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Previous: DREYFUS VARIABLE INVESTMENT FUND, N-30D, 1998-08-24 |
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[dreyfus lion "d" logo] (reg.tm)
[dreyfus logo] (reg.tm)
DREYFUS VARIABLE INVESTMENT FUND,
SMALL COMPANY STOCK 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. 151SA986
Variable
Investment Fund,
SMALL COMPANY
STOCK PORTFOLIO
Semi-Annual
Report
June 30, 1998
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the six months
ended June 30, 1998 for the Dreyfus Variable Investment Fund - Small Company
Stock Portfolio. During this time, your portfolio provided a total return of
3.32% ,* compared to a total return of 5.66% for the Portfolio's benchmark, the
Russell 2500 Index.**
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, 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 reflected 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, 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
Measured broadly, the half-year ended June 30, 1998 was another period of
solid advance for the stock market. Yet that general statement did not apply to
all categories of stocks.
To be sure, the S& P 500 achieved a new record of 17.72% at the end of the
six-month period. The Dow Jones Industrial Average (DJIA), while it didn't reach
its all-time record, nonetheless gained 14.16% for the six months, closing the
half-year above 9000. Small and medium size stocks, however, underperformed the
large cap issues. The Standard & Poor's MidCap 400 Index gained just 8.63% for
the half-year, and the Russell 2500 Index of small cap issues advanced a mere
5.66%.
The first calendar quarter provided most of the strength for the six months,
particularly among the large cap companies. In the April-June quarter, the S&P
500 gained 3.32% and the DJIA 2.15%, while the Russell 2500 actually dropped by
4.17%.
Stock categories that were strongest during the half-year included financials,
particularly banks, brokerages, insurance and diversified financial services;
technology, especially communications and computer issues; and cyclical consumer
stocks such as advertising, airlines, automotive, broadcasting and home
construction.
The weak categories for the period included precious metals, oil drilling and
oilfield suppliers, and some industrial issues.
Corporate profits dropped sharply from the strong pace of last year. According
to the statistical service First Call, profits for stocks in the S&P 500 were
expected to show a rise of just 2.3% for the second quarter, compared to 3.8% in
the first quarter. Of course there were optimists forecasting a hefty rise in
profits for later this year and early 1999, which could potentially propel stock
prices upward. Yet most investors seemed preoccupied with the here and now,
which included the strike at General Motors plants and the continuing fallout
from financial troubles in Japan and Southeast Asia.
As expected, the Fed at its last meeting made no change in interest rates,
even though inflationary pressures are a constant worry for the Fed. The reason
for their inaction may well have been the precarious state of some economies
elsewhere in the world and the desire not to precipitate a major correction in
the U.S. stock market. Even so, the Fed thought it timely to issue a stern
warning to banks not to become overextended with unwise loans, which happened in
the 1980s.
Despite warnings like this, and that stock prices are extremely high
historically in relation to earnings and cash flow, investors still appeared
eager to own equities. Moreover, surveys of consumer sentiment continued to show
that the average consumer was more confident about the future than had been the
case in a generation.
PORTFOLIO FOCUS
The portfolio' s underperformance in the past six months relative to its
benchmark occurred in the electronics, pollution control, producer goods, and
oil service industries. The five worst performing stocks were largely confined
to those industries and they consisted of Philip Services (pollution control),
Adaptec and Hadco (electronics), Smith International (oil service), and CompUSA
(retail).
Philip Services was hurt by an overstatement of past earnings which undermined
management' s credibility. The stock was sold at the end of April. Adaptec and
Hadco were impacted by the Asian slowdown and subsequent earnings
disappointments. Smith International was hit by softer oil and gas prices.
CompUSA was hurt by the lower selling prices for personal computers.
On the positive side, the best performing industries relative to the Russell
2500 were apparel, tires, insurance, miscellaneous finance, and services. In
terms of stocks, the five best performers were Fingerhut Cos. (catalog
retailing) , America West Holdings Cl. B (airline), Intuit (financial software),
Galileo International (airline reservation systems) , and Footstar (shoe
retailer).
Takeovers and mergers once again played a positive role in the Fund's
performance. LCI International, Money Store, Devon Group, Regal Cinemas, Medusa,
Triangle Pacific and Mid-Ocean Limited were all in the process of being acquired
at significant price premiums.
We continued to adhere strictly to our investment disciplines during the
reporting period. The Fund's sector weightings were similar to the Russell 2500
and the portfolio characteristics of beta volatility, yield and market
capitalization were also similar to the benchmark. We will continue to closely
monitor holdings and are on a constant lookout for new opportunities in seeking
to enhance returns. Interestingly, the relative valuations of smaller cap stocks
are now close to their 1990 lows as compared to larger cap stocks. We will look
to see what, if anything, this may mean going forward.
Sincerely,
[Anthony J. Galise signature logo] [James C. Wadsworth signature logo]
Anthony J. Galise and James C. Wadsworth
Portfolio Manager Portfolio Manager
July 17, 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
imposed in connection with investing in variable insurance contracts, which will
reduce returns.
**SOURCE: THE FRANK RUSSELL COMPANY -- Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Russell 2500
Index is a widely accepted unmanaged index of small cap stock performance.
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Common Stocks--99.3% Shares Value
- -------------------------------------------------------
____________ ___________
<S> <C> <C>
Aerospace--.8% Cordant Technologies 3,200 $ 147,600
Gulfstream Aerospace 3,400 (a) 158,100
____________
305,700
____________
Basic Industries--6.8% ACX Technologies 8,450 (a) 183,787
Agrium 12,500 157,813
American Building 3,400 (a) 101,150
AptarGroup 3,400 211,437
Cabot 9,000 290,813
Caraustar Industries 4,450 128,494
Clayton Homes 12,137 230,602
Cytec Industries 7,050 (a) 311,963
Jacobs Engineering Group 3,700 (a) 118,863
Mail-well 9,900 (a) 214,706
Medusa 3,950 247,863
Sybron International 6,700 (a) 169,175
Triangle Pacific 3,950 (a) 217,250
____________
2,583,916
____________
Capital Spending--24.7% AGCO 10,100 207,681
Adaptec 7,070 (a) 101,189
Altron 7,250 (a) 93,344
Analysts International 5,000 141,875
Apple Computer 11,300 (a) 324,169
Applied Graphics Technologies 2,630 (a) 120,322
Atmel 8,300 (a) 113,087
Avis Rent A Car 7,000 (a) 173,250
CellStar 12,100 (a) 156,544
Cognex 4,650 (a) 86,025
Cognos 7,800 (a) 207,797
Dallas Semiconductor 5,050 156,550
Duke Realty Investments 8,200 194,237
ECI Telecommunications, ADR 9,500 359,812
Electronics For Imaging 8,100 (a) 171,112
Fairchild, Cl. A 5,100 (a) 102,956
First Health Group 10,300 (a) 293,550
Galilieo International 7,700 346,981
Hadco 4,850 (a) 113,066
Hummingbird Communications 6,750 (a) 180,562
Intuit 8,200 (a) 502,250
Keane 2,500 (a) 140,000
Kennametal 5,050 210,837
Mutual Risk Management 11,666 425,080
NeoMagic 11,900 (a) 184,450
OmniQuip International 5,800 107,300
Pittston Brinks Group 8,150 300,531
Plantronics 6,600 (a) 339,900
Rental Service 8,100 (a) 272,363
SMART Modular Technologies 4,400 (a) 64,350
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ___________
Capital Spending (continued) SPX 2,700 $ 173,813
Silicon Valley Group 11,900 (a) 191,144
Sirrom Capital 14,000 364,000
Sotheby's Holdings, Cl. A 10,200 228,225
Sterling Commerce 7,072 (a) 342,992
Sterling Software 14,200 (a) 419,788
SunGuard Data Systems 12,700 (a) 487,363
Tech Data 7,850 (a) 336,569
Waters 4,900 (a) 288,794
Zebra Technologies, Cl. A 6,900 (a) 294,975
Ziff-Davis 8,900 (a) 123,488
____________
9,442,321
____________
Consumer Cyclical--16.4% Action Performance Cos. 4,500 (a) 144,844
Black Box 6,100 (a) 202,444
Borg-Warner Automotive 3,350 161,009
Chancellor Media, Cl. A 9,500 (a) 471,734
CompUSA 10,300 (a) 186,044
Ethan Allen Interiors 4,900 244,694
Fingerhut Cos. 12,600 415,800
Footstar 7,200 (a) 345,600
General Nutrition 9,600 (a) 298,800
Hollinger International, Cl. A 11,400 193,800
Interface, Cl. A 15,700 316,944
King World Productions 4,700 (a) 119,850
Michaels Stores 8,500 (a) 299,891
Patriot American Hospitality 1 14
Promus Hotel 4,730 (a) 182,105
Richfood Holdings 4,775 98,783
Ryan's Family Steak House 19,850 (a) 203,463
Safeskin 10,500 (a) 431,812
Sinclair Broadcast Group, Cl. A 14,500 (a) 416,875
Speedway Motorsports 6,600 (a) 168,712
Tommy Hilfiger 3,850 (a) 240,625
Tower Automotive 4,000 (a) 171,500
United National Foods 4,700 (a) 133,950
Wallace Computer Services 7,400 175,750
Warnaco Group, Cl. A 7,000 297,062
Zale 10,550 (a) 335,622
____________
6,257,727
____________
Consumer Staples--3.0% Canandaigua Wine, Cl. A 2,700 (a) 132,806
Central Garden & Pet 8,200 (a) 255,225
Dial 10,400 269,750
Robert Mondavi, Cl. A 2,400 (a) 68,100
Suiza Foods 7,117 (a) 424,796
____________
1,150,677
____________
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ___________
Energy--6.1% BJ Services 6,700 (a) $ 194,719
Camco International 2,200 171,325
Devon Energy 5,900 206,131
Holly 3,650 93,988
KN Energy 5,150 279,066
Newfield Exploration 6,600 (a) 164,175
Ocean Energy 8,588 (a) 168,003
Offshore Logistics 7,700 (a) 136,675
R&B Falcon 8,800 (a) 199,100
Sempra Energy 10,000 (a) 277,486
Smith International 4,350 (a) 151,434
Ultramar Diamond Shamrock 3,800 119,937
WICOR 8,200 189,625
____________
2,351,664
____________
Health Care--8.6% AmeriSource Health, Cl. A 7,700 (a) 505,794
Dura Pharmaceuticals 5,300 (a) 118,587
ESC Medical Systems 6,300 (a) 212,625
Lincare Holdings 7,400 (a) 311,263
Orthodontic Centers of America 15,200 (a) 318,250
PSS World Medical 15,100 (a) 220,837
PharMerica 17,700 (a) 213,506
PhyCor 10,100 (a) 167,281
Quorum Health Group 8,700 (a) 230,550
Sun Healthcare Group 10,300 (a) 150,638
Total Renal Care Holdings 6,100 (a) 210,450
Universal Health Services, Cl. B 4,800 (a) 280,200
Watson Pharmaceuticals 7,300 (a) 340,819
____________
3,280,800
____________
Interest Sensitive--21.1% AMBAC 5,900 345,150
AMRESCO 4,650 (a) 135,431
AmeriCredit 5,000 (a) 178,438
Amerin 7,000 (a) 204,313
Bank United, Cl. A 6,100 292,038
Boston Properties 10,100 348,450
CMAC Investment 7,300 448,950
Camden Property Trust 6,700 199,325
City National 9,700 358,294
EVEREN Capital 9,340 261,520
Edwards (A.G.) 3,725 159,011
Equity Office Properties Trust 8,276 234,832
FelCor Suite Hotels 4,400 138,050
First Tennessee National 9,200 290,375
Franchise Finance Corp. of America 6,400 166,000
Hambrecht & Quist Group 3,600 (a) 130,725
Health Care Property Investors 4,850 174,903
Hibernia, Cl. A 15,100 304,831
Highwoods Properties 5,100 164,794
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ___________
Interest Sensitive (continued) Life Re 2,600 $ 213,200
M & T Bank 539 298,606
Mack-Cali Realty 6,440 221,375
Mercantile Bankshares 8,500 295,906
Mid Ocean 3,450 270,825
Old Kent Financial 9,159 329,422
Pacific Gulf Properties 8,700 185,419
People's Bank 6,200 214,675
Peoples Heritage Financial Group 13,600 321,300
Protective Life 7,100 260,481
Reliance Group Holdings 15,700 274,750
Sovereign Bancorp 11,360 185,665
TCF Financial 9,100 268,450
Waddell & Reed Financial, Cl. A 7,400 177,137
____________
8,052,641
____________
Mining and Metals--1.9% Brush Wellman 5,300 108,981
Cable Design Technologies 6,575 (a) 135,609
IMCO Recycling 8,300 153,550
Texas Industries 2,900 153,700
Titanium Metals 7,400 163,263
____________
715,103
____________
Transportation--2.4% Air Express International 4,750 127,063
Airborne Freight 5,600 195,650
America West Holdings, Cl. B 9,450 (a) 269,916
Teekay Shipping 4,200 105,262
Wisconsin Central Transportation 9,800 (a) 214,375
____________
912,266
____________
Utilities--7.5% CalEnergy 9,500 (a) 285,594
Calpine 11,900 (a) 240,231
DQE 7,350 264,600
Illinova 9,000 270,000
MidAmerican Energy Holdings 11,150 241,119
Montana Power 7,700 267,575
NIPSCO Industries 10,200 285,600
Pinnacle West Capital 5,950 267,750
Qwest Communications 8,187 (a) 285,525
Tel-Save Holdings 12,700 (a) 187,325
Transaction Network Services 13,600 (a) 286,450
____________
2,881,769
____________
TOTAL COMMON STOCKS
(cost $34,624,281) $37,934,584
============
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Principal
Short-Term Investments--3.8% Amount Value
- -------------------------------------------------------
____________ ___________
U.S. Treasury Bills: 4.91%, 8/20/98 $ 112,000 $ 111,246
4.87%, 8/27/98 36,000 35,723
4.89%, 9/3/98 188,000 186,359
4.835%, 9/10/98 413,000 409,023
4.90%, 9/17/98 481,000 475,911
4.885%, 9/24/98 34,000 33,611
4.97%, 10/8/98 202,000 199,239
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $1,450,918) $ 1,451,112
============
TOTAL INVESTMENTS (cost $36,075,199) 103.1% $ 39,385,696
======= ============
LIABILITIES, LESS CASH AND RECEIVABLES (3.1%) $ (1,181,536)
======= ============
NET ASSETS 100.0% $38,204,160
======= ============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
____________ ___________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $36,075,199 $39,385,696
Cash 16,524
Receivable for investment securities sold 223,322
Dividends receivable 23,623
Prepaid expenses 257
____________
39,649,422
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 22,565
Payable for investment securities purchased 1,404,158
Accrued expenses 18,539
____________
1,445,262
____________
NET ASSETS $38,204,160
============
REPRESENTED BY: Paid-in capital $34,746,372
Accumulated undistributed investment income-net 34,559
Accumulated net realized gain (loss) on investments 112,732
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 3,310,497
____________
NET ASSETS $38,204,160
============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) 2,298,915
NET ASSET VALUE, offering and redemption price per share $16.62
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $168 foreign taxes
<S> <C> <C>
withheld at source) $173,161
Interest 22,952
_________
Total Income $196,113
EXPENSES: Investment advisory fee--Note 3(a) 127,129
Custodian fees--Note 3(a) 13,845
Auditing fees 13,665
Prospectus and shareholders' reports 7,908
Registration fees 2,708
Shareholder servicing costs 625
Trustees' fees and expenses--Note 3(b) 319
Legal fees 210
Loan commitment fees--Note 2 125
Miscellaneous 556
_________
Total Expenses 167,090
_________
INVESTMENT INCOME--NET 29,023
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments $128,356
Net unrealized appreciation (depreciation) on investments 810,217
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 938,573
_________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $967,596
=========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
________________ _______________
OPERATIONS:
<S> <C> <C>
Investment income--net $ 29,023 $ 79,878
Net realized gain (loss) on investments 128,356 535,237
Net unrealized appreciation (depreciation) on investments 810,217 1,941,468
____________ ____________
Net Increase (Decrease) in Net Assets Resulting from Operations 967,596 2,556,583
____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (4,134) (70,208)
Net realized gain on investments (93,031) (467,411)
____________ ____________
Total Dividends (97,165) (537,619)
____________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold 10,915,350 19,389,206
Dividends reinvested 97,166 537,619
Cost of shares redeemed (1,832,856) (1,940,009)
____________ ____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 9,179,660 17,986,816
____________ ____________
Total Increase (Decrease) in Net Assets 10,050,091 20,005,780
NET ASSETS:
Beginning of Period 28,154,069 8,148,289
____________ ____________
End of Period $38,204,160 $28,154,069
============ ============
UNDISTRIBUTED INVESTMENT INCOME--NET $ 34,559 $ 9,670
____________ ____________
Shares Shares
____________ ____________
CAPITAL SHARE TRANSACTIONS:
Shares sold 657,255 1,246,716
Shares issued for dividends reinvested 5,610 34,650
Shares redeemed (109,823) (137,983)
____________ ____________
Net Increase (Decrease) in Shares Outstanding 553,042 1,143,383
============ ============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK 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 each period indicated. This information
has been derived from the Series' financial statements.
Six Months Ended
June 30, 1998 Year Ended December 31,
__________________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
__________ ______ ______
<S> <C> <C> <C>
Net asset value, beginning of period $16.13 $13.52 $12.50
______ ______ ______
Investment Operations:
Investment income--net .01 .05 .05
Net realized and unrealized gain (loss)
on investments .53 2.89 1.03
______ ______ ______
Total from Investment Operations .54 2.94 1.08
______ ______ ______
Distributions:
Dividends from investment income--net (.00)(2) (.04) (.05)
Dividends from net realized gain on investments (.05) (.29) (.01)
______ ______ ______
Total Distributions (.05) (.33) (.06)
______ ______ ______
Net asset value, end of period $16.62 $16.13 $13.52
====== ====== ======
TOTAL INVESTMENT RETURN 3.32%(3) 21.77%
8.73%(3,4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .49%(3) 1.12% .75%(3)
Ratio of net investment income
to average net assets .08%(3) .53% .39%(3)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation -- -- .19%(3)
Portfolio Turnover Rate 20.12%(3) 34.48% 35.68%(3)
Net Assets, end of period (000's Omitted) $38,204 $28,154 $8,148
- -----------------------------
(1) From April 30, 1996 (commencement of operations) to December 31, 1996.
(2) Amount represents less than $.01 per share.(
(3) Not annualized.
(4) Calculated based on net asset value on the close of business on May 1, 1996 (commencement of initial offering) to December
31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Variable Investment Fund (the "Fund" ) is registered under the
Investment Company Act of 1940 ("Act") as an open-end management investment
company, operating as a series company currently offering thirteen series,
including the Small Company Stock Portfolio (the "Series") and is intended to be
a funding vehicle for variable annuity contracts and variable life insurance
policies to be offered by the separate accounts of life insurance companies. The
Series is a diversified portfolio. The Series' investment objective is to
provide investment results that are greater than the total return performance of
publicly-traded common stocks in the aggregate, as represented by the Russell
2500 Index. The Dreyfus Corporation ("Dreyfus") serves as the Series' investment
adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"). Premier
Mutual Fund Services, Inc. is the distributor of the Series' shares, which are
sold without a sales charge.
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 may 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.
(B) 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 receives
net earnings credits based on available cash balances left on deposit.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain 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.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes
NOTE 2--BANK LINE OF CREDIT:
The Series participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Series has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Series at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended June
30, 1998, the Series did not borrow under the Facility.
DREYFUS VARIABLE INVESTMENT FUND, SMALL COMPANY STOCK PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--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.
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 $13,845 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 $2,500 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--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 $15,904,189 and $6,742,422, respectively.
At June 30, 1998, accumulated net unrealized appreciation on investments was
$3,310,497, consisting of $5,813,405 gross unrealized appreciation and
$2,502,908 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).
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