Dreyfus Variable Investment Fund, International Value Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the portfolio
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the portfolio's investments and its share price.
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund, International Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, International Value Portfolio, covering the six-month period from January
1, 1999 through June 30, 1999. Inside, you'll find valuable information about
how the portfolio was managed during the reporting period, including a
discussion with the senior portfolio manager, Sandor Cseh.
Many international economies showed marked improvement after many of the world's
central banks lowered key short-term interest rates last fall to stimulate
economic growth. Less restrictive monetary policies especially helped prevent
further economic deterioration in Japan, Asia, Latin America and Eastern Europe,
where the worst of the global currency and credit crisis appears to be behind
us. In contrast, some Western European economies slowed moderately after the
formation of the European Monetary Union (EMU) and the debut of a new currency,
the euro.
These economic conditions produced mixed results for international stocks. Stock
markets in Japan and Asia began to recover over the past six months, showing
their first signs of real strength in over a year. Latin America provided good
results after concerns about Brazil' s currency devaluation abated. European
markets, on the other hand, provided mixed performance.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, International
Value Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Sandor Cseh, Senior Portfolio Manager
How did Dreyfus Variable Investment Fund, International Value Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, the Dreyfus Variable Investment
Fund, International Value Portfolio produced a total return of 9.67%.(1) This
compares with a 3.97% return for the portfolio's benchmark, the Morgan Stanley
Capital International Europe, Australasia, Far East ("MSCI-EAFE((reg.tm))")
Index for the same time period.(2)
We attribute this strong performance to several factors. First, in a global
trend that was particularly strong at the end of the period, investor preference
showed movement away from large capitalization, high-priced growth stocks, back
towards the value-oriented stocks in which the portfolio invests. Second,
several of the markets in which we invested a proportionally larger exposure,
notably Japan, outperformed the benchmark.
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, International Value Portfolio invests in an
internationally diversified portfolio of value stocks: stocks selling at
attractive prices relative to their perceived intrinsic worth based on
historical measures. These measures typically include price-to-earnings,
price-to-book value and price-to-cash flow ratios. Discrepancies from historical
norms are often the result of short-term factors that affect market perceptions.
We seek out stocks that have fallen out of general market favor. We purchase
such securities at a depressed price, hoping to profit when perceptions change
and prices revert to historical norms.
In implementing our value approach, the portfolio employs a multi-step process.
First, we choose how much to invest in each of the countries represented in the
MSCI-EAFE((reg.tm) ) Index. We make a baseline determination by the size of a
country' s gross domestic product and The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
the capitalization of its stock market compared to the world as a whole. We then
invest more or less than this proportion, based on our outlook for a country's
economy and the number of value opportunities we identify in its market.
Second, we select individual securities using a process that blends quantitative
and qualitative analysis. An initial computer screen eliminates approximately
90% of purchase candidates. Analysts perform extensive fundamental research and
may conduct on-site visits to determine which of the remaining 10% of stocks we
will buy. Stocks in the portfolio typically are sold when they reach a price at
which we no longer consider them attractive values, or when our analysts
determine that anticipated changes in market sentiment are no longer likely
What other factors influenced the portfolio's performance?
Market trends have historically cycled between preference for value and growth
types of investing. Low interest rates, falling commodity prices, and exciting
new technologies focused investor interest on growth issues for a long period by
historical standards. However, towards the end of our reporting period,
stabilizing commodity price and the threat of rising interest rates gave global
investors renewed incentive to consider value stocks.
Maintaining our value style, we found good investment opportunities in many
global markets. Europe was attractive as companies strove to increase efficiency
and productivity through consolidations and restructurings to compete in what is
emerging as a single economic market. In Britain, a strong market that
outperformed our benchmark, investments in Bunzel, a manufacturer of containers
and supermarket supplies, and the Laird Group, an auto parts manufacturer,
illustrate success in our value approach. And we believe Japan showed signs of
having addressed its fundamental economic and financial problems and positioning
itself to resume soundly based growth. As a result, our investments in compa
nies such as Aiful, a consumer finance firm, and Sankyo Company, a manufacturer
of amusement equipment are examples of securities the portfolio purchased at
prices depressed by historical standards, whose value was subsequently
recognized by the market.
What is the portfolio's current strategy?
As a whole, we believe growth-oriented stocks have outperformed value securities
for so long that the differences in valuation between these two types of
investments grew very wide by historical standards. As of the end of the period,
however, that gap appears to be narrowing, as investor sentiment reconsiders the
value style. It is, of course, impossible to determine if this trend will
continue. But we continued to believe that the dual disciplines of international
and value investing can benefit long-term investors.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. 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.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE INVESTMENT OF
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAINS DISTRIBUTIONS. THE MORGAN STANLEY
CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (MSCI-EAFE((reg.tm))) INDEX
IS AN UNMANAGED INDEX COMPOSED OF A SAMPLE OF COMPANIES REPRESENTATIVE OF THE
MARKET STRUCTURE OF EUROPEAN AND PACIFIC BASIN COUNTRIES AND INCLUDES NET
DIVIDENDS REINVESTED. THE INDEX IS THE PROPERTY OF MORGAN STANLEY & CO.
INCORPORATED.
The Portfolio
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCKS--93.4% Shares Value ($)
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<S> <C> <C>
AUSTRALIA--2.1%
Australia & New Zealand Banking 37,704 278,872
Goodman Fielder 60,000 53,809
Pacific Dunlop 85,988 124,806
457,487
AUSTRIA--.3%
EVN 400 58,676
BRAZIL--.2%
Telecomunicacoes Brasileiras, ADS 494 44,553
DENMARK--.8%
Jyske Bank 1,800 170,846
FINLAND--.8%
Kesko Oyj, Cl. B 13,000 175,502
FRANCE--10.7%
ALSTOM, ADS 3,310 105,920
AGF 2,740 132,373
Air Liquide 1,825 287,915
Bongrain 355 134,412
CNP Assurances 4,000 109,616
Compagnie Generale des Etablissements Michelin, Cl. B 4,051 166,248
Dexia France 1,300 174,561
Elf Aquitaine, ADS 3,000 220,688
PSA Peugeot Citroen 1,350 213,675
Pechiney, Cl. A 3,700 159,537
Societe Generale, Cl. A 1,628 287,824
Thompson CSF 5,024 175,149
Usinor 11,000 164,434
2,332,352
GERMANY--10.8%
Bayer 7,000 292,557
Deutsche Bank 4,000 244,762
Deutsche Lufthansa 8,500 154,586
GEA 6,500 196,348
Hoechst 3,900 177,117
KM Europa Metal 1,600 83,587
Merck KGaA 7,000 228,397
Siemens 3,900 301,784
Tarkett Sommer 3,500 31,320
COMMON STOCKS (CONTINUED) Shares Value ($)
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GERMANY (CONTINUED)
Veba 4,900 288,935
Viag 410 194,258
Volkswagen 2,100 134,910
2,328,561
GREECE--.7%
Hellenic Telecommunication Organization, ADS 12,800 141,600
HONG KONG--1.6%
Henderson Investment 200,000 139,198
HongKong Electric 62,321 200,810
340,008
ITALY--3.0%
Banca Popolare di Bergamo Credit Varesino 2,500 54,854
ENI, ADS 4,000 240,000
San Paulo-IMI, ADS 3,918 107,745
Telecom Italia 43,730 238,634
641,233
JAPAN--25.6%
Aiful 1,200 146,924
Canon 13,000 373,730
Credit Saison 12,400 259,166
Dai-Tokyo Fire & Marine Insurance 45,000 161,711
Fuji Machine Manufacturing 6,000 184,883
Honda Motor 6,000 254,276
Ito-Yokado 1,000 66,914
Mabuchi Motor 3,400 315,985
Marubeni 75,000 156,753
Matsumotokiyoshi 5,000 299,463
Minebea 29,000 323,420
Mitsubishi Heavy Industries 37,000 150,078
Murata Manufacturing 4,000 263,031
NAMCO 6,000 161,090
Nichiei 3,050 267,079
Nishimatsu Construction 24,000 137,596
Rinnai 10,000 229,657
Rohm 2,000 313,093
Sankyo 8,000 201,569
Sankyo Company 6,500 310,904
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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JAPAN (CONTINUED)
Sekisui Chemical 30,000 173,977
Sony 3,000 323,421
Toyota Motor 5,000 158,200
Yamanouchi Pharmaceutical 8,000 305,990
5,538,910
MEXICO--.2%
Telefonos de Mexico, ADR 603 48,730
NETHERLANDS--7.0%
ABN-AMRO 13,552 294,411
Akzo Nobel, ADS 4,100 173,738
Buhrmann 9,206 149,044
Hollandsche Beton Groep 10,231 131,241
Hunter Douglas 5,682 195,738
KPN, ADS 4,680 224,640
Koninklijke (Royal) Philips Electronics, ADR 1,816 183,189
Stork 6,861 156,859
1,508,860
NEW ZEALAND--1.2%
Fletcher Challenge Paper 125,596 94,371
Telekom Corporation of New Zealand 37,800 163,163
257,534
NORWAY--.4%
Orkla, Cl. B 6,800 92,454
PERU--.5%
Telefonica del Peru, ADS 7,500 113,438
PORTUGAL--1.2%
Banco Pinto & Sotto Mayor 6,160 109,735
Portugul Telecom 3,700 151,000
260,735
SINGAPORE--1.7%
Development Bank of Singapore 20,700 253,196
United Overseas Bank 16,000 111,967
365,163
COMMON STOCKS (CONTINUED) Shares Value ($)
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SOUTH KOREA--.6%
Korea Electric Power, ADR 6,500 133,250
SPAIN--4.5%
Argentaria, ADS 3,400 156,400
Banca Popular Espanol 3,200 230,900
Endesa 4,300 91,992
Gas y Electridad 3,300 260,306
Repsol, ADS 11,900 241,719
981,317
SWEDEN--.8%
Autoliv 5,700 174,487
SWITZERLAND--3.7%
Barry Callebaut 1,172 180,250
Forbo 500 199,676
Sulzer 250 152,665
UBS 900 269,855
802,446
UNITED KINGDOM--15.0%
BOC Group 14,949 292,455
Barclays 5,527 160,970
British Airway 6,314 43,606
British Airway, ADS 950 67,866
Bunzl 52,183 258,925
Laird Group 29,700 123,938
Medeva 43,571 70,804
Morgan Crucible 55,790 238,093
PowerGen 24,986 269,635
Rexam 35,000 141,362
Rio Tinto 14,002 234,938
Royal & Sun Alliance Insurance Group 29,452 264,394
Royal Bank of Scotland 11,000 224,223
Safeway 59,833 240,009
Storehouse 75,602 155,060
Tomkins 66,440 288,262
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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UNITED KINGDOM (CONTINUED)
Wolseley 22,800 171,765
3,246,305
TOTAL COMMON STOCKS
(cost $19,256,936) 20,214,447
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PREFERRED STOCKS--.8%
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GERMANY:
Hugo Boss 60 80,691
Rheinmetall 5,500 99,001
(cost $177,338) 179,692
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Principal
SHORT-TERM INVESTMENTS--2.7% Amount ($) Value ($)
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U.S. TREASURY BILLS;
4.4%, 9/16/99
(cost $581,305) 587,000 581,249
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TOTAL INVESTMENTS (cost $20,015,579) 96.9% 20,975,388
CASH AND RECEIVABLES (NET) 3.1% 680,333
NET ASSETS 100.0% 21,655,721
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 20,015,579 20,975,388
Cash 287,459
Cash denominated in foreign currencies 401,854 400,803
Dividends receivable 139,080
Receivable for investment securities sold 71,216
Prepaid expenses 404
21,874,350
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 16,831
Payable for investment securities purchased 183,741
Payable for shares of Beneficial Interest redeemed 124
Accrued expenses 17,933
218,629
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NET ASSETS ($) 21,655,721
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 19,608,114
Accumulated undistributed investment income-net 120,374
Accumulated net realized gain (loss) on investments 973,588
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 953,645
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NET ASSETS ($) 21,655,721
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SHARES OUTSTANDING
(unlimited number of $.001 par value
shares of Beneficial Interest authorized) 1,492,952
NET ASSET VALUE, offering and redemption price per share ($) 14.51
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $44,482 foreign taxes withheld at source) 324,955
Interest 8,624
TOTAL INCOME 333,579
EXPENSES:
Investment advisory fee-Note 3(a) 98,145
Custodian fees 11,949
Auditing fees 10,465
Prospectus and shareholders' reports 5,532
Legal fees 695
Shareholder servicing costs 261
Trustees' fees and expenses-Note 3(b) 200
Loan commitment fees-Note 2 112
Miscellaneous 426
TOTAL EXPENSES 127,785
INVESTMENT INCOME-NET 205,794
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 1,078,354
Net realized gain (loss) on forward currency exchange contracts (13,544)
NET REALIZED GAIN (LOSS) 1,064,810
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 560,110
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,624,920
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,830,714
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 205,794 212,294
Net realized gain (loss) on investments 1,064,810 1,714,620
Net unrealized appreciation (depreciation)
on investments 560,110 (120,484)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,830,714 1,806,430
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (122,643) (175,934)
Net realized gain on investments (184,654) (1,514,812)
TOTAL DIVIDENDS (307,297) (1,690,746)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 6,324,660 13,646,748
Dividends reinvested 307,297 1,690,746
Cost of shares redeemed (7,179,643) (13,789,635)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (547,686) 1,547,859
TOTAL INCREASE (DECREASE) IN NET ASSETS 975,731 1,663,543
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NET ASSETS ($):
Beginning of Period 20,679,990 19,016,447
END OF PERIOD 21,655,721 20,679,990
Undistributed investment income--net 120,374 37,223
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 458,392 954,460
Shares issued for dividends reinvested 22,916 128,159
Shares redeemed (526,441) (958,695)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (45,133) 123,924
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 Year Ended December 31,
--------------------------
(Unaudited) 1998 1997 1996(a)
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<S> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 13.45 13.45 12.80 12.50
Investment Operations:
Investment income--net .14(b) .14 .07 .08
Net realized and unrealized gain (loss)
on investments 1.14 1.01 1.03 .34
Total from Investment Operations 1.28 1.15 1.10 .42
Distributions:
Dividends from investment income--net (.09) (.12) (.07) (.08)
Dividends from net realized gain on
investments (.13) (1.03) (.30) (.04)
Dividends in excess of net realized gain
on investments -- -- (.08) --
Total Distributions (.22) (1.15) (.45) (.12)
Net asset value, end of period 14.51 13.45 13.45 12.80
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TOTAL RETURN (%) 9.67(c) 8.74 8.71 3.41(c,d)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .65(c) 1.29 1.42 1.01(c)
Ratio of net investment income to average
net assets 1.04(c) .94 .74 .76(c)
Decrease reflected in above expense ratios
due to undertakings by Dreyfus -- -- -- .34(c)
Portfolio Turnover Rate 17.41(c) 42.14 25.67 24.48(c)
Net Assets, end of period ($ x 1,000) 21,656 20,680 19,016 8,027
(A) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) 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>
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, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the International Value Portfolio (the "portfolio") 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 portfolio is a diversified series. The portfolio's investment
objective is long-term capital growth. The Dreyfus Corporation ("Dreyfus")
serves as the portfolio's investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A. Premier Mutual Fund Services, Inc. is the distributor of the
portfolios' 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 portfolio' s 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
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 portfolio 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 portfolios'
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 custody agreement, the portfolio received
net earnings credits of $60 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(d) 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 portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue
Code of 1986, as amended (the "Code"). To the extent that net realized capital
gain can be offset by capital loss carryovers, if any, it is the policy of the
portfolio not to distribute such gain.
(e) Federal income taxes: It is the policy of the portfolio 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 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 portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended June 30, 1999, the portfolio did not borrow under the Facility.
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 1% of the value of the
portfolio's average daily net assets and is payable monthly.
The portfolio 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 portfolio.
(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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended June 30, 1999 amounted to $3,362,421 and $4,556,231,
respectively.
The portfolio enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to settle foreign currency transactions. When executing
forward currency exchange contracts, the portfolio is obligated to buy or sell a
foreign currency at a specified rate on a certain date in the future. With
respect to sales of forward currency exchange contracts, the portfolio would
incur a loss if the value of the contract increases between the date the forward
contract is opened and the date the forward contract is closed. The portfolio
realizes a gain if the value of the contract decreases between those dates. With
respect to purchases of forward currency exchange contracts, the portfolio would
incur a loss if the value of the contract decreases between the date the forward
contract is opened and the date the forward contract is closed. The portfolio
realizes a gain if the value of the contract increases between those dates. The
portfolio is also exposed to credit risk associated with counter party
nonperformance on these forward currency exchange contracts which is typically
limited to the unrealized gain on each open contract. At June 30, 1999, there
were no forward exchange contracts outstanding.
(b) At June 30, 1999, accumulated net unrealized appreciation on investments was
$959,809, consisting of $2,672,787 gross unrealized appreciation and $1,712,978
gross unrealized depreciation.
At June 30, 1999, 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).
NOTES
For More Information
Dreyfus Variable Investment Fund, International Value
Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
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
(c) 1999 Dreyfus Service Corporation 152SA996
