timely basis.
Foreign securities involve special risks such as changes in currency exchange
rates, a lack of comprehensive company information, political instability and
potentially less liquidity.
Under adverse market conditions, the portfolio could invest up to all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures, and in foreign currencies. It may also sell short. These
practices, when employed, are used primarily to hedge the portfolio but may be
used to increase returns; however, such practices may reduce returns or increase
volatility. Derivatives can be illiquid, and a small investment in certain
derivatives could have a potentially large impact on the portfolio's
performance.
Because a relatively high percentage of the portfolio's assets may be invested
in the securities of a limited number of issuers, its performance may be more
vulnerable to changes in the market value of a single issuer or group of
issuers.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains and losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return
over time to that of the S&P 500((reg.tm)), a widely recognized, unmanaged index
of stock performance, and the Wilshire Large Company Value Index, an unmanaged
index of large companies that is constructed by using a blend of price-to-book
and forecast price-to-earnings ratios. Of course, past performance is no
guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
61.89 20.75 16.21 11.81 16.88
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +18.58%
WORST QUARTER: Q3 '98 -11.45%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (5/2/94)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 16.88% 24.31% 20.90%
S&P 500 21.03% 28.54% 25.65%*
WILSHIRE LARGE
COMPANY VALUE INDEX -7.11% 18.33% 15.54%*
</TABLE>
* FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 4/30/94 IS USED AS THE
BEGINNING VALUE ON 5/2/94.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.04%
- --------------------------------------------------------------------------------
TOTAL 0.79%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$81 $252 $439 $978
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Douglas D. Ramos, CFA. He has been
the portfolio's primary portfolio manager and has been employed by Dreyfus since
July 1997. For more than five years prior thereto, Mr. Ramos was employed by
Loomis, Sayles & Company, L.P., most recently serving as a senior partner and
investment counselor.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 22.63 20.78 19.55 18.33 11.98
Investment operations: Investment income -- net .16(1) .21 .28 .36 .28
Net realized and unrealized gain (loss)
on investments 3.64 2.23 2.79 3.43 7.07
Total from investment operations 3.80 2.44 3.07 3.79 7.35
Distributions: Dividends from investment income -- net (.15) (.20) (.28) (.35) (.27)
Dividends from net realized gain on investments (.70) (.39) (1.56) (2.22) (.73)
Dividends in excess of net realized gain
on investments (.10) -- -- -- --
Total distributions (.95) (.59) (1.84) (2.57) (1.00)
Net asset value, end of period 25.48 22.63 20.78 19.55 18.33
Total return (%) 16.88 11.81 16.21 20.75 61.89
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .79 .78 .80 .83 .92
Ratio of net investment income to average net assets (%) .67 1.00 1.37 1.96 2.21
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .03
Portfolio turnover rate (%) 96.26 126.18 180.73 237.44 255.42
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 461,392 430,702 369,832 225,935 71,161
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Growth and Income Portfolio),
for purchase of portfolio shares. The wire must include the portfolio account
number (for new accounts, a taxpayer identification number should be included
instead), account registration and dealer number if applicable of the
participating insurance company.
The portfolio's investments are generally valued based on market value, or where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
quarterly, and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund Growth and Income Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
108P0500
<PAGE>
Dreyfus Variable Investment Fund
International Equity Portfolio
Investing in stocks of foreign issuers for capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
International Equity Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks capital growth. To pursue this goal, the portfolio invests
primarily in the stocks of foreign companies. Typically, the portfolio invests
in at least 15 to 25 markets around the world, including emerging markets. The
portfolio's stock investments may include common stocks, preferred stocks and
convertible securities.
In choosing stocks, the portfolio conducts a "bottom-up" approach, focusing on
individual stock selection rather than on macroeconomic factors. There are no
country allocation models or targets. The portfolio is particularly alert to
companies whose revenue and earnings growth potential are considered by
management to be faster than those of industry peers or the local market.
The portfolio typically sells a stock when its growth forecast is reduced, its
valuation target is reached, or the portfolio manager decides to reduce the
weighting in its market.
Concepts to understand
FOREIGN COMPANY: a company organized under the laws of a foreign country or for
which the principal trading market is in a foreign country; or a company
organized in the U.S. with a majority of its assets or business outside the U.S
GROWTH COMPANY: a company of any capitalization whose earnings are expected to
grow faster than the overall market. Often, growth stocks have relatively high
price-to-earnings and price-to-book ratios, and tend to be more volatile than
value stocks.
MAIN RISKS
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in foreign countries. Like the stocks of U.S.
companies, the securities of foreign issuers fluctuate in price, often based on
factors unrelated to the issuers' value, and such fluctuations can be
pronounced. Unlike investing in U.S. companies, foreign securities include
special risks such as exposure to currency fluctuations, a lack of comprehensive
company information, political instability, and differing auditing and legal
standards. The value of a shareholder's investment in the portfolio will go up
and down, which means that shareholders could lose money.
The portfolio expects to invest primarily in the stocks of companies located in
developed countries. However, the portfolio may invest in the stocks of
companies located in emerging markets. These countries generally have economic
structures that are less diverse and mature, and political systems that are less
stable, than those of developed countries. Emerging markets may be more volatile
than the markets of more mature economies, and the securities of companies
located in emerging markets are often subject to rapid and large changes in
price; however, these markets also may provide higher long-term rates of return.
Because the stock prices of growth companies are based in part on future
expectations, these stocks may fall sharply if investors believe the prospects
for a stock, industry or the economy in general are weak, even if earnings do
increase. In addition, growth stocks typically lack the dividend yield that
could cushion stock prices in market downturns.
Under adverse market conditions, the portfolio could invest some or all of its
assets in the securities of U.S. issuers or money market securities. Although
the portfolio would do this to avoid losses, it could have the effect of
reducing the benefit from any upswing in the market. During such periods, the
portfolio may not achieve its investment objective.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures, and in foreign currencies. These practices, when
employed, are used primarily to hedge the portfolio but may be used to increase
returns; however, such practices sometimes may reduce returns or increase
volatility. Derivatives can be illiquid, and a small investment in certain
derivatives could have a potentially large impact on the portfolio's
performance.
Because a relatively high percentage of the portfolio's assets may be invested
in the securities of a limited number of issuers, its performance may be more
vulnerable to changes in the market value of a single issuer or group of
issuers.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE((reg.tm))) Index, an unmanaged index composed of a representative sample
of companies located in European and Pacific Basin countries and includes net
dividends reinvested. Of course, past performance is no guarantee of future
results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
7.39 11.61 9.61 4.48 59.76
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '99 +41.20%
WORST QUARTER: Q3 '98 -20.29%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (5/2/94)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 59.76% 17.01% 14.45%
MSCI EAFE((reg.tm))
INDEX 26.96% 12.83% 11.21%*
</TABLE>
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/94 IS USED AS THE
BEGINNING VALUE ON 5/2/94.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using the portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.27%
- --------------------------------------------------------------------------------
TOTAL 1.02%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$104 $325 $563 $1,248
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Douglas A. Loeffler. Mr. Loeffler
has been the portfolio's primary portfolio manager since he joined Dreyfus in
February 1999. He is also employed by Founders Asset Management LLC, an
affiliate of Dreyfus, since 1997 as a vice president of investments and from
1995 to 1997, as a senior international equities analyst. For seven years prior
thereto, he served as an international equities analyst and a quantitative
analyst for Scudder, Stevens & Clark.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.50 14.02 13.76 12.82 12.02
Investment operations: Investment income -- net .06(1) .15 .05 .10 .15
Net realized and unrealized gain (loss)
on investments 8.58 .48 1.27 1.16 .74
Total from investment operations 8.64 .63 1.32 1.26 .89
Distributions: Dividends from investment income -- net (.06) (.15) (.07) (.09) (.08)
Dividends in excess of investment income -- net -- -- -- -- (.01)
Dividends from net realized gain on investments (.74) -- (.34) (.39) --
Dividends in excess of net realized gain on investments -- -- (.65) (.06) --
Total distributions (.80) (.15) (1.06) (.54) (.09)
Capital contribution from an affiliate of the adviser -- -- -- .22 --
Net asset value, end of period 22.34 14.50 14.02 13.76 12.82
Total return (%) 59.76 4.49 9.61 11.61(2) 7.39
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.02 .99 1.06 1.28 1.59
Ratio of net investment income to average net assets (%) .38 1.04 .38 .92 1.13
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .45
Portfolio turnover rate (%) 261.64 204.50 165.75 181.13 70.22
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 69,208 45,811 39,388 24,355 7,672
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) HAD THE PORTFOLIO NOT HAD A CAPITAL CONTRIBUTION BY AN AFFILIATE OF THE
ADVISER DURING THE PERIOD, THE TOTAL INVESTMENT RETURN WOULD HAVE BEEN
9.89%.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: International Equity
Portfolio), for purchase of portfolio shares. The wire must include the
portfolio account number (for new accounts, a taxpayer identification number
should be included instead), account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
International Equity Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
109P0500
<PAGE>
Dreyfus Variable Investment Fund
International Value Portfolio
Investing in foreign stocks of value companies for long-term capital growth
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
International Value Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
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Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks long-term capital growth. To pursue this goal, the portfolio
ordinarily invests most of its assets in equity securities of foreign issuers
which Dreyfus considers to be "value" companies. To a limited extent, the
portfolio may invest in debt securities of foreign issuers. Though not
specifically limited, the portfolio ordinarily invests in companies in at least
three foreign countries, and limits its investments in any single company to no
more than 5% of its assets at the time of purchase.
The portfolio's investment approach is value oriented, research driven, and risk
averse. In selecting stocks, the portfolio manager identifies potential
investments through extensive quantitative and fundamental research. Emphasizing
individual stock selection rather than economic and industry trends, the
portfolio focuses on three key factors:
* value, or how a stock is valued relative to its intrinsic worth based on
traditional value measures
* business health, or overall efficiency and profitability as measured by
return on assets and return on equity
* business momentum, or the presence of a catalyst (such as corporate
restructuring, change in management or spin-off) that potentially will
trigger a price increase near term to midterm
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or declining momentum, or falls
short of the portfolio manager's expectations.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). For international investing, "value"
is determined relative to a company's home market. Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
MAIN RISKS
The portfolio's performance will be influenced by political, social and economic
factors affecting companies in foreign countries. Like the stocks of U.S.
companies, the securities of foreign issuers fluctuate in price, often based on
factors unrelated to the issuers' value, and such fluctuations can be
pronounced. Unlike investing in U.S. companies, foreign securities include
special risks such as exposure to currency fluctuations, a lack of comprehensive
company information, political instability, and differing auditing and legal
standards. The value of a shareholder's investment in the portfolio will go up
and down, which means that shareholders could lose money.
Value stocks involve the risk that they may never reach what the portfolio
manager believes is their full market value either because the market fails to
recognize the stock's intrinsic worth or the portfolio manager misgauged that
worth. They also may decline in price, even though in theory they are already
underpriced. Because different types of stocks tend to shift in and out of favor
depending on market and economic conditions, the portfolio's performance may
sometimes be lower or higher than that of other types of funds (such as those
emphasizing growth stocks).
The portfolio may invest in companies of any size. Investments in small and
midsize companies carry additional risks because their earnings tend to be less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies.
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore in the
portfolio's share price as well. In addition, if an issuer fails to make timely
interest or principal payments or there is a decline in the credit quality of a
bond, or perception of a decline, the bond's value could fall, potentially
lowering the portfolio's share price.
Under adverse market conditions, the portfolio could invest some or all of its
assets in the securities of U.S. issuers or money market securities. Although
the portfolio would do this to avoid losses, it could have the effect of
reducing the benefit from any upswing in the market. During such periods, the
portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures, and in foreign currencies. These practices, when
employed, are used primarily to hedge the portfolio, but may be used to increase
returns; however, such practices may lower returns or increase volatility.
Derivatives can be illiquid, and a small investment in certain derivatives could
have a potentially large impact on the portfolio's performance.
At times, the portfolio may engage in short-term trading. When employed, this
could increase the portfolio's transaction costs and taxable distributions,
lowering its after-tax performance accordingly.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Morgan Stanley Capital International Europe, Australasia, Far East
Index ("MSCI EAFE Index"), an unmanaged index composed of a representative
sample of companies located in European and Pacific Basin countries and includes
net dividends reinvested. Of course, past performance is no guarantee of future
results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
8.71 8.74 27.82
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +15.33%
WORST QUARTER: Q3 '98 -16.49%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/96)
- --------------------------------------------------------------------------------
PORTFOLIO 27.82% 12.93%
MSCI EAFE INDEX 26.96% 12.74%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/96 IS USED AS THE
BEGINNING VALUE ON 5/1/96.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
As with the performance information given previously, these figures do not
reflect any fees or charges imposed by participating insurance companies under
their VA contracts or VLI policies. Owners of VA contracts or VLI policies
should refer to the applicable insurance company prospectus for information on
those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00%
Other expenses 0.35%
- --------------------------------------------------------------------------------
TOTAL 1.35%
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<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C>
$137 $428 $739 $1,624
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 1.00% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Sandor Cseh. He has been the
portfolio's primary manager since the portfolio's inception, and has been
employed by Dreyfus since May 1996 and by The Boston Company Asset Management,
Inc., an affiliate of Dreyfus, or its predecessor since October 1994. Prior to
joining The Boston Company Asset Management, Inc., Mr. Cseh was president of
Cseh International & Associates Inc., and was a securities analyst with several
banks.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996(1)
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PER-SHARE DATA ($)
<S> <C> <C> <C> <C>
Net asset value, beginning of period 13.45 13.45 12.80 12.50
Investment operations: Investment income -- net .13(2) .14 .07 .08
Net realized and unrealized gain (loss) on investments 3.52 1.01 1.03 .34
Total from investment operations 3.65 1.15 1.10 .42
Distributions: Dividends from investment income -- net (.13) (.12) (.07) (.08)
Dividends from net realized gain on investments (1.30) (1.03) (.30) (.04)
Dividends in excess of net realized gain on investments -- -- (.08) --
Total distributions (1.43) (1.15) (.45) (.12)
Net asset value, end of period 15.67 13.45 13.45 12.80
Total return (%) 27.82 8.74 8.71 3.41(3,4)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.35 1.29 1.42 1.01(3)
Ratio of net investment income to average net assets (%) .90 .94 .74 .76(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- .34(3)
Portfolio turnover rate (%) 41.90 42.14 25.67 24.48(3)
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Net assets, end of period ($ x 1,000) 27,386 20,680 19,016 8,027
(1) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
(4) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1, 1996
(COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1996.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares.
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: International Value Portfolio,
for purchase of portfolio shares. The wire must include the portfolio account
number (for new accounts, a taxpayer identification number should be included
instead), account registration and dealer number if applicable of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
International Value Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
152P0500
<PAGE>
Dreyfus Variable Investment Fund
Limited Term High Income Portfolio
Investing in high yield securities for maximum total return
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Limited Term High Income Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks to maximize total return, consisting of capital appreciation
and current income. To pursue this goal, the portfolio normally invests in
fixed-income securities rated, when purchased, below investment grade ("high
yield" or "junk" bonds) or the unrated equivalent as determined by Dreyfus. The
portfolio may invest in various types of fixed-income securities, including
corporate bonds and notes, mortgage-related securities, asset-backed securities,
zero coupon securities, convertible securities, preferred stock and other debt
instruments of U.S. and foreign issuers.
In choosing securities, the portfolio manager seeks to capture the higher yields
offered by junk bonds, while managing credit risk and the volatility caused by
interest rate movements. The portfolio attempts to reduce interest rate risk by
maintaining an average effective portfolio duration of 3.5 years or less and an
average effective portfolio maturity of 4 years or less, although there is no
limit on the maturity or duration of individual securities.
The portfolio's investment process is based on fundamental credit research and,
at times, focusing on companies that are currently out-of-favor. The portfolio
looks at a variety of factors when assessing a potential investment, including
the company's financial strength, the state of the industry or sector it belongs
to, the long-term fundamentals of that industry or sector, the company's
management, and whether there is sufficient equity value in the company. The
portfolio may also invest in investment grade bonds, typically when it takes a
defensive investment position.
Concepts to understand
HIGH YIELD BONDS: those rated below BBB or Baa by credit rating agencies such as
Standard & Poor's or Moody's. Because their issuers may be at an early stage of
development or may have been unable to repay past debts, these bonds typically
must offer higher yields than investment grade bonds to compensate investors for
greater credit risk.
DURATION: an indication of an investment's "interest rate risk," or how
sensitive a bond or mutual fund portfolio may be to changes in interest rates.
Generally, the longer a fund's duration, the more it will react to interest rate
fluctuations.
MAIN RISKS
High yield bonds involve greater credit risk than investment grade bonds. They
tend to be more volatile in price and less liquid and are considered
speculative. As with stocks, the prices of high yield bonds can fall in response
to bad news about the issuer, the issuer's industry or the economy in general.
The portfolio's share price could also be hurt if it holds bonds of issuers that
default on payments of principal or interest. As a result, the value of a
shareholder's investment in the portfolio could go up and down, which means that
shareholders could lose money.
Other risk factors could have an effect on the portfolio's performance,
including:
* if there is a decline in the credit quality of a bond, or perception of a
decline, the bond's value could fall, potentially lowering the portfolio's
share price
* if the loans underlying the portfolio's mortgage-related securities are
paid off substantially earlier or later than expected, which could occur
because of movements in market interest rates, the portfolio's share price
or yield could be hurt and the duration of its portfolio affected
* if the portfolio holds securities which are traded in a market that becomes
"illiquid," typically when there are more sellers than buyers for the
securities, the value of such securities, and the portfolio's share price,
may fall dramatically.
The portfolio's investments in investment grade bonds could also reduce the
portfolio's yield and/or return.
Foreign securities, while allowing the portfolio to seek attractive
opportunities worldwide, also include special risks, such as exposure to
currency fluctuations, changing political climate, lack of comprehensive company
information and potentially less liquidity.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some of its assets in derivative securities,
such as options, futures and swaps, and in foreign currencies. The portfolio may
also sell short. These practices, when employed, are used primarily to hedge the
portfolio but may be used to increase returns; however, such practices may
reduce returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
In addition, the portfolio may borrow for certain purposes including to
facilitate trades in its portfolio securities (a form of leveraging), which
could have the effect of magnifying the portfolio's gains or losses.
At times, the portfolio may engage in short-term trading. When employed, this
could increase the portfolio's transaction costs and taxable distributions,
lowering its after-tax performance accordingly.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the performance of the portfolio's average
annual total return to that of the Merrill Lynch High Yield Master II Index, an
index of high yield bonds with at least $100 million par amount outstanding and
at least one year to maturity, and to a Customized Limited Term High Yield
Index*. Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
0.29 -1.54
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q1 '98 +3.90%
WORST QUARTER: Q3 '98 -5.46%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (4/30/97)
- --------------------------------------------------------------------------------
PORTFOLIO -1.54% 3.01%
MERRILL LYNCH HIGH YIELD
MASTER II INDEX 2.51% 6.05%
CUSTOMIZED LIMITED TERM
HIGH YIELD INDEX* 5.23% 6.71%
* THIS INDEX IS COMPOSED OF FOUR SUB-INDEXES OF THE MERRILL LYNCH HIGH YIELD
MASTER II INDEX. THESE SUB-INDEXES, BLENDED AND MARKET WEIGHTED, ARE (I)
BB-RATED 1-3 YEARS, (II) B-RATED 1-3 YEARS, (III) BB-RATED 3-5 YEARS, AND
(IV) B-RATED 3-5 YEARS. UNLIKE THE CUSTOMIZED LIMITED TERM HIGH YIELD
INDEX, WHICH IS COMPOSED OF BONDS RATED NO LOWER THAN "B", THE FUND CAN
INVEST IN BONDS WITH LOWER CREDIT RATINGS THAN "B" AND AS LOW AS "D".
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using the portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.65%
Other expenses 0.19%
- --------------------------------------------------------------------------------
TOTAL 0.84%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$86 $268 $466 $1,037
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. During the past fiscal year,
the portfolio paid Dreyfus an investment advisory fee at the annual rate of
0.65% of the portfolio's average daily net assets. Dreyfus is the primary mutual
fund business of Mellon Financial Corporation, a global financial services
company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Roger King. He has been the
portfolio's primary portfolio manager since the portfolio's inception and has
been employed by Dreyfus since February 1996. Prior thereto, Mr. King was a vice
president of high yield research and, most recently, director of high yield
research at Citibank Securities, Inc.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CLASS A 1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C>
Net asset value, beginning of period 11.80 12.88 12.50
Investment operations: Investment income -- net 1.21 1.14 .78
Net realized and unrealized gain (loss) on investments (1.38) (1.08) .41
Total from investment operations (.17) .06 1.19
Distributions: Dividends from investment income -- net (1.19) (1.14) (.77)
Dividends from net realized gain on investments -- -- (.04)
Total distributions (1.19) (1.14) (.81)
Net asset value, end of period 10.44 11.80 12.88
Total return (%) (1.54) .29 14.27(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .73 .77 .89(2)
Ratio of interest expense to average net assets (%) .11 .32 .20(2)
Ratio of net investment income to average net assets (%) 10.53 10.10 10.27(2)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) -- -- .05(2)
Portfolio turnover rate (%) 52.08 50.18 37.98(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 66,357 83,418 31,454
(1) FROM APRIL 30, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(2) ANNUALIZED.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: LIMITED TERM HIGH INCOME
PORTFOLIO), for purchase of portfolio shares. The wire must include the
portfolio account number (for new accounts, a taxpayer identification number
should be included instead), account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
quarterly, and distributes any net capital gains it has realized once a year.
DISTRIBUTIONS WILL BE REINVESTED in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
Limited Term High Income Portfolio
- ------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
156P0500
<PAGE>
Dreyfus Variable Investment Fund
Money Market
Portfolio
Investing in money market instruments for current income
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Money Market Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. As a money market
fund, the portfolio is subject to maturity, quality and diversification
requirements designed to help it maintain a stable share price of $1.00.
The portfolio invests in a diversified portfolio of high quality, short-term
debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by U.S. or foreign banks or their subsidiaries
or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign commercial paper, and other
short-term corporate and bank obligations of U.S. and foreign issuers
* obligations issued or guaranteed by one or more foreign governments or
their agencies, including obligations of supranational entities
Normally, the portfolio invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or less
* buy individual securities that have remaining maturities of 13 months or
less
* invest only in high-quality dollar-denominated obligations
MAIN RISKS
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the portfolio. Additionally, the
portfolio's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the portfolio has maintained a constant share price since inception, and
will continue to try to do so, the following factors could reduce the
portfolio's income level and/or share price:
* interest rates could rise sharply, causing the value of the portfolio's
securities, and share price, to drop
* any of the portfolio's holdings could have its credit rating downgraded or
could default
* the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking industry
* the risks generally associated with dollar-denominated foreign investments,
such as economic and political developments, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Concepts to understand
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner.
An issuer with the highest credit rating has a very strong degree of certainty
(or safety) with respect to making all payments. An issuer with the
second-highest credit rating has strong capacity to make all payments, but the
degree of safety is somewhat less.
Generally, the portfolio is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second-highest credit rating.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table shows average annual total return over time. Both tables
assume the reinvestment of dividends and distributions. Of course, past
performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.99 4.15 3.29 4.37 5.66 5.10 5.19 5.12 4.78
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q1 '91 +1.57%
WORST QUARTER: Q2 '93 +0.78%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 4.78% 5.17% 4.94%
</TABLE>
The portfolio's 7-day yield on 12/31/99 was 5.21%. For the portfolio's current
yield, call toll-free 1-800-645-6561.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
As with the performance information given previously, these figures do not
reflect any fees or charges imposed by participating insurance companies under
their VA contracts or VLI policies. Owners of VA contracts or VLI policies
should refer to the applicable insurance company prospectus for information on
those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
AS A % OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Other expenses 0.08%
- --------------------------------------------------------------------------------
TOTAL 0.58%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$59 $186 $324 $726
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.50% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce investment returns that are
shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .047 .050 .050 .050 .055
Distributions: Dividends from investment income -- net (.047) (.050) (.050) (.050) (.055)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.78 5.12 5.19 5.10 5.66
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .58 .56 .61 .62 .62
Ratio of net investment income to average net assets (%) 4.69 5.01 5.08 4.96 5.51
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .03
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 102,727 89,025 64,628 56,186 45,249
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Money Market Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio uses the amortized cost method of valuing its investments, which
does not take into account unrealized gains or losses.
DISTRIBUTIONS AND TAXES
The portfolio usually declares dividends from its net investment income daily
and pays dividends monthly, and distributes any net capital gains it has
realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
Money Market Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
117P0500
<PAGE>
Dreyfus Variable Investment Fund
Quality Bond Portfolio
Investing in fixed-income securities for maximum current income consistent with
the preservation of capital and maintenance of liquidity
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Quality Bond Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks to maximize current income as is consistent with the
preservation of capital and the maintenance of liquidity. To pursue this goal,
the portfolio invests at least 80% of net assets in fixed-income securities,
including mortgage-related securities, collateralized mortgage obligations
("CMOs"), and asset-backed securities, that, when purchased, are rated A or
better or are the unrated equivalent as determined by Dreyfus, and in securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
The portfolio also may invest in:
(pound) high grade commercial paper of U.S. issuers
(pound) certificates of deposit, time deposits and bankers' acceptances
(pound) fixed-income securities rated lower than A (but not lower than B) or
the unrated equivalent as determined by Dreyfus
(pound) municipal obligations and zero coupon securities
The portfolio may invest up to 10% of net assets in foreign securities.
Concepts to understand
MORTGAGE-RELATED SECURITIES: pools of residential or commercial mortgages whose
cash flows are "passed through" to the holders of the securities via monthly
payments of interest and principal.
CMOS: multi-class bonds backed by pools of mortgage pass-through securities or
mortgage loans. CMOs may be issued by government agencies or private issuers.
RATINGS: represent the opinions of rating agencies (like Moody's and S&P) as to
the quality of the fixed-income securities. Ratings are relative and subjective
and are not absolute standards of quality.
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore in the
portfolio's share price as well. As a result, the value of a shareholder's
investment in the portfolio could go up and down, which means that shareholders
could lose money.
Although the portfolio invests primarily in high quality and other investment
grade bonds, it may invest to a limited extent in high yield bonds which involve
greater credit risk, including the risk of default, than investment grade bonds.
They tend to be more volatile in price and less liquid and are considered
speculative. As with stocks, the prices of high yield bonds can fall in response
to bad news about the issuer, the issuer's industry or the economy in general.
Other risk factors could have an effect on the portfolio's performance,
including:
(pound) if an issuer fails to make timely interest or principal payments or
there is a decline in the credit quality of a bond, or perception of a
decline, the bond's value could fall, potentially lowering the
portfolio's share price
(pound) if the portfolio's mortgage-related securities are paid off
substantially earlier or later than expected, the portfolio's share
price or yield could be hurt
(pound) the price and yield of foreign debt securities could be affected by
factors ranging from political and economic instability to changes in
currency exchange rates
(pound) during unusual market conditions, the portfolio may not be able to sell
certain securities at the time and price it would like
Under adverse market conditions, the portfolio could invest up to all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
Most mortgage-related securities are a form of derivative. Derivatives can be
illiquid and highly sensitive to changes in their underlying securities,
interest rate or index and, as a result, can be highly volatile. Certain
derivatives, at times, may be used to leverage the portfolio, meaning that a
small investment could have a potentially large impact on the portfolio.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Lehman Brothers Aggregate Bond Index, an unmanaged index of
corporate, U.S. government and agency debt instruments, and mortgage-backed and
asset-backed securities, and Merrill Lynch Domestic Master Index (Subindex
D010), an unmanaged index of U.S. government, mortgage and corporate securities
rated A or better. Of course past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
14.12 12.08 15.33 -4.59 20.42 3.13 9.42 5.49 0.18
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q3 '92 +7.99%
WORST QUARTER: Q1 '94 -4.57%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 0.18% 7.50% 8.10%
LEHMAN BROTHERS
AGGREGATE BOND INDEX* -0.82% 7.73% 7.94%
MERRILL LYNCH
DOMESTIC MASTER
INDEX (SUBINDEX D010) 0.96% 7.70% 7.96%
</TABLE>
* LEHMAN BROTHERS AGGREGATE BOND INDEX IS THE PORTFOLIO'S PRIMARY INDEX BECAUSE
SUCH INDEX PROVIDES MORE FREQUENT STATISTICAL INFORMATION.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.65%
Other expenses 0.09%
- --------------------------------------------------------------------------------
TOTAL 0.74%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$76 $237 $411 $918
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in more than 160 mutual fund portfolios. For the past fiscal year,
the portfolio paid Dreyfus an investment advisory fee at the annual rate of
0.65% of the portfolio's average daily net assets. Dreyfus is the primary mutual
fund business of Mellon Financial Corporation, a global financial services
company with approximately $2.5 trillion of assets under management,
administration or custody, including approximately $485 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Investment decisions for the portfolio are made by the Taxable Fixed-Income
Committee of Dreyfus, and no person is primarily responsible for making
recommendations to that committee.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 11.50 11.73 11.50 11.81 10.53
Investment operations: Investment income -- net .62 .67 .73 .66 .68
Net realized and unrealized gain (loss)
on investments (.61) (.04) .32 (.31) 1.42
Total from investment operations .01 .63 1.05 .35 2.10
Distributions: Dividends from investment income -- net (.62) (.68) (.73) (.66) (.69)
Dividends from net realized gain
on investments -- (.18) (.09) -- (.13)
Total distributions (.62) (.86) (.82) (.66) (.82)
Net asset value, end of period 10.89 11.50 11.73 11.50 11.81
Total return (%) .18 5.49 9.42 3.13 20.42
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .74 73 .75 .79 .81
Ratio of interest expense to average net assets (%) -- -- .02 -- --
Ratio of net investment income to average net assets (%) 5.66 5.74 6.27 5.86 6.13
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .04
Portfolio turnover rate (%) 521.51 244.95 374.76 258.36 263.53
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 135,822 121,461 88,292 60,936 37,447
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Quality Bond Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number if applicable of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
monthly, and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund Quality Bond Portfolio
- ------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
120P0500
<PAGE>
Dreyfus Variable Investment Fund
Small Cap Portfolio
Investing in stocks of small-cap companies for maximum capital appreciation
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Small Cap Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks to maximize capital appreciation. To pursue this goal, the
portfolio generally invests at least 65% of its assets in the common stock of
U.S. and foreign companies. The portfolio focuses on small-cap companies with
total market values of less than $1.5 billion.
In choosing stocks, the portfolio uses a blended approach, investing in growth
2stocks, value stocks or stocks that exhibit characteristics of both. The
portfolio seeks companies characterized by new or innovative products or
services which should enhance prospects for growth of future earnings. The
portfolio also invests based on economic or political changes and may invest in
special situations, such as corporate restructurings, mergers or acquisitions.
The portfolio may invest up to 25% of its assets in common stocks of foreign
companies but currently intends to invest no more than 20% of its assets in
foreign securities.
The portfolio managers use a sector management approach, supervising a team of
sector managers who each make buy and sell decisions within their respective
areas of expertise. The fund's sector weightings typically approximate those of
the Russell 2000 Index.
The portfolio typically sells a stock when the reasons for buying it no longer
apply or when the company begins to show deteriorating fundamentals or poor
relative performance.
Concepts to understand
SMALL-CAP COMPANIES: these companies tend to grow faster than large-cap
companies and typically use profits for expansion rather than to pay dividends.
They are more volatile than larger companies and fail more often.
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings and
price-to-book ratios, and tend to be more volatile than value stocks.
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements (such as price-to-earnings or price-to-book ratios).
Because a stock can remain undervalued for years, value investors often look for
factors that could trigger a rise in price.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Small companies may present additional risks because their earnings are less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies. Some of the portfolio's investments
will rise and fall based on investor perception rather than economics. Other
investments, including special situations, anticipate future products, services
or events whose delay could cause the stock price to drop.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both and may achieve more modest gains than funds that use only one
investment style. Investments in growth companies may lack the dividend yield
that can cushion stock prices in market downturns. These companies are expected
to increase their earnings at a certain rate. If expectations are not met,
investors can punish the stocks inordinately, even if earnings do increase.
The portfolio's investments in value stocks are subject to the risk that their
intrinsic values may never be realized by the market, or their prices may go
down. Further, while the portfolio's investments in value stocks may limit the
overall downside risk of the portfolio over time, the portfolio may produce more
modest gains than riskier small-company stock funds as a trade-off for this
potentially lower risk.
Foreign securities, while allowing the portfolio to seek attractive
opportunities worldwide, also include special risks, such as exposure to
currency fluctuations, changing political climate, lack of comprehensive company
information and potentially less liquidity.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Russell 2000 Index, a widely recognized, unmanaged index of smaller
capitalization common stocks. Of course, past performance is no guarantee of
future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
159.73 71.28 68.31 7.75 29.38 16.60 16.75 -3.44 23.15
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q3 '91 +32.09%
WORST QUARTER: Q3 '98 -23.45%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 23.15% 15.93% 35.65%
RUSSELL 2000 INDEX 21.26% 16.69% 16.57%
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.03%
- --------------------------------------------------------------------------------
TOTAL 0.78%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$80 $249 $433 $966
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio managers are Hilary R. Woods and Paul Kandel.
Ms. Woods and Mr. Kandel have been the portfolio's primary managers since
October 1996. Ms. Woods and Mr. Kandel have been employed by Dreyfus since 1987
and 1994, respectively.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 53.91 57.14 52.08 46.13 36.52
Investment operations: Investment income -- net .04(1) .04 .07 .10 .16
Net realized and unrealized gain (loss) on investments 12.43 (2.21) 8.49 7.53 10.54
Total from investment operations 12.47 (2.17) 8.56 7.63 10.70
Distributions: Dividends from investment income -- net (.04) (.00)(2) (.07) (.10) (.18)
Dividends from net realized gain on investments -- (1.06) (3.43) (1.51) (.91)
Dividends in excess of net realized gain on investments -- -- -- (.07) --
Total distributions (.04) (1.06) (3.50) (1.68) (1.09)
Net asset value, end of period 66.34 53.91 57.14 52.08 46.13
Total return (%) 23.15 (3.44) 16.75 16.60 29.38
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .78 .77 .78 .79 .83
Ratio of net investment income to average net assets (%) .07 .07 .12 .24 .54
Portfolio turnover rate (%) 40.60 75.04 79.00 89.10 99.02
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,295,698 1,246,804 1,274,292 960,365 543,281
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Small Cap Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment
income, and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund Small Cap Portfolio
- ------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL
Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
121P0500
<PAGE>
Dreyfus Variable Investment Fund
Small Company Stock Portfolio
Investing in stocks of small and midsize companies for investment returns that
exceed the total return performance of the Russell 2500(tm) Stock Index
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Small Company Stock Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract
holders and VLI policyholders. The board of trustees will monitor events to
identify any material conflicts and, if such conflicts arise, determine what
action, if any, should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks investment returns (consisting of capital appreciation and
income) that are greater than the total return performance of stocks represented
by the Russell 2500(tm) Stock Index ("Russell 2500"). To pursue this goal, the
portfolio normally invests in a blended portfolio of growth and value stocks of
small and midsize domestic companies, whose market values generally range
between $500 million and $5 billion. Stocks are chosen through a disciplined
process combining computer modeling techniques, fundamental analysis and risk
management. Consistency of returns and stability of the portfolio's share price
compared to the Russell 2500 are primary goals of the investment process.
Dreyfus uses a computer model to identify and rank stocks within an industry or
sector, based on:
* VALUE, or how a stock is priced relative to its perceived intrinsic worth
* GROWTH, in this case the sustainability or growth of earnings
* FINANCIAL PROFILE, which measures the financial health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities, drawing on information technology as well as Wall Street
sources and company management. Then Dreyfus manages risk by diversifying across
companies and industries, limiting the potential adverse impact from any one
stock or industry. The portfolio is structured so that its sector weightings and
risk characteristics, such as growth, size, quality and yield, are similar to
those of the Russell 2500. The portfolio may invest in securities in all
available domestic trading markets, including initial public offerings and the
after-market.
Concepts to understand
COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe
of over 2,000 stocks, screening each stock for relative attractiveness within
its economic sector and industry. To ensure that the model remains effective,
Dreyfus reviews each of the screens on a regular basis, and maintains the
flexibility to adapt the screening criteria to changes in market and economic
conditions.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Small and midsize companies carry additional risks because their earnings are
less predictable, their share prices more volatile and their securities less
liquid than larger, more established companies. Some of the portfolio's
investments will rise and fall based on investor perception rather than
economics.
Although the portfolio seeks to manage risk by broadly diversifying among
industries and by maintaining a risk profile similar to the Russell 2500, the
portfolio is expected to hold fewer securities than the index. Owning fewer
securities and the ability to purchase companies not listed in the index can
cause the portfolio to underperform the index.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if earnings expectations are not
met or investors believe the prospects for a stock, industry or the economy in
general are weak, even if earnings do increase. Growth stocks also typically
lack the dividend yield that could cushion stock prices in market downturns.
With value stocks, there is the risk that they may never reach what the manager
believes is their full market value, either because the market fails to
recognize the stocks' intrinsic worth, or the portfolio manager misgauged that
worth. They also may decline in price even though in theory they are already
underpriced. While investments in value stocks may limit downside risk over
time, they may produce smaller gains than riskier stocks.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio, at times, may invest in derivative securities, such as options
and futures. These practices, when employed, are used primarily to hedge the
portfolio but may be used to increase returns; however, such practices may
reduce returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Russell 2500 Index, a widely recognized, unmanaged index of
small-cap and mid-cap stock performance. Of course, past performance is no
guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
21.77 -5.97 10.60
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +16.44%
WORST QUARTER: Q3 '98 -21.84%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/96)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PORTFOLIO 10.60% 9.11%
RUSSELL 2500 24.15% 14.91%*
</TABLE>
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/96 IS USED AS THE
BEGINNING VALUE ON 5/1/96.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.22%
- --------------------------------------------------------------------------------
TOTAL 0.97%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$99 $309 $536 $1,190
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio managers are Anthony Galise and James
Wadsworth. Mr. Galise has been a portfolio manager of the portfolio since its
inception. He has been a portfolio manager with Dreyfus since April 1996 and
also is a portfolio manager at Laurel Capital Advisors, an affiliate of Dreyfus.
Mr. Galise is a vice president and portfolio manager at Mellon. He joined Mellon
in 1993 with over 20 years of equity investment experience. Mr. Wadsworth has
managed the portfolio since its inception. In addition to being a portfolio
manager with Dreyfus, Mr. Wadsworth has been employed by Laurel Capital
Advisors, an affiliate of Dreyfus, since October 1990, serving as chief
investment officer of Laurel Capital Advisors since June 1994. Mr. Wadsworth
also is a senior vice president of Mellon, where he has been employed since
1977.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C>
Net asset value, beginning of period 15.09 16.13 13.52 12.50
Investment operations: Investment income -- net .04(2) .04 .05 .05
Net realized and unrealized gain (loss) on investments 1.56 (.99) 2.89 1.03
Total from investment operations 1.60 (.95) 2.94 1.08
Distributions: Dividends from investment income -- net -- (.04) (.04) (.05)
Dividends from net realized gain on investments -- (.05) (.29) (.01)
Total distributions -- (.09) (.33) (.06)
Net asset value, end of period 16.69 15.09 16.13 13.52
Total return (%) 10.60 (5.97) 21.77 8.73(3,4)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .97 .98 1.12 .75(3)
Ratio of net investment income to average net assets (%) .24 .26 .53 .39(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- .19(3)
Portfolio turnover rate (%) 47.01 45.09 34.48 35.68(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 32,530 34,857 28,154 8,148
(1) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
(4) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1, 1996
(COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1996.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: SMALL COMPANY STOCK
PORTFOLIO), for purchase of portfolio shares. The wire must include the
portfolio account number (for new accounts, a taxpayer identification number
should be included instead), account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
and distributes any net capital gains it has realized once a year.
DISTRIBUTIONS WILL BE REINVESTED in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
Small Company Stock Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
151P0500
<PAGE>
Dreyfus Variable Investment Fund
Special Value Portfolio
Investing in stocks of value companies for maximum total return
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Special Value Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks to maximize total return, consisting of capital appreciation
and current income. To pursue this goal, the portfolio invests primarily in
stocks of value companies of any size. The portfolio's stock investments may
include common stocks, preferred stocks and convertible securities of both U.S.
and foreign issuers. In choosing stocks, the portfolio manager looks for value
companies that provide opportunities for capital growth. The manager then
reviews these stocks for factors that could signal a rise in price, such as:
(pound) new products or markets
(pound) opportunities for greater market share
(pound) more effective management
(pound) positive changes in corporate structure or market perception
(pound) potential for improved earnings
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or falls short of the manager's
expectations.
The portfolio also may invest in bonds that offer opportunities for capital
growth. These bonds may be investment grade or below investment grade in
quality.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of a shareholder's investment in the
portfolio will go up and down, which means that shareholders could lose money.
Value stocks involve the risk that they may never reach what the portfolio
manager believes is their full market value, either because the market fails to
recognize the stock's intrinsic worth or the portfolio manager misgauged that
worth. They also may decline in price, even though in theory they are already
underpriced. Because different types of stocks tend to shift in and out of favor
depending on market and economic conditions, the portfolio's performance may
sometimes be lower or higher than that of other types of funds (such as those
emphasizing growth stocks).
The portfolio may invest in companies of any size. Investments in small and
midsize companies carry additional risks because their earnings tend to be less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies. Foreign securities involve special
risks such as changes in currency exchange rates, a lack of comprehensive
company information, political instability, and potentially less liquidity.
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore in the
portfolio's share price as well. In addition, if an issuer fails to make timely
interest or principal payments or there is a decline in the credit quality of a
bond, or perception of a decline, the bond's value could fall, potentially
lowering the portfolio's share price.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio, at times, may invest some assets in derivative securities, such
as options and futures, and in foreign currencies. It may also sell short. These
practices, when employed, are used primarily to hedge the portfolio but may be
used to increase returns; however, such practices sometimes may reduce returns
or increase volatility. Derivatives can be illiquid, and a small investment in
certain derivatives could have a potentially large impact on the portfolio's
performance.
At times, the portfolio may engage in short-term trading, which could produce
higher brokerage costs and taxable distributions.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Russell 1000 Value Index, an unmanaged index that measures the
performance of those Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values, the S&P 500((reg.tm)), a widely recognized,
unmanaged index of stock performance, and the Wilshire Midcap Value Index, an
unmanaged index of midcap stocks that is constructed by using a blend of
price-to-book and forecast price-to-earnings ratios. Of course, past performance
is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
10.60 1.07 28.69 -1.56 -0.26 -3.62 23.14 15.69 7.27
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +17.23%
WORST QUARTER: Q3 '99 -10.11%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 7.27% 8.00% 8.37%
RUSSELL 1000
VALUE INDEX* 7.35% 23.07% 18.23%
S&P 500 21.03% 28.54% 20.49%
WILSHIRE MIDCAP
VALUE INDEX -8.53% 13.58% 15.59%
* THE RUSSELL 1000 VALUE INDEX IS THE PORTFOLIO'S PRIMARY INDEX BECAUSE OF THE
PORTFOLIO'S AND THE INDEX'S LARGE-CAP VALUE ORIENTATION.
</TABLE>
EXPENSES
Investors using the portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies. Owners of VA contracts or VLI policies should refer
to the applicable insurance company prospectus for information on those fees or
charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75%
Other expenses 0.11%
- --------------------------------------------------------------------------------
TOTAL 0.86%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$88 $274 $477 $1,061
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Timothy M. Ghriskey. He has been
the portfolio's primary manager since January 1, 1997. Mr. Ghriskey has been
employed by Dreyfus since July 1995. For more than five years prior thereto, he
was vice president and associate managing partner of Loomis, Sayles & Company,
L.P.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 14.93 12.99 10.60 11.70 12.37
Investment operations: Investment income -- net .11(1) .10 .06 .63 .51
Net realized and unrealized gain (loss)
on investments .95 1.94 2.40 (1.05) (.54)
Total from investment operations 1.06 2.04 2.46 (.42) (.03)
Distributions: Dividends from investment income -- net (.10) (.10) (.01) (.56) (.64)
Dividends in excess of investment income -- net -- -- (.00)(2) (.06) --
Dividends from net realized gain on investments (1.25) -- (.06) -- --
Paid-in capital -- -- -- (.06) --
Total distributions (1.35) (.10) (.07) (.68) (.64)
Net asset value, end of period 14.64 14.93 12.99 10.60 11.70
Total return (%) 7.27 15.69 23.14 (3.62) (.26)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .86 .83 .99 .93 .94
Ratio of dividends on securities sold short to average net assets (%) -- -- .02 -- --
Ratio of net investment income to average net assets (%) .70 .67 .38 4.12 3.56
Portfolio turnover rate (%) 171.41 252.24 188.57 124.19 53.88
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 57,099 63,264 52,981 21,101 25,272
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares.
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Special Value Portfolio), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
and distributes any net capital gains it has realized once a year.
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund
Special Value Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
118P0500
<PAGE>
Dreyfus Variable Investment Fund
Zero Coupon 2000 Portfolio
Investing in zero coupon securities
for as high an investment return as is
consistent with the preservation of capital
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund
Zero Coupon 2000 Portfolio
Contents
The Portfolio
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 2
Management 3
Financial Highlights 4
Account Information
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 5
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies ("VLI policies"). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objectives and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
GOAL/APPROACH
The portfolio seeks as high an investment return as is consistent with the
preservation of capital. To pursue this goal, the portfolio invests primarily in
debt obligations issued by the U.S. government and its agencies and
instrumentalities that have been stripped of their unmatured interest coupons,
and interest coupons that have been stripped from these debt obligations
("stripped securities").
The portfolio may invest in other zero coupon securities issued by state and
local governments and their agencies, and in investment grade zero coupon
securities issued by domestic corporations.
The portfolio will invest at least 65% of its assets in zero coupon securities
which will mature on or about December 31, 2000. On that date, the portfolio
will be liquidated. Prior to December 31, 2000, you will be informed of the
liquidation of the portfolio and will have an opportunity to exchange your
investment for another portfolio of Dreyfus Variable Investment Fund. If the
portfolio has not received your instructions before the liquidation date, your
investment will be invested automatically in the Money Market Portfolio.
Concepts to understand
STRIPPED SECURITIES: a debt obligation that does not entitle the holder to any
periodic payments of interest prior to maturity. Stripped securities are issued
and trade at a discount from the face amount. The discount varies depending on
the time to maturity, prevailing interest rates and the perceived credit quality
of the issuer. Investors who hold stripped securities until maturity know the
total amount of their return at the time of investment.
<PAGE>
MAIN RISKS
Prices of stripped securities tend to move inversely with changes in interest
rates. While a rise in rates may allow the portfolio to invest for higher
yields, the most immediate effect is usually a drop in the prices of such
securities, and therefore in the portfolio's share price as well. As a result,
the value of a shareholder's investment in the portfolio will fluctuate and
shareholders could lose money by investing in the portfolio.
The portfolio may be subject to greater fluctuations in response to changing
interest rates than would a fund investing in debt obligations of comparable
maturities paying interest periodically. Because of the price volatility of
stripped securities prior to maturity, the portfolio may not be appropriate for
investors who have a current need for income from the investment or wish to
liquidate their investment prior to December 31, 2000.
The portfolio may purchase interest-bearing U.S. government securities and other
money market securities to provide income to pay the portfolio's expenses and to
meet redemption requests. If this income is insufficient, the portfolio may have
to sell certain stripped securities at times or prices that might be
disadvantageous.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some of its assets in derivative securities,
such as options and futures. These practices, when employed, are used primarily
to hedge the portfolio but may be used to increase returns; however, such
practices may reduce returns or increase volatility. Derivatives can be
illiquid, and a small investment in certain derivatives could have a potentially
large impact on the portfolio's performance.
The Portfolio
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Merrill Lynch U.S. Treasury Coupon 1-Year Strips Index, an unmanaged
zero coupon index with constant maturity and duration. Of course, past
performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
20.08 8.87 15.19 -3.91 17.95 2.59 7.01 7.27 2.69
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q3 '91 +8.54%
WORST QUARTER: Q1 '92 -3.77%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTFOLIO 2.69% 7.36% 8.83%
MERRILL LYNCH
U.S. TREASURY COUPON
1-YEAR STRIPS INDEX 4.34% 6.18% 6.05%
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
As with the performance information given previously, these figures do not
reflect any fees or charges imposed by participating insurance companies under
their VA contracts or VLI policies. Owners of VA contracts or VLI policies
should refer to the applicable insurance company prospectus for information on
those fees or charges.
- --------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.45%
Other expenses 0.19%
- --------------------------------------------------------------------------------
TOTAL 0.64%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$65 $205 $357 $798
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
<PAGE 2>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$127 billion in over 160 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.45% of
the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion of assets under management, administration or
custody, including approximately $485 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Gerald E. Thunelius. He has been
the portfolio's primary portfolio manager since March 1997 and a portfolio
manager of the portfolio since June 1994. He has been employed by Dreyfus since
September 1989.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio's
distributor) each have adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
The Portfolio
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "Total return" shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 12.50 12.30 12.29 12.70 11.39
Investment operations: Investment income -- net .66 .67 .69 .68 .69
Net realized and unrealized gain (loss) on investments (.33) .20 .14 (.36) 1.31
Total from investment operations .33 .87 .83 .32 2.00
Distributions: Dividends from investment income -- net (.66) (.67) (.69) (.68) (.69)
Dividends from net realized gain on investments -- -- (.13) (.05) --
Total distributions (.66) (.67) (.82) (.73) (.69)
Net asset value, end of period 12.17 12.50 12.30 12.29 12.70
Total return (%) 2.69 7.27 7.01 2.59 17.95
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .64 .59 .61 .66 .68
Ratio of net investment income to average net assets (%) 5.32 5.41 5.65 5.54 5.73
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .03
Portfolio turnover rate (%) 57.23 84.71 200.54 98.28 49.43
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 37,663 38,528 35,106 31,796 22,291
</TABLE>
<PAGE 4>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the portfolio's NAV, which is generally
calculated as of the close of trading on the New York Stock Exchange (usually 4:
00 p.m. Eastern time) every day the exchange is open. Purchase and sale orders
from separate accounts received in proper form by the participating insurance
company on a given business day are priced at the NAV calculated on such day,
provided that the orders are received by the portfolio in proper form on the
next business day. The participating insurance company is responsible for
properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Zero Coupon 2000 Portfolio),
for purchase of portfolio shares. The wire must include the portfolio account
number (for new accounts, a taxpayer identification number should be included
instead), account registration and dealer number, if applicable, of the
participating insurance company.
The portfolio's investments are generally valued based on market value, or where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
monthly, and distributes any net capital gains that it has realized once a year
Distributions will be reinvested in the portfolio unless it is instructed
otherwise by a participating insurance company.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's net asset value per share (NAV).
Account Information
<PAGE 5>
For More Information
Dreyfus Variable Investment Fund Zero Coupon 2000 Portfolio
- -------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager discussing recent market conditions, economic
trends and portfolio strategies that significantly affected the portfolio's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
ON THE INTERNET Text-only versions of certain portfolio documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
119P0500
<PAGE>
- ------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND
BALANCED PORTFOLIO
APPRECIATION PORTFOLIO
DISCIPLINED STOCK PORTFOLIO
GROWTH AND INCOME PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL VALUE PORTFOLIO
LIMITED TERM HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
QUALITY BOND PORTFOLIO
SMALL CAP PORTFOLIO
SMALL COMPANY STOCK PORTFOLIO
SPECIAL VALUE PORTFOLIO
ZERO COUPON 2000 PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
- ------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Balanced, Appreciation (formerly, Capital Appreciation Portfolio), Disciplined
Stock, Growth and Income, International Equity, International Value, Limited
Term High Income, Money Market, Quality Bond, Small Cap, Small Company Stock,
Special Value and Zero Coupon 2000 Portfolios, each dated May 1, 2000 (each, a
"Portfolio," and collectively, the "Portfolios") of Dreyfus Variable Investment
Fund (the "Fund"), dated May 1, 2000, as each may be revised from time to time.
To obtain a copy of the relevant Portfolio's Prospectus, please write to the
Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-554-4611 or 516-338-3300.
Shares of the Portfolios are offered only to variable annuity and variable
life insurance separate accounts established by insurance companies
("Participating Insurance Companies") to fund variable annuity contracts and
variable life insurance policies (collectively, "Policies").
The most recent Annual Report and Semi-Annual Report to Shareholders for
each Portfolio are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund and Portfolios....................................B-3
Management of the Fund....................................................B-36
Management Arrangements...................................................B-43
How to Buy Shares.........................................................B-50
How to Redeem Shares......................................................B-51
Determination of Net Asset Value..........................................B-52
Dividends, Distributions and Taxes........................................B-54
Portfolio Transactions....................................................B-57
Yield and Performance Information.........................................B-60
Information About the Fund................................................B-64
Counsel and Independent Auditors..........................................B-66
Year 2000 Issues..........................................................B-65
Appendix..................................................................B-67
<PAGE>
DESCRIPTION OF THE FUND AND PORTFOLIOS
The Fund is a Massachusetts business trust that commenced operations on
August 31, 1990. Each Portfolio is a separate series of the Fund, an open-end
management investment company, known as a mutual fund. Each of the Balanced,
Appreciation, Disciplined Stock, International Value, Limited Term High Income,
Money Market, Quality Bond, Small Cap, Small Company Stock, Special Value and
Zero Coupon 2000 Portfolios is a diversified fund, which means that, with
respect to 75% of the Portfolio's total assets, the Portfolio will not invest
more than 5% of its assets in the securities of any single issuer nor hold more
than 10% of the outstanding voting securities of any single issue. Each of the
Growth and Income and International Equity Portfolios is a non-diversified fund,
which means that the proportion of the Portfolio's assets that may be invested
in the securities of a single issuer is not limited by the Investment Company
Act of 1940, as amended (the "1940 Act").
The Dreyfus Corporation (the "Manager") serves as each Portfolio's
investment adviser. The Manager has engaged Fayez Sarofim & Co. ("Sarofim") to
serve as the sub-investment adviser of the Appreciation Portfolio. Sarofim
provides day-to-day management of the Fund's investments, subject to the
supervision of the Manager.
Dreyfus Service Corporation ("Distributor") is the distributor of each
Portfolio's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with each Portfolio's Prospectus.
Depositary Receipts. (Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Special Value and Small Company Stock
Portfolios) Each of these Portfolios may invest in the securities of foreign
issuers in the form of American Depositary Receipts and American Depositary
Shares (collectively, "ADRs") and Global Depositary Receipts and Global
Depositary Shares (collectively, "GDRs") 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. GDRs are receipts issued outside the
United States 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
GDRs in bearer form are designed for use outside the United States.
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. 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.
Foreign Government Obligations; Securities of Supranational Entities. (All
Portfolios) Each Portfolio 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 Manager (and, if applicable, the
Portfolio's sub-investment adviser) to be of comparable quality to the other
obligations in which the Portfolio may invest. Such securities also include debt
obligations of supranational entities. 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
Bank for Reconstruction and Development (the World Bank), the European Coal and
Steel Community, the Asian Development Bank and the InterAmerican Development
Bank.
Investment Companies. (Balanced, Special Value and Small Company Stock
Portfolios) Each of these Portfolios may invest in securities issued by
investment companies. Under the 1940 Act, the Portfolio's 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 Portfolio's
total assets with respect to any one investment company and (iii) 10% of the
Portfolio's total assets in the aggregate. Investments in the securities of
other investment companies may involve duplication of advisory fees and certain
other expenses.
Money Market Instruments. (All Portfolios) Each Portfolio 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. A security
backed by the U.S. Treasury or the full faith and credit of the United States is
guaranteed only as to timely payment of interest and principal when held to
maturity. Neither the market value of such securities nor the Portfolio's share
price is guaranteed.
Repurchase Agreements--Each Portfolio may enter into repurchase agreements. In a
repurchase agreement, the Portfolio 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. The Portfolio's custodian or sub-custodian
will have custody of, and will hold in a segregated account, securities acquired
by the Portfolio under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be loans by
the Portfolio. 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 Portfolio's ability to dispose of the underlying
securities. The Portfolio may enter into repurchase agreements with certain
banks or non-bank dealers. In an attempt to reduce the risk of incurring a loss
on a repurchase agreement, the Portfolio 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 Portfolio may invest or
government securities regardless of their remaining maturities, and will require
that additional securities be deposited with it if the value of the securities
purchased should decrease below resale price.
Bank Obligations--Each Portfolio 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.
Certificates of deposit ("CDs") are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits ("TDs") 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--Each Portfolio may purchase commercial paper consisting of
short-term, unsecured promissory notes issued to finance short-term credit
needs. The commercial paper purchased by the Portfolio will consist only of
direct obligations issued by domestic and foreign entities. The other corporate
obligations in which the Portfolio may invest consist of high quality, U.S.
dollar denominated short-term bonds and notes (including variable amount master
demand notes) issued by domestic and foreign corporations, including banks.
Participation Interests--Each Portfolio may purchase from financial institutions
participation interests in securities in which the Portfolio may invest. A
participation interest gives the Portfolio an undivided interest in the security
in the proportion that the Portfolio's participation interest bears to the total
principal amount of the security. These instruments may have fixed, floating or
variable rates of interest, with remaining maturities of 13 months or less. If
the participation interest is unrated, or has been given a rating below that
which is permissible for purchase by the Portfolio, 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 Manager
(and, if applicable, the Portfolio's sub-investment adviser) must have
determined that the instrument is of comparable quality to those instruments in
which the Portfolio may invest.
Convertible Securities. (Balanced, Appreciation, Disciplined Stock, Growth
and Income, International Equity, International Value, Limited Term High Income,
Special Value, 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.
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 provide for a stable stream of income with generally
higher yields than common stocks, but 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 generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.
Warrants. (Balanced, Appreciation, Growth and Income, International Equity,
International Value, Special Value, 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. Each Portfolio may invest
up to 5% (2% in the case of the Appreciation, Small Cap and Special Value
Portfolios) of its net assets in warrants, except that this limitation does not
apply to warrants purchased by the Portfolio that are sold in units with, or
attached to, other securities. Included in such amount, but not to exceed 2% of
the value of the Portfolio's net assets, may be warrants which are not listed on
the New York or American Stock Exchange.
Municipal Obligations. (Quality Bond, Limited Term High Income and Growth
and Income 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, the interest from which, in the opinion of
bond counsel to the issuer, is exempt from Federal income tax. 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. 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 obligation and purchased and sold separately. The Portfolio
also may acquire call options on specific Municipal obligations. The Portfolio
generally would purchase these call options to protect the Portfolio 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, the 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 Portfolio investments. Dividends received by
shareholders on Portfolio shares which are attributable to interest income
received by the Portfolio from Municipal obligations generally will be subject
to Federal income tax. The Portfolio may invest in Municipal obligations, the
ratings of which correspond with the ratings of other permissible Portfolio
investments. The Portfolio 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.
Mortgage-Related Securities. (Balanced, Growth and Income, Limited Term
High Income and Quality Bond Portfolios) Mortgage-related securities are a form
of derivative collateralized by pools of commercial or residential mortgages.
Pools of mortgage loans are assembled as securities for sale to investors by
various governmental, government-related and private organizations. These
securities may include complex instruments such as collateralized mortgage
obligations and stripped mortgage-backed securities, mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs"),
adjustable rate mortgages, real estate investment trusts ("REITs"), or other
kinds of mortgage-backed securities, including those with fixed, floating and
variable interest rates, those with interest rates that change based on
multiples of changes in a specified index of interest rates and those with
interest rates that change inversely to changes in interest rates, as well as
those that do not bear interest. See "Investment Considerations and Risks"
below.
Residential Mortgage-Related Securities--A Portfolio may invest in
mortgage-related securities representing participation interests in pools of
one- to four-family residential mortgage loans issued or guaranteed by
governmental agencies or instrumentalities, such as the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), or issued by
private entities. Similar to commercial mortgage-related securities, residential
mortgage-related securities have been issued using a variety of structures,
including multi-class structures featuring senior and subordinated classes.
Mortgage-related securities issued by GNMA include GNMA Mortgage
Pass-Through Certificates (also know 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 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 issued by 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. Fannie Maes are
guaranteed as to timely payment of principal and interest by FNMA.
Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). 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.
Commercial Mortgage-Related Securities--Commercial mortgage-related securities
generally are multi-class debt or pass-through certificates secured by mortgage
loans on commercial properties. These mortgage-related securities generally are
constructed to provide protection to the senior classes investors against
potential losses on the underlying mortgage loans. This protection generally is
provided by having the holders of subordinated classes of securities
("Subordinated Securities") take the first loss if there are defaults on the
underlying commercial mortgage loans. Other protection, which may benefit all of
the classes or particular classes, may include issuer guarantees, reserve funds,
additional Subordinated Securities, cross-collateralization and
over-collateralization.
Subordinated Securities--A Portfolio may invest in Subordinated Securities
issued or sponsored by commercial banks, savings and loan institutions, mortgage
bankers, private mortgage insurance companies and other non-governmental
issuers. Subordinated Securities have no governmental guarantee, and are
subordinated in some manner as to the payment of principal and/or interest to
the holders of more senior mortgage-related securities arising out of the same
pool of mortgages. The holders of Subordinated Securities typically are
compensated with a higher stated yield than are the holders of more senior
mortgage-related securities. On the other hand, Subordinated Securities
typically subject the holder to greater risk than senior mortgage-related
securities and tend to be rated in a lower rating category, and frequently a
substantially lower rating category, than the senior mortgage-related securities
issued in respect of the same pool of mortgage. Subordinated Securities
generally are likely to be more sensitive to changes in prepayment and interest
rates and the market for such securities may be less liquid than is the case for
traditional fixed-income securities and senior mortgage-related securities.
Collateralized Mortgage Obligations ("CMOs") and Multi-Class
Pass-Through-Securities--A CMO is a multiclass bond backed by a pool of mortgage
pass-through certificates or mortgage loans. CMOs may be collateralized by (a)
Ginnie Mae, Fannie Mae, or Freddie Mac pass-through certificates, (b)
unsecuritized mortgage loans insured by the Federal Housing Administration or
guaranteed by the Department of Veterans' Affairs, (c) unsecuritized
conventional mortgages, (d) other mortgage-related securities, or (e) any
combination thereof.
Each class of CMOs, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
The principal and interest on the underlying mortgages may be allocated among
the several classes of a series of a CMO in many ways. One or more tranches of a
CMO may have coupon rates which reset periodically at a specified increment over
an index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes more
than one index). These floating rate CMOs typically are issued with lifetime
caps on the coupon rate thereon. The Portfolio also may invest in inverse
floating rate CMOs. Inverse floating rate CMOs constitute a tranche of a CMO
with a coupon rate that moves in the reverse direction to an applicable index
such a LIBOR. Accordingly, the coupon rate thereon will increase as interest
rates decrease. Inverse floating rate CMOs are typically more volatile than
fixed or floating rate tranches of CMOs.
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying inversely
to a multiple of an applicable index creates a leverage factor. Inverse floaters
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 loss of principal. The markets for inverse floating rate
CMOs with highly leveraged characteristics at times may be very thin. The
Portfolio's ability to dispose of its positions in such securities will depend
on the degree of liquidity in the markets for such securities. It is impossible
to predict the amount of trading interest that may exist in such securities, and
therefore the future degree of liquidity.
Stripped Mortgage-Backed Securities--A Portfolio also may invest in stripped
mortgage-backed securities which are created by segregating the cash flows from
underlying mortgage loans or mortgage securities to create two or more new
securities, each with a specified percentage of the underlying security's
principal or interest payments. Mortgage securities may be partially stripped so
that each investor class receives some interest and some principal. When
securities are completely stripped, however, all of the interest is distributed
to holders of one type of security, known as an interest-only security, or IO,
and all of the principal is distributed to holders of another type of security
known as a principal-only security, or PO. Strips can be created in a
pass-through structure or as tranches of a CMO. The yields to maturity on IO and
POs are very sensitive to the rate of principal payments (including prepayments)
on the related underlying mortgage assets. If the underlying mortgage assets
experience greater than anticipated prepayments of principal, the Portfolio may
not fully recoup its initial investment in IOs. Conversely, if the underlying
mortgage assets experience less than anticipated prepayments of principal, the
yield on POs could be materially and adversely affected.
Real Estate Investment Trusts--A REIT is a corporation, or a business trust that
would otherwise be taxed as a corporation, which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
Code permits a qualifying REIT to deduct dividends paid, thereby effectively
eliminating corporate level Federal income tax and making the REIT a
pass-through vehicle for Federal income tax purposes. To meet the definitional
requirements of the Code, a REIT must, among other things, invest substantially
all of its assets in interests in real estate (including mortgages and other
REITs) or cash and government securities, derive most of its income from rents
from real property or interest on loans secured by mortgages on real property,
and distribute to shareholders annually a substantial portion of its otherwise
taxable income.
REITs are characterized as equity REITs, mortgage REITs and hybrid REITs.
Equity REITs, which may include operating or finance companies, own real estate
directly and the value of, and income earned by, the REITs depends upon the
income of the underlying properties and the rental income they earn. Equity
REITs also can realize capital gains (or losses) by selling properties that have
appreciated (or depreciated) in value. Mortgage REITs can make construction,
development or long-term mortgage loans and are sensitive to the credit quality
of the borrower. Mortgage REITs derive their income from interest payments on
such loans. Hybrid REITs combine the characteristics of both equity and mortgage
REITs, generally by holding both ownership interests and mortgage interests in
real estate. The value of securities issued by REITs are affected by tax and
regulatory requirements and by perceptions of management skill. They also are
subject to heavy cash flow dependency, defaults by borrowers or tenants,
self-liquidation and the possibility of failing to qualify for tax-free status
under the Code or to maintain exemption from the 1940 Act.
Adjustable-Rate Mortgage Loans ("ARMs")--ARMs eligible for inclusion in a
mortgage pool will generally provide for a fixed initial mortgage interest rate
for a specified period of time, generally for either the first three, six,
twelve, thirteen, thirty-six, or sixty scheduled monthly payments. Thereafter,
the interest rates are subject to periodic adjustment based on changes in an
index. ARMs typically have minimum and maximum rates beyond which the mortgage
interest rate may not vary over the lifetime of the loans. Certain ARMs provide
for additional limitations on the maximum amount by which the mortgage interest
rate may adjust for any single adjustment period. Negatively amortizing ARMs may
provide limitations on changes in the required monthly payment. Limitations on
monthly payments can result in monthly payments that are greater or less than
the amount necessary to amortize a negatively amortizing ARM by its maturity at
the interest rate in effect during any particular month.
Private Entity Securities--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other nongovernmental 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 Portfolio or
the price of the Portfolio's 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.
Other Mortgage-Related Securities--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including CMO residuals. Other mortgage-related securities may
be equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose
entities of the foregoing.
Asset-Backed Securities. (Limited Term High Income, and, to a limited
extent, Money Market Portfolios) Asset-backed securities are a form of
derivative. The securitization techniques used for asset-backed securities are
similar to those used for mortgage-related securities. These securities include
debt securities and securities with debt-like characteristics. The collateral
for these securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables. A Portfolio may
invest in these and other types of asset-backed securities that may be developed
in the future.
Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may provide a Portfolio
with a less effective security interest in the related collateral than do
mortgage-backed securities. Therefore, there is the possibility that recoveries
on the underlying collateral may not, in some cases, be available to support
payments on these securities.
The asset-backed securities in which the Money Market Portfolio may invest
are securities issued by special purpose entities whose primary assets consist
of a pool of mortgages, loans, receivables or other assets. Payment of principal
and interest may depend largely on the cash flows generated by the assets
backing the securities and in certain cases, supported by letters of credit,
surety bonds or other forms of credit or liquidity enhancements. The value of
these asset-backed securities also may be affected by the creditworthiness of
the servicing agent for the pool of assets, the originator of the loans or
receivables or the financial institution providing the credit support.
U.S. Treasury Securities. (Quality Bond and Zero Coupon 2000 Portfolios)
U.S. Treasury securities include Treasury Inflation-Protection Securities
("TIPS"), which are newly created securities issued by the U.S. Treasury
designed to provide investors a long term investment vehicle that is not
vulnerable to inflation. The interest rate paid by TIPS is fixed, while the
principal value rises or falls semi-annually based on changes in a published
Consumer Price Index. Thus, if inflation occurs, the principal and interest
payments on the TIPS are adjusted accordingly to protect investors from
inflationary loss. During a deflationary period, the principal and interest
payments decrease, although the TIPS' principal will not drop below its face
amount at maturity.
In exchange for the inflation protection, TIPS generally pay lower
interest rates than typical Treasury securities. Only if inflation occurs will
TIPS offer a higher real yield than a conventional Treasury bond of the same
maturity. In addition, it is not possible to predict with assurance how the
market for TIPS will develop; initially, the secondary market for these
securities may not be as active or liquid as the secondary market for
conventional Treasury securities. Principal appreciation and interest payments
on TIPS will be taxed annually as ordinary interest income for Federal income
tax calculations. As a result, any appreciation in principal must be counted as
interest income in the year the increase occurs, even though the investor will
not receive such amounts until the TIPS are sold or mature. Principal
appreciation and interest payments will be exempt from state and local income
taxes.
Stripped Treasury Securities. (Zero Coupon 2000 Portfolio and, to a
limited extent, all other Portfolios) Stripped Treasury Securities are U.S.
Treasury securities that have been stripped of their unmatured interest coupons
(which typically provide for interest payments semi-annually), interest coupons
that have been stripped from such U.S. Treasury securities, and receipts and
certificates for such stripped debt obligations and stripped coupons.
Stripped bonds and stripped coupons are sold at a deep discount because
the buyer of those securities receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
payments on the security.
Stripped Treasury Securities will include one or more of the following
types of securities: (a) U.S. Treasury debt obligations originally issued as
bearer coupon bonds which have been stripped of their unmatured interest
coupons, (b) coupons which have been stripped from U.S. Treasury bonds, either
of which may be held through the Federal Reserve Bank's book entry system called
"Separate Trading of Registered Interest and Principal of Securities" ("STRIPS")
or "Coupon Under Book-Entry Safekeeping" ("CUBES"), and (c) receipts or
certificates for stripped U.S. Treasury debt obligations evidencing ownership of
future interest or principal payments on U.S. Treasury notes or bonds which are
direct obligations of the United States. The receipts or certificates must be
issued in registered form by a major bank which acts as custodian and nominal
holder of the underlying stripped U.S. Treasury obligation (which may be held by
it either in physical or in book-entry form). The U.S. Government does not issue
Stripped Treasury Securities directly. The STRIPS program, which is ongoing, is
designed to facilitate the secondary market stripping of selected U.S. Treasury
notes and bonds into separate interest and principal components. Under the
program, the U.S. Treasury continues to sell its notes and bonds through its
customary auction process. A purchaser of those specified notes and bonds who
has access to a book-entry account at a Federal Reserve bank, however, may
separate the Treasury notes and bonds into interest and principal components.
The selected Treasury securities thereafter may be maintained in the book-entry
system operated by the Federal Reserve in a manner that permits the separate
trading and ownership of the interest and principal 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 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.
Stripped Corporate Securities. (Growth and Income, International Equity,
Limited Term High Income, Special Value, 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 Limited Term High
Income, Special Value, Growth and Income, International Equity or Quality Bond
Portfolios will bear ratings comparable to non-stripped corporate obligations
that may be purchased by such Portfolio. Stripped Corporate Securities purchased
by the Zero Coupon 2000 Portfolio will be rated at least Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Group
("S&P"). With respect to other features of Stripped Corporate Securities, such
as sales at deep discounts, see "Stripped Treasury Securities" above and
"Investment Considerations and Risks--Special Considerations Relating to
Stripped Securities" below.
Illiquid Securities. (All Portfolios) Each Portfolio 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 Portfolio's investment objective. These
securities may include securities that are not readily marketable, such as
securities that are subject to legal or contractual restrictions on resale,
repurchase agreements providing for settlement in more than seven days after
notice, certain mortgage-backed securities and certain privately negotiated,
non-exchange traded options and securities used to cover such options. As to
these securities, the Portfolio is subject to a risk that should the Portfolio
desire to sell them when a ready buyer is not available at a price the Portfolio
deems representative of their value, the value of the Portfolio's net assets
could be adversely affected.
Investment Techniques
The following information supplements and should be read in conjunction
with each Portfolio's Prospectus.
Foreign Currency Transactions. (Appreciation, Growth and Income,
International Equity, International Value, Limited Term High Income, Small
Company Stock and Special Value Portfolios) Each of these Portfolios may enter
into foreign currency transactions for a variety of purposes, including: to fix
in U.S. dollars, between trade and settlement date, the value of a security the
Portfolio has agreed to buy or sell; to hedge the U.S. dollar value of
securities the Portfolio 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, a Portfolio's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies. A short position would involve the Portfolio
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 Portfolio contracted to receive.
A Portfolio's success in these transactions will depend principally on the
ability of the Manager (and, where applicable, the Portfolio's sub-investment
adviser) to predict accurately the future exchange rates between foreign
currencies and the U.S. dollar.
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.
Borrowing Money. (All Portfolios) Each Portfolio is permitted to borrow to
the extent permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 33-1/3% of the value of its total assets. Each
Portfolio, other than the Growth and Income, Limited Term High Income and
Special Value Portfolios, 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. Money borrowed will be subject to interest costs. While such
borrowings exceed 5% of the Portfolio's total assets, the Portfolio will not
make any additional investments. In addition, the Balanced, 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, Limited Term High Income, Special Value and,
to a limited extent, Balanced, Money Market and Small Company Stock Portfolios)
Leveraging (buying securities using borrowed money) exaggerates the effect on
net asset value of any increase or decrease in the market value of a Portfolio's
investments. 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. For
borrowings for investment purposes, the 1940 Act requires a Portfolio to
maintain continuous asset coverage (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 Portfolio 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 Portfolio 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.
Each of these Portfolios may enter into reverse repurchase agreements with
banks, brokers or dealers. This form of borrowing involves the transfer by the
Portfolio of an underlying debt instrument in return for cash proceeds based on
a percentage of the value of the security. The Portfolio retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Portfolio repurchases the security at principal plus accrued
interest. To the extent a Portfolio enters into a reverse repurchase agreement,
the Portfolio will segregate custodial permissible liquid assets 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 the Portfolio.
Except for these transactions, borrowings by the Growth and Income and Limited
Term High Income Portfolios generally will be unsecured. Reverse repurchase
agreements may be preferable to a regular sale and later repurchase of the
securities because it avoids certain market risks and transaction costs. Such
transactions, however, may increase the risk of potential fluctuations in the
market value of the Portfolio's assets. In addition, interest costs on the cash
received may exceed the return on the securities purchased.
Short-Selling. (Growth and Income, Limited Term High Income, Special Value
and, to a limited extent, Small Cap Portfolios) In these transactions, a
Portfolio sells a security it does not own in anticipation of a decline in the
market value of the security. To complete the transaction, the Portfolio must
borrow the security to make delivery to the buyer. The Portfolio 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 Portfolio, 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 Portfolio's net assets. The Portfolio may not make a short
sale which results in the Portfolio having sold short in the aggregate more than
5% of the outstanding securities of any class of an issuer.
The Growth and Income, Limited Term High Income and Special Value
Portfolios also may make short sales "against the box," in which the Portfolio
enters into a short sale of a security it owns. At no time will more than 15% of
the value of the Portfolio's net assets be in deposits on short sales against
the box.
Until the Portfolio closes its short position or replaces the borrowed
security, the Portfolio will: (a) segregate permissible liquid assets at such a
level that the amount segregated, 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 Portfolios) Each Portfolio may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. The
Portfolio continues to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned securities, which affords
the Portfolio an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not exceed
33-1/3% (20% with respect to the Special Value and Zero Coupon 2000 Portfolios
and 10% with respect to the Appreciation, Quality Bond and Small Cap Portfolios)
of the value of the Portfolio's total assets, and the Portfolio 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 Portfolio at any time upon specified notice. The Portfolio
might experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio. In
connection with its securities lending transactions, a Portfolio may return to
the borrower or a third party which is unaffiliated with the Portfolio, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
Derivatives. (Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Quality
Bond, Small Company Stock, Special Value and Zero Coupon 2000 Portfolios) Each
of these Portfolios may invest in, or enter into, derivatives, such as options
and futures (except in the case of the Quality Bond Portfolio) and, in the case
of the Growth and Income and Quality Bond Portfolios, mortgage-related
securities, and, in the case of the Limited Term High Income Portfolio,
mortgage-related securities, asset-backed securities and swaps, 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 Portfolio 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 Portfolio 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 Portfolio can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities. However, 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 a Portfolio's
performance.
If a Portfolio invests in derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Portfolio's return
or result in a loss. A Portfolio also could experience losses if its derivatives
were poorly correlated with its other investments, or if the Portfolio 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 Portfolio will be a commodity pool,
certain derivatives subject the Portfolios to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Portfolio can invest in
such derivatives. A Portfolio may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, no Portfolio may
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, exceeds 5% of the
liquidation value of the Portfolio's 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.
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 variation margin system 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 Portfolio's 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 Portfolio. 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--(Balanced, Disciplined Stock, Growth and
Income, International Equity, International Value, Limited Term High Income,
Small Company Stock, Special Value and Zero Coupon 2000 Portfolios) Each of
these Portfolios may enter into futures contracts in U.S. domestic markets or on
exchanges located outside the United States. 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 Portfolio might realize in trading could be eliminated by adverse
changes in the currency exchange rate, or the Portfolio 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 the Portfolio
which could adversely affect the value of the Portfolio's net assets. Although
each Portfolio 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 Portfolio to
substantial losses.
Successful use of futures by a Portfolio also is subject to the ability of
the Manager (or, if applicable, the Portfolio's 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 securities being hedged and the price
movements of the futures contract. For example, if a Portfolio 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
Portfolio 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 Portfolio has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. A Portfolio 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 Portfolio may be required to segregate permissible liquid
assets to cover its obligations relating to its transactions in derivatives. To
maintain this required cover, the Portfolio 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. In addition, the
segregation of such assets will have the effect of limiting a Portfolio's
ability otherwise to invest those assets.
Specific Futures Transactions--The Balanced, Disciplined Stock, Growth and
Income, International Equity, International Value, Limited Term High Income,
Small Company Stock and Special Value Portfolios may purchase and sell stock
index futures contracts. A stock index future obligates the Portfolio 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, Limited
Term High Income, Small Company Stock and Special Value Portfolios may purchase
and sell currency futures. A foreign currency future obligates the Portfolio 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, Limited
Term High Income, Special Value and Zero Coupon 2000 Portfolios may purchase and
sell interest rate futures contracts. An interest rate future obligates the
Portfolio to purchase or sell an amount of a specific debt security at a future
date at a specific price.
Successful use by a Portfolio of futures contracts will be subject to the
ability of the Manager (or, if applicable the Portfolio's 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, the Portfolio may incur losses.
Interest Rate Swaps--(Limited Term High Income Portfolio) Interest rate swaps
involve the exchange by the Portfolio with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating
rate payments for fixed-rate payments). The exchange commitments can involve
payments to be made in the same currency or in different currencies. The use of
interest rate swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
security transactions. If the Manager is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of the Portfolio would diminish compared with what it would have been if these
investment techniques were not used. Moreover, even if the Manager is correct in
its forecasts, there is a risk that the swap position may correlate imperfectly
with the price of the asset or liability being hedged. There is no limit on the
amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions do not involve the delivery of securities or other
underlying assets or principal. Accordingly, the risk of loss with respect to
interest rate swaps is limited to the net amount of interest payments that the
Portfolio is contractually obligated to make. If the other party to an interest
rate swap defaults, the Portfolio's risk of loss consists of the net amount of
interest payments that the Portfolio contractually is entitled to receive.
Credit Derivatives--(Limited Term High Income Portfolio) The Portfolio may
engage in credit derivative transactions. There are two broad categories of
credit derivatives: default price risk derivatives and market spread
derivatives. Default price risk derivatives are linked to the price of reference
securities or loans after a default by the issuer or borrower, respectively.
Market spread derivatives are based on the risk that changes in market factors,
such as credit spreads, can cause a decline in the value of a security, loan or
index. There are three basic transactional forms for credit derivatives: swaps,
options and structured instruments. The use of credit derivatives is a highly
specialized activity which involves strategies and risks different from those
associated with ordinary portfolio security transactions. If the Manager is
incorrect in its forecasts of default risks, market spreads or other applicable
factors, the investment performance of the Portfolio would diminish compared
with what it would have been if these techniques were not used. Moreover, even
if the Manager is correct in its forecasts, there is a risk that a credit
derivative position may correlate imperfectly with the price of the asset or
liability being hedged. There is no limit on the amount of credit derivative
transactions that may be entered into by the Portfolio. The Portfolio's risk of
loss in a credit derivative transaction varies with the form of the transaction.
For example, if the Portfolio purchases a default option on a security, and if
no default occurs with respect to the security, the Portfolio's loss is limited
to the premium it paid for the default option. In contrast, if there is a
default by the grantor of a default option, the Portfolio's loss will include
both the premium that it paid for the option and the decline in value of the
underlying security that the default option hedged.
Options-In General--(Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Small
Company Stock, Special Value and Zero Coupon 2000 Portfolios) Each of these
Portfolios may invest up to 5% of its assets, represented by the premium paid,
in the purchase of call and put options. A Portfolio 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. 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 Portfolio is a call option with respect
to which the Portfolio owns the underlying security or otherwise covers the
transaction by segregating permissible liquid assets. A put option written by a
Portfolio is covered when, among other things, the Portfolio segregates
permissible liquid assets having a value equal to or greater than the exercise
price of the option 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 Portfolio 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, a Portfolio 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 Balanced, Disciplined Stock, Growth and
Income, International Equity, International Value, Small Company Stock and
Special Value 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.
Each of the Growth and Income, International Equity, Limited Term High
Income, Small Company Stock and Special Value 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.
Each of the Disciplined Stock, Growth and Income, International Equity,
Small Company Stock and Special Value Portfolios may purchase cash-settled
options on equity index swaps and the Limited Term High Income Portfolio may
purchase cash-settled options on interest rate swaps in pursuit of its
investment objective. Equity index swaps involve the exchange by the Portfolio
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 Portfolio of options will be subject to the ability of
the Manager (or, if applicable, the Portfolio's 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 Portfolio may incur losses.
Future Developments. (All Portfolios) A Portfolio 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 Portfolio or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Portfolio's investment objective and legally permissible for the Portfolio.
Before entering into such transactions or making any such investment on behalf
of a Portfolio, the Fund will provide appropriate disclosure in its Prospectus
or Statement of Additional Information.
Forward Commitments. (All Portfolios) Each Portfolio may purchase or sell
securities on a forward commitment, when-issued or delayed delivery basis, which
means delivery and payment take place a number of days after the date of the
commitment to purchase or sell the securities at a predetermined price and/or
yield. Typically, no interest accrues to the purchaser until the security is
delivered. When purchasing a security on a forward commitment basis, the
Portfolio assumes the rights and risks of ownership of the security, including
the risk of price and yield fluctuations, and takes such fluctuations into
account when determining its net asset value. Because the Portfolio is not
required to pay for these securities until the delivery date, these risks are in
addition to the risks associated with the Portfolio's other investments. If the
Portfolio is fully or almost fully invested when forward commitment purchases
are outstanding, such purchases may result in a form of leverage. The Portfolio
intends to engage in forward commitments to increase its portfolio's financial
exposure to the types of securities in which it invests. Leveraging the
portfolio in this manner will increase the Portfolio's exposure to changes in
interest rates and will increase the volatility of its returns. The Portfolio
will segregate permissible liquid assets at least equal at all times to the
amount of the Portfolio's purchase commitments. At no time will the Portfolio
have more than 33-1/3% of its assets committed to purchase securities on a
forward commitment basis.
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 Portfolio 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
Portfolio is fully or almost fully invested may result in greater potential
fluctuation in the value of the Portfolio's net assets and its net asset value
per share.
Portfolio Maturity. (Limited Term High Income Portfolio) Under normal
market conditions, the average effective portfolio maturity for the Limited Term
High Income Portfolio is expected to be four years or less. For purposes of
calculating average effective portfolio maturity, a security that is subject to
redemption at the option of the issuer on a particular date (the "call date")
which is prior to the security's stated maturity may be deemed to mature on the
call date rather than on its stated maturity date. The call date of a security
will be used to calculate average effective portfolio maturity when the Manager
reasonably anticipates, based upon information available to it, that the issuer
will exercise its right to redeem the security. The Manager may base its
conclusion on such factors as the interest rate paid on the security compared to
prevailing market rates, the amount of cash available to the issuer of the
security, events affecting the issuer of the security, and other factors that
may compel or make it advantageous for the issuer to redeem a security prior to
its stated maturity.
Investment Considerations and Risks
Equity Securities. (Balanced, Appreciation, Disciplined Stock, Growth and
Income, International Equity, International Value, Small Cap, Small Company
Stock and Special Value Portfolios) - Equity securities, including common stock,
preferred stock, convertible securities and warrants, 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 Portfolio's
investments will result in changes in the value of its shares and thus the
Portfolio's total return to investors.
Fixed Income Securities. (All Portfolios) 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
securities that may be purchased by a Portfolio, 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 Growth and Income, International Equity, Limited Term High
Income, Quality Bond and Special Value Portfolios, such as those rated Baa or
lower by Moody's and BBB or lower by S&P, Fitch IBCA, Inc. ("Fitch") and Duff &
Phelps Credit Rating Co. ("Duff" and together with S&P, Moody's and Fitch, the
"Rating Agencies"), 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.
Mortgage-Related Securities. (Growth and Income, Limited Term High Income
and Quality Bond Portfolios) Mortgage-related securities are complex derivative
instruments, subject to both credit and prepayment risk, and may be more
volatile and less liquid than more traditional debt securities. Although certain
mortgage-related securities are guaranteed by a third party (such as a U.S.
Government agency or instrumentality with respect to government-related
mortgage-backed securities) 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.
Mortgage-related securities are subject to credit risks associated with the
performance of the underlying mortgage properties. Adverse changes in economic
conditions and circumstances are more likely to have an adverse impact on
mortgage-related securities secured by loans on certain types of commercial
properties than on those secured by loans on residential properties. In
addition, these securities are subject to prepayment risk, although commercial
mortgages typically have shorter maturities than residential mortgages and
prepayment protection features. Some mortgage-related securities have structures
that make their reactions to interest rate changes and other factors difficult
to predict, making their value highly volatile.
Special Considerations Relating to Stripped Securities. (Zero Coupon 2000
Portfolio and, to a limited extent, all other Portfolios) 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 impositions of excise
taxes, however, the Zero Coupon 2000 Portfolio and any other Portfolio that
invests in Stripped Securities will be required to distribute dividends equal to
substantially all of its net investment income, including the accrued income,
derived from its Stripped Securities for which it receives no payments in cash
prior to their maturity.
The Portfolio 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
Portfolio 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 Manager
will monitor the Portfolio's 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, Limited Term High Income,
Quality Bond, Special Value and, to a limited extent, Small Cap Portfolios) The
Limited Term High Income Portfolio invests primarily, and each other such
Portfolio 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 a Rating Agency 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 a Rating Agency in the case of the Limited Term High
Income, Small Cap and Special Value Portfolios. They 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
Portfolio to sell certain securities or could result in lower prices than those
used in calculating the Portfolio's net asset value.
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 Portfolio's
ability to dispose of particular issues when necessary to meet such Portfolio's
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
Portfolio to obtain accurate market quotations for purposes of valuing the
Portfolio's 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 would disrupt severely the market for such
securities and have an adverse impact on the value of such securities, and could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon, which would increase the incidence of
default for such securities.
The Portfolio may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The
Portfolio has no arrangement with any persons concerning the acquisition of such
securities, and the Manager (or, if applicable, the Portfolio's sub-investment
adviser) will review carefully the credit and other characteristics pertinent to
such new issues.
The ratings of the Rating Agencies 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 Manager also will evaluate these
securities and the ability of the issuers of such securities to pay interest and
principal.
With respect to Limited Term High Income, the average distribution of
investments of the Portfolio in corporate bonds (excluding convertible preferred
stocks and convertible bonds) by ratings for the fiscal year ended December 31,
1999, calculated monthly on a dollar weighted basis, was as follows:
Limited Term High Income
Moody's or S&P, Fitch or Duff Percentage
Aaa AAA 3.0%
Baa BBB 1.3%
Ba BB 18.9%
B B 57.4%
Caa CCC 7.4%
Ca CC 1.0%
NR NR 2.9%*
____
91.9%**
_______________________
* These unrated securities have been determined by the Manager to be of
comparable quality to securities rated as follows: BBB (.2%), B (.7%) and CCC
(2.0%).
** The Portfolio also owns preferred stocks rated BB (1.4%), preferred stocks
rated CCC (1.3%), convertible bonds rated A (.8%) and convertible bonds rated
B (5.3%) or cash equivalents.
The credit risk factors pertaining to lower rated securities also apply to
lower rated Stripped Corporate Securities in which each Portfolio other than the
Quality Bond Portfolio may invest and pay-in-kind bonds in which each Portfolio
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 Portfolio will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer defaults,
the Portfolio may obtain no return at all on its investment. See "Dividends,
Distributions and Taxes."
Foreign Securities. (All Portfolios) Foreign securities markets generally
are not as developed or efficient as those in the United States. Securities of
some foreign issuers, including depositary receipts, foreign government
obligations and securities of supranational entities, 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 Portfolio 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 or restrict the payment of principal and interest
on the foreign securities 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 Portfolio 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 Portfolio's 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.
Foreign Currency Transactions. (Appreciation, Growth and Income,
International Equity, International Value, Limited Term High Income, Small Cap,
Small Company Stock and Special Value 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.
Bank Securities. (Money Market Portfolio) To the extent the Money Market
Portfolio's investments are concentrated in the banking industry, the Portfolio
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, Limited Term
High Income and Quality Bond Portfolios) Certain municipal lease/purchase
obligations in which the Portfolio 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 Manager 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 Portfolios) No Portfolio 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 Limited Term High Income, Small Cap and Special Value Portfolios, to be
less than 100% for the Balanced (for both common stock and bond portions of its
portfolio), Disciplined Stock and Small Company Stock Portfolios, to be less
than 150% for the International Equity, International Value and Zero Coupon 2000
Portfolios and to be less than 300% for the Growth and Income and Quality Bond
Portfolios. Because the Appreciation Portfolio invests for long-term growth
rather than short-term profits, its annual portfolio turnover rate is not
expected to exceed 15% and will exceed 25% only in the event of extraordinary
market conditions. Nevertheless, securities transactions for the Appreciation
Portfolio will be based only upon investment considerations and will not be
limited to other considerations when Sarofim deems it appropriate to make
changes in the Portfolio's portfolio securities. A turnover rate of 100% is
equivalent to the Portfolio buying and selling all of the securities in its
portfolio once in the course of a year. Higher portfolio turnover rates are
likely to result in comparatively greater brokerage commissions and transaction
costs. In addition, short-term gains realized from portfolio transactions are
taxable to shareholders as ordinary income. The Money Market Portfolio may have
a high portfolio turnover, but that should not adversely affect the Portfolio
since it (as is the case for the Quality Bond and Zero Coupon 2000 Portfolios)
usually does not pay brokerage commissions when it purchases short-term debt
obligations.
State Insurance Regulation. (All Portfolios) 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 future contracts and short sales of
securities, among other techniques. If applied to a Portfolio, the Portfolio 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 Portfolio operate in material compliance with current insurance laws and
regulations, as applied, in each jurisdiction in which the Portfolio is offered.
Simultaneous Investments. (All Portfolios) Investment decisions for each
Portfolio are made independently from those of the other Portfolios and
investment companies managed by the Manager (and, where applicable, the
Portfolio's sub-investment adviser). If, however, such other Portfolios or
investment companies desire to invest in, or dispose of, the same securities as
the Portfolio, 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 Portfolio or the price
paid or received by a Portfolio.
Investment Restrictions
Each Portfolio's investment objective is a fundamental policy, which
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of the Portfolio's outstanding voting shares. In addition, the
Portfolios have adopted certain investment restrictions as fundamental policies
and certain other investment restrictions as non-fundamental policies, as
described below.
Appreciation, Money Market, Quality Bond, Small Cap, Special Value and
Zero Coupon 2000 Portfolios. Each of these Portfolios (except as noted below)
has adopted investment restrictions numbered 1 through 14 as fundamental
policies. However, the amendment of these restrictions to add an additional
Portfolio, which amendment does not substantively affect the restrictions with
respect to an existing Portfolio, will not require approval by the holders of a
majority (as defined in the 1940 Act) of the Portfolio's outstanding voting
shares. Investment restrictions numbered 15 and 16 are not fundamental policies
and may be changed, as to a Portfolio, by a vote of a majority of the Fund's
Board members at any time. With respect to the Appreciation Portfolio,
investment restrictions numbered 2 and 3, 10 through 12 and 14 are not
fundamental policies and may be changed, as to that Portfolio, by a vote of a
majority of the Fund's Board members at any time. Except where otherwise
expressly stated, none of these Portfolios may:
1. Borrow money, except, with respect to each Portfolio 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
Portfolio's 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 Portfolio's total
assets, the Portfolio will not make any additional investments.
2. Sell securities short or purchase securities on margin, except
that the Small Cap and Special Value Portfolios may engage in short sales and
each Portfolio 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 Appreciation, Special
Value and Zero Coupon 2000 Portfolios may invest in futures contracts, including
those related to indices, 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 Portfolio 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 Portfolio's 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 Portfolio to hold more than 10% of the voting securities of such
issuer. This restriction applies only with respect to 75% of such Portfolio's
total assets.
10. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio 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 Board members of the Fund or the officers or Directors of the Manager (and,
with respect to the Appreciation Portfolio, the officers or Directors of
Sarofim) individually own beneficially more than 1/2% 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 Appreciation, Small Cap
and Special Value 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
Portfolio 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 Appreciation,
Small Cap, Special Value and Zero Coupon 2000 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 Portfolio's
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 Portfolio's net assets would be so invested.
* * *
Balanced, Disciplined Stock, Growth and Income, International Equity,
International Value, Limited Term High Income and Small Company Stock
Portfolios. Each of these Portfolios has adopted investment restrictions
numbered 1 through 8 as fundamental policies, and each of the Balanced,
Disciplined Stock, International Value, Limited Term High Income and Small
Company Stock Portfolios has adopted investment restrictions numbered 16 and 17
as additional fundamental policies. However, the amendment of these restrictions
to add an additional Portfolio, which amendment does not substantively effect
the restrictions with respect to an existing Portfolio, will not require
approval by the holders of a majority (as defined in the 1940 Act) of the
Portfolio's outstanding shares. Investment restrictions numbered 9 through 15
are not fundamental policies and may be changed, as to a Portfolio, by a vote of
a majority of the Fund's Board members at any time. None of these Portfolios
may:
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 Portfolio 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 Portfolio 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
Portfolio's 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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
Balanced, Disciplined Stock, International Value, Limited Term High Income and
Small Company Stock Portfolios. None of these Portfolios 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 Portfolio's 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 Portfolio's 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.
In addition, each Portfolio has adopted the following policies as
non-fundamental policies. Each Portfolio intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, and (ii) to comply in all material respects with insurance laws and
regulations that the Fund has been advised are applicable to investments of
separate accounts of Participating Insurance Companies. In addition, each
Portfolio, 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
The Fund's Board is responsible for the management and supervision of each
Portfolio. The Board approves all significant agreements with those companies
that furnish services to the Fund. These companies are as follows:
The Dreyfus Corporation........... Investment Adviser
Fayez Sarofim & Co................ Sub-Investment Adviser for the
Appreciation Portfolio
Dreyfus Service Corporation....... Distributor
Dreyfus Transfer, Inc............. Transfer Agent
The Bank of New York.............. Custodian for the International
Equity, International Value, Money
Market and Special Value Portfolios
Mellon Bank, N.A.................. Custodian for the Balanced,
Appreciation, Disciplined Stock,
Growth and Income, Limited Term
High Income, Quality Bond, Small
Cap, Small Company Stock and Zero
Coupon 2000 Portfolios
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.
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. He is also a
director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly Belding Heminway Company, Inc.), a button packager and
distributor, Century Business Services, Inc., a provider of various
outsourcing functions for small and medium sized companies and
QUIKCAT.com, Inc., a private company engaged in the development of high
speed movement, routing, storage and encryption of data across cable,
wireless, and all other modes of data transport. For more than five years
prior to January 1995, he was President, a director and, until August
1994, Chief Operating Officer of the Manager and Executive Vice President
and a director of the Distributor. From August 1994 until December 31,
1994, he was a director of Mellon Financial Corporation. He is 56 years
old and his address is 200 Park Avenue, New York, New York 10166.
DAVID P. FELDMAN, Board Member. A director of several mutual funds in the 59
Wall Street Mutual Funds Group and The Jeffrey Company, a private
investment company. He was employed by AT&T Investment Management
Corporation, from July 1961 until his retirement in May 1997, most
recently serving as Chairman and Chief Executive Officer. He is 60 years
old and his address is 466 Lexington Avenue, New York, New York 10017.
JOHN M. FRASER, JR., Board Member. Retired president of Fraser Associates, a
service company. 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 78 years old and his address is
133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Board Member. Adjunct Lecturer, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University since January 1992. Mr. Glauber 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 chairman of Measurisk.com, an Internet
provider of a risk measurement to institutional investors, and is also
a director of The Dun & Bradstreet Corp., XL Capital, Ltd., a
Bermuda-based insurance company, National Association of Securities
Dealers, Inc., NASD Regulation, Inc. and the Federal Reserve Bank of
Boston. He is 61 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 a partner of
the law firm of Lovejoy, Wasson & Ashton 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. He is 69 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. Merchandise and marketing consultant.
From 1977 to 1998 director of Merchandise and Marketing for Corporate
Property Investors, a real estate investment company. From 1974 to 1976,
she was owner and manager of a merchandise and marketing consulting firm.
Prior to 1974, she was a Vice President of Macy's, New York. She is 74
years old and her address is c/o Corporate Property Investors, 305 East
47th Street, New York, New York 10017.
DR. PAUL A. MARKS, Board Member. President-Emeritus of Memorial
Sloan-Kettering Cancer Center. From 1980 to 1999, Dr. Marks was
President and Chief Executive Officer of Memorial Sloan-Kettering
Cancer Center. He is also a director emeritus of Pfizer, Inc., a
pharmaceutical company, where he served as a director from 1978 to
1996; and a director of Tularik, Inc., a biotechnology company. He was
Vice President for Health Sciences and Director of the Cancer Center at
Columbia University from 1973 to 1980; Professor of Medicine and of
Human Genetics and Development at Columbia University from 1968 to
1982. He was a director of Life Technologies, Inc., a life science
company producing products for cell and molecular biology and
microbiology, from 1986 to 1996 and a director of Genos, Inc., a
genomics company from 1996 to 1999. He is 73 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 Academy for
Liberal Education, an accrediting agency for colleges and universities
certified by the U.S. Department of Education. Dr. Peretz is a Co-Chairman
of TheStreet.com, a financial daily on the Web. He is a director of the
Electronic Newstand, a distributor of magazines on the Web and Digital
Learning Group, LLC, an online publisher of college textbooks. He was a
director of Bank Leumi Trust Company of New York and Carmel Container
Corporation from 1988 to 1991, and LeukoSite Inc., a biopharmaceutical
company, from 1993 to 1999. He is 60 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. He is also a
director of Malibu Entertainment International, Inc., the Lillian
Vernon Corporation and Winstar Communications, Inc. 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 67 years old and his
address is 126 East 56th Street, Suite 12 North, New York, New York
10022-3613.
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 funds in the Dreyfus Family of
Funds for which such person was a Board member (the number of which is set forth
in parenthesis next to each Board member's total compensation)* during the year
ended December 31, 1999, were as follows:
<PAGE>
Total Compensation
From Fund and Fund
Name of Board Member Aggregate Compensation Complex Paid to Board
From Fund** Member
Joseph S. DiMartino $5,000 $642,177 (189)
David P. Feldman $4,000 $118,875 (56)
John M. Fraser, Jr. $4,000 $ 78,000 (41)
Robert R. Glauber $3,750 $ 94,250 (43)
James F. Henry $3,750 $ 53,750 (28)
Rosalind Gersten Jacobs $4,000 $ 92,250 (44)
Irving Kristol+ $3,750 $ 50,250 (28)
Dr. Paul A. Marks $4,000 $ 53,750 (28)
Dr. Martin Peretz $4,000 $ 54,500 (28)
Bert W. Wasserman $3,750 $ 53,750 (28)
---------------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund complex, including the Fund, for which the Board
member serves.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $7,633 for all Board members as a group.
+ Board member Emeritus since January 22, 2000.
Officers of the Fund
STEPHEN E. CANTER, President. President, Chief Operating Officer, Chief
Investment Officer of the Manager, and an officer of other investment
companies advised and administered by the Manager. Mr. Canter also is
a Director or an Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which
is an affiliate of the Manager. He is 54 years old.
MARK N. JACOBS, Vice President. Vice President, Secretary and General
Counsel of the Manager, and an officer of other investment companies
advised and administered by the Manager. He is 53 years old.
JOSEPH CONNOLLY, Vice President and Treasurer. Director - Mutual Fund Accounting
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 42 years old.
MICHAEL A. ROSENBERG, Secretary. Associate General Counsel of the Manager,
and an officer of other investment companies advised and administered
by the Manager. He is 40 years old.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel and
Assistant Secretary of the Manager, and an officer of other investment
companies advised and administered by the Manager. He is 50 years old.
ROBERT R. MULLERY, Assistant Secretary. Assistant General Counsel of the
Manager, and an officer of other investment companies advised and
administered by the Manager. He is 48 years old.
MICHAEL CONDON, Assistant Treasurer. Senior Treasury Manager of the Manager, and
an officer of other investment companies advised and administered by the
Manager. He is 38 years old.
WILLIAM MCDOWELL, Assistant Treasurer. Senior Accounting Manager - Taxable Fixed
Income of the Manager, and an officer of other investment companies
advised and administered by the Manager. He is 41 years old.
JAMES WINDELS, Assistant Treasurer. Senior Treasury Manager of the Manager, and
an officer of other investment companies advised and administered by the
Manager. He is 41 years old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
The Fund's Board members and officers, as a group, owned less than 1% of
each Portfolio's shares outstanding on April 17, 2000.
The following shareholders are known by the Fund to own of record 5% or
more of the indicated Portfolio's shares outstanding on April 17, 2000:
Shareholder Portfolio Percentage of Shares
Transamerica Occidental Life Balanced 75.03%
Insurance Company Appreciation 31.46%
Separate Account VA-2L Disciplined Stock 58.86%
Accounting Department Growth and Income 45.70%
P.O. Box 33849 International Equity 82.50%
Charlotte, NC 28233-3849 International Value 74.59%
Limited Term High Income 84.21%
Money Market 70.45%
Quality Bond 53.04%
Small Cap 12.33%
Small Company Stock 61.20%
Special Value 68.90%
Zero Coupon 2000 49.48%
First Transamerica Life Balanced 24.97%
Insurance Company Appreciation 10.38%
Separate Account VA - 2LNY Disciplined Stock 28.14%
Accounting Department Growth and Income 13.20%
P.O. Box 33849 International Equity 16.75%
Charlotte, NC 28233-3849 International Value 17.82%
Limited Term High Income 15.79%
Money Market 25.22%
Quality Bond 14.60%
Small Company Stock 19.17%
Special Value 30.90%
Zero Coupon 2000 23.44%
Nationwide Life Insurance Appreciation 17.19%
Nationwide NWVA-II Growth and Income 21.27%
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
Nationwide Life Insurance Small Cap 6.46%
Nationwide Multi - Felix
(NEA)
CO - 48 c/o IPO Portfolio
Accounting
P.O. Box 182029
Columbus, OH 43218-2029
Nationwide Life Insurance Appreciation 16.26%
NWVA - 9
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
Conseco Variable International Value 6.99
Insurance Co.
Attn: Carla Higgs
Dept. Separate A/C
11825 N. Pennsylvania Street
Carmel, IN 46032-4555
Provident Mutual Life & Zero Coupon 2000 23.80%
Annuity Company of America
P.O. Box 1717
Valley Forge, PA
19482-1717
Traverlers Fund U. Appreciation 7.73%
5 MS Bob Iagrossi Small Cap 5.03%
Tower Square
Hartford, CT 06182
VALIC Separate Account A Small Cap 58.38%
Division 18
2929 Allen Parkway L7-01
Houston, Texas
77019-2197
Lincoln National Life Small Cap 5.78%
Insurance
Mutual Fund Accounting - 4C-01
1300, S Clinton Street
Fort Wayne, IN 46802-3506
PLF Life Disciplined Stock 7.90%
Variable Annuity
Acct. A
4333 Edgewood Road NE
Cedar Rapids, IA 52499
American General Life Quality Bond 14.46%
Ins. Co.
Signature II A
C/O Variable Product
A/C 5 - 36
P.O. Box 1591
Houston, TX 77251-1591
A shareholder that beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed to be a "control person" (as
defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). 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.
The Manager provides advisory services pursuant to an Investment Advisory
Agreement (the "Agreement") between the Fund and the Manager. As to each
Portfolio, 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 Portfolio, 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. As to each Portfolio, 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 Portfolio, or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically, as to the relevant
Portfolio, in the event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman; J. David Officer, Vice Chairman
and a director; Ronald P. O'Hanley III, Vice Chairman; William T. Sandalls,
Jr., Executive Vice President; Stephen R. Byers, Senior Vice President; Mark
N. Jacobs, Vice President, General Counsel and Secretary; Diane P. Durnin,
Vice President - Product Development; Patrice M. Kozlowski, Vice
President-Corporate Communications; Mary Beth Leibig, Vice President-Human
Resources; Ray Van Cott, Vice President-Information Systems; Theodore A.
Schachar, Vice President-Tax; Wendy Strutt, Vice President; Richard Terres,
Vice President; William H. Maresca, Controller; James Bitetto, Assistant
Secretary; Steven F. Newman, Assistant Secretary; and Mandell L. Berman,
Burton C. Borgelt, Steven G. Elliott, Martin C. McGuinn, Richard W. Sabo and
Richard F. Syron, directors.
With respect to the Appreciation Portfolio, the Fund has entered into a
Sub-Investment Advisory Agreement (the "Sarofim Sub-Advisory Agreement") with
Fayez Sarofim & Co. As to such Portfolio, 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 Portfolio's 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 Sarofim, by vote cast in person at a meeting called for the
purpose of voting on such approval. 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 Portfolio's outstanding voting securities,
or, upon not less than 90 days' notice, by Sarofim. 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 Sarofim: Fayez
S. Sarofim, Chairman of the Board, President and a director; 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 V. Daniel and James A.
Reynolds, III, Vice Presidents.
The Manager manages the Fund's portfolios of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. With respect to the Appreciation Portfolio, Sarofim provides day-to-day
management of such Portfolio's portfolio of investments, subject to the
supervision of the Manager and the Fund's Board. The Portfolio's 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 Portfolio's portfolio managers are:
Portfolio Portfolio Manager
Balanced Laurie Carroll
Ron Gala
Appreciation Fayez S. Sarofim
Russell B. Hawkins
Catherine P. Crain
Disciplined Stock Bert Mullins
Growth and Income Timothy Ghriskey
Douglas D. Ramos
International Equity Douglas A. Loeffler
International Value Sandor Cseh
Limited Term High Income Dominick DeAlto (QB only)
Quality Bond Michael Hoeh
Zero Coupon 2000 Roger King
John Koeber
C. Matthew Olson
Gerald E. Thunelius
Money Market Bernard W. Kiernan, Jr.
Patricia A. Larkin
Thomas Riordan
Small Cap Hilary R. Woods
Paul Kandel
Small Company Stock Anthony J. Galise
James Wadsworth
Special Value Timothy M. Ghriskey
Douglas D. Ramos
The Manager and Sarofim maintain research departments with professional
portfolio managers and securities analysts who provide research services for the
Fund and for other funds advised by the Manager or Sarofim. All purchases and
sales of each Portfolio are reported for the Board's review at the meeting
subsequent to such transactions.
Mellon Bank, N.A., the Manager's parent, and its affiliates may have
deposit, loan and commercial banking or other relationships with the issuers of
securities purchased by a Portfolio. The Manager has informed the Fund that in
making its investment decisions it does not obtain or use material inside
information that Mellon Bank, N.A. or its affiliates may possess with respect to
such issuers.
The Manager's Code of Ethics (the "Code") subjects its employees' personal
securities transactions to various restrictions to ensure that such trading does
not disadvantage any fund advised by the Manager. In that regard, portfolio
managers and other investment personnel of the Manager must preclear and report
their personal securities transactions and holdings, which are reviewed for
compliance with the Code, and are also subject to the oversight of Mellon's
Investment Ethics Committee. Portfolio managers and other investment personnel
who comply with the Code preclearance and disclosure procedures and the
requirements of the Committee, may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
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 , 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 Portfolios and/or to
purchasers of VA contracts or VLI policies. The Manager also may make such
advertising or promotional expenditures, using its own resources, as it from
time to time deems appropriate.
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
Portfolio's sub-investment adviser). The expenses borne by the Fund include:
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 or any sub-investment adviser 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 Portfolio are charged against the assets of that
Portfolio; other expenses of the Fund are allocated among the Portfolios on the
basis determined by the Fund's Board, including, but not limited to,
proportionately in relation to the net assets of each Portfolio.
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, 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 Portfolios and/or to
purchasers of VA contracts or VLI policies. The Manager also may make such
advertising or 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 set forth below as a percentage of the relevant
Portfolio's average daily net assets. The effective annual rate of the monthly
investment advisory fee the Fund paid the Manager pursuant to any undertaking in
effect for the fiscal year ended December 31, 1999 as a percentage of the
relevant Portfolio's average daily net assets also is set forth below:
Effective
Annual Rate
Annual Rate of
of Investment Investment
Advisory Advisory
Name of Portfolio Fee Payable Fee Paid
Balanced Portfolio .75% .75%
Appreciation Portfolio .43%
0 to $150 million of average daily net assets .55%
$150 million to $300 million of average daily .50%
net assets .375%
$300 million or more of average daily net assets
Disciplined Stock Portfolio .75% .75%
Growth and Income Portfolio .75% .75%
International Equity Portfolio .75% .75%
International Value Portfolio 1.00% 1.00%
Limited Term High Income Portfolio .65% .65%
Money Market Portfolio .50% .50%
Quality Bond Portfolio .65% .65%
Small Cap Portfolio .75% .75%
Small Company Stock Portfolio .75% .75%
Special Value Portfolio .75% .75%
Zero Coupon 2000 Portfolio .45% .45%
The fees paid by the Fund to the Manager with respect to each Portfolio
for the fiscal years ended December 31, 1997, 1998 and 1999 (to the extent the
Portfolio was operational) were as follows:
Fee Paid For
Year Ended
December 31, 1997
Portfolio Advisory Fee Payable Reduction in Fee Net Fee Paid
Balanced* $ 164,386 $ 0 $ 164,386
Appreciation 944,004 0 944,004
Disciplined Stock 243,138 0 243,138
Growth and Income 2,254,248 0 2,254,248
International Equity 246,938 0 246,938
International Value 136,687 0 136,687
Limited Term High Income** 88,699 6,291 82,408
Money Market 304,681 0 304,681
Quality Bond 467,635 0 467,635
Small Cap 8,317,539 0 8,317,539
Small Company Stock 113,161 0 113,161
Special Value 250,293 0 250,293
Zero Coupon 2000 147,516 0 147,516
- -----------------
* From May 1, 1997 (commencement of operations) through December 31, 1997.
** From April 30, 1997 (commencement of operations) through December 31, 1997.
Fee Paid For
Year Ended
December 31, 1998
Portfolio Advisory Fee Payable Reduction in Net Fee Paid
Fee
Balanced $ 413,719 $ 0 $ 413,719
Appreciation 2,057,782 0 2,057,782
Disciplined Stock 712,844 0 712,844
Growth and Income 3,030,241 0 3,030,241
International Equity 343,496 0 343,496
International Value 225,035 0 225,035
Limited Term High Income 397,273 0 397,273
Money Market 371,422 0 371,422
Quality Bond 673,601 0 673,601
Small Cap 9,335,756 0 9,335,756
Small Company Stock 249,468 0 249,468
Special Value 450,888 0 450,888
Zero Coupon 2000 162,716 0 162,716
Fee Paid For
Year Ended
December 31, 1999
Portfolio Advisory Fee Payable Reduction in Fee Net Fee Paid
Balanced $ 574,439 $ 0 $ 574,439
Appreciation 3,788,264 0 3,788,264
Disciplined Stock 1,329,297 0 1,329,297
Growth and Income 3,244,091 0 3,244,091
International Equity 360,746 0 360,746
International Value 218,142 0 218,142
Limited Term High Income 516,571 0 516,571
Money Market 512,034 0 512,034
Quality Bond 839,257 0 839,257
Small Cap 8,915,955 0 8,915,955
Small Company Stock 240,369 0 240,369
Special Value 455,777 0 455,777
Zero Coupon 2000 172,383 0 172,383
As compensation for Sarofim's services, the Fund has agreed to pay Sarofim
a monthly sub-advisory fee at the annual rate set forth below as a percentage of
the Appreciation Portfolio's average daily net assets. The effective annual rate
of the monthly sub-investment advisory fee the Fund paid Sarofim for the fiscal
year ended December 31, 1999, as a percentage of the Appreciation Portfolio's
average daily net assets also is set forth below:
Effective
Annual Rate of Annual Rate
Sub-Investment of
Advisory Fee Sub-Investment
Appreciation Portfolio Payable Advisory
- ---------------------- Fee Paid in 1999
.32%
0 to $150 million of average daily net assets .20%
$150 million to $300 million of average daily .25%
net assets
$300 million or more of average daily net .375%
assets
The fees payable by the Fund to Sarofim with respect to the Appreciation
Portfolio for fiscal years ended December 31, 1997, 1998 and 1999 amounted to
$365,954, $1,171,093 and $2,888,264, respectively.
The Manager (and, with respect to the Appreciation Portfolio, Sarofim) 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 Appreciation Portfolio,
Sarofim), or the Manager (and, with respect to the Appreciation Portfolio,
Sarofim) 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
Appreciation Portfolio) is not subject to reduction as the value of a
Portfolio's assets increases.
The Distributor. The Distributor, a wholly-owned subsidiary of the
Manager, located at 200 Park Avenue, New York, New York 10166, 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.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
agent. Under a transfer agency agreement with the Fund, the Transfer Agent
arranges for 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, 100 Church Street, New York, New York 10286, serves
as custodian of the Fund's investments with respect to International Equity,
International Value, Money Market and Special Value Portfolios. The Bank of New
York has no part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, serves as the Fund's custodian with respect to
the Balanced, Appreciation, Disciplined Stock, Growth and Income, Limited Term
High Income, Quality Bond, Small Cap, Small Company Stock and Zero Coupon 2000
Portfolios. Under a custody agreement with the Fund, Mellon Bank, N.A. holds
each such Portfolio's securities and keeps all necessary accounts and records.
For its custody services, Mellon Bank, N.A. receives a monthly fee based on the
market value of each Portfolio's assets held in custody and receives certain
securities transaction charges.
HOW TO BUY SHARES
Fund shares currently are offered only to separate accounts of
Participating Insurance Companies. Individuals may not place purchase orders
directly with the Fund.
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. 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 Portfolio 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.
Portfolio 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 floor of the New York Stock Exchange. Net asset value per share is computed
by dividing the value of the net assets of each Portfolio (i.e., the value of
its assets less liabilities) by the total number of such Portfolio's shares
outstanding. The Limited Term High Income, Quality Bond and Zero Coupon 2000
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 Balanced, Appreciation,
Disciplined Stock, International Equity, International Value, Growth and Income,
Small Cap, Small Company Stock and Special Value 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
Portfolio's investments, see "Determination of Net Asset Value."
HOW TO REDEEM SHARES
Portfolio 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 Portfolio 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
Portfolio's 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.
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 Portfolio's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount, the Fund's Board reserves the
right to make payments in whole or part in securities or other assets of the
Portfolio in case of an emergency or any time a cash distribution would impair
the liquidity of the Portfolio to the detriment of the existing shareholders. In
such event, the securities would be valued in the same manner as the Portfolio's
portfolio is valued. If the recipient sells such securities, brokerage charges
might 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
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 Portfolio 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 Portfolio's price per share as
computed for the purpose of purchases and redemptions at $1.00. Such procedures
include review of the Portfolio's portfolio holdings by the Fund's Board, at
such intervals as it deems appropriate, to determine whether the Portfolio's 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%, 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.
Limited Term High Income, Quality Bond and Zero Coupon 2000 Portfolios.
Substantially all of each Portfolio's 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 Portfolio, 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.
Balanced, Appreciation, Disciplined Stock, Growth and Income,
International Equity, International Value, Small Cap, Small Company Stock and
Special Value Portfolios. Each Portfolio's 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 Portfolio's 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, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that each Portfolio has qualified as a "regulated
investment company" under the Code for the fiscal year ended December 31, 1999.
Each Portfolio intends to continue to so qualify if such qualification is in the
best interests of its shareholders. As a regulated investment company, each
Portfolio 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 Portfolio must
distribute at least 90% of its net income (consisting of net investment income
and net short-term capital gain) to its shareholders, and meet certain asset
diversification and other requirements. If a Portfolio did not qualify as a
regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax. 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 under "Dividends and Taxes" in
the Prospectus. In addition, the Code provides that if a shareholder holds
shares of the Portfolio 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 Portfolio 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 Portfolio's taxable year will be treated as sold for their then
fair market value, resulting in additional gain or loss to the Portfolio as
described above.
Offsetting positions held by a Portfolio involving financial futures and
options transactions may be considered, for tax purposes, to 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, override or modify
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 Portfolio were treated as entering into straddles by reason of its
engaging in 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
Portfolio may make one or more elections with respect to "mixed straddles."
Depending upon which election is made, if any, the results to the Portfolio may
differ. If no election is made and the straddle rules apply to positions
established by the Portfolio, losses realized by the Portfolio 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.
If the Fund either (1) holds an appreciated financial position with
respect to stock, certain debt obligations, or partnership interests
("appreciated financial position") and then enters into a short sale, futures or
forward contract, offsetting notional principal contract or other transaction
described in Treasury regulations to be issued in the future (collectively, a
"Contract") with respect to the same or substantially identical property or (2)
holds an appreciated financial position that is a Contract and then acquires
property that is the same as, or substantially identical to, the underlying
property, the Fund generally will be taxed as if the appreciated financial
position were sold at its fair market value on the date the Fund enters into the
financial position or acquires the property, respectively.
Investment by a Portfolio 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 Portfolio to recognize
income prior to the receipt of cash payments. For example, the Portfolio 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 Portfolio may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to satisfy these
distribution requirements.
Under the Code, each Portfolio of the Fund is treated as a separate entity
for purposes of qualification and taxation as a regulated investment company.
Each Portfolio 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 Portfolio 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 by a Participating Insurance Company. 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.
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 Portfolio
satisfies certain conditions, a segregated asset account owning shares of the
Portfolio will be treated as owning multiple investments consisting of the
account's proportionate share of each of the assets of the Portfolio. Each
Portfolio intends to satisfy the requisite conditions so that the shares of the
Portfolio owned by a segregated asset account of a Participating Insurance
Company will be treated as multiple investments. By meeting these and other
requirements, the Participating Insurance Companies, rather than VA contract
holders or VLI holders, should be subject to tax on distributions received with
respect to Portfolio shares. The tax treatment on distributions made to a
Participating Insurance Company will depend on the Participating Insurance
Company's tax status.
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 Portfolio's
sub-investment adviser) to supplement its own research and analysis with the
views and information of other securities firms and may be selected based upon
their sales of shares of funds advised by the Manager or its affiliates.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager (or, if applicable, the
Portfolio's sub-investment adviser) in advising other funds or accounts and,
conversely, research services furnished to the Manager (or, if applicable, the
Portfolio's sub-investment adviser) by brokers in connection with other funds or
accounts may be used in advising a Portfolio. Although it is not possible to
place a dollar value on these services, it is the opinion of the Manager (and,
if applicable, the Portfolio's sub-investment adviser) that the receipt and
study of such services should not reduce the overall research department
expenses.
The Fund contemplates that, consistent with the policy of obtaining the
most favorable net price, brokerage transactions may be conducted through the
Manager or its affiliates. The Fund's Board has adopted procedures, in
conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to the Manager or its affiliates are reasonable and fair.
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. A
Portfolio may pay commission rates in excess of those another broker or dealer
would have charged for effecting the same transaction, if the Manager determines
in good faith that the commission paid is reasonable in relation to the value of
the brokerage and research services provided.
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
Portfolio 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, 1997, 1998 and 1999. There were no
concessions on principal transactions for the fiscal years ended December 31,
1997 and 1998 and 1999.
Balanced, Appreciation, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Small Cap,
Small Company Stock and Special Value 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 Portfolio's 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 Company contemplates that, consistent with the policy of obtaining the
most favorable net price, brokerage transactions may be conducted through the
Manager or its affiliates, including Dreyfus Investment Services Corporation and
Dreyfus Brokerage Services, Inc. The Company's Board has adopted procedures in
conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to the Manager or its affiliates are reasonable and fair.
In connection with its portfolio securities transactions for the fiscal
years ended December 31, 1997, 1998 and 1999 (except as otherwise indicated),
each Portfolio indicated below paid brokerage commissions and, where
determinable, concessions on principal transactions, none of which was paid to
the Distributor, in the following amounts:
<TABLE>
<CAPTION>
Name of Portfolio Brokerage Commissions Paid Concessions on Principal Transactions
1997 1998 1999 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Balanced $ 36,932(1) $ 46,422 $ 51,888 $ 5,005 $ 810 $ 0
Appreciation 106,432 245,599 266,551(2) 9,391 20,193 79,724
Disciplined Stock 71,669(3) 168,290(4) 199,781(5) 0 0 0
Growth and Income 172,388 1,065,967 851,094(6) 928,323 452,048 161,915
International Equity 327,207 489,171 547,510 78,064 17,496 0
International Value 47,303 47,733 49,648 0 0 0
Small Cap 1,722,729 2,002,330 407,162(7) 3,192,427 1,685,130 410,882
Small Company Stock 39,015 53,298 42,309 0 0 0
Special Value 308,466 359,805 226,756(8) 56,309 85,449 58,874
</TABLE>
- -------------------
(1) From May 1, 1997 (commencement of operations) through December 31, 1997.
(2) $29,725 was paid to Dreyfus Brokerage Services, a wholly-owned subsidiary
of Mellon Financial Corporation. This amount represented approximately 11%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 15% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions.
(3) $29,358 was paid to Dreyfus Investment Services Corporation, a subsidiary
of Mellon Financial Corporation. This amount represented approximately 41%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 47% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions
(4) $51,195 was paid to Dreyfus Investment Services Corporation, a subsidiary
of Mellon Financial Corporation. This amount represented approximately 30%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 36% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions.
(5) $16,255 was paid to Dreyfus Investment Services Corporation, a subsidiary
of Mellon Financial Corporation. This amount represented approximately 41%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 15% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions.
(6) $17,900 was paid to Dreyfus Brokerage Services, a wholly-owned subsidiary
of Mellon Financial Corporation. This amount represented approximately 2%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 4% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions.
(7) $13,000 was paid to Dreyfus Brokerage Services, a wholly-owned subsidiary
of Mellon Financial Corporation. This amount represented approximately 1%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 2% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions.
(8) $5,433 was paid to Dreyfus Brokerage Services, a wholly-owned subsidiary
of Mellon Financial Corporation. This amount represented approximately 2%
of the aggregate brokerage commissions paid by the Portfolio for
transactions involving approximately 5% of the aggregate dollar value of
transactions for which the Portfolio paid brokerage commissions.
The aggregate amount of transactions during the last fiscal year in
securities effected on an agency basis through a broker for, among other things,
research services, and the commissions and concessions related to such
transactions were as follows:
Portfolio Transaction Amount Commissions and
Concessions
Appreciation $49,275,709 $42,696
Growth and Income 92,908,528 95,955
International Equity 468,682 335
Small Cap 11,859,435 38,468
Special Value 26,334,473 28,524
YIELD AND PERFORMANCE INFORMATION
The performance figures shown below do not reflect the separate charges
applicable to Policies offered by Participating Insurance Companies.
The yield and effective yield for the seven-day period ended December 31,
1999 for the following Portfolio was:
Portfolio Yield Effective Yield
Money Market 5.21% 5.35%
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 Portfolio's
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. You should remember that yield is a function of the type and quality of
the instruments in the portfolio, portfolio maturity and operating expenses.
Your principal in the Fund is not guaranteed. See "Determination of Net Asset
Value" for a discussion of the manner in which the Portfolio's price per share
is determined.
The current yields for the 30-day period ended December 31, 1999 for each
of the following Portfolios was:
Portfolio Current Yield
Limited Term High Income 10.53%
Quality Bond 6.26%
Zero Coupon 2000 5.39%
Current yield is computed pursuant to a formula which operates as follows:
The amount of the relevant Portfolio's 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
Portfolio during the period. That result is then divided by the product of: (a)
the average daily number of such Portfolio's 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 average annual total return for the periods indicated for each of the
following Portfolios was:
<TABLE>
<CAPTION>
1-year period ended 5-year period ended 9.34 year period
Portfolio December 31, 1999 December 31, 1999 ended December 31, 1999
- --------- ----------------- ----------------- -----------------------
<S> <C> <C> <C>
Quality Bond 0.18% 7.50% 8.10%
Small Cap 23.15% 15.93% 35.65%
Special Value 7.27% 8.00% 8.37%
Zero Coupon 2.69% 7.36% 8.83%
2000
1-year period ended 5-year period ended 6.75-year period ended
December 31, 1999 December 31, 1999 December 31, 1999
----------------- ----------------- ----------------------
Appreciation 11.46% 25.52% 20.05%
1-year period ended 5-year period ended 5.67-year period ended
December 31, 1999 December 31, 1999 December 31, 1999
----------------- ----------------- ______________________
Growth and 16.88% 24.31% 20.90%
Income
International 59.76% 17.01% 14.45%
Equity
</TABLE>
1-year period 3.67-year period
ended December 31, 1999 ended December 31, 1999
Disciplined Stock 18.45% 26.16%
International Value 27.82% 12.93%
Small Company Stock 10.60% 9.11%
1-year period 2.67-year period
ended December 31, 1999 ended December 31, 1999
----------------------- -----------------------
Balanced 8.13% 18.33%
Limited Term High Income -1.54% 3.01%
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. Computations of average annual total return for
periods of less than one year represent an annualization of the Portfolio's
actual total return.
Total return for each of the following Portfolios for the period indicated
was:
<TABLE>
<CAPTION>
Portfolio August 31, 1990 (commencement of investment operations) to December 31, 1999
- --------- -------------------------------------------------------------------
<S> <C>
Quality Bond 106.97%
Small Cap 1,625.12%
Special Value 111.90%
Zero Coupon 2000 120.35%
April 5, 1993 (commencement of investment operations) to December 31, 1999
-----------------------------------------------------------------
Appreciation 242.66%
May 2, 1994 (commencement of investment operations) to December 31, 1999
-------------------------------------------------------------------
Growth and Income 193.29%
International 114.92%
Equity
May 1, 1996 (commencement of investment operations) to December 31, 1999
-------------------------------------------------------------------
Disciplined Stock 134.63%
International Value 56.25%
Small Company Stock 37.69%
April 30, 1997 (commencement of investment operations) to December 31, 1999
------------------------------------------------------------------
Limited Term High 8.25%
Income
May 1, 1997 (commencement of investment operations) to December 31, 1999
-------------------------------------------------------------------
Balanced 56.73%
</TABLE>
Total return is calculated by subtracting the amount of the relevant
Portfolio's 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.
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. The effective yield and total
return for a Portfolio 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 Portfolio's yield or performance information may
reflect absorbed expenses pursuant to any undertaking that may be in effect.
Comparative performance information may be used from time to time in advertising
a Portfolio's shares, including data from the Consumer Price Index, Lipper
Analytical Services, Inc., IBC's Money Fund Report(TM), Money Magazine, Bank
Rate Monitor(TM), N. Palm Beach, Fla. 33408, Standard & Poor's 500 Composite
Stock Price Index, Standard & Poor's MidCap 400 Index, Russell 2500(TM) Index,
Morgan Stanley Capital International World Index, the Dow Jones Industrial
Average, Moody's Bond Survey Bond Index, Lehman Brothers Intermediate
Government/Corporate Bond Index, Morningstar, Inc., Value Line Mutual Fund
Survey and other industry publications.
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. Advertising materials for the Fund also may refer to Morningstar
ratings and related analyses supporting the rating, and may refer to, or
include, commentary by the Fund's portfolio managers relating to their
investment strategy, asset growth of the Portfolio, current or past business,
political, economic or financial conditions and other matters of general
interest to shareholders. From time to time, advertising materials may refer to
studies performed by The Dreyfus Corporation or its affiliates, such as "The
Dreyfus Tax Informed Investing Study" or "The Dreyfus Gender Investment
Comparison Study (1996-1997)" or such other studies.
INFORMATION ABOUT THE FUND
Each Portfolio 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.
Under Massachusetts law, shareholders, under certain circumstances, could
be held personally liable for the obligations of the Fund. However, the Fund's
Trust Agreement ("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 Portfolio's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Portfolio. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Portfolio itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment of
any liability incurred by the Portfolio, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Portfolio. 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
Portfolio.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for a Portfolio to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of Board members or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office.
Shareholders may remove a Board member by the affirmative vote of two-thirds of
the Fund's outstanding voting shares. In addition, the Board will call a meeting
of shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.
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 thirteen Portfolios of
shares. All consideration received by the Fund for shares of one of the
Portfolios, and all assets in which such consideration is invested, will belong
to that Portfolio (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 Portfolio would be treated separately from those of the
other Portfolios. The Fund has the ability to create, from time to time, new
series without shareholder approval.
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.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, 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 Portfolios' Prospectuses.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the Fund.
YEAR 2000 ISSUES
The Fund could be adversely affected if the computer systems used by the
Manager and the Fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000.
The Manager has taken steps designed to avoid year 2000-related problems
in its systems and to monitor the readiness of other service providers. In
addition, issuers of securities in which the Portfolios invest may be adversely
affected by year 2000-related problems. This could have an impact on the value
of a Portfolio's investments and its share price.
<PAGE>
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 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 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 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 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 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 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 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 rated Ca present obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C
Bonds 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.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or reorganization of
the obligor. DDD represents the highest potential for recovery on these bonds
and D represents the lowest potential for recovery.
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.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled principal
and/or interest payments.
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.
DREYFUS VARIABLE INVESTMENT FUND
PART C. OTHER INFORMATION
--------------------------------
Item 23. Exhibits
- ------- ----------
(a) Registrant's Agreement and Declaration of Trust and Articles of
Amendment are incorporated by reference to Exhibit (l) of
Post-Effective Amendment No. 13 to the Registration Statement on Form
N-1A, filed on April 19, 1995.
(b) Registrant's By-Laws, as amended are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 20 to the Registration
Statement on Form N-1A, filed on September 20, 1997.
(d) Investment Advisory Agreement is incorporated by reference to Exhibit
(5)(a) of Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A, filed on April 17, 1997.
(d)(2) Sub-Investment Advisory Agreement 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.
(e) Distribution Agreement and Forms of Service Agreements.
(g) (1) Custody Agreement between the Registrant 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.
(g)(2) Custody Agreement between the Registrant and Mellon Bank, N.A. is
incorporated by reference to Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A, filed on October 25, 1996.
(i) 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.
(j) Consent of Independent Auditors.
(p) Code of Ethics adopted by Registrant and its investment adviser and
principal underwriter.
(p)(2) Code of Ethics adopted by the Sub-Investment Adviser to
Registsrant's of Appreciation Portfolio.
Item 23. Exhibits. - List (continued)
- ------- -----------------------------
Other Exhibits
--------------
(a) Powers of Attorney of the Board members and officers.
(b) Certificate of Assistant Secretary.
Item 24. Persons Controlled by or under Common Control with Registrant.
- ------- -------------------------------------------------------
Not Applicable
Item 25. Indemnification
- ------- ---------------
The Statement as to the general effect of any contract, arrangements
or statute under which a Board member, 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 Board member, officer,
affiliated person or underwriter for their own protection, is
incorporated by reference to Item 23(b) of Part C of Post-Effective
Amendment No. 20 to the Registration Statement on From N-1A, filed
on September 20, 1997.
Reference is also made to the Distribution Agreement attached as
Exhibit (e) of Post-Effective Amendment No. 25 to the Registration
Statement on Form N-1A.
Item 26. 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 and manager 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 and distributor of other investment companies advised
and administered by Dreyfus. Dreyfus Investment Advisors, Inc.,
another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
- ----------------------------------------------------------------------------------
Officers and Directors of Investment Adviser
Name and Position
With Dreyfus Other Businesses Position Held Dates
CHRISTOPHER M. CONDRON Franklin Portfolio Associates, Director 1/97 - Present
Chairman of the Board and LLC*
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Director 4/95 - 1/98
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 - Present
Mellon Capital Management Director 5/95 - Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 - 1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Financial Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Founders Asset Management, Chairman 12/97 - Present
LLC**** Director 12/97 - Present
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Executive Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 - Present
Company*
The Boston Company Financial President 6/89 - 1/97
Strategies, Inc. * Director 6/89 - 1/97
MANDELL L. BERMAN Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
BURTON C. BORGELT DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Financial Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
STEPHEN R. BYERS Dreyfus Service Corporation++ Senior Vice President 3/00 - Present
Director of Investments
Gruntal & Co., LLC Executive Vice President 5/97 - 11/99
New York, NY Partner 5/97 - 11/99
Executive Committee 5/97 - 11/99
Member
Board of Directors 5/97 - 11/99
Member
Treasurer 5/97 - 11/99
Chief Financial Officer 5/97 - 6/99
STEPHEN E. CANTER Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, Director 2/99 - Present
LLC*
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Founders Asset Management, Member, Board of 12/97 - Present
LLC**** Managers
Acting Chief Executive 7/98 - 12/98
Officer
The Dreyfus Trust Company+++ Director 6/95 - Present
Chairman 1/99 - Present
President 1/99 - Present
Chief Executive Officer 1/99 - Present
THOMAS F. EGGERS Dreyfus Service Corporation++ Chief Executive Officer 3/00 - Present
Vice Chairman - Institutional and Chairman of the
And Director Board
Executive Vice President 4/96 - 3/00
Director 9/96 - Present
Founders Asset Management, Member, Board of 2/99 - Present
LLC**** Managers
Dreyfus Investment Advisors, Inc. Director 1/00 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 3/99 - Present
Massachusetts, Inc. +++
Dreyfus Brokerage Services, Inc. Director 11/97 - 6/98
401 North Maple Avenue
Beverly Hills, CA.
STEVEN G. ELLIOTT Mellon Financial Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Executive Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 4/97 - 12/99
Vice Chairman Advisors, Inc.++
Dreyfus Brokerage Services, Inc. Chairman 11/97 - 2/99
401 North Maple Ave. Chief Executive Officer 11/97 - 2/98
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.+++ Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Inc. ++ Director 1/97 - 4/99
Dreyfus Insurance Agency of Chairman 5/97 - 3/99
Massachusetts, Inc.++++ President 5/97 - 3/99
Director 5/97 - 3/99
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - 6/99
Corporation++ President 5/97 - 6/99
Director 12/94 - 6/99
Founders Asset Management, Member, Board of 12/97 - 12/99
LLC**** Managers
The Boston Company Advisors, Chairman 12/95 - 1/99
Inc. Chief Executive Officer 12/95 - 1/99
Wilmington, DE President 12/95 - 1/99
The Boston Company, Inc.* Director 5/93 - 1/99
President 5/93 - 1/99
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Boston Safe Deposit & Trust Co.+ Director 6/93 - 1/99
Executive Vice President 6/93 - 4/98
MARTIN G. MCGUINN Mellon Financial Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
J. DAVID OFFICER Dreyfus Service Corporation++ President 3/00 - Present
Vice Chairman Executive Vice President 5/98 - 3/00
And Director Director 3/99 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Dreyfus Brokerage Services, Inc. Chairman 3/99 - Present
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - 1/99
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - 6/99
Services, Inc.* Director 8/96 - 6/99
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
RICHARD W. SABO Founders Asset Management President 12/98 - Present
Director LLC**** Chief Executive Officer 12/98 - Present
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
RICHARD F. SYRON Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive Officer 6/99 - Present
Waltham, MA 02454-9046
American Stock Exchange Chairman 4/94 - 6/99
86 Trinity Place Chief Executive Officer 4/94 - 6/99
New York, NY 10006
RONALD P. O'HANLEY Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
Franklin Portfolio Associates, Director 3/97 - Present
LLC*
Boston Safe Deposit and Trust Executive Committee 1/99 - Present
Company* Member
Director 1/99 - Present
The Boston Company, Inc.* Executive Committee 1/99 - Present
Member 1/99 - Present
Director
Buck Consultants, Inc.++ Director 7/97 - Present
Newton Asset Management LTD Executive Committee 10/98 - Present
(UK) Member
London, England Director 10/98 - Present
Mellon Asset Management Non-Resident Director 11/98 - Present
(Japan) Co., LTD
Tokyo, Japan
TBCAM Holdings, Inc.* Director 10/97 - Present
The Boston Company Asset Director 1/98 - Present
Management, LLC*
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 2/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates; LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon Equity Associates; LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
MARK N. JACOBS Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
WILLIAM H. MARESCA The Dreyfus Trust Company+++ Chief Financial Officer 3/99 - Present
Controller Treasurer 9/98 - Present
Director 3/97 - Present
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 - Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant Treasurer 3/93 - 3/99
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
WILLIAM T. SANDALLS, JR. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97 - 12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company +++ Director 1/96 - Present
Dreyfus Service Organization, Treasurer 10/96 - 3/99
Inc.++
Dreyfus Insurance Agency of Director 5/97 - 3/99
Massachusetts, Inc.++++ Treasurer 5/97 - 3/99
Executive Vice President 5/97 - 3/99
DIANE P. DURNIN Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
PATRICE M. KOZLOWSKI NONE
Vice President - Corporate
Communications
MARY BETH LEIBIG NONE
Vice President -
Human Resources
THEODORE A. SCHACHAR Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
The Dreyfus Consumer Credit Chairman 6/99 - Present
Corporation ++ President 6/99 - Present
Dreyfus Investment Advisors, Vice President - Tax 10/96 - Present
Inc.++
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Vice President - Tax 10/96 - Present
Inc.++
WENDY STRUTT None
Vice President
RICHARD TERRES None
Vice President
RAYMOND J. VAN COTT Mellon Financial Corporation+ Vice President 7/98 - Present
Vice-President -
Information Systems
Computer Sciences Corporation Vice President 1/96 - 7/98
El Segundo, CA
JAMES BITETTO The TruePenny Corporation++ Secretary 9/98 - Present
ASSISTANT SECRETARY
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
STEVEN F. NEWMAN Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
**** The address of the business so indicated is 2930 East Third Avenue, Denver, Colorado 80206.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. Principal Underwriters
- -------- ----------------------
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred 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 Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
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 MidCap Index Fund
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 Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Intermediate Bond Fund
56) Dreyfus New York Tax Exempt Money Market Fund
57) Dreyfus U.S. Treasury Intermediate Term Fund
58) Dreyfus U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Premier California Municipal Bond Fund
64) Dreyfus Premier Equity Funds, Inc.
65) Dreyfus Premier International Funds, Inc.
66) Dreyfus Premier GNMA Fund
67) Dreyfus Premier Worldwide Growth Fund, Inc.
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Equity Funds
72) Dreyfus Short-Intermediate Government Fund
73) Dreyfus Short-Intermediate Municipal Bond Fund
74) The Dreyfus Socially Responsible Growth Fund, Inc.
75) Dreyfus Stock Index Fund
76) Dreyfus Tax Exempt Cash Management
77) The Dreyfus Premier Third Century Fund, Inc.
78) Dreyfus Treasury Cash Management
79) Dreyfus Treasury Prime Cash Management
80) Dreyfus Variable Investment Fund
81) Dreyfus Worldwide Dollar Money Market Fund, Inc.
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Funds, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Funds, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
<TABLE>
<CAPTION>
Positions and
Name and principal Offices with
Business address Positions and offices with the Distributor Registrant
- ---------------- ------------------------------------------ ----------
<S> <C> <C>
Thomas F. Eggers * Chief Executive Officer and Chairman of the None
Board
J. David Officer * President and Director None
Stephen Burke * Executive Vice President None
Charles Cardona * Executive Vice President None
Anthony DeVivio ** Executive Vice President None
David K. Mossman ** Executive Vice President None
Jeffrey N. Nachman *** Executive Vice President and Chief Operations None
Officer
William T. Sandalls, Jr. * Executive Vice President and Director None
Wilson Santos ** Executive Vice President and Director of None
Client Services
William H. Maresca * Chief Financial Officer None
Ken Bradle ** Senior Vice President None
Stephen R. Byers * Senior Vice President None
Frank J. Coates * Senior Vice President None
Joseph Connolly * Senior Vice President Vice President
and Treasurer
William Glenn * Senior Vice President None
Michael Millard ** Senior Vice President None
Mary Jean Mulligan ** Senior Vice President None
Bradley Skapyak * Senior Vice President None
Jane Knight * Chief Legal Officer and Secretary None
Stephen Storen * Chief Compliance Officer None
Jeffrey Cannizzaro * Vice President - Compliance None
Maria Georgopoulos * Vice President - Facilities Management None
William Germenis Vice President - Compliance None
Walter T. Harris * Vice President None
Janice Hayles * Vice President None
Hal Marshall * Vice President - Compliance None
Paul Molloy * Vice President None
Theodore A. Schachar * Vice President - Tax None
James Windels * Vice President None
James Bitetto * Assistant Secretary None
* Principal business address is 200 Park Avenue, New York, NY 10166.
** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY
11556-0144.
*** Principal business address is 401 North Maple Avenue, Beverly Hills,
CA 90210.
</TABLE>
Item 28. Location of Accounts and Records
- ------- --------------------------------
1. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
2. The Bank of New York
100 Church 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 29. Management Services
- ------- -------------------
Not Applicable
Item 30. Undertakings
- ------- ------------
None
SIGNATURES
_____________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, and
State of New York on the 27th day of April, 2000.
DREYFUS VARIABLE INVESTMENT FUND
BY: /s/ Stephen E. Canter*
_______________________
Stephen E. Canter, 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/ Stephen E. Canter* President 04/27/00
_______________________ (Principal Executive Officer)
Stephen E. Canter
/s/ Joseph Connolly* Vice President and Treasurer 04/27/00
_______________________ (Principal Financial and
Joseph Connolly Accounting Officer)
/s/ Joseph S. DiMartino* Chairman of the Board of 04/27/00
_______________________ Trustees
Joseph S. DiMartino
/s/ David P. Feldman* Trustee 04/27/00
_______________________
David P. Feldman
/s/ John M. Fraser, Jr.* Trustee 04/27/00
_______________________
John M. Fraser, Jr.
/s/ Robert R. Glauber* Trustee 04/27/00
_______________________
Robert R. Glauber
/s/ James F. Henry* Trustee 04/27/00
________________________
James F. Henry
/s/ Rosalind G. Jacobs* Trustee 04/27/00
________________________
Rosalind G. Jacobs
/s/ Paul A. Marks* Trustee 04/27/00
_________________________
Paul A. Marks
/s/ Martin Peretz* Trustee 04/27/00
_________________________
Martin Peretz
/s/ Bert W. Wasserman* Trustee 04/27/00
_________________________
Bert W. Wasserman
*BY: /s/ Robert R. Mullery
_______________________
Robert R. Mullery
Attorney-in-Fact
INDEX OF EXHIBITS
Other Exhibits
(a) Powers of Attorney dated March 6, 2000............................
Powers of Attorney dated March 22, 2000...........................
(b) Certificate of Assistant Secretary...............................
Exhibits
(e) Distribution Agreement and Forms of Service Agreements............
(j) Consent of Independent Auditors...................................
(p)(1) Code of Ethics adopted by the Registrant and its investment
adviser and principal underwriter.................................
(p)(2) Code of Ethics adopted by the Sub-Investment Adviser to
Registrant's of Appreciation Portfolio............................
DISTRIBUTION AGREEMENT
DREYFUS VARIABLE INVESTMENT FUND
200 Park Avenue
New York, New York 10166
March 22, 2000
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements
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 Securities 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 thereunder. As used in this agreement the
terms "registration statement" 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 amendment 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 Securities 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 therewith) which you, your officers and directors,
or any such controlling 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 controlling
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 controls the Fund within the
meaning of Section 15 of the Securities 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 therewith) 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 prospectus, 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
amendments 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 prospectus 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 registration 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, (a) by vote of holders of a majority of the Fund's or, as to any
relevant Series, such Series' outstanding voting securities, or (b) by the
Fund's Board as to the Fund or the relevant Series, as the case may be, or (c)
by you. 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. Miscellaneous
4.1 The Fund recognizes that from time to time your directors,
officers, and employees may serve as trustees, directors, partners, officers,
and employees of other business trusts, corporations, 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 distribution or other agreements with such other
entities. If you cease to act as the distributor of the Fund's shares or if The
Dreyfus Corporation ceases to act as the Fund's investment adviser, the Fund
agrees that, at the request of The Dreyfus Corporation, 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.
4.2 This agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his or her 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:
DREYFUS SERVICE CORPORATION
By:_______________________________
<PAGE>
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Balanced Portfolio May 21, 2000 May 21st
Appreciation Portfolio May 21, 2000 May 21st
Disciplined Stock May 21, 2000 May 21st
Portfolio
Growth and Income May 21, 2000 May 21st
Portfolio
International Equity May 21, 2000 May 21st
Portfolio
International Value May 21, 2000 May 21st
Portfolio
Limited Term High Income May 21, 2000 May 21st
Portfolio
Money Market Portfolio May 21, 2000 May 21st
Quality Bond Portfolio May 21, 2000 May 21st
Small Cap Portfolio May 21, 2000 May 21st
Small Company Stock May 21, 2000 May 21st
Portfolio
Special Value Portfolio May 21, 2000 May 21st
Zero Coupon 2000 May 21, 2000 May 21st
Portfolio
BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
beneficial interest or common stock of open-end registered investment companies
managed, advised or administered by The Dreyfus Corporation or its subsidiaries
or affiliates (hereinafter referred to individually as a "Fund" and collectively
as the "Funds"), for which you are the principal underwriter, as such term is
defined in the Investment Company Act of 1940, as amended, and for which you are
the exclusive agent for the continuous distribution of shares pursuant to the
terms of a Distribution Agreement between you and each Fund. Unless the context
otherwise requires, as used herein the term "Prospectus" shall mean the
prospectus and related statement of additional information (the "Statement of
Additional Information") incorporated therein by reference (as amended or
supplemented) of each of the respective Funds included in the then currently
effective registration statement (or post-effective amendment thereto) of each
such Fund, as filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby agreed
that our respective rights and obligations shall be as follows:
1. In all sales of Fund shares to the public, we shall act as dealer for our
own account and in no transaction shall we have any authority to act as
agent for any Fund, for you or for any other dealer.
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for
the redemption of any Fund shares shall be executed at the net asset
value per share, less the applicable deferred sales charge, redemption
fee, or similar charge or fee, if any, in each case as described in the
Prospectus of such Fund. The minimum initial purchase order and minimum
subsequent purchase order shall be as set forth in the Prospectus of
such Fund. All orders are subject to acceptance or rejection by you at
your sole discretion. Unless otherwise mutually agreed in writing, each
transaction shall be promptly confirmed in writing directly to the
customer on a fully disclosed basis and a copy of each confirmation
shall be sent simultaneously to us. You reserve the right, at your
discretion and without notice, to suspend the sale of shares or withdraw
entirely the sale of shares of any or all of the Funds. We warrant and
represent that we have taken appropriate verification measures to ensure
transactions are in compliance with all applicable laws and regulations
concerning foreign exchange controls and money laundering.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We
agree that we shall not offer or sell shares of any Fund except in
compliance with all applicable federal and state securities laws, and
the rules, regulations, requirements and conditions of all applicable
regulatory and self-regulatory agencies or authorities. In connection
with offers to sell and sales of shares of each Fund, we agree to
deliver or cause to be delivered to each person to whom any such offer
or sale is made, at or prior to the time of such offer or sale, a copy
of the Prospectus and, upon request, the Statement of Additional
Information of such Fund. We further agree to obtain from each customer
to whom we sell Fund shares any taxpayer identification number
certification and such other information as may be required from time to
time under the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder, and to provide you or your
designee with timely written notice of any failure to obtain such
taxpayer identification number certification or other information in
order to enable the implementation of any required withholding. We will
be responsible for the proper instruction and training of all sales
personnel employed by us. Unless otherwise mutually agreed in writing,
you shall deliver or cause to be delivered to each of the customers who
purchases shares of any of the Funds from or through us pursuant to this
Agreement copies of all annual and interim reports, proxy solicitation
materials and any other information and materials relating to such Funds
and prepared by or on behalf of you, the Fund or its investment adviser,
custodian, transfer agent or dividend disbursing agent for distribution
to each such customer. You agree to supply us with copies of the
Prospectus, Statement of Additional Information, annual reports, interim
reports, proxy solicitation materials and any such other information and
materials relating to each Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares other
than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or
display or publish any information or materials relating to any Fund
(including, without limitation, promotional materials and sales
literature, advertisements, press releases, announcements, statements,
posters, signs or other similar materials), except such information and
materials as may be furnished to us by you or the Fund, and such other
information and materials as may be approved in writing by you.
5. In determining the amount of any dealer reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable Fund
Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge, customers
may be entitled to a reduction in the sales charge on purchases made
under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such a case, our dealer reallowance will be paid
based upon the reduced sales charge, but an adjustment to the dealer
reallowance will be made in accordance with the Prospectus of the
applicable Fund to reflect actual purchases of the customer if such
customer's Letter of Intent is not fulfilled. The sales charge and/or
dealer reallowance may be changed at any time in your sole discretion
upon written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of each
Fund sold with a sales charge, a reduced sales charge may be applicable
with respect to customer accounts through a right of accumulation under
which customers are permitted to purchase shares of a Fund at the then
current public offering price per share applicable to the total of (i) the
dollar amount of shares then being purchased plus (ii) an amount equal to
the then current net asset value or public offering price originally paid
per share, whichever is higher, of the customer's combined holdings of the
shares of such Fund and of any other open-end registered investment company
as may be permitted by the applicable Fund Prospectus. In such case, we
agree to furnish to you or the transfer agent, as such term is defined in
the Prospectus of each Fund (the "Transfer Agent"), sufficient information
to permit your confirmation of qualification for a reduced sales charge,
and acceptance of the purchase order is subject to such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all sales by
us to the public qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the liquidation of
shares of one open-end registered investment company managed, advised or
administered by The Dreyfus Corporation or its subsidiaries or affiliates
in the shares of another open-end registered investment company managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates) shall, where available, be made subject to and in accordance
with the terms of each relevant Fund's Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be the
total holdings of the specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus and
Service Plan, Shareholder Services Plan, Distribution Plan or similar
plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B or C (or such other form as may be
approved from time to time by the board of directors, trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will be
subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in
the net asset value from that used in determining the offering price to
such customers, or otherwise. We agree that: (a) we shall not effect any
transactions (including, without limitation, any purchases, exchanges
and redemptions) in any Fund shares registered in the name of, or
beneficially owned by, any customer unless such customer has granted us
full right, power and authority to effect such transactions on such
customer's behalf, and (b) you, each Fund, the Transfer Agent and your
and their respective officers, directors, trustees, managing general
partners, agents, employees and affiliates shall not be liable for, and
shall be fully indemnified and held harmless by us from and against, any
and all claims, demands, liabilities and expenses (including, without
limitation, reasonable attorneys' fees) which may be incurred by you or
any of the foregoing persons entitled to indemnification from us
hereunder arising out of or in connection with the execution of any
transactions in Fund shares registered in the name of, or beneficially
owned by, any customer in reliance upon any oral or written instructions
reasonably believed to be genuine and to have been given by or on behalf
of us.
9. (a) We agree to pay for purchase orders for Fund shares placed by us in
accordance with the terms of the Prospectus of the applicable Fund. On
or before the settlement date of each purchase order for shares of any
Fund, we shall either (i) remit to an account designated by you with the
Transfer Agent an amount equal to the then current public offering price
of the shares of such Fund being purchased less our dealer reallowance,
if any, with respect to such purchase order as determined by you in
accordance with the terms of the applicable Fund Prospectus, or (ii)
remit to an account designated by you with the Transfer Agent an amount
equal to the then current public offering price of the shares of such
Fund being purchased without deduction for our dealer reallowance, if
any, with respect to such purchase order as determined by you in
accordance with the terms of the applicable Fund Prospectus, in which
case our dealer reallowance, if any, shall be payable to us on at least
a monthly basis. If payment for any purchase order is not received in
accordance with the terms of the applicable Fund Prospectus, you reserve
the right, without notice, to cancel the sale and to hold us responsible
for any loss sustained as a result thereof.
(b) If any shares sold to us under the terms of this Agreement are sold
with a sales charge and are redeemed for the account of the Fund or are
tendered for redemption within seven (7) business days after the date of
purchase: (i) we shall forthwith refund to you the full dealer reallowance
received by us on the sale; and (ii) you shall forthwith pay to the Fund
your portion of the sales charge on the sale which had been retained by you
and shall also pay to the Fund the amount refunded by us.
10. Certificates for shares sold to us hereunder shall only be issued in
accordance with the terms of each Fund's Prospectus upon our customer's
specific request and, upon such request, shall be promptly delivered to us
by the Transfer Agent unless other arrangements are made by us. However, in
making delivery of such share certificates to us, the Transfer Agent shall
have adequate time to clear any checks drawn for the payment of Fund
shares.
11. Each party hereby represents and warrants to the other party that: (a) it
is a corporation, partnership or other entity duly organized and validly
existing in good standing under the laws of the jurisdiction in which it
was organized; (b) it is duly registered as a broker-dealer with the
Securities and Exchange Commission and, to the extent required, with
applicable state agencies or authorities having jurisdiction over
securities matters, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); (c) it will comply with all
applicable federal and state laws, and the rules, regulations, requirements
and conditions of all applicable regulatory and self-regulatory agencies or
authorities in the performance of its duties and responsibilities
hereunder; (d) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and
approvals (if any) required for its lawful execution and delivery of this
Agreement and its performance hereunder have been obtained; and (e) upon
execution and delivery by it, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and
binding agreement, enforceable in accordance with its terms. Each party
agrees to provide the other party with such information and access to
appropriate records as may be reasonably required to verify its compliance
with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which you
believe the shares of the Funds have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such
states, but you shall have no obligation or responsibility as to our right
to sell shares in any jurisdiction. We agree to notify you immediately in
the event of (a) our expulsion or suspension from the NASD, or (b) our
violation of any applicable federal or state law, rule, regulation,
requirement or condition arising out of or in connection with this
Agreement, or which may otherwise affect in any material way our ability to
act as a dealer in accordance with the terms of this Agreement. Our
expulsion from the NASD will automatically terminate this Agreement
immediately without notice. Our suspension from the NASD for violation of
any applicable federal or state law, rule, regulation, requirement or
condition will terminate this Agreement effective immediately upon your
written notice of termination to us.
13. (a) You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15
of the Securities 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 therewith) which we, our
officers and directors, or any such controlling person, may incur under the
Securities Act of 1933, as amended, or under common law or otherwise,
arising out of or based upon (i) any breach of any representation, warranty
or covenant made by you herein, or (ii) any failure by you to perform your
obligations as set forth herein, or (iii) 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 any thereof not misleading; provided, however, that your
agreement to indemnify us, our officers and directors, and any such
controlling 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 you or the Fund by us specifically for use in the
preparation thereof. Your agreement to indemnify us, our officers and
directors, and any such controlling person, as aforesaid, is expressly
conditioned upon your being notified of any action brought against our
officers or directors, or any such controlling person, such notification to
be given by letter or by telecopier, telex, telegram or similar means of
same day delivery received by you at your address as specified in Paragraph
18 of this Agreement within seven (7) days after the summons or other first
legal process shall have been served. The failure so to notify you of any
such action shall not relieve you from any liability which you may have to
the person against whom such action is brought by reason of any such
breach, failure or untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of your indemnity agreement
contained in this Paragraph 13(a). You will be entitled to assume the
defense of any suit brought to enforce any such claim, demand, liability or
expense. In the event that you elect to assume the defense of any such suit
and retain counsel, 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 you do not elect to assume the defense of any such suit, you will
reimburse us, our officers and directors, and any controlling persons named
as defendants in such suit, for the fees and expenses of any counsel
retained by us and/or them. Your indemnification agreement contained in
this Paragraph 13(a) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the persons
entitled to indemnification from you pursuant to this Agreement and their
respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several officers
and directors, and each Fund and its several officers and directors or
trustees or managing general partners, and any person who controls you
and/or each Fund within the meaning of Section 15 of the Securities 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 therewith) which you and your several officers and directors,
or the Fund and its officers and directors or trustees or managing general
partners, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, arising out of
or based upon (i) any breach of any representation, warranty or covenant
made by us herein, or (ii) any failure by us to perform our obligations as
set forth herein, or (iii) any untrue, or alleged untrue, statement of a
material fact contained in the information furnished in writing by us to
you or any Fund specifically for use in such Fund's Registration Statement
or Prospectus, or used in the answers to any of the items of the
Registration Statement or in the corresponding statements made in the
Prospectus, or arising out of or based upon any omission, or alleged
omission, to state a material fact in connection with such information
furnished in writing by us to you or the Fund and required to be stated in
such answers or necessary to make such information not misleading. Our
agreement to indemnify you and your officers and directors, and the Fund
and its officers and directors or trustees or managing general partners,
and any such controlling person, as aforesaid, is expressly conditioned
upon our being notified of any action brought against any person or entity
entitled to indemnification hereunder, such notification to be given by
letter or by telecopier, telex, telegram or similar means of same day
delivery received by us at our address as specified in Paragraph 18 of this
Agreement within seven (7) days after the summons or other first legal
process shall have been served. The failure so to notify us of any such
action shall not relieve us from any liability which we may have to you or
your officers and directors, or to the Fund or its officers and directors
or trustees or managing general partners, or to any such controlling
person, by reason or any such breach, failure or untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on account of
our indemnity agreement contained in this Paragraph 13(b). We shall be
entitled to assume the defense of any suit brought to enforce any such
claim, demand, liability or expense. In the event that we elect to assume
the defense of any such suit and retain counsel, 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 we do not elect to assume the
defense of any such suit, we will reimburse you and your officers and
directors, and the Fund and its officers and directors or trustees or
managing general partners, and any controlling persons named as defendants
in such suit, for the fees and expenses of any counsel retained by you
and/or them. Our indemnification agreements contained in Paragraph 8 above,
Paragraph 16 below and this Paragraph 13(b) shall remain operative and in
full force and effect regardless of any investigation made by or on behalf
of any person entitled to indemnification pursuant to Paragraph 8 above,
Paragraph 16 below or this Paragraph 1 3(b), and shall survive the delivery
of any Fund shares and termination of this Agreement. Such agreements of
indemnity will inure exclusively to the benefit of the persons entitled to
indemnification hereunder and their respective estates, successors and
assigns.
14. The names and addresses and other information concerning our customers are
and shall remain our sole property, and neither you nor your affiliates
shall use such names, addresses or other information for any purpose except
in connection with the performance of your duties and responsibilities
hereunder and except for servicing and informational mailings relating to
the Funds. Notwithstanding the foregoing, this Paragraph 14 shall not
prohibit you or any of your affiliates from utilizing for any purpose the
names, addresses or other information concerning any of our customers if
such names, addresses or other information are obtained in any manner other
than from us pursuant to this Agreement. The provisions of this Paragraph
14 shall survive the termination of this Agreement.
15. We agree to serve as a service agent or to provide distribution assistance,
in accordance with the terms of the Form of Service Agreement annexed
hereto as Appendix A, Form of Shareholder Services Agreement annexed hereto
as Appendix B, and/or Form of Distribution Plan Agreement annexed hereto as
Appendix C, as applicable, for all of our customers who purchase shares of
any and all Funds whose Prospectuses provide therefor. By executing this
Agreement, each of the parties hereto agrees to be bound by all terms,
conditions, rights and obligations set forth in the forms of agreement
annexed hereto and further agrees that such forms of agreement supersede
any and all prior service agreements or other similar agreements between
the parties hereto relating to any Fund or Funds. It is recognized that
certain parties may not be permitted to collect distribution fees under the
Form of Distribution Plan Agreement annexed hereto, and if we are such a
party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed hereto as
Appendix D, we agree that you, each Fund with respect to which you permit
us to exercise an expedited redemption privilege, the Transfer Agent of
each such Fund, and your and their respective officers, directors or
trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture
between you and us. Neither party hereto shall be, act as, or represent
itself as, the agent or representative of the other, nor shall either party
have the right or authority to assume, create or incur any liability or any
obligation of any kind, express or implied, against or in the name of, or
on behalf of, the other party. This Agreement is not intended to, and shall
not, create any rights against either party hereto by any third party
solely on account of this Agreement. Neither party hereto shall use the
name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation, requirement or condition, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties hereto.
18. Except as otherwise specifically provided herein, all notices required or
permitted to be given pursuant to this Agreement shall be given in writing
and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, or by
telecopier, telex, telegram or similar means of same day delivery (with a
confirming copy by mail as provided herein). Unless otherwise notified in
writing, all notices to you shall be given or sent to you at your offices,
located at 200 Park Avenue, New York, New York 10166, Attention: General
Counsel, and all notices to us shall be given or sent to us at our address
shown below.
19. This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon 15 days'
prior written notice to the other party. This Agreement, including the
Appendices hereto, may be amended by you upon 15 days' prior written notice
to us, and such amendment shall be deemed accepted by us upon the placement
of any order for the purchase of Fund shares or the acceptance of a fee
payable under this Agreement, including the Appendices hereto, after the
effective date of any such amendment. This Agreement may not be assigned by
us without your prior written consent. This Agreement constitutes the
entire agreement and understanding between the parties hereto relating to
the subject matter hereof and supersedes any and all prior agreements
between the parties hereto relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to principles
of conflicts of laws.
Very truly yours,
Name of Broker or Dealer (Please Print or Type)
Address
Date: _____________________________ By:
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Dreyfus Service
Corporation. Upon acceptance one countersigned copy will be returned to you
for your files.
Accepted:
DREYFUS SERVICE CORPORATION
Date: _____________________________ By:
Authorized Signature
<PAGE>
APPENDIX A
TO BROKER-DEALER AGREEMENT
FORM OF SERVICE AGREEMENT
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders of, and
administering shareholder accounts in, certain mutual fund(s) managed, advised
or administered by The Dreyfus Corporation or its subsidiaries or affiliates
(hereinafter referred to individually as the "Fund" and collectively as the
"Funds"). You are the principal underwriter as defined in the Investment Company
Act of 1940, as amended (the "Act"), and the exclusive agent for the continuous
distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: answering client inquiries about the Funds;
assisting clients in changing dividend options, account designations and
addresses; performing subaccounting; establishing and maintaining
shareholder accounts and records; processing purchase and redemption
transactions; investing client account cash balances automatically in
shares of one or more of the Funds; providing periodic statements and/or
reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulation.
We represent and warrant to, and agree with you, that the compensation
payable to us hereunder, together with any other compensation payable to
us by clients in connection with the investment of their assets in
shares of the Funds, will be properly disclosed by us to our clients.
2. We shall provide such office space and equipment, telephone facilities
and personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel
employed by us) as is necessary or beneficial for providing information
and services to each Fund's shareholders, and to assist you in servicing
accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer
or dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. We
shall have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of
each calendar year. For all Funds as to which Board approval of this
Agreement is required, such continuance must be approved specifically at
least annually by a vote of a majority of (i) the Fund's Board of
Directors and (ii) Directors who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. For any Fund as to which
Board approval of this Agreement is required, this Agreement is
terminable without penalty, at any time, by a majority of the Fund's
Directors who are not "interested persons" (as defined in the Act) and
have no direct or indirect financial interest in this Agreement or, upon
not more than 60 days' written notice, by vote of holders of a majority
of the Fund's shares. As to all Funds, this Agreement is terminable
without penalty upon 15 days' notice by either party. In addition, you
may terminate this Agreement as to any or all Funds immediately, without
penalty, if the present investment adviser of such Fund(s) ceases to
serve the Fund(s) in such capacity, or if you cease to act as
distributor of such Fund(s). Notwithstanding anything contained herein,
if we fail to perform the shareholder servicing and administrative
functions contemplated herein by you as to any or all of the Funds, this
Agreement shall be terminable effective upon receipt of notice thereof
by us. This Agreement also shall terminate automatically in the event of
its assignment (as defined in the Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the
fees described as payable to us in each Fund's Service Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related
Statement of Additional Information. We understand that any payments
pursuant to this Agreement shall be paid only so long as this Agreement
and such Plan are in effect. We agree that no Director, officer or
shareholder of the Fund shall be liable individually for the performance
of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or
implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 200 Park Avenue, New York, New York 10166, Attention:
General Counsel, and all notices to us shall be given or sent to us at our
address which shall be furnished to you in writing on or before the
effective date of this Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
<PAGE>
APPENDIX B
TO BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders of, and
administering shareholder accounts in, certain mutual fund(s) managed, advised
or administered by The Dreyfus Corporation or its subsidiaries or affiliates
(hereinafter referred to individually as the "Fund" and collectively as the
"Funds"). You are the principal underwriter as defined in the Investment Company
Act of 1940, as amended (the "Act"), and the exclusive agent for the continuous
distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend
options, account designations and addresses; performing subaccounting;
establishing and maintaining shareholder accounts and records;
processing purchase and redemption transactions; providing periodic
statements and/or reports showing a client's account balance and
integrating such statements with those of other transactions and
balances in the client's other accounts serviced by us; arranging for
bank wires; and providing such other information and services as you
reasonably may request, to the extent we are permitted by applicable
statute, rule or regulation. We represent and warrant to, and agree with
you, that the compensation payable to us hereunder, together with any
other compensation payable to us by clients in connection with the
investment of their assets in shares of the Funds, will be properly
disclosed by us to our clients, will be authorized by our clients and
will not result in an excessive or unauthorized fee to us. We will act
solely as agent for, upon the order of, and for the account of, our
clients.
2. We shall provide such office space and equipment, telephone facilities
and personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel
employed by us) as is necessary or beneficial for providing information
and services to each Fund's shareholders, and to assist you in servicing
accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer
or dividend disbursing agent. We agree that in the event an issue
pertaining to a Fund's Shareholder Services Plan is submitted for
shareholder approval, we will vote any Fund shares held for our own
account in the same proportion as the vote of those shares held for our
clients' accounts.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. We
shall have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of
each calendar year. Such continuance must be approved specifically at
least annually by a vote of a majority of (i) the Fund's Board of
Directors and (ii) Directors who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in 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, at any time, by a majority of the Fund's Directors who
are not "interested persons" (as defined in the Act) and have no direct
or indirect financial interest in this Agreement. This Agreement is
terminable without penalty upon 15 days' notice by either party. In
addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such
Fund(s) ceases to serve the Fund(s) in such capacity, or if you cease to
act as distributor of such Fund(s). Notwithstanding anything contained
herein, if we fail to perform the shareholder servicing and
administrative functions contemplated herein by you as to any or all of
the Funds, this Agreement shall be terminable effective upon receipt of
notice thereof by us. This Agreement also shall terminate automatically
in the event of its assignment (as defined in the Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the
fees described as payable to us in each Fund's Shareholder Services Plan
and Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree
that no Director, officer or shareholder of the Fund shall be liable
individually for the performance of the obligations hereunder or for any
such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or
implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telex, telecopier, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 200 Park Avenue, New York, New York 10166, Attention:
General Counsel, and all notices to us shall be given or sent to us at our
address which shall be furnished to you in writing on or before the
effective date of this Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
<PAGE>
APPENDIX C
TO BROKER-DEALER AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Gentlemen:
We wish to enter into an Agreement with you with respect to our providing
distribution assistance relating to shares of certain mutual fund(s) managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as the "Fund" and collectively
as the "Funds"). You are the principal underwriter as defined in the Investment
Company Act of 1940, as amended (the "Act"), and the exclusive agent for the
continuous distribution of shares of the Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide distribution assistance in connection with the sale of
shares of the Funds. We represent and warrant to, and agree with you, that
the compensation payable to us hereunder, together with any other
compensation payable to us by clients in connection with the investment of
their assets in shares of the Funds, will be properly disclosed by us to
our clients.
2. We shall provide such office space and equipment, telephone facilities
and personnel (which may be all or any part of the space, equipment and
facilities currently used in our business, or all or any personnel
employed by us) as is necessary or beneficial for providing services
hereunder. We shall transmit promptly to clients all communications sent
to us for transmittal to clients by or on behalf of you, any Fund, or
any Fund's investment adviser, custodian or transfer or dividend
disbursing agent.
3. We agree that neither we nor any of our employees or agents are authorized
to make any representation concerning shares of any Fund, except those
contained in the then current Prospectus for such Fund, copies of which
will be supplied by you to us in reasonable quantities upon request. We
shall have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw the sale of shares of any or all of the
Funds.
5. We acknowledge that this Agreement shall become effective for a Fund only
when approved by vote of a majority of (i) the Fund's Board of Directors or
Trustees or Managing General Partners, as the case may be (collectively
"Directors," individually "Director"), and (ii) Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of
each calendar year. Such continuance must be approved specifically at
least annually by a vote of a majority of (i) the Fund's Board of
Directors and (ii) Directors who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in 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, at any time, by a majority of the Fund's Directors who
are not "interested persons (as defined in the Act) and have no direct
or indirect financial interest in this Agreement, or upon not more than
60 days' written notice, by vote of holders of a majority of the Fund's
shares. This Agreement is terminable without penalty upon 15 days'
notice by either party. In addition, you may terminate this Agreement as
to any or all Funds immediately, without penalty, if the present
investment adviser of such Fund(s) ceases to serve the Fund(s) in such
capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
distribution functions contemplated herein by you as to any or all of
the Funds, this Agreement shall be terminable effective upon receipt of
notice thereof by us. This Agreement also shall terminate automatically
in the event of its assignment (as defined in the Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the
fees described as payable to us in each Fund's Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related
Statement of Additional Information. We understand that any payments
pursuant to this Agreement shall be paid only so long as this Agreement
and such Plan are in effect. We agree that no Director, officer or
shareholder of the Fund shall be liable individually for the performance
of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and
self-regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal representative
of the other, nor shall either party have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or
implied, against or in the name of or on behalf of the other party.
10. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, or by telecopier, telex, telegram or similar means of
same day delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to you shall be given or
sent to you at 200 Park Avenue, New York, New York 10166, Attention:
General Counsel, and all notices to us shall be given or sent to us at our
address which shall be furnished to you in writing on or before the
effective date of this Agreement.
11. This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
<PAGE>
APPENDIX D
TO BROKER-DEALER AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Firm identified below which desires
to exercise expedited redemption privileges with respect to shares of certain
mutual funds managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates, which shares are registered in the name of, or
beneficially owned by, the customers of such Firm.
(PLEASE PRINT OR TYPE)
NAME OF FIRM
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Firm.
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
ACCOUNT NAME ACCOUNT NUMBER
STREET ADDRESS CITY STATE ZIP CODE
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights" and "Counsel and Independent Auditors"
and to the use of our reports dated February 3, 2000, for
Balanced Portfolio, Capital Appreciation Portfolio, Disciplined
Stock Portfolio, Growth and Income Portfolio, International
Equity Portfolio, International Value Portfolio, Limited Term
High Income Portfolio, Money Market Portfolio, Quality Bond
Portfolio, Small Cap Portfolio, Small Company Stock Portfolio,
Special Value Portfolio and Zero Coupon 2000 Portfolio which is
incorporated by reference, in this Registration Statement (Form
N-1A No. 33-13690) of Dreyfus Variable Investment Fund.
ERNST & YOUNG LLP
New York, New York
April 25, 2000
CONFIDENTIAL INFORMATION AND
SECURITIES TRADING POLICY
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
CONTENTS
Page
- ------------------------------
INTRODUCTION .................................................... 1
PART I
APPLICABLE TO ALL ASSOCIATES
SECTION ONE
CONFIDENTIAL INFORMATION............................ 2
-Types of Confidential Information.................. 2
-Rules for Protecting Confidential Information...... 3
-Supplemental Procedures............................ 4
SECTION TWO
INSIDER TRADING AND TIPPING......................... 5
-Legal Prohibitions................................. 5
-Mellon's Policy.................................... 6
SECTION THREE
RESTRICTIONS ON THE FLOW OF INFORMATION
WITHIN MELLON (THE "CHINESE WALL").................. 7
-Rules for Maintaining the Chinese Wall............. 7
-Reporting Receipt of Material Nonpublic
Information........................................ 8
-Functions "Above the Wall"......................... 9
-Supplemental Procedures............................ 9
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS IN MELLON
SECURITIES..........................................10
-Beneficial Ownership...............................11
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS IN OTHER
SECURITIES..........................................12
SECTION SIX
CLASSIFICATION OF ASSOCIATES........................14
-Insider Risk Associate.............................14
-Investment Associate...............................15
-Other Associate....................................15
PART II
APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY ....................................................16
-Prohibition on Investments in Securities of
Financial Services Organizations...................16
-Conflict of Interest...............................17
-Preclearance for Personal Securities
Transactions.......................................17
-Personal Securities Transactions Reports...........19
-Confidential Treatment.............................19
PART III
APPLICABLE TO INVESTMENT
ASSOCIATES ONLY ....................................................20
-Special Standards of Conduct for
Investment Associates..............................20
-Preclearance for Personal Securities
Transactions.......................................21
-Personal Securities Transactions Reports...........23
-Confidential Treatment.............................24
PART IV
APPLICABLE TO OTHER
ASSOCIATES ONLY ....................................................25
-Preclearance for Personal Securities
Transactions.......................................25
-Personal Securities Transactions Reports...........25
-Restrictions on Transactions in Other
Securities.........................................25
-Confidential Treatment.............................26
PART V
APPLICABLE TO NONMANAGEMENT
BOARD MEMBERS ....................................................27
-Nonmanagement Board Member.........................27
-Standards of Conduct for Nonmanagement
Board Member.......................................27
-Preclearance for Personal Securities
Transactions.......................................28
-Personal Securities Transactions Reports...........29
-Confidential Treatment.............................29
GLOSSARY Definitions.........................................30
INDEX OF EXHIBITS ....................................................33
</TABLE>
<PAGE>
INTRODUCTION
- ------------------------------
Mellon Bank Corporation ("Mellon") and its associates, and
the registered investment companies for which The Dreyfus
Corporation ("Dreyfus") and/or Mellon serves as investment
adviser, sub-investment adviser or administrator, are
subject to certain laws and regulations governing the use
of confidential information and personal securities
trading. Mellon has developed this Confidential Information
and Securities Trading Policy (the "Policy") to establish
specific standards to promote compliance with applicable
laws. Further, the Policy is intended to protect Mellon's
business secrets and proprietary information as well as
that of its customers and any entity for which it acts in a
fiduciary capacity.
The Policy set forth procedures and limitations which
govern the personal securities transactions of every Mellon
associate and certain other individuals associated with the
registered investment companies for which Dreyfus and/or
Mellon serves as investment adviser, sub-investment adviser
or administrator. The Policy is designed to reinforce
Mellon's reputation for integrity by avoiding even the
appearance of impropriety in the conduct of Mellon's
business.
Associates should be aware that they may be held personally
liable for any improper or illegal acts committed during
the course of their employment, and that "ignorance of the
law" is not a defense. Associates may be subject to civil
penalties such as fines, regulatory sanctions including
suspensions, as well as criminal penalties.
Associates outside the United States are also subject to
applicable laws of foreign jurisdictions, which may differ
substantially from U.S. law and which may subject such
associates to additional requirements. Such associates must
comply with applicable requirements of pertinent foreign
laws as well as with the provisions of the Policy. To the
extent any particular portion of the Policy is inconsistent
with foreign law, associates should consult the General
Counsel or the Manager of Corporate Compliance.
Any provision of this Policy may be waived or exempted at
the discretion of the Manager of Corporate Compliance. Any
such waiver or exemption will be evidenced in writing and
maintained in the Risk Management and Compliance
Department.
Associates must read the Policies and MUST COMPLY
with them. Failure to comply with the provisions
of the Policies may result in the imposition of
serious sanctions, including but not limited to
disgorgement of profits, dismissal, substantial
personal liability and referral to law enforcement
agencies or other regulatory agencies. Associates
should retain the Policies in their records for
future reference. Any questions regarding the
Policies should be referred to the Manager of
Corporate Compliance or his/her designee.
<PAGE>
PART I - APPLICABLE TO ALL ASSOCIATES
- ------------------------------
SECTION ONE
CONFIDENTIAL INFORMATION
As an associate you may receive information about Mellon,
its customers and other parties that, for various reasons,
should be treated as confidential. All associates are
expected to strictly comply with measures necessary to
preserve the confidentiality of information.
TYPES OF CONFIDENTIAL INFORMATION - Although it is
impossible to provide an exhaustive list of information
that should remain confidential, the following are examples
of the general types of confidential information that
associates might receive in the ordinary course of carrying
out their job responsibilities.
o Information Obtained from Business Relations - An associate
might receive confidential information regarding customers
or other parties with whom Mellon has business
relationships. If released, such information could have a
significant effect on their operations, their business
reputations or the market price of their securities.
Disclosing such information could expose both the associate
and Mellon to liability for damages.
o Mellon Financial Information - An associate might receive
financial information regarding Mellon before such
information has been disclosed to the public. It is the
policy of Mellon to disclose all material corporate
information to the public in such a manner that all those
who are interested in Mellon and its securities have equal
access to the information. Disclosing such information to
unauthorized persons could subject both the associate and
Mellon to liability under the federal securities laws.
o Mellon Proprietary Information - Certain nonfinancial
information developed by Mellon - such as business plans,
customer lists, methods of doing business, computer
software, source codes, databases and related documentation
- constitutes valuable Mellon proprietary information.
Disclosure of such information to unauthorized persons
could harm, or reduce a benefit to, Mellon and could result
in liability for both the associate and Mellon.
o Mellon Examination Information - Banks and certain other
Mellon subsidiaries are periodically examined by regulatory
agencies. Certain reports made by those regulatory agencies
are the property of those agencies and are strictly
confidential. Giving information from these reports to
anyone not officially connected with Mellon is a criminal
offense.
o Portfolio Management Information - Portfolio management
information relating to investment accounts or funds
managed by Mellon or Dreyfus, including investment
decisions or strategies developed for the benefit of
investment companies advised by Dreyfus, is for the benefit
of such account or fund. Disclosure or exploitation of such
information by an associate in an unauthorized manner may
cause detriment to such accounts or funds and may subject
the associate to liability under the federal securities
laws.
<PAGE>
RULES FOR PROTECTING CONFIDENTIAL INFORMATION - The
following are some basic rules to follow to protect
confidential information.
o Limited Communication to Outsiders - Confidential
information should not be communicated to anyone outside
Mellon, except to the extent they need to know the
information in order to provide necessary services to
Mellon.
o Limited Communication to Insiders - Confidential
information should not be communicated to other associates,
except to the extent they need to know the information to
fulfill their job responsibilities and their knowledge of
the information is not likely to result in misuse or a
conflict of interest. In this regard, Mellon has
established specific restrictions with respect to material
nonpublic information in order to separate and insulate
different functional areas and personnel within Mellon.
Please refer to Section Three, "Restrictions on The Flow of
Information Within Mellon" (The "Chinese Wall").
o Corporate Use Only - Confidential information should be
used only for Corporate purposes. Under no circumstances
may an associate use it, directly or indirectly, for
personal gain or for the benefit of any outside party who
is not entitled to such information.
o Other Customers - Where appropriate, customers should be
made aware that associates will not disclose to them other
customers' confidential information or use the confidential
information of one customer for the benefit of another.
o Notification of Confidentiality - When confidential
information is communicated to any person, either inside or
outside Mellon, they should be informed of the
information's confidential nature and the limitations on
its further communication.
o Prevention of Eavesdropping - Confidential matters should
not be discussed in public or in places, such as in
building lobbies, restaurants or elevators, where
unauthorized persons may overhear. Precautions, such as
locking materials in desk drawers overnight, stamping
material "Confidential" and delivering materials in sealed
envelopes, should be taken with written materials to ensure
they are not read by unauthorized persons.
o Data Protection - Data stored on personal computers and
diskettes should be properly secured to ensure they are not
accessed by unauthorized persons. Access to computer files
should be granted only on a need-to-know basis. At a
minimum, associates should comply with applicable Mellon
policies on electronic data security.
<PAGE>
o Confidentiality Agreements - Confidentiality agreements to
which Mellon is a party must be complied with in addition
to, but not in lieu of, this Policy. Confidentiality
agreements that deviate from commonly used forms should be
reviewed in advance by the Legal Department.
o Contact with the Public - All contacts with institutional
shareholders or securities analysts about Mellon must be
made through the Investor Relations Division of the Finance
Department. All contacts with the media and all speeches or
other public statements made on behalf of Mellon or about
Mellon's businesses must be cleared in advance by Corporate
Affairs. In speeches and statements not made on behalf of
Mellon, care should be taken to avoid any implication that
Mellon endorses the views expressed.
SUPPLEMENTAL PROCEDURES - Mellon entities, departments,
divisions and groups should establish their own
supplemental procedures for protecting confidential
information, as appropriate. These procedures may include:
o establishing records retention and destruction policies;
o using code names;
o limiting the staffing of confidential matters (for example,
limiting the size of working groups and the use of
temporary employees, messengers and word processors); and
o requiring written confidentiality agreements from certain
associates.
Any supplemental procedures should be used only to protect
confidential information and not to circumvent appropriate
reporting and recordkeeping requirements.
<PAGE>
SECTION TWO
INSIDER TRADING AND TIPPING
LEGAL PROHIBITIONS - Federal securities laws generally
prohibit the trading of securities while in possession of
"material nonpublic" information regarding the issuer of
those securities (insider trading). Any person who passes
along the material nonpublic information upon which a trade
is based (tipping) may also be liable.
"Material" - Information is material if there is a
substantial likelihood that a reasonable investor would
consider it important in deciding whether to buy, sell or
hold securities. Obviously, information that would affect
the market price of a security would be material. Examples
of information that might be material include:
o a proposal or agreement for a merger, acquisition or
divestiture, or for the sale or purchase of substantial
assets;
o tender offers, which are often material for the party
making the tender offer as well as for the issuer of the
securities for which the tender offer is made;
o dividend declarations or changes;
o extraordinary borrowings or liquidity problems;
o defaults under agreements or actions by creditors,
customers or suppliers relating to a company's credit
standing;
o earnings and other financial information, such as large
or unusual write-offs, write-downs, profits or losses;
o pending discoveries or developments, such as new products,
sources of materials, patents, processes, inventions or
discoveries of mineral deposits;
o a proposal or agreement concerning a financial
restructuring;
o a proposal to issue or redeem securities, or a
development with respect to a pending issuance or
redemption of securities;
o a significant expansion or contraction of operations;
o information about major contracts or increases or
decreases in orders;
o the institution of, or a development in, litigation or a
regulatory proceeding;
o developments regarding a company's senior management;
o information about a company received from a director of
that company; and
o information regarding a company's possible noncompliance
with environmental protection laws.
This list is not exhaustive. All relevant circumstances
must be considered when determining whether an item of
information is material.
<PAGE>
"Nonpublic" - Information about a company is nonpublic if
it is not generally available to the investing public.
Information received under circumstances indicating that it
is not yet in general circulation and which may be
attributable, directly or indirectly, to the company or its
insiders is likely to be deemed nonpublic information.
If an associate can refer to some public source to show
that the information is generally available (that is,
available not from inside sources only) and that enough
time has passed to allow wide dissemination of the
information, the information is likely to be deemed public.
While information appearing in widely accessible sources -
such as newspapers - becomes public very soon after
publication, information appearing in less accessible
sources - such as regulatory filings - may take up to
several days to be deemed public. Similarly, highly complex
information might take longer to become public than would
information that is easily understood by the average
investor.
MELLON'S POLICY - Associates who possess material nonpublic
information about a company - whether that company is
Mellon, another Mellon entity, a Mellon customer or
supplier, or other company - may not trade in that
company's securities, either for their own accounts or for
any account over which they exercise investment discretion.
In addition, associates may not recommend trading in those
securities and may not pass the information along to
others, except to associates who need to know the
information in order to perform their job responsibilities
with Mellon. These prohibitions remain in effect until the
information has become public.
Associates who have investment responsibilities should take
appropriate steps to avoid receiving material nonpublic
information. Receiving such information could create severe
limitations on their ability to carry out their
responsibilities to Mellon's fiduciary customers.
Associates managing the work of consultants and temporary
employees who have access to the types of confidential
information described in this Policy are responsible for
ensuring that consultants and temporary employees are aware
of Mellon's policy and the consequences of noncompliance.
Questions regarding Mellon's policy on material nonpublic
information, or specific information that might be subject
to it, should be referred to the General Counsel.
<PAGE>
SECTION THREE
RESTRICTIONS ON THE FLOW OF
INFORMATION WITHIN MELLON
(THE "CHINESE WALL")
As a diversified financial services organization, Mellon
faces unique challenges in complying with the prohibitions
on insider trading and tipping of material nonpublic
information and misuse of confidential information. This is
because one Mellon unit might have material nonpublic
information about a company while other Mellon units may
have a desire, or even a fiduciary duty, to buy or sell
that company's securities or recommend such purchases or
sales to customers. To engage in such broad-ranging
financial services activities without violating laws or
breaching Mellon's fiduciary duties, Mellon has established
a "Chinese Wall" policy applicable to all associates. The
"Chinese Wall" separates the Mellon units or individuals
that are likely to receive material nonpublic information
(Potential Insider Functions) from the Mellon units or
individuals that either trade in securities - for Mellon's
account or for the accounts of others - or provide
investment advice (Investment Functions).
Examples of Potential Insider Functions - Potential Insider
Functions include, among others, certain commercial
lending, corporate finance, and credit policy areas.
Insider Risk Associates (see Section Six, "Insider Risk
Associates") should consider themselves to be in Potential
Insider Functions unless their particular job
responsibilities clearly indicate otherwise.
Examples of Investment Functions - Investment Functions
include, among others, securities sales and trading,
investment management and advisory services, investment
research and various trust or fiduciary functions.
RULES FOR MAINTAINING THE "CHINESE WALL" - Without the
prior approval of the General Counsel, material nonpublic
information obtained by anyone in a Potential Insider
Function should not be communicated to anyone in an
Investment Function. To reduce the risk of material
nonpublic information being communicated, communications
between these associates in these functions must be limited
to the maximum extent consistent with valid business needs.
Particular rules -
o File Restrictions - Associates in Investment Functions must
not have access to commercial credit files, corporate
finance files, or any other Potential Insider Function
files that might contain material nonpublic information.
All such files that contain material nonpublic information
should be marked as "Confidential" and, if feasible,
segregated from nonconfidential files.
o Electronic Data - Associates in Investment Functions must
not have access to personal computer or word processing
files of associates in Potential Insider Functions.
o Meetings - Associates in Investment Functions must not
attend meetings between customers and associates in
Potential Insider Functions unless appropriate steps have
been taken to ensure that material nonpublic information
will not be disclosed or discussed.
o Committee Service - Without the prior approval of the
General Counsel, associates other than those "Above the
Wall" (see page 9) must not serve simultaneously on a
committee having responsibility for any Investment Function
and a committee having responsibility for any Potential
Insider Function.
o Information Requests - Requests for nonmaterial information
or public information across the "Chinese Wall" should be
made in writing to an appropriate associate in the
applicable area. Associates sending or receiving such a
request should resolve any questions regarding the
materiality or nonpublic nature of the requested
information by consulting their department head, who will
contact the General Counsel, as appropriate.
o Information Backflow - Associates should take care to avoid
inadvertent backflow of information that may be interpreted
as the prohibited communication of material nonpublic
information. For example, the mere fact that someone in a
Potential Insider Function, such as a mergers and
acquisitions specialist, requests information from an
associate in an Investment Function could give the latter
person a clue as to possible material developments
affecting a customer.
o Customers - Associates in Investment Functions must not
state or imply to customers that associates making
decisions or recommendations will have the benefit of
information from Mellon's Potential Insider Functions. When
appropriate, associates should inform customers of Mellon's
"Chinese Wall" policy.
o Conflicts of Interest - Associates should not receive or
pass on any information that would create an undue risk of
Mellon or any associate having a conflict of interest or
breaching a fiduciary obligation.
REPORTING RECEIPT OF MATERIAL NONPUBLIC INFORMATION -
Associates in Investment Functions who receive any
suspected material nonpublic information must report such
receipt promptly to their department or entity head. A
department or entity head who receives information believed
to be material and nonpublic should report the matter
promptly to the General Counsel. If the General Counsel
determines that the information is material and nonpublic,
the affected department or entity will:
o immediately suspend all trading in the securities of the
issuer to which the information applies, as well as all
recommendations with respect to such securities. The
suspension will remain in effect as long as the information
remains both material and nonpublic.
O notify the General Counsel before resuming transactions or
recommendations in the affected securities. The General
Counsel will advise as to possible further steps, including
ascertaining the validity and nonpublic nature of the
information with the issuer of the securities; requesting
the issuer of the securities, or other appropriate parties,
to disseminate the information promptly to the public if
the information is valid and nonpublic; and publishing the
information.
In certain circumstances, the department or entity head may
be able to demonstrate conclusively that the receipt of the
material nonpublic information has been confined to an
individual or small group of individuals and that measures
other than those described above will comparably reduce the
likelihood of trading on the basis of the information.
These measures might include temporarily relieving
individuals of responsibility for any Investment Functions
and preventing any contact between those individuals and
associates in Investment Functions. In these circumstances,
the department head, with the approval of the General
Counsel, may take those measures rather than the measures
described above.
<PAGE>
FUNCTIONS "ABOVE THE WALL" - Some functions at Mellon are
deemed to be "Above the Wall." For example, members of
senior management, Auditing, Risk Management and
Compliance, and the Legal Department will typically need to
have access to information on both sides of the "Chinese
Wall" to carry out their job responsibilities. These
individuals cannot rely on the procedural safeguards of the
"Chinese Wall" and, therefore, need to be particularly
careful to avoid any improper use or dissemination of
material nonpublic information.
SUPPLEMENTAL PROCEDURES - As appropriate, certain Mellon
departments or areas, such as Mellon Trust, should
establish their own procedures to reduce the possibility of
information being communicated to associates who should not
have access to that information.
<PAGE>
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS
IN MELLON SECURITIES
Associates who engage in transactions involving Mellon
securities should be aware of their unique responsibilities
with respect to such transactions arising from the
employment relationship and should be sensitive to even the
appearance of impropriety.
The following restrictions apply to all transactions in
Mellon's publicly traded securities occurring in the
associate's own account and in all other accounts over
which the associate could be expected to exercise influence
or control (see provisions under "Beneficial Ownership"
below for a more complete discussion of the accounts to
which these restrictions apply). These restrictions are to
be followed in addition to any restrictions that apply to
particular officers or directors (such as restrictions
under Section 16 of the Securities Exchange Act of 1934).
o Short Sales - Short sales of Mellon securities by
associates are prohibited.
o Sales Within 60 Days of Purchase - Sales of Mellon
securities within 60 days of acquisition are prohibited.
For purposes of the 60-day holding period, securities will
be deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the
other, or if the value of one is expressly dependent on the
value of the other (e.g., derivative securities).
In cases of extreme hardship, associates (other than senior
management) may obtain permission to dispose of Mellon
securities acquired within 60 days of the proposed
transaction, provided the transaction is pre-cleared with
the Manager of Corporate Compliance and any profits earned
are disgorged in accordance with procedures established by
senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period
restriction in the event of severe market disruption.
o Margin Transactions - Purchases on margin of Mellon's
publicly traded securities by associates is prohibited.
Margining Mellon securities in connection with a cashless
exercise of an employee stock option through the Human
Resources Department is exempt from this restriction.
Further, Mellon securities may be used to collateralize
loans or the acquisition of securities other than those
issued by Mellon.
o Option Transactions - Option transactions involving
Mellon's publicly traded securities are prohibited.
Transactions under Mellon's Long-Term Incentive Plan or
other associate option plans are exempt from this
restriction.
o Major Mellon Events - Associates who have knowledge of
major Mellon events that have not yet been announced are
prohibited from buying and selling Mellon's publicly traded
securities before such public announcements, even if the
associate believes the event does not constitute material
nonpublic information.
o Mellon Blackout Period - Associates are prohibited from
buying or selling Mellon's publicly traded securities
during a blackout period, which begins the 16th day of the
last month of each calendar quarter and ends three business
days after Mellon publicly announces the financial results
for that quarter. In cases of extreme hardship, associates
(other than senior management) may request permission from
the Manager of Corporate Compliance to dispose of Mellon
securities during the blackout period.
<PAGE>
BENEFICIAL OWNERSHIP - The provisions discussed above apply
to transactions in the associate's own name and to all
other accounts over which the associate could be expected
to exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom
substantial support is contributed;
o accounts of any other member of the associate's household
(e.g., a relative living in the same home);
o trust accounts for which the associate acts as trustee or
otherwise exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by
the associate;
o arrangements similar to trust accounts that are established
for bona fide financial purposes and benefit the associate;
and
o any other account for which the associate is the beneficial
owner (see Glossary for a more complete legal definition of
"beneficial owner").
<PAGE>
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS
IN OTHER SECURITIES
Purchases or sales by an associate of the securities of
issuers with which Mellon does business, or other third
party issuers, could result in liability on the part of
such associate. Associates should be sensitive to even the
appearance of impropriety in connection with their personal
securities transactions. Associates should refer to the
provisions under "Beneficial Ownership" (Section Four,
"Restrictions on Transactions in Mellon Securities"), which
are equally applicable to the following provisions.
The Mellon Code of Conduct contains certain restrictions on
investments in parties that do business with Mellon.
Associates should refer to the Code of Conduct and comply
with such restrictions in addition to the restrictions and
reporting requirements set forth below.
The following restrictions apply to all securities
transactions by associates:
o Credit or Advisory Relationship - Associate may not buy or
sell securities of a company if they are considering
granting, renewing or denying any credit facility to that
company or acting as an adviser to that company with
respect to its securities. In addition, lending associates
who have assigned responsibilities in a specific industry
group are not permitted to trade securities in that
industry. This prohibition does not apply to transactions
in securities issued by open-end investment companies.
o Customer Transactions - Trading for customers and Mellon
accounts should always take precedence over associates'
transactions for their own or related accounts.
o Front Running - Associates may not engage in "front
running," that is, the purchase or sale of securities for
their own accounts on the basis of their knowledge of
Mellon's trading positions or plans.
o Initial Public Offerings - Mellon prohibits its associates
from acquiring any securities in an initial public offering
("IPO").
o Margin Transactions - Margin trading is a highly leveraged
and relatively risky method of investing that can create
particular problems for financial services employees. For
this reason, all associates are urged to avoid margin
trading.
Prior to establishing a margin account, the associate must
obtain the written permission of the Manager of Corporate
Compliance. Any associate having a margin account prior to
the effective date of this Policy must notify the Manager
of Corporate Compliance of the existence of such account.
<PAGE>
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance
as an interested party on that account. Associates must
ensure that the Manager of Corporate Compliance promptly
receives copies of all trade confirmations and statements
relating to the account directly from the broker. If
requested by a brokerage firm, please contact the Manager
of Corporate Compliance to obtain a letter (sometimes
referred to as a "407 letter") granting permission to
maintain a margin account. Trade confirmations and
statements are not required on margin accounts established
at Dreyfus Investment Services Corporation for the sole
purpose of cashless exercises of employee stock options. In
addition, products may be offered by a broker/dealer that,
because of their characteristics, are considered margin
accounts but have been determined by the Manager of
Corporate Compliance to be outside the scope of this Policy
(e.g., a Cash Management Account which provides overdraft
protection for the customer). Any questions regarding the
establishment, use and reporting of margin accounts should
be directed to the Manager of Corporate Compliance.
Examples of an instruction letter to a broker are shown in
Exhibits B1 and B2.
o Material Nonpublic Information - Associates possessing
material nonpublic information regarding any issuer of
securities must refrain from purchasing or selling
securities of that issuer until the information becomes
public or is no longer considered material.
o Naked Options, Excessive Trading - Mellon discourages all
associates from engaging in short-term or speculative
trading, in trading naked options, in trading that could be
deemed excessive or in trading that could interfere with an
associate's job responsibilities.
o Private Placements - Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Preclearance
Compliance Officer (applicable only to Investment
Associates), the Manager of Corporate Compliance and the
associate's department head. Approval must be given by all
appropriate aforementioned persons for the acquisition to
be considered approved. After receipt of the necessary
approvals and the acquisition, associates are required to
disclose that investment when they participate in any
subsequent consideration of an investment in the issuer for
an advised account. Final decision to acquire such
securities for an advised account will be subject to
independent review.
o Scalping - Associates may not engage in "scalping," that
is, the purchase or sale of securities for their own or
Mellon's accounts on the basis of knowledge of customers'
trading positions or plans or Mellon's forthcoming
investment recommendations.
o Short-Term Trading - Associates are discouraged from
purchasing and selling, or from selling and purchasing, the
same (or equivalent) securities within 60 calendar days.
With respect to Investment Associates only, any profits
realized on such short-term trades must be disgorged in
accordance with procedures established by senior
management.
<PAGE>
SECTION SIX
CLASSIFICATION OF ASSOCIATES
Associates are engaged in a wide variety of activities for
Mellon. In light of the nature of their activities and the
impact of federal and state laws and the regulations
thereunder, the Policy imposes different requirements and
limitations on associates based on the nature of their
activities for Mellon. To assist the associates in
complying with the requirements and limitations imposed on
them in light of their activities, associates are
classified into one of three categories: Insider Risk
Associate, Investment Associate and Other Associate.
Appropriate requirements and limitations are specified in
the Policy based upon the associate's classification.
INSIDER RISK ASSOCIATE -
You are considered to be an Insider Risk Associate if you
are:
o employed in any of the following departments or functional
areas, however named, of a Mellon entity other than Dreyfus
(see Glossary for definition of "Dreyfus"):
<TABLE>
<CAPTION>
<S> <C>
- Auditing - International
- Capital Markets - Leasing
- Corporate Affairs - Legal
- Credit Policy - Mellon Business Credit
- Credit Recovery - Middle Market
- Credit Review - Portfolio and Funds Management
- Domestic Corporate Banking - Risk Management and Compliance
- Finance - Strategic Planning
- Institutional Banking - Wholesale, Administration and
Operations
</TABLE>
O a member of the Mellon Senior Management Committee,
provided that those members of the Mellon Senior Management
Committee who have management responsibility for fiduciary
activities or who routinely have access to information
about customers' securities transactions are considered to
be Investment Associates and are subject to those
provisions of the Policy pertaining to Investment
Associates;
o employed by a broker/dealer subsidiary of a Mellon
entity other than Dreyfus;
o an associate in the Stock Transfer business unit and have
been specifically designated as an Insider Risk Associate
by the Manager of Corporate Compliance; or
o an associate specifically designated as an Insider Risk
Associate by the Manager of Corporate Compliance.
<PAGE>
INVESTMENT ASSOCIATE -
You are considered to be an Investment Associate if you
are:
o a member of Mellon's Senior Management Committee who, as
part of his/her usual duties, has management responsibility
for fiduciary activities or routinely has access to
information about customers' securities transactions;
o a Dreyfus associate;
o an associate of a Mellon entity registered under the
Investment Advisers Act of 1940;
o employed in the trust area of Mellon and:
- have the title of Vice President, First Vice President
or Senior Vice President; or
- have access to material, confidential information
regarding securities transactions by or on behalf of
Mellon customers; or
o an associate specifically designated as an Investment
Associate by the Manager of Corporate Compliance.
OTHER ASSOCIATE -
You are considered to be an Other Associate if you are an
associate of Mellon Bank Corporation or any of its direct
or indirect subsidiaries who is not either an Insider Risk
Associate or an Investment Associate.
<PAGE>
PART II - APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY
- ------------------------------
PROHIBITION ON INVESTMENTS IN SECURITIES OF FINANCIAL
SERVICES ORGANIZATIONS
You are prohibited from acquiring any security issued by a
financial services organization if you are:
o a member of the Mellon Senior Management Committee. For
purposes of this restriction only, this prohibition also
applies to those members of the Mellon Senior Management
Committee who are considered Investment Associates.
o employed in any of the following departments of a Mellon
entity other than Dreyfus (see Glossary for definition of
"Dreyfus"):
- Strategic Planning - Finance
- Institutional Banking - Legal
o an associate specifically designated by the Manager of
Corporate Compliance and informed that this prohibition is
applicable to you.
Financial Services Organizations - The term "security
issued by a financial services organization" includes any
security issued by:
<TABLE>
<CAPTION>
<S> <C>
- Commercial Banks - Bank Holding Companies
(other than Mellon) (other than Mellon)
- Thrifts - Savings and Loan Associations
- Insurance Companies - Broker/Dealers
- Investment Advisory Companies - Transfer Agents
- Shareholder Servicing - Other Depository
Companies Institutions
</TABLE>
The term "securities issued by a financial services
organization" DOES NOT INCLUDE securities issued by mutual
funds, variable annuities or insurance policies. Further,
for purposes of determining whether a company is a
financial services organization, subsidiaries and parent
companies are treated as separate issuers.
Effective Date - The foregoing restrictions will be
effective upon adoption of this Policy. Securities of
financial services organizations properly acquired before
the later of the effective date of this Policy or the date
of hire may be maintained or disposed of at the owner's
discretion.
Additional securities of a financial services organization
acquired through the reinvestment of the dividends paid by
such financial services organization through a dividend
reinvestment program (DRIP) are not subject to this
prohibition, provided your election to participate in the
DRIP predates the later of the effective date of this
Policy or date of hire. Optional cash purchases through a
DRIP are subject to this prohibition.
Within 30 days of the later of the effective date of this
Policy or date of becoming subject to this prohibition, all
holdings of securities of financial services organizations
must be disclosed in writing to the Manager of Corporate
Compliance. Periodically, you will be asked to file an
updated disclosure of all your holdings of securities of
financial services organizations.
<PAGE>
CONFLICT OF INTEREST - No Insider Risk Associate may engage
in or recommend any securities transaction that places, or
appears to place, his or her own interests above those of
any customer to whom investment services are rendered,
including mutual funds and managed accounts, or above the
interests of Mellon.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Insider Risk Associates must notify the Manager of
Corporate Compliance in writing and receive preclearance
before they engage in any purchase or sale of a security.
Insider Risk Associates should refer to the provisions
under "Beneficial Ownership" (Section Four, "Restrictions
on Transactions in Mellon Securities"), which are equally
applicable to these provisions.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
O purchases or sales of Exempt Securities (see Glossary);
o purchases or sales of municipal bonds;
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (e.g., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Manager of Corporate Compliance, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
o transactions that are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an
associate stock option if the sale is part of a "netting of
shares" or "cashless exercise" administered by the Human
Resources Department (for which the Human Resources
Department will forward information to the Manager of
Corporate Compliance);
o the automatic reinvestment of dividends under a DRIP
(preclearance is required for optional cash purchases under
a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described
above; and/or
O those situations where the Manager of Corporate Compliance
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Manager of Corporate Compliance by completing a
Preclearance Request Form (see Exhibit C1).
The Manager of Corporate Compliance will notify the Insider
Risk Associate whether the request is approved or denied,
without disclosing the reason for such approval or denial.
<PAGE>
Notifications may be given in writing or verbally by the
Manager of Corporate Compliance to the Insider Risk
Associate. A record of such notification will be maintained
by the Manager of Corporate Compliance. However, it shall
be the responsibility of the Insider Risk Associate to
obtain a written record of the Manager of Corporate
Compliance's notification within 24 hours of such
notification. The Insider Risk Associate should retain a
copy of this written record.
As there could be many reasons for preclearance being
granted or denied, Insider Risk Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Insider Risk Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
O preclearance requests should not be made for a
transaction that the Insider Risk Associate does not
intend to make; and
o Insider Risk Associates should not discuss with anyone
else, inside or outside Mellon, the response they received
to a preclearance request.
Every Insider Risk Associate must follow these procedures
or risk serious sanctions, including dismissal. If you have
any questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - The Manager of Corporate Compliance will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Insider Risk Associates.
Restricted List(s) will not be distributed outside of the
Risk Management and Compliance Department. From time to
time, such trading restrictions may be appropriate to
protect Mellon and its Insider Risk Associates from
potential violations, or the appearance of violations, of
securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information to avoid unwarranted
inferences.
To assist the Manager of Corporate Compliance in
identifying companies that may be appropriate for inclusion
on the Restricted List, the department heads of sections in
which Insider Risk Associates are employed will inform the
Manager of Corporate Compliance in writing of any companies
they believe should be included on the Restricted List,
based upon facts known or readily available to such
department heads. Although the reasons for inclusion on the
Restricted List may vary, they could typically include the
following:
o Mellon is involved as a lender, investor or adviser in a
merger, acquisition or financial restructuring involving
the company;
o Mellon is involved as a selling shareholder in a public
distribution of the company's securities;
<PAGE>
o Mellon is involved as an agent in the distribution of the
company's securities;
o Mellon has received material nonpublic information on the
company;
o Mellon is considering the exercise of significant
creditors' rights against the company; or
o The company is a Mellon borrower in Credit Recovery.
Department heads of sections in which Insider Risk
Associates are employed are also responsible for notifying
the Manager of Corporate Compliance in writing of any
change in circumstances making it appropriate to remove a
company from the Restricted List.
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Insider Risk Associates are
required to instruct their brokers to submit directly to
the Manager of Corporate Compliance copies of all trade
confirmations and statements relating to their account. An
example of an instruction letter to a broker is contained
in Exhibit B1.
o Report of Transactions in Mellon Securities - Insider Risk
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND BY
OTHER PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
<PAGE>
PART III - APPLICABLE TO
INVESTMENT ASSOCIATES ONLY
- ------------------------------
Because of their particular responsibilities, Investment
Associates are subject to different preclearance and
personal securities reporting requirements as discussed
below.
SPECIAL STANDARDS OF CONDUCT FOR INVESTMENT ASSOCIATES
Conflict of Interest - No Investment Associate may
recommend a securities transaction for a Mellon customer to
whom a fiduciary duty is owed, or for Mellon, without
disclosing any interest he or she has in such securities or
issuer (other than an interest in publicly traded
securities where the total investment is equal to or less
than $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Investment Associate in
such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Investment Associate or
any party in which the Investment Associate has a
beneficial ownership interest (see "Beneficial Ownership"
in Section Four, "Restrictions On Transactions in Mellon
Securities").
Portfolio Information - No Investment Associate may divulge
the current portfolio positions, or current or anticipated
portfolio transactions, programs or studies, of Mellon or
any Mellon customer to anyone unless it is properly within
his or her job responsibilities to do so.
Material Nonpublic Information - No Investment Associate
may engage in or recommend a securities transaction, for
his or her own benefit or for the benefit of others,
including Mellon or its customers, while in possession of
material nonpublic information regarding such securities.
No Investment Associate may communicate material nonpublic
information to others unless it is properly within his or
her job responsibilities to do so.
Short-Term Trading - Any Investment Associate who purchases
and sells, or sells and purchases, the same (or equivalent)
securities within any 60-calendar-day period is required to
disgorge all profits realized on such transaction in
accordance with procedures established by senior
management. For this purpose, securities will be deemed to
be equivalent if one is convertible into the other, if one
entails a right to purchase or sell the other, or if the
value of one is expressly dependent on the value of the
other (e.g., derivative securities).
Additional Restrictions For Dreyfus Associates and
Associates of Mellon Entities Registered Under The
Investment Advisers Act of 1940 ONLY ("40 Act
Associates")
o Outside Activities - No 40 Act associate may serve on the
board of directors/trustees or as a general partner of any
publicly traded company (other than Mellon) without the
prior approval of the Manager of Corporate Compliance.
<PAGE>
o Gifts - All 40 Act associates are prohibited from accepting
gifts from outside companies, or their representatives,
with an exception for gifts of (1) a de minimis value and
(2) an occasional meal, a ticket to a sporting event or the
theater, or comparable entertainment for the 40 Act
associate and, if appropriate, a guest, which is neither so
frequent nor extensive as to raise any question of
impropriety. A gift shall be considered de minimis if it
does not exceed an annual amount per person fixed
periodically by the National Association of Securities
Dealers, which is currently $100 per person.
o Blackout Period - 40 Act associates will not be given
clearance to execute a transaction in any security that is
being considered for purchase or sale by an affiliated
investment company, managed account or trust, for which a
pending buy or sell order for such affiliated account is
pending, and for two business days after the transaction in
such security for such affiliated account has been
effected. This provision does not apply to transactions
effected or contemplated by index funds.
In addition, portfolio managers for the investment
companies are prohibited from buying or selling a security
within seven calendar days before and after such investment
company trades in that security. Any violation of the
foregoing will require the violator to disgorge all profit
realized with respect to such transaction.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Investment Associates must notify the Preclearance
Compliance Officer (see Glossary) in writing and receive
preclearance before they engage in any purchase or sale of
a security.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
o purchases or sales of "Exempt Securities" (see Glossary);
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (i.e., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Preclearance Compliance Officer, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
O transactions which are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an
associate stock option if the sale is part of a "netting of
shares" or "cashless exercise" administered by the Human
Resources Department (for which the Human Resources
Department will forward information to the manager of
Corporate Compliance);
o purchases which are part of an automatic reinvestment of
dividends under a DRIP (Preclearance is required for
optional cash purchases under a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described
above; and/or
o those situations where the Preclearance Compliance Officer
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
<PAGE>
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Preclearance Compliance Officer by completing a
Preclearance Request Form. (Investment Associates other
than Dreyfus associates are to use the Preclearance Request
Form shown as Exhibit C1. Dreyfus associates are to use the
Preclearance Request Form shown as Exhibit C2.)
The Preclearance Compliance Officer will notify the
Investment Associate whether the request is approved or
denied without disclosing the reason for such approval or
denial.
Notifications may be given in writing or verbally by the
Preclearance Compliance Officer to the Investment
Associate. A record of such notification will be maintained
by the Preclearance Compliance Officer. However, it shall
be the responsibility of the Investment Associate to obtain
a written record of the Preclearance Compliance Officer's
notification within 24 hours of such notification. The
Investment Associate should retain a copy of this written
record.
As there could be many reasons for preclearance being
granted or denied, Investment Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Investment Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
day on which preclearance is given;
o preclearance requests should not be made for a transaction
that the Investment Associate does not intend to make; and
o Investment Associates should not discuss with anyone else,
inside or outside Mellon, the response the Investment
Associate received to a preclearance request.
Every Investment Associate must follow these procedures or
risk serious sanctions, including dismissal. If you have
any questions about these procedures, consult the
Preclearance Compliance Officer. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - Each Preclearance Compliance Officer will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Investment Associates in their
area. From time to time, such trading restrictions may be
appropriate to protect Mellon and its Investment Associates
from potential violations, or the appearance of violations,
of securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information in order to avoid
unwarranted inferences.
In order to assist the Preclearance Compliance Officer in
identifying companies that may be appropriate for inclusion
on the Restricted List, the head of the
entity/department/area in which Investment Associates are
employed will inform the appropriate Preclearance
Compliance Officer in writing of any companies that they
believe should be included on the Restricted List based
upon facts known or readily available to such department
heads.
<PAGE>
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Investment Associates are required
to instruct their brokers to submit directly to the Manager
of Corporate Compliance copies of all trade confirmations
and statements relating to their account. Examples of
instruction letters to a broker are contained in Exhibits
B1 and B2.
o Report of Transactions in Mellon Securities - Investment
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan, and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
o Statement of Securities Holdings - Within ten days of
receiving this Policy and on an annual basis thereafter,
all Investment Associates must submit to the Manager of
Corporate Compliance a statement of all securities in which
they presently have any direct or indirect beneficial
ownership other than Exempt Securities, as defined in the
Glossary. Investment Associates should refer to "Beneficial
Ownership" in Section Four, "Restrictions on Transactions
in Mellon Securities," which is also applicable to
Investment Associates. Such statements should be in the
format shown in Exhibit D. The annual report must be
submitted by January 31 and must report all securities
holdings other than Exempt Securities. The annual statement
of securities holdings contains an acknowledgment that the
Investment Associate has read and complied with this
Policy.
o Special Requirement with Respect to Affiliated Investment
Companies - The portfolio managers, research analysts and
other Investment Associates specifically designated by the
Manager of Corporate Compliance are required within ten
calendar days of receiving this Policy (and by no later
than ten calendar days after the end of each calendar
quarter) to report every transaction in the securities
issued by an affiliated investment company occurring in an
account in which the Investment Associate has a beneficial
ownership interest. The quarterly reporting requirement may
be satisfied by notifying the Manager of Corporate
Compliance of the name of the investment company, account
name and account number for which such quarterly reports
must be submitted.
<PAGE>
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES, AND BY
OTHER PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
DOCUMENTS RECEIVED FROM DREYFUS ASSOCIATES ARE ALSO
AVAILABLE FOR INSPECTION BY THE BOARDS OF DIRECTORS OF
DREYFUS AND BY THE BOARDS OF DIRECTORS (OR TRUSTEES OR
MANAGING GENERAL PARTNERS, AS APPLICABLE) OF THE INVESTMENT
COMPANIES MANAGED OR ADMINISTERED BY DREYFUS.
<PAGE>
PART IV - APPLICABLE TO
OTHER ASSOCIATES ONLY
- ------------------------------
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - Except
for private placements, Other Associates are permitted to
engage in personal securities transactions without
obtaining prior approval from the Manager of Corporate
Compliance (for preclearance of private placements, use the
Preclearance Request Form shown as Exhibit C1.)
PERSONAL SECURITIES TRANSACTIONS REPORTS - Other Associates
are not required to report their personal securities
transactions other than margin transactions and
transactions involving Mellon securities as discussed
below. Other Associates are required to instruct their
brokers to submit directly to the Manager of Corporate
Compliance copies of all confirmations and statements
pertaining to margin accounts. Examples of an instruction
letter to a broker are shown in Exhibit B1.
Report of Transactions in Mellon Securities - Other
Associates must report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities. Purchases and sales of
Mellon securities include the following:
o DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
o Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
RESTRICTIONS ON TRANSACTIONS IN OTHER SECURITIES
Margin Transactions - Prior to establishing a margin
account, Other Associates must obtain the written
permission of the Manager of Corporate Compliance. Other
Associates having a margin account prior to the effective
date of this Policy must notify the Manager of Corporate
Compliance of the existence of such account.
<PAGE>
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance
as an interested party on each account. Associates must
ensure that the Manager of Corporate Compliance promptly
receives copies of all trade confirmations and statements
relating to the accounts directly from the broker. If
requested by a brokerage firm, please contact the Manager
of Corporate Compliance to obtain a letter (sometimes
referred to as a "407 letter") granting permission to
maintain a margin account. Trade confirmations and
statements are not required on margin accounts established
at Dreyfus Investment Services Corporation for the sole
purpose of cashless exercises of Mellon employee stock
options. In addition, products may be offered by a
broker/dealer that, because of their characteristics, are
considered margin accounts but have been determined by the
Manager of Corporate Compliance to be outside the scope of
this Policy (e.g., a Cash Management account which provides
overdraft protection for the customer). Any questions
regarding the establishment, use and reporting of margin
accounts should be directed to the Manager of Corporate
Compliance. An example of an instruction letter to a broker
is shown in Exhibit B1.
Private Placements - Other Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Manager of
Corporate Compliance and the Associate's department head.
Approval must be given by both of the aforementioned
persons for the acquisition to be considered approved.
As there could be many reasons for preclearance being
granted or denied, Other Associates should not infer from
the preclearance response anything regarding the security
for which preclearance was requested.
Although making a preclearance request does not obligate an
Other Associate to do the transaction, it should be noted
that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
o preclearance requests should not be made for a transaction
that the Other Associate does not intend to make; and
o Other Associates should not discuss with anyone else,
inside or outside Mellon, the response they received to a
preclearance request.
Every Other Associate must follow these procedures or risk
serious sanctions, including dismissal. If you have any
questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
<PAGE>
PART V - APPLICABLE TO
NONMANAGEMENT BOARD MEMBER
- ------------------------------
NONMANAGEMENT BOARD MEMBER -
You are considered to be a Nonmanagement Board Member if
you are:
o a director of Dreyfus who is not also an officer or
employee of Dreyfus ("Dreyfus Board Member"); or
o a director, trustee or managing general partner of any
investment company who is not also an officer or employee
of Dreyfus ("Mutual Fund Board Member").
The term "Independent" Mutual Fund Board Member means those
Mutual Fund Board Members who are not deemed "interested
persons" of an investment company, as defined by the
Investment Company Act of 1940, as amended.
STANDARDS OF CONDUCT FOR NONMANAGEMENT BOARD MEMBER
Outside Activities - Nonmanagement Board Members are
prohibited from:
o accepting nomination or serving as a director, trustee or
managing general partner of an investment company not
advised by Dreyfus, without the express prior approval of
the board of directors of Dreyfus and the board of
directors/trustees or managing general partners of the
pertinent Dreyfus-managed fund(s) for which a Nonmanagement
Board Member serves as a director, trustee or managing
general partner;
o accepting employment with or acting as a consultant to any
person acting as a registered investment adviser to an
investment company without the express prior approval of
the board of directors of Dreyfus;
o owning Mellon securities if the Nonmanagement Board Member
is an "Independent" Mutual Fund Board Member, (since that
would destroy his or her "independent" status); and/or
o buying or selling Mellon's publicly traded securities
during a blackout period, which begins the 16th day of the
last month of each calendar quarter and ends three business
days after Mellon publicly announces the financial results
for that quarter.
Insider Trading and Tipping - The provisions set forth in
Section Two, "Insider Trading and Tipping," are applicable
to Nonmanagement Board Members.
<PAGE>
Conflict of Interest - No Nonmanagement Board Member may
recommend a securities transaction for Mellon, Dreyfus or
any Dreyfus-managed fund without disclosing any interest he
or she has in such securities or issuer thereof (other than
an interest in publicly traded securities where the total
investment is less than or equal to $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Nonmanagement Board
Member in such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Nonmanagement Board Member
or any party in which the Nonmanagement Board Member has a
beneficial ownership interest (see "Beneficial Ownership",
Section Four, "Restrictions on Transaction in Mellon
Securities").
Portfolio Information - No Nonmanagement Board Member may
divulge the current portfolio positions, or current or
anticipated portfolio transactions, programs or studies, of
Mellon, Dreyfus or any Dreyfus-managed fund, to anyone
unless it is properly within his or her responsibilities as
a Nonmanagement Board Member to do so.
Material Nonpublic Information - No Nonmanagement Board
Member may engage in or recommend any securities
transaction, for his or her own benefit or for the benefit
of others, including Mellon, Dreyfus or any Dreyfus-managed
fund, while in possession of material nonpublic
information. No Nonmanagement Board Member may communicate
material nonpublic information to others unless it is
properly within his or her responsibilities as a
Nonmanagement Board Member to do so.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS -
Nonmanagement Board Members are permitted to engage in
personal securities transactions without obtaining prior
approval from the Preclearance Compliance Officer.
<PAGE>
PERSONAL SECURITY TRANSACTIONS REPORTS -
o "Independent" Mutual Fund Board Members - Any "Independent"
Mutual Fund Board Members, as defined above, who effects a
securities transaction where he or she knew, or in the
ordinary course of fulfilling his or her official duties
should have known, that during the 15-day period
immediately preceding or after the date of such
transaction, the same security was purchased or sold, or
was being considered for purchase or sale by Dreyfus
(including any investment company or other account managed
by Dreyfus), are required to report such personal
securities transaction. In the event a personal securities
transaction report is required, it must be submitted to the
Preclearance Compliance Officer not later than ten days
after the end of the calendar quarter in which the
transaction to which the report relates was effected. The
report must include the date of the transaction, the title
and number of shares or principal amount of the security,
the nature of the transaction (e.g., purchase, sale or any
other type of acquisition or disposition), the price at
which the transaction was effected and the name of the
broker or other entity with or through whom the transaction
was effected. This reporting requirement can be satisfied
by sending a copy of the confirmation statement regarding
such transactions to the Preclearance Compliance Officer
within the time period specified. Notwithstanding the
foregoing, personal securities transaction reports are not
required with respect to any securities transaction
described in "Exemption from the Requirement to Preclear"
in Part III.
o Dreyfus Board Members and "Interested" Mutual Fund Board
Members - Dreyfus Board Members and Mutual Fund Board
Members who are "interested persons" of an investment
company, as defined by the Investment Company Act of 1940,
are required to report their personal securities
transactions. Personal securities transaction reports are
required with respect to any securities transaction other
than those described in "Exemptions from Requirement to
Preclear" on Page 21. Personal securities transaction
reports are required to be submitted to the Preclearance
Compliance Officer not later than ten days after the end of
the calendar quarter in which the transaction to which the
report relates was effected. The report must include the
date of the transaction, the title and number of shares or
principal amount of the security, the nature of the
transaction (e.g., purchase, sale or any other type of
acquisition or disposition), the price at which the
transaction was effected and the name of the broker or
other entity with or through whom the transaction was
effected. This reporting requirement can be satisfied by
sending a copy of the confirmation statement regarding such
transactions to the Preclearance Compliance Officer within
the time period specified.
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL PERSONAL SECURITIES
TRANSACTION REPORTS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
<PAGE>
GLOSSARY
- ------------------------------
DEFINITIONS
o APPROVAL - written consent or written notice of
nonobjection.
o ASSOCIATE - any employee of Mellon Bank Corporation or its
direct or indirect subsidiaries; does not include outside
consultants or temporary help.
o BENEFICIAL OWNERSHIP - securities owned of record or held
in the associate's name are generally considered to be
beneficially owned by the associate.
Securities held in the name of any other person are deemed
to be beneficially owned by the associate if by reason of
any contract, understanding, relationship, agreement or
other arrangement, the associate obtains therefrom benefits
substantially equivalent to those of ownership, including
the power to vote, or to direct the disposition of, such
securities. Beneficial ownership includes securities held
by others for the associate's benefit (regardless of record
ownership), e.g. securities held for the associate or
members of the associate's immediate family, defined below,
by agents, custodians, brokers, trustees, executors or
other administrators; securities owned by the associate,
but which have not been transferred into the associate's
name on the books of the company; securities which the
associate has pledged; or securities owned by a corporation
that should be regarded as the associate's personal holding
corporation. As a natural person, beneficial ownership is
deemed to include securities held in the name or for the
benefit of the associate's immediate family, which includes
the associate's spouse, the associate's minor children and
stepchildren and the associate's relatives or the relatives
of the associate's spouse who are sharing the associate's
home, unless because of countervailing circumstances, the
associate does not enjoy benefits substantially equivalent
to those of ownership. Benefits substantially equivalent to
ownership include, for example, application of the income
derived from such securities to maintain a common home,
meeting expenses that such person otherwise would meet from
other sources, and the ability to exercise a controlling
influence over the purchase, sale or voting of such
securities. An associate is also deemed the beneficial
owner of securities held in the name of some other person,
even though the associate does not obtain benefits of
ownership, if the associate can vest or revest title in
himself at once, or at some future time.
In addition, a person will be deemed the beneficial owner
of a security if he has the right to acquire beneficial
ownership of such security at any time (within 60 days)
including but not limited to any right to acquire: (1)
through the exercise of any option, warrant or right; (2)
through the conversion of a security; or (3) pursuant to
the power to revoke a trust, nondiscretionary account or
similar arrangement.
<PAGE>
With respect to ownership of securities held in trust,
beneficial ownership includes ownership of securities as a
trustee in instances where either the associate as trustee
or a member of the associate's "immediate family" has a
vested interest in the income or corpus of the trust, the
ownership by the associate of a vested beneficial interest
in the trust and the ownership of securities as a settlor
of a trust in which the associate as the settlor has the
power to revoke the trust without obtaining the consent of
the beneficiaries. Certain exemptions to these trust
beneficial ownership rules exist, including an exemption
for instances where beneficial ownership is imposed solely
by reason of the associate being settlor or beneficiary of
the securities held in trust and the ownership, acquisition
and disposition of such securities by the trust is made
without the associate's prior approval as settlor or
beneficiary. "Immediate family" of an associate as trustee
means the associate's son or daughter (including any
legally adopted children) or any descendant of either, the
associate's stepson or stepdaughter, the associate's father
or mother or any ancestor of either, the associate's
stepfather or stepmother and his spouse.
To the extent that stockholders of a company use it as a
personal trading or investment medium and the company has
no other substantial business, stockholders are regarded as
beneficial owners, to the extent of their respective
interests, of the stock thus invested or traded in. A
general partner in a partnership is considered to have
indirect beneficial ownership in the securities held by the
partnership to the extent of his pro rata interest in the
partnership. Indirect beneficial ownership is not, however,
considered to exist solely by reason of an indirect
interest in portfolio securities held by any holding
company registered under the Public Utility Holding Company
Act of 1935, a pension or retirement plan holding
securities of an issuer whose employees generally are
beneficiaries of the plan and a business trust with over 25
beneficiaries.
Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or any
other contract, arrangement or device with the purpose or
effect of divesting such person of beneficial ownership as
part of a plan or scheme to evade the reporting
requirements of the Securities Exchange Act of 1934 shall
be deemed the beneficial owner of such security.
The final determination of beneficial ownership is a
question to be determined in light of the facts of a
particular case. Thus, while the associate may include
security holdings of other members of his family, the
associate may nonetheless disclaim beneficial ownership of
such securities.
o "CHINESE WALL" POLICY - procedures designed to restrict the
flow of information within Mellon from units or individuals
who are likely to receive material nonpublic information to
units or individuals who trade in securities or provide
investment advice. (see pages 12-14).
o CORPORATION - Mellon Bank Corporation.
o DREYFUS - The Dreyfus Corporation and its subsidiaries.
o DREYFUS ASSOCIATE - any employee of Dreyfus; does not
include outside consultants or temporary help.
<PAGE>
o EXEMPT SECURITIES - Exempt Securities are defined as:
- securities issued or guaranteed by the United States
government or agencies or instrumentalities;
- bankers' acceptances;
- bank certificates of deposit and time deposits;
- commercial paper;
- repurchase agreements; and
- securities issued by open-end investment companies.
o GENERAL COUNSEL - General Counsel of Mellon Bank
Corporation or any person to whom relevant authority is
delegated by the General Counsel.
o INDEX FUND - an investment company which seeks to mirror
the performance of the general market by investing in the
same stocks (and in the same proportion) as a broad-based
market index.
o INITIAL PUBLIC OFFERING (IPO) - the first offering of a
company's securities to the public.
o INVESTMENT COMPANY - a company that issues securities that
represent an undivided interest in the net assets held by
the company. Mutual funds are investment companies that
issue and sell redeemable securities representing an
undivided interest in the net assets of the company.
o MANAGER OF CORPORATE COMPLIANCE - - the associate within
the Risk Management and Compliance Department of Mellon
Bank Corporation who is responsible for administering the
Confidential Information and Securities Trading Policy, or
any person to whom relevant authority is delegated by the
Manager of Corporate Compliance.
o MELLON - Mellon Bank Corporation and all of its direct and
indirect subsidiaries.
o NAKED OPTION - an option sold by the investor which
obligates him or her to sell a security which he or she
does not own.
o NONDISCRETIONARY TRADING ACCOUNT - an account over which
the associated person has no direct or indirect control
over the investment decision-making process.
o OPTION - a security which gives the investor the right but
not the obligation to buy or sell a specific security at a
specified price within a specified time.
o PRECLEARANCE COMPLIANCE OFFICER - a person designated by
the Manager of Corporate Compliance, to administer, among
other things, associates' preclearance request for a
specific business unit.
o PRIVATE PLACEMENT - an offering of securities that is
exempt from registration under the Securities Act of 1933
because it does not constitute a public offering.
o SENIOR MANAGEMENT COMMITTEE - the Senior Management
Committee of Mellon Bank Corporation.
o SHORT SALE - the sale of a security that is not owned by
the seller at the time of the trade.
<PAGE>
INDEX OF EXHIBITS
- ------------------------------
EXHIBIT A SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
EXHIBIT B SAMPLE INSTRUCTION LETTER TO BROKER
EXHIBIT C PRECLEARANCE REQUEST FORM
EXHIBIT D PERSONAL SECURITIES HOLDINGS FORM
<PAGE>
EXHIBIT A
- ------------------------------
SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
- --------------------------------------------------------------------------------
MELLON INTEROFFICE
MEMORANDUM
Date: From: Associate
To: Manager, Corporate Compliance Dept:
Aim #:
Aim #: 151-4342 Phone:
Fax:
- --------------------------------------------------------------------------------
RE: REPORT OF SECURITIES TRADE
Type of Associate: ____________ Insider Risk
____________ Investment
____________ Other
Type of Security: ____________ Mellon Bank Corporation
____________ Mellon Bank Corporation - optional
cash purchases under Dividend
Reinvestment and Common Stock
Purchase Plan
____________ Mellon Bank Corporation - exercise
of an employee stock option
Attached is a copy of the confirmation slip for a securities trade I
engaged in on _____________________, 19xx.
or
On _____________________, 19xx, I (purchased/sold)__________________
shares of ___________________________ through (broker). I will
arrange to have a copy of the confirmation slip for this trade
delivered to you as soon as possible.
<PAGE>
EXHIBIT B1
- ------------------------------
FOR NON-DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm
noted above, please be advised that the Risk Management and
Compliance Department of Mellon Bank should be noted as an
"Interested Party" with respect to my accounts. They should,
therefore, be sent copies of all trade confirmations and account
statements relating to my account.
Please send the requested documentation ensuring the account
holder's name appears on all correspondence to:
Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Manager, Corporate Compliance (151-4342)
<PAGE>
EXHIBIT B2
- ------------------------------
FOR DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm
noted above, please be advised that the Risk Management and
Compliance Department of Dreyfus Corporation should be noted as an
"Interested Party" with respect to my accounts. They should,
therefore, be sent copies of all trade confirmations and account
statements relating to my account.
Please send the requested documentation ensuring the account
holder's name appears on all correspondence to:
Compliance Officer at The Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Dreyfus Compliance
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EXHIBIT C1
- ------------------------------
PRECLEARANCE REQUEST FORM Non Dreyfus Associates
====================================================================================================
To: Manager, Corporate Compliance 151-4342 (All Insider and Other Associates)
Designated Preclearance Compliance Officer (All Investment Associates excluding Dreyfus)
- ----------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
- ----------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
ACCOUNT INFORMATION
- ----------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
- ----------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
- ----------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
====================================================================================================
TRANSACTION DETAIL
- ----------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: No. of Shares:
- ----------------------------------------------------------------------------------------------------
If sale, date acquired: Margin Transaction: Initial Public Offering: Private Placement:
/ / Yes / / Yes / / Yes
- ----------------------------------------------------------------------------------------------------
====================================================================================================
DISCLOSURE STATEMENT
- ----------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is
(1) attempting to benefit personally from any existing business relationship between the issuer and
Mellon or any Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive
trading activity; (3) in possession of any material non-public information concerning the security
to which is request relates.
- ----------------------------------------------------------------------------------------------------
Associate Signature: Date:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
COMPLIANCE OFFICER USE ONLY
- ----------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
- ----------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on __________________, 19__.
If you decide not to effect the trade, please notify me.
- ----------------------------------------------------------------------------------------------------
Date: By:
- ----------------------------------------------------------------------------------------------------
<PAGE>
EXHIBIT C2
- ------------------------------
PRECLEARANCE REQUEST FORM Dreyfus Associates Only
====================================================================================================
To: Dreyfus Compliance Officer
- ----------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
- ----------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
ACCOUNT INFORMATION
- ----------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
- ----------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
- ----------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
====================================================================================================
TRANSACTION DETAIL
- ----------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: Symbol:
- ----------------------------------------------------------------------------------------------------
Amount: Current Market Price: If sale, date acquired: Margin Transaction:
- ----------------------------------------------------------------------------------------------------
Is this a New Issue? Is this a Private Placement?
/ / Yes / / No / / Yes / / No
- ----------------------------------------------------------------------------------------------------
Reason for Transaction, identify source:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
DISCLOSURE STATEMENT
- ----------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is
(1) attempting to benefit personally from any existing business relationship between the issuer and
Mellon or any Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive
trading activity; (3) in possession of any material non-public information concerning the security
to which is request relates.
- ----------------------------------------------------------------------------------------------------
Associate Signature: Date:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
COMPLIANCE OFFICER USE ONLY
- ----------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
- ----------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on __________________, 19__.
If you decide not to effect the trade, please notify me.
- ----------------------------------------------------------------------------------------------------
Date: By:
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT D1
- ------------------------------
Return to: Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
STATEMENT OF SECURITY HOLDINGS
As of
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you
or your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a
beneficial ownership - (see Glossary in Policy). If none, write NONE.
Securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities, bankers' acceptances, bank certificates of deposit and
time deposits, commercial paper, repurchase agreements and shares of
registered investment companies need not be listed. IF YOUR LIST IS
EXTENSIVE, PLEASE ATTACH A COPY OF THE MOST RECENT STATEMENT FROM YOUR
BROKER(S), RATHER THAN LIST THEM ON THIS FORM.
-----------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your
registered representative (if applicable), the account registration and
the relevant account numbers. If none, write NONE.
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
-----------------------------------------------------------------------------
Date: Printed Name:
-----------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------------
<PAGE>
EXHIBIT D2
- ------------------------------
Return to: Compliance Officer at the Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
STATEMENT OF SECURITY HOLDINGS
As of
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you
or your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a
beneficial interest. If none, write NONE. Securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities, bankers'
acceptances, bank certificates of deposit and time deposits, commercial
paper, repurchase agreements and shares of registered investment
companies need not be listed. IF YOUR LIST IS EXTENSIVE, PLEASE ATTACH A
COPY OF THE MOST RECENT STATEMENT FROM YOUR BROKER(S), RATHER THAN LIST
THEM ON THIS FORM.
-----------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your
registered representative (if applicable), the account registration and
the relevant account numbers. If none, write NONE.
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
-----------------------------------------------------------------------------
Date: Printed Name:
-----------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------------
CODE OF ETHICS
FAYEZ SAROFIM & CO. AND AFFILIATES
REVISED AS OF MARCH 1, 2000
<PAGE>
CODE OF ETHICS
I. INTRODUCTION
This Code of Ethics (this "Code") applies to FS & Co.1 and each other Group
Member, and, among other things, this Code is intended to, and shall always be
construed in a manner necessary to, satisfy the requirements of (i) Rule 17j-1
under the Investment Company Act2 and (ii) Rule 204-2 under the Investment
Advisers Act.3 This Code applies to every Employee4. An Employee who is also an
Access Person is subject to certain provisions in this Code which are not
applicable to Employees who are not Access Persons. This Code extends to all
activities of an Employee, including such Employee's duties as an Employee and
her or his duties in connection with any Fund for which a Group Investment
Adviser acts as investment adviser or sub-investment adviser. Among other
things, this Code governs conflicts of interest in personal securities
transactions, including those that typically arise when a person associated with
a Group Member or a Fund invests in securities that are held or are to be
acquired by a Fund or a Managed Account.
Each Employee must read, acknowledge receipt and understanding of, and
retain a copy of this Code. Any questions regarding this Code should be referred
to the Compliance Officer.
II. DEFINITIONS
Access Person: means a Director, an officer and any Employee of a Group
member (i) who, in connection with her or his regular functions or duties,
makes, participates in or obtains information with respect to (a) the purchase
or sale of securities for Managed Accounts, a Fund or a Group Member or (b) the
recommendations of such purchases or sales, or (ii) whose functions relate to
the making of any recommendations with respect to such purchases or sales. At
all times, the Compliance Officer shall maintain a then current list of Access
Persons.
Compliance Assistant or Assistants: means, to the extent not otherwise
determined by the Board of Directors of FS & Co., (i) either or both of Robert
M. Hopson II and William D. Hanna and (ii) such other individuals designated as
such by the Board of Directors of FS & Co. A Compliance Assistant shall have the
authority to act on behalf of the Compliance Committee in connection with the
gathering of information necessary for the Compliance Committee to act in the
manner intended by this Code.
Compliance Officer: means Mrs. Raye G. White, or her successor in the
office of Executive Vice President of FS & Co. If at the time of required action
by the Compliance Officer, Mrs. White, or her successor is absent, a reference
to the Compliance Officer in this Code shall mean another member of the
Compliance Committee.
Compliance Committee: means Individuals designated as such by the Board of
Directors of FS & Co., such individuals being Mrs. Raye G. White, Russell
Hawkins, and Charles Sheedy as of March 1, 2000.
Covered Security: means a Security other than (i) direct obligations of the
United States government, (ii) bankers' acceptances, bank certificates of
deposits, commercial paper and high quality short-term debt instruments,
including repurchase agreements and (iii) shares issued by open-end investment
companies registered under the Investment Company Act.
Employee: means an individual employed by a Group Member.
Exempt Issuer: means an issuer of securities which is not required to file
reports with the SEC.
FS & Co.: means Fayez Sarofim & Co., a Texas corporation.
Fund: means an "investment company" within the meaning of the Investment
Company Act.
Group: means the chain of corporations connected through stock ownership
with Sarofim Group, with (i) Sarofim Group owning directly "control stock" in
one of the other corporations, and (ii) one or more of the other corporations
owning directly "control stock" in each of the other corporations. For purposes
of this definition, "control stock" means stock of any corporation which
possesses at least 80 percent of the total voting power and which has a value
equal to at least 80 percent of the stock of such corporation.
Group Investment Adviser: means a Group Member registered as an investment
adviser in accordance with the Investment Advisers Act.
Group Member: means a corporate member of the Group or any partnership or
similar business arrangement of which a Group Member is a general partner or
holds a similar position.
Insider Trading: means trading in Securities while in possession of Non-Public
Material Information.
Investment Company Act: means the Investment Company Act of 1940, as
amended.
Investment Advisers Act: means the Investment Advisers Act of 1940, as
amended.
IPO: means an offering registered with the SEC, the issuer of which,
immediately before the registration was an Exempt Issuer.
Limited Offering: means a private placement offering which is exempt from
registration with the SEC, as well as an offering that is not public under
federal securities laws.
Limited Offering Venture: means the entity or other business arrangement
which makes a Limited Offering.
Managed Account: means an account for which a Group Investment Adviser acts
as the investment adviser.
NASD: means the National Association of Securities Dealers.
Non-Public Material Information: means information which is both
"non-public information" and "material information."
"Non-public information" is information which has not been
effectively communicated to the marketplace. In order for information
to be other than "non-public", one must be able to point to some fact
to establish that the information is generally public. For example,
information appearing in the Dow Jones news wire service, Reuters
Economic Services, The Wall Street Journal or other publications of
general circulation would be considered information which has been
effectively communicated to the marketplace.
"Material information" is information for which there is a
substantial likelihood that a reasonable investor would consider it
important in making her or his investment decisions, or information that
is reasonably certain to have any effect on the price of an issuer's
Securities. Information that should be considered material includes,
without limitation, (i) dividend changes, (ii) earnings estimates, (iii)
changes in previously released earnings estimates, (iv) significant
expansion or curtailment of operations, (v) a significant increase or
decline in orders, (vi) significant new products or discoveries, (vii)
extraordinary borrowing, (viii) purchase or sale of substantial assets,
(ix) significant merger or acquisition proposals or agreements, (x) major
litigation, (xi) liquidity problems, and (xii) extraordinary management
developments. Material information does not have to relate to an issuer's
business. For example, information about the contents of a forthcoming
newspaper or magazine article that is expected to affect the price of a
Security should be considered material. Similarly, information concerning
significant transactions which a Group Investment Adviser intends to
execute on behalf of a Fund or a Managed Account could be material
information and is prohibited from being communicated.
Publicly-Traded Security: means a Security the issuer of which is subject
to registration with the SEC.
Sarofim Group: means The Sarofim Group, Inc., a Texas corporation.
SEC: means the United States Securities and Exchange Commission.
Security or Securities: has the meaning as set forth in Section 2(a)(36) of
the Investment Company Act, the text of which is also set forth in Appendix A.
III. PROHIBITED CONDUCT
As a general matter, an Employee is prohibited from engaging in, or
recommending, any Securities transaction which places, or appears to place, her
or his own interests above that of any Fund, Managed Account, Group Member or
affiliate of a Group Member5 or any other fraudulent, deceptive or manipulative
acts.6 Specifically, an Employee shall not do any of the following in connection
with the purchase or sale, directly or indirectly, by such Employee of a
Security held or to be acquired by any Fund, Managed Account, Group member or
affiliate of a Group Member:
(i) Employ any device, scheme or artifice to defraud a Fund, Managed Account,
Group Member or affiliate of a Group Member;
(ii) Make any untrue statement of a material fact to a Fund, Managed Account,
Group Member or affiliate of a Group Member, in light of the circumstances
under which they are made, not misleading;
(iii) Engage in any act, practice or course of business that operates or would
operate as a fraud or deceit on a Fund, Managed Account, Group Member or
affiliate of a Group Member; or
(iv) Engage in any manipulative practice with respect to a Fund, Managed
Account, Group Member or affiliate of a Group Member.
DISCLOSURE OF INTERESTS
An Employee is prohibited from recommending Securities transactions to be
entered into by any Fund, Managed Account, Group Member or affiliate of a Group
Member without disclosing her or his interest or potential interest, if any, in
such Securities or the issuer of such Securities, including, without limitation:
(i) any direct or indirect beneficial ownership7 of any Securities of
such issuer, or its affiliates;
(ii) any contemplated transaction by such Employee in such Securities;
and
(iii) any present or proposed business relationship between such issuer
(or its affiliates) and such Employee or any party in which such
Employee has a significant interest.
DISCLOSURE OF INFORMATION
An Employee is prohibited from divulging the current portfolio positions,
and current and anticipated portfolio transactions, programs and studies of a
Group Investment Adviser, any Fund, any Managed Account, any Group Member or any
affiliate of any Group Member to anyone unless such divulgence is properly
within her or his duties.
DISCLOSURES WITH RESPECT TO LIMITED OFFERINGS
At least annually, each Employee will be required to disclose to the
Compliance officer a list of all Limited Offering Ventures in which such
Employee is a direct or indirect investor.8
Each Employee will be required from time to time to provide written
assurance to the Compliance Officer that any Limited Offering Venture in which
such Employee is an investor, directly or indirectly, does not hold any
Publicly-Traded Securities. If the Employee is unable to provide such assurance
due to any such holding of a Publicly-Traded Security, the Employee must notify
the Compliance Officer in writing of all Publicly-Traded Securities so held and
must continue to provide such information on an annual basis after such time.
Such Employee must notify the Compliance Officer of any Security held by the
Limited Offering Venture which is to become a Publicly-Traded Security prior to
the time such Security becomes a Publicly-Traded Security.
INSIDER TRADING
An Employee is prohibited from engaging in any Securities transaction, for
her or his own benefit, or the benefit of others, including any Fund, any
Managed Account, any Group Member or any affiliate of a Group Member, while in
possession of Non-Public Material Information concerning such Securities. An
Employee is prohibited from communicating, directly or indirectly, Non-Public
Material Information concerning any Security to others unless such communication
is properly within her or his duties as an Employee.
Penalties for communicating Non-Public Material Information, or trading
based on such information, are severe, both for the individuals involved in such
unlawful conduct and their employers. A person can be subject to some or all of
the penalties below even if she or he does not personally benefit from the
violation. Penalties include:
* CIVIL INJUNCTIONS;
* TREBLE DAMAGES;
* DISGORGEMENT OF PROFITS;
* JAIL SENTENCES of up to 10 years;
* FINES for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person
actually benefitted; and
* FINES for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
In addition, any violation of this Code can be expected to result in
serious sanctions by the Group, including dismissal of the person involved by a
Group Member.
IV. PROCEDURES FOR CLEARANCE OF PERSONAL
SECURITIES TRANSACTIONS
The following procedures have been established to aid Employees in
avoiding conflicts of interest and Insider Trading, and to aid the Group,
especially the Group Investment Advisers, in preventing, detecting and imposing
sanctions against such conduct. Every Employee must follow these procedures or
risk serious sanctions, including dismissal, substantial personal liability and
criminal penalties. If you have any questions about these procedures you should
consult the Compliance Officer. Interpretive issues that arise under these
procedures shall be decided by, and are subject to the discretion of, the
Compliance Officer.
No Employee may engage in any transaction involving, directly or
indirectly, a Security without obtaining prior approval from the Compliance
Officer.9 All requests for prior approval of transactions in Securities shall be
submitted to the Compliance Officer by completing a Request For Approval of
Orders For Personal Accounts Within Fayez Sarofim & Co., which shall be
substantially the same as that form attached to this Code as Appendix B, and
such other documents and information as the Compliance Officer, another member
of the Compliance Committee or a Compliance Assistant deems appropriate or
necessary.
Certain transactions in Securities often involve complex issues of
potential conflicts of interest or personal advantage. Examples of these
transactions are IPO's, "hot issue" public offerings and Limited Offerings
involving direct or indirect investments in Publicly-Traded Securities.
Transactions involving IPOs are also subject to various SEC and NASD rules and
regulations, including restrictions on the purchase of so-called "hot issues" by
persons associated with a registered investment adviser. Thus, an Employee
should be aware that the following transactions in Securities will not be
approved by the Compliance Officer unless there are extraordinary circumstances
justifying such approval:
(i) the purchase of Securities in any "hot issue" public offering;
(ii) the purchase of Securities in any IPO;
(iii) the purchase of Securities in a Limited Offering; and
(iv) transactions in Securities during "blackout periods" under
federal securities laws.
As used in this Code, the term "engaging in any transaction involving,
directly or indirectly, a Security" means purchasing or selling, directly or
indirectly, any Security in which the Employee has, or by reason of such
transaction would acquire, any direct or indirect beneficial ownership. Unless
the Compliance Officer otherwise determines in writing, this term applies to (i)
the Employee, (ii) any member of the Employee's immediate family (including such
person's (w) spouse, (x) minor children, (y) stepchildren and (z) relatives of
the Employee or the Employee's spouse who are sharing the Employee's household),
(iii) any other member of the Employee's immediate household, (iv) any trust or
estate of which the Employee or spouse is a trustee (or other fiduciary) or a
beneficiary or of which the Employee's minor child is a beneficiary, and (v) any
person for whom the Employee directs or effects transactions under a power of
attorney or otherwise, provided, however, that accounts in which the Employee or
members of the Employee's family have an economic interest, but do not
participate in investment decisions, such decisions being made exclusively by
independent parties, are not covered.
The Compliance Officer shall promptly notify the Employee whether the
request for approval of engaging in a personal Securities transaction is
approved or denied, and the Compliance Officer shall record such action and
retain such record for such periods as are required by applicable federal
securities laws. It is expected that all orders implementing a personal
Securities transaction will be promptly entered after notification of approval.
In any event, clearance to enter an order shall be effective for only one hour
after approval is given.
Ordinarily, the Compliance Officer will approve a proposed purchase or
sale whenever:
(i) no Fund, Managed Account, Group Member or affiliate of a Group
Member is purchasing or selling, or considering for purchase or
sale, such Security;
(ii) the Employee represents that she or he does not possess Non-Public
Material Information concerning the Security proposed to be
purchased or sold;
(iii) the Employee represents that she or he has disclosed all
personal interests as required by this Code; and
(iv) it does not otherwise appear to the Compliance Officer based upon
the facts available at the time the request for approval is made,
that the transaction in question (a) would amount to Insider
Trading, (b) would involve a "hot issue", (c) would involve an IPO,
(d) would involve a Limited Offering, or (e) would result in, or
give the appearance of, a conflict of interest between the Employee
and a Fund, Managed Account, Group Member or affiliate of a Group
Member.
V. ADDITIONAL REPORTING OF PERSONAL
SECURITIES TRANSACTIONS
Each Employee must cooperate with the Compliance Assistants in the
collection, retention and maintenance of all reports required by this Code.
CONFIRMATIONS AND STATEMENTS FROM ALL EMPLOYEES
All Employees engaging in personal Securities transactions must provide
the Compliance Officer with timely duplicate confirmations of such transactions.
In this regard, all Employees shall take such steps as are required by the
Compliance Officer to ensure that the Compliance Officer receives in a timely
manner (i) duplicate copies of confirmations of Securities transactions and (ii)
monthly or quarterly statements.
The Compliance Officer shall send a letter (which shall be signed by the
Employee), which shall be substantially the same as the form annexed hereto as
Appendix C, to the broker-dealer or other entity responsible for preparation of
such confirmations and statements in order to ensure receipt by the appropriate
Group Member of duplicate confirmations and monthly statements. All information
relating to personal Securities transactions received by the Compliance Officer,
including information from confirmations and statements, shall be treated and
maintained as "Personal and Confidential", but will be available for inspection
by other members of the Compliance Committee, the Compliance Assistants, the
Board of Directors of a Group Member, and individuals authorized to inspect by
relevant laws.
REPORTS BY EMPLOYEES
The following reports are required to be submitted by Employees; provided,
however, such reports are not required with respect to transactions effected
for, and Securities held in, any account over which the Employee has no direct
or indirect control.10 Under applicable federal laws, a Group Member may report
to the directors of a Fund from time to time some or all of the information
provided by Employees pursuant to the requirements of this Code.
INITIAL HOLDINGS REPORT
No later than ten days after an individual becomes an Employee, such
individual must submit to the Compliance Officer an Initial Holdings Report
containing the following information:
(i) The title, number of shares and principal amount of each Covered
Security in which such she or he had any direct or indirect
beneficial ownership when such individual became an Employee;
(ii) the name of any broker, dealer or bank with whom or which such
Employee maintained an account in which any Securities were held for
such Employee's direct or indirect benefit as of the date she or he
became an Employee; and
(iii) the date that such Initial Holdings Report is submitted by such
Employee.
The Initial Holdings Report shall be substantially the same as that contained in
Appendix D to this Code. If, after submitting the Initial Holdings Report and
before submission of the Annual Holdings Report (see below), an Employee opens a
brokerage account, such Employee is required to send written notification of
such fact to the Compliance Officer disclosing the name and address of the
broker and the account number of the account. Such notification must be
submitted prior to engaging in any Securities transactions through such account.
ANNUAL HOLDINGS REPORTS
On or before January 29 of each calendar year, an Employee shall submit to
the Compliance Officer an Annual Holdings Report containing the following
information which must be current as of a date no more than 30 days before the
Annual Holdings Report is submitted:
(i) The title, number of shares and principal amount of each Covered
Security in which such Employee had any direct or indirect
beneficial ownership;
(ii) the name of any broker, dealer or bank with whom or which such
Employee maintained an account in which any Securities are held for
the such Employee's direct or indirect benefit;
(iii) the name, address and person to contact of each Limited Offering
Venture in which such Employee is a direct or indirect investor; and
<PAGE>
(iv) the date that such Annual Holdings Report is submitted by such
Employee.
The Annual Holdings Report shall be substantially the same as that contained in
Appendix E to this Code.
REPORTS BY EMPLOYEES WHO ARE ALSO ACCESS PERSONS
QUARTERLY TRANSACTION REPORTS
No later than ten days after the end of a calendar quarter, an Employee
who is an Access Person must submit to the Compliance Officer a Quarterly
Transaction Report containing the following information:
(i) With respect to any Covered Security transaction during the quarter
in which the Access Person had any direct or indirect beneficial
ownership:
(a) The date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the
principal amount of each Covered Security involved;
(b) the nature of the transaction (i.e., purchase, sale, or
any other type of acquisition or disposition);
(c) the Covered Security price at which the transaction was
effected;
(d) the name of the broker, dealer or bank with or through
which the transaction was effected; and
(e) the date that the report is submitted.
(ii) With respect to any account established by the Access Person in
which any Securities were held during the quarter for the direct or
indirect benefit of the Access Person:
(a) The name of the broker, dealer or bank with whom or
which such Access Person established the account;
(b) the date the account was established; and
(c) the date that the report is submitted by such Access
Person.
The Quarterly Transaction Report shall be substantially the same as that
contained in Appendix F to this Code.
The Quarterly Transaction Report will not be required if the Compliance
officer causes a report to be prepared for an Access Person for a calendar
quarter and (i) such alternate Quarterly Transaction Report is confirmed in
writing, dated and returned by such Access Person to the Compliance Officer
within 10 days after the end of the calendar quarter to which such alternate
Quarterly Transaction Report relates, and (ii) such confirmation by such Access
Person specifically confirms that all of the information required to be included
in a Quarterly Transaction Report is set forth in such alternate Quarterly
Transaction Report.
EMPLOYEE QUESTIONNAIRE
Each Employee shall complete a questionnaire substantially in the form of
Appendix G at such times as requested by the Compliance Officer.
VI. GUIDELINES TO CONSIDER BEFORE INVESTING
Before seeking approval for engaging in any personal Securities
transaction, an Employee should consider at least the answers to the following
questions:
(i) Is the Security involved also a Security being purchased or sold or
subject to a program for purchase or sale by a Fund or Managed
Account?
(ii) Is the Security being considered for purchase or sale by a Fund or
other Managed Account? (A Security is being considered for purchase or
sale whenever a recommendation to purchase or sell such Security has
been made to an investment officer of a Fund, or a Principal of the
Group for a Managed Account, and such person has not affirmatively
rejected such recommendation).
With respect to Securities about which an Employee may have Non-Public
Material Information, the Employee should consider at least the answers to the
following questions before trading for herself or himself or others, including
Funds or Managed Accounts:
(i) Is the information "material information"? Is this information that
an investor would consider important in making her or his investment
decision? Is this information that would substantially affect the
market price of the securities if generally disclosed?
(ii) Is the information "non-public"? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in the Dow Jones news wire service,
Reuters Economic Services, The Wall Street Journal or other
publications of general circulation?
If, after consideration of the items set forth above, there is any
unresolved question as to the applicability or interpretation of the foregoing
procedures or as to the propriety of trading on such information, an Employee
should contact the Compliance Officer before trading or communicating the
information to anyone.
VII. RESTRICTING ACCESS TO MATERIAL NON-PUBLIC INFORMATION
Information in an Employee's possession that the Employee or others have
identified as Non-Public Material Information may not be communicated to anyone,
including persons within the Group, except the Compliance Officer, another
member of the Compliance Committee or a Compliance Assistant. In addition, care
should be taken so that such Non-Public Material Information is secure. For
example, files containing Non-Public Material Information should be sealed and
access to computer files containing Non-Public Material Information should be
restricted.
APPENDIXES:
Appendix A - "What Constitutes A Security?" and "What Is Beneficial Ownership?"
Appendix B - Request For Approval of Orders For Personal Accounts
Appendix C - Letter to Broker/Dealer
Appendix D - Initial Holdings Report
Appendix E - Annual Holdings Report
Appendix F - Access Person Quarterly Transaction Report
Appendix G - Employee Questionnaire
- --------
1Capitalized terms used in this Code shall have the meanings ascribed to
them in the Definitions section below to the extent their meanings are not
otherwise ascribed to them elsewhere in this Code.
2As amended effective as of October 29, 1999.
3As amended effective as of October 29, 1999.
4In addition to being subject to this Code, all Employees are subject to
the "Code of Business Conduct of Fayez Sarofim & Co. and Affiliates."
5Thus, the placing of one's own interests above that of any Fund, Managed
Account, Group Member or affiliate of a Group Member might result from short
term trades in a Publicly-Traded Security prior to its acquisition for a Fund,
Managed Account, Group Member or affiliate of a Group Member based on the
knowledge that such Publicly-Traded Security is going to be acquired, or is
likely to be acquired, for a Fund, Managed Account, Group Member or affiliate of
a Group Member.
6Penalties for violations of those federal securities laws pertaining to
conflict of interest matters may include fines of up to $10,000, as well as jail
sentences of up to five years.
7The term "beneficial ownership" is explained in Appendix A.
8The first such disclosure under this March 1, 2000 revision of the Code
shall be made during the first half of the 2000 calendar year.
9No one may approve her or his own transactions, but must obtain prior
approval of her or his transactions from one of the approval sources.
10In order for an Employee to be able to claim that she or he has no
direct or indirect control over an account, such Employee must receive the
Compliance Officer's written agreement to that effect.
APPENDIX A
----------
WHAT CONSTITUTES A "SECURITY"?
- ------------------------------
The Investment Advisers Act defines a "security" as any note, stock,
treasury stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit for a
security, fractional undivided interest in oil, gas, or other mineral rights,
any put, call, straddle, option, or privilege on any security (including a
certificate of deposit) or on any group or index of securities (including any
interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
foreign currency, or, in general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guaranty of, or warrant or right to
subscribe to or purchase, any of the foregoing.
WHAT CONSTITUTES "BENEFICIAL OWNERSHIP"?
- ----------------------------------------
Securities owned of record or held in your name are generally considered
to be beneficially owned by you.
Securities held in the name of any other person are deemed to be
beneficially owned by you if by reason of any contract, understanding,
relationship, agreement or other arrangement, you obtain from such arrangements
benefits substantially equivalent to those of ownership, including the power to
vote, or to direct the disposition of, such securities. Beneficial ownership
includes securities held by others for your benefit (regardless of record
ownership); for example, without limitation, beneficial ownership would include:
(i) securities held for you or members of your immediate family (defined below
for purposes of this paragraph), by agents, custodians, brokers, trustees,
executors or other administrators; (ii) securities owned by you, but which have
not been transferred into your name on the books of the issuer; (iii) securities
which you have pledged; and (iv) securities owned by a corporation that should
be regarded as your personal holding corporation. As a natural person,
beneficial ownership is deemed to include securities held in the name of, or for
the benefit of, your immediate family, unless because of special and
countervailing circumstances, you do not enjoy benefits substantially equivalent
to those of ownership. Benefits substantially equivalent to ownership include,
for example, application of the income derived from such securities to maintain
a common home, to meet expenses which such person otherwise would meet from
other sources, and the ability to exercise a controlling influence over the
purchase, sale or voting of such securities. You are also deemed the beneficial
owner of securities held in the name of some other person, even though you do
not obtain benefits of ownership, if you can vest or revest title in yourself at
once, or at some future time. For purposes of this paragraph, "immediate family"
means your spouse, your minor children and stepchildren and your relatives, or
relatives of your spouse, who are sharing your home or who are directors or
officers of the issuer of the security or a subsidiary.
In addition, the SEC has promulgated certain rules which provide that a
person shall be deemed the beneficial owner of a security if she or he has the
right to acquire beneficial ownership of such security at any time (within 60
days) including, but not limited to, any right to acquire: (i) through the
exercise of any option, warrant or right; (ii) through the conversion of a
security; or (iii) pursuant to the power to revoke a trust, discretionary
account, or similar arrangement.
With respect to ownership of securities held in trust, beneficial
ownership includes (i) the ownership of securities as a trustee in instances
where either you as trustee or a member of your "immediate family" (defined
below for purposes of this paragraph) has a vested interest in the income or
corpus of the trust, (ii) the ownership by you of a vested beneficial interest
in the trust and (iii) the ownership of securities as a settlor of a trust in
which you as the settlor have the power to revoke the trust without obtaining
the consent of the beneficiaries. Certain exceptions to these trust beneficial
ownership rules exist, including an exception for instances where beneficial
ownership is imposed solely by reason of your being settlor or beneficiary of
the securities held in trust and the ownership, acquisition and disposition of
such securities by the trust is made without your prior approval as settlor or
beneficiary. For purposes of this paragraph, your "immediate family" means (i)
your son or daughter (including your legally adopted child) or any descendant of
either, (ii) your stepson or stepdaughter, (iii) your father or mother or any
ancestor of either, (iv) your stepfather or stepmother and (v) your spouse.
The SEC has promulgated rules with respect to indirect beneficial
ownership. To the extent that stockholders of a company use it as a personal
trading or investment medium and the company has no other substantial business,
stockholders are regarded as beneficial owners, to the extent of their
respective interests, of the stock thus traded or invested. A general partner in
a partnership is considered to have indirect beneficial ownership in the
securities held by the partnership to the extent of her or his pro rata interest
in the partnership. Indirect beneficial ownership is not, however, considered to
exist solely by reason of any indirect interest in portfolio securities held by
any holding company registered under the Public Utility Holding Company Act of
1935, any Investment Company, a pension or retirement plan holding securities of
an issuer whose employees generally are beneficiaries of the plan and a business
trust with over 25 beneficiaries.
Any person who, directly or indirectly, creates or uses a trust, proxy,
power of attorney, pooling arrangement or any other contract, arrangement, or
device with the purpose or effect of divesting such person of beneficial
ownership as part of a plan or scheme to evade the reporting requirements of the
Securities Exchange Act of 1934 shall be deemed the beneficial owner of such
security.
The final determination of beneficial ownership is a question to be
determined in light of the facts of a particular case. Thus, it may be possible
to establish the lack of beneficial ownership of securities held by others.
APPENDIX B
----------
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
REQUEST FOR APPROVAL OF ORDERS FOR
PERSONAL ACCOUNTS WITHIN FAYEZ SAROFIM & CO.
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ACCOUNT NAME:_______________ BROKERAGE FIRM:___________________ APPROVED BY:__________________
PORTFOLIO NUMBER:_______________ REG. REPRESENTATIVE:___________________ APPROVAL DATE:__________________
BROKER ACCOUNT PHONE NUMBER:___________________ APPROVAL TIME:__________________
NUMBER:______________________________
- -------------------------------------------------------------------------------------------------------------------------
SELL
POSITION TRADE TIME PRICE WHEN EXECUTION
ELIMINATED SHARES TICKER SECURITY DENIED ORDER PLACED ORDER PLACED PRICE
o --------- --------- --------- --------- --------- --------- ---------
o --------- --------- --------- --------- --------- --------- ---------
o --------- --------- --------- --------- --------- --------- ---------
BUY
TRADE TIME PRICE WHEN EXECUTION
NEW POSITION SHARES TICKER SECURITY DENIED ORDER PLACED ORDER PLACED PRICE
o --------- --------- --------- --------- --------- --------- ---------
o --------- --------- --------- --------- --------- --------- ---------
o --------- --------- --------- --------- --------- --------- ---------
TRADING DEPT: TIME THAT ORDER WAS RECEIVED: ______ TIME THAT ORDER WAS
CONFIRMED: ______
PLEASE NOTE: All trades must be approved by the Compliance Officer or a Director
of Research prior to execution. If a Security transaction is denied, a new
request form must be submitted and approved before any trade is permissible.
Personal trades are to be handled by Trading unless other arrangements are made
with the Compliance Officer. If the trade is not executed within one hour of
approval, it must be approved again.
I have disclosed all interests or potential interests with respect to
these Securities transactions which are required to be disclosed pursuant to the
Code of Ethics of Fayez Sarofim & Co. and Affiliates and I do not possess any
Non-Public Material Information (as defined in such Code) with respect to the
issuers of the Securities set forth above.
- -------------------------
------------------------------------------
Date Employee Signature
</TABLE>
APPENDIX C
-----------
Date
Contact
Broker/Dealer
Address
Dear Madam or Sir:
This letter will serve as our request for duplicate trade confirms and
monthly statements pertaining to the account referenced below to be sent to the
Compliance Officer of Fayez Sarofim & Co. at the address indicated above.
Account Name:
Account Number:
Thank you for your assistance with this matter.
Sincerely yours,
Compliance Officer
My signature below evidences that I am subject to the Code of Ethics of
Fayez Sarofim & Co. which requires me to provide the Compliance Officer of Fayez
Sarofim & Co. with certain personal information. Thus, please comply with the
request set forth above.
Sincerely yours,
Signature
Print Name
APPENDIX D
----------
INITIAL HOLDINGS REPORT
------------------------
As of ____________, ____
This Report pertains to all Securities (as defined in the Code of Ethics
of Fayez Sarofim & Co. and Affiliates) (the "Code") and related accounts in
which any of the following maintain a beneficial1 interest: (i) you, (ii)
members of your immediate family, (iii) any other member of your immediate
household, (iv) any trust or estate of which you or your spouse is a trustee or
fiduciary or a beneficiary, or of which your minor child is a beneficiary, or
(v) any person for whom you direct or effect transactions under a power of
attorney or otherwise. If none, write NONE.
WITH RESPECT TO EACH SECURITY:
- -------------------------------------------------------------------------------
NUMBER OF SHARES OR PRINCIPAL AMOUNT
NAME OF ISSUER OR TITLE ------------------------------------
- --------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------------------------------------------------
- --------
1 If you have any questions about "beneficial" ownership or interests,
refer to Appendix A of the Code.
WITH RESPECT TO ANY BROKER, DEALER OR BANK WITH WHOM OR WHICH YOU MAINTAINED AN
ACCOUNT IN WHICH ANY SECURITY WAS HELD FOR YOUR DIRECT OR INDIRECT BENEFIT AS OF
THE DATE YOU BECAME AN EMPLOYEE:
- -------------------------------------------------------------------------------
NAME ADDRESS
---- -------
- ------------------------------------- ------------------------------------
- ------------------------------------- ------------------------------------
- ------------------------------------- ------------------------------------
- -------------------------------------------------------------------------------
WITH RESPECT TO ANY SECURITY INVOLVING A LIMITED OFFERING VENTURE2 PROVIDE THE
FOLLOWING WITH RESPECT TO EACH SECURITY HELD BY THE LIMITED OFFERING VENTURE.
- -------------------------------------------------------------------------------
NUMBER OF SHARES OR PRINCIPAL AMOUNT
NAME OF ISSUER OR TITLE ------------------------------------
-----------------------
- ---------------------------------- ------------------------------------
- ---------------------------------- ------------------------------------
- ---------------------------------- ------------------------------------
- ---------------------------------- ------------------------------------
- ---------------------------------- -------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------- -------------------------------------
Date this Report is submitted Employee Signature
- --------
2 See the Code for the definition of a Limited Offering Venture.
APPENDIX E
----------
ANNUAL HOLDINGS REPORT
----------------------
As of ____________, ____
This Report pertains to all Securities (as defined in the Code of Ethics
of Fayez Sarofim & Co. and Affiliates (the "Code")) in which any of the
following maintain a beneficial1 interest: (i) you, (ii) members of your
immediate family, (iii) any other member of your immediate household, (iv) any
trust or estate of which you or your spouse is a trustee or fiduciary or
beneficiary, or of which your minor child is a beneficiary, or (v) any person
for whom you direct or effect transactions under a power of attorney or
otherwise. If none, write NONE.
WITH RESPECT TO EACH SECURITY:
- -------------------------------------------------------------------------------
NUMBER OF SHARES OR PRINCIPAL AMOUNT
NAME OF ISSUER OR TITLE ------------------------------------
-----------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- -------------------------------------------------------------------------------
- --------
1 If you have any questions about "beneficial" ownership or interests,
refer to Appendix A of the Code of Ethics of Fayez Sarofim & Co. and Affiliates.
WITH RESPECT TO ANY BROKER, DEALER OR BANK WITH WHOM OR WHICH YOU MAINTAINED AN
ACCOUNT IN WHICH ANY SECURITY WAS HELD FOR YOUR DIRECT OR INDIRECT BENEFIT AS OF
THE DATE YOU BECAME AN EMPLOYEE:
- -------------------------------------------------------------------------------
NAME ADDRESS
----- --------
- ------------------------------------- ------------------------------------
- ------------------------------------- ------------------------------------
- -------------------------------------------------------------------------------
WITH RESPECT TO ANY SECURITY INVOLVING A LIMITED OFFERING VENTURE2 PROVIDE THE
FOLLOWING WITH RESPECT TO EACH SECURITY HELD BY THE LIMITED OFFERING VENTURE
ENTITY:
- -------------------------------------------------------------------------------
NUMBER OF SHARES OR PRINCIPAL AMOUNT
NAME OF ISSUER OR TITLE ------------------------------------
-----------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- -------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------- -------------------------------------
Date this Report is submitted Employee Signature
- --------
2 See the Code for a definition of a Limited Offering Venture.
APPENDIX F
-----------
ACCESS PERSON QUARTERLY TRANSACTION REPORT
------------------------------------------
[TO BE SUBMITTED WITHIN 10 DAYS AFTER THE END OF EACH CALENDAR QUARTER]
As of ____________, ____
This Report covers the calendar quarter ended and pertains to Covered
Securities1 transactions during such calendar quarter and Securities accounts in
which any of the following maintain a beneficial2 interest: (i) you, (ii)
members of your immediate family, (iii) any other member of your immediate
household, (iv) any trust or estate of which you or your spouse is a trustee or
fiduciary or beneficiary, or of which your minor child is a beneficiary, or (v)
any person for whom you direct or effect transactions under a power of attorney
or otherwise. If none, write NONE.
WITH RESPECT TO EACH COVERED SECURITY TRANSACTION INVOLVING STOCK:
- -------------------------------------------------------------------------------
Nature Number of
Date (e.g., buy, Price Shares Issuer Name of Broker
sell )
- ------ -------------- ------- ------------ --------- -------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- --------
1 "Covered Securities" and "Securities" are defined in the Code of Ethics
of Fayez Sarofim & Co. and Affiliates (the "Code").
2 If you have any questions about "beneficial" ownership or interests,
refer to Appendix A of the Code.
WITH RESPECT TO EACH COVERED SECURITY TRANSACTION INVOLVING DEBT:
- -------------------------------------------------------------------------------
Buy Int. Rate/
---- ----------
or Principal Maturity
--- ---------- --------
Date Sell Price Amt. Date Issuer Name of Broker
- ----- ------- ----- --------- -------- ---------- ---------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
WITH RESPECT TO ANY BROKER, DEALER OR BANK WITH WHOM OR WHICH YOU ESTABLISHED AN
ACCOUNT IN THE CALENDAR QUARTER AND IN WHICH ANY SECURITY WAS HELD FOR YOUR
DIRECT OR INDIRECT BENEFIT:
- -------------------------------------------------------------------------------
NAME ADDRESS
---- -------
- ------------------------------------- ------------------------------------
- -------------------------------------- ------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------- -------------------------------------
Date this Report is submitted Access Person Signature
APPENDIX G
AS AN EMPLOYEE OF THE GROUP (AS DEFINED IN THE CODE OF ETHICS OF FAYEZ SAROFIM &
CO. AND AFFILIATES), PLEASE (1) ANSWER EACH OF THE FOLLOWING QUESTIONS WITH
"YES" OR "NO", AND (2) SIGN AND DATE IN THE SPACE PROVIDED BELOW.
I. In the past ten years have you been convicted of or pleaded guilty or nolo
contendre ("no contest") to:
<TABLE>
(A) a felony or misdemeanor involving:
<S> <C> <C> <C>
1. investment or an investment-related business YES _____ NO_____
2. fraud, false statements, or omissions YES _____ NO_____
3. wrongful taking of property or
4. bribery, forgery, counterfeiting,
or extortion? YES ____ NO_____
(B) any other felony? YES_____ NO_____
II. Has any court:
(A) in the past ten years, enjoined you in connection with any
investment-related activity?
YES _____ NO_____
(B) ever found that you were involved in a violation of investment-related
statutes or regulations?
YES _____ NO_____
III. Has the U.S. Securities and Exchange Commission or the Commodity Futures Trading Commission ever:
(A) found you to have made a false statement or omission?
YES _____ NO_____
(B) found you to have been involved in a violation of its regulations or
statutes?
YES _____ NO_____
(C) with respect to any investment related business in which you were
authorized to do business, found you to have been a cause of such
investment-related business's authorization to do business being
denied, suspended, revoked, or restricted?
YES _____ NO_____
(D) entered an order denying, suspending or revoking your registration
or otherwise disciplined you by restricting your activities?
YES _____ NO_____
IV. Has any other federal regulatory agency or any state regulatory agency:
(A) ever found you to have made a false statement or omission or been
dishonest, unfair, or unethical?
YES _____ NO_____
(B) ever found you to have been involved in a violation of investment
regulations or statutes?
YES _____ NO_____
(C) ever found you to have been the cause of an investment-related
business having your authorization to do business denied, suspended,
revoked, or restricted?
YES _____ NO_____
(D) in the past ten years, entered an order against you in connection
with an investment-related activity?
YES _____ NO_____
(E) ever denied, suspended, or revoked your registration or license,
prevented you from associating with an investment-related business,
or otherwise disciplined you by restricting your activities?
YES _____ NO_____
(F) ever revoked or suspended your license as an attorney or accountant?
YES _____ NO_____
V. Has any self-regulatory organization or commodities exchange ever:
(A) found you to have made a false statement or omission?
YES _____ NO_____
(B) found you to have been involved in a violation of its rules?
YES _____ NO_____
(C) found you to have been the cause of an investment-related business
having its authorization to do business denied, suspended, revoked,
or restricted?
YES _____ NO_____
(D) disciplined you by expelling or suspending you from membership, by
barring or suspending your association with other members, or by
otherwise restricting your activities?
YES _____ NO_____
VI. Has any foreign government, court, regulatory agency, or exchange ever
entered an order against you related to investments or fraud?
YES _____ NO_____
VII. Are you now the subject of any proceeding that could result in a `yes'
answer to any of the above questions?
YES _____ NO_____
VIII. Has a bonding company denied, paid out on, or revoked a bond for you?
YES _____ NO_____
IX. Do you have any unsatisfied judgements or liens against you?
YES _____ NO_____
X. Have you ever been a securities firm or an advisory affiliate of a
securities firm that has been declared bankrupt, had a trustee appointed
under the Securities Investor Protection Act, or had a direct payment
procedure begun?
YES _____ NO_____
XI. Have you, ever failed in business, made a compromise with creditors, filed
a bankruptcy petition or been declared bankrupt?
YES _____ NO_____
SIGNATURE OF EMPLOYEE:
PRINTED NAME OF EMPLOYEE: _____________________________________________
DATE:
</TABLE>
POWERS OF ATTORNEY
The undersigned hereby constitute and appoint Mark N. Jacobs, Steven
Newman, Michael Rosenberg, Jeff Prusnofsky, Robert R. Mullery, Janette
Farragher, Mark Kornfeld, and John Hammalian, and each of them, with full power
to act without the other, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her, and in his
or her name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to the Registration Statement of
Dreyfus Variable Investment Fund (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 or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
/s/ Joseph S. DiMartino March 6, 2000
- ------------------------------------
Joseph S. DiMartino
/s/ David P. Feldman March 6, 2000
- ------------------------------
David P. Feldman
/s/ John M. Fraser, Jr. March 6, 2000
- ------------------------------
John M. Fraser, Jr.
/s/ Robert R. Glauber March 6, 2000
- ------------------------------
Robert R. Glauber
/s/ James F. Henry March 6, 2000
- ------------------------------------
James F. Henry
/s/ Rosalind Gersten Jacobs March 6, 2000
- ------------------------------
Rosalind Gersten Jacobs
/s/ Paul A. Marks March 6, 2000
- ------------------------------
Paul A. Marks
/s/ Martin Peretz March 6, 2000
- ------------------------------
Martin Peretz
/s/ Bert W. Wasserman March 6, 2000
- ------------------------------
Bert W. Wasserman
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
The undersigned hereby each constitute and appoint Mark N. Jacobs, Steven
F. Newman, Michael A. Rosenberg, Jeff Prusnofsky, Robert R. Mullery, Janette
Farragher, Mark Kornfeld, and John B. Hammalian, and each of them, with full
power to act without the other, her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for her, and in her name,
place and stead, in any and all capacities (until revoked in writing) to sign
any and all amendments to the Registration Statement of Dreyfus Variable
Investment Fund (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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Stephen E. Canter March 22, 2000
Stephen E. Canter
President
/s/ Joseph W. Connolly March 22, 2000
Joseph W. Connolly
Vice President and Treasurer
DREYFUS VARIABLE INVESTMENT FUND
Certificate of Assistant Secretary
The undersigned, Robert R. Mullery, Assistant Secretary of
Dreyfus Variable Investment Fund (the "Fund"), hereby certifies that
set forth below is a copy of the resolution adopted by the Fund's Board
authorizing the signing by Mark N. Jacobs, Steven F. Newman, Michael A.
Rosenberg, John B. Hammalian, Jeff Prusnofsky, Robert R. Mullery,
Janette Farragher, and Mark Kornfeld 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 Mark N. Jacobs,
Steven Newman, Michael Rosenberg, John Hammalian, Jeff Prusnofsky,
Robert R. Mullery, Janette Farragher, and Mark Kornfeld, 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 Statements and any and all
amendments and supplements thereto, as whom he or she is acting as
attorney-in-fact, might or could do in person.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of the
27th day of April, 2000.
Robert R. Mullery
Assistant Secretary
(SEAL)
DREYFUS VARIABLE INVESTMENT FUND
