-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C/5tk5mFnjuhEWSx1GaQ+9dzg/ZsV/UN82035EkAq4o/RTPP8iNrMxg4ct/yBRU0 egON2xNLX2T2LekvsROU/g== 0001056707-00-000005.txt : 20000505 0001056707-00-000005.hdr.sgml : 20000505 ACCESSION NUMBER: 0001056707-00-000005 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS INVESTMENT PORTFOLIOS CENTRAL INDEX KEY: 0001056707 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 333-47011 FILM NUMBER: 619364 BUSINESS ADDRESS: STREET 1: C/O THE DREYFUS CORPORATION STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2129226789 MAIL ADDRESS: STREET 1: C/O THE DREYFUS CORPORATION STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 497 1 COMBINED PROSPECTUS Dreyfus Investment Portfolios Core Bond Portfolio Core Value Portfolio Emerging Leaders Portfolio Emerging Markets Portfolio European Equity Portfolio Founders Discovery Portfolio Founders Growth Portfolio Founders International Equity Portfolio Founders Passport Portfolio Japan Portfolio MidCap Stock Portfolio Technology Growth Portfolio PROSPECTUS May 1, 2000 (reg.tm) 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. Contents The Portfolios - -------------------------------------------------------------------------------- Core Bond Portfolio INSIDE COVER Core Value Portfolio 3 Emerging Leaders Portfolio 6 Emerging Markets Portfolio 9 European Equity Portfolio 12 Founders Discovery Portfolio 15 Founders Growth Portfolio 18 Founders International Equity Portfolio 21 Founders Passport Portfolio 24 Japan Portfolio 27 MidCap Stock Portfolio 30 Technology Growth Portfolio 33 Management 36 Financial Highlights 44 Account Information - -------------------------------------------------------------------------------- Account Policies 50 Distributions and Taxes 51 For More Information - -------------------------------------------------------------------------------- INFORMATION ON THE PORTFOLIOS' 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 portfolios. The VA contracts and the VLI policies are described in the separate prospectuses issued by the participating insurance companies, as to which the portfolios assume 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. Each portfolio has its own investment strategy and risk/return profile. The differences in strategy among the portfolios determine the types of securities in which each portfolio invests and can be expected to affect the degree of risk each portfolio is subject to and its performance. While the portfolios' investment objectives and policies may be similar to those of other funds managed by the investment advisers, the portfolios' investment results may be higher or lower than, and may not be comparable to, those of the other funds. Core Bond Portfolio GOAL/APPROACH The portfolio seeks to maximize total return through capital appreciation and current income. To pursue this goal, the portfolio invests at least 65% of its assets in fixed-income securities, such as: U.S. government bonds and notes, corporate bonds, convertible securities, preferred stocks, asset-backed securities, mortgage-related securities, and foreign bonds. The portfolio also may own warrants and common stock acquired in "units" with bonds. Generally, the portfolio seeks to maintain an investment grade (BBB/Baa) average credit quality. However, the portfolio may invest up to 35% of its assets in lower-rated securities (" high yield" or "junk" bonds). The portfolio has the flexibility to shift its investment focus among different fixed-income securities, based on market conditions and other factors. In choosing market sectors and securities for investment, the issuer's financial strength, and the current state and long-term outlook of the industry or sector are reviewed. Current and forecasted interest rate and liquidity conditions also are important factors in this regard. Typically, the portfolio can be expected to have an average effective maturity of between 5 and 10 years and an average effective duration between 3.5 and 6 years. While the portfolio' s duration and maturity usually will stay within these ranges, if the maturity or duration of the portfolio's benchmark index moves outside these ranges, so may the portfolio's. Concepts to understand AVERAGE EFFECTIVE MATURITY: an average of the stated maturity of bonds, adjusted to reflect provisions that may cause a bond's principal to be repaid earlier than at maturity. 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 speaking, the longer a portfolio's duration, the more it is likely to react to interest rate fluctuations and the greater its long-term risk/return potential. [Page] MAIN RISKS Prices of bonds tend to move inversely with changes in interest rates. A rise in rates usually causes a drop in bond prices and therefore in the portfolio's share price as well. The longer the portfolio's maturity and duration, the more its share price is likely to react to interest rate movements. The value of a shareholder's investment in the portfolio could go up and down, which means that shareholders could lose money. Mortgage-related securities may react differently to interest rate changes than other bonds, because of prepayments and other factors. When rates fall, mortgage pass-through securities may be paid off earlier than expected, and the portfolio may reinvest those assets at lower rates. This lessens price-appreciation potential from rate declines. When rates rise, prices may decline less, given their generally higher coupon, and it may effectively lengthen a mortgage security' s expected maturity and cause its value to fluctuate more widely as rates change. High yield bonds involve greater credit risk than investment grade bonds, and are considered speculative. The prices of high yield bonds can fall in response to bad news about the issuer or its industry, or the economy in general, or if an issuer fails to make timely interest or principal payments. Other risk factors that could have an effect on the portfolio's performance: * the prices of foreign bonds can be affected by political and economic instability or changes in currency exchange rates * if the portfolio holds securities that are traded in a market that becomes "illiquid," typically when there are many more sellers than buyers for the securities, the value of such securities, and the portfolio's share price, may fall dramatically 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 reduce the benefit from any upswing in the market. During such periods, the portfolio may not achieve its investment objective. Other potential risks Most mortgage and asset-backed securities are a form of derivative. The portfolio, at times, may also invest in other derivative securities, such as options and futures. Futures and options 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. The portfolio may buy securities on a forward-commitment basis, and enter into reverse repurchase agreements, which are forms of borrowing that can increase the portfolio's overall price volatility. At times, the portfolio may engage in short-term trading, which could produce higher brokerage costs. What the portfolio is -- and isn't The portfolio is a mutual fund: a pooled investment that is professionally managed and gives shareholders 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. Core Bond Portfolio [Page 1] CORE BOND PORTFOLIO (CONTINUED) PAST PERFORMANCE As a new portfolio, past performance information is not available for the portfolio as of the date of this prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 0.60% Other expenses 0.25% - -------------------------------------------------------------------------------- TOTAL 0.85% - -------------------------------------------------------------------------------- Expense example 1 Year 3 Years - -------------------------------------------------------------------------------- $87 $271 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: estimated fees to be paid by the portfolio for the current fiscal year for miscellaneous items such as transfer agency, custody, professional and registration fees. Core Value Portfolio [Page 2] GOAL/APPROACH The portfolio seeks long-term growth of capital, with current income as a secondary objective. To pursue these goals, the portfolio invests primarily in stocks of large-cap value companies (market capitalizations of $1 billion and above) . The portfolio typically invests mainly in the stocks of U.S. issuers, and will limit its foreign stock holdings to 20% of the value of its total assets. The portfolio's stock investments may include common stocks, preferred stocks, convertible securities and depositary receipts. In choosing stocks, the portfolio manager focuses on individual stock selection (a "bottom-up" approach) rather than forecasting stock market trends (a " top-down" approach) , and looks for value companies. A three-step value screening process is used to select stocks: * VALUE: quantitative screens track traditional measures such as price-to-earnings, price-to-book and price-to-sales. These ratios are analyzed and compared against the market. * SOUND BUSINESS FUNDAMENTALS: a company's balance sheet and income data are examined to determine the company's financial history. * POSITIVE BUSINESS MOMENTUM: a company's earnings and forecast changes are analyzed and sales and earnings trends are reviewed to determine the company's financial condition. 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 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). Because a stock can remain undervalued for years, value investors often look for factors that could trigger a rise in price. LARGE-CAP COMPANIES: established companies that are considered "known quantities." Large-cap companies often have the resources to weather economic shifts, though they can be slower to innovate than small companies. [Page 3] CORE VALUE PORTFOLIO (CONTINUED) 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). Any foreign securities purchased by the portfolio 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 reduce 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 shareholders 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 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. 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. [Page 4] PAST PERFORMANCE The bar chart and table below show some of the risks of investing in the portfolio. The bar chart shows the portfolio's performance for its first full calendar year of operations. The table compares the portfolio's average annual total returns to those of the Standard & Poor's 500/BARRA Value Index (S&P 500 BARRA Value) ,which has been selected as the portfolio's primary index based on the portfolio' s and the index's value orientation, and the Standard & Poor's 500((reg.tm) ) Composite Stock Price Index (S&P 500 Composite), the portfolio's former primary index, each a broad measure of stock performance. Performance for the S& P 500 Composite will not be shown in the future. All performance figures reflect 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 (%) 19.73 90 91 92 93 94 95 96 97 98 99 BEST QUARTER: Q4 '99 +13.16% WORST QUARTER: Q3 '99 -10.40% - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 Since inception 1 Year (5/1/98) - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO 19.73% 7.61% S&P 500 BARRA VALUE 12.72% 8.46%* S&P 500 COMPOSITE 21.03% 19.80%* * FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 4/30/98 IS USED AS THE BEGINNING VALUE ON 5/1/98.
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 a 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. - -------------------------------------------------------------------------------- Fee table ANNUAL PORTFOLIO OPERATING EXPENSES % OF AVERAGE DAILY NET ASSETS Management fees 0.75% Other expenses 0.75% - -------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 1.50% Fee waiver and/or expense reimbursement (0.50%) - -------------------------------------------------------------------------------- NET OPERATING EXPENSES* 1.00% *THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%. - --------------------------------------------------------------------------------
Expense example 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ $102 $425 $771 $1,748
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. The one-year number is based on the net operating expenses. The longer-term numbers are based on total annual portfolio operating expenses. 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 5] Core Value Portfolio Emerging Leaders Portfolio GOAL/APPROACH The portfolio seeks capital growth. To pursue this goal, the portfolio invests in companies Dreyfus believes to be emerging leaders: small companies characterized by new or innovative products, services or processes having the potential to enhance earnings growth. The portfolio invests at least 65% of its total assets in companies with total market values of less than $1.5 billion at the time of purchase. The portfolio's investments may include common stocks, preferred stocks and convertible securities. In choosing stocks, the portfolio uses a blended approach, investing in a combination of growth and value stocks. Using fundamental research and direct management contact, the portfolio managers seek stocks with dominant positions in major product lines, sustained achievement records and strong financial condition. They also seek special situations, such as corporate restructurings or management changes, that could increase the stock price. The portfolio managers use a sector management approach, supervising a team of sector managers who assist in making buy and sell decisions within their respective areas of expertise. The portfolio' 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, when the company begins to show deteriorating fundamentals or poor relative performance, or when a stock is fully valued by the market. Concepts to understand SMALL COMPANIES: new, often entrepreneurial companies. Small companies tend to grow faster than large-cap companies, but frequently are more volatile, are more vulnerable to major setbacks, and have a higher failure rate than larger companies. GROWTH COMPANIES: companies 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. 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. [Page 6} 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, sometimes dramatically, which means that shareholders could lose money. Small companies carry additional risks because their operating histories tend to be more limited, their earnings 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 perceptions rather than economics. In addition, some of the portfolio's investments will be made in anticipation of future products and services that, if delayed, could cause the stock price to drop. Growth companies are expected to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns. 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. 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 reduce 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, and in foreign currencies. The portfolio may also sell short, which involves selling a security it does not own in anticipation of a decline in the market price of the security. 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. In addition, derivatives can be illiquid and highly sensitive to changes in their underlying instrument. 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. 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 shareholders 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. [Page 7} Emerging Leaders Portfolio EMERGING LEADERS PORTFOLIO (CONTINUED) PAST PERFORMANCE Since the portfolio has less than one calendar year of performance, annual total return information for the portfolio is not included in this section of the prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 0.90% Other expenses 0.25% - -------------------------------------------------------------------------------- TOTAL 1.15% - -------------------------------------------------------------------------------- Expense example 1 Year 3 Years - -------------------------------------------------------------------------------- $117 $365 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: estimated fees to be paid by the portfolio for the current fiscal year for miscellaneous items such as transfer agency, custody, professional and registration fees. [Page 8} Emerging Markets Portfolio GOAL/APPROACH The portfolio seeks long-term capital growth. To pursue this goal, the portfolio invests primarily in the stocks of companies organized, or with a majority of its assets or business, in emerging market countries. Normally, the portfolio will not invest more than 25% of its total assets in the securities of companies in any one emerging market country. The portfolio may invest up to 35% of its net assets in the high yield debt securities of such companies as Dreyfus deems appropriate in light of market conditions. In choosing stocks, the portfolio emphasizes growth-oriented stocks and employs a top-down country allocation approach which involves identifying and forecasting: key trends in global economic variables, such as gross domestic product, inflation and interest rates; investment themes, such as the impact of new technologies and the globalization of industries and brands; relative values of equity securities, bonds and cash; and long-term trends in currency movements. Within countries and sectors determined to be relatively attractive, the portfolio seeks what the portfolio manager believes to be attractively priced companies that possess a sustainable competitive advantage in their country or sector. The portfolio typically will sell a security when themes or strategies change, or when the portfolio manager determines that the company's prospects have changed or that its stock is fully valued by the market. Concepts to understand EMERGING MARKET COUNTRIES: consist of all countries represented by the Morgan Stanley Capital International (MSCI) Emerging Markets (Free) Index, which currently includes Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, Sri Lanka, South Africa, Taiwan, Thailand, Turkey and Venezuela, or any other country Dreyfus believes has an emerging economy or market. GROWTH COMPANIES: companies 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. [Page 9} EMERGING MARKETS PORTFOLIO (CONTINUED) MAIN RISKS The stock markets of emerging market countries can be extremely volatile. The value of a shareholder' s investment in the portfolio will go up and down, sometimes dramatically, which means that shareholders could lose money rapidly. The portfolio's performance will be influenced by political, social and economic factors affecting investments in companies in emerging market countries. 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. Special risks include exposure to currency fluctuations, less liquidity, less developed or efficient trading markets, a lack of comprehensive company information, political instability, and differing auditing and legal standards. Such risks could result in more volatility for the portfolio. 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. In addition, growth stocks typically lack the dividend yield that could cushion stock prices in market downturns. The fund may invest in companies of any size. Investments in smaller 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. High yield ("junk" ) bonds 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. The portfolio is non-diversified and may invest a greater percentage of its assets in a particular company compared with other funds. Accordingly, the portfolio may be more sensitive to changes in the market value of a single company or industry. 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 reduce 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, and in foreign currencies. The portfolio may also sell short, which involves selling a security it does not own in anticipation of a decline in the market price of the security. These practices, when employed, are used primarily to hedge its portfolio but also to increase returns; however, such practices sometimes may reduce returns or increase volatility. In addition, derivatives can be illiquid and highly sensitive to changes in their underlying instrument. 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. 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 shareholders 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. [Page 10} PAST PERFORMANCE Since the portfolio has less than one calendar year of performance, annual total return information for the portfolio is not included in this section of the prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 1.25% Other expenses 0.25% - -------------------------------------------------------------------------------- TOTAL 1.50% - -------------------------------------------------------------------------------- Expense example 1 Year 3 Years - -------------------------------------------------------------------------------- $153 $474 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: estimated fees to be paid by the portfolio for the current fiscal year for miscellaneous items such as transfer agency, custody, professional and registration fees. [Page 11} Emerging Markets Portfolio European Equity Portfolio GOAL/APPROACH The portfolio seeks long-term capital growth. To pursue this goal, the portfolio generally invests at least 80% of its total assets in stocks included within the universe of the 300 largest European companies. The portfolio may invest up to 10% of its total assets in the stocks of non-European companies. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities. In choosing stocks, the portfolio manager identifies and forecasts: key trends in economic variables, such as gross domestic product, inflation and interest rates; investment themes, such as the impact of new technologies and the globalization of industries and brands; relative values of equity securities, bonds and cash; and long-term trends in currency movements. Within markets and sectors determined to be relatively attractive, the portfolio manager seeks what are believed to be attractively priced companies that possess a sustainable competitive advantage in their market or sector. The portfolio manager generally sells securities when themes or strategies change or when the portfolio manager determines that the company's prospects have changed or that its stock is fully valued by the market. Concepts to understand EUROPEAN COMPANY: a company organized under the laws of a European country or for which the principal securities trading market is in Europe; or a company, wherever organized, with a majority of its assets or business in Europe. PREFERRED STOCK: stock that pays dividends at a specified rate and has preference over common stock in the payment of dividends and the liquidation of assets. Preferred stock ordinarily does not carry voting rights. CONVERTIBLE SECURITIES: corporate securities, usually preferred stock or bonds, that are exchangeable for a set amount of another form of security, usually common stock, at a prestated price. [Page 12} MAIN RISKS While stocks have historically been a 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. The portfolio's performance will be influenced by political, social and economic factors affecting companies in European countries and throughout the world. These risks include changes in currency exchange rates, a lack of comprehensive company information, political instability, less liquidity and differing auditing and legal standards. The portfolio expects to invest primarily in the stocks of companies located in developed European countries. However, the portfolio may invest in the stocks of companies located in certain European countries which are considered to be 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 may provide higher rates of return to investors. 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 reduce 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 shareholders 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 in derivative securities, such as options and futures, and in foreign currencies. The portfolio may also sell short, which involves selling a security it does not own in anticipation of a decline in the market price of the security. These practices, when employed, are used primarily to hedge its portfolio but also may be used to increase returns; however, such practices sometimes may reduce returns or increase volatility. In addition, derivatives can be illiquid and highly sensitive to changes in their underlying instrument. A small investment in certain derivatives could have a potentially large impact on the portfolio's performance. [Page 13} European Equity Portfolio EUROPEAN EQUITY PORTFOLIO (CONTINUED) PAST PERFORMANCE Since the portfolio has less than one calendar year of performance, annual total return information for the portfolio is not included in this section of the prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 4.03% - -------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 5.03% Fee waiver and/or expense reimbursement (3.53%) - -------------------------------------------------------------------------------- NET OPERATING EXPENSES* 1.50% *THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%. - --------------------------------------------------------------------------------
Expense example 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ $153 $1,194 $2,234 $4,832
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. The one-year number is based on net operating expenses. The longer-term numbers are based on total annual portfolio operating expenses. 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 14} Founders Discovery Portfolio GOAL/APPROACH The portfolio seeks capital appreciation. To pursue this goal, the portfolio invests primarily in equity securities of small, U.S.-based companies which are characterized as "growth" companies. These companies typically are not listed on a national securities exchange, but trade on the over-the-counter market. The portfolio may purchase securities of companies in initial public offerings or shortly thereafter. The portfolio manager seeks investment opportunities for the portfolio in companies with fundamental strengths that indicate the potential for growth in earnings per share. The portfolio manager focuses on individual stock selection (a "bottom-up" approach) rather than on forecasting stock market trends (a "top-down" approach). The portfolio may invest up to 30% of its assets in foreign securities. The portfolio may invest in securities of larger issuers if the portfolio manager believes these securities offer attractive opportunities for capital appreciation. The portfolio also may invest in investment grade debt securities of domestic or foreign issuers that the portfolio manager believes -- based on market conditions, the financial condition of the issuer, general economic conditions, and other relevant factors -- offer opportunities for capital appreciation. Concepts to understand 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. SMALL COMPANIES: generally, those companies with market capitalizations of less than $2.2 billion. This range may fluctuate depending on changes in the value of the stock market as a whole. Small companies tend to grow faster than large-cap companies, but frequently are more volatile, are more vulnerable to major setbacks, and have a higher failure rate than large companies. EQUITY SECURITIES: common stocks, preferred stocks and convertible securities. The portfolio will invest in preferred stocks and convertible securities rated at the time of purchase at least B by a credit rating agency or the unrated equivalent as determined by the portfolio's sub-adviser. [Page 15} FOUNDERS DISCOVERY PORTFOLIO (CONTINUED) 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, sometimes dramatically, which means that shareholders could lose money. Small companies carry additional risks because their operating histories tend to be more limited, their earnings less predictable, their share prices more volatile and their securities less liquid than larger, more established companies. The prices of securities purchased in initial public offerings or shortly thereafter may be very volatile. Some of the portfolio's investments will rise and fall based on investor perceptions rather than economics. Because the portfolio may allocate relatively more assets to certain industry sectors than others, the portfolio's performance may be more susceptible to any developments which affect those sectors emphasized by the portfolio. Growth companies are expected to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns. Any foreign securities purchased by the portfolio are subject to 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 reduce 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 shareholders 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 in derivative securities, such as options and futures, and in foreign currencies. These practices, when employed, are used to hedge its portfolio; however, such practices sometimes may reduce returns or increase volatility. In addition, derivatives can be illiquid and highly sensitive to changes in their underlying instrument. 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. [Page 16} PAST PERFORMANCE Since the portfolio has less than one calendar year of performance, annual total return information for the portfolio is not included in this section of the prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 0.90% Other expenses 0.25% - -------------------------------------------------------------------------------- TOTAL 1.15% - -------------------------------------------------------------------------------- Expense example 1 Year 3 Years - -------------------------------------------------------------------------------- $117 $365 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: estimated fees to be paid by the portfolio for the current fiscal year for miscellaneous items such as transfer agency, custody, professional and registration fees. [Page 17} Founders Discovery Portfolio Founders Growth Portfolio GOAL/APPROACH The portfolio seeks long-term growth of capital. To pursue this goal, the portfolio invests primarily in equity securities of well-established, high quality "growth" companies. These companies tend to have strong performance records, solid market positions and reasonable financial strength, and have continuous operating records of three years or more. The portfolio will seek investment opportunities, generally, in companies which the portfolio managers believe have fundamental strengths that indicate the potential for growth in earnings per share. The portfolio managers focus on individual stock selection (a "bottom-up" approach) rather than on forecasting stock market trends (a "top-down" approach). The portfolio may invest up to 30% of its assets in foreign securities, and up to 25% of its assets in any one foreign country. The portfolio also may invest in investment grade debt securities of domestic or foreign issuers that the portfolio managers believe -- based on market conditions, the financial condition of the issuer, general economic conditions, and other relevant factors - -- offer opportunities for capital growth. Concepts to understand 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. EQUITY SECURITIES: common stocks, preferred stocks and convertible securities. The portfolio will invest in preferred stocks and convertible securities that are rated at the time of purchase at least B by a credit rating agency or the unrated equivalent as determined by the portfolio's sub-adviser. [Page 18} 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. While the portfolio' s investments in stocks of well-established companies 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. Because the portfolio may allocate relatively more assets to certain industry sectors than others, the portfolio's performance may be more susceptible to any developments which affect those sectors emphasized by the portfolio. Growth companies are expected to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns. Any foreign securities purchased by the portfolio 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 reduce 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 shareholders 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 At times, the portfolio may engage in short-term trading, which could produce higher brokerage costs. [Page 19} Founders Growth Portfolio FOUNDERS GROWTH PORTFOLIO (CONTINUED) PAST PERFORMANCE The bar chart and table below show some of the risks of investing in the portfolio. The bar chart shows the portfolio's performance for its first full calendar year of operations. The table compares the portfolio's average annual total returns to those of the Standard & Poor's 500/BARRA Growth Index (S&P 500 BARRA Growth), which has been selected as the portfolio's primary index based on the portfolio' s and the index's growth orientation, and the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Composite), the portfolio's former primary index, each a broad measure of stock performance. Performance for the S& P 500 Composite will not be shown in the future. All performance figures reflect 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 (%) 39.01 90 91 92 93 94 95 96 97 98 99 BEST QUARTER: Q4 '99 +30.13% WORST QUARTER: Q3 '99 -4.29% - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 Since inception 1 Year (9/30/98) - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO 39.01% 57.77% S&P 500 BARRA GROWTH 28.25% 45.19% S&P 500 COMPOSITE 21.03% 35.94%
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 this portfolio to fund a VA contract or a 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. - -------------------------------------------------------------------------------- Fee table ANNUAL PORTFOLIO OPERATING EXPENSES % OF AVERAGE DAILY NET ASSETS Management fees 0.75% Other expenses 1.58% - -------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 2.33% Fee waiver and/or expense reimbursement (1.33%) - -------------------------------------------------------------------------------- NET OPERATING EXPENSES* 1.00% *THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%. - --------------------------------------------------------------------------------
Expense example 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ $102 $600 $1,124 $2,563
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. The one-year number is based on net operating expenses. The longer-term numbers are based on total annual portfolio operating expenses. 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 20] Founders International Equity Portfolio GOAL/APPROACH The portfolio seeks long-term growth of capital. To pursue this goal, the portfolio invests primarily in equity securities of foreign issuers which are characterized as "growth" companies. The portfolio may purchase securities of companies in initial public offerings or shortly thereafter. The portfolio will seek investment opportunities, generally, in companies which the portfolio manager believes have fundamental strengths that indicate the potential for growth in earnings per share. The portfolio manager focuses on individual stock selection (a "bottom-up" approach) rather than on forecasting stock market trends (a "top-down" approach). The portfolio will invest primarily in foreign issuers from at least three foreign countries with established or emerging economies, but will not invest more than 50% of its assets in issuers in any one foreign country. The portfolio also may invest in investment grade debt securities of foreign issuers that the portfolio manager believes -- based on market conditions, the financial condition of the issuer, general economic conditions, and other relevant factors - -- offer opportunities for capital growth. Concepts to understand 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. EQUITY SECURITIES: common stocks, preferred stocks and convertible securities. The portfolio will invest in preferred stocks and convertible securities that are rated at the time of purchase at least B by a credit rating agency or the unrated equivalent as determined by the portfolio's sub-adviser. [Page 21] FOUNDERS INTERNATIONAL EQUITY PORTFOLIO (CONTINUED) 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. The prices of securities purchased in initial public offerings or shortly thereafter may be very volatile. 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. Because the portfolio may allocate relatively more assets to certain industry sectors than others, the portfolio's performance may be more susceptible to any developments which affect those sectors emphasized by the portfolio. Growth companies are expected to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns. The portfolio may invest in the stocks of companies located in developed countries and in emerging markets. Emerging market 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. 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 reduce 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 shareholders 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 At times, the portfolio may engage in short-term trading, which could produce higher brokerage costs. [Page 22] PAST PERFORMANCE The bar chart and table below show some of the risks of investing in the portfolio. The bar chart shows the portfolio's performance for its first full calendar year of operations. The table compares the portfolio's average annual total returns to those of the Morgan Stanley Capital International World (ex. US) Index (MSCI World (ex. US) Index), a broad measure of international stock performance. All performance figures reflect 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 (%) 60.69 90 91 92 93 94 95 96 97 98 99 BEST QUARTER: Q4 '99 +40.36% WORST QUARTER: Q1 '99 +2.44% - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 Since inception 1 Year (9/30/98) - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO 60.69% 63.30% MSCI WORLD (EX. US) INDEX 27.93% 41.33%
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 a 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. - -------------------------------------------------------------------------------- Fee table ANNUAL PORTFOLIO OPERATING EXPENSES % OF AVERAGE DAILY NET ASSETS Management fees 1.00% Other expenses 2.77% - -------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 3.77% Fee waiver and/or expense reimbursement (2.27%) - -------------------------------------------------------------------------------- NET OPERATING EXPENSES* 1.50% *THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%. - --------------------------------------------------------------------------------
Expense example 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ $153 $943 $1,752 $3,865
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. The one-year number is based on net operating expenses. The longer-term numbers are based on total annual portfolio operating expenses. 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 23] Founders International Equity Portfolio Founders Passport Portfolio GOAL/APPROACH The portfolio seeks capital appreciation. To pursue this goal, the portfolio invests primarily in equity securities of foreign issuers with market capitalizations or annual revenues of $1 billion or less and which are characterized as "growth" companies. The portfolio may purchase securities of companies in initial public offerings or shortly thereafter. The portfolio seeks investment opportunities, generally, in companies which the portfolio manager believes have fundamental strengths that indicate the potential for growth in earnings per share. The portfolio manager focuses on individual stock selection (a "bottom-up" approach) rather than on forecasting stock market trends (a "top-down" approach). The portfolio will invest primarily in foreign issuers from at least three foreign countries with established or emerging economies. The portfolio may invest in securities of larger foreign issuers or in U.S. issuers, if the portfolio manager believes these securities offer attractive opportunities for capital appreciation. The portfolio also may invest in investment grade debt securities of domestic or foreign issuers that the portfolio manager believes -- based on market conditions, the financial condition of the issuer, general economic conditions, and other relevant factors -- offer opportunities for capital appreciation. Concepts to understand 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. EQUITY SECURITIES: common stocks, preferred stocks and convertible securities. The portfolio will invest in preferred stocks and convertible securities that are rated at the time of purchase at least B by a credit rating agency or the unrated equivalent as determined by the portfolio's sub-adviser. [Page 24] 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. Because the portfolio may allocate relatively more assets to certain industry sectors than others, the portfolio's performance may be more susceptible to any developments which affect those sectors emphasized by the portfolio. Growth companies are expected to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns. The portfolio may invest in the stocks of companies located in developed countries and in emerging markets. Emerging market 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. The portfolio invests primarily in securities issued by companies with relatively small market capitalizations. Smaller companies typically 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 prices of securities purchased in initial public offerings or shortly thereafter may be very volatile. 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 reduce 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 shareholders 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 At times, the portfolio may engage in short-term trading, which could produce higher brokerage costs. [Page 25] Founders Passport Portfolio FOUNDERS PASSPORT PORTFOLIO (CONTINUED) PAST PERFORMANCE The bar chart and table below show some of the risks of investing in the portfolio. The bar chart shows the portfolio's performance for its first full calendar year of operations. The table compares the portfolio's average annual total returns to those of the Morgan Stanley Capital International World (ex. US) Index (MSCI World (ex. US) Index), a broad measure of international stock performance. All performance figures reflect 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 (%) 76.05 90 91 92 93 94 95 96 97 98 99 BEST QUARTER: Q4 '99 +53.13% WORST QUARTER: Q1 '99 +3.55% - -------------------------------------------------------------------------------- Average annual total return AS OF 12/31/99 Since inception 1 Year (9/30/98) - -------------------------------------------------------------------------------- PORTFOLIO 76.05% 76.79% MSCI WORLD (EX. US) INDEX 27.93% 41.33% 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 a 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. - -------------------------------------------------------------------------------- Fee table ANNUAL PORTFOLIO OPERATING EXPENSES % OF AVERAGE DAILY NET ASSETS Management fees 1.00% Other expenses 2.64% - -------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 3.64% Fee waiver and/or expense reimbursement (2.14%) - -------------------------------------------------------------------------------- NET OPERATING EXPENSES* 1.50% *THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.50%. - --------------------------------------------------------------------------------
Expense example 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ $153 $916 $1,701 $3,758
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. The one-year number is based on net operating expenses. The longer-term numbers are based on total annual portfolio operating expenses. 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 26} Japan Portfolio GOAL/APPROACH The portfolio seeks long-term capital growth. To pursue this goal, the portfolio invests primarily in stocks of Japanese companies. Generally, the portfolio invests at least 60% of its assets in Japanese companies with market caps of at least $1.5 billion at the time of investment. The portfolio's investments may include common stocks, preferred stocks and convertible securities. In choosing stocks, the portfolio manager identifies and forecasts: key trends in economic variables, such as gross domestic product, inflation and interest rates; investment themes, such as the impact of new technologies and the globalization of industries and brands; relative values of equity securities, bonds and cash; company fundamentals and long-term trends in currency movements. Within markets and sectors determined to be relatively attractive, the portfolio manager seeks what are believed to be attractively priced companies that possess a sustainable competitive advantage in their market or sector. The portfolio manager generally sells securities when themes or strategies change or when the portfolio manager determines that a company's prospects have changed or that its stock is fully valued by the market. Many of the securities in which the portfolio invests are denominated in yen. To protect the portfolio against potential depreciation of the yen versus the U.S. dollar, the portfolio manager may engage in currency hedging. Concepts to understand JAPANESE COMPANY: a company organized under the laws of Japan or for which the principal securities trading market is Japan; or a company, wherever organized, with a majority of its assets or business in Japan. CURRENCY HEDGING: the value of the yen can fluctuate significantly relative to the U.S. dollar and potentially result in losses for investors. To help offset such losses, the portfolio manager may employ certain techniques designed to reduce the portfolio's foreign currency exposure. Generally, this involves buying options, futures, or forward contracts for the foreign currency. [Page 27} JAPAN PORTFOLIO (CONTINUED) MAIN RISKS While stocks have historically been a 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. The portfolio's performance will be influenced by political, social and economic factors affecting investments in Japanese companies. These risks include changes in currency exchange rates, a lack of comprehensive company information, political instability, less liquidity and differing auditing and legal standards. Each of those risks could result in more volatility for the portfolio. While investments in all foreign countries are subject to those risks, the portfolio' s concentration in Japanese securities could cause the portfolio' s performance to be more volatile than that of more geographically diversified funds. Small companies carry additional risks because their operating histories tend to be more limited, their earnings 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 perceptions rather than economics. 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 reduce 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 shareholders 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 in derivative securities, such as options and futures, and in foreign currencies. The portfolio may also sell short, which involves selling a security it does not own in anticipation of a decline in the market price of the security. When employed, these practices are used primarily to hedge the portfolio but may also be used to increase returns; however, such practices sometimes may reduce returns or increase volatility. In addition, derivatives can be illiquid and highly sensitive to changes in their underlying instrument. A small investment in certain derivatives could have a potentially large impact on the portfolio's performance. The portfolio can buy securities with borrowed money (a form of leverage), which could magnify the portfolio's gains or losses. [Page 28} PAST PERFORMANCE Since the portfolio has less than one calendar year of performance, annual total return information for the portfolio is not included in this section of the prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 0.25% - -------------------------------------------------------------------------------- TOTAL 1.25% - -------------------------------------------------------------------------------- Expense example 1 Year 3 Years - -------------------------------------------------------------------------------- $127 $397 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: estimated fees to be paid by the portfolio for the current fiscal year for miscellaneous items such as transfer agency, custody, professional and registration fees. [Page 29} Japan Portfolio MidCap Stock Portfolio GOAL/APPROACH The portfolio seeks investment results that are greater than the total return performance of publicly traded common stocks of medium-size domestic companies in the aggregate, as represented by the Standard & Poor's MidCap 400((reg.tm)) Index (" S& P 400"). To pursue this goal, the portfolio invests primarily in a blended portfolio of growth and value stocks of medium-size companies, those whose market values generally range between $200 million and $10 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 S&P 400 are primary goals of the process. The portfolio's stock investments may include common stocks, preferred stocks, convertible securities and depositary receipts. 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. Dreyfus then 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 400. Concepts to understand MIDCAP COMPANIES: established companies that may not be well known. Midcap companies have the potential to grow faster than large-cap companies, but may lack the resources to weather economic shifts, and are more volatile than large companies. COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe of over 2,000 stocks. Dreyfus reviews each of the screens on a regular basis. Dreyfus also maintains the flexibility to adapt the screening criteria to changes in market conditions. [Page 30} 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. Medium-size 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. 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 very similar to the S&P 400, 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 S&P 400 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. 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, or that their intrinsic values may fall. 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 reduce 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 shareholders 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. These practices, when employed, are used to hedge the portfolio and 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. 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. [Page 31} MidCap Stock Portfolio MIDCAP STOCK PORTFOLIO (CONTINUED) PAST PERFORMANCE The bar chart and table below show some of the risks of investing in the portfolio. The bar chart shows the portfolio's performance for its first full calendar year of operations. The table compares the portfolio's average annual total returns to those of the S& P 400, a broad measure of midcap stock performance. All performance figures reflect 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 (%) 10.82 90 91 92 93 94 95 96 97 98 99 BEST QUARTER: Q4 '99 +14.67% WORST QUARTER: Q3 '99 -7.11% - -------------------------------------------------------------------------------- Average annual total return AS OF 12/31/99 Since inception 1 Year (5/1/98) - -------------------------------------------------------------------------------- PORTFOLIO 10.82% 4.72% S&P 400 14.72% 12.02%* * FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/98 IS USED AS THE BEGINNING VALUE ON 5/1/98. 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 a 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. - -------------------------------------------------------------------------------- Fee table ANNUAL PORTFOLIO OPERATING EXPENSES % OF AVERAGE DAILY NET ASSETS Management fees 0.75% Other expenses 0.71% - -------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 1.46% Fee waiver and/or expense reimbursement (0.46%) - -------------------------------------------------------------------------------- NET OPERATING EXPENSES* 1.00% *THE DREYFUS CORPORATION HAS AGREED, UNTIL DECEMBER 31, 2000, TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT EXPENSES (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES, INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) DO NOT EXCEED 1.00%. FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, DREYFUS FURTHER REIMBURSED THE PORTFOLIO FOR OTHER EXPENSES SO THAT TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES WERE 0.97% INSTEAD OF 1.00%. THIS ADDITIONAL EXPENSE REIMBURSEMENT WAS VOLUNTARY. - --------------------------------------------------------------------------------
Expense example 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ $102 $414 $751 $1,707 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. The one-year number is based on the net operating expenses. The longer-term numbers are based on total annual portfolio operating expenses.
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 32] Technology Growth Portfolio GOAL/APPROACH The portfolio seeks capital appreciation. To pursue this goal, the portfolio invests primarily in the stocks of growth companies of any size that Dreyfus believes to be leading producers or beneficiaries of technological innovation. Up to 25% of the portfolio's assets may be invested in foreign securities. The portfolio' s stock investments may include common stocks, preferred stocks and convertible securities. In choosing stocks, the portfolio looks for sectors in technology that are expected to outperform on a relative scale. The more attractive sectors are overweighted; those sectors with less appealing prospects are underweighted. Among the sectors evaluated are those that develop, produce or distribute products or services in the computer, semi-conductor, electronics, communications, healthcare, biotechnology, computer software and hardware, electronic components and systems, network and cable broadcasting, telecommunications, defense and aerospace, and environmental sectors. Although the portfolio looks for companies with the potential for strong earnings growth rates, some of the portfolio's investments may currently be experiencing losses. Moreover, the portfolio may invest in small-, mid- and large-cap securities in all available trading markets, including initial public offerings and the aftermarket. Concepts to understand SMALL AND MIDSIZE COMPANIES: new and often entrepreneurial companies. These companies tend to grow faster than large-cap companies and typically use any profits for expansion rather than for paying dividends. They are also 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. [Page 33] TECHNOLOGY GROWTH PORTFOLIO (CONTINUED) MAIN RISKS While stocks have historically been a leading choice of long-term investors, they do fluctuate in price. In fact, the technology sector has been among the most volatile sectors of the stock market. The value of a shareholder's investment in the portfolio will go up and down, sometimes dramatically, which means that shareholders could lose money. Technology companies, especially small-cap technology companies, involve greater risk because their earnings tend to be less predictable, their share prices more volatile and their securities less liquid than larger, more established companies. The prices of securities purchased in initial public offerings or shortly thereafter may be very volatile. Some of the portfolio's investments in technology companies will rise and fall based on investor perception rather than economics. Other portfolio investments are made in anticipation of future products and services which, if delayed or cancelled, could cause the stock price to drop dramatically. Growth companies are expected to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns. 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 reduce 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 shareholders 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 in derivative securities, such as options and futures, and in foreign currencies. The portfolio may also sell short, which involves selling a security it does not own in anticipation of a decline in the market price of the security. These practices, when employed, are used primarily to hedge its portfolio but also may be used to increase returns; however, such practices sometimes may reduce returns or increase volatility. In addition, derivatives can be illiquid and highly sensitive to changes in their underlying instrument. 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. 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. [Page 34] PAST PERFORMANCE Since the portfolio has less than one calendar year of performance, annual total return information for the portfolio is not included in this section of the prospectus. EXPENSES Investors using this portfolio to fund a VA contract or a 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. 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 0.25% - -------------------------------------------------------------------------------- TOTAL 1.00% - -------------------------------------------------------------------------------- Expense example 1 Year 3 Years - -------------------------------------------------------------------------------- $102 $318 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: estimated fees to be paid by the portfolio for the current fiscal year for miscellaneous items such as transfer agency, custody, professional and registration fees. [Page 35] Technology Growth Portfolio MANAGEMENT The investment adviser for the portfolios 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. 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. CORE BOND PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 0.60% of the portfolio' s average daily net assets. CORE VALUE PORTFOLIO -- For the fiscal year ended December 31, 1999, the portfolio paid Dreyfus an annual management fee of 0.25% of the portfolio's average daily net assets. EMERGING LEADERS PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 0.90% of the portfolio's average daily net assets. For the fiscal period December 15, 1999 (commencement of operations) through December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. EMERGING MARKETS PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 1.25% of the portfolio's average daily net assets. For the fiscal period December 15, 1999 (commencement of operations) through December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. EUROPEAN EQUITY PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 1.00% of the portfolio's average daily net assets. For the fiscal period April 30, 1999 (commencement of operations) through December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. FOUNDERS DISCOVERY PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 0.90% of the portfolio's average daily net assets. For the fiscal period December 15, 1999 (commencement of operations) through December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. FOUNDERS GROWTH PORTFOLIO -- For the fiscal year ended December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. FOUNDERS INTERNATIONAL EQUITY PORTFOLIO -- For the fiscal year ended December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. FOUNDERS PASSPORT PORTFOLIO -- For the fiscal year ended December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. JAPAN PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 1.00% of the portfolio's average daily net assets. For the fiscal period December 15, 1999 (commencement of operations) through December 31, 1999, the portfolio did not pay Dreyfus a management fee as a result of a fee waiver/expense reimbursement in effect. MIDCAP STOCK PORTFOLIO -- For the fiscal year ended December 31, 1999, the portfolio paid Dreyfus an annual management fee of 0.26% of the portfolio's average daily net assets. [Page 36] TECHNOLOGY GROWTH PORTFOLIO -- The portfolio has agreed to pay Dreyfus an annual management fee of 0.75% of the portfolio's average daily net assets. For the fiscal period August 31, 1999 (commencement of operations) through December 31, 1999, Dreyfus waived or reimbursed a portion of its management fee so that the net fee paid by the portfolio was 0.49%. Dreyfus has engaged its affiliate, Founders Asset Management LLC, to serve as the sub-investment adviser for the Founders Discovery Portfolio, Founders Growth Portfolio, Founders International Equity Portfolio and Founders Passport Portfolio. Founders, located at Founders Financial Center, 2930 East Third Avenue, Denver, Colorado 80206, and its predecessor companies have been offering tools to help investors pursue their financial goals since 1938. As of December 31, 1999, Founders managed mutual funds and other client accounts having aggregate assets of approximately $7.94 billion. Dreyfus has engaged its affiliate, Newton Capital Management Limited, to serve as sub-investment adviser for the European Equity Portfolio and the Japan Portfolio. Newton, located at 71 Queen Victoria Street, London, EC4V 4DR, England, was formed in 1977 and, as of December 31, 1999, together with its parent and its parent' s subsidiaries, managed approximately $29 billion in discretionary separate accounts and other investment accounts. Portfolio managers The primary portfolio managers of the portfolios are as follows: CORE BOND PORTFOLIO -- The Dreyfus Taxable Fixed Income team makes investment decisions for the portfolio. No individual team member is primarily responsible for making these investment decisions. The portfolio managers comprising the team are identified in the Statement of Additional Information. CORE VALUE PORTFOLIO -- The portfolio's primary portfolio manager is Valerie J. Sill. She has been a portfolio manager of the portfolio since its inception. Ms. Sill is a portfolio manager of Dreyfus and senior vice president of The Boston Company Asset Management, Inc. ("TBCAM"), an affiliate of Dreyfus. She is also a member of the Equity Policy Group of TBCAM. She previously served as director of equity research and as an equity research analyst for TBCAM. EMERGING LEADERS PORTFOLIO -- The portfolio's primary portfolio managers are Paul Kandel and Hilary Woods. Mr. Kandel and Ms. Woods have been the portfolio's primary portfolio managers since its inception. Mr. Kandel joined Dreyfus in 1994 as senior sector manager for the technology and telecommunications industries. Ms. Woods joined Dreyfus in 1987 as senior sector manager for the capital goods industry. EMERGING MARKETS PORTFOLIO -- The portfolio' s primary portfolio manager is Daniel Beneat. Mr. Beneat has been the primary portfolio manager of the portfolio since its inception and has been employed by Dreyfus since May 1996. For the three previous years, he was a vice president and portfolio manager at UBS Asset Management (NY) , Inc. EUROPEAN EQUITY PORTFOLIO -- The portfolio's primary portfolio manager is Joanna Bowen. Ms. Bowen has been a primary portfolio manager for the portfolio since its inception. She joined Newton in 1993 as a European fund manager, was appointed an associate director of Newton in 1997, and was appointed a director of Newton in 1999. FOUNDERS DISCOVERY PORTFOLIO -- The portfolio's primary portfolio manager is Robert T. Ammann, C.F.A. He has been the portfolio's primary portfolio manager since the portfolio's inception and has been employed by Founders since 1993. He is a vice president of investments at Founders. [Page 37] Management MANAGEMENT (CONTINUED) FOUNDERS GROWTH PORTFOLIO -- The portfolio's primary portfolio managers are Scott A. Chapman, C.F.A. and Thomas M. Arrington, C.F.A. Mr. Chapman and Mr. Arrington have been the portfolio's primary portfolio managers, and have been employed by Founders, since December 1998. Mr. Chapman is a vice president of investments and director of research at Founders. Mr. Arrington is a vice president of investments at Founders. Prior to joining Founders, Mr. Chapman was employed for seven years at HighMark Capital Management, Inc., a subsidiary of Union BanCal Corporation, most recently as a vice president and director of growth strategy. Prior to joining Founders, Mr. Arrington was employed for eight years at HighMark Capital where he held various positions, including vice president and director of income and growth strategy, securities research analyst and, most recently, vice president and director of income equity strategy. FOUNDERS INTERNATIONAL EQUITY PORTFOLIO -- The portfolio's primary portfolio manager is Douglas A. Loeffler, C.F.A. He has been the portfolio's primary portfolio manager since the portfolio' s inception and has been employed by Founders since 1995. He is a vice president of investments at Founders. Prior to joining Founders, Mr. Loeffler was employed for seven years at Scudder, Stevens & Clark as an international equities and quantitative analyst. FOUNDERS PASSPORT PORTFOLIO -- The portfolio's primary portfolio manager is Tracy P. Stouffer. She has been the portfolio's primary portfolio manager, and has been employed by Founders, since July 1999. Prior to joining Founders, Ms. Stouffer was a vice president and portfolio manager with Federated Global Incorporated from 1995 to July 1999, and a vice president and portfolio manager with Clariden Asset Management, Inc. from 1988 to 1995. JAPAN PORTFOLIO -- The portfolio's primary portfolio manager is Miki Sugimoto. She has been the portfolio's primary portfolio manager since the portfolio's inception and has been employed by Newton since 1995. Prior to joining Newton, Ms. Sugimoto was employed for five years at S.G. Warburg where she worked primarily in the corporate finance department. MIDCAP STOCK PORTFOLIO -- John O'Toole is the portfolio's primary portfolio manager, a position he has held since the portfolio's inception. He has been employed by Dreyfus since October 1994. Mr. O'Toole also is a senior vice president and a portfolio manager for Mellon Equity Associates, an affiliate of Dreyfus, and has been employed by Mellon Bank, N.A. since 1979. TECHNOLOGY GROWTH PORTFOLIO -- The portfolio's primary portfolio manager is Mark Herskovitz. Mr. Herskovitz has been the primary portfolio manager of the portfolio since its inception and has been employed by Dreyfus since 1996. From 1992 to 1996, he served as a senior technology analyst at National City Bank. Each portfolio, Dreyfus, Founders, Newton and Dreyfus Service Corporation (each portfolio' s distributor) 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 a portfolio. The Dreyfus and Founders codes of ethics restrict the personal securities transactions of their employees, and require portfolio managers and other investment personnel to comply with the code's preclearance and disclosure procedures. Each code's primary purpose is to ensure that personal trading by Dreyfus or Founders employees does not disadvantage any Dreyfus- or Founders-managed fund. [Page 38] Core Bond, Emerging Leaders, Emerging Markets and Founders Discovery portfolios - -- Performance Information for Related Public Funds Although the Core Bond Portfolio is newly organized and does not yet have its own performance record, the portfolio has the same investment objective and follows substantially the same investment policies and strategies as a corresponding series of another open-end investment company advised by Dreyfus - -- Dreyfus Premier Core Bond Fund -- Class A shares (the "Premier Core Bond Fund"). The portfolio currently has the same investment team as the Premier Core Bond Fund. The table below shows average annual total return information for the Premier Core Bond Fund and for the Merrill Lynch Domestic Master Index, the benchmark index of the portfolio and the Premier Core Bond Fund. Historical performance information for Class A shares of the Premier Core Bond Fund and the Merrill Lynch Domestic Master Index for various periods ended December 31, 1999, as calculated pursuant to SEC guidelines, is as follows: - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 1 Year 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ DREYFUS PREMIER CORE BOND FUND CLASS A (NAV) 4.92% 9.41% 8.76% CLASS A (WITH SALES LOAD) -1.12% 8.12% 8.11% MERRILL LYNCH DOMESTIC MASTER INDEX(1) -.96% 7.74% 7.75% 1) THE MERRILL LYNCH DOMESTIC MASTER INDEX IS AN UNMANAGED PERFORMANCE BENCHMARK FOR U.S. GOVERNMENT SECURITIES AND INVESTMENT GRADE CORPORATE SECURITIES WITH MATURITIES GREATER THAN OR EQUAL TO ONE YEAR. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS.
Although the Emerging Leaders Portfolio is newly organized and does not yet have its own full year of performance, the portfolio has substantially the same investment objective and follows substantially the same investment policies and strategies as two corresponding series of separate open-end investment companies advised by Dreyfus -- Dreyfus Emerging Leaders Fund, which is offered to the public, and Dreyfus Small Cap Portfolio (the "Insurance Fund"), which, like the portfolio, serves as a funding vehicle for variable insurance products. The portfolio currently has the same primary portfolio managers as the Dreyfus Emerging Leaders Fund and the Insurance Fund. The table below shows average annual total return information for the Dreyfus Emerging Leaders Fund, the Insurance Fund and the Russell 2000 Index, the benchmark index of the portfolio, the Dreyfus Emerging Leaders Fund and the Insurance Fund. Historical performance information for the Dreyfus Emerging Leaders Fund, the Insurance Fund and the Russell 2000 Index for various periods ended December 31, 1999, as calculated pursuant to SEC guidelines, is as follows: - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 Since 1 Year 5 Years inception(2) - ------------------------------------------------------------------------------------------------------------------------------------ DREYFUS EMERGING LEADERS FUND 38.26% -- 33.61% DREYFUS SMALL CAP PORTFOLIO 23.15% 15.93% 35.65% RUSSELL 2000 INDEX(3) 21.26% 16.69% 13.63%(4) 16.57%(5) (2) THE INCEPTION DATES OF THE DREYFUS EMERGING LEADERS FUND AND INSURANCE FUND WERE 9/29/95 AND 8/31/90, RESPECTIVELY. (3) THE RUSSELL 2000 INDEX IS A WIDELY RECOGNIZED, UNMANAGED SMALL-CAP INDEX COMPRISED OF THE COMMON STOCKS OF THE 2,000 U.S. PUBLIC COMPANIES NEXT IN SIZE AFTER THE LARGEST 1,000 PUBLICLY TRADED U.S. COMPANIES. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. (4) FOR COMPARATIVE PURPOSES FOR THE DREYFUS EMERGING LEADERS FUND, THE VALUE OF THE INDEX ON 9/30/95 IS USED AS THE BEGINNING VALUE ON 9/29/95. (5) FOR COMPARATIVE PURPOSES FOR THE INSURANCE FUND, THE VALUE OF THE INDEX ON 8/31/90 IS USED AS THE BEGINNING VALUE. [Page 39] Management
MANAGEMENT (CONTINUED) Although the Emerging Markets Portfolio is newly organized and does not yet have its own full year of performance, the portfolio has the same investment objective and follows substantially the same investment policies and strategies as a corresponding series of another open-end investment company advised by Dreyfus -- Dreyfus Premier Emerging Markets Fund -- Class A shares (the "Premier Emerging Markets Fund"). The portfolio has the same primary portfolio manager as the Premier Emerging Markets Fund. The table below shows average annual total return information for the Premier Emerging Markets Fund and for the Morgan Stanley Capital International (MSCI) Emerging Markets (Free) Index, the benchmark index of the portfolio and the Premier Emerging Markets Fund. The one-year performance of the Premier Emerging Markets Fund and the index was due in large part to an economic recovery in emerging markets and a recovery of liquidity in the asset class. Such returns should not be expected over the long term. Historical performance information for Class A shares of the Premier Emerging Markets Fund and for the MSCI Emerging Markets (Free) Index for various periods ended December 31, 1999, as calculated pursuant to SEC guidelines, is as follows: - -------------------------------------------------------------------------------- Average annual total return AS OF 12/31/99 Since inception 1 Year (3/31/98) - -------------------------------------------------------------------------------- DREYFUS PREMIER EMERGING MARKETS FUND CLASS A (NAV) 104.56% 16.30% CLASS A (WITH SALES LOAD) 92.83% 12.45% MSCI EMERGING MARKETS (FREE) INDEX(6) 66.41% 9.39% (6) THE MSCI EMERGING MARKETS (FREE) INDEX IS A MARKET-CAPITALIZATION-WEIGHTED INDEX COMPOSED OF COMPANIES REPRESENTATIVE OF THE MARKET STRUCTURE OF 25 EMERGING MARKET COUNTRIES IN EUROPE, LATIN AMERICA AND THE PACIFIC BASIN AND INCLUDES GROSS DIVIDENDS REINVESTED. THE INDEX EXCLUDES CLOSED MARKETS AND THOSE SHARES IN OTHERWISE FREE MARKETS WHICH ARE NOT PURCHASABLE BY FOREIGNERS. Although the Founders Discovery Portfolio is newly organized and does not yet have its own full year of performance, the portfolio has the same investment objective and follows substantially the same investment policies and strategies as a corresponding series of another open-end investment company advised by Founders -- Dreyfus Founders Discovery Fund (the "Founders Discovery Fund"). The portfolio currently has the same primary portfolio manager as the Founders Discovery Fund. The table below shows average annual total return information for the Founders Discovery Fund and for the Russell 2000 Index, the benchmark index of the portfolio and the Founders Discovery Fund. The one-year performance of the Founders Discovery Fund was due in part to the allocation to the Founders Discovery Fund of securities sold in initial public offerings (" IPOs" ). There is no guarantee that the Founders Discovery Fund's investments in IPOs will continue to have a similar impact on performance, and such returns should not be expected over the long term. Historical performance information for the Founders Discovery Fund and for the Russell 2000 Index for various periods ended December 31, 1999, as calculated pursuant to SEC guidelines, is as follows: - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 1 Year 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ FOUNDERS DISCOVERY FUND 94.59% 31.68% 23.96% RUSSELL 2000 INDEX(7) 21.26% 16.69% 13.40% (7) THE RUSSELL 2000 INDEX IS A WIDELY RECOGNIZED, UNMANAGED SMALL-CAP INDEX COMPRISED OF THE COMMON STOCKS OF THE 2,000 U.S. PUBLIC COMPANIES NEXT IN SIZE AFTER THE LARGEST 1,000 PUBLICLY TRADED U.S. COMPANIES. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS.
[Page 40] Investors should not consider this performance data as an indication of the future performance of the portfolios. The performance figures for the Premier Core Bond Fund, Dreyfus Emerging Leaders Fund, Insurance Fund, Premier Emerging Markets Fund and Founders Discovery Fund reflect the deduction of the historical fees and expenses paid by the funds, and not those to be paid by the respective portfolios. The Premier Core Bond Fund's total annual operating expenses for the fiscal year ended October 31, 1999 were 1.18% of its average daily net assets. The total annual operating expenses, after fee waiver and expense reimbursement, if any, for the fiscal year ended August 31, 1999 for the Dreyfus Emerging Leaders Fund were 1.38% and for the fiscal year ended December 31, 1999 for the Insurance Fund were 0.78% of the respective fund's average daily net assets. The Premier Emerging Markets Fund' s total annual operating expenses, after fee waiver and expense reimbursement, for the year ended September 30, 1999 were 2.25% of its average daily net assets. The Founders Discovery Fund's total annual operating expenses, after fee waiver and expense reimbursement, for the year ended December 31, 1999 were 1.46% of its average daily net assets. The performance figures also do not reflect the deduction of charges or expenses attributable to VA contracts or VLI policies, which would lower the performance quoted. Policy owners should refer to the applicable insurance company prospectus for information on any such charges and expenses. Additionally, although it is anticipated that each portfolio and its corresponding fund will hold similar securities, their investment results are expected to differ. In particular, differences in asset size and in cash flow resulting from purchases and redemptions of portfolio shares may result in different security selections, differences in the relative weightings of securities or differences in the price paid for particular portfolio holdings. Performance information for Public Funds and Founders Growth, Founders International Equity and Founders Passport portfolios Each of the Founders Growth, Founders International Equity and Founders Passport portfolios has the same investment objective and follows substantially the same investment policies and strategies as a corresponding series of another open-end investment company advised by Founders, the Dreyfus Founders Growth Fund, the Dreyfus Founders International Equity Fund and the Dreyfus Founders Passport Fund, respectively (the "Public Funds"). Each portfolio currently has the same primary portfolio managers as its corresponding Public Fund. The first three tables on page 42 show average annual total return information for the Public Funds and for the appropriate securities index. The fourth table shows average annual total return information for each portfolio and for the appropriate securities index. Investors should not consider this performance data as an indication of the future performance of the portfolios. The performance figures for the Public Funds reflect the deduction of the historical fees and expenses paid by the Public Funds, and not those to be paid by the respective portfolio. The Public Funds' total annual operating expenses, after fee waiver and expense reimbursement, for the year ended December 31, 1999 were 1.09% of Dreyfus Founders Growth Fund' s average daily net assets, 1.80% of Dreyfus Founders International Equity Fund' s average daily net assets and 1.64% of Dreyfus Founders Passport Fund's average daily net assets. The performance figures for the Public Funds and the portfolios also do not reflect the deduction of charges or expenses attributable to VA contracts or VLI policies, which would lower the performance quoted. Policy owners should refer to the applicable insurance company prospectus for information on any such charges and expenses. Additionally, although it is anticipated that each portfolio and its corresponding Public Fund will hold similar secu- [Page 41] Management MANAGEMENT (CONTINUED) rities, their investment results are expected to differ. In particular, differences in asset size and in cash flow resulting from purchases and redemptions of portfolio shares may result in different security selections, differences in the relative weightings of securities or differences in the price paid for particular portfolio holdings. Performance information for the Public Funds and portfolios reflect the reinvestment of dividends and other distributions. The one-year performance of the Dreyfus Founders International Equity Fund and the Dreyfus Founders Passport Fund was due in part to the allocation to those funds of securities sold in initial public offerings ("IPOs"). There is no guarantee that the Dreyfus Founders International Equity Fund's and the Dreyfus Founders Passport Fund' s investments in IPOs will continue to have a similar impact on performance, and such returns should not be expected over the long term. PUBLIC FUNDS Historical performance information for the corresponding Public Funds and for the securities indexes for various periods ended December 31, 1999, as calculated pursuant to SEC guidelines, is as follows: - --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99 1 Year 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ DREYFUS FOUNDERS GROWTH FUND -- CLASS F(1) 39.06% 30.16% 20.07% S&P 500 BARRA GROWTH INDEX(2) 28.25% 33.61% 20.59% S&P 500 COMPOSITE INDEX(3) 21.03% 28.54% 18.19% - ------------------------------------------------------------------------------------------------------------------------------------ Average annual total return AS OF 12/31/99
Since inception 1 Year (12/29/95) - -------------------------------------------------------------------------------- DREYFUS FOUNDERS INTERNATIONAL EQUITY FUND -- CLASS F(1) 58.71% 26.45% MSCI WORLD (EX. US) INDEX(4) 27.93% 13.49%(5)
Average annual total return AS OF 12/31/99 Since inception 1 Year 5 Years (11/16/93) - ------------------------------------------------------------------------------------------------------------------------------------ DREYFUS FOUNDERS PASSPORT FUND -- CLASS F(1) 87.44% 26.20% 19.79% MSCI WORLD (EX US) INDEX(4) 27.93% 13.09% 13.21%(6)
FOUNDERS GROWTH, FOUNDERS INTERNATIONAL EQUITY AND FOUNDERS PASSPORT PORTFOLIOS Average annual total return for each portfolio and securities index for various periods ended December 31, 1999, as calculated pursuant to SEC guidelines, is as follows: - -------------------------------------------------------------------------------- Average annual total return AS OF 12/31/99 Since inception 1 Year (9/30/98) - -------------------------------------------------------------------------------- FOUNDERS GROWTH PORTFOLIO 39.01% 57.77% S&P 500 BARRA GROWTH INDEX(2) 28.25% 45.19% S&P 500 COMPOSITE INDEX(3) 21.03% 35.94% FOUNDERS INTERNATIONAL EQUITY PORTFOLIO 60.69% 63.30% MSCI WORLD (EX US) INDEX(4) 27.93% 41.33% FOUNDERS PASSPORT PORTFOLIO 76.05% 76.79% MSCI WORLD (EX US) INDEX(4) 27.93% 41.33% - -------------------------------------------------------------------------------- (1) CLASS F SHARES ARE GENERALLY CLOSED TO NEW INVESTORS. (2) THE S& P BARRA GROWTH INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF ALL THE STOCKS IN THE S&P 500 COMPOSITE INDEX THAT HAVE HIGH PRICE-TO-BOOK RATIOS. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. (3) THE S& P 500 COMPOSITE INDEX IS A WIDELY RECOGNIZED, UNMANAGED INDEX OF STOCK PERFORMANCE. ALL PERFORMANCE FIGURES REFLECT THE REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. (4) THE MSCI WORLD (EX. US) INDEX IS AN ARITHMETICAL AVERAGE OF THE PERFORMANCE OF OVER 1,000 SECURITIES LISTED ON THE STOCK EXCHANGES OF EUROPE, CANADA, AUSTRALIA, NEW ZEALAND AND THE FAR EAST. TOTAL RETURN FIGURES FOR THE INDEX ASSUME CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AFTER DEDUCTION OF LOCAL TAXES, BUT DO NOT DEDUCT ANY FEES OR EXPENSES WHICH ARE CHARGED TO THE RESPECTIVE PUBLIC FUNDS AND THE PORTFOLIO. (5) FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 12/31/95 IS USED AS THE BEGINNING VALUE ON 12/29/95. (6) FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 11/30/93 IS USED AS THE BEGINNING VALUE ON 11/16/93. [Page 42] Japan Portfolio -- Performance Information for Related Investment Accounts Although the portfolio is newly organized and does not yet have its own full year of performance, the portfolio has a substantially similar investment objective and follows substantially similar investment policies and strategies as two investment accounts advised by Newton -- Newton Japan Fund and Newton Universal Growth Funds Japanese Equity Fund (collectively, the "Investment Accounts" ). The portfolio currently has the same portfolio managers as the Investment Accounts. The table at the right shows composite average annual total return information for the Investment Accounts and for the Morgan Stanley Capital International (MSCI) Japan Index, the benchmark index of the portfolio and the Investment Accounts. Investors should not consider this performance data as an indication of the future performance of the portfolio. The performance figures for the Investment Accounts were calculated by Micropal on a "bid-bid" basis (i.e., the price at which an investor can sell its shares) with the accounts' gross income reinvested in U.S. dollars. The performance figures were then adjusted to reflect the deduction of the historical annual management fee paid by the Investment Accounts (1.50% of each Investment Account's net assets), and not those to be paid by the portfolio. The performance figures for the Investment Accounts do not reflect the deduction of charges or expenses attributable to VA contracts or VLI policies, which would lower the performance quoted. Policy owners should refer to the applicable insurance company prospectus for information on any such charges and expenses. Moreover, the performance of the Investment Accounts could have been adversely affected by the imposition of certain regulatory requirements, restrictions and limitations if the accounts had been regulated as investment companies under the U.S. federal securities and tax laws. Additionally, although it is anticipated that the portfolio and the Investment Accounts will hold similar securities, their investment results are expected to differ. In particular, differences in asset size and in cash flow resulting from purchases and redemptions of portfolio shares may result in different security selections, differences in the relative weightings of securities or differences in the price paid for particular portfolio holdings. The one-year performance of the Investment Accounts was due in large part to a period of extremely strong stock market performance in Japan, which should not be expected over the long term. Historical performance information for the Investment Accounts and for the MSCI Japan Index for various periods ended December 31, 1999 is as follows: - -------------------------------------------------------------------------------- Average annual total return AS OF 12/31/99 Since 1 Year 11/22/94(1) - -------------------------------------------------------------------------------- NEWTON JAPAN FUND 59.6% 56.6% NEWTON UGF JAPANESE EQUITY FUND 59.5% 53.0% MSCI JAPAN INDEX(2) 61.8% 6.7% (1) NEWTON BEGAN MANAGING THE INVESTMENT ACCOUNTS ON NOVEMBER 22, 1994. PRIOR THERETO, THE INVESTMENT ACCOUNTS WERE MANAGED BY CAPITAL HOUSE, LLC, A SUBSIDIARY OF THE ROYAL BANK OF SCOTLAND. PERFORMANCE FOR THE MSCI JAPAN INDEX IS CALCULATED FROM OCTOBER 31, 1994. (2) THE MSCI JAPAN INDEX IS A CAPITALIZATION-WEIGHTED INDEX (ADJUSTED IN U.S. DOLLARS) OF COMPANIES IN JAPAN INTENDED TO REPLICATE THE INDUSTRY COMPOSITION OF THE LOCAL MARKET. THE CHOSEN LIST OF STOCKS INCLUDES A REPRESENTATIVE SAMPLING OF LARGE, MEDIUM AND SMALL-CAPITALIZATION WEIGHTED STOCKS, TAKING EACH STOCK'S LIQUIDITY INTO ACCOUNT. THE RETURNS OF THE INDEX ASSUME REINVESTMENT NET OF WITHHOLDING TAX AND, UNLIKE FUND RETURNS, DO NOT REFLECT ANY FEES OR EXPENSES. [Page 43] Management FINANCIAL HIGHLIGHTS The following tables describe each portfolio' s performance for the fiscal periods indicated. Certain information reflects financial results for a single portfolio share. "Total return" shows how much an investment in the portfolio would have increased (or decreased) during each period, assuming the investor had reinvested all dividends and distributions. These figures have been independently audited by Ernst & Young LLP, whose report, along with the portfolios' 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 tables, would reduce the investment returns that are shown. No financial information is provided for the Core Bond Portfolio, which had not commenced operations as of the date of this prospectus.
YEAR ENDED DECEMBER 31, CORE VALUE PORTFOLIO 1999 1998(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 11.72 12.50 Investment operations: Investment income -- net .07(2) .07 Net realized and unrealized gain (loss) on investments 2.24 (.77) Total from investment operations 2.31 (.70) Distributions: Dividends from investment income -- net (.06) (.08) Net asset value, end of period 13.97 11.72 Total return (%) 19.73 (5.59)(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) 1.00 .67(3) Ratio of net investment income to average net assets (%) .56 .62(3) Decrease reflected in above expense ratios due to actions by Dreyfus (%) .50 .74(3) Portfolio turnover rate (%) 97.14 47.37(3) - -------------------------------------------------------------------------------- Net assets, end of period ($ x 1,000) 15,343 5,959 (1) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) NOT ANNUALIZED. PERIOD ENDED DECEMBER 31, EMERGING LEADERS PORTFOLIO 1999(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.50 Investment operations: Investment income -- net .01 Net realized and unrealized gain (loss) on investments .93 Total from investment operations .94 Net asset value, end of period 13.44 Total return (%) 7.52(2) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) .07(2) Ratio of net investment income to average net assets (%) .04(2) Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.25(2) Portfolio turnover rate (%) 1.79(2) - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ($ x 1,000) 2,150 (1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999. (2) NOT ANNUALIZED. [Page 44] PERIOD ENDED DECEMBER 31, EMERGING MARKETS PORTFOLIO 1999(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.50 Investment operations: Investment income -- net .02 Net realized and unrealized gain (loss) on investments 1.11 Total from investment operations 1.13 Net asset value, end of period 13.63 Total return (%) 9.04(2) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) .09(2) Ratio of net investment income to average net assets (%) .18(2) Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.51(2) Portfolio turnover rate (%) .43(2) - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ($ x 1,000) 2,181 (1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999. (2) NOT ANNUALIZED. PERIOD ENDED DECEMBER 31, EUROPEAN EQUITY PORTFOLIO 1999(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.50 Investment operations: Investment income -- net .04(2) Net realized and unrealized gain (loss) on investments 3.61 Total from investment operations 3.65 Distributions: Dividends from investment income -- net (.03) Dividends from net realized gain on investments (.16) Total distributions (.19) Net asset value, end of period 15.96 Total return (%) 29.20(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) 1.01(3) Ratio of net investment income to average net assets (%) .32(3) Decrease reflected in above expense ratio due to actions by Dreyfus (%) 2.38(3) Portfolio turnover rate (%) 99.89(3) - -------------------------------------------------------------------------------- Net assets, end of period ($ x 1,000) 6,592 (1) FROM APRIL 30, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) NOT ANNUALIZED. [Page 45] Financial Highlights FINANCIAL HIGHLIGHTS (CONTINUED) PERIOD ENDED DECEMBER 31, FOUNDERS DISCOVERY PORTFOLIO 1999(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.50 Investment operations: Investment income -- net .01 Net realized and unrealized gain (loss) on investments 1.38 Total from investment operations 1.39 Net asset value, end of period 13.89 Total return (%) 11.12(2) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) .07(2) Ratio of net investment income to average net assets (%) .06(2) Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.45(2) Portfolio turnover rate (%) 7.49(2) - -------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 2,223 (1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999. (2) NOT ANNUALIZED. YEAR ENDED DECEMBER 31, FOUNDERS GROWTH PORTFOLIO 1999 1998(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 15.90 12.50 Investment operations: Investment income -- net (.02)(2) .01 Net realized and unrealized gain (loss) on investments 5.79 3.39 Total from investment operations 5.77 3.40 Distributions: Dividends from investment income -- net (.01) -- Dividends from net realized gain on investments (1.79) -- Total distributions (1.80) -- Net asset value, end of period 19.87 15.90 Total return (%) 39.01 27.20(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) 1.00 .25(3) Ratio of net investment income to average net assets (%) (.11) .05(3) Decrease reflected in above expense ratios due to actions by Dreyfus (%) 1.33 .31(3) Portfolio turnover rate (%) 115.08 75.65(3) - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ($ x 1,000) 7,485 2,544 (1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) NOT ANNUALIZED. [Page 46] YEAR ENDED DECEMBER 31, FOUNDERS INTERNATIONAL EQUITY PORTFOLIO 1999 1998(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 14.36 12.50 Investment operations: Investment income (loss) -- net (.02)(2) (.01) Net realized and unrealized gain (loss) on investments 8.73 1.87 Total from investment operations 8.71 1.86 Distributions: Dividends from net realized gain on investments (1.42) -- Net asset value, end of period 21.65 14.36 Total return (%) 60.69 14.88(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) 1.50 .38(3) Ratio of investment (loss) to average net assets (%) (.11) (.08)(3) Decrease reflected in above expense ratios due to actions by Dreyfus (%) 2.27 .81(3) Portfolio turnover rate (%) 190.80 29.25(3) - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ($ x 1,000) 4,608 2,297 (1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) NOT ANNUALIZED. YEAR ENDED DECEMBER 31, FOUNDERS PASSPORT PORTFOLIO 1999 1998(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 14.46 12.50 Investment operations: Investment income (loss) -- net (.10)(2) .00(3) Net realized and unrealized gain (loss) on investments 11.04 1.97 Total from investment operations 10.94 1.97 Distributions: Dividends from investment income -- net -- (.00)(3) Dividends from net realized gain on investments (1.58) (.01) Total distributions (1.58) (.01) Net asset value, end of period 23.82 14.46 Total return (%) 76.05 15.79(4) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) 1.50 .38(4) Ratio of net investment income to average net assets (%) (.60) .02(4) Decrease reflected in above expense ratios due to actions by Dreyfus (%) 2.14 .30(4) Portfolio turnover rate (%) 319.31 3.98(4) - -------------------------------------------------------------------------------- Net assets, end of period ($ x 1,000) 14,836 5,788 (1) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE. (4) NOT ANNUALIZED. [Page 47] Financial Highlights FINANCIAL HIGHLIGHTS (CONTINUED) PERIOD ENDED DECEMBER 31, JAPAN PORTFOLIO 1999(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.50 Investment operations: Investment income -- net .00(2) Net realized and unrealized gain (loss) on investments .34 Total from investment operations .34 Net asset value, end of period 12.84 Total return (%) 2.64(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) .07(3) Ratio of net investment income to average net assets (%) .03(3) Decrease reflected in above expense ratio due to actions by Dreyfus (%) 1.35(3) Portfolio turnover rate (%) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ($ x 1,000) 2,054 (1) FROM DECEMBER 15, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999. (2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE. (3) NOT ANNUALIZED. YEAR ENDED DECEMBER 31, MIDCAP STOCK PORTFOLIO 1999 1998(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.16 12.50 Investment operations: Investment income -- net .03(2) .02 Net realized and unrealized gain (loss) on investments 1.28 (.34) Total from investment operations 1.31 (.32) Distributions: Dividends from investment income -- net (.03) (.02) Net asset value, end of period 13.44 12.16 Total return (%) 10.82 (2.53)(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) .97 .67(3) Ratio of net investment income to average net assets (%) .26 .18(3) Decrease reflected in above expense ratios due to actions by Dreyfus (%) .49 .60(3) Portfolio turnover rate (%) 77.73 75.74(3) - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ($ x 1,000) 15,563 10,506 (1) FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,1998. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) NOT ANNUALIZED. [Page 48} PERIOD ENDED DECEMBER 31, TECHNOLOGY GROWTH PORTFOLIO 1999(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) Net asset value, beginning of period 12.50 Investment operations: Investment (loss) (.02)(2) Net realized and unrealized gain (loss) on investments 6.97 Total from investment operations 6.95 Net asset value, end of period 19.45 Total return (%) 55.60(3) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets (%) .36(3) Ratio of net investment (loss) income to average net assets (%) (.14)(3) Decrease reflected in above expense ratio due to actions by Dreyfus (%) .09(3) Portfolio turnover rate (%) 20.01(3) - -------------------------------------------------------------------------------- Net assets, end of period ($ x 1,000) 65,707 (1) FROM AUGUST 31, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999. (2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (3) NOT ANNUALIZED.
[Page 49] Financial Highlights 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 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#8900375108/DREYFUS INVESTMENT PORTFOLIOS: name of 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) and account registration and dealer number, if applicable, of the participating insurance company. CORE BOND PORTFOLIO -- generally values investments by using available market quotations or at fair value, which may be determined by one or more pricing services approved by the fund's board. EACH PORTFOLIO OTHER THAN CORE BOND PORTFOLIO -- Each 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 each of the Emerging Markets, European Equity, Founders International Equity, Founders Passport and Japan portfolios 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. [Page 50] DISTRIBUTIONS AND TAXES CORE BOND PORTFOLIO -- usually pays dividends from its net investment income once a month, and distributes any net capital gains it has realized once a year. EACH PORTFOLIO OTHER THAN CORE BOND PORTFOLIO -- usually 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 relevant portfolio unless it is instructed otherwise by a participating insurance company. Since each 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 applicable 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 portfolios. 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). [Page 51] Account Information NOTES [Page] NOTES [Page] For More Information Dreyfus Investment Portfolios - ---------------------------------------- SEC file number: 811-08673 More information on the portfolios is available free upon request, including the following: Annual/Semiannual Report Describes each 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 portfolios and their 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 fund 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 publicinfo@sec.gov, or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. (c) 2000 Dreyfus Service Corporation [Page] -----END PRIVACY-ENHANCED MESSAGE-----