Dreyfus Variable Investment Fund, Special Value Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
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.
<PAGE>
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
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The Portfolio
Dreyfus Variable Investment Fund, Special Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Special 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 portfolio manager, Timothy M. Ghriskey.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader Standard & Poor's 500 Composite Stock
Price Index and the technology-laden NASDAQ Index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Special Value
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
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DISCUSSION OF PERFORMANCE
Timothy M. Ghriskey, Portfolio Manager
How did Dreyfus Variable Investment Fund, Special Value Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Special Value Portfolio produced a total return of 8.68%.(1) This compares
favorably to the Wilshire Large Company Value Index's 7.81% total return and the
Wilshire MidCap Value Index's return of 4.41% for the same period.(2)
We attribute the portfolio' s performance primarily to our success with the
selection and timing of individual investments. The portfolio benefited in
particular from selected healthcare investments. The portfolio also gained from
exposure to certain economic sectors that were positively exposed to the stock
market' s mid-period shift in favor of value-oriented stocks and smaller
companies.
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, Special Value Portfolio invests in a
diversified portfolio of value-oriented companies. We define a value stock as
one that appears underpriced in relation to the company's intrinsic value, as
measured by a wide range of financial and business data. To put it another way,
we seek to buy what we believe are growing companies at bargain prices.
We select investments one stock and one company at a time. Our investment
process starts with computerized, quantitative analysis of the universe of
stocks. First we attempt to identify those stocks that meet our definition of
value, and then we focus on those value stocks we believe are best positioned to
grow in the current market environment. Our team of experienced analysts examine
the fundamentals of each top-ranked candidate. Armed with these analytical
insights, the portfolio manager decides which stocks to purchase, and whether
any current holdings should be sold.
The Portfolio
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DISCUSSION OF PERFORMANCE (CONTINUED)
The result of our approach during the recent six-month period was a diversified
portfolio of carefully selected stocks that delivered mixed performance. The
portfolio enjoyed particularly strong results from several of its health care
holdings, despite an increasingly restrictive regulatory environment that hurt
many stocks in the sector. Holdings such as Allergan and Columbia/HCA Healthcare
rose sharply in response to effective restructuring efforts. Several other
holdings among HMOs also bucked the sector's poor overall performance by taking
advantage of a strong pricing environment and implementing effective cost
controls.
Similarly, many of the portfolio's financial industry holdings performed well,
despite concerns about impact of rising interest rates that hurt the financial
sector as a whole. Our performance among financials was led by American
International Group and Citigroup, two of the largest and best-regarded
companies in the sector. We also scored notable successes with our holdings in
several other sectors. Above-average performers included capital goods
companies, such as Honeywell and Tyco International; communications services
companies, such as MCI WorldCom and Bell Atlantic; and energy companies, such as
BP Amoco, A.D.S. and Mobil.
Of course not every stock in the portfolio showed positive returns. Some lagged,
even among our best-performing sectors. Among health care stocks, for example,
our holdings of pharmaceutical companies, such as Zeneca Group, A.D.R. and
American Home Products, faltered due to regulatory and reimbursement concerns.
In the financial arena, several insurance company holdings underperformed, hurt
by fears of Y2K-related lawsuits.
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What other factors influenced the portfolio's performance?
In the consumer staples sector, company-specific problems hurt several of the
portfolio' s holdings. For example, Dean Foods financed an acquisition through
the distribution of shares of stock, thereby diluting shareholder value and
forcing stock prices lower. Fresh Del Monte Produce suffered from a decline in
banana prices. Poor results from these and other securities drove the
portfolio's return from consumer staples investments into negative territory.
What is the portfolio's current strategy?
As of June 30, 1999, we have been encouraged by the market's broadening base of
strength. Value-oriented stocks have performed relatively well since mid-April,
whereas during the first few months of the year most of the market's gains had
been concentrated among a handful of very large, high-growth companies.
Of course we cannot be certain that investors' interest in value will continue,
but we continue to adhere to the portfolio's investment approach.
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: WILSHIRE ASSOCIATES, INC. -- THE WILSHIRE LARGE COMPANY VALUE INDEX
IS CONSTRUCTED BY USING A BLEND OF PRICE-TO-BOOK AND FORECAST PRICE-TO-EARNINGS
RATIOS. THE LARGEST 750 STOCKS IN THE WILSHIRE 5000 ARE RANKED BASED ON A STYLE
SCORE THAT IS 75% PRICE-TO-BOOK RATIO AND 25% FORECAST P/E. THE UNIVERSE IS
DIVIDED SO THAT COMPANIES THAT REPRESENT HALF OF THE TOTAL CAPITALIZATION FALL
INTO GROWTH AND THE REMAINDER ARE PLACED INTO VALUE. THE WILSHIRE MIDCAP VALUE
INDEX IS COMPRISED OF 500 STOCKS THAT RANK IN SIZE FROM 501ST TO 1,000TH WITHIN
THE WILSHIRE 5000 AND ARE RANKED BASED ON A STYLE SCORE THAT IS 75%
PRICE-TO-BOOK RATIO AND 25% FORECAST P/E.
The Portfolio
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STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
COMMON STOCKS--100.2% Shares Value ($)
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<S> <C> <C>
CONSUMER DURABLES--4.3%
Black & Decker 23,200 1,464,500
General Motors 18,900 1,247,400
2,711,900
CONSUMER SERVICES--4.7%
Cendant 63,800 (a) 1,307,900
Time Warner 5,300 389,550
Wendy's International 44,200 1,251,413
2,948,863
ELECTRONIC TECHNOLOGY--6.4%
Hewlett-Packard 4,100 412,050
Intel 19,000 1,130,500
International Business Machines 19,400 2,507,450
4,050,000
ENERGY MINERALS--9.4%
BP Amoco, A.D.S. 11,400 1,236,900
Mobil 17,700 1,752,300
Royal Dutch Petroleum (New York Shares) 29,600 1,783,400
Texaco 19,000 1,187,500
5,960,100
FINANCE--19.9%
Bank of America 25,900 1,898,794
Bank One 23,000 1,369,938
Chase Manhattan 19,200 1,663,200
Citigroup 40,500 1,923,750
First Tennessee National 29,600 1,134,050
Fleet Financial Group 31,000 1,375,625
KeyCorp 18,400 591,100
Morgan Stanley Dean Witter & Co. 7,400 758,500
Wells Fargo 43,600 1,863,900
12,578,857
HEALTH SERVICES--5.5%
Columbia/HCA Healthcare 47,200 1,076,750
Foundation Health Systems, Cl. A 58,600 (a) 879,000
Wellpoint Health Networks 17,900 (a) 1,519,263
3,475,013
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COMMON STOCKS (CONTINUED) Shares Value ($)
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HEALTH TECHNOLOGY--3.5%
Allergan 12,800 1,420,800
Lilly (Eli) & Co. 6,000 429,750
Pharmacia & Upjohn 6,100 346,556
2,197,106
INSURANCE--7.8%
ACE 38,800 1,096,100
American General 17,300 1,303,987
American International Group 11,600 1,357,925
CIGNA 5,600 498,400
Everest Reinsurance Holdings 19,700 642,713
4,899,125
NON-ENERGY MINERALS--1.6%
Alcoa 16,600 1,027,125
PROCESS INDUSTRIES--6.4%
Dow Chemical 10,000 1,268,750
duPont (E.I.) deNemours & Co. 10,000 683,125
International Paper 22,300 1,126,150
Lyondell Chemical 35,500 732,187
Rohm & Haas 5,700 244,388
4,054,600
PRODUCER MANUFACTURING--7.4%
Coltec Industries 29,400 (a) 637,612
Delphi Automotive Systems 13,209 245,192
General Electric 10,800 1,220,400
Honeywell 10,600 1,228,275
Tyco International 14,100 1,335,975
4,667,454
RETAIL TRADE--3.5%
Albertson's 18,648 961,537
Federated Department Stores 23,500 (a) 1,244,031
2,205,568
TECHNOLOGY SERVICES--2.6%
Computer Associates International 29,600 1,628,000
The Portfolio
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STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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TRANSPORTATION--2.6%
CNF Transportation 25,400 974,725
Union Pacific 11,300 658,931
1,633,656
UTILITIES--14.6%
AT&T 38,000 2,120,875
Ameritech 18,000 1,323,000
Bell Atlantic 18,000 1,176,750
Coastal 28,700 1,148,000
Enron 3,700 302,475
GTE 18,700 1,416,525
MCI WorldCom 14,000 (a) 1,207,500
Texas Utilities 13,700 565,125
9,260,250
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TOTAL INVESTMENTS (cost $52,961,976) 100.2% 63,297,617
LIABILITIES, LESS CASH AND RECEIVABLES (.2%) (103,098)
NET ASSETS 100.0% 63,194,519
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 52,961,976 63,297,617
Receivable for investment securities sold 2,571,726
Dividends receivable 81,884
Prepaid expenses 11,521
65,962,748
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 38,531
Cash overdraft due to Custodian 464,645
Payable for investment securities purchased 2,239,947
Accrued expenses 25,106
2,768,229
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NET ASSETS ($) 63,194,519
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 50,086,854
Accumulated undistributed investment income--net 196,027
Accumulated net realized gain (loss) on investments 2,575,997
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 10,335,641
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NET ASSETS ($) 63,194,519
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
3,967,911
NET ASSET VALUE, offering and redemption price per share ($) 15.93
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
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STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $7,450 foreign taxes withheld at source) 443,475
Interest 15,556
TOTAL INCOME 459,031
EXPENSES:
Investment advisory fee-Note 3(a) 231,662
Professional fees 16,079
Prospectus and shareholders' reports 8,773
Custodian fees 4,990
Trustees' fees and expenses-Note 3(b) 441
Shareholder servicing costs 404
Miscellaneous 655
TOTAL EXPENSES 263,004
INVESTMENT INCOME-NET 196,027
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4: ($)
Net realized gain (loss) on investments 2,751,731
Net unrealized appreciation (depreciation) on investments 2,213,652
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 4,965,383
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 5,161,410
SEE NOTES TO FINANCIAL STATEMENTS.
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STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 196,027 405,287
Net realized gain (loss) on investments 2,751,731 3,319,993
Net unrealized appreciation (depreciation)
on investments 2,213,652 4,623,217
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,161,410 8,348,497
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net - (412,632)
Net realized gain on investments (1,119,841) --
TOTAL DIVIDENDS (1,119,841) (412,632)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 3,287,959 14,388,912
Dividends reinvested 1,119,841 412,632
Cost of shares redeemed (8,519,287) (12,454,202)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (4,111,487) 2,347,342
TOTAL INCREASE (DECREASE) IN NET ASSETS (69,918) 10,283,207
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NET ASSETS ($):
Beginning of Period 63,264,437 52,981,230
END OF PERIOD 63,194,519 63,264,437
Undistributed investment income--net 196,027 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 218,480 1,044,993
Shares issued for dividends reinvested 76,180 27,861
Shares redeemed (563,602) (914,852)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (268,942) 158,002
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
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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 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 14.93 12.99 10.60 11.70 12.37 12.92
Investment Operations:
Investment income--net .05(a) .10 .06 .63 .51 .35
Net realized and unrealized
gain (loss) on investments 1.22 1.94 2.40 (1.05) (.54) (.56)
Total from Investment Operations 1.27 2.04 2.46 (.42) (.03) (.21)
Distributions:
Dividends from investment
income--net -- (.10) (.01) (.56) (.64) (.32)
Dividends in excess of
investment income-net -- -- (.00)(b (.06) -- (.02)
Dividends from net realized gain
on investments (.27) -- (.06) -- -- --
Paid-in capital -- -- -- (.06) -- --
Total Distributions (.27) (.10) (.07) (.68) (.64) (.34)
Net asset value, end of period 15.93 14.93 12.99 10.60 11.70 12.37
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TOTAL RETURN (%) 8.86(c) 15.69 23.14 (3.62) (.26) (1.56)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .42(c) .83 .99 .93 .94 .25
Ratio of dividends on securities sold
short to average net assets -- -- .02 -- -- --
Ratio of net investment income
to average net assets .31(c) .67 .38 4.12 3.56 3.54
Decrease reflected in above expense
ratios due to undertakings
by Dreyfus and
Comstock Partners, Inc. -- -- -- -- -- .88
Portfolio Turnover Rate 105.16(c) 252.24 188.57 124.19 53.88 25.96
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Net Assets,
end of period ($ x 1,000) 63,195 63,264 52,981 21,101 25,272 30,510
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
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 Special 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 to maximize total return, consisting of capital appreciation and
current income. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's
investment adviser. Premier Mutual Fund Services, Inc. is the distributor of the
portfolio's 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 Portfolio
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 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 portfolio's
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 receives
net earnings credits based on available cash balances left on deposit.
(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
<PAGE>
Code of 1986, as amended (the "Code"). To the extent that the 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:
In accordance with an agreement with a bank, the portfolio may borrow up to $5
million under a short-term unsecured line of credit. Interest on borrowings is
charged at rates which are related to the Federal funds rate in effect from time
to time. During the period ended June 30, 1999, the portfolio did not borrow
under the line of credit.
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
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
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$64,344,129 and $66,586,900, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$10,335,641, consisting of $11,289,331 gross unrealized appreciation and
$953,690 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).
<PAGE>
For More Information
Dreyfus Variable
Investment Fund, Special 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 118SA996
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