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DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with your first semi-annual report for Dreyfus
Investment Portfolios -- Core Value Portfolio, which began operations on May 1,
1998. In the two-month period between May 1, 1998 and June 30, 1998, the close
of the Portfolio's semi-annual fiscal period, your Portfolio's total return was
- -3.68% .* This compares with a total return of 2.27% for the Standard & Poor's
500 Composite Stock Price Index for the same period.**
ECONOMIC REVIEW
Fears of Federal Reserve Board tightening appear to have eased due to
accumulating evidence of slower overall economic growth since the spring.
Monetary tightening has been deterred by the Asian financial crisis. The Fed's
main domestic concern is that the tight labor market has begun to fuel faster
wage growth across many industries. However, thus far rising wages have still
not meant rising prices. Instead, this cost-price mix threatens to further erode
corporate profit margins. Market interest rates have already rejected the slower
economy, and the interest rate curve has become quite flat.
The shift to slower economic growth this spring is largely due to the drag
from Asia's recession, but may well be reinforced this summer by the multiplier
impacts of the General Motors strike. Among broader economic factors, the trade
deficit has widened sharply due to both weak exports and strong growth in
imports. Also, inventories soared earlier this year, potentially creating some
drag on future production. However, thus far slowing industrial output has
largely been met by shortening the manufacturing work week, not by cutting jobs.
Hence, the shift to slower growth has not relieved the tightness in the labor
market. Instead, the virtual absence of bad news has left consumers to enjoy the
benefits of rising real wages and lower interest rates that, in turn, have
boosted spending and home ownership.
Although growth in corporate profits has slowed in many sectors in the past
year, consensus estimates of future profit growth continue to be cut by many
analysts. Profit margins had already begun to shrink under the weight of rising
labor costs, making companies' reported profits increasingly dependent on growth
of sales. Overall profits could thus prove quite vulnerable to a period of
significantly slower economic growth.
Virtually all Treasury market interest rates have already fallen near to the
floor set by the Federal Funds rate. This implies that further substantial
interest rate drops are unlikely unless the economy weakens enough to justify
action by the Fed to ease credit.
MARKET OVERVIEW
The brief period when the Portfolio was operating before June 30, 1998 was
marked by general market weakness in May, followed by a rebound in June by
large-capitalization stocks, primarily those with growth characteristics. Value
stocks, especially those in the mid-cap range, were left aside in the market's
June advance.
PORTFOLIO FOCUS
Against this backdrop, the Portfolio emphasized value stocks with strong
operating fundamentals and positive business momentum. The Portfolio' s
characteristics demonstrate favorable value relative to its benchmark, the S&P
500. The Portfolio' s 1998 estimated price-to-earnings ratio of 15.3 is well
below the S& P 500's price-to-earnings ratio of 21.2. The price-to-book ratio
also compared favorably at 2.6 for the Portfolio and 4.3 for the S&P 500.
Currently, the Portfolio is overweighted in the financial services, consumer
services, and energy sectors. Chase Manhattan, Harcourt General, Union Pacific,
Waste Management, and NationsBank are currently the Portfolio' s largest
holdings.
The Portfolio' s strongest performing sectors, since its inception, include
capital goods, energy, and consumer services. News Corp. A.D.S., Harcourt
General, Waste Management, Circuit City Stores -- Circuit City Group, and
General Re were among the top contributors to performance during this period.
Underperforming sectors included technology, consumer nondurables, and health
care. Columbia/HCA Healthcare, Union Pacific, Philips Electronics N.V., and Lam
Research detracted from the Portfolio's performance.
Thank you for your confidence in Dreyfus. We look forward to serving your
investment needs.
Sincerely,
[Valerie J. Sill, signature logo]
Portfolio Manager
July 20, 1998
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts, which will reduce returns.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index of
U.S. stock market performance.
<TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Common Stocks--93.0% Shares Value
- ------------------------------------------------------- ___________ __________
<S> <C> <C>
Basic Industries--5.6% Bethlehem Steel (a) 1,600 $ 19,900
British Steel, A.D.S. 1,800 40,950
Broken Hill Proprietary, A.D.R. 1,900 32,181
Crown Cork & Seal 700 33,250
IMC Global 1,200 36,150
Inco 1,800 24,525
Louisiana Pacific 1,200 21,900
Phelps Dodge 400 22,875
Reynolds Metals 600 33,563
Union Carbide 500 26,688
___________
291,982
___________
Capital Goods--7.5% Case 200 9,650
Federal-Mogul 400 27,000
Lockheed Martin 600 63,525
Northrop Grumman 400 41,250
Raytheon, Cl. A 1,100 63,388
United Technologies 800 74,000
Waste Management 3,100 108,500
___________
387,313
___________
Consumer Durables--5.5% Lear (a) 1,400 71,838
Philips Electronics, N.V. 750 63,750
Republic Industries (a) 4,000 100,000
Whirlpool 700 48,125
___________
283,713
___________
Consumer Non-Durables--9.0% Harcourt General 2,000 119,000
Hasbro 700 27,519
Kimberly-Clark 1,800 82,575
Loews 1,000 87,125
Philip Morris 2,600 102,375
RJR Nabisco Holdings 1,900 45,125
___________
463,719
___________
Consumer Services--13.2% ACNielsen (a) 1,600 40,400
American Stores 1,800 43,537
Circuit City Stores-Circuit City Group 1,700 79,687
Deluxe 800 28,650
Federated Department Stores (a) 1,100 59,194
First Data 1,600 53,300
Limited 2,200 72,875
LucasVarity, A.D.S 1,300 51,756
McDonald's 900 62,100
Toys R Us (a) 1,700 40,056
Tricon Global Restaurants (a) 2,400 76,050
Venator Group (a) 4,000 76,500
___________
684,105
___________
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ___________ __________
Energy--11.0% Amoco 1,200 $ 49,950
Burlington Resources 1,000 43,063
Canadian Pacific 2,500 70,937
Elf Aquitaine, A.D.S 800 56,800
Mobil 900 68,963
Oryx Energy (a) 900 19,913
Phillips Petroleum 1,600 77,100
Tosco 2,100 61,688
Unocal 2,000 71,500
YPF Sociedad Anonima, A.D.S 1,600 48,100
___________
568,014
___________
Financial Services--18.1% Aetna 500 38,062
Ahmanson (H.F.) & Co. 800 56,800
Allmerica Financial 800 52,000
Astoria Financial 300 16,050
BankAmerica 600 51,862
Chase Manhattan 1,600 120,800
CIGNA 1,500 103,500
Dun & Bradstreet 1,100 39,737
Equitable 700 52,456
Everest Reinsurance Holdings 1,200 46,125
First Union 1,800 104,850
General Re 200 50,700
Golden State Bancorp (a) 500 14,875
NationsBank 1,400 107,100
Republic New York 600 37,763
Washington Mutual 1,050 45,609
___________
938,289
___________
Health Care--6.2% Amgen (a) 1,000 65,375
Columbia/HCA Healthcare 3,500 101,937
Foundation Health Systems (a) 1,800 47,475
Mallinckrodt 800 23,750
Pharmacia & Upjohn 1,100 50,738
Tenet Healthcare (a) 1,100 34,375
___________
323,650
___________
Technology--8.6% Adaptec (a) 2,300 32,919
Applied Materials (a) 1,600 47,200
Compaq Computer 2,100 59,587
Electronic Data Systems 1,300 52,000
Intel 700 51,887
International Business Machines 650 74,628
Lam Research (a) 1,600 30,600
National Semiconductor (a) 100 1,318
Sun Microsystems (a) 1,300 56,469
Teradyne (a) 1,400 37,450
___________
444,058
___________
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ___________ __________
Transportation--2.3% Union Pacific 2,700 $ 119,138
__________
Utilities--6.0% Bell Atlantic 1,000 45,625
CMS Energy 1,300 57,200
Duke Energy 500 29,625
Edison International 800 23,650
Entergy 1,700 48,875
GTE 700 38,937
Pinnacle West Capital 900 40,500
Southern 1,000 27,688
___________
312,100
___________
TOTAL COMMON STOCKS
(cost $5,023,973) $4,816,081
===========
Preferred Stocks--1.9%
- -------------------------------------------------------
Consumer Services; News Corp, A.D.S.
(cost $82,833) 3,500 $ 98,875
===========
Principal
Short-Term Investments--6.5% Amount
- ------------------------------------------------------------------------------------------ ___________
Agency Discount Notes; Federal Home Loan Banks,
5.85%, 7/1/1998
(cost $337,000) $ 337,000 $ 337,000
===========
TOTAL INVESTMENTS (cost $5,443,806) 101.4% $5,251,956
========== ===========
LIABILITIES, LESS CASH AND RECEIVABLES (1.4%) $ (70,190)
========== ===========
NET ASSETS 100.0% $5,181,766
========== ===========
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
___________ __________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $ 5,443,806 $5,251,956
Cash 13,816
Receivable for investment securities sold 41,598
Dividends and interest receivable 8,980
Prepaid expenses--Note 1(f) 29,242
Due from The Dreyfus Corporation and affiliates 5,514
__________
5,351,106
__________
LIABILITIES: Payable for investment securities purchased 129,182
Accrued expenses 40,158
__________
169,340
__________
NET ASSETS $5,181,766
==========
REPRESENTED BY: Paid-in capital $5,373,134
Accumulated undistributed investment income-net 11,514
Accumulated net realized gain (loss) on investments (11,032)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (191,850)
___________
NET ASSETS $5,181,766
===========
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) 430,482
NET ASSET VALUE, offering and redemption price per share $12.04
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $1,174 foreign taxes
<S> <C> <C>
withheld at source) $ 14,343
Interest 5,805
__________
Total Income $ 20,148
EXPENSES: Investment advisory fee--Note 2(a) 6,358
Auditing fees 5,000
Custodian fees--Note 2(a) 1,963
Registration fees 1,585
Shareholders' reports 1,250
Organization expense--Note 1(f) 1,008
Legal fees 831
Trustees' fees and expenses--Note 2(b) 779
Shareholder servicing costs 213
Miscellaneous 256
__________
Total Expenses 19,243
Less--expense reimbursement from Dreyfus
due to undertaking--Note 2(a) (10,609)
__________
Net Expenses 8,634
_________
INVESTMENT INCOME--NET 11,514
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments $ (11,032)
Net unrealized appreciation (depreciation) on investments (191,850)
__________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (202,882)
_________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(191,368)
=========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998 (UNAUDITED)
OPERATIONS:
<S> <C> <C>
Investment income--net $ 11,514
Net realized gain (loss) on investments (11,032)
Net unrealized appreciation (depreciation) on investments (191,850)
___________
Net Increase (Decrease) in Net Assets Resulting from Operations (191,368)
___________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold 5,329,758
Cost of shares redeemed (6,624)
___________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 5,323,134
___________
Total Increase (Decrease) in Net Assets 5,131,766
NET ASSETS:
Beginning of Period--Note 1 50,000
___________
End of Period $ 5,181,766
===========
UNDISTRIBUTED INVESTMENT INCOME--NET $ 11,514
Shares
___________
CAPITAL SHARE TRANSACTIONS:
Shares sold 427,028
Shares redeemed (546)
___________
Net Increase (Decrease) in Shares Outstanding 426,482
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from May 1, 1998
(commencement of operations) to June 30, 1998. This information has been derived
from the Series' financial statements.
PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning of period $12.50
_______
Investment Operations:
Investment income--net .03
Net realized and unrealized gain (loss) on investments (.49)
_______
Total from Investment Operations . (.46)
_______
Net asset value, end of period $12.04
=======
TOTAL INVESTMENT RETURN (3.68%)*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .17%*
Ratio of net investment income to average net assets . .23%*
Decrease reflected in above expense ratio due to undertaking by The Dreyfus Corporation .21%*
Portfolio Turnover Rate 18.98%*
Net Assets, end of period (000's Omitted) $5,182
- ------------------------
* Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Portfolios (the "Fund") had no operations until May 1, 1998
(commencement of operations) other than matters relating to its organization and
registration as a diversified open-end management investment company under the
Investment Company Act of 1940 ("Act") and the Securities Act of 1933 and the
sale and issuance of 4,000 shares of Beneficial Interest ("Initial Shares") to
The Dreyfus Corporation (" Dreyfus" ). The Fund operates as a series company
currently offering two series, including the Core Value Portfolio (the "Series")
. The Fund is only offered to variable annuity and variable life insurance
separate accounts established by insurance companies to fund variable annuity
contracts and variable life insurance policies and to qualified pension and
retirement plans. The Series' investment objective is to provide long-term
capital growth. Dreyfus serves as the Series' investment adviser. Dreyfus is a
direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned
subsidiary of Mellon Bank Corporation. Premier Mutual Fund Services, Inc. is the
distributor of the Series' shares, which are sold without a sales charge.
As of June 30, 1998, MBIC Investment Corp., an indirect subsidiary of Mellon
Bank Corporation, held 400,000 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Series does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Series' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the value of
assets and liabilities other than investments in securities resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custodian agreement, the Series received
net earnings credits of $203 during the period ended June 30, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
DREYFUS INVESTMENT PORTFOLIOS, CORE VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, if any, are normally declared and paid annually, but the Series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the policy
of the Series not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Series to qualify as a
regulated investment company, if such qualification is in the best interests of
its shareholders, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of taxable income sufficient to relieve
it from substantially all Federal income and excise taxes.
(F) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from May 1, 1998, the date
operations commenced, over the period during which it is expected that a benefit
will be realized, not to exceed five years. At June 30, 1998, the unamortized
balance of such expenses amounted to $29,242. In the event that any of the
Initial Shares are redeemed during the amortization period, the redemption
proceeds will be reduced by any unamortized organization expenses in the same
proportion as the number of such shares being redeemed bears to the number of
such shares outstanding at the time of such redemption.
NOTE 2--INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
Series' average daily net assets and is payable monthly. However, Dreyfus had
undertaken from May 1, 1998 through June 30, 1998, to reduce the management fee
and reimburse such excess expenses paid by the Series, to the extent that the
Series' aggregate annual expenses (exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses) exceeded an annual rate of 1% of the
value of the Series' average daily net assets. The expense reimbursement,
pursuant to the undertaking, amounted to $10,609 during the period ended June
30, 1998.
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series.
The Series compensates Mellon under a custody agreement for providing
custodial services for the Series. During the period ended June 30, 1998, the
Series was charged $1,963 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended June 30, 1998 amounted
to $5,737,224 and $619,387, respectively.
At June 30, 1998, accumulated net unrealized depreciation on investments was
$191,850, consisting of $125,035 gross unrealized appreciation and $316,885
gross unrealized depreciation.
At June 30, 1998, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
[reg.tm]
[reg.tm]
DREYFUS INVESTMENT PORTFOLIOS,
CORE VALUE PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 172SA986
Investment Portfolios,
CORE VALUE PORTFOLIO
Semi-Annual
Report
June 30, 1998
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