Dreyfus Variable Investment Fund, Small Cap 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
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund, Small Cap Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Small Cap 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 period, including a discussion with the
portfolio managers, Hilary Woods and Paul Kandel.
The past six months have been rewarding for many equity investors, including
those who own small-cap stocks. Strong U.S. economic growth, low inflation and
high levels of consumer spending supported continued strength in many broad
measures of stock market performance. As a result, several major U.S. market
indices set new records, including the technology-laden NASDAQ index.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including small-cap stocks, as investors became increasingly attracted
to their high growth rates. 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 large- and
small-capitalization sectors of the stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Small Cap
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Hilary Woods and Paul Kandel, Portfolio Managers
How did Dreyfus Variable Investment Fund, Small Cap Portfolio perform relative
to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Small Cap Portfolio produced a strong positive total return of 12.34%.(1) This
performance exceeded the Russell 2000 Index's 9.28% total return for the same
period.(2)
We attribute this performance to our success in identifying attractive
individual investment opportunities among a diverse range of sectors, industries
and investment styles. In addition, the portfolio's broad diversification among
value-oriented and smaller-cap stocks positioned us to benefit from the
broadening of market strength that occurred in April 1999.
What is the portfolio's investment approach?
The portfolio invests primarily in a diversified portfolio of small-cap
companies, focusing on those companies that offer new or innovative products or
services that we believe enhance prospects for growth of future earnings. We
also base investment decisions on economic or political conditions that we
believe are likely to affect a stock's performance, and on the impact of changes
in a company's management or organizational structure.
Our investment approach targets both growth-oriented stocks (those of companies
with earnings that are expected to grow faster than the overall market), and
value-oriented stocks (those that appear underpriced according to a variety of
financial measurements) . We further diversify among the market' s various
industries and sectors, supervising a team of sector managers who each make buy
and sell decisions within their respective areas of expertise.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
The result of our approach during the recent six-month period was a broadly
diversified portfolio of carefully selected stocks that generally performed
well. During the first three months of the period, when growth stocks were
showing marked strength, we realized our best performance from growth-oriented
holdings in the technology and utilities sectors. Among the portfolio's
technology holdings, internet-related companies, such as CMGI, and semiconductor
makers, such as Conexant Systems, led the way. Among utilities, we scored
successes with telecommunications-related stocks, including Metromedia Fiber
Network, Cl. A., which provides telephone companies and corporations with the
increased bandwidth required for data-intensive communications.
After the market' s dramatic, mid-period shift in favor of value stocks, we
achieved our greatest returns from value-oriented holdings among basic
industrial suppliers and producers. The portfolio's performance was fueled by
energy exploration and production company Devon Energy, oilfield services outfit
Global Industries, and paper industry producers and suppliers, such as
Smurfit-Stone Container and Minerals Technologies.
The portfolio also achieved excellent results in the consumer products sector,
with strong performance driven by high levels of consumer confidence throughout
the period. Our best performers included TCA Cable TV, which was taken over by
Cox Communications, and Tiffany & Co., the luxury retailer.
What other factors influenced the portfolio's performance?
Of course not every company in the portfolio showed positive returns. Some
stocks lagged, even among our best-performing sectors. Among technology stocks,
for example, our holdings among business software companies, such as Network
Associates and Aspect Development, faltered due to fears of a Y2K-related
corporate spending slowdown. In the consumer arena, Fresh Del Monte Produce
underperformed, hurt by a drop in banana prices.
The portfolio also experienced weak performance throughout the period from two
sectors in particular: finance and health care. Financial stocks generally
suffer during periods of rising interest rates,
as was the case during the first half of 1999. Although the managers were
significantly underweight in the financial sector going into this period, many
of the portfolio' s financial company holdings lost ground. In particular,
Reliance Group Holdings and Fremont General disappointed due to a combination of
company-specific problems and the unfavorable economic environment. An exception
was Executive Risk, which was taken over by Chubb Corp. at a substantial
premium.
The health care sector was battered by an increasingly restrictive regulatory
environment and the prospect for further government-imposed limitations on
Medicare and Medicaid reimbursements. Although the portfolio benefited from its
holding in Foundation Health Systems, Cl. A., a turnaround HMO, and
advanced-stage biotech companies, such as Gilead Sciences, those gains were more
than matched by losses in information management services companies negatively
impacted by Y2K, such as IDX Systems, and early-stage drug discovery companies,
such as Pharmacyclics.
What is the portfolio's current strategy?
In general, the portfolio has benefited from the market's mid-period shift in
favor of value-oriented and smaller-cap stocks. While no one knows whether or
for how long this trend will persist, we continue to believe that small-cap
stocks offer the potential for strong growth and above-average capital
appreciation. Accordingly, we continue to adhere to our blended growth-and-value
investment strategy in seeking to outperform the Russell 2000 Index.
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 REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAINS DISTRIBUTIONS. THE RUSSELL
2000 INDEX IS AN UNMANAGED INDEX OF SMALL-CAP PERFORMANCE AND IS COMPOSED OF THE
2,000 SMALLEST COMPANIES IN THE RUSSELL 3000 INDEX. THE RUSSELL 3000 INDEX IS
COMPOSED OF THE LARGEST U.S. COMPANIES BY MARKET CAPITALIZATION.
The Portfolio
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS--96.0% Shares Value ($)
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<S> <C> <C>
COMMERCIAL SERVICES--6.7%
Outdoor Systems 625,000 (a) 22,812,500
Profit Recovery Group International 575,000 (a) 27,204,687
Reynolds & Reynolds, Cl. A 610,000 14,220,625
Strategic Distribution 945,000 (a) 2,185,313
Valassis Communications 450,000 (a) 16,481,250
82,904,375
CONSUMER DURABLES--1.1%
Mohawk Industries 450,000 (a) 13,668,750
CONSUMER NON-DURABLES--2.6%
Movado Group 550,000 14,231,250
Tommy Hilfiger 250,000 (a) 18,375,000
32,606,250
CONSUMER SERVICES--8.6%
Meredith 432,500 14,975,312
Premier Parks 700,000 (a) 25,725,000
SFX Entertainment 400,000 (a) 25,600,000
Sun International Hotels 465,000 (a) 20,808,750
TCA Cable TV 350,000 19,425,000
106,534,062
ELECTRONIC TECHNOLOGY--12.1%
CMGI 80,000 (a) 9,125,000
Conexant Systems 425,000 24,676,562
Cordant Technologies 395,000 17,849,063
Lattice Semiconductor 370,000 (a) 23,032,500
Newport News Shipbuilding 550,000 16,225,000
Novellus Systems 315,000 (a) 21,498,750
SDL 350,000 (a) 17,871,875
Sanmina 265,000 (a) 20,106,875
150,385,625
ENERGY MINERALS--1.8%
Devon Energy 400,000 14,300,000
Ocean Energy 900,000 (a) 8,662,500
22,962,500
FINANCE--14.1%
ARM Financial Group, Cl. A 500,000 4,250,000
Bank United, Cl. A 200,000 8,037,500
CCB Financial 225,000 11,896,875
COMMON STOCKS (CONTINUED) Shares Value ($)
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FINANCE (CONTINUED)
Charter One Financial 567,000 15,769,687
Dime Bancorp 500,000 10,062,500
Duff & Phelps Credit Rating 280,000 (b) 18,725,000
Everest Reinsurance Holdings 475,000 15,496,875
FBL Financial Group, Cl. A 650,000 12,675,000
Fremont General 700,000 13,212,500
Horace Mann Educators 550,000 14,953,125
Protective Life 430,000 14,190,000
Reliance Group Holdings 1,825,000 13,573,438
Republic Bancorp 461,461 7,008,439
Terra Nova (Bermuda) Holdings, Cl. A 554,500 14,936,844
174,787,783
HEALTH SERVICES--5.9%
Covance 525,000 (a) 12,567,187
Foundation Health Systems, Cl. A 1,000,000 (a) 15,000,000
Oxford Health Plans 800,000 (a) 12,450,000
Total Renal Care Holdings 970,000 (a) 15,095,625
Universal Health Services, Cl. B 375,000 (a) 17,906,250
73,019,062
HEALTH TECHNOLOGY--2.2%
Gilead Sciences 400,000 (a) 20,900,000
Mentor 355,000 6,611,875
27,511,875
INDUSTRIAL SERVICES--7.5%
Cooper Cameron 450,000 (a) 16,678,125
Global Industries 1,435,000 (a) 18,385,938
Granite Construction 700,000 20,518,750
IMCO Recycling 400,000 6,850,000
Safety-Kleen 750,000 (a) 13,593,750
Smith International 400,000 (a) 17,375,000
93,401,563
NON-ENERGY MINERALS--2.5%
Martin Marietta Materials 245,000 14,455,000
Minerals Technologies 300,000 16,743,750
31,198,750
PROCESS INDUSTRIES--5.6%
Abitibi-Consolidated 1,425,000 16,209,375
Albany International, Cl. A 700,000 (a) 14,525,000
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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PROCESS INDUSTRIES (CONTINUED)
Crompton & Knowles 700,000 13,693,750
OM Group 400,000 13,800,000
Smurfit-Stone Container 550,000 (a) 11,309,375
69,537,500
PRODUCER MANUFACTURING--7.5%
Case 450,000 21,656,250
Crane 475,000 14,932,813
Harsco 425,000 13,600,000
MagneTek 1,265,500 (a) 13,366,844
Titan International 1,295,000 (b) 15,378,125
U.S. Can 654,000 (a) 14,551,500
93,485,532
RETAIL TRADE--3.9%
Consolidated Stores 450,000 (a) 12,150,000
Tiffany & Co. 375,000 36,187,500
48,337,500
TECHNOLOGY SERVICES--5.4%
Intuit 190,000 (a) 17,123,750
National Data 385,000 16,458,750
New Era of Networks 350,000 (a) 15,378,125
Rational Software 535,000 (a) 17,621,562
66,582,187
TRANSPORTATION--1.0%
Expeditors International of Washington 470,000 12,807,500
UTILITIES--7.5%
IPALCO Enterprises 400,000 8,475,000
Metromedia Fiber Network, Cl. A 875,000 (a) 31,445,313
Minnesota Power 530,000 10,533,750
Montana Power 250,000 17,625,000
National Fuel Gas 295,000 14,307,500
Sierra Pacific Resources 300,000 10,912,500
93,299,063
TOTAL COMMON STOCKS
(cost $848,153,134) 1,193,029,877
Principal
SHORT-TERM INVESTMENTS--4.6% Amount ($) Value ($)
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U.S. TREASURY BILLS:
4.50%, 8/5/1999 762,000 759,142
4.48%, 8/19/1999 10,304,000 10,242,568
4.48%, 8/26/1999 6,982,000 6,934,641
4.49%, 9/16/1999 37,054,000 36,690,982
4.65%, 9/30/1999 1,214,000 1,199,723
4.67%, 10/7/1999 1,570,000 1,550,124
TOTAL SHORT-TERM INVESTMENTS
(cost $57,380,903) 57,377,180
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TOTAL INVESTMENTS (cost $905,534,037) 100.6% 1,250,407,057
LIABILITIES, LESS CASH AND RECEIVABLES (.6)% (7,301,311)
NET ASSETS 100.0% 1,243,105,746
(A) NON-INCOME PRODUCING.
(B) INVESTMENTS IN NON-CONTROLLED AFFILIATES (COST $20,525,121)--SEE NOTE 1(D).
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 905,534,037 1,250,407,05
Receivable for investment securities sold 1,279,487
Dividends receivable 820,240
Prepaid expenses 25,438
1,252,532,222
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 774,403
Cash overdraft due to Custodian 1,491,253
Payable for investment securities purchased 7,100,693
Accrued expenses 60,127
9,426,476
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NET ASSETS ($) 1,243,105,746
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 913,677,410
Accumulated undistributed investment income-net 499,396
Accumulated net realized gain (loss) on investments (15,944,080)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 344,873,020
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NET ASSETS ($) 1,243,105,746
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial
Interest authorized) 20,541,816
NET ASSET VALUE, offering and redemption price per share ($) 60.52
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends:
Unaffiliated issuers 4,051,212
Affiliated issuers-Note 1(d) 54,975
Interest 1,070,943
TOTAL INCOME 5,177,130
EXPENSES:
Investment advisory fee-Note 3(a) 4,454,674
Prospectus and shareholders' reports 87,866
Professional fees 56,360
Custodian fees--Note 3(a) 46,292
Shareholder servicing costs 9,460
Trustees' fees and expenses-Note 3(b) 8,184
Loan commitment fees-Note 2 2,506
Miscellaneous 7,267
TOTAL EXPENSES 4,672,609
INVESTMENT INCOME-NET 504,521
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 72,807,973
Net unrealized appreciation (depreciation) on investments:
Unaffiliated issuers 58,806,634
Affiliated issuers 6,467,188
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 138,081,795
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 138,586,316
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 504,521 856,250
Net realized gain (loss) on investments 72,807,973 (88,451,268)
Net unrealized appreciation (depreciation)
on investments 65,273,822 40,225,699
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 138,586,316 (47,369,319)
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (863,336) (4,484)
Net realized gain on investments - (23,750,579)
TOTAL DIVIDENDS (863,336) (23,755,063)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 126,396,318 208,013,634
Dividends reinvested 863,336 23,755,063
Cost of shares redeemed (268,680,783) (188,132,272)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (141,421,129) 43,636,425
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,698,149) (27,487,957)
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NET ASSETS ($):
Beginning of Period 1,246,803,895 1,274,291,852
END OF PERIOD 1,243,105,746 1,246,803,895
Undistributed investment income--net 499,396 858,211
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 2,356,733 3,992,161
Shares issued for dividends reinvested 16,198 525,438
Shares redeemed (4,959,835) (3,690,117)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (2,586,904) 827,482
SEE NOTES TO FINANCIAL STATEMENTS.
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 ($):
Net asset value,
beginning of period 53.91 57.14 52.08 46.13 36.52 34.45
Investment Operations:
Investment income--net .03(a) .04 .07 .10 .16 .17
Net realized and unrealized
gain (loss) on investments 6.62 (2.21) 8.49 7.53 10.54 2.50
Total from Investment Operations 6.65 (2.17) 8.56 7.63 10.70 2.67
Distributions:
Dividends from investment
income--net (.04) (.00)(b) (.07) (.10) (.18) (.16)
Dividends from net realized gain
on investments -- (1.06) (3.43) (1.51) (.91) (.33)
Dividends in excess of net
realized gain on investments -- -- -- (.07) -- (.11)
Total Distributions (.04) (1.06) (3.50) (1.68) (1.09) (.60)
Net asset value, end of period 60.52 53.91 57.14 52.08 46.13 36.52
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TOTAL RETURN (%) 12.34(c) (3.44) 16.75 16.60 29.38 7.75
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .39(c) .77 .78 .79 .83 .55
Ratio of net investment income
to average net assets .04(c) .07 .12 .24 .54 1.18
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation -- -- -- -- -- .52
Portfolio Turnover Rate 22.99(c) 75.04 79.00 89.10 99.02 106.00
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Net Assets, end of period
($ x 1,000) 1,243,106 1,246,804 1,274,292 960,365 543,281 173,215
(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>
The 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, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the Small Cap 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 capital appreciation. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. (" Mellon" ). 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 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 received
net earnings credits of $4,009 during the period ended June 30, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) AFFILIATED ISSUERS: Issuers in which the portfolio held 5% or more of the
outstanding voting securities are defined as "affiliated" in the Act. The
following summarizes affiliated issuers during the period ended June 30, 1999:
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
<TABLE>
<CAPTION>
SHARES
-----------------------------------------------------------
BEGINNING END OF DIVIDEND MARKET
NAME OF ISSUER OF PERIOD PURCHASES SALES PERIOD INCOME ($) VALUE ($)
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<S> <C> <C> <C> <C> <C> <C>
Duff & Phelps Credit
Rating 280,000 -- -- 280,000 16,800 18,725,000
Titan International 1,250,000 45,000 -- 1,295,000 38,175 15,378,125
</TABLE>
(E) 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, it is the policy of the portfolio not to distribute such gain.
(F) 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.
The portfolio has an unused capital loss carryover of approximately $87,485,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. If not
applied, the carryover expires in fiscal 2006.
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 .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. During the
period ended June 30, 1999, the portfolio was charged $137 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999, the
portfolio was charged $46,292 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 $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
The following summarizes the aggregate amount of purchases and sales of
investment securities, excluding short-term securities, during the period ended
June 30, 1999:
PURCHASES ($) SALES ($)
- -------------------------------------------------------------------------------
Unaffiliated issuers 264,148,416 400,425,917
Affiliated issuers 413,438 --
TOTAL 264,561,854 400,425,917
At June 30, 1999, accumulated net unrealized appreciation on investments was
$344,873,020, consisting of $381,107,172 gross unrealized appreciation and
$36,234,152 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).
The Portfolio
For More Information
Dreyfus Variable Investment Fund, Small Cap 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
The 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 121SA996
